Category Archives: Innovation

Medici Effect – Encourage Innovation in the Organization

“Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while. That’s because they were able to connect experiences they’ve had and synthesize new things. And the reason they were able to do that was that they’ve had more experiences or they have thought more about their experiences than other people.”
– Steve Jobs

What is the Medici Effect?

Frans Johanssen has written a lovely book on the Medici Effect. The term “Medici” relates to the Medici family in Florence that made immense contributions in art, architecture and literature. They were pivotal in catalyzing the Renaissance, and some of the great artists and scientists that we revere today – Donatello, Michelangelo, Leonardo da Vinci, and Galileo were commissioned for their works by the family.

Renaissance was the resurgence of the old Athenian democracy. It merged distinctive areas of humanism, philosophy, sciences, arts and literature into a unified body of knowledge that would advance the cause of human civilization. What the Medici effect speaks to is the outcome that is the result of creating a system that would incorporate what on first glance, may seem distinctive and discrete disciplines, into holistic outcomes and a shared simmering of wisdom that permeated the emergence of new disciplines, thoughts and implementations.


Supporting the organization to harness the power of the Medici Effect

We are past the industrial era, the Progressive era and the Information era. There are no formative lines that truly distinguish one era from another, but our knowledge has progressed along gray lines that have pushed the limits of human knowledge. We are now wallowing in a crucible wherein distinct disciplines have crisscrossed and merged together. The key thesis in the Medici effect is that the intersections of these distinctive disciplines enable the birth of new breakthrough ideas and leapfrog innovation.

So how do we introduce the Medici Effect in organizations?

Some of the key ways to implement the model is really to provide the support infrastructure for
1. Connections: Our brains are naturally wired toward associations. We try to associate a concept with contextual elements around that concept to give the concept more meaning. We learn by connecting concepts and associating them, for the most part, with elements that we are conversant in. However, one can create associations within a narrow parameter, constrained within certain semantic models that we have created. Organizations can hence channelize connections by implementing narrow parameters. On the other hand, connections can be far more free-form. That means that the connector thinks beyond the immediate boundaries of their domain or within certain domains that are “pre-ordained”. In those cases, we create what is commonly known as divergent thinking. In that approach, we cull elements from seemingly different areas but we thread them around some core to generate new approaches, new metaphors, and new models. Ensuring that employees are able to safely reach out to other nodes of possibilities is the primary implementation step to generate the Medici effect.
2. Collaborations: Connecting different streams of thought in different disciplines is a primary and formative step. To advance this further, organization need to be able to provide additional systems wherein people can collaborate among themselves. In fact, the collaboration impact accentuates the final outcome sooner. So enabling connections and collaboration work in sync to create what I would call – the network impact on a marketplace of ideas.
3. Learning Organization: Organizations need to continuously add fuel to the ecosystem. In other words, they need to bring in speakers, encourage and invest in training programs, allow exploration possibilities by developing an internal budget for that purpose and provide some time and degree of freedom for people to mull over ideas. This enables collaboration to be enriched within the context of diverse learning.
4. Encourage Cultural Diversity: Finally, organizations have to invest in cultural diversity. People from different cultures have varied viewpoints and information and view issues from different perspectives and cultures. Given the fact that we are more globalized now, the innate understanding and immersion in cultural experience enhances the Medici effect. It also creates innovation and ground-breaking thoughts within a broader scope of compassion, humanism, social and shared responsibilities.


Implementing systems to encourage the Medici effect will enable organizations to break out from legacy behavior and trammel into unguarded territories. The charter toward unknown but exciting possibilities open the gateway for amazing and awesome ideas that engage the employees and enable them to beat a path to the intersection of new ideas.

Pivots – The Unholy Grail of Employee Engagement !

Most of you today have heard the word “pivot”. It has become a very ubiquitous word – it pretends to be something which it is not.  And entrepreneurs and VC’s have found oodles of reasons to justify that word.  Some professional CXO’s throw that word around in executive meetings, board meetings, functional meetings … somehow they feel that these are one of the few words that give them gravitas. So “pivot” has become the sexy word – it portrays that the organization and the management is flexible and will iterate around its axis quickly to accommodate new needs … in fact, they would change direction altogether for the good of the company and the customers. After all, agility is everything, isn’t it? And couple that with Lean Startup – the other Valley buzz word … and you have created a very credible persona. (I will deal with the Lean Startup in a later blog and give that its due. As a matter of fact, the concept of “pivot” was introduced by Eric Ries who has also introduced the concept of Lean Startup).

Pivots happen when the company comes out with product that is not the right fit to market. They assess that customers want something different. Tweaking the product to fit the needs of the customer does not constitute a pivot. But if you change the entire product or direction of the company – that would be considered a pivot.

