Strategic Insight in Three Circles: 4 Steps

Sometimes simple tools are elegant and powerful and this is one such tool. Critical strategic insights can be gained from populating a template involving just three circles. 

How to build a distinct competitive advantage in order to grow and be profitable over the long term? Just draw  three circles. Those circles, placed in the proper relationship to one another, provide a good visual representation of what strategy—both internal and external—means. You will absorb strategy concepts by using this simple tool and take it back to your  organization where it can become a part of the decision-making process.

Here’s how it works.

1. Draw a circle and fill it with the things that customers value and why—that is, Customers’ Needs. Depending on the complexity and breadth of your offering, you may need to focus on a specific customer segment. Note that this exercise, when done in a group, may reveal brand new or emerging opportunities for value creation. The first circle thus represents the consensus view of everything the most important customers or customer segments want or need.

2. Now draw a second circle. You’ll fill this one with how customers perceive Company Offerings. This one could be especially tricky in a group exercise, because (short of good, hard analysis), there may be plenty of opinions about how customers perceive your product and brand.

3. Now “slide” the two circles together so that your specific set of offerings overlap with customers' needs. Let’s hope that the overlap “feels” good and solid, so that there’s a high comfort level that you are providing some significant benefit or set of benefits that the customer requires. “Even in very mature industries customers don’t articulate all their wants or problems in conversations with companies. ..Customers’ unexpressed problems can often become a source of relationship building and growth opportunity.”

At this point, working on your own, you can probably see a number of areas where further investigation may be required—even though you think about this stuff everyday. And, working as a group, it may be time for a lunch break, as (at least the first time through) there is bound to be a fair amount of debate around both circles, and their overlap.

4. Now it’s time for the last circle, which represents how customers perceive the offerings of your competitors. In a group setting, this may be the circle where there is the least amount of agreement. (Which is why you’re trying this exercise in your office with the door closed, first. Forewarned is forearmed.) This third circle slides up to overlap the first two in a variety of interesting ways, as follows:

Each area within the circles is strategically important, but A, B, and C are critical to building competitive advantage. You should ask questions about each.






 
For A: How big and sustainable are our advantages? Are they basd on distinctive capabilities? (Sometimes the biggest surprise is often that area A, envisioned as huge by the company, turns out to be minuscule in the eyes of the customer.”)

For B: Are we delivering effectively in the area of parity?

For C: How can we counter our competitors’ advantages?

You first, and later the team, should form hypotheses about the company’s competitive advantages and test them by asking customers. The process can yield surprising insights, such as how much opportunity for growth exists in the white space (E).

Another insight might be what value the company or its competitors create that customers don’t need (D, F, or G). This plays, by the way, to Christensen’s Innovator’s Dilemma: Where have you pushed the technology or offering so far that folks stopped seeing value in it?

Perhaps the greatest insight will be how much opinion and conjecture there are behind your "analysis," instead of data-based knowledge. That alone—knowing what you don’t know—may be one of the most useful outcomes of the exercise.

9 mistakes to avoid if you are successful in the market

Success affects everyone differently. And not necessarily in a good way. Because what it took you to become successful will not allow you to stay their for long - unless you learn to avoid these 9 common mistakes successful people commit : 

1. Become a defender after being a challenger : successful start-ups often enter by disrupting the status quo but when they succeed they themselves become the  status quo and yet they don't realize it. Why did Apple and Google had to challenge and disrupt the BlackBerry with their new platforms : iPhone and Android platform? Because RIM itself was a disrupter but they forgot it when they began succeeding.
2. Sticking to knitting when the rest of the world changes around you. When success makes the businesses rigid - and when the markets evolve rapidly around them - they often go back to "doing their  basics" - what made them successful earlier - with renewed vigour.  Sony CEO Howard Stringer's strategy was built around the concept of product synergy- in fact there was none. 
3. Losing the fear of failure. As Andy Grove of Intel said; "only the paranoids survive". Fear is a key emotion that warns you when to be alert and when you need to act. When you start to think that success is inevitable and believe you can't fail, you become reckless and take risks you shouldn't. This is the reason why mega-mergers and leveraged buy-outs failed.
4. Paralyzed by the fear of losing it all . The opposite of the above is to become totally risk averse because you're afraid of losing what you've won. Nothing risked, nothing gained.  
5. Not listening to those who matter  : When you stop asking questions and don't listen pro-actively and deeply to your key stakeholders -- customers, executives, directors, investors -- you miss critical "early warning" signs. If you do not experience minor aches and pains when they are minor, you will not need to be on a hospital bed for weeks for a major operation.
6. Becoming isolated from reality : you cut yourself off from the reality through the  layers of bureaucracy and hierarchy. That includes executive, suites, buildings,  assistants, meetings, dinners, conferences and other filters to keep the external world out. This is the reason the rulers in the olden days used to go out among the masses incognito in the night to see what they talk and think.
7. Surrounding yourself with people like you :  There are always those around you to tell you what you want to hear and sugarcoat negative news for you. Keeping only the people you like creates a bias which can be fatal.
8. Forgetting the "magic of the moment" factor . Do not attribute your success only to the products, materials, features. There was a "magic of the moment" too - pricing, timing, partners, even luck. The same old formula will not work because the magic of the moment will not come every time. You must actively change yourself. 
9. Being a one time wonder :  There are many who get it right and get the funding and the stars shine bright and become "one hit wonders" . But to develop a second and a third successful product requires a willingness to embrace marketing, sales, operations, customer service and other business functions.

