Cut outs #11

New business models: Chinese music fans paying their way with streamed music

Time for more intelligent ad placement tech? P&G slashes digital ads by $140M

Rip it up and start again? Tribulations of a magazine editor in a digital age

The objective approach: how to tell if design is good or bad

Complementarity vs. Similarity: Netflix’s first acquisition is an indie comic book publisher

What makes good customer experience? Five retailers leading the way

MBA reflections #2

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Last weekend I graduated from my MBA  course at Warwick Business School. The ceremony marked the conclusion of three years’ of hard, but incredibly rewarding and very enjoyable, work – despite the challenges of balancing study with career and family life. I’ve also been enormously privileged to meet some great people along the way and make some fantastic friendships.

When I started the course I said that I would post regularly about my experiences along the way. That was three years ago and I’ve failed miserably to keep my promise, but on the positive side, I completed the course, managed to maintain some semblance of balance in my life and graduated with a distinction.

When I take a moment to reflect, I’m pretty chuffed with what I’ve achieved, so now seems like a good time to pause and reflect on the experience, and hopefully pick out a few lessons that can help others thinking about a similar path. So in no particular order, here goes…

1. You get out what you put in. It’s a pretty simple equation. An MBA from a good business school carries a lot of prestige, but it won’t gift you opportunities. You need to have a good idea of what you want to achieve by doing the course when you start, then take every opportunity to draw the value from the models, events and networking opportunities you get involved in along the way. You might have a very clear idea of the job you want to go for once you’ve completed the course, or your goal might be less specific, and be about exploring a new career direction, for example. Both options are fine, but a plan gives you purpose and helps guide your choice of modules, research topics and much more along the way. Of course, be open to new ideas and the possibility that your plan might change. After all, one of the reasons you signed up in the first place was probably to broaden your horizons.

2. things you’re interested in. It’s hard to write an assignment, let alone a dissertation, if you’re not interested in the subject. Most courses will give you some freedom in the subjects you select for your assignments. Choosing an issue to analyse or a company to research that you’re personally interested in makes the experience much more enjoyable and will probably result in a better quality paper. When I planned papers and my dissertation, I asked myself three questions:

– Do I find this interesting?
– Is it useful from a business perspective?
– Does it have some academic value?

If the answer to all three is yes, then you’re probably onto something

3. It’s all still in there. With any course, once a module is over it can feel like you’ve completely forgotten all the knowledge you just gained as you start on the next one. It’s all still in there, but to keep it fresh I tried to draw on ideas from previous modules in the new modules I would start. Reading around the topic – particularly following the business news – is also a great way to apply the lessons you’ve learned. Finally, I found studying part-time a great advantage because I could think about events and experiences in the workplace in the context of my course and even put a few things into practice. Whether you work while you study or not, using what you learn to reflect on your own experience is a great mental exercise and a good way to embed the learning.

4. Meet new people. One of the most rewarding things for me about the course was meeting new people from very different professional backgrounds to my own. If you’ve spent your whole career in a particular profession, surrounded by particular kinds of people with similar personality profiles and skill sets it becomes very easy to assume that everyone in business is like that. Having my assumptions challenged, seeing the variations in how people think, act and solve problems, and the subtleties involved in making a team work with radically different personality types and skills certainly forced me to confront my preconceptions.

5. Broaden your horizons. Without doubt the school where you study will offer a wide range of modules to choose from, some firmly within your area of experience, others way beyond it. Of course, the modules you choose will be guided by what you want to get out of the course (see point one), but an MBA is a good opportunity to explore some new areas, learn some new skills and bring some breadth to your expertise. I’ve often found that the lessons I think are going to be least useful prove to be the most useful and vice versa. Serendipity is a wonderful thing, so give it the maximum opportunity to do good work.

I’ll leave it there for now, but I reckon I have a few more ideas I can share in another post. Any thoughts or ideas you have, please feel free to add in the comments.

Cut outs #10

What does it take to reach Digital Maturity?

An alternative route to success? The power of Anti-Goals

Mission, Vision, Guiding Principles, Values: What do they all mean?

Enterprise – Start-up collaboration: Mind the (innovation) Gap

Retail disintermediation: Household essentials for $3 or less

STEAM & STEM

Innovation process: learning by doing

What did Innovation Labs ever do for us?