Attached is an interesting link that I came across —

http://www.readwriteweb.com/start/2012/10/when-is-it-time-to-pivot-8-startups-on-how-they-knew-they-had-to-change.php

It gives examples of eight entrepreneurs who believe that they have exercised pivot in their business model. But if you read the case studies closely, none of them did. They tweaked and tweaked and tweaked along the way. The refined their model.  Scripted.com appears to be the only example that comes closest to the concept of the “pivot” as understood in the Valley.

Some of the common pivots that have been laid out by Eric Ries and Martin Zwilling  are as follows 😦http://blog.startupprofessionals.com/2012/01/smart-business-knows-8-ways-to-pivot.html). I have taken the liberty of laying all of these different pivots out that is on Mr. Zwilling’s blog.

  1. Customer problem pivot. In this scenario, you use essentially the same product to solve a different problem for the same customer segment. Eric says that Starbucks famously did this pivot when they went from selling coffee beans and espresso makers to brewing drinks in-house.
  2. Market segment pivot. This means you take your existing product and use it to solve a similar problem for a different set of customers. This may be necessary when you find that consumers aren’t buying your product, but enterprises have a similar problem, with money to spend. Sometimes this is more a marketing change than a product change.
  3. Technology pivot. Engineers always fight to take advantage of what they have built so far. So the most obvious pivot for them is to repurpose the technology platform, to make it solve a more pressing, more marketable, or just a more solvable problem as you learn from customers.
  4. Product feature pivot. Here especially, you need to pay close attention to what real customers are doing, rather than your projections of what they should do. It can mean to zoom-in and remove features for focus, or zoom-out to add features for a more holistic solution.
  5. Revenue model pivot. One pivot is to change your focus from a premium price, customized solution, to a low price commoditized solution. Another common variation worth considering is the move from a one-time product sale to monthly subscription or license fees. Another is the famous razor versus blade strategy.
  6. Sales channel pivot. Startups with complex new products always seem to start with direct sales, and building their own brand. When they find how expensive and time consuming this is, they need to use what they have learned from customers to consider a distribution channel, ecommerce, white-labeling the product, and strategic partners.
  7. Product versus services pivot. Sometimes products are too different or too complex to be sold effectively to the customer with the problem. Now is the time for bundling support services with the product, education offerings, or simply making your offering a service that happens to deliver a product at the core.
  8. Major competitor pivot. What do you do when a major new player or competitor jumps into your space? You can charge ahead blindly, or focus on one of the above pivots to build your differentiation and stay alive.

Now please re-read all of the eight different types of “pivot” carefully! And reread again. What do you see? What do you find if you reflect upon these further? None of these are pivots! None! All of the eight items fit better into Porter’s Competition Framework. You are not changing direction. You are not suddenly reimagining a new dawn. You are simply tweaking as you learn more. So the question is – Is the rose by any other name still a rose? The answer is yes!  Pivot means changing direction … in fact, so dramatically that the vestiges of the early business models fade away from living memory.  And there have been successful pivots in recent business history.  But less so … and for those who did, you will likely have not heard of them at all. They have long been discarded in the ash heap of history.

Great companies are established by leaders that have vision. The vision is the aspirational goal of the company. The vision statement reflects the goal in a short and succinct manner.  Underlying the vision, they incorporate principles, values, missions, objectives … but they also introduce a corridor of uncertainty. Why? Because the future is rarely a measure or a simple extrapolation of expressed or latent needs of customers in the past.  Apple, Microsoft, Oracle, Salesforce, Facebook, Google, Genentech, Virgin Group, Amazon, Southwest Airlines etc. are examples of great companies who have held true to their vision. They have not pivoted. Why? Because the leaders (for the most part- the founders) had a very clear and aspirational vision of the future! They did not subject themselves to sudden pivots driven by the “animal spirits” of the customers. They have understood that deep waters run still, despite the ripples and turbulence on the surface. They have honed and reflected upon consumer behavior and economic trends, and have given significant thought before they pulled up the anchor. They designed and reflected upon the ultimate end before they set sail. And once at sea, and despite the calm and the turbulence, they never lost sight of the aspirational possibilities of finding new lands, new territories, and new cultures. In fact, they can be compared to the great explorers or great writers – search for a theme and embark upon the journey …within and without.  They are borne upon consistency of actions toward attainment and relief of their aspirations.