Why Consulting Is A Job Everyone Needs To Experience

 You should see yourself as a consultant. Here’s why you need to experience consulting

Reason #1: Problem solving

No matter what field you are consulting in, your job is to identify problems, and fix them.
If you are lucky, you’ll have free rein to do whatever you want, but the chances are you’ll have to solve the problem within specific guidelines. This means you’ll have to be creative and start to think outside of the box. This is important for you to learn because it will not only teach you how to solve problems, but it will also teach you how to do this across any industry. This means you can work in any field in the future because you can adapt to any environment. And if you decide to stay with the 9 to 5 route you will be more valuable to your employer as they will be able to throw you at any problem.

Reason #2: You’ll learn to speak your mind

A consultant isn’t an employee. Sure you maybe working for a consulting firm, or your own firm, but when you go to different businesses to help them out, you’re considered a consultant… not an employee. As a consultant, you won’t be shy to speak your mind and tell companies what they are doing wrong. Why? Because you are getting paid to do that!
Speaking your mind is a really important trait… these days there are one too many people who are afraid to do this in the corporate world. By speaking your mind, you are helping your co-workers or the company who hired you. So always say what you are thinking, especially if it benefits the company.

Reason #3: You’ll learn how to keep a job

If you’ve ever worked at a large corporation, you know that there are plenty of people who just twiddle their thumbs every day. And to make matters worse, they keep getting paid without doing much work and no one ever dares to fire them. As a consultant you won’t have that luxury. Businesses have much more strict rules when it comes to laying off an employee versus firing a consultant. Typically they can fire a consultant without requiring any approval from their superior. This means that you have to continually earn spot as a consultant. You will have to keep on working hard and continually provide exceptional results. You’ll learn how to fight to stay alive and never give up.

Reason #4: Communication

The best thing I learned as a consultant is how to communicate effectively. You won’t be working in an office every day and you know your gig isn’t steady. You’ll have to keep providing results, as I mentioned in reason number 3 above. But providing results isn’t enough, you need to show them. You do this through reports, emails, phone calls, meetings and any other form of communication you can think of. By communicating on a regular basis people will know that you are working away and producing results. The moment you stop communicating is the day they’ll think you are goofing off, which will lead to you being fired.
You can’t take communication for granted and it is important no matter what you do in life.

Reason #5: Deadlines

Don’t you hate it when people miss deadlines? I’m so used it these days that I expect certain people within my organization to be delayed and I even account for it on my end. Well, you won’t have the luxury of missing them as a consultant. You either hit the deadlines, or else you’ll face consequences. I still remember each of the deadlines I missed because it usually lead to me getting fired or I wasn’t paid for the work that I put in. It taught me that you need to hit deadlines and how important it is to be timely. And what you’ll really learn is that a lot of people within a company can affect your deadline. Sometimes it isn’t you who is causing the delay, so you’ll have to learn how to manage people and timelines.

Reason #6: C-level experience

No, you’re not going to be the CEO as a consultant. But you do get to interact with the CEO or other high-leveled executives. They are the ones who approved hiring you and they write your check. You’ll have to learn how to sell yourself and your solutions. This is very valuable experience because in the corporate world, you can’t just do anything you want, you typically have to get buy in from other people. And if things don’t go your way and you get shot down a few times, don’t worry about it. Pick yourself back up and keep pushing forward. Eventually you’ll learn how to convince executives to do what you think is best for them. It took me a few years to get there, but now, I am great at selling to C-level executives.

Reason #7: Money management

It doesn’t matter if you are consulting for a big corporation with billions of dollars in the bank, or a small startup. Everyone has budget constraints. You’ll have to learn how to play within the constraints to get the job done. You’ll get first hand experience when it comes to trimming the fat, figuring out ways to be more efficient, and stretching the dollar as far as it can possibly go. Best of all, you’ll learn how to keep track of expenses, which is something that everyone can use. You can’t run a company without being conscious about how much you’re spending on a weekly if not daily basis.

12 points of advice to new MBAs

The author created a discussion  on LinkedIn and analyzed hundreds of responses to create twelve pieces of advice for getting off to a good start in one's career.

