Management Blog

Whitespace: Innovation - by the people for the people

Lots of people have good ideas. In the shower over the years you've probably conjured up a new invention or product enhancement you believe could shake up an entire market. But you've never acted on this brilliance because it's not your industry, not your normal field of expertise, or simply because you've forgotten all about the idea a few minutes later.

You're not alone. Every moment across the globe millions of consumers have bright ideas that go nowhere. An avoidable waste? Perhaps not.

Imagine if you could tap into this rich mine of creativity and incorporate it into your company's innovation strategy. It's more than possible, argue proponents of the innovation trend known as crowdcasting… it's already happening. And it could be just what your business needs to achieve faster, more effective innovation.

It's all about passion

Crowdcasting proponents believe traditional models of product development rely too heavily on the belief that "our experts are smarter than our customers". A better approach, according to consumer experience consultant Patricia Seybold, is for companies to work shoulder to shoulder with passionate customers to harness, adapt and commercialise their ideas. [1]

The crowdcasting process revolves around the recruitment of lead consumers. These people are not your biggest spenders. Lead consumers are the most passionate end users or would-be end users of your product or service. They might be parents (in the case of nappies), Generation Y men (body spray deodorants), or teachers (educational toys). Different product categories would have very different lead consumers, however the common link between all lead consumers is an unassailable passion for a particular product.

According to crowdcasting advocates, these passionate consumers will not replace on-staff designers, scientists or other experts; they work with your team to co-design new ways of achieving a desired outcome, a process that can generate new ideas, shorten R&D timelines, reduce development costs and foster a direct emotional connection with consumers. Ultimately, the big promise of crowdcasting is a reduction in the failure rate of new products – estimated at 80% for the US market in 2005. [2]

While involving consumers in the innovation processes isn't particularly new, the strength of crowdcasting is new media facilitated instant feedback. In a short space of time companies can collect the ideas of lead consumers via private online communities, development toolkits and online games. Fast feedback means fast innovation, a distinct advantage in response to ever decreasing product lifecycles.

Community affairs

Once you've found your lead consumers you need to engage them. Online communities connect consumer to company as well as consumer to consumer via private chat rooms and instant messaging. By monitoring this communication and measuring the results firms are able to directly tap into the concerns and creativity of their customers.

Hallmark's 'Ideas Exchange' offers an example of a successful private online community. The greeting card and gift company regularly asks its lead customers to offer their ideas, value add to other people's ideas and discuss gift giving or lifestyle related topics. And the pay-off? Hallmark says its online relationship with consumers delivers 10 to 15 usable new concepts each month. [3]

Members of Hallmark's online community don't receive payment for expressing their ideas, they receive incentives such as small gifts. And nobody's complaining. It appears members of this and other online communities are more in interested in helping a brand they are passionate about than being directly paid for their input.

Tools of the trade

Online toolkits are another way to harness customer innovation. Toolkits generally feature easy-to-use design software that enables lead consumers to create, test or modify products. Whirlpool recently estimated it could reduce new product research time by a month and cut expenses by 30 per cent as a result of asking its online community to make design changes to images of household appliances. [4]

When BMW added a toolkit to its website that allowed customers to design cars featuring advances in online information delivery services it received 1,000 responses. According to BMW, the results were impressive with 15 participants brought to Germany to meet with engineers. Several of their suggestions have been utilised in new car prototypes. [5] 

Other online toolkits offer consumers the opportunity to develop the next generation of LEGO toys using 3D design software or the chance to select burrito ingredients for Taco Bell using an animated programme. Or you might want to take your toolkit into Second Life. Sportswear band adidas currently allows Second Life residents to design concept shoes in a 3D virtual environment.

Avoiding the pitfalls

Crowdcasting is not without its risks. Pioneers in the field Stefan Thomke and Eric von Hippel warn that far from being easy ride, companies seeking to take advantage of customer involvement must carefully develop and maintain their online community or toolkit. Creative consumers are smart consumers; they will see through an unfocused approach. Firms should also be prepared to revamp their existing business model and adjust their managerial mindset when equipping customers with the tools to build their own products. [6]

Ignoring the power of consumer creativity is another risk. The stock photography business changed dramatically after iStockphoto enabled 23,000 amateur photographers to sell digital images up to 99% cheaper than the offerings of existing players. [7] Industry heavyweight Getty Images has since purchased iStockphoto for US$50 million to protect their market share.

Fad or future?

Wikipedia, citizen journalism, YouTube… the emergence of user created content has been swift and influential. Is innovation its next frontier? While the practicalities of crowdcasting are still unfolding, one thing cannot be challenged: companies must work intimately with their consumers to gain a deep understanding of their context and motivations. They must pull experiences from consumers, rather than push product at them. Your smartest customers are ready, willing and able to share their ideas. Are you prepared to do more than just listen, but to invite them into your company's innovation inner sanctum?

