A new world warfare

I don’t often write about dangers as I am by nature, optimistic.  However this recent video article by Fast Company about Stuxnet is too compelling to ignore.  http://bit.ly/mMPZUg

In the article Cliff Kuang describes how the Stuxnet virus works and concludes:

There’s a powerful, under-reported takeaway here: The Stuxnet virus, having already done its job, now enjoys a scary afterlife. Its code is available online for anyone to look at and play with — and keep in mind, this is a virus capable of shutting down entire power grids. Could hackers re-engineer the virus to other ends, posing far greater threats to the international economy?

In 100 years, historians will probably look back at Stuxnet’s emergence as the Trinity Test for a new age of warfare — a harbinger of danger in an uncertain era.

It would seem that this virus has taken infection to a much higher level of sophistication.  It’s unclear as to whether we are ready for it.

Behavior disruption implications

So, how long before we see viruses:

• that transfer monies from one account to another
• that open up bank records or even vaults
• that gain access to ATM machines
• that capture internet credit card information
• that take down internet services like iTunes or Amazon.com
• that access government secret files
• on our favorite apps as sleepers to capture credit information on our mobile devices.

Should any of this happen, even in a small way, e-business would suffer tremendously.

It’s not a happy signal.

Given the risk level and underlying uncertainty of where’s it’s headed uncertainty it is a signal I believe we all should monitor for further developments .

Does anyone know who is tracking this phenomenon?

Thanks you for visiting http://ennova.ca

Learning-based experimental design reduces risk

No-one is destined to be a me-too player. We can be game changers.

The third in a series of posts about how businesses can own their future.

Here is what we have covered so far.

1. Game Changing Part 1 – Analyzing the Future
2. Game Changing Part 2 – Sensing and Adapting

In this post we use a Ted Talk presentation to showcase how learning-based experimental design reduces risk.

It is also a very compelling story.  Let’s hope our children experience it soon in our schools.

Observations

Some observations from that experience

1. He took his idea and tested it one piece at a time.  What will children do if given a technology was the first test.
2. He did not interact with the experiment.  He left the children alone to discover on their own.  Good designers do the same thing when they observe, without asking questions, how people use products.
3. Learning was his agenda.  When he had expectations (the children would fail the bio-technology) he did not influence the experiment.
4. He formulated his hypothesis as the experiments progressed.  Education is a self organizing system, where learning is an emergent phenomenon.
5. Based on the hypothesis that emerged from the experiments he then built his program/technology.

Good Learning-Based Experimental Design

Based on the above here are five characteristics for good experimental design.

1. Break ideas into small pieces and test independently.
2. Focus on learning as the outcome.
3. Observe but  interact as little as possible to get clean data.
4. Build your hypothesis as it emerges from the learning.
5. Create your working prototype from the emergent hypothesis.

Reduce Risk

In conclusion, good experiment-based design reduces risk.  By building a working prototype based on emergent hypothesis gained from in-field learning, we ensure much greater chance of success.

Questions to consider

1. How well do the people in your company demonstrate these behaviors when they create new offerings?
2. What percentage your new offerings in the last 3 years failed to meet expectations for market share and growth?
3. What was the cost of your failed offerings?
4. Can you afford not to take a learning approach?

Thank-you for visiting www.ennova.ca

How to shape a publishing future

Here is an idea that builds on the concepts I’ve talked about to shape our future.  Enjoy.

JE: Hi I’m Jim Ellis and I’m the Managing Editor of Business week. I’d like to welcome you to today’s podcast. This podcast is the fourth in a series of six where we showcase the most intriguing innovations from 2014.

I’m pleased to have on today’s show Frank Nedamyer, President of CenterICE.com. For listeners on our show CenterICE is the New Sports fan experience that has swept the National Hockey League over the last three years.
Welcome Frank I’m so glad you could be with us.

FN: I’m happy to be here.

JE: Frank when I called you in February to inform you that our innovation team had selected you and your organization as one of the winners of our “Most Intriguing Innovators Award” I was thinking about CenterICE. Yet just two weeks ago you made an announcement about the NFL. Can you tell us a little more about that?