1. What you learned in college is a foundation for future learning, nothing more. What's past is prologue.This is not to minimize your accomplishments or to downplay the importance of graduating from college. Just take care not to view your degree as a destination. What you learned is important. What you learned about how to learn is essential; it's the foundation for your life-long success.
2. Be someone that your colleagues want to work with.No one wants to work with someone who is unpleasant or unreliable or self-serving. So position yourself to be the colleague-of-choice. Bring a positive attitude to everything you do. Keep the commitments you make. Help others advance their (legitimate) agendas. If you do, others will want to work with you and help you to succeed.
3. You're not as smart as you think you are, even if you are as smart as you think you are.You won't go far wrong, no matter how able you are, if you err on the side of humility. Arrogance breeds resistance; even if you really do have all the right answers, you need to bring people along with you. Recognize, as well, when to stand by your beliefs and when to flex in the face of good advice. 
4. From the very first moment, remember you are creating an impression. You never get a second chance to make a first impression. People come to conclusions about you at an astonishing speed and form first impressions in seconds. And, once formed, opinions can be difficult or impossible to change. In fact, people tend to seek out information that confirms their pre-existing impressions and block out information that doesn't — the so-called "confirmation bias." So think hard about the impressions you want to create.
5. Do what's required, from the menial to the extraordinary, to get the job done. No one achieves great things without first paying their dues. So be prepared to do a lot of work early on that may seem beneath your abilities. Keep in mind it's more important to work in a good organization than to start with a good position. If you demonstrate your energy, dedication and ability, advancement will surely follow.
6. The harder and smarter you work, the luckier you'll get.In the long run, good work discipline matters as much or more than talent. If you can't prioritize, focus, and produce on a consistent basis, you're not going to go far. We are what we repeatedly do. Excellence, then, is not an act, but a habit.
7. Learn to listen, listen to learn. The act of listening, actively and thoroughly, is the most powerful influence technique there is. If you listen well, you will learn. And even if you fundamentally disagree with what's being said, your ability to demonstrate understanding of others' points of view will open their minds.
8. Always do your homework. The discipline of being prepared is indispensable. No one wants to waste their time with someone who hasn't done the necessary preparation; it's a sure-fire way to corrode confidence and lose respect. And preparation is an essential prerequisite for innovation. Chance favors the prepared mind.
9. Don't learn the tricks of the trade, learn the trade.There are no shortcuts to becoming excellent. A dream doesn't become reality through magic; it takes sweat, determination and hard work. So find your vocation and figure out what it will take to be outstanding in doing it. Resist the temptation to take shortcuts, because they usually are dead-ends. Keep in mind that few people mistake appearances for reality for very long.
10. Strive to recognize and compensate for your weaknesses. Because it's certain that you will be called upon, at many points in your career, to do things that don't naturally play to your strengths.So get on the path to self-awareness early, take advantage of every opportunity you get to engage in self-assessment and embrace good coaching wherever you find it.
11. Network" It's not who you know, it's who knows you." In reality knowing and being known are important; but neither is sufficient. You need to cultivate relationships that are founded in mutual benefit, whatever the relevant currencies are. The benefits of business relationships range from having valued sources of advice, to securing conduits for exerting influence, to exploiting channels for getting access to information and resources. Think hard about the relationships you need to build, because they require substantial investment. Treat each relationship as a bank account into which you must deposit at least as much value as you hope to withdraw.
12. Don't lose yourself trying to be what you think others want you to be.Finally, learn to appreciate the power of authenticity, especially your own. Reflect on what you feel when you are in the presence of someone who is being inauthentic: pity, disgust, but never respect. Keep in mind this is what others will feel, sooner or later, if you try to be something you fundamentally are not. This is true even — in fact especially — if you are trying to be what you think others want you to be. To be nobody but yourself — inspite of the  world trying to make you somebody else — is the hardest battle any human can fight."

Attract Customers Who Want to Buy: 7 Ways

Kevin Daum

Apr 23, 2013

Attract Customers Who Want to Buy

7 Ways

Last week, I suggested to some contention that you could Do More Business with Fewer Sales People. One clear path to doing this is through inbound marketing.

The about to be released 2013 State of Inbound Marketing Report, (here's an exclusive sneak peak), shows that 58 percent of respondents are using inbound marketing. More important, 48 percent will increase their spending on inbound marketing this year. So it's likely that if you're not using inbound marketing techniques, you'll be competing against those who are.

The report also showed that companies struggle with measurement, and a clear definition of what inbound marketing is and isn't. Many have tried to classify some tools like blogs and SEO as inbound versus ads and direct mail as traditional. However I maintain that blogs, e-mail, TV ads, and any other marketing tool can be used as traditional or inbound marketing.

Inbound marketing strategically integrates data, technology, content and intimacy to efficiently attract customers predisposed to buy, and often at a premium price. The survey results also confirm that inbound marketing helps consolidate and target fragmented audiences and generate resource efficient leads.

In case you haven't yet fully adopted an inbound marketing approach, I consulted with several inbound marketing experts to provide some best-practice tips so you can compete with the inevitable onslaught of inbound marketers:

1. Give Before You Get

Michael Brito, senior vice president of social business strategy at Edelman Digital notes that most ads don't take into account where a customer is in their buying process. If you just read a blog entry, getting an aggressive call from a sales rep is unwarranted. Instead, he recommends "giving valued content" so customers feel a benefit from your brand, and are more inclined to come to you when it's time to buy.

2. Build Your Own Audience Instead of Renting One

Jason Falls, vice president of digital strategy at Cafe Press, notes that traditional paid advertising involves essentially renting eyeballs or clicks. "With inbound, you're building the audience you need so you don't have to pay someone to go find them. At CafePress, we provide sharable, inspirational and humorous designs, images and quotes on our Facebook page. The people who enjoy those are people who generally enjoy the types of unique products and gifts we offer. So when we're ready to run an offer or promotion on $5 silly t-shirts or a low-price art canvas, we've gathered over 430,000 people interested in our type of products to present that offer to."

3. Replace Campaigns with Continuity

"Marketing used to be isolated events involving large-scale advertising and media campaigns, but your customers don't live on a campaign schedule," suggests David Carpenter of Connection Model. Continuous engagement is the new campaign. Successful inbound marketing can follow a customer through their entire lifecycle, from their first site visit, to the point they become a lead, through the sales process, and even after for repeat and referral business. Don't just go for one and done.

4. Go Above and Beyond Content

Kipp Bodnar, HubSpot's director of marketing and author of The B2B Social Media Book, says, "Content marketing is a critical component of inbound marketing, but it goes well beyond that to include an integrated system to optimize every interaction in your funnel." Use compelling content as fuel to stoke your inbound marketing fire.

5. Measure, Experiment, Remeasure 

Data is readily available in electronic marketing so use it a lot. Measure everything you can and find ways to capitalize. For example, a study by Marketing Sherpa notes that lead scoring increases conversion rates by 79 percent. And HubSpot data based on their users indicates that lately most e-mail unsubscribes come on Tuesdays, while the highest click through rates occur at 6 a.m. Little numbers can have big impact so measure everything and adjust constantly.

