Every year I launch a start-up venture.  They often fail.  In fact, here are a couple of my favourite failures:

ArtPension would have given people a tax-efficient “cheque book” for buying things they love like fine art, wine and classic cars in their pension fund. It was great timing.  People had fallen out of love with equities generally and pensions specifically following a series of market crashes and mis-selling scandals.  I was launch-ready with regulatory approval, an operational platform and a marketing plan.  Then the UK government changed the regulations, making the business impossible.

365 Memory sold the cheapest digital memory anywhere in the UK.  We were the price leader for three reasons. Firstly, we had great supplier relationships in Taiwan.  Secondly we were ferociously tax efficient.  Being Jersey-based, the business didn’t need to charge VAT. Thirdly, we had very little money tied up in stock because of our drop-ship, factory direct model. Unfortunately we died because of failed Jersey-based logistics and dispersed management.

Failure goals and the “Dyson myth”

There’s a toxic myth about entrepreneurship.  You could call it the “Dyson mythology”.  It goes like this.

James Dyson, the inventor of the Dyson vacuum cleaner, gambled everything he had on his business.   In five years, he produced 5,126 failed prototypes, mortgaged everything and was on the verge of bankruptcy.  Salvation came with a chance contact from a small Japanese company.   The resulting  vacuum cleaner went on to sell more than £2 billion worldwide.

James Dyson is a hero.  He fought hard, broke the rules, never gave up, risked everything and succeeded hugely.   History is shaped by people like that.  But the great are the enemy of the good.  The problem is that people like James Dyson make it seem like all-or-nothing risk is what entrepreneurship is all about.

Learning to dream again… safely

I have a personal goal to lose 20% of what I earn every year until I fail to succeed at losing it.  Having a failure goal, takes away the fear of not succeeding.

Research on entrepreneurship says that on average one in ten start-ups succeeds.  So giving up on first failure isn’t a great way to do it.  Oddly, that’s often the mistake that corporate innovators make too.

That specific 20% is important too.  It means that I don’t bet the farm and can walk away from failures with my home, happiness and marriage intact.

Why every employee should be a spare-time entrepreneur

There are three reasons why every employee should be a spare-time entrepreneur.  What’s more, enlightened companies should encourage it.  Here’s why:

1. Learning to dream

Doing a start-up reminds you how to dream, imagine, create and invent.  There is no company in the world that doesn’t value those qualities.  But too often, process-centric corporate cultures don’t make it feel that way.  Quite simply, being an entrepreneur makes you a better employee.

2. Better than an MBA

Start-ups teach you priceless lessons about how to get things done and about how to manage risk, plan and deliver.  They give you the ultimate personal responsibility.

3. Better than a pension

Many people in employment are racing their first coronary to a subsistence retirement and a newspaper round at 80 years old.  The risk-return arithmetic on start-ups is a lot better than on pensions ; so long as you don’t bet everything on a single throw.

In the blood?

Some people say that being an entrepreneur is in the blood.  Possibly, I fall into that category since I set up my first (successful) organization when I was 19.  But actually, I think it’s more likely to be a question of choice.

So this week, I’m really excited to have set up a new company…more on that soon.

Related posts:

1. Old-school hip-hop and a pretty strange lesson in customer engagement
2. After Eureka: 7 questions to test innovation for big and unreasonable profit potential
3. Five ways that customer service fails… and what to do about it

My iPad arrived two days ago turning me into a four-year old boy on Xmas eve. Yesterday, a queue of cooing colleagues snaked around my desk. Everyone wants one.

So two days into ownership, this is what I think it means.

1. It WON’T replace laptops … Not yet anyway.

iPad is a device for consuming media, not for creating it.  It’s hideous to type on.  But lovely to browse with.

It’s much nicer to swipe and tap with your finger than to point and click with a mouse.  So whether tablets get physical keyboards or laptops get natural user interfaces, this will change device design.

2. It’s ALREADY the device I want to use for casual surfing.

How did I ever manage without something that’s always on, weighs nothing and doesn’t burn my thighs?  Enough said.