Six tips for effective crowdsourcing

1. Maintain focus – don't ask vague questions or have ill defined goals
2. Create an 'in crowd' – only recruit the smartest consumers
3. Community matters – build solid, rewarding relationships
4. Tool up – provide easy-to-use tools that bolster creativity
5. Be open – be prepared reveal your business processes
6. Filter effectively – you will receive an abundance of ideas, good filters are essential

Notes

1. Seybold, Patty, Outside innovation: How your customers will co-design your company's future, HarperCollins, New York, 2006
2. Wells, Melanie, "Have it your way", Forbes, 2006
3. Seybold
4. Wells
5. "The rise of the creative consumer", Economist, 2005
6. Thomke, Stefan & von Hippel, Eric, "A toolkit for customer innovation", Working Knowledge, 2002
7. Howe, Jeff, "The Rise of Crowdcasting", Wired, 2006

Whitespace: Are you ready for Second Life?

You're standing next to a floating neon Christmas tree talking to a colleague as she proudly displays her gossamer wings. Another nearby co-worker has ankle length green hair and is wearing a red tutu. A fat little elf with robotic hands joins the conversation. It might sound like you're at a fancy dress Christmas party. You're not. You're not even in the same room as these people. You're at your desk conversing with colleagues in Helsinki, Sydney and Johannesburg via the 3D online experience known as Second Life. Some claim it's the future of the web. Others believe it's an over-hyped geek enclave that shouldn't be taken too seriously. Differing viewpoints aside, one thing cannot be disputed: innovation-focused companies large and small across the real world are watching Second Life very closely. Should you?

Imagine it, create it

Second Life is the offspring of San Francisco-based new media developer Linden Labs. Since going live three years ago over 1.8 million people have joined this startlingly beautiful animated world where members, referred to as residents, are free to participate in a virtual economy, buy virtual land and create virtual homes, offices and objects. Second Life is not a game; there is no overriding objective. According to its website: "Second Life is a 3D online digital world imagined, created and owned by its residents". Each resident is represented by a 3D personalised avatar, a human-like form that can be personalised to look like you or somebody completely different. Navigating the Second Life universe is as easy as walking, flying or teleporting to whatever location takes your fancy.

Creation and reinvention define Second Life. You'll discover everything from ancient Egyptian ruins to interactive jukeboxes, S&M parlours to ice skates that glide perfectly across any surface, all of which have been created and are owned by residents. To achieve this, residents are given access to online software that enables them to build any object imaginable. These 3D modelling applications are as simple as to use as desktop publishing software (although a degree of design savvy will help). Soon after joining Second Life you'll be able to create simple objects like a floating sphere; it might take a little longer to design and build a modernist townhouse. And if you don't want to create an object yourself, you can buy it from somebody else using Second Life's currency Linden dollars or L$ which can be earned or exchanged for real world currency.

The business end of Second Life

There is real world money to be made in Second Life. It's estimated several thousand residents earn over US$20,000 a year (1) by creating and selling residences, objects and experiences; a virtual form of cottage industry. The next – and currently evolving – stage in the commercial evolution of Second Life is the sale of products online that are subsequently delivered to a resident's real world address. Dell is blazing a trail in this area by allowing residents to build customised computers in the company's Second Life store; once the purchase is complete a manufactured version is delivered to the buyer's first life home. A host of other companies, including adidas and Toyota, are encouraging residents to develop (but not purchase) personalised products as part of an engaging brand experience that has considerable product development and market testing value. (2)

Other value adding services that suit Second Life include online technical support featuring 3D product demonstrations or retail stores in which avatars with a resident's real body measurements try on clothes for size. Or how about an optometrist's shop that enables you to see how glasses look on your face from all angles. With relatively low overheads and the promise of immersive experiences, Second Life could be a dream come true for retailers. And don't assume this virtual world is limited to a market of spotty teenage males; the average age of Second Life residents is 32 years old and the gender balance is roughly 50/50. (3)

Collaboration is king

While Second Life's potential as a marketing conduit is substantial, its impact as a tool for workplace collaboration is likely to emerge as this virtual world's most valuable commercial benefit in the short term. Numerous advertising and media companies are setting up offices that allow staff from across the world or across the hall to meet in creatively engaging private meeting spaces. Could there be any better incubator for innovation that an environment built on the tenets collaborative creation? Multinational advertising agency Leo Burnett thinks so. The company is in the process of establishing a Second Life presence that will allow its 2,400 creative workers from around the world to collaborate in an 'ideas hub'. (4)

Second Life offers an inclusive communication channel for interaction with home-based or Third Place staff members that, unlike video conferencing, does not chew up large amounts of bandwidth. It may also lessen the occurrence of mundane or convoluted meetings; Second Life is said to force people to get to the point quickly as communication is predominantly text-based, although expect this to change as voice over Internet protocol (VoIP) starts to make its presence felt. (5)

The jury is still out on whether it's a good idea to meet with clients in Second Life. More suited to brainstorming than formal presentations, there is, as yet, no easy way to display work or deliver reports in virtual form. It can be more difficult to organise Second Life meetings with external parties than staff and the acceptance of this form of interaction depends on the type of company you're dealing with; some clients might see Second Life interaction as cutting edge and in tune with online developments, others may see it as an irreverent gimmick.