FN: I’d love to Jim. We’ve just signed an agreement with the NFL to create a similar fan experience for their fans which we’re going to call CenterField. It’s a 10 year contract to work with the teams using our proprietary “Fan at the center” technology. We expect to complete the roll-out in August just prior to the start of the season.

We’re especially excited because the NFL is the premier sport enterprise in the world and will help us migrate this platform to every major sports franchise.

JE: How did this all get started? If I remember correctly you started this back in late 2011 correct?

Disruption

FN: Actually, Jim it was earlier than that. It began in early 2010 when I was working at corporate headquarters and was given the task of developing a customer focused innovation capability. At the time we had a number of different companies one of which was the Jersey Publishing Company with a number of broadsheet newspapers as our core properties.

As happened to all of us in the newsprint business it was a time of great disruption. Craigslist had substantially reduced the most profitable source of revenue – classified ads. Page advertisers were leaving to go to Google ads where they could key word and location target. Readers, especially the younger generation were using alternative source of information like blogs.

All of this disruption in a time of increasing costs.

At the time of course, we were on the web with an on-line offering. It was successful enough as it goes, comparable to others, but we couldn’t seem to crack the nut. Our trajectory was not one of sustainable high profit growth. And then to top it off, the iPad was launched guaranteeing that further disruptions were coming our way. As you can imagine it was not a fun period.

JE: Is that when you first started to innovate?

FN: Not exactly. We had developed a very robust internal innovation process back in 2001. We had been very successful with it in the ensuring years, at least in terms of internal efficiencies. However, it had never really yielded anything of any significance in terms of growing the top line. They were mostly expense based innovations. So we knew something wasn’t right and started in the spring of 2010 to inform ourselves of what capabilities were required to innovate on the top line.

JE: This sounds very interesting what did you learn?

FN: Of my gosh all kinds of things. Fundamentally it’s a mindset change in how you look at your business. But if I was to summarize this change, three things really stood out. First, to create a customer-focused, fast-growing, profitable innovation you need to disrupt. And right there, that word, disrupt, was a challenge. We don’t normally think about innovation as disruptive. But it is.

And by disruption I mean you need to put something into the market that allows a new behavior to emerge in your target population. Here’s an example. When you looked at what we, and every other publisher, were doing on-line, it was copying the paper experience over. Sure users could search, and print, and read some blogs. But basically, everything was very similar. So from a user standpoint there was nothing really new in what they could do.

Read the paper, or read it on-line, it’s all the same – passive interaction with content. That’s why those models never really attracted many users. And without users, advertisers won’t come.

JE: Very insightful. What else?

Business Model as Core Capabilitites

FN: The second big insight we had was how to look at our business. We learned to stop seeing the business as publishing but more from a capabilities standpoint.

Rather than framing all our conversations about innovation and top line growth from a publishing bias, we learned to frame it from a core capability perspective. For us, what we excelled at was gathering and assimilating information and turning it into stories and insights very rapidly. That was our core.

JE: Is that when you came up with the idea for CenterICE?

FN: Almost, there was one more piece left. Our last big learning was about motivations. Identifying a target group of people who have deep seated motivations to explore and express themselves in new ways. Then figure out what we now call the sweet spot.

Choose a target you have familiarity with including their motivations, and using your core capabilities aligned with creative use of technology, create an environment where they can do things they have never done before. Create an experience that they could never do before because your offering did not exist.

It’s like the phone. No-one ever knew they needed to be able to connect with people across town instantly until the phone arrived. Once it showed up people started behaving differently. They called instead of writing.

No-one knew they needed to make videos to share with their friends and family until YouTube arrived. Now 13 hours are uploaded every minute. That‘s the equivalent of 57,000 hours of Hollywood feature length films a week.

It goes all the way back to our heritage. No-one knew they needed fire until our ancestors figured out how to capture it a move it from place to place.

Take any significant innovation, from fire, to the printing press, to electricity, to the iPhone, to CenterICE, and it always follows the same pattern.

JE: So what was the thinking behind CenterICE?

FN: Well, when we looked at the business through this new disruptive lens a couple of targets immediately came to light: Sports fans and Political followers.

Both groups are passionate about their fields. We choose Sports fans because the risk was lower and they have lots of fanatics. Fanatics can’t get enough.

