Watch the replay >>
Sometimes I wonder why we have forgotten these principles from the late Paul Polak. When I chatted with him about the $300 House, he wanted me to reconsider and make it a $100 House. His point was simple: affordability drives design.
Now, as part of the research agenda of the Regenerative Marketing Institute, I’m thinking about how these BoP principles and Stuart Hart‘s BoP protocol apply to the developed world — to communities trying to find a way back from the COVID-crash.
Here are Polak’s principles:
1) Go to where the action is. You can’t solve poverty from a World Bank office.
2) Talk to the people and listen to what they have to say.
3) Learn everything about the context of the problem and the people.
4) Think and act big. No reason to be modest. Small solutions applied thousands of thousands of times.
5) Think like a child to find the obvious solution people have missed in the past. (Irony of thinking big and like a child)
6) See and do the obvious. Emersing yourself in the problem helps.
7) If someone has invented it–you don’t have to. Find existing solutions
8} Make sure your approach can be scaled up.
9) Design for the poor. Affordability rules the design process with poor customers.
10) Follow practical 3 year plans. Must transform into effective work plan for 3 years.
11) Continue to learn from your customers. (Interviewed more than 3000 farm families, $12 solar lantern)
12) Don’t be distracted by what other people say (Almost every project I’ve done has had sceptics)
Let’s add another principle for impact innovation:
13) Design for justice. (The design schools don’t)
Where does it end?
The billionaires don’t need employees.
Humans are too much trouble. Far better a company run by robots.
Will the customer be a robot too? And, can we replace the CEO with AI?
Can marketing be regenerative? And what would that look like?
Our definition >>
Regenerative marketing is defined as marketing practices which nurture communities and build local prosperity over the long term. The outcomes of regenerative marketing include value creation for customers, employees, and local communities. Regenerative marketing practices must – by definition – build community wealth.
Read the article in The Marketing Journal >>
If you missed it, you may want to check it >>
It’s time to put aside our toys – our ideologies and guns – and look at this time in history as our final exam. This is a test, as Buckminster Fuller said, to see if we, the human species, deserve to carry on. COVID has shown us that we cannot find consensus on how to deal with the virus.
Time’s running out. Philip Kotler, Karthiga Ratnam, and I think it’s time for a movement of movements.
Learn more on the Wicked7 Project site >>
What are we going to do now? The #forkintheroad which Buckminster Fuller warned us about is here now >> “Whether it is to be Utopia or Oblivion will be a touch-and-go relay race right up to the final moment… Humanity is in a final exam as to whether or not it qualifies for continuance in the Universe.”
What will it take to leap across the chasm and undo the destruction we’ve caused? Why can’t the UN fix it?
We’re hurtling into a state of climate emergency whilst we simultaneously face the convergence of the Wicked7.
What are the Wicked7? The world’s most urgent problems.
We’ve distilled over 200 problems into the Wicked7:
- The Death of Nature
- Hate & Conflict
- Power & Corruption
- Work and Technology
- Health and Livelihood
- Population & Migration
You can’t solve wicked problems. That’s what we’ve been led to believe. And for years, we haven’t. Solve them, that is.
Well, if not now, then when?
Wicked problems must have virtuous solutions. If any lesson has emerged from this COVID-19 pandemic, it is this: we must address the urgent problems of the world now, or perish. Why? Because COVID-19 is just the tip of the proverbial iceberg… the ecosystem of wicked problems will not wait.
After working on this idea for over a year, Philip Kotler and I kicked off the Wicked7 Challenge on April Fool’s Day, 2021.
Our first challenge? The Death of Nature.
Join us >>
P.S. – Bucky Fuller was wrong. Thanks to Sonmoy, one of our W7 advisors, we now see that there’s a triple fork in the road, and utopia is simply no longer an option. What we must fight for is survival.
