Outsourcing Your Future – part 2

theatre seating

There are a number of company-hosted competitions, events, hackathons all with the aim of introducing innovation to the host company. I questioned the rationale behind these initiatives in the first part of Outsourcing Your Future.

The P&G Signal Accelerator Innovation Brief for Daycare Subscription is a good example of how these can be presented to the public, encouraging submissions from other companies. It opens the door for innovation with the potential reward of access its brands for the external company.

Whereas I questioned the motivation behind the initiative in the previous post, I want to look at other aspects in this post.

Maturity of the host

When I talk about maturity, I’m usually thinking of the difference between experience and wisdom. Someone can have a great number of experiences, but they may not be wise from what they’ve experienced. Similarly, an organisation that is mature in age is not necessarily mature in its capabilities.

By hosting innovation events, older companies are trying to introduce the capability of innovation into their organisation. It’s a parallel move to that which we saw in call-centres, then contact centres and also in shared services solutions. The company focusses on its core and outsources some standardised capabilities of its business.

In principle, that seems fair, since innovating is just one of many capabilities (we could give it a better name, but it’s still innovation). The bigger issue is that the target of these innovation events is often the core business; something which very few chief executives would ever dream of outsourcing. However in hosting innovation events, that’s what they’re doing; they’re outsourcing the company’s future.

Direction

Having read through a number of calls-for-applications and similar invites, plus being familiar with a larger number of events, I see two directions forming.

  1. Rather than the innovation happening on the inside and pushing it’s way out, the innovation is nurtured on the outside and is adopted internally. Or more often, it meets the resistance of the host organisation and fizzles.
  2. Innovation happens on the outside and is then partnered, e.g. you keep the external startup as an external and then purchase services from it (which may be viewed as allowing it access to your procurement team, but it’s still money transferring for services). That partnership arrangement keeps the innovation skills on the outside, but allows you the benefit of the innovation for a cost.

Managing risk

Considering the age of many companies hosting these events, they will have rigid governance procedures. Startups, on the other hand, do not. They are more flexible, more able to change direction and quicker to deliver. By allowing other companies into your problem space, you take advantage of their ability to take shortcuts that wouldn’t be allowed in your organisation. Those short-cuts may not be short-cuts in reality, it could well be that your organisation has created obstacles that do not need to be there. However, the result is that the external startup can deliver more quickly than your internal teams. That speed of delivery has value in terms of being able to conduct business experiments and learn from the experiments more quickly.

But as well as being able to make short-cuts, startups can take riskier approaches, which is easy to see when one of the guiding mantras of the startup ecosystem is “Do things that don’t scale” originally from Paul Graham.

By hosting innovation events, you’re outsourcing some of your risk management. You allow yourself to focus on the product, not how the product was developed. That doesn’t free you from all responsibility, but it does allow a shift in responsibility at significant points in the development process.

Debt

There’s been a growing trend of recognising the concept of technical debt. In the same way that shortcuts or short-term decisions for technology have to be paid back later, there are other forms of debt. I’ve discussed process debt before.

Innovation events, especially sprints have an element of creating debt. It’s not necessarily bad debt, since the act of bringing people together to progress a common goal has significant value, but the team involved may decide to do something quickly because of the time available. Even if the decision is “I’ll do it in this tool to get it ready by Thursday evening and, if the concept is accepted, then we’ll do it properly next week.” – that’s still debt. And we’ll see those decisions across process, technology, management structure, job descriptions, skills, stakeholder management, customer engagement, etc.

At the point that you want to bring the innovation in-house, you will have to pay that debt, so where have you found yourself? Did hosting the innovation event outweigh the debt incurred? Sometimes yes, sometimes no.

Value

And that brings me to my last point. I’m struggling to think of – actually, I can’t think of – a single company that has ran an innovation event and then openly discussed those innovations a year later. There are companies that regularly host innovation events and there are those that are starting out in 2018 for the first time. Of those that have hosted previously, none publish what’s happened since. Some do not refer to previous events. A few publish what happened soon after the event, but do not follow-up with current news, reflecting on the value realised through hosting the event.

I can think of one company that has benefited from an innovation event from a cultural perspective; being able to expose its wider workforce to innovation through immersing them in a week-long festival. Even in that case, one which they openly refer to previous innovations, I do not know which of the innovations are currently active one year later.

