From “The Ecosystem of Poverty” to “The Ecosystem of Wicked Problems”

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, 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.

Now, in 2020 – Philip Kotler and myself, along with a gracious cast of advisers, have embarked on this journey once more; this time we are looking to map the world’s most urgent wicked problems.

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 >>

RIP, Professor Christensen.

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 >>

Clayton Christensen: 
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 >>

Are over 50% of the accounts on Facebook fake?

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.
Download the report here >>

A Defense of Philip Kotler

Recently, my dear friend and mentor – Professor Philip Kotler (yes, that Kotler!) got entangled in a squabble between Narendra Modi, the Prime Minister of India, and Rahul Gandhi, the dynastic leader of the Congress party.

The fun began when Professor Kotler presented the Prime Minister with the inaugural Philip Kotler Presidential Award, an award that recognizes Shri Narendra Modi’s leadership qualities on the global stage.

Because his physician had advised him not to travel, Professor Kotler chose his friend Professor Jagdish Sheth, an eminent marketer in his own right, to present the award on his behalf.

The award was presented by a delegation led by Professor Sheth on January 14, 2019. Also part of the delegation were representatives of the World Marketing Summit which had held a conference in Delhi in December of 2018.

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The Reaction

The next day, this tweet from Rahul Gandhi poked fun at the award, seeking to undermine not just the PM, but, more importantly for me, the integrity of Professor Kotler as well:

Almost immediately, the comments inspired by the post fell into two categories – insults and praise; insults from Rahul Gandhi followers and praise from PM Modi supporters.  The tone of these comments was shrill, with many attacking Professor Kotler directly.

Professor Kotler and I were shocked.  The article questioning the award was written by a leftist outlet which casts doubt on the award:

The government’s press release makes no mention of jury members, nor the exact organisation behind the new award.

The media pounced on the story and added to the controversy:

Even one of my literary heroes – Shashi Tharoor – piled on, going so far as to call the award a fake.

Questions & Answers

As questions were raised, I decided to collect and answer them:

Is the award real? (“…little information has been shared about the provenance of the latest award, or the organisation presenting it.”)

Yes, it is real.  And why would people like Tharoor assume it was fake? The “journalists” in Rahul Gandhi’s tweet did not follow the first rule of journalism which is – check your facts with the source.  How easy it would have been to Google Philip Kotler and contact him through his Northwestern faculty page.

Who is Philip Kotler?  What qualifies him to give this award?

Along with Peter Drucker, Professor Philip Kotler is considered to be one of our greatest management thinkers. Who is the leading business scientist in history? According to the Hirsch-Index its Philip Kotler with an h-index of 163, followed by Michael Porter with 159.

Ask any MBA student anywhere in the world, and you will find that they have studied Professor Kotler’s books. He has received 22 honorary degrees from around the world, and published over 70 books. His 50+ years of work with the Kellogg School of Management has resulted in building the #1 Marketing department in the world.

Professor Kotler is a man with great integrity and openness. He is also one of the smartest thinkers to grace the planet. He is in the Thinkers50 Hall of Fame (2013), and is featured as a “guru” in the Economist.

Who chose the award? Why is there no jury?

Professor Philip Kotler made the final decision after a committee for the World Marketing Summit came up with a list of possible candidates.

Professor Kotler explains via a letter published on his blog:

lettertopmmodi_small.jpgWhy is Kotler’s twitter account not verified?

Because Twitter has stopped verifying accounts, and Prof. Kotler never thought to ask. I messaged Jack Dorsey to ask him if he could make an exception for Professor Kotler.

Why was there no mention of the award on the Kotler website?

Professor Kotler’s site is not updated often. When the Indian press started questioning the authenticity of the Award, Professor Kotler tweeted about it:

Why was the Indian site for the World Marketing Summit taken down?

After an event is over, often times the microsite that’s used to describe the event and/or register participants is usually taken down.  The global site for the World Marketing Summit, Kotler Impact and Kotler Awards are still running.

What could Professor Philip Kotler possibly know about India?  

