Strategy. Innovation. Brand.
Innovation and the Installed Base
How could God create the entire universe in only six days? He didn’t have to worry about an installed base.
Need to upgrade to Universe 2.0?
It’s fairly easy to innovate technically when you don’t have customers. You can adapt new technologies or new ideas without fear of alienating current users. Once you have customers, you have to pay attention to their needs. That includes the ability to upgrade seamlessly from one generation to another. Your customers feel that they’ve paid you money for a long time so their needs should dominate your planning. That may mean that you have to slow down new releases of your product to help your installed base tag along.
Think about it this way: which company is more innovative: Apple or Microsoft? Most people would say that Apple is far more innovative. But which company takes better care of its installed base? By and large, Microsoft has. When Microsoft releases a new operating system, they actually test to determine if old applications will run on the new platform. Apple is much quicker to dump the old stuff to keep the new stuff coming. The latest example is the new plug for the iPhone 5. If and when I upgrade to the iPhone 5, I’ll obsolete half a dozen perfectly good cables that no longer fit. That’s irritating but it may well get me into new technologies that work better than the old.
So do innovation and good customer care always conflict with each other? Not necessarily. Your fundamental commitment to customers is not that you’ll help them to move from release to release. Your promise is actually simpler — that you’ll stay in business to continue to serve your customers. I’m a veteran of a number of companies that no longer exist. Our customers were totally out of luck — they got nothing. Much better to give your customers something new — even if it entails ripping out the old — than it is to give them nothing at all.
When is it acceptable to ship an innovation that disrupts your installed base? I think there are two answers: 1) When a new technology emerges that allows you to provide much better solutions at a lower cost. You need to hop to a new platform to take advantage of the change. I saw this happen in the transition from host-centric to client/server software. It’s happening again today with cloud computing and mobile platforms. 2) When a competitor is shipping a solution that will disrupt your relationship with your installed base. Better to disrupt your own base than to let someone else do it for you.
And, how do build innovative new solutions while also maintaining and developing your traditional, bread-and-butter products? It’s not easy. The best answer I’ve seen is the ambidextrous organization which you can read about here.
Dunbar’s Number: Why My Clients Hire Me?
Want to join my social circle?
I’ve noticed a pattern among my clients. Many of them are small software companies with good ideas that are growing rapidly. When they first call me, they have approximately 150 employees. I’ve often wondered, what is it that triggers a problem — and a call to an outsider — at 150 employees?
Then I discovered Dunbar’s number and the pattern started to make sense. Robin Dunbar, a British anthropologist, is an expert on the social lives of monkeys. (Wouldn’t you love to have a job like that?) Dunbar made an interesting observation: Monkeys with small brains have small social circles. Monkeys with larger brains have larger social circles. Actually, it’s not total brain size — it’s the size of the neocortex, the area of the brain where we do our abstract reasoning. In Dunbar’s charts, you’ll find a distinct up-and-to-the-right relationship between the size of the neocortex (relative to the rest of the brain) and the size of the social group.
So, you might wonder, how does this affect the lives of large-brained primates known as humans? How big is our “natural” social group? Funny you should ask. Dunbar frames the question this way: what’s the largest number of people in which it’s possible for everyone to know each other and also to know how everyone relates to everyone else? The answer is slippery but it seems to be around 150 people (plus or minus, oh, say 30).
How many for humans?
If you search the topic on the web, you’ll find a number of observers arguing for a higher number. (I didn’t find any arguing for a lower number). On the other hand, you’ll also find observers who claim that 150 occurs frequently and “naturally” in traditional societies. Apparently, the Roman Legions were divided into companies of 150 men. Church parishes in 18th century England contained 150 people. If your parish grew bigger, the bishop would campaign for an additional church.
How does Dunbar’s number affect organizations? Generally speaking, a smaller organization can be fairly loosey-goosey. We all know each other and we all know how we relate to each other. We don’t need a lot of structure. Above 150, however, organizations start to get more bureaucratic. According to Wikipedia, “…analysts assert that organizations with populations of people larger than Dunbar’s number … generally require more restrictive rules, laws, and enforced norms, to maintain a stable, cohesive group.”
Maybe this is why companies call me when they reach about 150 employees. They’re growing up and they’re feeling the growing pains. It’s not as simple as it used to be. In fact, it’s getting rather complicated. I hope they keep calling me. I’m becoming a bit of a specialist.
You can find Dunbar’s original article here.
Better Communication Through Plumbing
Got an idea? We can help.
Want to improve communication in your organization? Reduce the number of bathrooms. Everybody needs to use the bathroom from time to time. With fewer bathrooms to choose from, people are more likely to bump into each other. When they do, they wind up communicating.
One of your goals is to get people to bump into each other (more or less literally) as often as possible. It’s particularly important to get people from different disciplines to mix and mingle. When they do, sparks of creativity start to fly. You can design (or re-design) your space to ensure that this happens. Instead of having a coffee pot in every corner of the building, have only one coffee service centrally located. Coffee is a people magnet. Be sure to have some tables nearby so people will have a place to chat while consuming their caffeine.
You can also randomize your offices. Instead of having engineers sit only with engineers and marketers sit only with marketers, mix them up a bit. Ensure that people from different disciplines get to know each other. It sparks new ideas and reduces the us-versus-them mentality.
What else can you do? Well, maybe you should encourage your employees to take up smoking. Watch the video to find out why.
Innovation: Free Port Rules
Nice place to develop an idea.
