Archive for Innovator's Dilemma
by Rob Paterson
June 16, 2011 at 10:32 am · Filed under
Economics, Innovation, Innovator's Dilemma, New Realities, Personal Branding
How much would a nice hotel room cost you in a really cool part of Manhattan? At least $350 a night. A grotty room maybe for $250. Can you get any hotel room in the Plateau (the most Bohemian part of Montreal)? The quick answer is no.
But if you use AirBNB – you can get a really nice place for maybe $100 in Manhattan and $70 in Montreal. As with eBay you also get the advantage of a trust mediator.
Here is the core idea – AirBNB and other sites like it – there are 3 that have just got major funding – are run along the lines of eBay. You have a flat or house or even a room in your place. You use the aggregating power of the mediator to position your place and to control the trust issues. You are a traveller. You are exposed to the content which is highly personal – with a number of trust issues dealt with by rating and how the money works. In essence good behaviour on both sides is good business. Both sides are rated.
The barrier for travellers is to get over the idea that Hotels are it. Once you do, you may never go back and the hotels – as with newspapers and Craigslist cannot compete. For they have fixed costs like a newspaper that they cannot reduce.
Who wins? Well you do. My wife intends to stay in Montreal with my daughter in the fall to help my daughter in law who will have new baby. We have found a 3 bedroom flat 100 yards away for $75 a night. More than ideal. The renter can now get a return on her place that was impossible before.
Once again the Personal Brand will trump the corporate brand – for we can truly trust a person.
Of course, as with newspapers, the best brands will be ok – But what about all those budget hotels or those mid level hotels? Armageddon I think. Others agree and have valued Airbnb at 1 billion dollars
The process of the Innovator’s Dilemma will now take place.
This is truly a game changer for all involved. Who would ever have thought?
by Rob Paterson
April 28, 2011 at 6:08 am · Filed under
Adoption, Clayton Christenson, Healthcare, Innovator's Dilemma, Paradigm, Social Media, Social Objects
Once upon a time there were department stores that sold everything. They hardly exist anymore. Why? because we get a better deal from specialty stores. Once upon a time there were record albums where many songs were in one package. We don’t buy albums anymore. If we buy any music we buy songs.
We used to rely on advertising. Increasingly we use our trusted personal networks to help us navigate the market.
It used to take millions to make complex things but more and more we are seeing new tools that can do big things for very little cost.
The world of Macy’s and Mad Men is over. But not in health care
Today we have a department store model for healthcare. Today we use all the old models of business in healthcare.
So what might a truly modern view of health care look like?
This is where Clayton Christensen’s new vision for Healthcare makes so much sense to me.
Here in one page is the guts of CC’s case. All of these models are combined today in the healthcare model and are rooted in the most expensive part of the system – the doctor’s office and the hospital. It’s all Macy’s in the 1950’s. It’s big and aggregated into one high overhead system that has massive organizational friction and so low quality.
Clayton Christensen is advocating that we break this up as happened to the department stores. Then each part of the mix woudl get the best deal!
Imagine each part of this mix being pulled out as CC suggests:
- Fee for Service – Here you pay a lot to get the best shot at finding out what the problem is when what is wrong is not clear. ”House” on steroids. The McKinsey model.
- Fee for Outcome - Specialized units that focus on doing one proceedure well – we see this already with hernia operations – you are much better going to a specialist clinic – lower overhead – better operational process – better outcomes.
- Membership as the Model – A social network aggregated around similar issues. Such as Type 2 Diabetes etc. Here prevention and living with a diease or the life changes needed to cure us will take place. None of these tasks can be done by a doctor as we currently organize health. Nor should they. They can best be done by us the pubic. For here the issue is how we live and of course getting off our addictions.
How to do this?
CC offers the playbook here too. It is very unlikley that the system will reform itself to do this. Systems don’t do that. The system will have to be disrupted from below.
