Your newsletter on applied creativity, imagination, ideas and innovation in business.
Thursday 21 July 2011
Hello and welcome to another issue of Report 103, your twice-monthly (or thereabouts) newsletter on creativity, imagination, ideas and innovation in business.
As always, if you have news about creativity, imagination, ideas, or innovation please feel free to forward it to me for potential inclusion in Report103. Your comments and feedback are also always welcome.
Information on unsubscribing, archives, reprinting articles, etc can be found at the end of this newsletter.
JEFFREY IS ON TWITTER: @creativeJeffrey
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THE GREAT INNOVATION CHALLENGE OF THE 21ST CENTURY
In late 2007, a handful of misbehaving US banks went spectacularly bust and promptly sent the US economy to hell in a handbasket. As it turned out, many other banks and countries were not really on good financial standing either and most of the developed world join America in its downward economic spiral. Technically, America left recession more than a year ago as have most other countries. In actuality, however, the situation is far from good and is likely to be problematic for the long term. Indeed, America’s national debt has reached an incomprehensibly high number of dollars and continues to grow. And while America’s politicians are doing everything they can to preserve jobs, it appears to be only their own jobs they care about: they are more concerned about scoring political points by not cooperating with the other party than they are about solving the debt problem.
Europe is not in much better shape. Greece, Portugal and Ireland have all had to seek massive loans to save their economies and Greece is still in poor shape. Japan has had a largely stagnant economy for years and there is no sign of its getting better.
All of this is having and will continue to have a profound affect on global business and will continue to do so indefinitely. This means not only the businesses will need to innovate in order to survive, but they will need to innovate in new ways to meet the changing needs, expectations and financial situations of their customers.
In addition to economic slowdown, the wealthier world’s economies are largely changing from being manufacturing based to being services based. Manufacturers are closing shop or moving their operations to countries with lower labour costs. This means that a lot of people who earned a good living working in a factory in America or France may find it impossible ever to find another manufacturing job again. Worse, many of them lack the skills, knowledge and experience to move into the service economy, at least at the same wage level as they experienced in their factories. Going from €25/hour in a factory to €10 in a fast-food shop is not easy, especially if you are supporting a family.
As a result: many people around the world are without jobs, some who have jobs are earning much less than they did in the past and many people are worried about losing their jobs. Worse, the situation seems unlikely to improve for years. This is changing the way people buy things and will doubtless have a lasting effect. People who do not have money cannot buy as much. People who do have money are more likely to save it, rather than spend it, in case they lose their own jobs. As a result, the bulk of consumers in the richer world are being more careful about their expenditures and this is likely to last for the foreseeable future since there are no quick fixes to the economic problems of the world.
At the same time, the gap between the rich and the poor has been expanding in most rich countries. This means that there is a small subset of society who can largely buy what they want. However, they are notoriously demanding, expecting very high levels of quality. Needless-to-say, not every business can cater to this small group. Most businesses need to cater to the masses and the masses are spending a lot less than they used to.
Free-Spending Middle Classes No Longer So Free-Spending
Prior to the recession, the middle classes in the developed world never had it so good. There were jobs in abundance, salaries were good, borrowing was easy and inexpensive goods from the developing world enabled even people of relatively modest income to live lives of comparative luxury. Businesses, of course, eagerly catered to the free spending masses which spurred further growth. Better still, it was easy for businesses to find new products to sell to people eager to spend their wealth.
As a result, business innovation was largely about making improved products, adding new features to existing products, giving people perceived prestige, delivering convenience and providing greater luxury. From an innovation point of view, adding complexity and luxury is easy, particularly if costs are not of particular concern.
But the global economy has changed this. People are being more careful about their money. They are looking for value and affordability. Where once they would have borrowed to buy enticing new things, now they are paying off debts and saving more of their income. Companies that continue to try and sell expensive but low value luxury goods or products packed with unnecessary features are finding that their sales are stagnant or worse.
Meanwhile, companies like Walmart, Aldi and other cut-price retailers have been growing as more service oriented and expensive shops have seen their businesses shrink, particularly as the Internet enables people to seek the best bargains for almost all products.
Companies that have been innovating ever increasing complexity into their products in order to increase margins and income must now innovate to reduce complexity, provide needed value and reduce costs. Only those companies that cater the the wealthy may continue in their old habits. But when the percentage of wealthy people is a single digit number, there is a limit to how many companies can follow that route.