Climbing the learning curve

Universities are taking note of the collaborative aspects of Second Life with as many as 60 US institutions establishing virtual presences where academics and students can meet in informal surroundings. (6) Many believe Second Life interaction will give distance education students a greater sense of community and introduce valuable cross-cultural perspectives into course work. Expect to see more academic research being carried out in Second Life. Researcher Professor Peter Yellowlees from the University of California, Davis has recently unveiled a 'schizophrenic' experience in Second Life to give psych students greater insight into mentally illness. (7)

Staff training and professional development are other growth areas. Multinationals American Express and Intel as well as the US retail giant Wal-Mart have plans underway to train staff in Second Life. (8) You can imagine cost efficiencies of conducting a training session with staff across the country in a virtual environment. The innate creativity, informality and role-playing opportunities of Second Life are also a good foundation for coaching and mentoring.

The trouble with virtual

Rushing into Second Life is not without its risks for businesses. Where there's commerce there's crime with con artists and hackers setting up shop in Second Life just like everyone else. Applications known as copybots are currently roaming through Second Life replicating virtual possessions without permission. While relatively harmless, this application may be a precursor of things to come.

It's a mistake to think any organisation is safe from real world issues in Second Life. Some companies have been boycotted or experienced protests in their virtual store or office over their actions in the real world. (9) Security is another concern. While you can restrict who enters parcels of land you own, security measures should always be top of mind when discussing confidential topics.

Nefarious activities aside, size is an issue for this online community. Despite the hype over its popularity, not that many signed up residents visit Second Life on a regular basis. At any one time there are only between 10,000 and 15,000 people (10) – a community the size of Dalby – logged onto Second Life. Of those residents who are logged on, many are more interested in social than commercial pursuits, including virtual sex (although you will need to buy genitalia first) and gambling.

Where to from here?

Prepare yourself for a deluge of predictions that Second Life is the next big thing. You'll soon start hearing how it will replace the Internet as we know it with avatars wandering through visually rich 3D worlds to fulfil the majority of our shopping and information gathering activities. At this point in time there is very little evidence one way or another to suggest Second Life will transform into a commercial powerhouse. However, it must be remembered that this online world is a work in progress. While there are many unknowns, it's safe to say that being part of an environment built on sustained creativity will foster creativity within innovation-focused enterprises. For that reason alone it's worth putting your toe in the virtual water and experiencing Second Life. Who knows what ideas will come to mind while you're talking to your gossamer-winged CIO.

Notes

1. Newitz, Annalee, "Your Second Life is ready", popsci.com, September 2006
2. Jana, Reena & McConnon, Aili, "Second Life lessons", Business Week, 27 November 2006
3. Newitz, Annalee
4. Steel, Emily, "Avatars at work", Career Journal, 16 November 2006
5. Wilson, David, "Weekday warriors", The Age, 24 November 2006
6. Wong, Grace, "Educators explore 'Second Life' online", cnn.com, 14 November 2006
7. Hutcheon, Stephen, "Visual hallucination is all in the mind", The Age, 5 December 2006
8. Newitz, Annalee
9. Jana, Reena & McConnon, Aili
10. "Brands show a lust for Second Life", Brandweek, 20 November 2006

Whitespace: Remote control - the benefits of fostering a Third Place culture

Remote working, telecommuting, flexi-working: whatever you call it, working from home is on the rise, but does it suit every employee?

As some of us are naturally more social than others, the answer has to be no. That's why an alternative, known as the Third Place, is emerging. And it's coming to a coffee shop near you. That is, if it's already not there.

A Third Place isn't a home or company office. It's a physical location - a café, shared office, perhaps even a 'work club' - that gives your staff greater flexibility in a world dictated by speed and rapid change.

The term itself was popularised by urban sociologist Ray Oldenberg in his 1999 book The Great Good Place which described the essential community building role of informal public spaces such as cafes, coffee shops, bars, bookstores and hair salons. (1)

The corporate world has since commandeered the phrase to label the concept of allowing staff to choose to work where they feel most comfortable, versatile and creative.

But before you start visualising a people-free office with tumbleweeds blowing through the corridors, it's worth noting that the adoption of a Third Place culture does not signal an end to the company workplace.

Some staff may work from a Third Place once a month, some might work remotely once a week, others might always work from their Third Place. Certain employees might not feel comfortable about the Third Place option at all, preferring to work exclusively from the company office or remotely from home.

Whatever the mix, working from a Third Place is an alternative that can help you foster and hold onto talent in the face of ever-increasing skills shortages. It can also lower overheads, broaden labour market opportunities and bolster productivity.

It's all about job satisfaction

The benefits of remote work were recently quantified by the European Union's Sustainable Telework survey (2), a study that measured the economic, environmental and social impact of off-site employment in five countries.

While this research did not look specifically at Third Place workers, it found remote workers in general exhibited higher productivity, recorded less sick days and enjoyed greater job satisfaction than their cubicle bound colleagues.