Diagnosis – Most GP’s refer complex cases of all kinds up the line as it is. They are in reality traffic directors. They can treat only very minor problems. Most of the time they simply write a prescription. They are so time pressed that they cannot help with prevention. They are not paid for that anyway. The real issue for most of their patients is that they have a chronic disease such as heart disease or type 2 diabetes. All of these diseases are based on lifestyle. Not the Dr’s forte. Drugs are the proxy for health.
CC is suggesting that we see high end diagnosis as a field in itself. This does not have to be based in one hospital.
Just as a hospital or a Dr’s office has low skills and high overheads – Specialty Clinics have high skills and low overheads.
In Canada we have a start here in specialty clinics such as the Shouldice Clinic – If you have a hernia you would be silly to go anywhere else. This is what CC means as fee for outcome and this type of clinic can generate such process expertise as to all but guarantee a good result. The Shouldice is the specialty retailer that replaced the department store.
Changing all this above is hard work as it involves changes to the system as it is.
What interests me the most is the largest group at the bottom where groups of people with say Type 2 Diabetes can get together an help each other.
The new frontier for health that can grow up in spite of the system is “Community Health”. Where you and I take charge of our health and use simple and powerful tools and each other to stay healthy, get healthy and help each other at rock bottoms costs.
- In using diagnostic and measurement tools – as with all other tools more and more diagnotic tools that used to ve expensive and hard to use are available at prices and levels of complexity that you and I can use.
- In learning more about their condition – as with the publication of the bible in the 16th century, information that was restrricted ony to Dr’s is widely available to all of us now. Many know more about their condition that theur GP who has to be so broad.
- In learning about diet – we are learning that diet is at the heart of most of the diseases of medern life. Dr’s know nothing abut this. Changing our diet is often beyond our power alone. We need the help of our peers.
- In helping each other makes the hard lifestyle changes they need to take back control. No expert can help here – only peers.
Here the skilled part is in Facilitation. This is where 85% of the system will reside.
Here is I think where the power of social media combined with what we are learning about the true causes of most modern disease offers us so much.
We could all get more healthy at a fraction of the cost of the current system – cost to us as individuals and as societies.
This is the revolution that is ahead.
by Rob Paterson
February 26, 2010 at 1:04 pm · Filed under
Innovator's Dilemma
Many look forward to the day when technology will enable their organization to become a real 2.0 place that draws on the full energy and knowledge of all who work there. Don’t hold your breath! There is a process that is in the way that all ignore. But it is the central implementation barrier.
Many years ago after the post war election that brought in the Labour Government in England, a new Labour MP was in a bar at the house of Commons with Nye Bevan, a very experienced Labour MP and Minister. The newbie noticed that several Labour Members were drinking with several Tories and both were having a good time. Shocked, he said “The’re fraternizing with the enemy!”. Bevan smiled and said, ‘The’re not the enemy. The’re the Opposition. You sit next to the enemy.”
We all go on and on in organizational life about the “competition”. But we all know really that the real enemy are those bastards in the other department or division.
Let’s get straight here. Here is the fractal. The sole purpose institutions is to get bigger and to accrue more financial resources in its direct control. The sole purpose of its subsidiary departments and divisions is to do the same. To imagine any other purpose is to be recklessly naive. Institutions do not exist to serve any external purpose. They exist to look after their own interests. The same is true for their parts.
All is reduced to money. So the only game in town is the budget.
At the centre of all job grading for executives, is the budget. The man with the biggest budget (I use the term man deliberately) gets the most points and is the King of the game. All executives know this. It matters not that the work that you do may have a bigger impact, budget trumps all.
Hence the silos. Hence the fact that every organization in the world will tell you that communications is their biggest challenge. They will tell you how they hope for more cooperation. But the truth is that because all are locked in a life and death struggle to get more from the budget, cooperation is impossible. For the foolish and naive executive to play the game any differently, I plead guilty here, means only that you lose and so do your people.
So to share resources is to dilute your budget. To reduce waste is to dilute your budget. To be more effective is to dilute your budget. To be more innovative is to dilute your budget. See!