Professor Kotler is not just the “father of modern marketing.” He is an economist and studied with some the greatest Economics teachers on the planet.  His involvement with India began in 1955, when he spent a year working on his PhD thesis in India. If the journalists bothered to read My Adventures in Marketing, they might have known that. Since then he has visited India often to teach and speak.

What could Professor Philip Kotler possibly know about democracy?

Professor Kotler has published books and written numerous articles on capitalism and democracy.  See: Democracy in Decline and Confronting Capitalism.

How to Argue 

Bottom line, I’m disgusted with the trash-talking that I see from the left-leaning Indian journalists and social media participants.

Too many of our disagreements fall in the bottom two layers of Paul Graham’s Hierarchy of Disagreement:

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If someone wants to question PM Modi’s track record, they would do far better through Refutation rather than Ad Hominem and Name-Calling.  Let that be a lesson for you, young Rahul, and for all who would seek to look childish: focus on the substance instead.

Professor Kotler, please excuse the mess caused by this controversy. 

DISCLOSURE: I have worked and continue to work with Professor Philip Kotler on several projects, including The Marketing Journal, ActivistBrands.com, and FIXCapitalism. We’ve written a book together titled Brand Activism: From Purpose to Action (the print version is forthcoming).  No one asked me or paid me (in India, as elsewhere, paid-journalism is a thing) to write this.  I simply felt compelled to stand up for a learned man of great integrity. 

Brand Activism: From Purpose to Action

Professor Philip Kotler – the “father of modern marketing” – and I have co-authored a book: Brand Activism: From Purpose to Action

Brand activism is driven by a fundamental concern for the biggest and most urgent problems facing society. The main idea here is that when government fails to do its job, business has a civic responsibility to stand up for the public interest. It’s what a good citizen does.  

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available in the following countries

US UK DE FR ES IT NL JP BR CA MX AU IN

The book introduces the reader to regressive and progressive Brand Activism, and shows how the best businesses are making the world a better place because their activism is a differentiator – for customers, for employees, and for society at large.  We also examine the role of the CEO.  

Here’s a look at the table of contents:

Screen Shot 2018-11-22 at 5.54.07 PM.pngThe book includes the Sarkar-Kotler Brand Activism Framework, a toolkit for business leaders looking to transform their companies and institutions.  

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The book also includes interviews with leaders from various fields:

  • Scott Galloway
  • John Elkington
  • Raj Sisodia
  • John Ehrenreich
  • Christopher Davis
  • Stephen M. R. Covey
  • Hennie Botes
  • Stuart L. Hart
  • David “Dread” Hinds
  • Clark Fox

and 

Philip Kotler

Finally, we’ve launched a separate website to help individuals who want to learn more – www.activistbrands.com.  We hope you find it useful.

How Marketing Guru Phil Kotler Stepped Up to Confront Capitalism

The Founding Fathers didn’t envision corporate personhood, or Citizen’s United.

In fact, I wonder what they’d think about capitalism as an enemy of democracy and a grave threat to the very survival of life on Earth.

Is democracy doomed?

What must we do to save capitalism from itself?

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Enter Phil Kotler. The legendary marketing guru is marketing a new sort of product these days. He is trying to fix Capitalism, a system he believes has helped create more wealth for more people than any other economic model.

Says the esteemed Professor Kotler (he’s taught at Northwestern for 50 years!) >>

“Capitalism must evolve to serve the needs of all citizens, not just the very affluent. Our goal is to discuss the 14 Shortcomings of Capitalism and systematically analyze the problems and potential solutions. We want to gather opinions and recommendations from everyone – and begin the process of saving capitalism from itself.”

It’s great to see one of the greatest capitalist minds working on reforming capitalism with a capital C.