For instance, I’d be interested to see previous entrants to the event, how they were engaged following the event and what progress has been made up to now.

I can think of one brand-led accelerator, Collider, that does publish details about previous cohorts.

Overall, it looks like the pickings are slim when trying to evaluate the performance and value of outsourcing innovation through hosting an innovation event.

Outsourcing your future

Innovation

There’s a growing trend in organisations to outsource their future through innovation labs and innovation competitions.

I like to question the rationale behind these decisions and look at the host company more closely. After all, what is behind its decision to handle innovation from outside-in, rather than inside-out?

Reasons

Innovation Ideas
Innovation Ideas

So let’s explore. Why would an organisation decide to innovate from outside?

  1. Because directors/senior management do not believe the company holds the skills for innovation within itself
  2. Because it doesn’t actually hold the skills for innovation within itself
  3. Because it doesn’t have a culture that nurtures innovation
  4. Because it doesn’t have a financial model that permits innovation
  5. Because it wants to perform innovation theatre

Let’s look at each of those in turn and see if the innovation competition is the best approach

1. Because directors/senior management do not believe the company holds the skills for innovation within itself

This is an issue of perception and/or distance. Perception in that the skills exist but are not exposed in a way that directors know that the skills are there. Maybe those skills are hidden performing other tasks. Distance in that the directors are too remote from the sources of innovation in the company. In this case, outsourcing innovation is likely to be met with resistance internally, by those who have ideas, have an appropriate approach and behaviour but are not recognised.

2. Because it doesn’t hold the skills for innovation within itself

In this scenario, the host is attempting to outsource the provision of innovation skills. However it’s only sourcing them for the life of the innovation programme, typically an accelerator. It may have a desire to borrow innovation skills from the startups it works with, however the issues are often more fundamental than that. Leading to requiring a change in culture rather than just skills. And a change in culture may require fresh blood.

3. Because it doesn’t have a culture that nurtures innovation

By mixing its own employees with that of startups, the host organisation hopes to have some of the culture rub off on its own employees. This culture-transference is fine in principle, but only works for those that are directly engaged. The effect dissipates quickly as those that were engaged then re-encounter the culture of the host organisation, especially if that host organisation has severe governance procedures.

4. Because it doesn’t have a financial model that permits innovation

Spending money on an innovation programme is a known cost within standard parameters. The host organisation can commission the accelerator or competition under its in-house business rule policies. Whereas if the same business case authors had presented individual and separate innovations to the same approval board, they may have been rejected due to the differences between innovation accounting and more traditional financial accounting.

5. Because it wants to perform innovation theatre

I’d like to think that innovation theatre is a product of accident. In that I’d hope that no organisation sets out with the express wish, whether in terms of vision or other goal, of performing innovation theatre.

Assuming it occurs by accident, we find examples of idea generation, possibly in terms of a internal staff panel competition (think Dragon’s Den/Shark Tank), running a 12 week incubator, hosting a hackathon. How many of those innovation events result in real, lasting change of the same magnitude as predicted during the innovation session? Or do they fizzle when they encounter the host organisation?

Next

I’ve addressed this from a few different angle in a following article.

How accurate is your testing routine?

Traynor Guitar Amp

Testing is not just for software, but for the business processes, organisation or service that you’re implementing?

I’ve seen many test routines that are too artificial, too removed from the reality of what the users will go through. Fortunately this factor has improved over time, especially with more focus on user stories.

Let’s consider one of the best examples of testing I’ve ever seen. Guitar amps are generally fragile. They’re usually robust enough for scrapes and minor bashes as you’re carrying them through doorways, but they don’t survive being dropped down stairs very well.

One amp manufacturer had a test routine of removing the glass valves (they’re replaceable consumables) and then throwing the test amp from the roof of the building to emulate the journey that some amps go through. On the ground, they inserted valves and powered it up to see if it would work.

How does that compare to your test routine? Is yours as accurate to the reality that it will be used in?

Here’s a clip of the actual test

Rain versus Innovation

rain

The following tweet made me consider, initially thinking about the place of Manchester in innovation, but also the wider concept of personal transport versus climate.