In the UK, the absentee rate of remote workers dropped by around 70% with nine out of 10 employees saying they enjoyed a better work-life balance despite actually working longer hours.

The survey also found that remote workers went about their jobs more creatively with 90% of BMW's remote workers suggesting their take up and implementation of new ideas had improved.

Remote work is fast becoming a mainstream practice. Research conducted in the US by AT&T estimates that over one quarter of American companies allow more than 50% of their employees to work from home on a regular basis. (2)

Home and away

While working from home is a perfect fit for some, it leaves many feeling isolated and in desperate need of a daily dose of social interaction.

Neither home nor office, Third Places can offer the best of both worlds. They deliver on environmental buzz and social contact yet are free of household distractions. And because these remote work destinations are chosen by the worker themselves you can be sure it will be an environment they like.

An employee's Third Place will generally be close to their home, perhaps a healthy walk or bike ride away. This proximity diminishes unproductive commuting time, lessens our reliance on fossil fuels and reduces greenhouse gas emissions.

Encouraging staff to participate in your Third Place culture can also help alleviate the burnout inducing problem of overworking that often occurs when the distinction between home and work is blurred. (3)

And as much as you'd probably prefer not to think about it, a Third Place offers a contingency plan for your business to continue running in the aftermath of a natural disaster, terrorist attack or pandemic.

Making Third Places work

Communication is the key to developing a successful Third Place culture at your company. That's why you'll be visiting your workers' Third Places on a regular basis... not physically, but virtually.

Technological innovation and the roll-out of ubiquitous wi-fi broadband will enable video calls to provide the physical presence managers need to adequately engage and support their staff.

Video calls will be the communications tool of choice as they offer an enhanced sense of 'being there' with face-to-face interaction enabling you to quickly and succinctly read non-verbal cues.

While video calls aren't particularly impressive at their current stage of development, they will become a powerful communications alternative as image quality and software interfaces improve.

A word of warning: You will need to be mindful of how confidential issues are communicated. One solution is to give Third Place staff plenty of warning regarding sensitive topics thereby enabling them to move to a 'safe' area if necessary.

In the US, some shared Third Place workspaces or 'work clubs' feature dedicated 'cone of silence' areas and quiet rooms. (4) Perhaps these will be standard features of future Starbucks outlets or even the pub down the road.

The Third Place checklist

To make a Third Place culture work for your organisation:

1. Carefully evaluate which positions and people are suited to remote work

2. Invite participation, don't order it

3. Schedule in regular face-to-face time to ensure remote staff feel supported

4. Make sure workers have access to reliable, secure communications tools

5. Regularly monitor and evaluate the productivity of Third Place workers

6. Make communications training available to avoid lapses in confidentiality

7. Keep your team connected with a combination of real world networking and new media facilitated contact (e.g. instant messaging and blogs)

8. Ensure your organisation has a strong sense of corporate identity that is continually filtered through to remote workers

The Third Place trend is worth keeping an eye on. Next time you walk past a coffee shop on a workday afternoon see how many laptops and business meetings you can count. This time next year that number will probably be double or more as organisations come to realise that even a small injection of workplace flexibility can prove the odd adage 'a change is as good as a holiday'.

Notes:

(1) http://www.pps.org/info/placemakingtools/placemakers/roldenburg

(2) http://www.teleworkconsortium.org/the_remote_working_revolution.pdf

(3) http://www.careerjournal.com/columnists/workfamily/20060828-workfamily.html?cjpos=home_whatsnew_minor

(4) http://www.networkworld.com/net.worker/columnists/2004/0614kistner.html

Whitespace: Is MySpace your space?

By Mark Fowler

It's better than even odds that you use Google as your primary Internet search engine. And as a reader of AIM's Whitespace it's also likely that you are a Baby Boomer (aged between 42 and 60).

It is also possible that you haven't yet picked up on the stratospheric global ascent in popularity (and importance) of MySpace.com, the Internet social networking site for younger (than us) people.

The typical model for social networking sites has been that an initial set of founders invites members of their own personal networks to join their site. New members repeat the process, growing the total number of members and links in the network. These sites offer features such as automatic address book updates, viewable profiles, the ability to form new links through "introduction services", and other forms of online social connections. (1)

In May, Jon Gibs, senior director of media, Nielsen//NetRatings described the rising phenomenon. "Social networking sites are the reality television of the Internet. The content is relatively inexpensive for publishers to produce, and social networking is not a fad that will disappear. If anything, it will become more ingrained in mainstream sites, just as reality TV programming has become ubiquitous in network programming." (2)

MySpace co-founders Tom Anderson and Chris DeWolfe launched the site in July 2003 from Santa Monica in Califomia. Their intent was to grow beyond the existing social networking models into a one-stop web portal, combining the most popular features with Generation Y (aged 6 to 25) from other social-networking portals: the instant-message capabilities of American Online, the classifieds of craigslist.com, the invitation service of Evite.com and the come-hither dating profiles of match.com. (3)

As of the 23 September 2006 MySpace had a whopping 112 million registered users. (4) MySpace had nearly 45.7 million unique visitors in June, with users spending an average of nearly two hours on the site at a time. Australia alone already has 2 million MySpace members, many of whom sign in from an Australian MySpace home page at http://au.myspace.com/.