According to Kotler, the current state of capitalism is falling short because it:

1. Proposes little or no solution to persistent poverty

2. Generates a growing level of income inequality

3. Fails to pay a living wage to billions of workers

4. Doesn’t create enough human jobs in the face of growing automation

5. Doesn’t charge businesses with the full social costs of their activities

6. Exploits the environment and natural resources in the absence of regulation

7. Creates business cycles and economic instability

8. Emphasizes individualism and self-interest at the expense of community and the commons

9. Encourages high consumer debt and leads to a growing financially-driven rather than producer-driven economy

10. Lets politicians and business interests collaborate to subvert the economic interests of the majority of citizens

11. Favors short-run profit planning over long-run investment planning

12. Should have regulations regarding product quality, safety, truth in advertising, and anti-competitive behavior

13. Tends to focus narrowly on GDP growth

14. Needs to bring social values and happiness into the market equation.

So that’s my latest project – helping Kotler and friends get the word out and make a difference.

Like the $300 House Project, I’m helping build an “ecosystem of concerned folks” to face the challenge.

We began by enlisting the Huffington Post as our media partner. 

We now have a FIXCapitalism channel; we’re slowly beginning to get some attention with these articles:

Check out our FIXCapitalism website, read the book, like our FIXCapitalism Facebook page, and follow us on Twitter.

The future is too important to leave in the hands of the corporations and their paid stooges – the politricksters in D.C.!

Can you help? Connect us to others who are interested – who may have a point of view they want to share – and can help move the conversation forward. Join us!

Help spread the word!

The Search for the Sources of Innovation

How does innovation happen? Most company’s struggle to understand how innovation works, often confusing creativity with innovation. In today’s tacit, knowledge-based creative economy, innovation and differentiation rarely come from one distinct source. Rather, innovation evolves from:

  • new ways of thinking,
  • new business models,
  • new processes,
  • new organizations (or new collaborative inside/outside team structures),
  • and new products (offerings including services)

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In his classic book – Innovation and Entrepreneurship, the late Peter Drucker found seven sources of innovation. The first four sources were internal, inside the enterprise, whereas the last three are external, outside of the company.
1. The Unexpected
2. Incongruities
3. Process Needs
4. Shifts In Industry And Market Structure
5. Demographic Changes
6. Changes In Perception
7. New Knowledge
A good description of the seven sources is here. Unfortunately, not everyone stumbles into innovation like the legendary 3M Post-It notes, or the unexpected discovery of Aspartame, but innovation can, and should be pursued in a systematic way.
Larry Keeley‘s Ten Types of Innovation: The Discipline of Building Breakthroughs gives us a glimpse into how that might be:
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Here is an added insight from Keeley and friends: the things we love in the world–the services and systems we value and use–are the ones that make it easy to do hard things.
What does all of this have to do with business results?
Clearly there is plenty of room for innovation when it comes to designing superior, differentiated experiences for customers.  Every interaction with your customer can be differentiated, integrated with the purpose of the customer.  Make it easy to do business with you, said Jakob Nielsen, the web usability expert, many years ago.
What about the power of ecosystems?  At the individual level, ecosystem thinking can help you create better ideas. it’s all about disorganization.
Ideas need to be sloshing around or crashing in to one another to produce breakthroughs:
  • Research shows that the volume of ideas bouncing about make large cities disproportionately more creative than smaller towns.
  • Having multiple hobbies allows your brain to subconsciously compare and contrast problems and solutions, forming new connections at the margins of each.
  • Similarly, reading multiple books at the same time vs serially lets your brain juxtapose new ideas and develop new connections.
  • Wandering minds are more creative.
  • Studying a field “too much” doesn’t limit creativity — it does the opposite. More ideas banging about just produces even more ideas.
  • The “accept everything” mantra of brainstorming doesn’t work. Debate is far more effective. Let those ideas fight.
  • ADD and bipolar disorder are both associated with greater creativity. When you’re drunk or exhausted your brain is poised for breakthroughs.
  • Even with teams, it’s better to mix up experience levels, familiarity with one another and other factors to keep things rough around the edges.
And at the organizational level, there’s ecosystem strategy.  That’s a post unto itself…
Ask:
– How do you make it easy for the customer to do business with you?
– What outcomes do you want to see?
– What is required to achieve those outcomes?
– What must be done? What needs to change?
– How do we make innovation a embedded process?

Brand Resuscitation: Can TESCO be Saved?