And because a large portion of fans are of younger age they would be open to new experiences. The key motivational factor was fans don’t want to just cheer. They want to coach! Go to any bar and the conversations are about what the coach should have done. So, that’s the experience we created for them.

We started in late 2011 with an on-line site where they could simultaneously watch the game and provide live analysis.

This was supported by our top sports columnists who were live analyzing the game as well. All the participants rated the views provided by both the pro journalists as well as the fans “scribes”. Overtime, the fan journalists who did well, as voted on by the group, achieved status rankings ranging all the way from Newbies up to Pro.

It really took off when we signed an agreement with the Philadelphia Flyers and they invited the “Pro” writers to interview the players. Fans went crazy trying to achieve the Pro status and volume on the site grew.

JE: How were you making money?

FN: Initially it was just advertising. In the beginning it was free for the fans. But, because we had their complete profiles we were able to charge premium rates to advertisers to have access to our site. After the Flyers joined we went into joint ventures on product placement etc.

Now, we’re ruining journalist boot camps on-line for wannabe sport journalists and we charge for that. Finally, to have access to the behind the scenes information we charge premium subscriptions to fans. All our “Pros” get that free. Those working up the ranking system, have to pay. It’s a multi-tiered monetization scheme.

The sports fans love it and the teams love it as we are delivering to them more dedicated fans. That’s why in 2014 we were able to negotiate with the NHL commissioner a league wide offering.

JE: So why did you start with hockey?

Risk Mitigation

FN: It was part of our risk mitigation. Look, the NFL is the 800 pound gorilla in the room. You don’t want to bring an idea to them that’s not been fully worked out. The NHL on the other hand is the weakest of the major franchises. That made them more open to our concept.

JE: Weren’t you worried about the other leagues stealing your idea once you got going.

FN: Once again our risk mitigation strategy kicked in. We created an unassailable patent wall around this offering. I can’t get into the particulars but it was a three year effort. Some leagues tried but soon found out it wasn’t possible to breach it.

JE: What about “Behind the Bench”?

FN: That was in 2013. By then we had 237 fans who had reached pro status. And boy, were they fast and good. With the instant feeds between them and a digital based collaboration site they could jointly analyze a game in real time.

Imagine, two hundred thirty-seven experts all working at the same time collaboratively. We started to recognize that they were seeing things that the coaches behind the bench couldn’t see. So we approached Peter Laviolette, the Flyers coach and ran a little pilot program. Five minutes before the end of the period a representative from the group would debrief someone from the coaching staff.

It was slick. They had video clips and diagrams and the whole lot. Then they would pass it on to the coach to use or not use as he saw fit.

Remember in April after the game when the Flyers made it into the play-offs and Peter mentioned that he owed a lot to the CenterICE team for their analysis between the second and third periods? After that endorsement our fan base jumped 30% in the three teams we had platforms for. As they say in hockey, sometimes the puck bounces your way.

JE: How about building it out. How difficult was that?

FN: We stumbled a bit in the beginning until we realized that you can’t take people who have a fulltime job in traditional publishing and expect them to work on an idea as different as this in their spare time. Not only is it too stressful to balance both, you inevitably put them into a conflict of interest. Do I work on sustaining the publishing business or work on this new business that might hurt the publishing business? That’s a trade-off you can’t ask people to make.

What we did was create semi-permanent innovation teams who reported in to head office and were tasked to take an idea from prototype to pilot very quickly on a (mostly) full-time basis. While the operating groups complained about taking their people away we were able to negotiate our way through this.

What was interesting in this process is how we found ourselves unlearning a lot about risk. Traditionally, we had applied traditional business risk principles to innovation. In particular, eliminate uncertainty. From a practical standpoint what that meant in the past was if the idea was bold, reduce the “boldness” of the idea so it reduces the uncertainty and hence the risk. That’s how you end up with an on-line offering that mirrors the paper version.

What we learned to do successfully was to keep the idea bold and therefore keep the uncertainty high. BUT, use other techniques to reduce the uncertainty.

All in all, customer-focused innovation is very different. And while we bolted the new system on to our tracking and creativity processes that we had in place, we learned that it takes a different mindset and structure to make it work.