Once again, it is useful to study the past to learn what applies here to our ecosystematic journeys. Of particular interest is the work of Donella Meadows, who taught us how to focus on having the most impact on a system (Bill Gates, listen up!) >>
Where to intervene:
12. Constants, parameters, numbers (such as subsidies, taxes, standards).
11. The sizes of buffers and other stabilizing stocks, relative to their flows.
10. The structure of material stocks and flows (such as transport networks, population age structures).
9. The lengths of delays, relative to the rate of system change.
8. The strength of negative feedback loops, relative to the impacts they are trying to correct against.
7. The gain around driving positive feedback loops.
6. The structure of information flows (who does and does not have access to information).
5. The rules of the system (such as incentives, punishments, constraints).
4. The power to add, change, evolve, or self-organize system structure.
3. The goals of the system.
2. The mindset or paradigm out of which the system — its goals, structure, rules, delays, parameters — arises.
1. The power to transcend paradigms.
Read all about it >>
Those of us who have been building digital communities know that we were simply trying to re-interpret and re-create the rules of real, living, communities. Wendell Berry had something say about this many years ago which applies to the “ecosystem builders” of today.
These “rules” or steps are not optional – you can’t pick or chose. All or nothing. Our survival as a species may depend on understanding this.
These are also the rules for sustainable development. Gandhian all the way.
Supposing that the members of a local community wanted their community to cohere, to flourish, and to last, they would:
1. Ask of any proposed change or innovation: What will this do to our community? How will this affect our common wealth?
2. Include local nature — the land, the water, the air, the native creatures — within the membership of the community.
3. Ask how local needs might be supplied from local sources, including the mutual help of neighbors.
4. Supply local needs first (and only then think of exporting their products, first to nearby cities, and then to others).
5. Understand the ultimate unsoundness of the industrial doctrine of ‘labor saving’ if that implies poor work, unemployment, or any kind of pollution or contamination.
6. Develop properly scaled value-adding industries for local products in order not to become merely a colony of the national or the global economy.
7. Develop small-scale industries and businesses to support the local farm or forest economy.
8. Strive to produce as much of their own energy as possible.
9. Strive to increase earnings (in whatever form) within the community, and decrease expenditures outside the community.
10. Circulate money within the local economy for as long as possible before paying it out.
11. Invest in the community to maintain its properties, keep it clean (without dirtying some other place), care for its old people, and teach its children.
12. Arrange for the old and the young to take care of one another, eliminating institutionalized ‘child care’ and ‘homes for the aged.’ The young must learn from the old, not necessarily and not always in school; the community knows and remembers itself by the association of old and young.
13. Account for costs that are now conventionally hidden or ‘externalized.’ Whenever possible they must be debited against monetary income.
14. Look into the possible uses of local currency, community-funded loan programs, systems of barter, and the like.
15. Be aware of the economic value of neighborliness — as help, insurance, and so on. They must realize that in our time the costs of living are greatly increased by the loss of neighborhood, leaving people to face their calamities alone.
16. Be acquainted with, and complexly connected with, community-minded people in nearby towns and cities.
17. Cultivate urban consumers loyal to local products to build a sustainable rural economy, which will always be more cooperative than competitive.
From a speech delivered November 11, 1994 at the 23rd annual meeting of the Northern Plains Resource Council.
A special thanks to the Business Ecosystem Alliance and Dr. Annika Streiber for hosting me on the topic of “Ecosystematic” – the forthcoming book co-authored with Philip Kotler:
Join Philip Kotler and myself as we kickoff this project to “save humanity from itself.”
WEBINAR >> April 1, 2021 >> 4 pm EASTERN / 10 PM EU
REPLAY available here >>
I still think of Larry Keeley‘s 10 types of innovation – and think about how the model can be applied to social innovation – to meet the “unmet needs” of society.
The 11th type of innovation is purpose – to what ends are your capabilities and talents being deployed? Are you inclusive or is your company supporting new forms of apartheid? That is what Brand Activism, and by extension – the Wicked7 Project – are about.
So how do we determine society’s Jobs to be Done?
Find out on March 31st (2:00 PM -2:45 PM ET) when I chat with Strategyn’s Tony Ulwick about this and more . Register here for the free webinar.
One of the points of the Wicked7 Project is to demonstrate how we have a shared responsibility — business, government, and social institutions — to work together for the future of the planet.