The business opportunity to reach and 'own' this highly web-active market of global youth prompted Rupert Murdoch's News Corporation to buy MySpace for US$580 million in July 2005. Already this looks like a bargain. The Australian recently reported that RBC Capital analyst Jordan Rohan estimates that MySpace could be worth around US$15 billion (AUD$20.02 billion) within three years, measured in terms of the value created for shareholders of parent company, News Corporation. (5)

Marketers and advertisers are hugely attracted to the possibility creating personal relationships with millions of young people.

"What we really struck upon is the power of friendship," said Michael Barrett, chief revenue officer for News Corp.'s Fox Interactive Media and overseer of these deals, in a recent Wall Street Journal Interview. (6)

So what?

It is clear MySpace has achieved a spectacular resonance or connection with young people worldwide generally, and specifically with young Australians. If you or your organisation are looking to understand or connect with this demographic, it's probably time to jump into your own MySpace and find out what's going on. If you have kids, ask them if they use MySpace. And if they do, ask them to take you on a tour. You might be surprised.

Notes

1. Internet social networks - Social network, Wikipedia.org, 3 October 2006
2. Social networking sites grow 47 percent, Year over year, reaching 45 percent of web users, Nielsen//Netratings, 11 May 2006
3. Do You MySpace, The New York Times, 28 August 2005
4. List of social networking websites, Wikipedia.org, 3 October 2006
5. MySpace tipped to top $20bn worth, The Australian, 28 September 2006
6. On MySpace, Millions of Users Make 'Friends' With Ads, The Wall Street Journal, 7 August 2006

Mark Fowler is a Director of Global Foresight Network Pty Ltd, a business consultancy which provides research, strategic advice, facilitation and training services to help organisations navigate the 21st Century.

Whitespace: The power of word of mouth

By Mark Fowler

There has been a recent flurry of consumer research published which signals the accelerating importance of Word of Mouth (WOM) marketing in shaping brand perceptions and purchasing decisions.

WOM promotion is the passing of information by verbal and written means, especially recommendations, but also general information, in an informal, person-to-person manner, rather than by mass media, advertising, organised publication, or traditional marketing (1).

It's about the importance of trust as a determinant of the credibility of market messages.  People are now more inclined to believe word of mouth over more formal forms of promotion because the communicator was satisfied by the goods or services provided and is unlikely to have an ulterior motive (1).

Show me the numbers

• BIGresearch's US release of their Simultaneous Media Usage Survey (SIMM VII) in December showed that WOM is the most influential media for all ages. The respondents ranked the media as follows (2):   

1. Word of Mouth
2. TV
3. Coupons
4. Newspaper Inserts
5. Read Article
6. Direct Mail
7. Magazines
8. In-store Promotion
9. Cable TV
10. Internet Advertising 

• 76% of US people don’t believe that companies tell the truth in advertisements. (3)
• 68% of US people trust other people "like themselves", up from 22% in 2003. (4)
• 92% of US customers cite WOM as best source for product ideas, up from 67% in 1977. (5)
• Friends and family are considered either an "extremely" or "very" credible source of information by 58% of US respondents (up from 42% in 2005), second only to articles in business magazines. (4)
• The stated impact of known contacts is twice as important to people than the impact company led info. (6)

Why the shift?
The decreasing power of the traditional top down messaging, and the rapidly rising importance of consumer word of mouth marketing is being driven by two main factors:

• As broadband becomes ubiquitous, the Internet is enabling connected individuals to move from merely consuming information to social networking and content creation. Customers can now and do readily share their opinions and ideas about product and service experiences in a trusted peer-to-peer communications environment.
• The deluge of corporate and government scandals over the last five years has seriously eroded citizen and consumer trust in the credibility of the communications from business leaders and politicians. Just mention of the acronyms HIH, AWB and WMD and you know what we mean. For instance, PR company Edelman’s Trust Barometer 2006 research has just reported that people who lose trust in a company do not simply internalise their doubts, they talk to others and spread distrust – with up to 33% now using the web to post their views.

WOM starter pack
So where might you begin developing a WOM strategy? The Word of Mouth Marketing Association (WOMMA) recently held their second basic training conference in San Francisco. At one of the workshops several expert panellists discussed a series of possible WOM strategies and approaches. (7) A sample of these ideas is listed below:

• Make it easy for people to find you and tell people about you.
• Create a market advisory council which includes customers.
• Use interesting stories to bring your word of mouth topics to life.
• Encourage your brand champions to tell two friends about you, not just one.
• Do something unexpected and generous for your customers - send a free product (include an extra for them to pass along to a friend) just for being a valued customer.
• Identify and engage with ‘influentials’ using online social networking sites.
• Create experiences around your products and services.
• Be an evangelist for your evangelists.
• It's not just marketing: embed WOM into your sales culture.
• Use humour or "did you know" language to help consumers feel like they have something funny or unique to add to the conversation.
• Hide it. Discovery is a trigger for WOM, so make your tool or marketing message hard to find and you'll create something people will want to talk about and share.
• Leverage provocative content to make everyday product talk-worthy. 