6. Know Who You Are, Know Who They Are

Consumers want to interact with brands in a highly relational way. They want to believe there is a distinct YOU, know who YOU are, and that there is mutual respect and understanding between YOU and THEM. Develop buyer personas based on your customers' habits, buying behavior, and lifestyle. Then instead of searching for customers, help them find you. Put yourself in places they want to be, and invite them to come to you. Julia Roy, co-founder of WorkHacks suggests if you are clear on who you serve, you can serve them better. She points out: "It's counterintuitive at first, but you really don't want to reach everyone. Focus on the dreams and desires of your top customers and pay them special attention."

7. Practice Smarketing

HubSpot's Senior Vice President of Sales and Services, Mark Roberge notes that the benefits of inbound marketing extend beyond your marketing department. "The best companies win with inbound marketing by deeply engaging and aligning with their sales department so both parts of the business are more measurable, scalable, and effective."

8 ways of successful people to live life by choice and design and not be default

Most people want success but most are not willing to do what it takes. Truly successful people don't leave much to chance. They are disciplined and focused.  They constantly seek new methods to achieve more, in bigger and faster ways. Listed below are eight different practices that will help you concentrate your efforts on rising above the tide.

1. Set a standard for your material needs : Do not focus on the byproducts of success like fancy cars and large houses. They will come but focus on building a sustainable success in the first place. Establish a bare minimum for your material needs as your standard so that you can enjoy the benefits of anything above that without stress.
2. Always be curious and active in learning :  The higher up the success ladder you climb, the more complex the systems and opportunities that are presented to you. Absorb all the information you can and  fill the gap by learning yourself or by connecting  with those who know.
3. Allocate and manage time for relationships : Successful individuals attract and carry others  with them - but this requires investment of time to cultivate these relationships. Make choices about the people who matter to you and determine how you each can get value from your interactions and the carefully allocate and regulate your time.
4. Practice Emotional Self-Awareness : Not all successful people are nice but most are aware of their idiosyncrasies and know how to use their emotions to get what they want from life and work hard to make sure feelings don't become a detriment. Know yourself and learn how to let your emotions work for you in positive ways.
5. Commit to a Physical Ideal : Everyone has a vision of their own perfect body. They don't have to be fashion models or athletes to be happy. But physical health is a consideration in their life and it's a big distraction when it gets out of whack. Determine the body you believe is worth working for and set a game plan to achieve and maintain it.
6. Gain Clarity About Spirituality :  People like Richard Branson and Warren Buffett are not religious but  have a clear point of view as to the role spirituality plays in their life. Find your own way to be at one with the universe and be clear and deliberate in how you practice.
7. Adhere to a Code of Ethics  : Really successful people live by rules. They may not be the rules of others, but consistency is important for them to maintain power and stability. Their individual view of how the world works is the basis for how they believe people should be treated and they will defend it until their dying day. Determine your ethical lines and broadcast them loud and clear so people around you know where you stand.
8. Focus on Time Efficiency :  Prioritization is a key component of success. You can't reach your pinnacle if you are wasting time on distractions. Integration of activities frees up time for greater achievement. Spend your time on activities that are fun, enlightening and productive and soon you'll have gained hours to reap the benefits of success.

Six Secrets to Doing Less

Why the best innovation strategies are rooted in the art of subtraction.

by Matthew E. May

In the pursuit of innovation, leaders are often faced with three critical decisions: what to follow versus what to ignore, what to leave in versus what to leave out, and what to do versus what not to do.