JE: So what’s next for you?

FN: As you know we’ve started dialogues with NBA and MLB, and have had representatives from both the IOC and the FIFA World Cup approach us.

JE: Well on behalf of our listeners I’d like to thank you for joining today’s show and being one of the 2015 most innovative companies.

FN: My pleasure Jim. We hope to see you at the game and CenterICE.

I hope you enjoyed the story.

Thank you for visting www.ennova.ca

In an earlier post I mentioned that Jonathan Burns and myself were given permission to blog about a web 2.0 value disruption project that is currently underway.  This post is number two in the series that is expected to run until mid May.

Value disruption project posts

1. Introduction

Note: Clients names are kept confidential and/or disguised.

Value Disruption Project Scope

In November of last year we completed our three stage web 2.0 solutions program and delivered to our clients a project plan to develop three web 2.0 applications: expert blogging, internal collaboration, and a friends of ___ site.  We used a wall sized Implementation Canvas^TM to develop, with their team, strategies for reducing the risks and optimizing the rewards of the project.

A canvas to manage risk and rewards

Project Scope Items

The power of the canvas is that a team can simultaneously see all the strategic elements of a project.  And the design of the canvas forces users to adopt a risk-reduction, reward-optimization approach.  We completed a canvas for each web 2.0 application: Blogging, Collaboration, and Friends of___.

In terms of project risk:

• Blogging is the simplest of the applications with the least ambiguity and hence uncertainty.
• Collaboration is middle of the road and
• Friends of ___ is the  most uncertain and hence the most risky.

Here are highlights of three areas from the Collaboration Implementation Canvas: Risk, Rewards, and Uncertainties.

Collaboration Risks

• We can’t get the staff to use it so people view the project as a failure
• ISO compliance issues
• Not sufficient administration of system security
• We get the balance wrong on the scale of openness/lack of structure/ease of use and security/ISO compliance and end up with a tool that’s too complex and hard to use.
• There is unintended disclosure, we are highly regulated.

Collaboration Rewards

• Get projects done faster
• Improved productivity, find information faster -  Reduce email
• Keep track of what projects we are doing (macro level – not the details)
• Knowledge transfer to new staff
• Do repeat projects faster
• Retain IP of alumni
• Increase employee satisfaction
• Better logging of who edits the docs, revisions vs current “I drive” method
• Visible lessons learned
• Concurrent report writing (faster!)

After completing the risks and rewards they analyzed them to determine what they didn’t know.  In other words, they determined what they were uncertain about.

The challenge on all projects is not what you know, it’s what you don’t know.  So mapping the uncertainties, what you don’t know, is a critical step to reducing risks (as well as making sure the rewards are realized).  So, instead of making assumptions, determine what you don’t know and then go find answers to those questions.

Collaboration Uncertainties

• Who controls the level of access?
• How do we fit into the ISO document management requirements?
• What are the rules for a document becoming ISO official?
• What are the roles of the people in the walled-off garden?
• How do we migrate old technology?
• What are our metrics of success?
• How will this change our work-flow patterns?
• What projects types will we pilot on?

Mapping these uncertainties allowed them to structure the project, select the appropriate team and develop an initial set of actions to resolve the uncertainties.  They created a starting point.

Learning

Here’s what we found after using the canvases.

1. Each team was on board with the project.   The ability to see all the project elements in one place made them feel more comfortable that we, collectively, understood all the risks and had a good starting point for how to resolve the uncertainties.
2. It was a quick process.  The team was able to develop three implementation plans in about 4 hours.  Visualization of the entire project enabled the quick speed, in a team of 12 people.  (All 12 people agreed.)
3. The CEO, David L. appreciated the focus on risk management.  His role is to move the organization forward without exposing the organization to undue risk.  Explicitly determining the risks, as well as the rewards,  prioritizing them into the greatest areas of uncertainties, and then developing plans to turn uncertainties into known quantities made him feel confident his team has a deep handle on the issues.  When the CEO feels comfortable with the team that energy translates into enthusiasm.
4. Explicitly dealing with risks and their uncertainties brought us together as a team.  As we worked through the different applications we started to see how each individual had a contribution to make in dealing with the uncertainties.