It rains in Manchester. From personal experience, Manchester doesn’t feel the rainiest place in the United Kingdom, but it does have a reputation for significant rainfall. That doesn’t dampen the city’s spirits. We just do things differently (that’ the obligatory Tony Wilson reference done)

The type of personal transportation afforded by a bicycle, whether electric or not, isn’t ideal in a climate that features rain heavily on its calendar. The cyclist has to wear weatherproofs, need a change of clothes in the office, probably a shower, and then the reverse on the way home. Or they could just get wet.

That doesn’t prevent cycling in Manchester; it just makes us think more about our journeys. We can’t be as relaxed in planning them.

That creates inertia to change. Which prompted me to think about climates where single person vehicle commuting could be more suitable. Regardless of Britain’s position in the world ranking of innovation, does that mean that Britain will get overtaken by other countries with more suitable climates?

Britain’s transport infrastructure always feels more intensive compared to any other country I’ve travelled to. I’ve seen the quizzical expressions when explaining to US colleagues that we may have to set aside a day to travel 250 miles in the UK (it doesn’t always but it massively depends on which 250 miles you want to travel). But I’ve yet to experience Japan or similarly densely populated countries. With innovation being driven by warmer climates, especially in terms of Silicon Valley, or countries with larger infrastructure (e.g. China, Germany and again, the United States), you can imagine solutions being solved for those countries and climates, not the UK’s. To be clear, it’s no-one but the UK’s and EU’s role to alleviate transport issues in the UK, let innovation solve the problems of each country. Some will be applicable beyond the geographical boundaries in which they were developed, some won’t be. Which then creates an inequality. It’s not the inequality created by resources or the centralisation of power or empire. Instead, it’s an inequality created by provenance of ideas in relation to the location.

Which reminds me, I wonder how the doors on Tesla’s model X fare in Manchester. Our rain is usually accompanied by wind so it blows sideways, not falls down.

Gibson, where is the strategy?

Gibson Guitar

As news increases of looming bankruptcy for Gibson, the guitar manufacture, I’m left to wonder what happened. How did such an iconic brand end up in such a situation.

Gibson is iconic. Ask anyone to name a brand of guitar and it’ll be the answer roughly 50% of the time. I’m reminded of Harley Davidson (quick quiz: can you name another brand whose customers tattoo the brand name on their body?). Maybe Gibson fits more closely with Jack Daniels. Both represent a way of life, on the edge of 50s/60s rebellion, now more refined.

So what did happen?

Quality

I think of Rover, the once British car manufacturer, primarily based at its Longbridge plant, Birmingham. At one point, it was close to leading the world alongside other main brands, such as GM, Ford, Fiat. But over time, a lack of focus, resulted in cars that were of lower quality than those coming from elsewhere. From living in Birmingham at the time, and being subject to a number of Rover cars as fleet hire cars, I saw first-hand the issues with the brand.

Being at the head of the pack, it was easy to pick on Gibson. They were some of the most expensive factory-built, mass-produced guitars on the market. With that price tag, you would usually expect the best quality. Perhaps the best quality you can afford before having to stretch for hand-made guitars. But Gibson was releasing guitars from its plants with issues. Many of the issues may have been minor, but from a customer perspective, the severity of a minor issue inflates quickly in line with the cost of the guitar. So even a small issue on an otherwise-perfect guitar would lead to complaints.

Internet

Gibson suffered from being a old brand with the advent of the Internet, specifically newsgroups and forums where users could complain about their new purchase. Anecdotal of course, but I can’t remember seeing a good post about 90s/00s Gibsons, all posts were detrimental. For every post asking about Gibsons, there would be a number of responders pointing out how their guitar had issues, or how they’d avoided them based on having tried a few Gibsons in the past.

On the other side, Gibson benefitted massively from the increased reach that the Internet allowed them. Not solely direct advertising, but MTV + Internet showcased Gibson guitars in the hands of idols. This was back in the time before musical instrument sales had dropped significantly.

Inflation and Asian Manufacturing

The cost of guitars, especially US-built guitars was rocketing. The stronger the US Dollar, the more expensive the guitar to other purchasers in other countries. These price increases also impacted the cost of labour, with build costs increasing along with living costs (but not necessarily equal). There’s nothing special about that; it’s common for many industries.

Back in the 1970s, Japanese guitar builders started building US designs (sometimes under licence and at the request of the US manufacturer). The factories then had the ability to build their own brand guitars or for more local brands. This resulted in “lawsuit guitars” and a lot of mystique associated with them.