Many of the most original innovators tend to focus far more on the second half of each choice. They adopt a “less is best” approach to innovation, removing just the right things in just the right way in order to achieve the maximum effect through minimum means and deliver what everyone wants: a memorable and meaningful experience.
It’s the art of subtraction, defined simply as the process of removing anything excessive, confusing, wasteful, hazardous, or hard to use—and perhaps building the discipline to refrain from adding it in the first place. These six rules help guide that discipline.
1. What isn’t there can often trump what is. As Jim Collins wrote in a 2003 USA Today article, “A great piece of art is composed not just of what is in the final piece, but equally important, what is not.”
Designers of the automotive youth brand Scion essentially used this strategy in creating the fast-selling and highly profitable xB model, a small and boxy vehicle made intentionally spare by leaving out hundreds of standard features in order to appeal to the Gen Y buyers who wanted to make a personal statement by customizing their cars with trendy options. Buyers would commonly invest an amount equal to the US$15,000 purchase price to outfit their xB with flat-panel screens, carbon-fiber interior elements, and high-end audio equipment. It wasn’t about the car, it was about what was left out of it—and the possibilities that absence presented.
2. The simplest rules create the most effective experience. Order and engagement might best be achieved not through rigid hierarchy and central controls, but through one or two vital agreements, often implicit, that everyone understands and is accountable for, yet that are left open to individual interpretation and variation. The limits are set by social context.
Visitors to the 2012 Olympic Games enjoyed the “shared space” redesign of London’s cultural mecca, Exhibition Road. It enabled motor vehicles, pedestrians, and cyclists to share the road equally, with the only rule being “all due respect to the most vulnerable.” Shared-space design is void of nearly all traditional traffic controls, signs, and lights. Curbs have been removed, red brick has replaced asphalt, and fountains and trees and café seating are placed right where you think you should drive. It’s completely ambiguous. You keep moving, yet you have no choice but to slow down and think. The result? Twice the fun and a steady flow—with half the normal number of accidents.
3. Limiting information engages the imagination. Conventional wisdom says that to be successful, an idea must be concrete, complete, and certain. But the most engaging ideas are often none of those things.
Specifics draw people in, but give too many and they turn their attention elsewhere. The former Cadbury Schweppes, makers of the U.K. candy favorite Cadbury Dairy Milk, aired a 90-second television commercial for its chocolate bars a few years ago that featured a gorilla (or rather, a man in a gorilla suit) seated at a drum set in a recording studio while Phil Collins’s “In the Air Tonight” played. For the first full minute, we see only close-ups of the near motionless gorilla, which looks to be contemplating the music and preparing for the performance of a lifetime. The next 26 seconds shows the gorilla rocking out on the drums. The only reference to the product is a four-second shot of the chocolate bar at the very end of the spot, with the tagline “A glass and a half full of joy.” Sales rose 10 percent in the two months following the ad, during which period it was viewed more than 7 million times on YouTube.
4. Creativity thrives under intelligent constraints. As writer, art critic, and essayist G.K. Chesterton once claimed, “Art consists of limitation. The most beautiful part of every picture is the frame.”
In the mid-1990s, the Mars Pathfinder team at Jet Propulsion Laboratory in Pasadena, Calif., had to respond to the new NASA mandate of “faster, better, cheaper” by launching a reliable, low-cost alternative to traditional space exploration. Their challenge: Create a rover that could efficiently return with new engineering and scientific data on Mars, and do it for less than one-tenth the typical cost of a space mission. It was a seemingly impossible task requiring a “change everything” approach. The results, though, were spectacular. The entire project, from concept to touchdown, was completed in 44 months—less than half the time of the previous Viking mission to Mars—with significantly fewer team members, and on budget. And it resulted in dozens of resourceful innovations, the most remarkable being the use of deployable airbags as the landing method.
5. Break is the important part of breakthrough. Innovation often demands a break with convention.
While the U.S. government struggles to solve the healthcare problem, one entrepreneur is taking a fresh approach. WellnessMart, MD, is a retail doctor’s office for healthy people to access services such as vaccinations, CPR training, and physicals. Founded by physician Richard McCauley in Los Angeles, WellnessMart is nothing like a typical medical office. Picture modern furnishings, an open floor plan, big-screen televisions, and walls covered with prominent menu boards listing services and cash pricing. In McCauley’s view, sick people and healthy people should not go to the same place, and healthcare isn’t just for unhealthy times. With low prices, no insurance accepted, no appointments, and no coughs and sniffles, the WellnessMart approach is a complete departure from other healthcare operations. The business has expanded to four retail locations in California, and McCauley is contemplating a national franchise.
6. Doing something isn’t always better than doing nothing. Innovation often demands taking a break from the rigors of work. Neuroscience now confirms that the ability to engineer creative breakthroughs indeed hinges on the capacity to synthesize and make connections between seemingly disparate things. A key ingredient is a quiet mind, severed for a time from the problem at hand.
Meditation—a practice that eliminates distraction and clears the mind—is an effective way to enhance self-awareness, focus, and attention, and to prime your brain for achieving creative insights. Oracle chief executive Larry Ellison meditates, and asks his executives to do the same. In 2007, Google initiated a mindfulness and meditation course at its Google University to help its employees maintain the company’s strong track record for innovation. Leaders at GE, 3M, Bloomberg Media, Green Mountain Coffee Roasters, and Salesforce.com meditate. So do Ford chairman William Ford and former corporate chiefs Bill George of Medtronic and Bob Shapiro of Monsanto. George, now a Harvard leadership professor, says that as CEO of Medtronic, he went so far as to set aside one of the company’s conference rooms for employees to take mental breaks.
Business leaders today face endless choice and feature overkill. They need to cut through the noise, using the art of subtraction to reveal the quiet truth. These six rules point to a single, powerful idea for achieving simplicity in any innovative effort: When you remove just the right things in just the right way, good things happen.

4 Fears that block creativity

David Kelley, Founder of Stanford's Hasso Plattner Institute of Design and the design and innovation consultancy, IDEO.

What are those four fears?

1. Fear of the messy unknown (as against all that nice, safe and comfortable that comes to your desk automatically) and of getting out and going to places where people don't know you. Reality is always messier than the prepackaged data that comes to your desk.
2. Fear of being judged. As you get older you're worried everybody's is going to judge you and make fun if you don't say exactly the right thing. It drives people to just remain silent or not take risks.
3. Fear of the first step. For the writer, it's the blank page. For the teacher, it's like the first day of school. That is really the hardest because once you start, you have momentum. It is so much easier to hang back and not take that first step.
4. Fear of letting go. Fear of losing control where people think they have to control every aspect of something. 

We take people through a process of small successes, one success after another. You have a little success, it's hard to get going, so you have a small success, and that feels good.

And then we hold their hands and we do another step and that feels good. And pretty soon when you've done this for a while, you get down to the end and you surprise yourself.

oh my God, look how creative that solution was that I came up with.We call this creative confidence. The famous psychologist at Stanford, Albert Bandura, calls it self-efficacy. This sense that you know how the world's put together and that you can do what you set out to do. 

So our deal is you're just building these muscles. These are tools that we give people and you're building a muscle. So it's not as easy, you have to get past your habit of thinking of yourself as not creative and thinking that this is hard.

But once you start having some successes, then it makes it real easy for you to keep going. It's sort of like you started to play the piano and everybody was saying boy, you can really play the piano well. Then that spurs you on to keep going even though it's a lot of mileage.