Business also need to realise that where once people would have paid for added convenience, they are now happy to do things themselves in order to save money.
In spite of the world’s challenged economy, a few countries are thriving economically. Aside from a couple of notable exceptions in the rich world, such as Australia and Germany, the countries that are truly thriving have been the big emerging economies, particularly India and China. Moreover, because incomes are still very low in these countries, businesses there have a wealth of experience in selling to people who do not have much money. Indeed, this has been a major focus of their innovation. Until recently, countries in the developed world have largely focused on innovation that increases the cost of the products.
As a result, manufacturers in the emerging economies have the innovative edge when it comes to producing low cost products and services.
What Needs to Be Done?
Many, if not most, businesses in the rich world need to change their innovation strategy from adding complexity and cost to adding value while reducing cost. They also need to understand that poor people shop differently than middle income and wealthy people. For instance, purchasing in larger volumes is usually cheaper than buying in smaller volumes. A five litre carton of ice cream costs less per litre than does a one litre carton. However, poorer people might simply not be able to afford the five litre box and, even if they could, they may not have the freezer space to store it. If a family has only €50 for groceries in a given week, they will not be able to purchase the bigger quantity items that are less expensive on a per unit basis. This ironically requires that poor people spend more for the same products than do wealthier people who can buy in bulk and store stuff in their bigger homes with bigger refrigerators and freezers. Businesses in the developing world, such as in India, understand this. There you can purchase in the markets, for example, tiny packets of shampoo sufficient for a wash or two; single cigarettes and other small items very inexpensively.
Such knowledge paired with an innovation strategy aimed at maximising value for money give growing global companies from emerging economies a distinct advantage.
Changing Face of Global Innovation
In the past, we in the richer world have enjoyed the notion that we are providing value added innovation but outsourcing cheap labour to the developing world where people work cheaply but do not innovate so well. If that was ever true, it is certainly not true now. China and India are innovating in their own ways – and many of those ways involve selling to low income consumers, An innovation skill we in the richer world need to learn more about.
This is not to say that innovation in the future will come only from the developing world. The rich world still retains an advantage in cutting edge technology, pharmaceuticals and the like. Moreover, historically, wealthier economies have long had more money to pour into research and development and this has given them a strong advantage in scientific and technical innovation.
And businesses in both the developed world and emerging economies need to learn from each other.
Meanwhile, here in the developed world (where I now live) I believe changes in the focus of innovation will need to happen. In particular, I believe businesses will need to learn to use innovation in order to...
- Reduce costs while adding value.
- Understand the buying habits and needs of those with reduced income.
- Find ways to engage and employ fruitfully the developed world’s unemployed factory workers.
- Enable innovators in emerging economies to bring their ideas to the developed world.
It’s a big challenge. And it is a necessary one.
BECOME AN INNOVATION MASTER
Do you need to become an innovation master and lead your company on a path towards innovative success?
If so, read my book, The Way of the Innovation Master. It’s more fun than most business books and full of useful information. More at http://www.creativejeffrey.com/books/
LEARN ABOUT OPEN INNOVATION WITH ME IN JOHANNESBURG
I will be delivering a presentation on open innovation at the fourth South African Innovation Summit next month. But that’s not all, some of South Africa’s and the world’s top thinkers in innovation will be speaking and delivering workshops at this fantastic event. Join us! http://www.innovationsummit.co.za/
A GUIDE TO ANTICONVENTAL THINKING (ACT)
A few months ago, I wrote an article in Report 103 entitled Anticonventional Thinking (ACT) and it described a new creative thinking method that I’ve evolved based on my learnings about creativity and innovation. I’ve just written a more in-depth 20 page, illustrated paper on the topic, which you can download from http://www.creativejeffrey.com/act/ (or download the PDF document directly via http://www.creativejeffrey.com/act/ACTinaNutshell.pdf).
Meanwhile, here is the introduction to the paper, which includes some of my infamous cartoon illustrations...
Have you ever participated in a brainstorming session only to be left yawning at the results? Have you ever engaged in an ideas campaign and found yourself thoroughly underwhelmed by the level of creativity in the ideas generated? Have you ever managed a crowdsourcing event – and still find yourself waking in the middle of the night screaming about having to review thousands of painfully mediocre ideas? If so, you are not alone. The sad truth is that idea generation events are designed to generate lots of ideas rather than creative ideas. Worse, their success tends to be measured by the number of ideas rather than the creativity of the results.