Following Japan, we saw Indonesia increasing the quality of basic guitars. It reached the point in late 90s where many starter guitars were sufficient for a lifetime. Similar to the concept of quick and dirty solutions being good enough, we started to see guitarists settle for cheaper guitars because the gap between the one they had and the next guitar up in quality was too much.

Following Indonesia, we began to see new successful plants in India and China. Each reducing the cost of production, but also increasing the overall quality floor, i.e. the basic guitars were improving.

Used Guitars

The used instrument market has changed. eBay, Reverb, Craigslist and other sites and apps allow easier access to buy and sell guitars. Every year, new guitars are produced, but not as many guitars are destroyed. So overall, the guitar population increases year on year. That means that for a purchaser, there are now more used guitars to purchase from than new guitars.

That becomes interesting for a few reasons:

  1. Used guitars are usually cheaper – considering inflation. Similar to most industries, the original purchaser has taken the bulk of the depreciation.
  2. Gigging guitarists use guitars – so are less worried about wear and tear than in other sectors
  3. Used guitars could come from a quality with a better perceived quality
  4. Used guitars could be more iconic – representing the guitar sound from a particular era

From my own experience, having bought new and used, I only buy used now. There are enough guitars in the world, I’m sure I can find a used one to meet my needs.

So if your business model is centred on selling new guitars, it’s going to get difficult.

Good now is better later

Unlike many products, there’s no obsolescence in a guitar. The general trend is the opposite to the trend in technology. Guitars are usually deemed to get better with age. That’s not something I necessarily agree with, but I won’t argue with the market. There are two elements here:

  1. Perception that guitars get better with age
  2. Perception that older guitars are better because they were originally built better

So there’s little point in buying new when used guitars are good enough if not better. Whether planned or not, technology has a tendency towards obsolescence; guitars do not. So there’s little incentive for a guitar owner to buy a new guitar, based on the state of their current guitar. A guitarist will buy a new guitar when they have outgrown their current one, e.g. if they bought a basic guitar and then wanted to upgrade to a better model. Guitarists can also be fickly and buy based on colour or other specification, but that behaviour is equal across all ranges and hasn’t changed with time, so irrelevant here.

Guitar2
Guitar2

Woods

The protection of certain timbers (and hence the living trees) as found in CITES regulation is a red-herring for this brand. On one hand, it affects all guitar manufacturers, or at least the majority of them. On the other hand, it does affect the margin by increasing the cost. It slows down transactions, resulting in some sellers and purchasers not wishing to go through the hoops necessary to sell a guitar, especially cross-border. Bear in mind that some woods involved in CITES were primary woods for guitar-building; it didn’t affect only rare woods. Gibson have had issues with the formality of wood laws, but other than a potential knock-on affect due to impacting cashflow a few years ago, I don’t see a major issue here. Like many guitar builders, alternative woods or sources of woods are considered.

Lack of innovation

My issue here isn’t the lack of innovation at Gibson, but probably the adoption of innovation. Gibson have innovated on the product, feature the much-maligned robot tuners, chambered bodies, locking sockets and so on. Most of those innovations have been ridiculed as moving the brand away from what it’s meant to be (in the eyes of the customer). Guitarists can be funny about this idea, they want the guitar as it was built in 1959, or any another famous year; complete with substandard components.

This applies to all the brands with historically, famous guitars. Guitarists can be awkward regarding innovation with cultural expectations influencing responses.

With innovation, I usually see types within a company. The first is the product innovation, i.e. what innovations can be added to the existing product line or new products created. That’s where Gibson have gone. The second is innovation in how the product is produced. I’m not sure if Gibson have done this or not.

Investments and Non-Core Business

Similar to other major guitar-building brands, Gibson have entered other related markets and customer segments. They acquired other guitar brands to appeal to other users – including the ability to separate cheaper related guitars, in the case of Epiphone. Gibson also acquire Cakewalk for its software and has very recently stood down that product line in order to focus on its core business.

The other main divergence from core is into audio electronics being the majority stakeholder in TEAC and the acquisition of Royal Philips consumer audio division, Woox.

Guitar
Guitar

What’s the Answer?