True innovation becomes impossible too. Why? Because of the ROI issue. You are the ex big winner of the Trucks Division at say GM. You have a huge budget and you still are making out like a bandit back in the day. The discussion at the board is like this. Bright Board Member “Surely we all agree that soon gas prices will rise and our truck line will be vulnerable?” Senior Board Member “Yes but look at the ROI we have on this our largest investment. If we start to shift into smaller vehicles, our ROI will go down. We will not be able to bear the drop in ROI (under his breath – you idiot)”
Why did companies like BP or Shell not make the shift into renewables? Lots of talk. But when push came to shove all this was window dressing. Why? Because they cannot make the returns in the new that they make in a mature business like oil. It’s all about the budget lock in effect. The big shuts out the small, so the new cannot grow in a mature organization. If by any chance it does, the big will do its best to close it down. The Innovator’s Dilemma! The people at the top are not stupid – they are locked in by the budget.
So what does this mean?
- No executive who wants to climb will change the job grading system – who wants to be accountable for impact when a much simpler task of getting more budget is the alternative
- All the talk of innovation attacks the power holders of the mature parts that have the largest budgets – so rest assured it’s all bullshit
- All the talk of cooperation attacks the power holders ……
- All the talk of customer service being #1 attacks the main power holders….
- All the talk of beating the competition attacks the main power holders….
So what do big organizations do then to keep power if they don’t in fact do any of the things that we are all taught at school that we are meant to do and that is the public discourse inside the organizations?
They seek to get bigger. Size matters. And when they are really big, such as banks that are too big to fail, they use budget to rig the larger playing field.
So the main work of very large organizations for profit and non profit, is to influence their field. So for schools, it’s not about the kids, it’s about the teachers. In health it is not about our health it is about big pharma. In defense it is not about our men and women in harms way, it is about big defense.
It is the same game all the way up – it is “Turtles” all the way up.
- In your department, you game the system to get and to keep more budget – your adversary is the other department in the division
- In your division…
- In your SBU…
- In your organization…
- In your sector….
So, where are we? I think that we are living a lie.
We thought that jobs were good and that our organizations were designed to compete. I certainly thought that and I was a SVP HR for a very large bank.
But we can now look behind the green curtain and see the reality. We have seen that the purpose of a job is to deskill people. We can see that all the core business process that business school teaches us to pay attention to, are subsidiary to the budget.
What this means is that nearly all the ideas that are baked into HR help make organizations grow into unresponsive dinosaurs. You get GM as a result.
So can GM be reformed? Or must we look at a new model?
Next post
by Paula Thornton
September 16, 2009 at 4:43 pm · Filed under
2.0 Design Thinking, David Weinberger, Emergent, Enterprise 2.0, Innovator's Dilemma
“technology…processes by which an organization transforms labor capital, materials, and information into products and services of greater value.”
Clayton Christensen, The Innovator’s Dilemma
Technology?
The term “technology” is as misused as the word “diet”. Anything you eat makes up your diet. You can’t go on a diet, you’re already on one. You can, however, go on a “restricted diet” or a “reduction diet”. The key modifiers are often dropped.
Andrew McAfee purports that Enterprise 2.0 is “not not about the technology.” Using the Christensen definition noted above, this is true. But is Andy missing a modifier? His writings seem to focus on “digital technology”, which can indeed enable Enterprise 2.0. And yet, many of these technologies have been available for over a decade. How significant then are these technologies and where’s the issue?
Digital technologies labeled Enterprise 2.0, will not provide 2.0 results if implemented with 1.0 thinking.
2.0 Thinking: Embrace Dichotomy
How is 2.0 thinking different? It relies on a shift away from many commonly held beliefs. It is not an abandonment of such beliefs, but requires that they be suspended to move to a more flexible, adaptive middle. It requires the ability to embrace dichotomy, to simultaneously consider opposing concepts to find new possibilities (see “The Opposable Mind” by Roger Martin, Rotman School of Business and “The Innovation Paradox” by Richard Farson and Ralph Keyes).