Now we are looking at the millennial generation. Quick turnarounds, fast cash, prepare the company for an acquisition and a sale or what is commonly called the “flip” … everything is super-fast and we are led to believe that this is greatness. Business plans are glibly revised. This hotbed of activity and the millennial agility to pivot toward short-term goal is the new normal — pivot is the concept that one has to be ready for and adopt quickly. I could not disagree more.  When I hear pivots … it tells me that the founders have not deliberated upon the long-term goals well. In fact, it tells me that their goals are not aspirational for the most part. They are what we call in microeconomic theory examples of contestable agents in the market of price-takers. They rarely, very rarely create products that endure and stand the test of time!

So now let us relate this to organizations and people. People need stability. People do not seek instability – at least I can speak for a majority of the people. An aspirational vision in a company can completely destabilize a certain market and create tectonic shifts … but people gravitate around the stability of the aspirational vision and execute accordingly. Thus, it is very important for leadership to broadcast and needle this vision into the DNA of the people that are helping the organization execute.  With stability ensured, what then happens are the disruptive innovations!  This may sound counter-factual! Stability and disruptive innovations!  How can these even exist convivially together and be spoken in the same breath!  I contend that Innovation occurs when organizations allow creativity upon bedrock of discipline and non-compromising standards.  A great writer builds out the theme and let the characters jump out of the pages!

When you have mediocrity in the vision, then the employees have nothing aspirational to engage to. They are pockets sometimes rowing the boat in one direction, and at other times rowing against one another or in a completely direction. Instability is injected into the organization.  But they along with their leaders live behind the veil of ignorance – they drink the Red Bull and follow the Pied Piper of Hamelin.  So beware of the pivot evangelists!

MECE Framework, Analysis, Synthesis and Organization Architecture toward Problem-Solving

MECE is a thought tool that has been systematically used in McKinsey. It stands for Mutually Exclusive, Comprehensively Exhaustive.  We will go into both these components in detail and then relate this to the dynamics of an organization mindset. The presumption in this note is that the organization mindset has been engraved over time or is being driven by the leadership. We are looking at MECE since it represents a tool used by the most blue chip consulting firm in the world. And while doing that, we will , by the end of the article, arrive at the conclusion that this framework alone will not be the panacea to all investigative methodology to assess a problem – rather, this framework has to reconcile with the active knowledge that most things do not fall in the MECE framework, and thus an additional system framework is needed to amplify our understanding for problem solving and leaving room for chance.

So to apply the MECE technique, first you define the problem that you are solving for. Once you are past the definition phase, well – you are now ready to apply the MECE framework.

MECE is a framework used to organize information which is:

  1. Mutually exclusive: Information should be grouped into categories so that each category is separate and distinct without any overlap; and
  2. Collectively exhaustive: All of the categories taken together should deal with all possible options without leaving any gaps.

In other words, once you have defined a problem – you figure out the broad categories that relate to the problem and then brainstorm through ALL of the options associated with the categories. So think of  it as a mental construct that you move across a horizontal line with different well defined shades representing categories, and each of those partitions of shades have a vertical construct with all of the options that exhaustively explain those shades. Once you have gone through that exercise, which is no mean feat – you will be then looking at an artifact that addresses the problem. And after you have done that, you individually look at every set of options and its relationship to the distinctive category … and hopefully you are well on your path to coming up with relevant solutions.

Now some may argue that my understanding of MECE is very simplistic. In fact, it may very well be. But I can assure you that it captures the essence of very widely used framework in consulting organizations. And this framework has been imported to large organizations and have cascaded down to different scale organizations ever since.

Here is a link that would give you a deeper understanding of the MECE framework:

http://firmsconsulting.com/2010/09/22/a-complete-mckinsey-style-mece-decision-tree/

Now we are going to dig a little deeper.  Allow me to digress and take you down a path less travelled. We will circle back to MECE and organizational leadership in a few moments. One of the memorable quotes that have left a lasting impression is by a great Nobel Prize winning physicist, Richard Feynman.

“I have a friend who’s an artist and has sometimes taken a view which I don’t agree with very well. He’ll hold up a flower and say “look how beautiful it is,” and I’ll agree. Then he says “I as an artist can see how beautiful this is but you as a scientist takes this all apart and it becomes a dull thing,” and I think that he’s kind of nutty. First of all, the beauty that he sees is available to other people and to me too, I believe. Although I may not be quite as refined aesthetically as he is … I can appreciate the beauty of a flower. At the same time, I see much more about the flower than he sees. I could imagine the cells in there, the complicated actions inside, which also have a beauty. I mean it’s not just beauty at this dimension, at one centimeter; there’s also beauty at smaller dimensions, the inner structure, also the processes. The fact that the colors in the flower evolved in order to attract insects to pollinate it is interesting; it means that insects can see the color. It adds a question: does this aesthetic sense also exist in the lower forms? Why is it aesthetic? All kinds of interesting questions which the science knowledge only adds to theexcitement, the mystery and the awe of a flower! It only adds. I don’t understand how it subtracts.”