You can see evidence of a few well-tried strategies already in place in Gibson.

  • In light of reducing guitar sales, it reduced the workforce
  • In light of producing fewer newer guitars, it requires less manufacturing space and so can sell existing plants and search for cheaper sites
  • In light of reducing revenue and profit in its main revenue stream, it has been diversify; exploring other related markets. I’m reminded of BATS‘ diversification into more acceptable brands.
  • In light of reducing profit, it has stopped production on a non-core product (Cakewalk)

All of those are typical strategies, but in a way, they feel more tactical with the aim of reducing the current pain, without longer-term direction.

The longer-term direction may be more painful still, if the company is to survive. The guitar-building business and the consumer electronics business are very different. They could sell to the same segment, allowing for some positive combination of cross-product marketing, but they don’t need to be part of the same group.

At some point, we’d have to question how profitable the underlying core of the business is. Simply put, does Gibson guitars generate more money than it spends to build and sell the guitars? Then factor in the cost of loans and debts, what scale of business does actually work?

Ideally, we’d see Gibson retreat to a smaller size, concentrating on its iconic models, simplifying the product range to those that sell well. That company does not need to innovate in the product line, instead it needs to innovate in how it builds the guitars and how it sells. It could learn lessons from Schecter or PRS as they were back in the 1980s and 1990s. What scale worked for them? What did they focus on? How did they ensure quality? Unfortunately we may not see that see that comfortable retreat.

Notes

I’ve written about Gibson as a single entity. In face there are two main companies to be aware of::

  • Gibson Brands – this is the primary company
  • Gibson Innovations – home audio leisure company

There are other additional companies held by Gibson Brands, e.g. TEAC.

Primarily, my interest is with Gibson Brands. That’s the original company (although under different names previously). That’s the core business.

But regardless of how good, well-liked, or profitable a core business is (at least in terms of unit cost), if it is saddled with too much debt, then there are risks. If you want to read about the effects of debt on otherwise-healthy companies, the Rolling Stone article on Mitt Romney is a good starter.

From reading the post at Far Out Magazine, it could be that the recent news is a ploy regarding a struggle between investors and the board. Everything I’ve written above is still true.

Patents, MVA or GDP: None of them indicate innovation

Innovation?

In “When is it innovation?“, I introduced the idea of a sector’s familiarity with an concept. I’ve just read Bloomberg’s Innovation Index and I find a few of the variables used to be old-school to say the least. It made me wonder what the index should actually include to be relevant to innovation.

 Issue 1: Patents

The first item I noticed was the grading of countries based on the number of patents. I think of patents as being the enemy of innovation, especially when we consider the role of patent trolls in the marketplace. If someone can create an idea, patent it, but have no intention of delivering it. But only holds onto it in order to prevent the person who does actually figure out how to build it, isn’t that stifling innovation?

To some extent, I’m just shouting against a wall. The establishment and market of patents exists and I do not possess the influence to change it. I’m ok with that. However, considering the position of patents, why are they in the Innovation Index? Wouldn’t a better figure be, the ratio of patents created in that country against the number of patented, implemented products? That at least would account for ideas that have been translated into reality.

Issue 2: Non-innovation Metrics

There are several metrics in the table that do not fit with innovation, at least in any definition I’m aware of, and definitely not in the definition I’d proposed in “When is it innovation?“.

For instance, Manufacturing-Value Add is a good metric for assessing the transformation of materials in higher value, e.g. taking a raw material and refining it, taking sheet metal and producing a finished product, etc. But that’s not innovation. That’s just doing your job. It’s business as usual. You could innovate in that area, e.g. a novel way of refining, etc. But that metric doesn’t measure that.

Also, the Productivity metric based on GDP and GNI exhibits similar issues. It’s a measure of how much money is generated relative to the population. That isn’t innovation. True, a high productivity score could be attributed to high levels of innovation (in terms of increasing the output of each person), but not necessarily.

 

The Parallels Between RPA and Fax Automation

Fax Machine

There are times when the cheap and nasty solution is so economically efficient that it can preclude doing it properly later on.

Background – The Fax

Just under a decade ago, I was working with a local authority client and their NHS hospital partner. The interpretation of the law at that time was that email was considered a non-secure channel. Fax was at the time the chosen channel since it was considered to be secure.