But my favorite is this news aggregator called "Pulse." These two students started out, they were in computer science and kind of reluctant to this go out and talk to people kind of thing.
But through the class, they were convinced to hang out in a coffee shop every day for about five weeks. And each time they talked to people, they got a better idea. And they kept releasing their product, and they kept going, and they eventually made "Pulse" which was the best-selling iPad app there was out there at the time.

Well sure. For example, one of the things you can do is you can just go online. And most companies now have forums where the customers collect. Where they talk about the company so you're just listening to what they say.One thing we encourage people to do is just call in, pretend you're a customer. Call in to your customer service line, see what that experience actually is. Because you'd be surprised how many senior executives haven't really experienced their own service in the way that a first-time customer does.
Sure. Fear of letting go, it starts with just acknowledging that I'm not going to have all the inputs. No matter how smart I might be, if the problem is a significant one, I can't control the solution from start to finish and so you have an open mind about this. And so one really powerful tool is open innovation schemes where you really ask the world for a solution.
At IDEO we have a open innovation platform we call Open IDEO. And we put these social innovation questions out into the world and 30,000 people from 170 different countries have helped us work on really tough social issues. And so yes, we have 600 people who we think are pretty smart, but we went to the world to look for answers. And so we're letting go of our own feeling, we're like OK, we got to solve this all ourselves.

And so in the article, we tell a story about Bonnie Simi who was then director of airport planning for JetBlue Airways. She's now head of HR for the company. But she wanted to wrestle with this problem in which they'd had a big flight delay. There had been a big storm at JFK, and it disrupted their flight service for six days.

And if you had too much fear of letting go, you'd try to solve the whole problem yourself, you'd try to be the hero. But that's not what she did. She brought 120 front-line employees together for a day and they wrote every problem on a Post-it and they filled a room with Post-its. And then she worked with teams throughout the company along the way. And so she gained her creative confidence by letting others help.

I want to move on to fear of the first step. I know that entrepreneurs talk a lot about low-cost experiments. But how might one do that in a big bureaucratic organization which typically requires lots of analysis and approvals before getting a new project or new idea off the ground? David, can you address that?

So what we ask them to do is to do their job. You're not going to endear yourself to the people in your company if you say no, I don't want to do it the way the company does it. I'm going to go off and do this other thing.
Instead we say, do your job, but also take these new skills that you've learned and try some experiments on your own. And then after you have a little success, we find that people will pay attention. And pretty soon they notice oh, that group's more creative, look what they're doing. And so by doing these kind of little experiments on the side, you can get the ball rolling.

Doug Dietz was a design engineer at GE who had worked on MRI machines. He decided that on his own he was going to go to the hospital and see what was going out with the machine and use these user-centered approaches that we had. And he was doing his regular job as well. But he really noticed that the children were having trouble dealing with this big machine.

And so he started designing ideas for ways to make it enjoyable. Like it was a Pirate ship and the kids would be more playful. And in the end, his way of looking at things really resonated and the whole company turned on a dime. He built these little quick prototypes and the company saw them, and the kids reacted to them, and the hospital reacted to it. And pretty soon it was a mainstream idea now, it wasn't just this one guy going off.

And because our approach is so human-centered, we find that it's really easy for people to adopt that point of view. So you're normally doing it a certain way, and you're doing it in a more human-centered way and people will react to that. And the individuals react, and then the whole organization will react. So mainly what we're talking about is you build some very low-cost prototype of what your big idea is in addition to your normal job.

So we've had great success with working for a car company and we're doing some kind of new interface. Instead of spending a lot of time making a new car or going through the process of doing something completely digital, we just put a camera in the front seat and drive around. And then we have a bunch of film and then we can edit that and make it work.

Or when we're doing prototypes of things for children's television network, apps for kids. Instead of doing a lot of digital work and having to use a lot of computer time, we will do things like take a big cardboard thing and cut out a shape that's the size of a real human and then we just put the camera on but we dance behind it. And then you can show it to the other people in the company and get them excited and say what you think about this? What if Elmo does this?
And there's so low investment in our kind of quick and dirty prototypes that you can do those on the side and then start building excitement around it. It's much easier than trying to convince the company that they should do things a different way. You win them over through the kind of success of the quick prototype. And that builds confidence in everybody that you know that what you're going to do is going to work.

TOM KELLEY: Well, Dave and I have been working on innovation for something like 30 years at IDEO. And so people might think that we have a slight bias on this subject. So maybe if I turn to a more objective third party source. In one of the recent IBM global surveys, they go around the world, interview 1,500 global CEOs. They asked the CEOs what was keeping them up at night and they talked a lot about complexity. And then in the summary of the findings they said that creativity was the single most important competency for organizations trying to navigate through that complexity. So this is not designers, this is not real self-identified creatives. This is the CEOs of public and private sector enterprises.
And there's actually a more recent survey from Adobe where they went out 5,000 people in five different countries and they asked them questions about creativity. And 80% said that unlocking creativity was important for economic growth. And I loved that they phrased it in that way, "unlocking creativity," Because you don't have to teach people creativity. It's there inside them, you just have to unlock it.
And so we think that anybody can gain creative competency. You just need the right kind of nudge, the right kind of spark. And so historically, David and his work at Stanford has been teaching designers in the product design program. But with this new product at the d.school, he's teaching non-designers.
See, there are graduate students from all seven schools-- the law school, the business school, the medical school. And so these are not self-identified creatives, and yet we found a way to unlock their creativity. And so it's possible to do with anybody and we think it's really important for economic growth in an organization, in a community, even in a nation.
ALISON BEARD: Well, that's a very hopeful message. Tom, David, thanks so much for your time today.
TOM KELLEY: It was a pleasure, thanks.
DAVID KELLEY: Thanks, Alison.
ALISON BEARD: That was Tom and David Kelley of IDEO. To read their December article "Reclaim Your Creative Confidence," go to hbr.org.

who killed Michael Porter

What Killed Michael Porter's Monitor Group? The One Force That Really Matters

Why go through the hassle of actually designing and making better products and services, and offering steadily more value to customers and society, when the firm could simply position its business so that structural barriers ensured endless above-average profits?