By definition, solving society’s most urgent problems is a balancing act between the various requirements and needs of the different stakeholders across all sectors. Our policy-making must be driven by this idea of balance if it is to create a sustainable and resilient society.
Read >> The Unmet Needs of Society: Introducing Multi-stakeholder Jobs to be Done by Christian Sarkar, Anthony Ulwick, and Philip Kotler.
Each morning I get up and check to see if we’re still living in a Democracy.
I’m only half joking. In the US, Trump was just a symptom of the larger rot. It is not an accident that all around the world countries are falling into the trap of authoritarianism.
What can be done to stop the backsliding?
Maybe Bill Gates could start a PAC to get money out of politics. Maybe we could take to the streets to stop voter suppression.
Or maybe we could just keep being distracted by Harry and Megan.
Staying silent will kill us all. Nerds, unite.
This letter spells out the duopoly which is now in full force in US politics. The last remaining chance for Democracy to survive in the US is for us to heed this warning >>
A Letter to the Democratic Convention from Franklin D. Roosevelt
July 18, 1940
Members of the Convention:
In the century in which we live, the Democratic Party has received the support of the electorate only when the party, with absolute clarity, has been the champion of progressive and liberal policies and principles of government.
The party has failed consistently when through political trading and chicanery it has fallen into the control of those interests, personal and financial, which think in terms of dollars instead of in terms of human values.
The Republican Party has made its nominations this year at the dictation of those who, we all know, always place money ahead of human progress.
The Democratic Convention, as appears clear from the events of today, is divided on this fundamental issue. Until the Democratic Party through this convention makes overwhelmingly clear its stand in favor of social progress and liberalism, and shakes off all the shackles of control fastened upon it by the forces of conservatism, reaction, and appeasement, it will not continue its march of victory.
It is without question that certain political influences pledged to reaction in domestic affairs and to appeasement in foreign affairs have been busily engaged behind the scenes in the promotion of discord since this Convention convened.
Under these circumstances, I cannot, in all honor, and will not, merely for political expediency, go along with the cheap bargaining and political maneuvering which have brought about party dissension in this convention.
It is best not to straddle ideals.
In these days of danger when democracy must be more than vigilant, there can be no connivance with the kind of politics which has internally weakened nations abroad before the enemy has struck from without.
It is best for America to have the fight out here and now.
I wish to give the Democratic Party the opportunity to make its historic decision clearly and without equivocation. The party must go wholly one way or wholly the other. It cannot face in both directions at the same time.
By declining the honor of the nomination for the presidency, I can restore that opportunity to the convention. I so do.
We are now at that point in history where collapse seems inevitable: political, social, environmental, civilizational. The decisions our politicians make are killing us.
“Where there is no vision, the people perish.” — Proverbs 29:18
In Texas, we can applaud our fearless Governor Greg Abbott and his Republican mafia for destroying any pretense of serving the public good (see exhibits A and B). Every decision made by leaders in the Republican Party is made based on ideology, not reason, science, or even common sense. Some argue we live in the Age of Social Murder. The Democrats, for their part, are slightly better — but certainly not equal to the task which lies ahead.
It’s time to depoliticize decision-making.
Either that, or our time is up.
The work of leadership has never been more clear: it is to bridge the gap — across all boundaries — and to create a way forward for the common good. The pyramid of love reminds us that it is possible to resolve conflicts and escalate peace.
Says David Hinds of Steel Pulse: “Where there is no love, there can be no justice; and where there is no justice, there will never be peace.”
That about sums it up.
As the Senate holds its second impeachment trial of president Trump, they would be well advised to educate their members on how incitement and escalation of hate can indeed lead to violence and even genocide. Here’s a slightly modified version of the Pyramid of Hate developed by the Anti-Defamation League (ADL), Echoes and Reflections, and the Holocaust Center for Humanity.
The pyramid reminds us that hatred can be used to dehumanize people by race/color, tribe, ideology, and faith. The misleader polarizes and radicalizes their followers, pushing them up the pyramid of hate.
The new normal is the old normal. How much has really changed since the days of the East India Company? We are accelerating backwards, back to a world run by a few, for the few.
The question we should ask now is: what does it mean to decolonize the corporation?