3. It WILL change the way I consume newspapers and magazines.

WIRED magazine on iPad is highly readable and wow-inducing.  It pushes the boundary of what’s magazine and what’s interactive media and for the first time ever I would RATHER have a magazine in electronic than print format.

Talking of formats, I’d much rather read the Financial Times on my little iPad than wrestle with a print broadsheet on the train.

Coincidently, my WIRED magazine subscription got delivered on the same day as my iPad.  I still haven’t opened the paper version.

4. It MIGHT change the way I buy books.

Integrated search, in-line dictionaries and the ability to carry half the British Library in my hand are nice.

But I wrestle with this.  You see, my Mother was a teacher.  My maternal grandfather was a Cambridge academic.  I’m co-author of a book (here … thank you for asking).  Books are in my blood; almost religiously.  I love the novelty and utility of eBooks.  But they don’t take me back to when I was six years old and my Mum read poems to me.  There’s almost something sacrilegious about them.

Maybe that’s just generational change-resistance.

5. It WILL make me pay more for media.

Hello iPad.  Goodbye free content?

I know several entrepreneurs whose attempts to charge for online content succeeded about as well as King Canute’s wave management.  iPad apps might possible turn the tide against free content because the experience is so good.

Pricing models for iPad media content are a little Darwinian right now.  They range from The Times £9.99 per month subscription to Men’s Health’s $2.99  per issue to Wired’s free content.  Which pricing model proves the fittest for the iPad environment remains to be seen.  But I personally think it will be disruptive of the free content model.

In summary

Is the iPad useful?  Definitely.  Is it compelling?  Hmm … kind of.  Is it a disruptive innovation?  Possibly.  Is it the end of the laptop?  No.

Now, repeat after me:

I must not blog about Apple.  I must not blog about Apple. I must not blog about Apple …

Related posts:

1. How to time product launches perfectly
2. What the home entertainment industry that never was can teach us about Google and Facebook
3. How to have disruptive ideas

If you need to go to a health clinic, it’s useful to know how long you need to wait.  By giving customers this information, clinics can cut costs by smoothing out service demand peaks.

1. Check the clinic map  (here, or click on the map image).
2. Click a red circle to see a live webcam of the queue at the clinic.
3. Click a yellow triangle to see average and peak queue data.

Related posts:

1. Government innovation and participatory budgets
2. How service teams can inspire product innovation
3. New utility customer service challenges

“Irrational passion is the key change agent of our economy.” – Seth Godin

Right brain frameworks like this one aren’t the key to creating transformative innovation, but they help to polish and explain the idea.

Seven key innovation questions

There are the seven questions to ask about any new innovation:

1. Is the market attractive?
2. What customer needs does the innovation meet?
3. What’s the proposition?
4. How can we lock out competitors?
5. Is it do-able?
6. Can it be profitable?
7. Is it strategic?

Is the market attractive?

“I have determined that there is no market for talking pictures” – Thomas Edison, 1926.

The market is a set of external, immutable forces acting on your idea.  You need to think about:

• What’s the size and value of the market?
• What share is realistically available?
• Is the market changing, growing, shrinking or consolidating?
• Are there any unprecedented changes or discontinuities like new legislation, new entrants, disruptive technology or other tipping points that could transform the market in your favour?

What customer needs does the innovation meet?

“If I had asked people what they wanted, they would have said faster horses”, – Henry Ford.

But ultimately, what Henry Ford’s customers needed was to get places faster.  The Model-T met a strong, unvoiced customer need.  Ask yourself:

• Are my customer needs clearly defined, strong and unmet?
• Are there unvoiced customer needs?
• What’s it worth to the customer to meet those needs?

What’s the proposition?

A proposition describes the sum total of benefits that a customer gets from a product or service.  For me, one of the ultimate proposition statements of all time was Apple’s “one thousand songs in your pocket” tagline for the first iPod.  To develop a great proposition, ask:

• Is the proposition clearly defined?
• Does it meet strong customer needs?
• Is it different from what competitors offer?
• Is it interesting?