Bottom line
We have reached a significant tipping point, a shift in where individuals, citizens and consumers go to get credible information and advice about brands, products and services. The trust equation has changed, so the way if effective promotion and marketing must change.

Notes

1. Definition: Word of mouth, Wikipedia.org, 4 September 2006
2. BIGresearch Releases SIMM VII -  Word of Mouth Most Influential, BIGresearch, 20 December 2005
3. Yankelovick, 2005
4. Edelman Trust Barometer 2006 [PDF]
5. GfK NOP/Rop
6. Millward Brown, WOM Influence Study, 2005
7. Practical Word of Mouth: 43 Word of Mouth Ideas You Can Implement Tomorrow for Not Much Money, Word of Mouth Basic Training 2, 20 June 2006

Mark Fowler is a Director of Global Foresight Network Pty Ltd, a business consultancy which provides research, strategic advice, facilitation and training services to help organisations navigate the 21st Century. Whitespace is an AIM monthly feature focusing on trends, opportunities and new concepts in the business world.

Whitespace: An instinctive approach to discovering the new rules

By Mark Fowler and Mike McAllum

All the conditions that create uncertainty make it likely that the rules for success will change.

The brain is a marvellous instrument. It creates patterns that help us use what we have seen and learnt as we approach new situations. Our ideas of success are just one of the many patterns we store – both conscious and unconscious. We call these patterns mental models.

Harvard Professor Michael D. Watkins sums up our vulnerability to such patterned thinking:

• We tend to harbour illusions that things are better than they really are
• We give great weight to evidence that supports our preconceptions
• We pay too little heed to what other people are doing
• We are creatures of the present
• Most of us don't feel compelled to prevent a problem that we have not personally experienced (1)

But if the conditions for success are changing then we must disrupt our existing thought patterns in order to see new possibility.

20th Century	21st Century so far
Resource-based – buildings, machines, things	Knowledge-based – idea, networks
Strong boundaries for industry	Post industry boundary less world
Competitor focused	New competitive space focused
Nation state centric	Global
Efficiency paradigm	Optimisation paradigm
Measured time	Real time

In his book Leading the Revolution, Gary Hamel says, "We need stand on a threshold of a new age- the age of revolution. In our minds we know that the new age has already arrived; in our bellies we are not sure we like it. For we know it is going to be an age of upheaval." (2)

We must be prepared to continuously rethink or reconceive:

• Our direction and outcomes
• How we compete and what value is developed
• The capability we need to build
• The mental models that we have

The instinctive approach
In this world of fast paced changes there are few external constants. At such times we will need to rely on our sense of instinct or internal certainty.

Malcolm Gladwell in his book Blink suggests that decisions made very quickly can be every bit as good as decisions made cautiously and deliberately. These snap judgements and first impressions can be educated and controlled. (3)

Our instinct is what psychologists describe as our adaptive unconscious. Others talk about it as our internal voice, first impressions or snap judgements.

This adaptive unconscious finds patterns in new or unfamiliar situations and behaviours based on narrow slices of experience. This is known as thin slicing.

You can sensitise yourself to this internal voice and improve the quality of your instinctive choices by:

• Be willing to make snap judgements and then consciously analysing them
• Understanding that thin slices can often contain deep held views at odds with your conscious values
• If your 'first impressions' seem 'wrong' then look to change the experiences that compose that impression
• Placing yourself in situations that require spontaneity – but ensure that your spontaneity has ground rules
• Understanding that in good decision making often less is more – this helps us see more easily the underlying patterns
• Focusing on body language especially micro expressions around the face

Notes

Max H. Bazerman and Michael D. Watkins, Predictable Surprises: The Disasters You Should Have Seen Coming, and How to Prevent Them, Harvard Business School Press, 2004.

Gary Hamel, Leading the Revolution: How to Thrive in Turbulent Times by Making Innovation a Way of Life, Harvard Business Press, 2002.

Malcolm Gladwell, Blink: The Power of Thinking Without Thinking, Little, Brown, 2005.

Mark Fowler and Michael McAllum are Directors of Global Foresight Network Pty Ltd, a business consultancy which provides research, strategic advice, facilitation and training services to help organisations navigate the 21st Century.

Whitespace: Breaking the inertia of our advertising habits

By Mark Fowler

Television, radio and print media advertising most often spring to mind when we consider the means of promoting our company’s brand, goods and services. This message is often repeated when I speak to fellow Baby Boomer (aged 42-60) advertising colleagues about potential campaigns.

Decades of marketing experience and successful advertising campaigns, built on well understood advertising skills sets and processes, have created the current dominant industry logic (and inertia) that television, radio and print are the most effective media for advertising.

But over the last 10 years the Internet and new digital media have changed everything.