A former colleague of mine used to say that ‘we’re all making it up as we go along.’ He didn’t mean that as consultants we deliberately set out to deceive, but that in a fast-changing business world where new technologies and possibilities are emerging all the time, there are very few precedents to follow or principles to abide by. Instead you have to be attentive to your environment, adaptable, willing to experiment and show the humility to recognise and learn from mistakes.

I remembered this when I read about an increasing trend amongst firms to close down innovation labs. For established firms wanting to experiment with new business models, autonomous innovation labs have been a popular strategy. They provide an environment where ideas can be developed, tried and tested rapidly within small teams, free from the restrictions and complexities of a large parent firm. They also have valuable PR cache and that’s no slight; for firms with a traditional, or even staid reputation, encouraging skilled experienced hires and talented graduates to resist the lure of glamourous digital firms to join their ranks can be challenging. The innovation lab can be a powerful symbol of a fresh, progressive culture promising freedom, opportunity and creativity. But making the innovation lab deliver value back to the business is a different challenge.

In my experience, the innovation labs created by established, national and multinational firms are run by experienced professionals with deep expertise in their chosen fields and the tolerance of risk necessary to explore ideas and stimulate a create environment. The particularly successful ones manage to combine a wide range of disciplines and skill sets to enrich their work. Much like their parent companies, they can claim to be experts in their domain. A bit cooler, edgier and maybe a touch flashier, but experts nonetheless.

Where I believe the innovation lab strategy struggles is not necessarily in the lab environment itself, but in the relationship with the parent firm. In particular, the way in which creative ideas emerging from the innovation lab are transitioned into the parent firm and transformed into innovations – ideas capable of providing value for customer and delivering value back to the firm in return. This transfer of innovation from one domain to the other – from the lab, which emphasises creativity and experimentation, to the firm environment, where revenue, profit and operational efficiency are more dominant concerns – is where the challenge lies. While the pools of expertise and experience in the innovation lab and parent firm are often deep, it is at the point of transfer between the two that many firms find themselves ‘making it up as they go along’.

And if firms do find themselves improvising the transfer of potential new product or business model from one domain to the other, it’s no surprise. Both organisations will necessarily want to focus resources and energy on their core business activities; for the innovation lab, stimulating fresh ideas and for the parent firm, delivering revenue and profits and scale while reducing costs. That’s a crude simplification of the goals of two types of organisations, but it serves to illustrate a contrast.

The challenge is that while both organisations concentrate on the priorities of their particular domains too little attention is given to the integration between the two. As a result, an innovation transfer problem occurs. The organisations fall into a pattern of innovation where ideas are developed independently in the lab environment, then transferred to the parent firm for implementation and scaling. However, without a keen understanding of the particular factors shaping the firm’s environment at that time, or the intricacies of operating processes, manufacturing, service delivery and other key areas, perfectly good ideas will struggle to achieve adoption and the innovation lab will appear to have failed. In reality it’s the linearity of the innovation process firms are following that’s the source of the problem, not the innovation lab itself.

Context is king. Innovation labs provide a valuable, independent, creative atmosphere in which ideas can flourish, but for those ideas to scale to the orders of magnitude necessary to be commercially viable, input from the parent firm is necessary throughout the innovation process. Equally, the parent firm itself must begin to anticipate how a new idea will disrupt its existing business models and begin the process of adapting if adoption of the innovation is to be successful.

Organisations must not fall into a linear innovation process – especially where external innovation is concerned. It must be handled synchronously, with several contexts of activity happening simultaneously. Work in the innovation lab, the parent firm, and in the all-important innovation space between the two are equally important for ideas to successfully graduate to innovations. But if the innovation lab appears to be struggling to deliver results, don’t jump to the conclusion that the lab itself is the problem. Widen the focus. Look to the innovation space and ask how the transfer of an innovation is being managed and how the lab and parent firm integrate through the innovation process. Although it rarely feels like it at the time, things going wrong offers the best opportunity to learn. So the answers to those questions may reveal more insights and opportunities than you first anticipate and lead you to take a second look at the potential of the lab.