Digital technologies are, well, fundamentally digital. They operate off of algorithms and binary code. As such, they provide approximations of reality. But knowledge work is not inherently defined by processes. Forcing knowledge work into processes defined by algorithms and binary code introduces ‘rounding errors’. The more algorithms and binary code you string together into a single solution, the more error you introduce.
The promise of object-oriented theory was to create reusable pieces of code. This was a fallacy. The true potential was not in the code itself, but in reusable functions – algorithms of process (the real essence of SOA).
Consider the following continuum:
Based on observations from Roger Martin, the adaptive middle requires a move away from (not an abandonment of) binary code. The entire continuum is relevant — optimal flexibility synthesizes all of these. Where the dynamic middle falls, depends on the context of the problem or opportunity at hand. Consider the left side Art and the right side Science. Synthesized, they lead to the optimal: context-relevant design.
One discipline that relies on the synthesis of art and science is architecture. While digital architecture might be considered both art and science, Enterprise 2.0 requires a form of Enterprise Architecture akin to, but not equal to the Zachman Framework (frameworks, the conceptual equivalent to technology platforms). No one individual can or should defend the various perspectives needed to shape such an architecture.
Structure Minimized, Not Eliminated
Fundamental to Enterprise 2.0 is simplicity. The most simplistic form in nature is that which emerges, governed by the laws of complexity – the middle between chaos and order (basic premises of complexity science, including feedback loops are assumed and not detailed here).
Emergence is strangled by order and dissipates in chaos. It requires “Small Pieces Loosely Joined”. In his book by the same name, David Weinberger lays out a “unified theory of the web”. Enterprise 2.0 embraces a unified theory of work, celebrating the most adaptive resource a company has: its people.
Enterprise 2.0 unleashes the potential of corporate resources by shifting control. While management does not go away, it is not an activity in the hands of a few.
Gary Hamel suggests, “Management is out of date. Like the combustion engine, it’s a technology that has largely stopped evolving…” Management is not a group of people with a title, it’s “the capacity to marshal resources, lay out plans, program work, and spur effort” and “is central to the accomplishment of human purpose.”
Fluid Structure: Think Lava Lamp
There’s no ‘big bang’ theory. Emergence does not evolve from nothing – it requires structure. Endless possibilities of form emerge from the elements and constraints of a lava lamp. Break the container and the possibilities of the elements end.
Where does structure come from? It depends – this, the ultimate design answer. The right answer comes from the context of the business.
There are no checklists for creating an Enterprise 2.0-enabled environment. The business is already operating. The challenge is akin to repurposing a Boeing 777 into a 787 Dreamliner mid-flight, except there is no ‘finished’ design, but there is a starting architecture (heuristics). Most progress is tested/validated in-flight.
The term “repurposing” should not be taken lightly. Tremendous potential exists for leveraging what’s already in place: “Thus the task is not so much to see what no one yet has seen, but to think what nobody yet has thought about that which everybody sees” Arthur Schopenhauer. One form of this is the mashup, but there are many other ways to leverage existing resources by using pieces of existing designs and solutions or modifying them with new functional or UI patterns.
While digital technologies contribute to the structure, they are only seeds. At the lowest level construct, Blog technology is not different than a Wiki: both provide functions to create and display content in a specific format. The main distinctions in Blogs and Wikis are the functions and formats they provide. But the same is true for all other common desktop applications. A Blog or a Wiki is no more inherently social than email.
Indeed, Blogs and Wikis are common to desktop applications in one very negative way: they can create more silos of information faster. This is the antithesis of the flexibility required by Enterprise 2.0. There must be a guiding architecture for Enterprise 2.0 success, one that separates the UI from the functions, the format from the content and data. A digital technology that earns an E2.0-relevant label, will be built around or support such an architecture, one that understands and leverages the fundamentals of fluid structure.
Architectures rely on operating assumptions: an HVAC system must be kept in good repair to maintain comfortable temperatures for building occupants. Enterprise 2.0 requires some form of facilities maintenance. The evolving details of the care and feeding of the environment can be embodied in a Governance Model, not to be confused with highly regulated models often used for restraint. The E2.0 version is more heuristic than algorithmic, but includes a blend of recommendations and process. It may define formal and informal roles. It simply reflects agreements.