The above quote by Feynman lays the groundwork to understand two different approaches – namely, the artist approaches the observation of the flower from the synthetic standpoint, whereas Feynman approaches it from an analytic standpoint. Both do not offer views that are antithetical to one another: in fact, you need both to gather a holistic view and arrive at a conclusion – the sum is greater than the parts. Feynman does not address the essence of beauty that the artist puts forth; he looks at the beauty of how the components and its mechanics interact well and how it adds to our understanding of the flower.  This is very important because the following dialogue with explore another concept to drive this difference between analysis and synthesis home.

There are two possible ways of gaining knowledge. Either we can proceed from the construction of the flower ( the Feynman method) , and then seek to determine the laws of the mutual interaction of its parts as well as its response to external stimuli; or we can begin with what the flower accomplishes and then attempt to account for this. By the first route we infer effects from given causes, whereas by the second route we seek causes of given effects. We can call the first route synthetic, and the second analytic.

 

We can easily see how the cause effect relationship is translated into a relationship between the analytic and synthetic foundation.

 

A system’s internal processes — i.e. the interactions between its parts — are regarded as the cause of what the system, as a unit, performs. What the system performs is thus the effect. From these very relationships we can immediately recognize the requirements for the application of the analytic and synthetic methods.

 

The synthetic approach — i.e. to infer effects on the basis of given causes — is therefore appropriate when the laws and principles governing a system’s internal processes are known, but when we lack a detailed picture of how the system behaves as a whole.

Another example … we do not have a very good understanding of the long-term dynamics of galactic systems, nor even of our own solar system. This is because we cannot observe these objects for the thousands or even millions of years which would be needed in order to map their overall behavior.

 

However, we do know something about the principles, which govern these dynamics, i.e. gravitational interaction between the stars and planets respectively. We can therefore apply a synthetic procedure in order to simulate the gross dynamics of these objects. In practice, this is done with the use of computer models which calculate the interaction of system parts over long, simulated time periods.

The analytical approach — drawing conclusions about causes on the basis of effects – is appropriate when a system’s overall behavior is known, but when we do not have clear or certain knowledge about the system’s internal processes or the principles governing these. On the other hand, there are a great many systems for which we neither have a clear and certain conception of how they behave as a whole, nor fully understand the principles at work which cause that behavior. Organizational behavior is one such example since it introduces the fickle spirits of the employees that, at an aggregate create a distinct character in the organization.

Leibniz was among the first to define analysis and synthesis as modern methodological concepts:

“Synthesis … is the process in which we begin from principles and [proceed to] build up theorems and problems … while analysis is the process in which we begin with a given conclusion or proposed problem and seek the principles by which we may demonstrate the conclusion or solve the problem.”

 

So we have wandered down this path of analysis and synthesis and now we will circle back to MECE and the organization. MECE framework is a prime example of the application of analytics in an organization structure. The underlying hypothesis is that the application of the framework will illuminate and add clarity to understanding the problems that we are solving for. But here is the problem:  the approach could lead to paralysis by analysis. If one were to apply this framework, one would lose itself in the weeds whereas it is just as important to view the forest.  So organizations have to step back and assess at what point we stop the analysis i.e. we have gathered information and at what point we set our roads to discovering a set of principles that will govern the action to solve a set of problems.  It is almost always impossible to gather all information to make the best decision – especially where speed, iteration, distinguishing from the herd quickly, stamping a clear brand etc. are becoming the hallmarks of great organizations.

Applying the synthetic principle in addition to “MECE think” leaves room for error and sub-optimal solutions. But it crowd sources the limitless power of imagination and pattern thinking that will allow the organization to make critical breakthroughs in innovative thinking. It is thus important that both the principles are promulgated by the leadership as coexisting principles that drive an organization forward. It ignites employee engagement, and it imputes the stochastic errors that result when employees may not have all the MECE conditions checked off.

 

In conclusion, it is important that the organization and its leadership set its architecture upon the traditional pillars of analysis and synthesis – MECE and systems thinking.  And this architecture serves to be the springboard for the employees that allows for accidental discoveries, flights of imagination, Nietzschean leaps that transform the organization toward the pathway of innovation, while still grounded upon the bedrock of facts and empirical observations.

 

 

Implementing Balanced Scorecard Model for Employee Engagement

The Balanced Scorecard Model (BSC) was introduced by Kaplan & Norton in their book “The Balanced Scorecard” (1996). It is one of the more widely used management tools in large organizations.