There’s plenty of advice out there for UK-based TESCO’ s new CEO Dave Lewis as pledges to return to the core of Tesco’s business, “in price, availability and service.”  

For me, there’s a critical question: what one change will deliver an 80% difference in results?

I think I know.  I spent 6 months visiting TESCO at least twice a week when I was in Hertford, and all I can say is “wow.” If you just view TESCO with the eyes of a typical US customer, it’s obvious what that 80% difference is. 

There really aren’t as many difficult calls as it seems.  

So, what’s the one thing TESCO has to focus on?  Restocking shelves to meet demand during and after peak traffic.  

Every evening, right after after-work traffic died down, here’s what the TESCO produce section would look like:

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Seriously.

And that’s not all, their soft drinks are not replenished either. So if you go buy a Dr. Pepper in the morning, and then come in the next day – guess what?  No availability.  

This was a problem all over England.

Dave Lewis, just fix it.  Whatever it is they do here in the US to keep stocks replenished, copy it.

That’s it. The one thing that will save TESCO.

INFOGRAPHIC: Are you a Wavemaker? (With Tips on Collaborative Innovation)

Here’s an interesting classification or segmentation of change makers (from Deloitte) along with some advice on how to make a difference via collaboration >>

Steady Supplier: Combine your contextual knowledge with the Public Value Innovators to create new value

Multirational Multinational: Engage with Citizen Changemakers to gain local insights and ideas

Investors: Connect Wavemakers to amplify impact

Public Value Innovator: Leverage the reach of the Multinationals to reach more communities

Citizen Changemaker: provide feedback to all in order to get to root issues

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Inclusivity: Will America Find Its Soul Again?

I know what some of you are thinking – “Well, did America have a soul to begin with?” I happen to think it did. For me the soul of America is “We, the people…”

Furthermore, I’m quite sure that people, as defined by our founders, did not mean corporations. (See what Charles Handy has to say >>)

But to get back to the topic of inclusivity, I’d like to make a shameless plug for our new book, co-authored with University of Michigan’s Professor Michael Gordon, called Inclusivity: Will America Find Its Soul Again?

inclusivity bookbuy now

BUY now >>

So what’s all the fuss about? The book is about asking questions:

  • How can companies take better care of their employees–and thrive?
  • Why don’t they see the opportunities in creating social value?
  • Do Americans think we have a fair distribution of wealth?
  • What are new means of putting our collective talents to work?
  • How can communities take the lead in creating opportunity?
  • How can public education prepare all students for the future?
  • How can better health care be made available without doctors?
  • How can communities do something about global warming?
  • How can you make a difference?
  • Why should you care?

Inclusivity: Will America Find Its Soul Again is a book of questions, hints, and suggestions about creating more opportunity for more people–starting with the USA, but looking at and learning from the rest of the world.

The very idea of the “United” States is based on the principles of inclusivity–all men and women are created equal under the law. But we seem to have lost our conviction that inclusivity is possible or even to be desired. The current divisive political climate, along with economic uncertainty, has fostered an atmosphere of fear and narrow-mindedness across the country.

What can we do in the face of this reality? The choice is not easy, but it is clear. Either we will decide to be more inclusive, or we will turn against each other – finding reasons to divide ourselves, not just from each other as citizens, but also from a shared future.

The USA, unless we decide otherwise, will become simply the SA.

This book is dedicated to an inclusive future for all our children, including my daughters M and K, and the idea that the United States is still the last best hope for democracy and inclusivity. We won’t have one without the other.

The book includes the following sections:

  • What Is INCLUSIVITY?
  • Inclusive World
  • Inclusive Entrepreneur
  • Inclusive Economy
  • Inclusive Cities
  • Inclusive Education
  • Inclusive Health
  • Inclusive Leadership
  • Inclusive Future

Let us know what you think!

P.S. – We don’t want this, do we?

Design Your Life, Change the World

Michael Gordon‘s book, Design Your Life, Change the World: Your Path as a Social Entrepreneur [A GUIDE for CHANGEMAKERS] is for changemakers – the people and organizations that want to make a difference in the world. 

book

The book tries to answer two questions, says Professor Gordon:

1) How can organizations best address important societal problems such as poverty, inadequate health care, sub-par education, and an unhealthy planet?