It means understanding that everything we do in business is built on the foundation of the brutal business model handed down to us by Robert Clive and friends.
P.S. – did you know the East India Company came back to life in 2004?
What’s wrong with Elon Musk? And why do we—as a society— allow billionaires to play games with our future?
Maybe it’s because we think Elon Musk, Jeff Bezos, Mark Zuckerberg and/or Bill Gates will save us with their genius. Don’t count on it, children. The revenge of the nerds is nigh.
Here’s what Musk had to say: “You can’t see where the implant is and he’s a happy monkey. We have the nicest monkey facilities in the world. We want them to play mind-Pong with each other.”
The line between Trump and Musk is a fine line indeed.
Now check out Zuckerberg and his “monkey experiment” —
We are all “happy” monkeys now.
How high do we have to jump for that banana?
UPDATE: see also — the #happypig
Phil Kotler and I write about new approaches non-profits should consider as they plan their futures. Here are seven recommendations we think can make a real difference:
- Revisit your Mission.
- Organize as an Ecosystem.
- Look for Entrepreneurial Opportunities.
- Design for Justice.
- Embrace Brand Activism.
- Build/Join a Purpose Platform.
- Start/Join a Movement.
Read the article at The Marketing Journal >>
The problem isn’t Trump. Philip Kotler and I explain in this article for The Institute of Art and Ideas >>
Where can we find light, y’all?
The Hill We Climb
by Amanda Gorman
When day comes, we ask ourselves, where can we find light in this never-ending shade?
The loss we carry. A sea we must wade.
We braved the belly of the beast.
We’ve learned that quiet isn’t always peace, and the norms and notions of what “just” is isn’t always justice.
And yet the dawn is ours before we knew it.
Somehow we do it.
Somehow we weathered and witnessed a nation that isn’t broken, but simply unfinished.
We, the successors of a country and a time where a skinny Black girl descended from slaves and raised by a single mother can dream of becoming president, only to find herself reciting for one.
And, yes, we are far from polished, far from pristine, but that doesn’t mean we are striving to form a union that is perfect.
We are striving to forge our union with purpose.
To compose a country committed to all cultures, colors, characters and conditions of man.
And so we lift our gaze, not to what stands between us, but what stands before us.
We close the divide because we know to put our future first, we must first put our differences aside.
We lay down our arms so we can reach out our arms to one another.
We seek harm to none and harmony for all.
Let the globe, if nothing else, say this is true.
That even as we grieved, we grew.
That even as we hurt, we hoped.
That even as we tired, we tried.
That we’ll forever be tied together, victorious.
Not because we will never again know defeat, but because we will never again sow division.
Scripture tells us to envision that everyone shall sit under their own vine and fig tree, and no one shall make them afraid.
If we’re to live up to our own time, then victory won’t lie in the blade, but in all the bridges we’ve made.
That is the promise to glade, the hill we climb, if only we dare.
It’s because being American is more than a pride we inherit.
It’s the past we step into and how we repair it.
We’ve seen a force that would shatter our nation, rather than share it.
Would destroy our country if it meant delaying democracy.
And this effort very nearly succeeded.
But while democracy can be periodically delayed, it can never be permanently defeated.
In this truth, in this faith we trust, for while we have our eyes on the future, history has its eyes on us.
This is the era of just redemption.
We feared at its inception.
We did not feel prepared to be the heirs of such a terrifying hour.
But within it we found the power to author a new chapter, to offer hope and laughter to ourselves.
So, while once we asked, how could we possibly prevail over catastrophe, now we assert, how could catastrophe possibly prevail over us?
We will not march back to what was, but move to what shall be: a country that is bruised but whole, benevolent but bold, fierce and free.
We will not be turned around or interrupted by intimidation because we know our inaction and inertia will be the inheritance of the next generation, become the future.
Our blunders become their burdens.
But one thing is certain.
If we merge mercy with might, and might with right, then love becomes our legacy and change our children’s birthright.
So let us leave behind a country better than the one we were left.
Every breath from my bronze-pounded chest, we will raise this wounded world into a wondrous one.
We will rise from the golden hills of the West.
