Tag: innovation

The high cost of failing fast

There can be real human costs to failing fast as the history of Twentieth Century aircraft shows

It’s fashionable to talk about innovation and failing fast but exploring new technologies has always carried a great deal of risk as a BBC feature on failed aircraft design shows.

Aviation, like automobiles, was a wonderful opportunity for early Twentieth Century tinkerers. With the added impetuous of two world wars, the development of aircraft saw some strange experiments.

One of the things that drove aviation innovation was the evolution of materials science and manufacturing methods, sometimes with tragic results as we saw with the Comet jet liner’s fuselage failures and the DC-10s defective cargo door latches.

In many ways, the early days of airliners was not dissimilar to today’s experiments with smart materials and 3D printing.

Tragedies like the Comet and DC-10  should remind us that in some field the cost of failure is high.When a widget breaks, people can get hurt.

As we experiment with new materials and manufacturing processes, we will make mistakes just as the aviation pioneers did. It’s an ethical aspect of innovation we need to keep in mind, there can be real costs to failing fast.

Image of De Havilland Comet by Clinton Groves through Wikipedia

 

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Living in a changing world

If we want to understand how to adapt to a rapidly changing world, we could learn from our great-grandparents.

“We’re looking at a future where every aspect of our lives could be utterly different to how it is now,” declared ABC Radio host Linda Mottram in our semi-regular technology spot on Monday.

Linda’s concern was based around our talk on 4D printing and the future of design and she’s absolutely right – life is going to be totally different by the end of this century.

We won’t be the first generation to experience such massive change to society and the economy, our great grandparents at the beginning of the Twentieth were born into a world without electricity, the motor car or antibiotics.

Those who survived the two world wars and lived to a ripe old age in the 1970s saw life expectancy soar, childhood mortality rates collapse and the western economies shift from being predominately agricultural to mainly industrial and service based.

From our position, it’s difficult to comprehend just how radically life changed in western countries during the Twentieth Century.

When we wonder where the jobs of the 21st Century will come from, it’s worth reflecting that many careers we take for granted today didn’t exist a hundred years ago and the same will be true in a hundred years time.

The technology we’re using may be new, but adapting to massive change isn’t.

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Three business lessons from the New York Times

The New York Times Innovation study has important lessons for all business owners and managers.

“The New York Times is winning in journalism,” starts the newspaper’s much discussed internal Innovation Report. Then in great detail it goes on to describe how the audience is being lost to upstarts like the Huffington Post and Buzzfeed.

Given the number of digital forests that have been felled discussing the report in the last week, it’s not worthwhile giving an in depth analysis of the study – particularly given Nieman Labs’ comprehensive dissection of the document.

What does stand out though are a number of over-riding themes that apply to almost any business, not just struggling traditional media outlets.

Being digital first

A constant mantra in the NY Times report is about being ‘digital first’ – if you’re thinking about that today, then you’re probably too late in your industry.

Every industry is now digital: If you’re designing widgets, you’re doing it on CAD system; if you’re selling real estate, you’re listing online (one of the great killers of the old metropolitan newspaper model) and if you’re selling doughnuts, you’re placing your suppliers’ order electronically and maybe 3D printing your icing patterns in the near future.

There isn’t one industry that isn’t being radically changed by digital technology.

Breaking down silos

One of the areas that’s been most resistant to digital change, and yet is the most threatened, is management.

Silos within organisations are a triumph of management power and make it difficult for a business to be dynamic when it’s necessary to negotiate with different fiefdoms just to change the colour of paperclips.

Those silos are fine when industries are cosy and there’s little competition but when disruptors enter the market those management empires become a dangerous, and expensive, weakness.

The New York Times study spends a great deal of its pages discussing how to break down silos within its own organisation and this is something every business owner or manager should be exploring.

With modern communication, information management and workplace collaboration tools many management roles are no longer needed.

For smaller businesses, this is the greatest strength when competing against larger corporations as Huffington Post, Buzzfeed and Business Insider  have shown in stealing the market from the New York Times.

You need to be found

One of the toughest conclusions from the NY Times study is that the quality of content actually doesn’t matter in the marketplace; The Huffington Post and Buzzfeed do an excellent job of taking the NYT’s work, repackaging it and redistributing it in a way readers prefer.