What killed the Monitor Group, the consulting firm co-founded by the legendary business guru, Michael Porter? What went wrong ? The answers to this questions are strange and troubling. We can find some of them in the work of consulting insider, Matthew Stewart, and his enlightening, but misleadingly-titled, book, The Management Myth (Norton, 2009).

In his book, Stewart tells how in 1969, when Michael Porter graduated from Harvard Business School and went across the river to get a PhD in Harvard’s Department of Economics, he learned that excess profits were real and persistent in some companies and industries, because of barriers to competition. To the public-spirited economists, the excess profits of these comfortable low-competition situations were a problem to be solved.

Porter saw that what was a problem for the economists was, from a certain business perspective, a solution to be enthusiastically pursued. It was even a silver bullet. An El Dorado of unending above-average profits. Why go through the hassle of actually designing and making better products and services, and offering steadily more value to customers and society, when the firm could simply position its business so that structural barriers ensured endless above-average profits?

In 1983, Porter co-founded his consulting company, the Monitor Group, that over the years generated hundreds of millions of dollars in fees from corporate clients (as well as from clients in the nonprofit sector), and also providing rich livelihoods for other large consulting firms, like McKinsey, Bain and BCG.

No basis in fact or logic

There was just one snag. What was the intellectual basis of this now vast enterprise of locating sustainable competitive advantage? As Stewart notes, it was “lacking any foundation in fact or logic.” Except where generated by government regulation, sustainable competitive advantage simply doesn’t exist.

Porter might have pursued sustainable business models. Or he might have pursued ways to achieve above-average profits. But sustainable above-average profits that can be deduced from the structure of the sector?

y.

Although Porter’s conceptual framework could help explain excess profits in retrospect, it was almost useless in predicting them in prospect.

The goal of strategy is to avoid competition?

How did all this happen? Porter began his publishing career in his March-April 1979 Harvard Business Review article, “How Competitive Forces Shape Strategy”, with a very strange sentence: “The essence of strategy is coping with competition.” Ignoring Peter Drucker’s foundational insight of 1973 that the only valid purpose of a business is to create a customer, Porter focused strategy on how to protect businesses from other business rivals. The goal of strategy, business and business education was to find a safe haven for businesses from the destructive forces of competition.

By defining strategy as a matter of defeating the competition, Porter envisaged business as a zero-sum game. As he says in his 1979 HBR article, “The state of competition in an industry depends on five basic forces… The collective strength of these forces determines the ultimate profit potential of an industry.” For Porter, the ultimate profit potential of an industry is a finite fixed amount: the only question is who is going to get which share of it.

What’s gone wrong here was Porter’s initial thought. The purpose of strategy—or business or business education—is not about coping with competition–i.e. a contest in which a winner is selected from among rivals. The purpose of business is to add value for customers and ultimately society.

Making profits without deserving them

In the theoretical landscape that Porter invented, all strategy worthy of the name involves avoiding competition and seeking out above-average profits protected by structural barriers. Strategy is all about figuring out how to secure excess profits without having to make a better product or deliver a better service.

It is a way of making more money than the merits of the product or service would suggest, or what those plain folks uncharitable to the ways of 20^th Century business might see as something akin to cheating. However for several decades, many companies were ready to set aside ethical or social concerns and pay large consulting fees trying to find the safe and highly profitable havens that Porter’s theory promised.

No competitive advantage is sustainable

The disastrous consequences of thinking that the purpose of strategy, business and business education is to defeat one’s business rivals rather than add value to customers has of course been aggravated by the epic shift in the power of marketplace from the seller to the buyer. In the studies of the oligopolistic firms of the 1950s on which Porter founded his theory, it appeared that structural barriers to competition were widespread, impermeable and more or less permanent.

Over the following half century, the winds of globalization and the Internet blew away most of these barriers, leaving the customers in charge of the marketplace. Except for a few areas, like health and defense where government regulation offers some protection, there are no longer any safe havens for business. National barriers collapsed. Knowledge became a commodity. New technology fueled spectacular innovation. Entry into existing markets was alarmingly easy. New products and new entrants abruptly redefined industries.

The “profit potential of an industry” turned out to be, not a fixed quantity with the only question of determining who would get which share, but rather a highly elastic concept, expanding dramatically at one moment or collapsing abruptly at another, with competitors and innovations coming out of nowhere. As Clayton Christensen demonstrated in industry after industry, disruptive innovation destroyed company after company that believed in its own sustainable competitive advantage.

The only safe place

The business reality of today is that the only safe place against the raging innovation is to join it. Instead of seeing business—and strategy and business education—as a matter of figuring out how to defeat one’s known rivals and protect oneself against competition through structural barriers, if a business is to survive, it must aim to add value to customers through continuous innovation and finding new ways of delighting its customers. Experimentation and innovation become an integral part of everything the organization does.