Top Three Tips

Here’s my top three tips from this experience.

1. Explicitly focus project planning on risk-mitigation.  Pay particular attention to those risks (and rewards) that are uncertain.  Uncertainties represent the biggest failure point, especially in projects with high degrees of ambiguity.  You can learn more about risks and managing ambiguous projects that here and here.
2. Use a blank wall or wall canvas to map the project.  It makes all the elements visible to everyone so  conversations become more directive and integrative.  If you’d like to use our canvas, contact us at iCanvas@ennova.ca
3. As a seller of services, embracing risk is powerful.  The reason clients most often don’t do projects is because they legitimately see risks that they don’t know how to deal with.  Putting your team and their team together to explicitly discuss the risks and develop solutions for mitigating them is the most creative way to resolve this roadblock.  If you and your client team can’t find a way to mitigate the risks then you shouldn’t be doing the project anyway.

What risk mitigation strategies have you used?  What kinds of ambiguous projects do you run?  What other topics would you like us to blog about in this project?

Thank you for visiting http:ennova.ca

It’s all about uncertainty

In a world of increasing commoditization we are forced to consider ever more ambitious and outside-the-norm ideas.  With that comes greater ambiguity and risk.

In an earlier post we discussed types of  risk.  It’s time to return to that topic and discuss ways we can reduce risk when implementing change in projects which contain heightened ambiguity.

The knowability of risk

The conversation in the previous post asserted that not all risks are equal.  Some risks we know a lot about.  For example, a cola manufacturer producing another flavoured drink pretty much knows the risks involved in launching the new product.

Risks such as:

• expected market demand,
• packaging alternatives,
• amount of required marketing spend,
• distribution strategy,
• etc.

have been solved in the past so they know the kinds of questions they need to answer and how to best find those answers.

Having done it many times they have developed standardized procedures for asking and answering these questions – standard roles and procedures that speed them to optimal results.   In cases such as these, the risks are largely knowable.

Knowable Risks

What we will explore now are situations where the risks associated with change are unknowable.  For example, imagine the same cola manufacturer now wants to allow consumers to help suggest and select new cola flavours through a web 2.0 application like this one.  The company has never done anything like this before.  It’s a new experience for them.  Consequently, they have little knowledge to draw upon to accurately identify and assess the risks and rewards.  No procedures exists.  No standard list of important questions to answer has been developed and vetted overtime.  They don’t know what they don’t know.  The risks themselves are uncertain.

Uncertain Risks

Organizational reaction to new ideas

Many organizations when faced with an outside-the-norm idea reject it.  They do so for any number of reasons.  In our experience the reasons boil down to a risk-reward calculation and the certainty, or in this case uncertainty, attached to it.

1. They have no experience to draw upon so they have a hard time assessing the benefits.  While they can clearly imagine the benefits, (customer selected products increase probability of launch success) their lack of experience makes them uncomfortable that the imagined benefits can be realized.  By comparison to other projects, they are uncertain about the benefits.
2. We are predisposed to focus most heavily on the risks of a new situation rather than the rewards.  Our evolutionary history (defenseless apes in the Savannah) selected for high risk-sensitivity.  When confronted with a new situation you’d better proceed cautiously.  That’s as true in the boardroom jungle as it is in the Savannah.

So, it’s entirely understandable that outside-the-norm ideas are regularly dismissed.  So that begs the question, in today’s world of increasing commoditization when the need to innovate is great, how do we start and run projects that deal with highly ambiguous situations?

Tips for dealing with ambiguous projects

Here are some starter tips for running projects that contain high ambiguity.