That might be a transition effect – it’s hard not to think that should original content creators like the NY Times be driven out of business then Buzzfeed will have to start employing more journalists and Arianna paying her writers – however right now gloss beats quality.

Buzzfeed and the Huffington Post are attracting audiences because their stories are easy to find online and their headlines almost beg you to read them.

For non-media businesses, the lesson is you need to be found; you may be the best restaurant, electrician or accountant in town but if you’re on the fifteenth page of Google in search results for your industry and suburb then you’re doomed.

The New York Times faces its own unique set of challenges, as do the publishing and media industries, many of the lessons though from the NYT  Innovation paper though can be applied to many businesses.

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What happened to Australia?

Australia turned insular in the 1990s, can its luck continue well into the 21st Century?

Today I have a piece up in Technology Spectator on PwC’s Expanding Australia’s Economy report, the headline for which probably guarantees I’ll never get a job in a large Australian corporation again.

While the headline – which wasn’t mine – is inflammatory, there is an element of truth to it as Australian companies have become far more insular and comfortable in the last twenty years.

It wasn’t always like that, for a brief period in the late 1980s and early 1990s corporate Australia was prepared to take on the world. But something happened in the mid 1990s.

John Winston Howard

One of the key turning points was the election of the Liberal government in 1996, John Howard’s fundamental belief was that things were better in the 1950s and Australia should return to those days. He delivered.

The Australian people thought his vision was a great idea, having become exhausted by the reform agenda of the 1980s Hawke and Keating Labor governments that had opened and reinvigorated the economy.

Howard was helped by the Labor Party abandoning its reformist agenda with its successful 1993 campaign against the Liberal’s policy of changing the tax system. As George Megalogenis pointed out in his book The Australian Moment, Paul Keating’s populist victory over John Hewson demolished any appetite for meaningful reform among Australia’s political classes.

Cosy clubs

The centerpiece of Keating’s economic reforms was the compulsory retirement savings system; while the idea was good in principle, the practice of private fund managers looking after the savings has meant most of the investment has been concentrated in the top ASX stocks.

As a consequence, Australia’s top companies were relieved of the chore of answering to stroppy shareholders as their registries were dominated by their friends from Sydney’s Balmoral Beach Club and the hallowed halls of the Melbourne Club.

Domestic duopolies

Compounding that problem was another failure of the Hawke-Keating years of allowing domestic monopolies to develop on the basis that Australian companies needed a strong local footing in order to compete in global markets.

For a while that worked until Australia’s now powerful duopolies decided it was more profitable to exploit their domestic market strength rather than competing as global players. This happened around the time Keating won the 1993 election, by time Howard became PM the practice was well established.

The combination of tame shareholders and comfortable markets is why Australian corporations haven’t responding to global pressures; they simply don’t have to. Which leads us back to the conclusions of the PwC report.

Australia needs to lift its game. We are lagging behind our peers globally and are not considered a leader of innovation. The Organisation for Economic Co-operation and Development in its Science, Technology and Industry Outlook 2012 rates Australia as average against its key drivers that measure competency and capacity to innovate. Change is required.

It’s difficult to see where change is going to come from for Australia while everyone – business leaders, politicians and the population at large – are comfortable. As the long as The Lucky Country stays lucky it can afford not to invest in the 21st Century.

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A consumerist utopia – where does Australia go in the 21st Century?

A raft of reports and media stories highlight the threats to Australia’s continued prosperity but the nation’s business leaders aren’t listening.

Today has been a big day for Australian navel-gazing with a range of reports released on the country’s prospects on in the Twenty-First Century.

One of the reports was the Joined Up Innovation survey commissioned by Microsoft and written by PwC, I wrote a story for Business Spectator on the results.

While the Microsoft report focused on the small business sector, Startup Aus released their Crossroads report that warns Australia is falling behind the rest of the world. Smart Company’s Rose Powell has a more detailed summary of the report.

Alan Noble, head of Google’s Australian Engineering operations warns, “we still lag behind many other nations, with one of the lowest rates of startup formation in the world, and one of the lowest rates of venture capital investment.”

