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.

Summer Union 2016.PNG

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.

Embracing complexity: an open approach to innovation

Before I joined IBM I worked on a project with a healthcare company to launch a new approach to drug development. The client had spent quite some time working on the new approach and had already devised their launch plan.

My team’s role was to do the market research that would prove it could work. A little bit ‘cart before horse’ you might say, but the launch plan was at least thorough and well-considered.

The trouble was, our research found some serious risks in how the industry and the public might react that the client simply hadn’t spotted. And, whichever way we looked at the results, we couldn’t find a way to mitigate the risks in the existing plan.

The plan needed to change, but the client wasn’t budging. They had their plan and they were sticking to it. There was no room for compromise.

As you can probably imagine, the meeting in which we presented back our results was a pretty uncomfortable affair and it was clear that even if we’d wanted to, we wouldn’t be asked to support the next stage of the programme.

This turned out to be no bad thing.

We found out later that the launch plan had been put into action without any changes and that the ‘risks’ we’d foreseen had indeed come to pass. The whole programme was put on hold within five days of the launch, ‘pending review’. That was a couple of years ago and nothing’s been heard of it since.

Listening to customers seems like the most obvious thing in the world.

According to IBM’s Global C-suite study, for CEOs, customer influence is second only to the C-suite in terms of strategic influence. So why do we still hear about companies tumbling into the same predicament as my healthcare client?

They want to innovate their products and services, but whether it’s due to time restraints, resource pressure, or just an overwhelming belief in their own convictions, they continue alone. I’m certainly not arguing against the value of gut instinct, but when it comes to the practice of innovation I do believe – and experience has shown – gaining multiple perspectives on a problem or an idea is vital to finding the best answer.

That’s why I also believe in value of open innovation and the tremendous potential of social media.

Social platforms and behaviours have a major role in enabling innovation. IBM’s study into how successful organisations innovate identifies three areas where leaders outperform the competition: organisation, culture and process.


Source: More than magic: How the most successful organizations innovate, IBM Institute for Business Value, 2015.

Culture and Process are both important to my earlier point about time and resource constraints: by developing a culture that appreciates innovation and the conditions it requires, and has the processes in place to support innovation-generating activities, then you will be better-placed to act swiftly and confidently when the need arises.

Organisation and structure is the ‘glue’ that unites Culture and Process, ensuring the activities within both ‘spheres’ deliver value back to the business. It’s here where I want to focus for a moment.

By building robust structures to support ‘open’ forms of innovation it becomes possible to tap into the wealth of market intelligence and insight shared by your customers in social media. More significantly, it also becomes possible to connect with those customers directly, to formulate new ideas and concepts, and develop and prototype products in an inclusive way.

Lego Ideas is probably one of the most well-known and successful examples of open, social innovation. The platform not only helps customers build affinity with the brand, but for Lego promotes higher success rates for new initiatives, thanks to the early input from customers.

Many other organisations have experienced similar benefits:

GE has adopted an ecosystem approach to accelerate its innovation programme, ‘crowdsourcing’ ideas through Quirky, it is able to reduce risk and costs while sharing revenue with Quirky and the inventor community.

Xiaomi, the Chinese smartphone producer, uses open innovation to improve product and as a vehicle for marketing and sales. Xiaomi releases a new version of its MIUI software every week in response to user feedback. The releases and feedback system are, in effect, the marketing content and channel, while the software itself provides a platform to generate sales.


LEGO Ideas

Across all industries, firms face a common challenge in the growing complexity of the business environment. Unlike my healthcare client which tried to shield itself from the uncertainty this creates by focussing inward, I believe the best way to deal with complexity is to become more complex yourself – opening up the innovation process and providing employees with the tools and environments (physical or virtual) in which to engage in collaboration.

Of course, systems of governance must be in place to protect the firm and the collaborators, but in an environment where customers have the means and the will to share their views and ideas, surely it would be foolish not to listen?