Consider this:

• All consumers have a huge and growing range of new digital choices: mobile phones and messaging, email, Internet chat, Google news, electronic games, cable TV, Voice-over-IP, etc.
• Different consumer generations gather news, socialise and play in different places. For instance Generation Y (aged 6-25) are much more likely to engage in the following activities than Generation X and Baby Boomer generations: play online games, send instant and text messages, download music and videos, read and create blogs. (1)
• Jack McKenzie, an advertising strategist, says of Generation Y: "Their reliance and trust in non traditional sources - meaning everyday people, their friends, their networks, the network they've created around them - has a much greater influence on their behaviours than traditional advertising." (2)
• Australian online advertising in 2006 is tipped to add 60 per cent on 2005, to $620 million, "stealing thunder from free-to-air TV". (3)
• The elusive 18- to 34-year-old male demographic in the US spent more time in 2003 playing video games than watching prime-time TV. TV commercials last about 30 seconds; print ads are often seen for a fraction of that time. But with a video game, potential consumers could be interacting with a product for seven to 10 minutes at a time. (4)

As consumers and business people both shift and diverge (by generation) in their media choices, so will the ways in which we hope to reach and influence them with our marketing messages.

If you haven't already, it's probably time to revaluate how and where you and your advertising agent spend your advertising dollars. To begin the conversation you might ask yourself:

• Which generational group(s) will be the primary target of our company's brand, goods or services advertising messages?
• What media types are the most effective means of reaching them?

And you might ask your advertiser:

• What percentage of your total clients' advertising spend is delivered through TV, radio and print versus Internet, gaming and mobile phone media?
• How many of your team are specialists in digital and online advertising?

Bottom line: Changing the way you do business and breaking the inertia of previous success is always difficult. But spending advertising dollars to promote in locations where nobody is looking is just a waste of money.

Notes

1. Susannah Fox & Mary Madden, "Generations Online", Pew Internet & American Life Project, 22 January 2006
2. Tom Zeller Jr., "A Generation Serves Notice: It's a Moving Target" , The New York Times, 22 January 2006
3. Christopher Vollmer, John Frelinghuysen & Randall Rothenberg, "Old Media Fumbling with New Technology", Sydney Morning Herald, 20 June 2006
4. William Weir, "And now a game from our sponsor", The Journal Gazette Fort Wayne, 22 June 2006

Mark Fowler is a Director of Global Foresight Network Pty Ltd, a business consultancy which provides research, strategic advice, facilitation and training services to help organisations navigate the 21st Century. Whitespace is an AIM monthly feature focusing on trends, opportunities and new concepts in the business world.

Whitespace: Boiled frog retail

By Mark Fowler

It has become increasing tough for small manufacturing and grower businesses to profitably supply their products to the price-squeezing duopoly of Coles and Woolworths which jointly drive 76 percent of the $70 billion-a-year Australian supermarket sector. (1)

And to make life even more challenging the just released PriceWaterhouseCoopers report "Retail & Consumer Outlook 2006" (2) confidently expects private label sales to reach 30 percent of supermarket revenue in the medium term.

Continuing down this margin-eroding and brand-loss path is a no-win scenario for small manufacturers and growers.

It’s time to break out!

Asking questions is a great way to jump-start the creative process. Here are some starters:

• Are there any emerging consumer lifestyle trends which present unfulfilled opportunity?
• What alternative retail channels might deliver higher margin, or customer loyalty?
• Could partnering or industry cluster strategies create a better customer value differentiation for your product than working alone?

Some start point ideas:

A web shop
Despite post-2000 dot com crash rumours to the contrary, six years on, the business of selling products and services to consumers via the Internet has become a very convenient, highly functional and now affordable shop front for all manner of products and services. A recent Forrester report found more that almost 40 per cent of online customers were new customers (3). It also found that consumer visits to retailer websites influenced 22 percent of their purchase decisions. So increasingly the Internet has become an essential parallel shop front. How could a website allow your business to bypass the supermarket choke point, to better reach and service your market?

Farmers markets point to new clustering opportunities
Consumer demand for healthy, fresh and organic food products is growing rapidly. Farmers markets are popping up all around Australia to meet this opportunity. They present a powerful example of how small businesses can successfully cluster around a common theme of not just high quality - but also wrapping value around the product to create a valued experience - participating in a memorable and repeatable carnival like market event. Are there opportunities for your business to cluster with ‘like’ businesses in an innovative physical or virtual (Internet) space which could create increased customer lifestyle value or an exciting new consumer experience?

Like the boiling frog fable (4), it’s always hard to recognise the impact of slowly emerging trends on an industry from the perspective within that industry. But it’s very clear now – it’s time to get out of the pot.

Notes

1. Stephen McMahon, "Metcash chief has growth in the bag", The Age, 29 April 2006

2. "Retailers' pursuit of private label likely to succeed says PwC", PriceWaterHouseCoopers Australia, 3 May 2006

3. "Online Retail Predicted to Top $200 Billion", eMarketer.com, 25 May 2006

4. "Will it happen here? UK report paints bleak picture for independents’ survival", Checkout, March 2006

Mark Fowler is a Director of Global Foresight Network Pty Ltd, a business consultancy which provides research, strategic advice, facilitation and training services to help organisations navigate the 21st Century. Whitespace is an AIM monthly feature focusing on trends, opportunities and new concepts in the business world.