We will rise from the windswept Northeast where our forefathers first realized revolution.
We will rise from the lake-rimmed cities of the Midwestern states.
We will rise from the sun-baked South.
We will rebuild, reconcile, and recover.
And every known nook of our nation and every corner called our country, our people diverse and beautiful, will emerge battered and beautiful.
When day comes, we step out of the shade of flame and unafraid.
The new dawn balloons as we free it.
For there is always light, if only we’re brave enough to see it.
If only we’re brave enough to be it.
Billionaires are a prisoners of their own “success.” Someone once said that if you have to give back to society, then you took too much from it.
The lowest paid, full-time Amazon worker makes $31,200 a year. It would take them just 4.15 million years to earn as much as their boss. Really.
Did you know that billionaires saw their fortunes rise by 27% during the pandemic while the rest of us struggled to keep our jobs?
Did you know that since 2016, corporate and trade association PACs have given $170 million to lawmakers who voted to challenge the US presidential election?
What will it take for the wealthy to care about the common good? What would society be like if our politicians weren’t owned by the rich and powerful, but actually worked for the people?
In Do Billionaires Destroy Democracy and Capitalism? Phil Kotler and I look at the problem in some depth.
The question that remains is: should billionaires exist at all?
2021 has already shown us that the wickedness of 2020 was just the beginning. The “new normal” is that there is no “new normal.”
The job of leadership now is (re)visioning – rethinking what it means to live in an age of collapse.
We will explore this topic in an article we’re writing (Phil Kotler and I) on the leadership we need now. This is also part of the agenda for The Wicked7 Project.
In 2015, the late architect and teacher Abhijit De and I wrote an article for Thinkers called The Ecosystem of Poverty: Lessons Learned from the $300 House.
In it we popped in a chart that was constructed after days and months of debate with students, surveys and discussions with villagers in rural India, and the “experts”:
Soon after, we were working on the concept of a “smart village” – with the sobering realization that the problems of the poor are not going to be solved without solving other wicked problems. A few days before his untimely passing, we discussed expanding this chart.
This “ecosystem of wicked problems“ is not going to magically vanish. It needs our attention, now more than ever.
And that’s the point of The Wicked 7 Project.
Join us >>
Change is coming.
Clark Fox, Solomon Kane and I decided to do this >>
submit your work!
Clayton Christensen has passed on to a better world. We did not deserve him. I only ever met the Professor over the phone – in the early 2000s – when I did this interview with him >>
The Innovation Catalyst
“You never want to ever say: ‘Well those idiots failed because they had the wrong strategy.’
“You have to ask: ‘Why did they have the wrong strategy?’
“Almost always, they’ve used the wrong process to come with the strategy.”
— Clayton Christensen, author, The Innovator’s Dilemma and The Innovator’s Solution
What are your views on Nick Carr’s Harvard Business Review article, “IT Doesn’t Matter”?
Clayton Christensen: In chapters 5 and 6 of Innovator’s Solution, I talk about how you start out in the early era of an industry’s history when the functionality and reliability of the product aren’t good enough. The way you compete is to make more reliable and higher performing products. In order to do that well, you need to have an interdependent architecture that’s a proprietary system. You then get to the paint where you’ve overshot what customers can use.
At this point, a process of commodization begins to set in. It has two dimensions: First, having overshot you keep trying to improve the product. People will accept the improved product; however, they won’t pay much money for the improvements. Customers often don’t need all of the improvements.
The other dimension of commodization surrounds the argument of now having to compete differently. You’re faced with the need to market so that every customer gets exactly what they need when they need it. If you achieve this, you can responsibly market to smaller and smaller niches in the market. To compete at this level, you need to have the architecture of the product evolve from a proprietary interdependent one to a modular architecture. When you have a modular architecture where the product’s performance is really driven by the subsystem that you snap together, like your personal computer, then modularity finishes the commodization job. You can no longer differentiate your product from the others on the basis of product performance because everyone has the same modules.
In the first realm of commodization, the functionality and reliability are determined in the architecture of the product. The component themselves don’t make much of a difference. In the other realm of commodization, the components or the subsystems make all the difference and the architecture doesn’t make much difference.