No Beginning, No End
There is no prescribed starting point for Enterprise 2.0, but there is one capability that emergence fundamentally depends on: the ability for people to find each other by things that define relevance – work, topics, skills, affiliations, trust. As well, people must have ready access to relevant ‘raw materials’ for their work. Shorten the distance to finding relevant resources.
To be truly emergent, Enterprise 2.0 must be seamlessly integrated with knowledge work. It cannot be an appendage; it should not require adoption.
Enterprise 2.0 is inherently social. It is not about managing knowledge but is about rendering knowledge. It is enabled by, but is not achieved by installing a digital technology. It unleashes the potential of humans not with workflow, but by flowing work and thought on persistent conversations.
by Rob Paterson
July 2, 2009 at 7:55 am · Filed under
Adoption, Clayton Christenson, Culture, Enterprise 2.0, Innovator's Dilemma, Interview, Media, Movie Making, Organizational Design, Public Media, Social Media
One thing I know is true- real innovation – the disruptive idea that declares independence from the old system – can only happen at the edge.
So this spring when I got a call from Howard Blumenthal CEO of MiND, in Philadelphia, my instincts told me that this was a very very important call.
No TV operation is more unique than MiND (or, properly, MiND: Media Independence).
MiND is not a PBS affiliate. It broadcasts a stream of 5-minute programs, many made by MiND’s staff producers, some made by members of the public who attend MiND’s production Boot Camps. MiND is both on air and on the web. The staff have their own voice in a way that I have never seen anywhere before in media or ANY other place of work. It was not only a novel TV operation – it was a novel organization. It was what a 2.0 organization would be like- inside and outside. As an independent community licensee, MiND makes the most of its freedom–and engages everyone who walks through the door.
So I booked my flight and flew down to see Howard and his team.
So what did I find? How to make TV, the Gutenberg of our time.
You don’t believe me? Please invest 5 minutes in this film.
Did you get it? I found it compelling. A beautifully crafted story. Here is a heartfelt comment on IMDB. Made by a real pro – right? No – made by a regular citizen, Leontyne Anglin, whose passion is the topic but who had never made a film before.
The impact of Gutenberg’s technology in the 1500’s was to give people a voice. If video and TV are the main means of communication today, then the “New TV” must give people a voice. This is surely more than uploading to YouTube or adding comments to a web video. Merely pointing and shooting does not make you a filmmaker. When you have the ability to tell a story well – then you need a place where your early work reaches an audience with an already-established relationship with a trusted brand.
This is what happens at MiND. Day-in and day-out. It’s the reason why the system was built. And it’s working.
The key to MiND is found in its willingness to help the public learn how to be real video storytellers. MiND’s core members have joined a tribe of filmmakers with something to say. MiND’s eagerness to provide every storyteller access to its Trusted Space makes all the difference—MiND is a branded space that adds real depth and texture to the word “public” in the term “public television.”
How does MiND do this?
First of all, MiND employs a production staff drawn from the public and not from the priesthood. It has attracted such a staff by its culture and by its remarkable intern-and-volunteer system. While many stations regard interns as more trouble than they are worth, MiND has transformed coping with, and training, more than 200 interns into common practice. As such, the keen are fed into the system and the cream rise to the top. Nearly a third of MiND’s current staff members started as either volunteers or interns.
Secondly, MiND has built a transformational training system modeled on and called ‘Boot Camp.’ It is transformational in that a citizen comes in with all sorts of wild expectations about television and media; after six hours of intensive training, she is on the path to making a real MiND program that will go on the air and become part of MiND’s extensive internet library of 5-minute programs. In time, she becomes an enabled storyteller.
Leontyne went to a MiND Boot Camp. She was a doubter – MiND’s promise seemed too good to be true. But Leontyne and two others at the Boot Camp took up the challenge. They developed an idea, checked back with MiND to make sure they were on the right track, and made a terrific MiND program.