So documents were sent from the hospital, via the fax machine to the fax machine in the social care offices. Continuing Health Care panels met to decide on whether the NHS or the local authority paid for the care, based on whether the primary need was a health need or a social care need. That’s simplifying the logic behind the process and the decision but it’s enough detail for this article.

To be able to make that decision on tens or hundreds of thousands of pounds per year per person, that panel needed to review the data about that individual carefully. So this meant that 40-150 pages per person would be faxed from the hospital to the social care office.

The process for this was relatively convoluted:

  • the hospital professional (therapist, nurse, discharge planner, etc) collates the documents
  • they ring the social care office and tell them they’re about to send the documents
  • they feed the documents into the fax machine
  • they’re sending more than the fax machine can fit into its auto-document feeder, so they have to standby to top it up
  • at the other end, the fax machine starts printing
  • the social worker picks up the paper before it falls onto the floor
  • the fax machine runs out of paper (several hundred pages per panel and it’s likely that you’ll have to refill the paper)
  • the social worker obtains blank paper, loads the fax machine with the new paper
  • the social worker collates all the faxes
  • the hospital professional rings the social worker to confirm that they have the documents.

The First Proposal – Email

Naturally, the partners want to make this more efficient so the design conversation usually reverts to proposal of email. But, as mentioned earlier, that’s not considered secure. Or at least the email solutions available at that time were not secure.

But there is a strange alternative.

The Implemented Solution – Fax Gateway

We used fax gateways at either end. It turns an email into a fax to be communicated on the phone line, to then be converted back to an email at the other end. The revised process was a lot more efficient:

  • the hospital professional (therapist, nurse, discharge planner, etc) collates the images ready to be sent (e.g. prints to file or scans in the remaining few that they don’t have electronically)
  • they send an email containing the fax header and the documents to their fax gateway
  • at the other end, the fax gateway converts the received fax into an email for the social worker.
  • the social worker reads the email and downloads the attachments ready for the panel

It’s a solution that shouldn’t have existed. It relied on old technology but until the law caught up with the technology (or the technology caught up with what it had to do to be secure, e.g. nhs.net accounts, etc), then it was the cheap, workable solution. But it was messy and I shudder every time I think of it as a solution. However it made it better for the clients, making the process simpler for them as end-users and freeing up time to do more important work.

Front-End RPA

That’s what the current state of RPA feels like to me. Not the whole of RPA, but the element that’s involved in the user front-end of systems. It’s like the fax gateway. So instead of the better solution of orchestrations between the various IT systems involved, we’ll automate the front-ends.

The Parallels

Now I’m wondering if we’ll see the same situation with RPA as we did from implementing the fax gateways. We found ourselves with a cheap and nasty solution which then made the business cases for full integration prohibitive.

Why would you spend hundreds of thousands of pounds on a better solution when the cheap one works adequately?

So if that angle of RPA solves the automation from a front-end, replacing the mundane tasks performed by employees, why would we look to orchestrate the back-end?

Will initial RPA implementations deter us from better integration of products? And, more importantly, is that necessarily a bad thing? After all, my NHS and LA client were still able perform better with the cheap solution than they were able to without it, and they also avoided a costly integrated solution. In the end, it was a temporary measure until secure email became a practical solution for them and their partners. I’d expect to see parallel initiatives nowadays with RPA, with clients improving their efficiency through the introduction of RPA, but avoiding more costly integration. Especially, as a temporary measure that will likely have a longer-than-intended lifespan.

High-heels, guitars and cultural expectations

high-heeled-shoes

Expectations can run deeper than you may at first think, especially if those expectations are based on decades of cultural information/misinformation. This may affect attitudes towards quality or acceptance of new ideas, including industry innovations. If we’re aiming to make changes in an organisation, we should look out for the deep-rooted expectations of what’s acceptable.

It’s about the form

high-heeled-shoes
high-heeled-shoes

High-heels have been a feature of women’s attire for centuries, especially since the latter half of the last century. They’ve become a focus for discussing what’s acceptable in our society, to the extent of legislation in some countries banning companies from requiring its female workforce to wear heels. But also, from a moral perspective about whether wearing them can ever be required. Setting the moral and legal arguments aside, let’s take a quick look at what’s behind them.