In chapter 6, the very move in this direction at a stage of value added precipitates a reciprocal of decommodization of the adjacent stages. Usually, that where what’s not good enough gets resolved.
Carr’s point is a little bit consistent with this view. There was an era when you could gain a competitive advantage by having information technology that (1) others didn’t have, and (2) you had processes within your company to integrate that technology into your strategic planning, product development processes, and pricing better and faster than others. Now, the ability to capture that information, process it, and deploy it to the people who need it is almost modular, in the sense, any company can get it. Carr overstates this point a bit. Things are headed in this direction, and thus the information technology becomes a commodity you must have. You just can’t differentiate yourself.
Let’s talk about a specific example- about five years ago, StorageNetworks built an IT infrastructure from commercially available hardware, raised more than $200 million, and offered organizations a third-party source for immediate storage, likened to that of a public service utility. EMC validated the concept. StorageNetworks couldn’t make a go of that business and offered backup stores and eventually started licensing its software. StorageNetworks went Chapter 11 and couldn’t given find a buyer. What went wrong here?
Clayton Christensen: I haven’t really studied this company in depth. So, I can only surmise. With the caveat that I haven’t crawled inside, I will tell you some of the things I worry about as I watch that. First, Chapter 8’s key assertion is the only thing you know for sure at the beginning you don’t know what the right strategy is. Likewise, you don’t know who are the right customers, and what job are they trying to get done. You start out with a deliberate strategy where you think this’s the right thing. You almost have to know for sure you are wrong. Therefore, you have to get in the market quick with a little of this and then figure out what’s work.
In Chapter 8, I cite a colleague’s study of 400 Harvard Business School graduates who started new companies. Half have been successfully; half haven’t been. The half that succeeded didn’t entirely trust the strategy they used when they raised money. They ended up selecting another strategy that enabled them to succeed. Ninety percent of this group said they ended up doing something completely different from what they intended to do. The difference between the successes and the failures wasn’t the successful ones got it right the first time. They just had money left over after they got it wrong. They learned from their mistake in time to shift gears.
In Chapter 9, I talk about good money and bad money. Bad money is a lot of money flowed into something with the willingness to accept big losses. You have the expectation that the more you spend, the more you will earn later. The money is spent in the expectation your strategy is right.
We would be in error to say that somewhere in that space where StorageNetworks was there wasn’t a great business opportunity. It’s more accurate to say, like everyone else, there initial strategy wasn’t right. They spent a lot of money pursuing that strategy. The problem they employed a deliberate strategy aggressively from the beginning, and spent to get big fast.
How do you fix the disconnect between upper management’s ideas and what the market will accept?
Clayton Christensen: It is a combination of Chapters 8 and 9. Too much money is a huge curse. Enough money can get you into the market as quickly as possible. In Chapter 3 talks about segmenting the market by the job people are trying to get done. The faster you can get into the market and get people to pay real money for real products, then you need to figure you what were these people trying to get done for them when they hired your product. You can then begin to focus on helping them get the job done better and better. As you learn what works and how the customers are using your product, you reach the point where you can aggressively spend money to grow. It’s the premature outlay of huge amounts of money in pursuit of the wrong strategy is the thing to avoid. You need to have an experimental mindset.
In my own language, I try not to use innovative and non innovative. Most company’s are innovative, but in different ways. An established company is usually very good in the sustaining innovation track. Usually established companies pull off radical sustaining innovations. Some times they overshooting and flaming out. The disruptive innovation is a different kind. I would rather work for an innovative company. The question is which ones.
As I live with the ideas in the Innovator’s Solution, history might judge the concepts in Chapter 3 — segmenting markets in ways that cause us to fail – might judge this to be the most important chapter in the book.
We always have an overwhelming tendency to frame the market we are targeting by the boundaries defined by product categories, or product points, or the demographics of the customers. We think about industry verticals. When we target products that markets that are defined by demographics of customers or by the product characteristics, we are playing the crapshoot game of determining whether or not there is a valid customer need. We define our business as helping a customer get a job done – one that he is already struggling to get done and has no satisfactory means of doing it – the probability that product will contact with the customer is very high. You need to look at what is the customer trying to get done and does it help him or her get it done better. Or, does it make it easier for them to do what they aren’t trying to get done. The latter is a failure.