1. Manage uncertainty – not time-lines.  Start by recognizing that these kind of projects are different than the norm.  It’s much more about mapping the uncertainties and learning about them than it is about managing time-lines and milestones.  When you don’t know what you don’t know, well articulated and detailed project plans are not going to help (too many critical assumptions factored in).  Creating a reasonable starting point of what you know and don’t know, and then running low cost experiments to learn about the uncertainties (what you don’t know) is how to get started.
2. Embrace diversity.  Learning accelerates when people with diverse opinions and experiences are brought to play.  In the example above, the company could and should include existing consumers as part of their team.  They will provide insights about what they, as consumers, would want to experience.  Diversity keeps you from spending too much time going down false trails.
3. Go fast and slow at the same time.  When running experiments to uncover the answers to critical uncertainties get out there as fast as you can.  A good rule of thumb is 60 days.  Test roughed-out ideas with real people very fast.  Counteract that with the expectation that overall, the project will likely run slow.  It can take many months and iterations before the real answers surface.  Hence the need to test rapidly.
4. Review learning.  Finally, keep the momentum high by running regular (weekly) learning reviews. Sharing the learning on a regular basis keeps team members focused and makes each individual’s contribution that much more robust.

Questions business owners and executive team leaders can ask

Here are some question you can ask of yourself and your team.

1. How comfortable are we in discussing ideas that fall outside the norm of our experience?  How quick are we to judge?  Is our judgement focused too heavily on the risks?
2. How well do we as a  team or company deal with ambiguous ideas?  Do we devote sufficient time in exploring the uncertainties that arise from it?
3. What is our capacity to develop and execute low cost experiments?  Do we have procedures in place?
4. When dealing with uncertainty how well do we embrace diversity?
5. How well do our habits in selecting team help us in creating a wide range of potential solutions?
6. How well do we balance between aggressive targets for completion with sufficient allowance for learning and prototyping?
7. How well do we create and maintain momentum?   What is our capacity for tracking and sustaining project implementation?
8. How well do our reviews focus on learning?  Are we too focused on time-lines at the expense of managing risks through learning?

We’ll expand on this topic of implementing ambiguous projects in future posts.

Thank you for visiting www.ennova.ca

Risk is a function of the severity of an adverse event times the probability of the event occurring. A lightening strike is often deadly (very severe). Luckily they happen infrequently. However, a third component influences risk. That is the degree to which a risk itself is knowable.

Lightening strikes are easy to know. We can measure the voltage of typical lightening strikes, and they don’t vary much between strikes (all have high amperage). And because we can understand the risk (i.e. the risk severity and occurrence frequency does not vary much) we can develop standard mitigation responses and then follow-up. Lie down when lightening occurs, don’t hold metal objects, stay in your car where the rubber wheels insulate you, are all mitigation responses.

The steps to mitigate risks in this environment are straightforward.

1. Aware of risk
2. Assess risk
3. Scope the mitigation response
4. Implement mitigation
5. Monitor

But what do you do when the risks themselves are highly variable? When there is a great deal of uncertainty about the risk itself. When the risk itself is unknowable.

For example, Apple launched the iPod in 2003 featuring a device that stored and played songs in MP3 format, where they gave away the software to manage it for free, and were planning to sell the songs for $1 through their Apple Store. They did this in a market dominated by large players who owned the rights to popular songs, where their biggest competitor for selling songs was illegal downloading for free, with a technology that had not yet broken through into the mass market.

Here’s a partial list of highly severe adverse events they faced.

1. Could they convince the owners of the songs to sell them rights to distribute the songs?
2. Would anyone buy the songs given they could download them for free?
3. Would anyone buy the iPod?

Any one of these risks coming to pass would cause a catastrophic failure.

That’s what makes this venture so risky. It’s entirely unique. Nothing about what we know about launching new products can help us predict whether this particular venture will succeed or not.

It’s the uncertainty of the risk itself which multiples the risk and makes it so terrifyingly large. It’s the reason why you can buy insurance against lightening strikes on your building, but you can’t buy insurance for the failure of a product launch. The former is knowable, the latter is not.

The key then for managing in this environment is how you deal with the uncertainties. In projects of this type don’t focus on managing timelines.  Instead, focus on managing the uncertaintites around the risks.

Tips

1. Conduct rapid prototyping to learn your way through the uncertainty.  This means you need to keep your idea and business model flexible.  As you learn your way through the uncertainties you will change your business model as you go.
2. Prioritize your uncertainties.  Which ones are at the root of the problem?  Solve the root uncertainties first. Is it access to songs or people buying?  Does one influence the other?

We’ll return to this topic in later posts.

Thanks for visiting http://ennova.ca