Can I lock out competitors?

It’s not enough to be a first mover if you have powerful competitors that can overtake you.  To lock-out competitors, ask:

• Is the innovation patentable?  Or is there any other intellectual property that can’t be substituted?
• Can I use or build a powerful brand?
• Are there any scale economies and can I get big fast enough to benefit from them?
• Do I have an insight, knowledge or skill that’s rare and significant to the innovation?
• Can I build exclusive partnerships?

Is it do-able?

Imagination often exceeds capability.  See my post on premature genius.  To avoid premature genius, think about:

• Who needs to be asked what to understand if it can be done?
• Are there precedents that suggest it’s feasible?
• Can it be done at reasonable cost?

Can it be profitable?

As Gary Hamel observed, “growth is the scoreboard, not the game”.  Profitability is the outcome of innovation.  But, when it comes to drawing up forecasts and valuations ask:

• What businesses are comparable?  How much do they make and what are they worth?
• How risky are the cost and revenue streams?
• How many revenue streams does the innovation generate?  Generally, the more revenue streams, the less risky is the idea.

Is it strategic?

If you’re working in a big company, you’ll need to answer this too.  Strategy is either brutally simple (if it makes money, it’s a fit) or inscrutably complex.   Many strategy academics, take a resource based view, which means answering:

• What core competency would the venture deploy?
• How does it fit or leverage brand or distribution strengths?
• Does it use proprietary processes, skills and know-how?

Be a storyteller, not an analyst

“Innovation is not the product of logical thought, although the result is tied to logical structure” -Einstein

Use this framework to shape and develop your thinking but not to constrain it.  When you communicate the idea, use the facts and analysis.  But don’t be limited by them.

Be a storyteller, not an analyst.

Related posts:

1. How service teams can inspire product innovation
2. How to have disruptive ideas
3. How to time product launches perfectly

The problem is that service is complex, cross-functional, rational and emotional.  In our experience,  there are five archetypal failure points of service management:

Five archetypes of customer service failure

1.  Drinking from the fire hydrant

Problem: High volume of unwanted and avoidable customer contact that soak up contact centre resource and add no value.  Most of this kind of contact isn’t caused by the service team.

Solution: A service management framework that makes root cause ownership of unwanted avoidable contact visible, quantified and owned by the function that caused it.

2.  Customer contact evasion

Problem: Managing down high volumes of contact by making it really, really hard for customers to contact us, even if it’s really important to them.

Solution: When avoidable, unwanted contact has been managed out, it’s possible to provide services when, where and how customers want.

3.  Dear ears

Problem:  Insight from customer contact is used to manage operations but not for strategic innovation of the product, proposition and service.

Solution: Analyse customer contact for strategic insight and make sure that senior, strategic executives get direct experience of the voice of the customer.

4. Scapegoat

Problem: Blaming the Customer Service department for problems that are caused by other functions or teams.  For example, the call centre blows up because of an widespread error sent out by the Billing team.

Solution: Identify root causes of service failure and make sure that the functions or departments that cause the problem, also carry the financial cost through transfer-pricing.

5.  Operation successful, patient dead

Problem: Using operational metrics (like Average Handling Time and First Contact Resolution) that don’t necessarily measure things about which customers really care.

Solution:  Implement a balanced scorecard that measures customer experience against brand and which tracks unwanted, avoidable contact.

Related posts:

1. Contact evasion and how to avoid it
2. How service teams can inspire product innovation
3. New utility customer service challenges

As gadgets get smaller, Britain has the largest plug in the world.  A problem, brought to life in this video:

The traditional British plug was invented in 1946.  Why did it take 64 years to invent a better one?  More importantly, why didn’t any of the rest of us have that idea?

Listen to what nobody says

I think the reason is that it’s so hard to find unvoiced customer needs.  No British customer has ever said to a product designer “I’d like a more portable electric plug.”  Not even to the inventor.  Instead the designer, Min Kyu-Choi, had an experience; he scratched his new laptop on its plug.