2) What’s the best advice for students who want to address these issues and still live lives of relative comfort?

The reason I’m helping the professor is because now, more than ever, we need the brightest students to tackle the world’s biggest problems. And the oil-coal-nuclear lobby isn’t making things any easier…

Are you a changemaker?  Go find out >> 

P.S. – you can download the PDF version here >>

Richard Branson: Business As Unusual

I don’t watch TV much but I just caught a clip of Richard Branson promoting his book Screw Business As Usual. Looks like he’s on the same page as Stuart Hart – who has been essentially saying the same thing for twenty years.  They ought to compare notes!

What was funny was watching Branson sit there as the producers had him wait and wait for his three minute interview.  He was clearly in distress – the anguish of the entrepreneur who can’t bear to waste time – as he smiled and waved every time they turned the camera on him. 

The book is available later this month… have a Happy Green Christmas!

The Promise of Integrated Development

I first met Bob Freling at a board meeting of the Solar Electric Light Fund (SELF) in San Francisco several years ago.  At the time, I felt that here was an NGO doing innovative things but not getting enough visibility for their work. They were solar way before solar was cool.

What struck me is how informal and close the board members were.  One of the board members – Larry Hagman (good ol’ J.R. Ewing) – did a brilliant set of solar commercials which I think says a lot about his character and wanting to make the world a better place (quite the opposite of his TV character!). But I digress.

The story here is that SELF pioneered the use of solar power to fight “energy poverty” across a spectrum of applications with their “solar integrated development model” – from clean water, to drip irrigation to improve food security, to electricity for health clinics, schools, and micro-enterprise.

In his blog post about the $300 House Energy Challenge, Bob explains:

“It’s simple really. First, solar energy powers pumps and filters for clean water. This also enables drip irrigation for critical crops. Once people have those necessities, the solar energy is used to power health care facilities which can power equipment and refrigerate vaccines, for example. This increasingly healthy population can then open schools which are powered by solar to provide computer and Internet-based learning. Finally, these well-fed, well-cared for, well-educated villagers can begin community and entrepreneurial activities to grow their economy.”

Bob’s optimism is tempered with reality. The Millennium Development Goals won’t be achieved without energy access, he explains in another blog post.  In case you forgot what the MDGs are (as I often do) they’re listed as:

1) eradicating extreme poverty and hunger;
2) achieving universal primary education;
3) promoting gender equality and empowering women;
4) reducing child mortality;
5) improving maternal health;
6) combating HIV/AIDS, malaria, and other diseases;
7) ensuring environmental sustainability; and
8) building a global partnership for development.

Note that they are interrelated, ecosystemic problems – and that from Bob’s perspective, energy is the key factor which makes all of them feasible.

With the $300 House project, my eyes have been opened to the fact that the approaches for dealing with the poor are often not very constructive, and sometimes end up doing more damage than good.  That’s what  $300 House adviser Stuart L. Hart is talking about when he says we need to create smaller problems. It is also a concern of our critics on the $300 House. When I spoke to Matias Echanove recently, he was concerned that mass produced housing could in fact disrupt the local economy – the small businesses that are based in informal slums around the country. I hear him.

Our $300  House project is exploring ways to integrate services and jobs into the ecosystem as well, and we’re reaching out to talk to the leaders in the communities that are interested in this approach. In India, we’ve just completed a survey – with the help of THL – that covers 15 villages in three of the poorest states in India – Uttar Pradesh, Bihar, and Jharkhand.  I’ll go into more detail in a later post.

For me the question is quite simple – we see an explosion of interest in  developing integrated  townships for the middle class in India, but why is there nothing comparable for the poor? To borrow a phrase from the US, why can’t we build “master-planned communities” for the poor?