Also published at IBM iX Blog:

From the ridiculous to the sublime

A week ago the Internet was buzzing with debate about the colour of a dress.

Today the Salvation Army turned it into a provocative and thought-provoking advertising campaign about domestic violence.

It’s a brilliant piece of creative subversion that the Salvation Army should be applauded for, enabled by close monitoring of trends; creative expertise; swift decision-making and good management of media channels.

Combine all those things together in one team and it’s amazing what can be achieved – from Oreo’s taking of Twitter by storm after a Superbowl power cut to the kind of rich coverage of a serious social issue we’ve seen today.

It’s also a great illustration of why I love the Internet – you can go from the utterly ephemeral to the most complex and serious of stories in a moment.

And often when you’re least expecting it.

Leadership and Open Innovation

Yesterday, Innovation Excellence published a forthright post by Paul Sloane about the factors impeding the growth of open innovation. IE lays the responsibility squarely on CEOs, who, the post argues, say all the right things about innovation, but aren’t following up with enough action.

The post made me think of this profile of Jack Welch, reflecting on his time as chairman and CEO of General Electric. Towards the end of the film he talks about how he saw his role as leader, as moving around the corporation “with a can of water in one hand and a can of fertilizer in the other”, using his knowledge, experience and expertise to help the companies and people who make GE to grow.

I’ve never worked for GE, so I’ve no idea how closely Jack Welch’s perception of his role matched the reality of what he did, but what is interesting is that of the few companies Paul Sloane names as making strides forward in open innovation, GE is on the list.

Taking an edge

Picture of Ling's Leases owner, Ling Valentine, with her personal truck

Not sure what the lease rate is on this one. Source:

The other day I was planning a client workshop with a colleague, when we discovered our mutual love of

What’s great about Lings Leases is that it doesn’t so much ignore every rule in the book when it comes to web design, it takes the rule book and bludgeons the authors into submission until they’re willing to admit that animated gifs are actually a very good thing indeed and that every website should have them. Along with some karaoke sing-a-longs too.

Although then again, does it?

Ling’s Leases reminds me a bit of a Tommy Cooper performance; at first glance it looks like a gloriously haphazard amateurish mess, but take a closer look and you realise a lot of thought and planning have gone in to both to provoke a certain reaction.

For Tommy Cooper, it was laughter; for Ling’s Leases, it’s trust. And probably a bit of laughter too.

Ling clearly recognised that to build a brand in a highly competitive and mature market, like car leasing, she had to get an edge.

That meant creating a service proposition and a website completely unlike anything else in the marketplace.

She also recognised that the best way to win the trust of customers was to give her business personality, and what better personality to place at the heart of her marketing than her own?

A woman in a male-dominated industry, a recent immigrant to the UK and with an irreverent sense of humour, Ling is perfectly placed to offer customers something different and she does that so openly and directly it’s hard not to be convinced by her.

A very different website that I was browsing around the other day is the new Guardian.

Definitely a different experience to Lings Leases, but actually the underlying values aren’t too dissimilar.

Transparency and personality are still central to the experience: a cleaner presentation, better integration of pictures and video, the ability to embed Guardian content in your own blog or website to aid sharability, and we can even see what the Guardian journalists are reading to inform their ideas and writing.

According to the latest edition of the Edelman Trust Barometer (my former employer) firms need to think hard about how they build trust with customers, as the average level of trust in business is apparently declining:

There’s a lesson here I think about personality: the more genuine personality you can bring to your marketing and the more you can make your people part of the marketing communication, the more potential you’ll have to build trust.

This takes more than simply featuring pictures of your staff on the website or in glossy brochures; it depends on their direct participation in the communications activity and the willingness of the firm to give them autonomy to tell the firm’s story.

By all means work with them to craft that story in the first place – in fact, make that an essential part of your plan – but allow them to tell it in their own way.

The subject matter might be different, but Ling and the Guardian both tell powerful stories.