Firms like Apple [AAPL], Amazon [AMZN], Salesforce [CRM], Costco [COST], Whole Foods [WFM] and Zara [BMAD:ITX] are examples of prominent firms pursuing this approach. They have shifted the concept of the bottom line and the very purpose of the firm so that the whole organization focuses on delivering steadily more value to customers through innovation. Thus experimentation and innovation become an integral part of everything the company does. Companies with this mental model have shown a consistent ability to innovate and to disrupt their own businesses with innovation.

Thus what is striking about continuous innovation is that the approach is not only more innovative: it tends to make more money. The latter point is important to keep in mind. For all the hype about innovation, unless it ends up making more money for the firm, ultimately it isn’t likely to flourish. Making money isn’t the goal, but the result has to be there for sustainability.

Is continuous innovation sustainable? Firms like those I mentioned have been at it for one or more decades with extraordinary results. What’s interesting is that they are consistently disrupting others, rather than being disrupted themselves. Will they survive for 50 or 100 years? Time will tell. What we do see is that they are doing a lot better than firms pursuing shareholder value or focusing merely on defeating rivals.

Monitor had no place in the emerging world

In this world, Monitor’s value proposition of a supposed sustainable competitive advantage achieved by studying the numbers and the existing structure of the industry became increasingly implausible and irrelevant. Its consultants were not people with deep experience in understanding what customers might want or what is involved in actually making things or delivering services in particular industries or how to innovate and create new value.

They were part-time academics who promised to find business solutions just from studying the numbers. They had no idea how to build cars or make mobile phones or generate great software. They were numbers men looking for financial solutions to problems that required real-world answers.

The important question is not: why did Monitor go bankrupt? Rather, it is: how were they able to keep going with such an illusory product for so long? The answer is that Porter’s claim of sustainable competitive advantage, based on industry structure and the numbers, had massive psychological attractions for top management.

Porter’s theory thus played to the image of the CEO as a kind of superior being. As Stewart notes, “For all the strategy pioneers, strategy achieves its most perfect embodiment in the person at the top of management: the CEO. Embedded in strategic planning are the assumptions, first, that strategy is a decision-making sport involving the selection of markets and products; second, that the decisions are responsible for all of the value creation of a firm (or at least the “excess profits,” in Porter’s model); and, third, that the decider is the CEO. Strategy, says Porter, speaking for all the strategists, is thus ‘the ultimate act of choice.’ ‘The chief strategist of an organization has to be the leader— the CEO.”

Strategy leads to “the division of the world of management into two classes: “top management” and “middle management.” Top management takes responsibility for deciding on the mix of businesses a corporation ought to pursue and for judging the performance of business unit managers. Middle management is merely responsible for the execution of activities within specific lines of business.

The concept of strategy as it emerges defines the function of top management and distinguishes it from that of its social inferiors. That which is done at the top of an organizational structure is strategic management. Everything else is the menial task of operational management.

Two classes of management

Practitioners of strategy insist on this distinction between strategic management and lower-order operational management. Strategic (i.e. top) management is a complex, reflective, and cerebral activity that involves interpreting multidimensional matrices. Operational management, by contrast, requires merely the mechanical replication of market practices in order to match market returns. It is a form of action, suitable for capable but perhaps less intelligent types.

This picture of CEO-superdeciders helps justify their huge compensation and the congratulatory press coverage, and yet again, it also has little foundation in fact or logic. The strategy business thus lasted so long in part because it supports and advances the pretensions of the C-suite.

Porter’s strategy theory is to CEOs what ancient religions were to tribal chieftains. The ceremonies are ultimately about the divine right of the rulers to rule—a kind of covert form of political theory. Stewart cites Brian Quinn that it is “like a ritual rain dance. It has no effect on the weather that follows, but those who engage in it think that it does.”

The future of strategy consulting

Does strategy consulting have a future? When rightly conceived as the art of thinking through how companies can add value to customers–and ultimately society–through continuous innovation, strategy consulting has a bright future. The market is vast because most large firms are still 20^th Century hierarchical bureaucracies that are focused on “the dumbest idea in the world”: shareholder value. They are very weak at innovation.

Consultancies that can guide large firms to move into the world of continuous innovation in the 21^st Century have a bright future. To succeed in this field, however, consultants need to know something both about innovation and about the sectors in which they operate and the customers who populate them. Merely rejiggering the financials or flattering the CEO as the master strategist is not going to get the job done. Managers and consultants are going to have to get their hands dirty understanding what happens on the front lines where work gets done and where customers experience the firm’s products and services. To prosper, everyone has to become both more creative and more down-to-earth.

What has no future is strategy conceived as defeating rivals by finding a sustainable comparative advantage simply through studying the structure of the industry and juggling the numbers.

Since Monitor had no other arrow in its strategy quiver, it was doomed from the outset. Its embarrassing debacle marked the beginning of the end of the era of business metaphysics and the exposure of the most over-valued idea on the planet: sustainable competitive advantage.

Monitor was killed by the dominant force: the customer

Eventually even attractive illusions come to an end: people see through them. Ceremonial rain dances come to be viewed for what they are. The financial crisis of 2008 was a wake-up call that reminded even entrenched firms how vulnerable they were. Today, large firms have little interest in paying large fees to strategists to find sustainable competitive advantage just from studying the numbers.

Monitor eventually learned the hardest lesson of all: strategy, business and business education are not about pursuing the chimera of sustainable competitive advantage.

Monitor wasn’t killed by any of the five forces of competitive rivalry. Ultimately what killed Monitor was the fact that its customers were no longer willing to buy what Monitor was selling. Monitor was crushed by the single dominant force in today’s marketplace: the customer.