Is it too much to ask that governments, NGOs and development institutions, and businesses work together with the communities involved to build integrated solutions?

integrateddev.gif

Unfortunately, there are far too few examples of collaborative development. This is something we all need to look at urgently.  There is also a problem of ownership.  The development community, NGOs, and most governments think they “own” the problem.  Unfortunately, without a business mindset to make solutions scale, their is so little real progress.

The poor remain poor. 

And that’s why the work Paul Polak is doing is so important.  He’s looking at making small changes at the bottom of the pyramid; small changes that make a big difference in the earnings of the poor. This is also the approach advocated by Esther Duflo and Abhijit Bannerjee in Poor Economics.

At a much larger scale, we see an example in the Gates Foundation‘s approach – which is all about examining the ecosystems of poverty.  A common criticism of the Gates Foundation goes along these lines: “How can people like Gates, living in a different universe, help people at the bottom of the pyramid?”  This is a false and damaging argument, but answered quite well by Sam Dryden:

“Some people may ask how my team and I–working at the world’s largest foundation located in a prosperous corner of a rich nation–can relate to a subsistence farming family in Ethiopia or Bangladesh. This is a very reasonable question to ask. The farmer has a direct connection to the land and we are considerably removed, both by distance and culture. We begin by realizing these differences and humbly listening to farmers and their families, learning and respecting their cultures, ways of living, and knowledge of place and home. The solutions we seek are those appropriate and welcomed in this context, not those imposed by distant values or interests.”

And finally, perhaps there is an alternative to the giant top-down programs, and incremental bottom-up “Let the Poor Do It Themselves” approaches we’ve encountered.

With the $300 House, we’re thinking micro-developmentis it possible to build integrated micro-solutions at the village level?  And in cities, at the neighborhood level? 

Why not?

The Ecosystems of Poverty

When I first started working on classifying online ecosystems, I had no idea that my thinking there would influence my thoughts on the $300 House. But now it seems like the systems approach to understanding wicked problems is pretty much the only way to go.  None of this is new, of course, but I’m still impressed at the power of ecosystem thinking.

Here’s how Nobel prize laureate Gunnar Myrdal was thinking about the problems of race and poverty:

myrdal.gif

The “vicious circle” has not yet made its way into our political thinking though, if we judge the policy makers of today’s Congress. Heck, they can’t even bring themselves to accept the effects of global warming – in no small part thanks to our lobbyist friends.

The idea of poverty as the outcome of a dysfunctional ecosystem is explained here as well:

wickedcycle.gif

Note that this applies to poverty in the US as well, not just the emerging world.

So, part of tackling the issue of affordable housing for the poor is to try to understand the interconnected nature of these problems.  I tried to draw causal arrows between the various problems, but gave up. In essence, we have a problem of insecurity, in which all of these factors must be addressed simultaneously if we are to change the vicious cycle of poverty, disease, and suffering.  Here’s what I ended up with:

insecurity.gif

The poor live in an insecure, unbalanced universe. 

I’m calling it the “ecosystems of poverty.”

Next we’ll look at the idea of integrated development (another old idea) which fell out of favor, but must be re-evaluated in today’s light if we are serious about poverty alleviation.

What’s Good about the USA

Despite all the whining about the decline of the USA, and charts showing the downsizing of the American dream, today’s a good day to reflect on why we still hold the promise of Abraham Lincoln’s words in 1862: “the last best hope of earth.”

A few thoughts:

1. The individual can still make a difference:  Check out Paul Farmer, Paul Polak, Michael Moore and, yes, Barack Obama. Give me an example of any other country in the world where someone like Obama could even remotely hope to be elected president.  See what I mean? Of course, the flip side of this is that you have corporate puppets like Sarah Palin and Rick Perry, but I’ll take the voice of the individual any day.  What’s the alternative? China.  Enough said.

2. The rich aren’t all money-grubbing pirates. More than any other country on earth, our rich turn to philanthropy to leave a legacy.  Check out the Gates Foundation or the Clinton Global Initiative.  Where else do we see this kind of private philanthropy at the individual level – from both rich and poor? Have you seen what happens in Bangladesh?  Note: I know, we do have folks like the Koch brothers who are busy strangling democracy while they protect their “freedom.”  What about India?  Nope.