Morris conducted an experiment analysing the attractiveness of female gait with the observers having no idea that the women were or were not wearing heels or even that the people they were observing were men or women. The observed were all women, and they all wore flats and heels. The observers had no idea that they’d see the same person’s gait twice; once with heels, once with flats. The result was that the “video clips of the walks in high heels were judged to be significantly more attractive than those in flats”. So there is an characteristic that we find more attractive and that characteristic reveals itself in our perception of gait which high heels enable.

A follow-up experiment reached a further conclusion, summarised as “by exaggerating the normal female gait, high heels serve to falsely enhance our perception of the wearer’s femininity”

So we end up with a cultural expectation of femininity based on the shoe type. Wear flats and you appear less feminine. Wear heels and you accentuate your femininity. And this is whether or not the heels are the most attractive (not just the effect that they have on the wearer) or which footwear would be the functionally most appropriate attire.

Consider a woman walking towards you. If she’s wearing flats, she’d be considered less attractive than if she were wearing heels. But it’s the same woman with the same attributes, same personality, even the same body, but her form and gait is altered by the use of the heels. It’s an expectation and it’s deeply rooted. I’m not saying that it’s the right thing or that women should wear heels, just noting the cultural expectation.

It’s about the tone

musician
musician

Guitarist have for decades sought the tone of the electric guitar pioneers. Think Beatles-era guitar sounds. Those are the tones that act as a reference for all modern guitar tones. Later, Jimi Hendrix took that tone and added colour to it through distorting amplifiers and effects units. Tony Iommi of Black Sabbath took Hendrix’s tone and detuned it. And so on. You can trace the line back to 1950’s popular tones.

Let’s say I innovate and introduce an exceptional guitar amplifier based on amazing audio technology that can clearly reproduce the guitar tone as it’s produced from the guitar. It would fall flat and no-one would buy it. Guitarists are not interested in the best (if we define best as “accurate” to the sound made by the guitar). The reference from the 1950s was made using inefficient amplifiers, inefficient cables, substandard guitars, low technology in strings and speakers that were appalling by today’s hifi standards. Even the speaker in your tv has a better response that those 1950s speakers. But that’s the tone we recognise as good. It’s so deeply ingrained in our models of what counts as good, that more accurate to the guitar doesn’t mean better. In fact the opposite.

There’s an additional complication in that the tone we hear for the guitar isn’t even that 1950s tone from the guitar amps. That produced tone is manipulated at the mixing desk, with appropriate equalisation to filter out the parts of the tone that we don’t need and especially to filter out the parts of the tone that would conflict with other instruments. So if you listen to the isolated tone that’s been recorded, it’s reedy and thin compared to what you’d expect. But add that isolated track into the rest of the song and your brain fills in the gaps.

So when we hear a guitar in a song, we expect it to have a compromised frequency range compared to what the guitar and amplifier can actually produce. If we heard what it could do, then it would sound odd, very odd indeed.

Similar to the high heels, we’ve built up a cultural expectation over decades of what constitutes good. It doesn’t mean it is good and, similar to heels, in many ways it is worse than what can be achieved. But it’s difficult to argue with deep-rooted expectations and, while we know it is possible to change minds, changing something this ingrained will take a lot of effort, time and patience.

Thoughts

As transformation agents (whether directors, analysts, managers, etc), we often miss the cultural expectations. We could use the Empathy Map Canvas, Lewin’s Force-field Analysis, Prosci’s ADKAR or whatever model your organisation chooses to use. But we should be careful as we use each of them, because sometimes the expectations are that ingrained, it’s difficult to bring them to surface. If you were to ask members of the public to attend a focus group on guitar tone and then worked through what’s prompting the change or resisting it, would the concept of the tone from the 1950s actually feature as an arrow that resists change? I doubt it. It’s invisible to them.

Instead, these hidden expectations create a risk to the change programme in potentially blocking the changes for what initially appear to be non-sensical reasons. That is, until you uncover the expectations which run deeper than you first thought.

Now consider the above examples of high-heels and guitar tone. Imagine trying to motivate just the people in your organisation to accept the better alternative (i.e. flats for function regardless of event or a hifi guitar sound). How difficult do you think that would be? And how does that compare to recent significant changes you’ve had to introduce?

Any comments, get in touch @alanward

The Value Affix – Xtech and Why I’m Fed Up with Tech part 2

ecommerce

I wrote in the previous article that we don’t need a separate xtech for any given sector x.