Their are so many ways to trigger the inductive leaps that create innovative new products.  But for me, the best one is to have direct experiences.  The easy part of that is that we all of us have experiences continuously.  When my alarm goes off, that’s a customer experience.  When I get on the train, it’s a customer experience.  Buying my morning coffee – an experience.  They all come bundled up with  satisfaction and frustration.

The hard part is noticing the response rather than accepting the “how things are-ness” of it.  One of the best ways is to keep a record of what happens – mark up every experience on a timeline and plot your emotional response.

Not taking problems for granted is the first step towards great product design.

Related posts:

1. Is iPad the end of free content?
2. How service teams can inspire product innovation
3. Design for experience, not features

“By means of this remarkable instrument, a man can have the Italian opera, the Federal Congress, and his favorite preacher laid on his own house.” (New York Times, 22nd March 1876, see here)

Facebook overtakes Google, the social web wins

Almost exactly 134 years later (13th March 2010 to be precise) Facebook became the most visited website in the USA, pulling in more visitors than Google.  Last week’s data from Hitwise (an online competitive intelligence agency) shows a quiet, creeping discontinuity:

The graph says  that once we used the web mostly for information; now we’re primarily social users.  So what does that have to do with the New York Times and its prediction of telephone-based home entertainment?

What disruptive technology is really for

It takes twenty years to work out what any disruptive new technology is for.  Disruptive technology has a lifecycle. It’s invented.  A thousand flowers bloom as entrepreneurs and visionaries vie to make their fortunes.  Some businesses fail.  Others succeed.  After twenty years or so the dust clears on a new consensus about what that particular technology was for.

The year 1881 was a good one for French inventor Clément Ader.  At the Paris International Electrical Exhibition, he demonstrated how his théâtrophone system would open up the vast opportunity of a French home entertainment system based on a stereo telephone line.

He wasn’t the only person thinking that way.   In 1893 Telefon Hírmondó was launched by a colleague of Alexander Bell to 60 subscribers.  It’s opening message declared:

“We greet the inhabitants of Budapest. We greet them in an unusual way from which telephone broadcasting all over the world will start its victorious journey.”

By 1907, its subscriber base was 15,000 and it only stopped broadcasting with the Second World War.

Just as we eventually found out what the telephone is really for, last week’s Hitwise data shows that we’re discovering what the web is mostly for.  If the web really is primarily social, that  has big implications for online proposition development.

Things we may need to do more of include:

1. Design based on the needs of communities, not just individuals.
2. Emphasising social functionality as much as content and transactions.
3. Building content that can travel on social networks, rather than driving traffic to your own site.

Related posts:

1. New utility customer service challenges
2. Is iPad the end of free content?
3. 10 management truths for the web age

The SEO money pit

Here’s a personal example.  Yesterday, I paid $299 dollars to Yahoo for a little, insignificant Directory listing for Opine Consulting (which is here, in case you’re curious).

Submitting to the big directories is part of basic belt and braces Search Engine Optimisation (SEO).  However, $299 is a lot of money for an obscure little raindrop of a link in the big, wide ocean of the internet.  For the keyword “innovation” my site is competing against 112 million other pages on Google.  For ‘marketing’, I’m up against half-a-billion alternatives.  For ‘service’ there are just a shade under 10 billion pages.

SEO is at the sharp-end of the global attention famine.  In the SEO arms race, only the biggest juggernauts (and of course the channel owners) can be long-run winners.    The internet is moving towards a globally perfect market and back-links, directory submissions, paid search, and article marketing are money-pits.

Innovation is worth more than cash

Thinking about the SEO arms race, is making me get very clear about these principles:

1. Imagination is worth more than cash.  A resonant idea that people pick up on, creates more exposure than £££s of traditional marketing expenditure.
2. Innovation has no monopolies.  If anything, it’s inverse to size as many large organisations are bound by conservatism and process.  That’s an incendiary thought because of what it means for competition.
3. Innovation can’t be faked.  It comes out of fun, interest and obsession.  Like any right-brain process it’s unpredictable and isn’t confined to 9-5 thinking.  People doing what they love will win in this particular game.