We give a little example in Chapter 3. It’s about investments in Internet-based or electronic learning technologies which are oriented as trying to help college students learn more. These technologies usually never work. If you think about what college students are really trying to do, they want to pass the course without really having to study. If the same effort was focused on crammed.com, making it easier for them to cram, you help them try to do what they are already trying to get done. This works.
Carr makes the comment about commodization (Oracle and SAP struggling to sell better products at higher and higher prices). If the IT industry has lost a bit of its luster, history will show IT vendors have cut to segment the market by product categories and by the attributes of customers, rather than the fundamental jobs people are trying to do in organization. An IT professional who wants to know should I join this organization or this organization I am working with have high potential. If there’s a deep of what the customer is trying to accomplish, then I would be excited about working there.
What are the symptoms of a business or an industry that’s ready for disruption? You mention companies that produce products with features no one uses. What are some of the other attributes to look for?
Clayton Christensen:There are two types of disruptions – low-end and new market. The possibility that a low-end disruption, which is covered in Chapter 2, might occur only if two conditions are met: There have to be customers at the low end of the market who don’t value and won’t pay for further improvement. The second condition for that to happen is that someone has to figure out a lower-cost business model that can be attractively profitable at the discount prices required to win the business of those customers at the low end. If these conditions are met, then a low-end disruption most likely will occur.
The new market disruption is based on an entirely new market sector. If there is a population who are trying to get something done but they can’t to do it for themselves satisfactorily because they don’t have the skills or money to buy the product, they have to rely on the expensive and inconvenient help of experts. If that population exists, that is the requisite condition for new market disreputability. The second reason for new market disruption is can I technologically come up with a market that is so afford and simple to use that I can enable this new population who are trying to get it done, but can’t. If these two conditions exist, then a market is a new market disreputable.
Your company- Innosight- is a disruptive company in the management consulting space. How do you differentiate yourself from the McKinsey’s and the Bains?
Clayton Christensen: The trajectory that the consulting firms are on is higher billings, per partner, per client. Partners make more money by putting more people on the ground. These projects tend not to be strategic related, but operations effectiveness type consulting in mergers and acquisitions and integration. That has become the bread and butter of those companies. The way we try top to help a company is to go in and spend a day going over theory. We have this conviction that theory is a very useful thing. It’s a statement of what causes what and why. Managers use theories every day. In a way, we give them virtual glasses so they can see these theories.
On the second day, we have them make a list of 20 or more of the new business ideas or growth product ideas that have been kicked around in this company. Let’s look at each one of those ideas through this lens. Almost always, there are three or four that just pop out and managers say we haven’t been giving this much thought because it is not a sustaining innovation. However, when you look at it through the theories lenses, the ideas have enormous potential. As we go through the day, we say it has enormous potential, but the way we’ve been thinking about doesn’t meet with what we say in Chapter 3. Most likely, they’ve been studying the wrong customers for that idea. You can take an idea and start to shape it so it conforms to the pattern of disruptive successful companies.
By the end of the second day, they have several products which they say could be successful. Then we have them go through a market study phase where we try to send them to market by the job customers are trying to get done. They need to answer how big is this market? It does involve finding some people to watch and then to ask them a unique set of questions. When you just hired that product what job were you trying to get done? And when you don’t hire that product, what else do you hire to get the job done? There’s a methodology for converting those insight into an estimate for how big is the job.
The third is to work with the team to create a business plan that can get funded and implemented.
When creating businesses to commercialize high-potential innovations, you have six questions, six decisions you ask people to make. Can you go over them with us?
Clayton Christensen: The questions are fairly simple:
1) Whether the new business should be set up to operate autonomously. Opportunities that require developing new skills and using new business models ought to be kept separate from the main business.
2) The activities the company should build versus the activities it should buy. The new business needs to control activities that allow it to improve performance along dimensions that matter most to customers.
3) How the new business should interact with “value network” participants, such as suppliers and channel partners. The new business must help its value network partners move up their own improvement trajectory. People don’t do what doesn’t make sense to them.