Abstracting further, the focus should be on the customer, not the technology.

We see healthtech, fintech and insuretech which indicate the use of new technologies to improve existing or introduce new business models. But technology is just one factor that could be changed.

Historic changes to business models

Instead we could be changing other elements of the business model.

We’ve already seen the changes introduced during the shift from bricks-and-mortar to online. We stuck an “e-” at the beginning of everything. If it’s Apple-related, maybe an “i”.

We saw segmentation and stuck a CRM at the end of it. And I still chuckle from hearing a supplier introduce “farmerCRM” at the time. In that room, we had all misheard PharmaCRM which made more sense consider the state of the market, although nowadays farmerCRM or more formally agriCRM has enough market presence.

Sometimes we did both and added an “e” and a “CRM”, e.g. ePharmaCRM. Although that was more a proposition from one company than an industry concept.

Then organisations started to realise that not every customer type was the same, so we removed the ‘C’ out of CRM and replaced it with ‘P’ for Partner, ‘E’ for Employee, “G” for Government, etc. Fortunately that died out and we are left with CRM for any type of customer.

We looked at how the channels were being managed and ended up with B2B, B2C, P2P, G2C and so on.

Moreover, some brand names have become synonymous with the elements of the business model they’ve changed.

Think cheap, put an “easy” at the front

Think everything related in one place, put an “rUs” at the end (although at the time of writing, maybe that should be Chapter11RUs?)

And we can continue with the other elements of business models looking for the affixes that denote what’s being changed. Unfortunately, we can also use those affixes to misdirect prospects by indicating that we’ve changed but we haven’t, instead we’ve just stuck an “e” at the front because everyone else does.

Focus on the Customer

Whatever element we’re changing, the focus should always be the customer, or rather, how to deliver more value to the customer.

Based on that concept, should we also see healthvalue, finvalue, insurevalue, etc? However similar to the tech suffix mentioned in the previous article and how techtech is absurb, adding value as a suffix also sounds absurd, but for different reasons.

1) The word “value” is being hijacked

The word “value” has become a euphemism for cheap and a synonym for budget, e.g. “you’ll want our value model” meaning “cheap model” or “budget model”. The word has been hijacked by brands not wanting to admit to customers that it’s a cheaper, inferior product to what they could have bought. I remember returning a drill a few years ago because my house broke it. The clutch on the drill had not coped well with the dense bricks and so the drill had stopped working. I returned the drill to be asked “what did you expect? That’s a value drill.”

On one hand, when viewed as value=cheap. That’s just on the edge of being an acceptable response, but should be followed up with how they can help me.

On the other hand, when viewed as value=worth of good received for total cost (money, time, effort) of transaction, then it implies that every other model of drill in that shop doesn’t provide value to the customer. We can then infer, from using the word as commonly defined in the dictionary, that I had obviously bought the right one for me as it was the only one that provided value.

However, in the parlance of that brand, and many other brands, I’d bought a cheap, inferior product. So we’d have to question whether value is the most appropriate term.

2) It’s all just improvement

By affixing a suffix, we lose sight of what we’re trying to achieve. We allow ourselves to abstract from the domain and the problem at hand, and immediately focus on our solution to resolve that problem. That’s definitely the case for the “-tech” suffix or the ‘e’ prefix. By adding -tech, we’re implying that our solution is tech and it will resolve the issues in that sector or allow us to expand into that market. However there may be more appropriate solutions than tech, so we shouldn’t be constrained by that.  Interestingly, the “-value” suffix doesn’t constrain us in that way, so maybe it is suitable after all.

But we still must be aware that what we’re trying to do with every initiative is to improve. It’s either improve our marketshare (and investor returns), improve our efficiency (and hence profits), improve the life of our customers or some combination thereof. Even if we’re innovating or inventing to get to that point, it’s still an aim to improve the position.

Conclusion

So instead of creating yet more hyped portmanteaus, can we simply stick with the original sectors?

Instead of saying you’re in Fintech, say you’re in Finance and you’re increasing the value you provide to customers everyday. You may do that through technology or you may do that by improving the partnership relations. Or probably both. But it’s still Finance.

 

Since I started writing this article, I began to formulate a 3rd article in the series.