3. The United States
is the world’s largest source of humanitarian aid.
Yes, despite all the whining, our government is still the largest donor by far. We can do better, but hey, you don’t see anyone else even close in real dollars. This type of comparison is a statistical game.

4. We’re far less sexist than Europe.  Seriously, that’s a fact.

5. Class and caste barriers are far lower here, and can be overcome.  See point # 1.

6. Customer Service.  If you think customer service is bad in the US, you should see the rest of the world. Speaking from plenty of experience, we are in another league.

7. Independent thinking.  Not so widely seen on Fox, but still here.  The sheep to thinker ratio is far healthier in the US. 

8. Tolerance.  We are a tolerant nation. It’s kind of funny when the most intolerant group we have is the atheists.

9. Melting Pot of People and Ideas. True in business, but also in social terms.  I’m still a fan of E pluribus unum.

Keep on keeping on, America. And may tomorrow always be better than yesterday.

Bin Laden lost.

The Middle Class: An Endangered Species?

reich1.gif

The story is captured in this snippet borrowed from a larger infographic from the New York Times. The middle class is under historic assault in the US, explains Robert Reich, and this bodes badly for democracy, not just here, but all over the world. 

Here’s the money quote:

Look back over the last hundred years and you’ll see the pattern. During
periods when the very rich took home a much smaller proportion of total
income — as in the Great Prosperity between 1947 and 1977 — the nation
as a whole grew faster and median wages surged. We created a virtuous
cycle in which an ever growing middle class had the ability to consume
more goods and services, which created more and better jobs, thereby
stoking demand. The rising tide did in fact lift all boats.


During periods when the very rich took home a larger proportion — as
between 1918 and 1933, and in the Great Regression from 1981 to the
present day — growth slowed, median wages stagnated and we suffered
giant downturns. It’s no mere coincidence that over the last century the
top earners’ share of the nation’s total income peaked in 1928 and 2007
— the two years just preceding the biggest downturns.

reich2.gif

We’re losing our competitiveness, as well as our ability to lead.

There’s a growing sense in the business community that we must find a way to work together again. To do this, we have to reject political terrorism – the political brinksmanship which prevents us from finding common ground or even beginning to look for honest solutions. Howard Schultz, the CEO of Starbucks, recently created a stir when he suggested that it was time to halt all political donations. Warren Buffett did the same with his no-nonsense plea to raise his taxes.

Welcome to the third world, America! Looks like we’re headed on the fast-track back to serfdom.  Brought to you in large part by the GOP and corporate Democrats.

The $300 House: Go, Go, Go!

The final Harvard Business Review post in the series, and hopefully the start of some real change at the bottom of the pyramid.

Our goal is to go social for social business. Can social co-creation help the poor?

socialprocess.gif

Keeping fingers crossed.  Thanks to Ingersoll-Rand for the sponsorship and to all the judges and advisers at 300House.com!  Thanks jovoto and COMMON. Thanks Shaun.

Thanks also to Scott Berinato at HBR and of course – VG, my partner in crime.

Shameful: The Business Roundtable CEOs

Writes Floyd Norris in the New York Times:

The Business Roundtable, a group comprising 200 of the largest companies in the United States, is out with a “study” that claims to show that the United States levies excessively high tax rates on companies. It actually shows nothing of the kind.

This is the sort of thing that makes business look E-V-I-L.

What is the Business Roundtable?  Another version of the US Chamber of Commerce? And just who are the members of this august organization?

Surprise! They’re only the CEOs of the “most respected” companies in the US.

Have they no shame?  No sense of decency?

The CEOs should be embarrassed, but instead they keep playing this absurd, deceptive game. We have come to expect this sort of behavior from the oil and coal lobby, but not you. To Bank of America, General Electric, Xerox, Wal-Mart, UPS, Target, SAP, Pepsico, Microsoft, and Procter and Gamble: Grow up, ladies and gentlemen. You are hurting both democracy and capitalism. Not to mention your brand.

Good on you, Google and Apple, for not being part of this institutional lying machine.