UPDATE: This week Venturebeat published an article on the same theme. Thanks to @rolandharwood for sharing

Cut outs #9

Superhuman – Channel 4 releases new ad for Rio Paralympics

Net Neutrality – Tim Berners-Lee makes plea to European regulators

Wearable tech goes Underground – acrylic nails with embedded RFID Oyster card tech

Down the Tubes – Transport for London’s digital first strategy

Where it’s at – The Start-up Heatmap for Europe

 

Cut outs #8

Data transparency and building trust at The Guardian

Pew Research showing how young and old want to get their news in different ways

Planning to create a new kind of porridge? The secret to success for product innovation is the Goldilocks Theory, according to HBR

600 years of resistance: barriers to the acceptance of disruptive innovation from Innovation Excellence

Thoughts on how artificial intelligence will affect the future of work from MIT Media Lab

 

 

 

Enhancing innovation through M&A and investments

Last week I gave a presentation at the 100% Open Innovation Union about how companies can enhance innovation through mergers, acquisitions and minority stake investments.

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M&A and investment is a central part of business life. Last year in the UK alone, acquisitions worth about £60 billion were completed. Based on a quick scan of the press release archives, IBM has made over 50 acquisitions over the past five years. As is the case for many large companies, it’s a core part of our reinvention strategy. The ‘injection’ of new technology, people and ideas enables us to move into new markets, adapt more readily to customer needs and gather the ingredients necessary to create our next wave of products and services. On a personal level, I’ve experienced four or five acquisitions, both on the acquired or acquiring side, and I expect many people have been through plenty more.

But what’s the relationship between M&A, investments and innovation?

As the graph in this presentation illustrates, M&A and investment activity tends to happen in waves, usually triggered by circumstances in the broader business environment. Traditionally, the objectives for M&A and investments tended to be either strategic (e.g. increasing market share), economic (e.g. creating economies of scale) or financial (e.g. gaining access to more cash to reduce leverage). An increasingly common objective driving the next wave of activity is boosting innovation. Established firms are facing growing challenges to compete in their core markets. Disruption by new market entrants to their business models, increased competition, market fragmentation and the rate of technology change all make it increasingly difficult to keep up. M&A and investment offers a swift way to get access to new resources and capabilities that can boost performance in the short-term and enhance innovation in the long-term. But this strategy for growth is not without its challenges.

Statistically-speaking, M&As and investments are fraught with difficulty and result in a very high rate of failure, in terms of the value delivered back to shareholders of the acquiring company (acquired companies tend to fare much better, any budding entrepreneurs out there might be happy to know). And that’s before we consider how they deliver on something as intangible and long-term as innovation.

Certainly, one consideration needs to be how the effect of M&A and investment on innovation is measured, as the majority of research tends to focus on how M&A performs against traditional strategic, economic and financial goals. However, my MBA research suggests there are a number of factors which do influence the level of innovation value companies can gain. To make judging the success of the deal easier, many companies switch from using long-term strategic measures of performance to short-term financial measures. For managers coping with the complexity and workload of integrating a new firm and team of people, financial measures are must simpler and clearer to comprehend and report to shareholders. However, their focus on short-term performance runs contrary to innovation which requires a longer term view, so the management activities the financial measures encourage simply serve to constrain innovation, despite the best intentions of the managers themselves. A further factor that affects innovation is the judgment of synergies between the companies. If the activities of the firms are too similar they will duplicate each other, leading to practical tensions between teams and the creation of little new value. If the companies are too different, they will struggle to find the points of integration where creative sparks can ignite innovation. To stimulate innovation, companies needs to have enough in common in terms of domain experience, processes, products and practice to give a basis for collaboration, but still be able to bring new ideas and methods to the relationship.

Certainly, if companies can overcome these hurdles and others that tend to occur, then there are significant benefits to be gained. Many companies report boosts in the quality and quantity of R&D inputs from successful M&A and investment activity. Outputs in terms of patents to fuel future innovation activity (a target IBM prizes highly) and of course new products and services taken to market can also increase significantly. As more established firms explore routes to innovation and face pressure to adapt more rapidly to market changes, I expect M&A, investment and other forms of alliance partnership will grow as priorities. No strategic initiative is without challenge though, and the key question companies must answer is how they navigate a way around the barriers to achieve the benefits.