But don’t panic! There is a better approach to creativity and it is called anticonventional thinking (ACT). Rather than attempting to generate ideas by the sack full in hopes that one or two of them may be brilliant, ACT aims to generate a few brilliant ideas. It’s based on how people’s brains respond to problems and emulates the way many artists, writers, scientists and other creative geniuses think.
As the name implies, ACT is about taking a purposely unconventional approach to problem solving and idea generation. But it’s not just about the ideas. ACT is also about being anticonventional in framing the problem or issue for which you are looking for ideas, the insights you seek and how you respond to them.
Think about it. In a typical company, brainstorming tends to be around issues, or challenges, such as “In what ways might we improve product X?” or “How might we make better use of social media in our marketing communications?” Challenges such as these beg for mediocre and predictable ideas.
But this is not how highly creative people solve problems. People, like Pablo Picasso for instance, did not ask “In what ways might I improve my portraits?” or “How might I make better use of acrylic paints?” Rather he posed big, game-changing challenges like “How might an artist present multiple three dimensional view points on a two dimensional canvas?” The result to this challenge was cubism, one of the major innovative art movements of the 20th century.
Albert Einstein did not ask himself “How might I improve the world’s understanding of mechanics?” Rather, he asked, “How might I reconcile Maxwell’s electromagnetism equations with Newton’s laws of mechanics?” This issue concerned many physicists in the early 1900s, but no one dared address it head-on as the two disciplines seemed irreconcilable. Einstein’s very unconventional (at the time) challenge, combined with some then mind-blowingly unconventional ideas about how matter behaves in extreme situations (such as approaching the speed of light or in a gravity well), resulted in his Theories of Relativity – one of the cornerstones of modern physics.
While most of us can never be as creative as Picasso or Einstein, we can learn to emulate their approach to creative thinking and follow it as individuals or groups. That’s what ACT is all about. So, let’s see how it works.
Read the entire paper at http://www.creativejeffrey.com/act/ACTinaNutshell.pdf
DÉBUT OF ANTICONVENTIONAL THINKING
I will make my first ever public presentation of Anticonventional thinking during an interactive workshop at the European Conference of Creativity and Innovation (ECCI) in Faro, Portugal in September. Join me and the cream of Europe’s creative thinking crop at ECCI – Europe’s most important creativity and innovation event of the year. More information at http://www.eaci.net/eccixii/
THE EIGHT RULES OF ANTICONVENTIONAL THINKING
Be anticonventional! Reject conventional solutions, embrace unconventional ideas.
In order to devise unconventional solutions to problems, you need to look at your problems in unconventional ways and express them in provocative, anticonventional language. Conventional problems encourage conventional solutions. Anticonventional problems promote anticonventional ideas.
When you need solutions, do not copy the first one you find on Google. No matter how creative that idea may seem, copying it will not be creative for you or the 1000s of other people who google the same problem.
On the other hand, applying an idea (whether you’ve found it on Google or elsewhere) that solved a problem completely different to yours might very well be creative.
Seek insight and inspiration widely and constantly. When seeking insight to a specific problem, look beyond the problem, the subject of the problem and everything related to the problem. Diverse insight leads to diverse ideas.
You probably know that in Brainstorming you should reserve judgement and never criticise ideas? Well, that’s wrong. In anticonventional thinking you are welcome to criticise ideas, particularly boring, conventional ideas. But you should also point out weaknesses in ideas you believe may not work. However, you must criticise with respect and you must always invite others to defend the criticised ideas. If you are not respectful, the others are allowed to slap you silly.
Anticonventional thinking aims to generate a few really creative ideas and not lots of ideas of mixed quality. You’re busy, I’m busy. We don’t have time to sift through boring, conventional ideas when we want insane, unconventional ones!
Once you have come up with an insane unconventional idea, act upon it! Make it happen! Do it! Now!
JENNI IDEA MANAGEMENT
If you need to capture, evaluate and implement creative ideas from your workforce, your business partners and/or your customers, take a look at Jenni innovation process management software. It’s easy to use, fun and a bargain compared to competing products which lack the functionality and expertise in organisational innovation.
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Report 103 is edited by Jeffrey Baumgartner and is published on a monthly basis.
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