One of the major strengths of the BSC model is how the key categories in the BSC model links to corporate missions and objectives. The key categories which are referred to as “perspectives” illustrated in the BSC model are:

Financial Perspective:

Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With the implementation of a corporate database, it is hoped that more of the processing can be centralized and automated. But the point is that the current emphasis on financials leads to the “unbalanced” situation with regard to other perspectives. There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data, in this category.

Customer Perspective

Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good. In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups

Internal Business Process Perspective

This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be carefully designed by those who know these processes most intimately; with our unique missions these are not necessarily something that can be developed by outside consultants. My personal opinion on this matter is that the internal business process perspective is too important and that internal owners or/and teams take ownership of understanding the process.

Learning and Growth Perspective

This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people — the only repository of knowledge — are the main resource. In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. Metrics can be put into place to guide managers in focusing training funds where they can help the most. In any case, learning and growth constitute the essential foundation for success of any knowledge-worker organization.

Kaplan and Norton emphasize that ‘learning’ is more than ‘training’; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers, the engagement of the workers, the potential of cross-training that would create pockets of bench strength and switch hitters, and other employee specific programs that allows them to readily get help on a problem when it is needed. It also includes technological tools; what the Baldrige criteria call “high performance work systems.”

Innovation Perspective

This perspective was appended to the above four by Bain and Company.  It refers to the vitality of the organization and its culture to provide the appropriate framework to encourage innovation. Organizations have to innovate. Innovation is becoming the key distinctive element in great organizations, and high levels of innovation or innovative thinking are talent magnets.

Taking the perspectives a step further, Kaplan and Cooper instituted measures and targets associated with each of those targets. The measures are geared around what the objective is associated with each of the perspectives rather than a singular granule item. Thus, if the objective is to increase customer retention, an appropriate metric or set of metrics is around how to measure the objective and track success to it than defining a customer.

One of the underlying presumptions in this model is to ensure that the key elements around which objectives are defined are done so at a fairly detailed level and to the extent possible – defined so much so that an item does not have polymorphous connotations. In other words, there is and can be only a single source of truth associated with the key element. That preserves the integrity of the model prior to its application that would lead to the element branching out into a plethora of objectives associated with the element.

Objectives, Measures, Targets and Initiatives

 

Within each of the Balance Scorecard financial, customer, internal process, learning perspectives and innovation perspectives, the firm must define the following:

Strategic Objectives – what the strategy is to achieve in that perspective

Measures – how progress for that particular objective will be measured

Targets – the target value sought for each measure

Initiatives – what will be done to facilitate the reaching of the target?

As in models and analytics, the information that the model spouts could be rife with a cascade of metrics. Metrics are important but too many metrics associated with the perspectives may diffuse the ultimate end that the perspectives represent.

Hence, one has to exercise restraint and rigor in defining a few key metrics that are most relevant and roll up to corporate objectives. As an example, outlined below are examples of metrics associated with the perspectives:

Financial performance (revenues, earnings, return on capital, cash flow);

Customer value performance (market share, customer satisfaction measures, customer loyalty);

Internal business process performance (productivity rates, quality measures, timeliness);

Employee performance (morale, knowledge, turnover, use of best demonstrated practices);

Innovation performance (percent of revenue from new products, employee suggestions, rate of improvement index);

To construct and implement a Balanced Scorecard, managers should:

  • Articulate the business’s vision and strategy;
  • Identify the performance categories that best link the business’s vision and strategy to its results (e.g., financial performance, operations, innovation, and employee performance);
  • Establish objectives that support the business’s vision and strategy;
  • Develop effective measures and meaningful standards, establishing both short-term milestones and long-term targets;
  • Ensure company wide acceptance of the measures;
  • Create appropriate budgeting, tracking, communication, and reward systems;
  • Collect and analyze performance data and compare actual results with desired performance;
  • Take action to close unfavorable gaps.

Source : http://www.ascendantsmg.com/blog/index.cfm/2011/6/1/Balanced-Scorecard-Strategy-Map-Templates-and-Examples

The link above contains a number of templates and examples that you may find helpful.

I have discussed organization architecture and employee engagement in our previous blogs. The BSC is a tool to encourage engagement while ensuring a tight architecture to further organizational goals. You may forget that as an employee, you occupy an important place in the ecosystem; the forgetting does not speak to your disenchantment toward the job, neither to your disinclination toward the uber-goals of the organization. The forgetting really speaks to potentially a lack of credible leadership that has not taken the appropriate efforts to engage the organization by pushing this structure that forces transparency. The BSC is one such articulate model that could be used, even at its crudest form factor, to get employees informed and engaged.