4) Which managers should be appointed to run the new business. Managers should have wrestled with challenges (attended “schools of experience”) they know they will encounter.
5) How the new business should set its strategy. In all likelihood, the new business needs to use an “emergent” strategy process that lets it experiment and learn from the marketplace.
6) Who should fund the new business. The new business needs investors whose prioritization criteria match the business’ needs. For truly disruptive innovations, this typically means being patient for growth but impatient for profits.
People assume an answer to these questions without really asking. They often don’t have a theory or strategic framework to think them through. You never have a one-size fits all answer. There are no best practices. Best practices is flawed thinking- it causes innovation to fail.
For example, should the business be autonomous or not? There is a model in Chapter 7 of resources, processes, and values. The organization needs to be autonomous if its normal processes of prioritizing things would place other priorities over this one. The organization can’t succeed if the responsible people are over prioritizing. You can do the same thing with processes. A process is designed to do a particular thing. If the process won’t facilitate success, then you need a different process. Then you need a separate team.
The concept of getting the right people is one of the most important ideas for an organization. You shouldn’t segment markets by the attributes of the product. You shouldn’t segment people by their personal attributes. You need, instead, to segment them by the way they solve problems during earlier times in their career. You make a list of what kinds of problems this management team is going to comfort. Once we know, we have to make sure we have people on the team who’ve seen problems like this before.
You never want to ever say well those idiots failed because they had the wrong strategy. You have to ask “Why did they have the wrong strategy?” Almost always, they’ve used the wrong process to come with the strategy. We show two fundamentally different processes: one is a top-down analytical project that is followed by implementation, and the other way is get into the market to try to experiment what works and what doesn’t.
Who should fund the business? During the era of being out in the market experimenting, then the money has to be patient for growth and impatient for profit. Once you have it figured out and you know what strategy is going to work, then the money can demand growth.
Christian Sarkar: Thank you so much.
Years later, I interviewed Clay again – still not face to face – for The Marketing Journal >> “Branding as a Job to be Done” – An Interview with Clayton Christensen
I am grateful for everything you did for us nerds, Prof. Christensen. We will not forget you. See this from Harvard Business Review >>
Why are leading brands turning to progressive Brand Activism?
How do brands align their values with the values of their customers, their employees, and society at large?
We offer the workshop in two locations:
(1) in Sarasota, Florida (workshop led by Professor Philip Kotler and Christian Sarkar)
(2) on your company’s premises (workshop led by Christian Sarkar)
WHO SHOULD ATTEND
Senior executives responsible for company/brand strategy and direction
The workshop introduces executives to the strategic power of Brand Activism done right.
- What is Brand Activism?
- How are leading companies stepping up? (NIKE, PUMA, Microsoft, Google, Unilever, Patagonia, The Body Shop, Kenneth Cole, and more)
- The role of Trust: local, national, and global
- What are the existing models for Brand Activism?
- An introduction to the Sarkar-Kotler Brand Activism Framework
- Understanding Brand Activism strategy
- The CEO as Brand Activist
- How do you find your authentic Brand Activism story?
- What could possibly go wrong?
- Aligning values and building movements
- Measuring the impact of Brand Activism (Return on Trust)
- Brand Activism Mapping
- The Brand Activism Canvas
According to PlainSite, Facebook has been lying to the public about the scale of its problem with fake accounts, which likely exceed 50% of its network. Its official metrics–many of which it has stopped reporting quarterly–are self-contradictory and even farcical. The company has lost control of its own product.
Fake accounts affect Facebook at its core in numerous ways:
- Its customers purchase advertising on Facebook based on the fact that it can supposedly target advertisements at more than 2 billion real human beings. To the extent that users aren’t real, companies are throwing their money down the drain.
- Fake accounts click on advertising at random, or “like” pages, to throw off anti-fraud algorithms. Fake accounts look real if they do not follow a clear pattern. This kind of activity defrauds advertisers, but rewards Facebook with revenue.
- Fake accounts often defraud other users on Facebook, through scams, fake news, extortion, and other forms of deception. Often, they can involve governments.