Whitepace: The Innovation Imperative

By Mark Fowler

Almost every recent article, speech, and presentation in the business space contains an obligatory exhortation to 'innovate'. Innovate' is almost as overused as the 'empower' word. This essay on innovation is an attempt to define it, outline its importance, and introduces a starter pack on how to do it.

Innovation defined
From Oxford Dictionary: 'innovate' (verb) introduce new methods, ideas or products. From the Latin 'innovare' renew, alter, from 'novus' 'new' (1). The free encyclopaedia Wikipedia is a little more explicit: 'innovation' is the process of making changes to something established by introducing something new. The term innovation may refer to both radical or incremental changes to products, processes or services (2).

21st Century realities
All start-up or established businesses are continuously challenged by new realities as they enter the 21st Century:

• The advance of virtually every technology is relentless.
• The Internet has delivered vast choice and shifted market power from sellers to business and consumer buyers.
• Globalisation of labour, capital and knowledge is driving intense price commoditising.
• Almost daily new products, services and experiences arrive to challenge and reshape existing markets and industries.

During the late industrial age (1970s through the 1990s) it was enough for most companies to maintain competitive parity through incremental innovation. Quality improvement programs like Six sigma, Balridge and ISO 9001 led the charge. Over the last five years established businesses have squeezed every ounce of fat out of their businesses. They are all flatter, leaner and more efficient.

The down-side has been that many firms have lost their connection with customers through investments in self service initiatives and streamlined support. And this is at a time when customers are presented with ever more choice to jump ship. Customer loyalty is a rare jewel.

The success barrier
Today the only way firms can be sure of providing compelling value in a market of constant change and bourgeoning choice is by developing the capability to deliver continuous and increasingly radical innovation.

This can be a major challenge for businesses already highly tuned to deliver increased efficiency to their product or service offerings through incremental improvement. Radical innovation is counter-intuitive to the dominant logic of these organisations. Co-founder of Peer Insight, Jeneanne Rae, recently described this challenge in Businessweek: "Why try something radically new when you're successful at what you're already doing? Success is a narcotic. Under its influence, why take a risk?". (3)

Innovation Starter Pack
The following three ideas present a starter pack to beginning an innovation transformation in your business:

1. Exercise the muscle
Establishing a powerful innovation capability inside your company is a major shift. It's analogous with athletes' commitment to win future events. Their training regimes are all about establishing objectives and following through with repetition of specific exercise programs. Businesses can’t build their innovation muscle the way they so often run their strategy – via the proverbial annual executive retreat. And the primary catalyst for such change must be the business leader. "CEOs should lead and champion innovation and relentlessly communicate its value." (4)
   
2. Tune outwards
To deliver valuable innovation assumes that business has a strong pulse on what is happening in their market at both a local and global level. How are customer aspirations, lifestyles and needs changing? What new products have been launched or are likely to launch? How are competitors exploiting new technologies and business models? Businesses must break out from their previously successful operational (and often inward) focus and look outwards. US Fortune 500 business advisor and author Ram Charan suggests six questions as a process framework for businesses to regularly establish a view of how patterns of converging and diverging trends fit together (5):

I. What is happening in the world today?
II. What does it mean for others?
III. What does it mean for us?
IV. What would have to happen first (for the results we want to occur)?
V. What do we have to do to play a role?
VI. What do we do next?   

Another great handbook for market scanning techniques is Clayton Christensen’s highly acclaimed book Seeing What's Next: Using Theories of Innovation to Predict Industry Change. (6)

3. Innovation Culture
Industrial Age businesses built hierarchical organisation structures designed to deliver machine like efficiency and reliability. Such command-and-control approaches are not conducive to tapping the combined creative pool of a business – its people. Businesses need to create a climate or culture which encourages and values full employee participation in the innovation process.

Businesses which have become successful innovators have introduced specific employee programs to encourage this innovation culture. Examples include employee innovation days, payment incentives, and cross-silo 'skunk work' projects. The common themes of the successful programs are regularity and continuous communication about the programs within the business.

Notes

1. AskOxford.com

2. Wikipedia

3. Jeneanne Rae, "The Keys to High-Impact Innovation", BusinessWeek, 28 October 2005
4. Maneesh Mehta, "Growth by design", Ivey Business Journal, Jan/Feb 2006

5. Ram Charan, "Sharpening Your Business Acumen", Strategy+Business, Spring 2006

6. Clayton Christensen, Seeing What's Next: Using Theories of Innovation to Predict Industry Change, Harvard Business School Press, May 2004

Mark Fowler is a Director of Global Foresight Network Pty Ltd, a business consultancy which provides research, strategic advice, facilitation and training services to help organisations navigate the 21st Century. Whitespace is an AIM monthly feature focusing on trends, opportunities and new concepts in the business world.