Intrinsic and Extrinsic Motivation: Impact on Employee Engagement

The difference between intrinsic and extrinsic motivation lays the groundwork to reflect the qualitative dimension of motivation. The distinction is critical, in that – understanding it would serve the purpose of laying out the appropriate organizational architecture that would encourage the proper motivation that would drive employee engagement.

Intrinsic motivation reflects an engagement in activities that are performed with the sole end being satisfaction. An intrinsically motivated employee would do things simply for the sheer joy of doing things and assessing results. Tangible rewards or any rewards per se are not the ends that they drive toward. On the other hand, an extrinsically motivated employee is driven by tangible rewards – money, gifts, social approval; or they are driven specifically to avoid punishments – getting fired, rejection, being passed over for an important project, and career limiting responses.

Thus, in both instances, the theory was fairly mechanistic and behavioral. In fact, even intrinsically motivated employees can be framed in a mechanistic and behavioral world wherein the cause and effect relationship is an act and the joy of seeing a result. The only difference is that they are not connected to influences from without.  But what has become a fact is that if the organization provides the appropriate structure to allow employees to ignite their intrinsic drives, the organization will benefit more than the alternative framework. This does not mean that one has to do without the other; it does mean though that depending on the nature of the work and the stage of the company – either or both motivation archetypes can be activated which will elicit the right engagement to advance the cause of the company. The questions though remain – What, When and How?

What? The culture has to address deficiency needs. These constitute the needs like security in the job, reasonable pay, and opportunities for growth, promotions, recognition, etc. Deploying a structure that only satisfies the intrinsic inclinations will be less likely to succeed if the deficiency needs are not clearly addressed. This would mean that good organizations would embark and deploy programs to address and mitigate deficiency needs. However, all that the organization has provided upon successful deployment is a sense of shared relief.  But the organization needs to up their ante to allow for “growth needs” which is the manifestation of the intrinsic metric. That would mean to dive deeper on a case by case basis and as a group to deploy programs that fuel aspirational and idealistic goals of the employees. A great example that I immediately recall is the 3M model or the Google model wherein employees are given time to do their own thing on company time! Now this is obviously not practical for all companies, but certainly there is and will be some points that organizations can deploy to fuel “voluntary” engagement.

When?  Timing is important. An organization can set a directional tone, but when to deploy what is driven by a host of discrete or related factors – for example, rush to go-to-market, liquidity crisis, major software pushes, declaring and preparing for earnings’ release, etc.  When the organization is being driven on account of all these factors and more to ensure their survival, they do not have the degree of freedom necessarily to deploy the programs that promote “growth needs”.  In fact, some organizations in a hyper-competitive environment may always feel as if they are in a pressure cooker and thus cascade that pressure across the ranks and files of the company.  In the extreme case, if the organization is better insulated from the trials and tribulations of external factors, they would have a greater degree of freedom to nurture the “growth needs”.  Now the latter scenario is very important to understand since today we belong in the information age rather than the mechanistic industrial age. In fact, we are being ushered at a break neck pace into an age where insight gathered against information is the salient competitive distinction — the morass of data and information is fast becoming now a millstone around an organization’s neck. So to success in the Age of Insights, so to speak, the company MUST deploy programs that anticipate and nurture the “growth needs”. The case for it is amplified further by the simple fact that people are mobile and have more and more choices. Hence, the Best Place to Work is an important metric that companies and employees follow since these companies have provided the right mix. To reiterate, timing the programs is important but the fact that both programs must be deployed to ensure an engaged culture is less debatable.

How?  This is the penultimate question. Once the organization have assessed what is need and when, they have to execute. How do we establish a balanced set of programs that would fuel the appropriate level of engagement that will positively impact the organization? Conversely, how do we untether from legacy programs that were good for a particular set of circumstances, but may not be good going forward. This probably comes more in the realm of organizational psychologists but here are a few takeaways. First, employees have to be given free choice – in other words, given other alternatives, they would choose to do that alternative that optimizes and increases the value of the company the most.  A fine example would be co-founders banging away at their work 24X7 and fuelled by dreams and possibilities for their creation. Put on a spotlight on this behavior – Multiply this behavior a hundred fold to characterize mass group psychology, and then figure out what can be done to create a “permanent immanence” or the state of continuous excitement and engagement. What we know based on studies, that engagement arising out of intrinsic motivation results in creativity, well-being, cognitive flexibility, loyalty, etc. By comparison, we also know that engagement as a result of extrinsic motivation may be as good – or depending on your perspective, may be as bad as a sugar high. Engagement ceases immediately or slowly once the extrinsic motivator is removed.  In fact, a more extreme version suggests that introduced extrinsic motivation programs that serve “dependency needs” may actually depress engagement even lower than the original state.