“If we fail to address this, we risk forfeiting over $100 billion in economic benefits from emerging tech companies, and an irreversible decline in Australia’s competitiveness.”

Looking in from the outside

Particularly notable from the two surveys is that the discussion about Australia’s tech competitiveness is the debate is being led by two local employees of US Multinationals.

For a local perspective, the Macrobusiness blog joins the day’s chorus with a long examination of the risks to Australia’s living standards by being too far down the global value chain.

In the Business Spectator piece, I compared some of PwC’s recommendations with the efforts of the UK and Singapore to rebuild their manufacturing industries.

Australia’s collective decision

For Australia, it’s probably way too late to worry about most of the manufacturing industry as in the 1980s the country made a collective – and almost unanimous – decision to shift the economy to being resources and high value added services.

The high value added services haven’t eventuated; mainly because the internet has shifted the global dynamics towards lower cost centres and partly because Australian business leaders decided it was easier to exploit their domestic market power rather than compete globally.

Mining proved to be a better bet, more by the accident of China’s turn of the century boom rather than any deliberate policy, however the industry employs less than ten percent of the workforce and the vast majority of Australians living in the South East corner of the country have little contact with the resources industry.

A consumerist utopia

For most Australians, employment and prosperity relies upon a growing population driving city GDP growth with domestic wealth supported by buoyant property prices. Australia truly is the consumerist utopia.

As a result of a booming, seemingly unstoppable, housing market and an expending resources sector, Australia’s exchange rate has soared while the nation’s productivity has slumped.

Making matters worse is that outside of mining and a few agricultural markets most of Australia’s industry is grossly expensive by global standards and suffering from chronic under-investment.

An unsustainable economic model

That model is not sustainable, it will take one shock to Australia’s housing market to see the good burghers of Brisbane, Sydney and Melbourne impoverished so the nation’s continued prosperity requires something to drive the economy beyond low interest rates and Chinese commodity purchases.

Whether Australia’s business and political leadership are capable of hearing and reacting to these reports remains to be seen, but they will have no excuse to say they weren’t warned.

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An era of exponential innovation

Deloitte Center for the Edge founder John Hagel talks about our era of exponential innovation.

“How do we move to an exponential approach to innovation” asks John Hagel, Director of Deloitte’s Centre for the Edge in the latest Decoding the New Economy video.

The Centre For The Edge is Deloitte’s Silicon Valley based think tank that identifies and explores emerging opportunities related to big shifts that are not yet on the senior management agenda.

John tells us how the cycles of change and innovation have varied over the last thirty years in the industry; “the biggest thing for me is that nothing is stabilising. I often go back into history and look at things like electricity, the steam engine and the telephone – all hugely disruptive to business practices.”

“But the interesting pattern is they all had a burst of innovation and then a levelling off,” says John . “You could stabilise and figure out how to use all this technology.”

“With digital technology there is no stabilisation.”

That lack of stabilisation leads to what John has termed ‘exponential innovation‘ where he sees business and education being rapidly transformed as technology upends established practices and methods.

Healthcare, financial services and “any industry that has a high degree of information content ” are the sectors currently facing the greatest challenges in John’s view.

John sees the solution for businesses and managers in looking at the current era not as a time of technology innovation but of institutional innovation. That institutions, like companies, have to reinvent how they are organised.

Reinventing well established companies or centuries old bureaucracies is a massive challenge, but if John Hagel’s view is right then that radical change to institutions is what is going to be needed to face a rapidly changing society.

Bank image by Ben Earwicker, Garrison Photography of Boise, ID through sxc.hu

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Nothing is stabilising – welcome to an era of exponential innovation

John Hagel of Deloitte’s Centre for the Edge joined Decoding the New Economy to discuss his view that we’re living in an age of exponential innovation.

John Hagel of Deloitte’s Centre for the Edge joined Decoding the New Economy to discuss his view that we’re living in an age of exponential innovation.

“Increasingly our view is that it’s creating a challenge for companies, traditional businesses who say ‘we’ve been operating in a linear fashion for decades or in some cases centuries or more’ but how do we move to an exponential approach to technology so we don’t get overwhelmed.”

I’ll be writing the interview up in more detail later, but for the moment enjoy the video.

Image of John Hagel by Trycatch though Wikimedia

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