I can guarantee that I won’t be spending much more on SEO.  Watch this space…

Related posts:

1. How service teams can inspire product innovation
2. Old-school hip-hop and a pretty strange lesson in customer engagement
3. After Eureka: 7 questions to test innovation for big and unreasonable profit potential

Public policy paradoxes

KPMG concluded in its report, “The Wolf is at the Door”:

“The public sector has one or two years to draw up plans to radically change their (sic) business models to enable their respective services to be prepared to meet the hard times ahead without compromising on quality of services delivered.”

Insanity, as Einstein observed, is doing the same thing over and over again and expecting different results.  In setting budgets, government has to deal with two awesome paradoxes:

1.  There is a large public expenditure gap…

–        but businesses and citizens retain high expectations of public services.

2.  Tough policy and budget decisions are necessary …

–        But public trust in government is required to consent to tough choices and that trust is at an all time low.

Participatory budgets could the be answer to these problems.  In this kind of budget process, citizens are actively engaged in setting, debating and challenging budget options.  The results are a budget that is properly democratic and properly legitimate.  It fully reflects citizens’  priorities and is worthy of citizens’ trust and consent.

Last year, the City of Cologne won the European Public Sector Award for its participatory budget.  The process was a massive piece of citizen outreach through flyers, internet and call-centres which allowed citizens to view, submit, comment on and prioritise proposals for better spending and saving.   There’s a case study of the participatory budget process here:

With a history of corruption scandals, a €4 billion budget and a million citizens, Cologne is not an unfair prototype for what could be achieved in the UK.

Related posts:

1. Innovation to manage government health service demand
2. After Eureka: 7 questions to test innovation for big and unreasonable profit potential
3. How service teams can inspire product innovation

Customer insight arms race

For £10,000 a report, anybody can buy as much customer surveying, benchmarking, customer ethnography, usability, psychodemographic segmentation, social network monitoring and integrated listening capability as they want.  There are two problems with driving innovation from this kind of insight:

1. Lots of organisations have deep pockets, so the pursuit of a commercial edge through third party solutions becomes an arms race rather than a competitive advantage.
2. These approaches are a step removed from reality.  They’re constructs.   They are to real customer experience what television is to reality or what air conditioning is to climate.

Contact centre Cassandras

By contrast, service teams are the most under-exploited resource for driving product and service innovation out of customer insight.  If this isn’t self-evident, ask yourself the following questions:

• Who spends the day in constant contact with customers?
• Who has most emotional investment in putting right the things that cause customers angst?

Contact centre staff know exactly what customers love and hate.  They experience it viscerally every day.  But, Cassandra-like, their voice is often overlooked in strategic marketing and new product innovation.  Why?  The reasons boil down to a)  narrow service management focus on cost and operations, b) silo’s between service management and marketing c) service staff without the skills, systems or incentives to make a strategic difference and d) physical and cultural remoteness from the Board.  Visually, the problem looks like this:

Service management barriers to product innovation

The most powerful customer insight you’ll ever have?

All of these barriers can be broken down fairly easily, and for far less cost than many customer insight approaches.  Here are four key ways of doing it:

1. Get service agents to listen and probe for what customers are saying about competitors, products and features.  Make sure that this kind of insight can be captured and reported in the Customer Relationship Management (CRM) system.
2. Track service performance against brand values, and not just operational targets.
3. Conduct regular reviews of raw customer service feedback, searching for strategic product and service insight.
4. Give the Board regular, visceral, experience of the customer.  Board members should sit in on the call centre at least every month and should regularly listen to representative recordings of customer contact.

Related posts:

1. Five ways that customer service fails… and what to do about it
2. How to have disruptive ideas
3. After Eureka: 7 questions to test innovation for big and unreasonable profit potential