So the general consensus appears to be to introduce not a plan but a surprise.  For example, rewards that are expected, contingent on engagement or on task completion, and tangible are more likely to be detrimental to intrinsic motivation than rewards that are unexpected, not contingent, and intangible. More studies have in fact shown that employers should pursue the internalization of an employees’ extrinsic motivation for these tasks. Thus commending employees with unplanned surprises coupled with surfacing the value of the activity in and out of the organization appeals to the individual’s innate sense of worth to the company and outside of it. Hence, recognition at deeper granularity that is served with an element of surprise in an open environment is one of the better programs that ignite employee engagement.

Viral Coefficient – Quick Study and Social Network Implications

Virality is a metric that has been borrowed from the field of epidemiology. It pertains to how quickly an element or content spreads through the population. Thus, these elements could be voluntarily or involuntarily adopted. Applying it to the world of digital content, I will restrict my scope to that of voluntary adoption by participants who have come into contact with the elements.

The two driving factors around virality relate to Viral Coefficient and Viral Cycle Time. They are mutually exclusive concepts, but once put together in a tight system within the context of product design for dissemination, it becomes a very powerful customer acquisition tool. However, this certainly does not mean that increased virality will lead to increased profits. We will touch upon this subject later on for in doing so we have to assess what profit means – in other words, the various components in the profit equation and whether virality has any consequence to the result. Introducing profit motive in a viral environment could, on the other hand, lead to counterfactual consequences and may depress the virality coefficient and entropy the network.

What is the Viral Coefficient?

You will often hear the Viral Coefficient referred to as K.  For example, you start an application that you put out on the web as a private beta. You offer them the tool to invite their contacts to register for the application. For example, if you start off with 10 private beta testers, and each of them invites 10 friends and let us say 20% of the 10 friends actually convert to be a registered user. What does this mean mathematically as we step through the first cycle?  Incrementally, that would mean 10*10*20% = 20 new users that will be generated by your initial ten users. So at the end of the first cycle, you would have 30 users. But bear in mind that this is the first cycle only. Now the 30 users have the Invite tool to send to 10 additional users of which 10% convert. What does that translate to?  It would be 30*10*10% =30 additional people over the base of 30 of your current installed based. That means now you have a total of 60 users. So you have essentially sent out 100 invites and then another 300 invites for a total of 400 invites — you have converted 50 users out of the 400 invites which translates to a 12.5% conversion rate through the second cycle. In general, you will find that as you step through more cycles, your conversion percentage will actually decay. In the first cycle, the viral coefficient (K) = 2 (Number of Invites (10) * conversion percentage (20%)), and through the incremental second cycle (K) = 10% (Number of Invites (10) * conversion percentage (10%)), and the total viral coefficient (K) is 1. If the K < 1, the system lends itself to decay … the pace of decay being a function of how low the viral coefficient is. On the other hand if you have K>1 or 100%, then your system will grow fairly quickly. The actual growth will be based on you starting base. A large starting base with K>1 is a fairly compelling model for growth.

The Viral Cycle Time:

This is the response time of a recipient to act upon an invite and send it out to their connection. In other words, using the above example, when your 10 users send out 10 invites and they are immediately acted upon ( for modeling simplicity, immediate means getting the invite and turning it around and send additional invites immediately and so on and on), that constitutes the velocity of the viral cycle otherwise known as Viral Cycle time. The growth and adoption of your product is a function of the viral cycle time. In other words, the longer the viral cycle time, the growth is significantly lower than a shorter viral cycle time.  For example if you reduce viral cycle time by ½, you may experience 100X+ growth. Thus, it is another important lever to manage the growth and adoption of the application.

 

 

So when one speaks of Virality, we have to consider the Virality Coefficient and the Viral Cycle Time. These are the key components and the drivers to these components may have dependencies, but there could be some mutually exclusive underlying value drivers. Virality hence must be built into the product. It is often common to think that marketing creates virality. I believe that marketing certainly does influence virality but it is more important, if and when possible, to design the product with the viral hooks.

 

 

Walled Garden: Mirage or Oasis?

A walled garden in the context of the internet relays to full control of the user experience. In other words, it is a methodology that is deployed to ensure closed or exclusive content for consumption by a set of users.

One of the prime examples of the walled garden in the technology world is the Apple ecosystem. This constitutes the interplay or hardware and software intricately tied in a manner that precludes any legal way to contaminate the harmony of user experience. Well, at least that is what Apple has vociferously claimed over the ages. They have argued that adopting the walled garden has served to be a bedrock of innovation, and the millions of applications on the Appstore bears out that fact. But the open source folks argue otherwise.

applew Read the rest of this entry

Social Gaming and Organizational Psychology

soc gamingWe encourage children to play. It is one of the oldest and cheapest forms of entertainment. Children create imaginary worlds, assume roles, establish rules, and determine what constitutes a win. In all that, along the way they create the processes that elevate fun and learning … though we, as adults, may have different opinions about the type of fun and the magnitude of learning that play fosters in the social tapestry of children’s play.