As a result, Leontyne is a new person–and now, one of MiND’s most vocal advocates. On her own terms, she has become video- and story- literate. She possesses new power in the most powerful medium of our age.
She is not an anomaly.
Here is a short documentary film made by another MiND intern. It’s broadcast quality in every way – a strong story line and intricate editing combine old and new footage. The person who made this film has become an accomplished filmmaker–and is now a teacher at a small college in New England.
MiND is creating a core of accomplished story/film makers who can help their community as storytellers. In time, with MiND’s support, Philly (and in time, other cities that may carry a local version of MiND as their own service) can develop a cadre of the new, media-literate creative workers engaged in the betterment of their home, their neighborhood, their city. It does not take much to imagine what they could do.
The incentive that MiND offers its “students” and interns is that not only will they gain the skills that they will need for our time, but that the work will be showcased on TV and the web–by a Trusted Brand.
All artists want their work to have an audience. TV is 1.0 but it offers a reward like no other. “Hey Mom my work is on TV!” So MiND is expanding its reach to other markets. It is building a national alliance in most of the key markets of the US – details here. The bigger the audience, the greater the impact.
So what next?
It is no secret that all the public stations in Pennsylvania are under pressure because their Governor plans to cut all state funding. MiND’s low cost approach makes it especially vulnerable–just completing its first year, MiND has focused on operational efficiency, programming and community; MiND’s first revenue programs are just beginning, and are insufficient to cover a 40% cut in the total budget. MiND will not stop–but it will slow down as resources disappear.
This is the reason for my post today–to encourage the public television community to consider what MiND has done in its first year, and how its ideas might be used to reinvigorate a tired system. MiND is not the full answer but it contains most of the DNA for the full answer and so I felt compelled to tell its story now.
What can we all learn from this?
Set up a new organization to do this – The station culture is key. MiND is a 2.0 Culture. Here is how it sees itself. These are not simply words on a page. With 30 plus years in the field of culture – I observed first hand that this is no bull – what they say is how they are. So you cannot change all your station culture to be like this. I also know that to be true. So what can you do? Clay Christenson is clear – set up a separate organization to house this aspect of the new - your transformational organization. I know of several stations that are thinking along these lines. You cannot make this shift inside the old–but you can make the shift if the new is allowed to grow alongside the old.
The Goal Is Self Reliance – The goal is to transform your community to be self-reliant – to do that you have to be able to tell the collective story of how people are bringing about change in your community. To do that you need to develop real storytellers by teaching them how to tell stories– and you have to imbue their stories with the added value of your brand. Create a “school” for the new literacy. Bring in the people as interns and volunteers. Bring in the young. Use your digital channels and the web as the “channel.” Or, let MiND show you how; they are willing and capable guides. And, please, don’t get caught up in the validity of five-minute programs–not before watching MiND or considering the sheer number of unique five-minute programs that can be produced in a year.
Gain strength and power by connecting. Connect to the institutions organizations in your community who need this kind of help – use your storytellers to give them a voice. How might non-profits be involved? How about schools (K-12 and higher education)? What if everyone really did have a voice–and what if that voice defined the future of public media? Imagine connecting with other stations across America and the world–perhaps create a national network with MiND at the core – and jointly build MiND as an initiative that engages people at the local, regional, national, even global level. It’s clear that MiND was built with precisely that strategy at its core. Increase the power of the collective story by comparing what’s happening in Philadelphia with what’s happening in Chicago or Denver, and ultimately, with Mumbai or Warsaw.
MiND benefits from a wonderful gift–it is one of the few truly independent agents within public media–in fact, the company’s official name is (you guessed it) Independence Media. From that independence has grown true innovation. Make no mistake–this is not a play by a tiny public TV station operating at the edge of reality. Instead, it is likely the center of a new solar system with increasingly powerful gravitational pull.
We will not get through the turbulence of our times by relying on the status quo in any part of our lives. So I do my bit to tell the story of Howard and his band of sisters and brothers at MiND.
Bless them all. And for my American friends, about to celebrate their annual holiday, do consider the value, opportunity and responsibilities associated with independence.
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