An employee has generated a good idea. Your company’s Idea First Responders have accepted the idea, stabilized it, and started to transport it to the next phase of your innovation process. And where should they take it? One good place is the Free Port.
Free Ports of old accepted ships of all nations and gave them safe harbor. That’s a good model for harboring and developing new business ideas. An Idea Free Port may be as simple as a department manager’s “good idea” file. Or it may be a prestigious, cross-departmental committee tasked with the development and implementation of good ideas. Your Free Port should adopt rules that conform to your company culture. Here are some guidelines:
- (Almost) all ideas are welcome — in general, ideas enter the Free Port via Idea First Responders (IFR). In other words, IFRs do some vetting. You can set the vetting guidelines to your company’s needs — from very stringent to very loose. All IFRs have to understand the rules in the same way. If an IFR says the idea meets the guidelines, then it enters the Free Port.
- Free Port Registry — if you encourage creativity in your company, you’ll get a lot of good ideas. You can’t implement all of them — at least, not all at once. So, one function of the Free Port is to keep track of ideas lest you forget them.
- Compare & Evaluate — since you’ll have more ideas than you can handle, the Free Port committee will need to compare ideas and decide which ones should move forward ahead of others. These are tough, often emotional decisions. A Free Port committee needs a transparent and widely accepted set of questions to evaluate ideas.. Your questions will vary depending on your needs. My favorite question is: which idea will deliver the greatest good to the greatest number of customers? Other useful questions may include: Which ideas will bring us new customers either by offering more or less than our current products offer? Which ideas would our competitors never dare to try?
- Fear of failure causes failure — business plans are based on the past. A truly innovative idea has no past — so you can’t write detailed plans for it. You have to try it out and see if it works. Sometimes it will, sometimes it won’t. The Free Port committee needs a mechanism allowing it to experiment without fear of failure. You can do this at an individual level by offering “get out of jail free” cards. At the department level (or higher), you may need a special “it may fail but let’s try it” fund.
- Free Port Reports — it will take time to organize, sort, and develop the many ideas that will enter the Free Port. Your employees will wonder what’s going on. After a while, they may even wonder if this is another cynical management ploy. The Free Port has to keep employees informed. A simple method is to publish meeting minutes. From time to time however, Free Port leaders should report to employees in person, with ample time for a robust Q&A. (You’ll develop a lot of new ideas in these sessions).
Free Ports can get bogged down in bureaucratic red tape. To avoid this, keep meetings brief and keep measurements rough. (New ideas are notoriously hard to measure. Don’t overdo it.) Also, keep the CEO involved. She can resolve disputes quickly and make the many judgment calls that need to be made. Her presence will also remind people of how important the Free Port really is.
Innovation: When Inspiration Strikes, Where Are You?
Long, long ago when I was a graduate student, I was working late in the computer lab trying to solve a complex programming problem.
Walking is the best way to get there.
Though I had written most of the code I needed, I just couldn’t figure out how to code the crux of the problem. After several hours of hit-and-miss programming, I gave up and walked home.
During my 15-minute walk, the answer popped into my head. I made two observations: 1) I had a good idea while I was walking; 2) I’m not a very good programmer — the problem wasn’t so terribly difficult.
The second idea helped me re-plan my career. Maybe I shouldn’t be a programmer after all. The first idea helped me be successful in my career.
I don’t claim to be a very creative thinker. But I do have a good idea every now and again. When I do, I try to note and remember my circumstances. I figure that there’s something about the environment that promotes creative thinking. Conversely, there are some environments that seem to inhibit — perhaps prohibit — creative thinking. To stimulate my creative processes, I need to insert myself into more of the former environments and fewer of the latter.
Here’s what I’ve found. I have a lot of my good ideas — perhaps a majority — when I’m walking. I’m a visual thinker and there’s a lot to see when I’m out for a walk. It’s stimulating. Yet it doesn’t require so much attention that I can’t process things in the back of my mind. If I’m walking with my wife, she often points out things that I might have missed. Then I can ask myself, “why did I see X but not Y?” That can stimulate interesting thoughts as well.
Other activities that seem to stimulate creativity (for me, at least) include riding a bike, light exercise at the gym, flying in an airplane, riding a train, taking a shower, and cooking oatmeal. It’s an odd combination. The common thread seems to be that I’m doing something that takes part of my attention but not all of it.
Here are some places where I never have good ideas: airports, commuting in heavy traffic, watching TV, and sitting in business meetings. It’s ironic that good ideas don’t come to me in business meetings. Basically, I’m trying to keep up with the conversation. If I’m a good listener, then I’m paying attention to other people rather than processing interesting thoughts myself.
I find brainstorming sessions useful though I rarely have a good idea when I’m in one. It’s like thinking of a good joke. If you ask me to tell a good joke, my mind goes blank. If my mind is wandering, however, I can think of a dozen jokes. It’s the same in brainstorming sessions. I try to follow the conversation and the various social interactions. That means I’m not processing stray, random, and perhaps interesting thoughts. For me, brainstorming sessions are useful for enhancing group communication and building trust. That creates the conditions for creating ideas.
I’m not at all sure that my “creative” activities will work for you. So here’s a suggestion: keep an idea log. Don’t just jot down the idea. Jot down where you were and what you were doing when the idea occurred to you. Sooner or later, you’ll see a pattern. Then you can create more “creative” experiences. In the meantime, I’m going for a walk.
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