With time and increasing responsibilities, the communion established by play is supplanted for experiences that align the adult toward other goals. However, Read the rest of this entry

Organization Architecture – Evolving strain!

Innovation is happening at a rapid pace. An organization is being pummeled with new pieces of information, internally and externally, that is forcing pivots to accommodate changing customer needs and incorporating emerging technologies and solutions.  Thus, the traditional organization structures have been fairly internally focused. Ronald Coase in his famous paper The Nature of the Firm (1937) had argued that organizations emerge to arrest transactional costs of managing multiple contracts with multiple service providers; the organization represents an efficient organizational unit given all other possible alternatives to coexist in an industrial ecosystem. Read the rest of this entry

Creativity vs. Innovation: The Bridge to Somewhere Relevant.

Creativity is not innovation. Let me say that again – Creativity is not innovation!

However, creativity is an important process toward innovation. There are other components that are just as important in the process, and these may, one might argue, amputate the creative process – but these components are important in increasing orders of magnitude to fuel the innovative cycle. Some of the other key components are focus, discipline, boundaries, and relevance. I will tackle each of these in further detail.

1. Creativity: You begin with an idea. The idea could be different, it could be unique or it could be an existing shift in the way of looking at things. It is novel but perhaps may not be appropriate. It could defy the physical and temporal constraints … it may not be even appropriate for the time and purpose. It elevates a response to a condition that has actually brewed in one’s mind for some time; or a simple realization when the constellation of circumstances seem to be aligned to surface the idea. It is singularly the process of gestating and giving form to an idea and channelizing it, through some medium, for active and passive observation.

2. Focus: The idea is out there … an abstract metaphor perhaps! Or something that is concrete but it is an object that is like an amoeba. It changes, it is malleable, it is psychedelic, it is formless … and so now you have to zero in and seek the relevance. You have to eliminate the irrelevant … you have to peel the onion and get to the core of the creative component. Two people might look at the core in the same creative component and arrive at starkly different results. The core is a mesh of both – objective being and a subjective assessment of its latent value.

3. Discipline: Now that you have zeroed in on the core and you have reflected upon it long enough to allow permanence, the hard task is discipline. This is an act of pushing away all peripheral thoughts that may threaten or distract you from amplifying the core. It is here when you say more no’s to push away the meteoric shower of blinding and provoking possibilities. This is a hard milestone: this is where we now start to think that we can bite more than we can chew; we give ourselves superhuman strength; we believe that a few extras here and there will only add and certainly not take away value from the core. Alas, we would be so wrong if we start thinking that way. If we happen to introduce more variables with the penultimate thought of creating something grand, we would have create immense complexities that would suddenly make the core less relevant. So discipline is to ward off those extraneous thoughts and return with plural judgment toward a singular end.

4. Boundaries: Now you ensure that the core does not spillover beyond its reach … in other words, it does not spread itself so thin that it dilutes its purpose for existence and relevance. You establish boundaries. The scale of such boundaries that you determine are in the context of the existence of the core … ideas that are thinly separable from others but enough to maintain its own identity will have smaller and well defined boundaries versus ideas that swim in the blue ocean wherein one can envision a slightly larger scale with some porous frontiers.

5. Relevance: Once you have gone through all of the above steps, you have to seek relevance or position the core toward relevance. It is a philosophical mindset … if you get this right, the messaging of positioning and execution strategy will be a lot easier and executable.

Innovation is the production and the implementation of the ideas. But innovation must have a payback within a reasonable time frame. It may span seconds to a generation, each of which would have different levels of investment and risks attached to it. Regardless, innovation without payback is a mirage … a delusion … a word that will implode quickly with the passage of time. Creation is easy, innovation is hard! Creation can be a solo effort; innovation by and large requires more players in place, institutional or otherwise. Creation dies with you; Innovation stands the test of time. Creation is the embodiment of the thought – cogito ergo sum; Innovation is the core that lives beyond your times.

So consider the question – Do I want to simply create or do I want to innovate?

The answers may lead you to divergent paths …and, if innovation is the path you choose, get in terms with the social network – the array of people, institutions, value systems, dreams … all of which exist in some cohesive whole. Imagine that the social network is your reference library that you must depend on to forge ahead to enable meaningful and impactful innovations … since innovation cannot ever occur in a vacuum.