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The best leaders understand that the current success of their business, and any future innovation, depends upon the “deep smarts” of their employees — the business-critical, experience-based knowledge that employees carry with them. Leaders with a passion for developing employees’ skills, and those who understand the need to transfer knowledge among generations of workers, know how important it is to link in-house education to strategic planning.

Take architectural and engineering firm EYP as an example. Leila Kamal, vice president for design and expertise, not only reports to the CEO but also is a member of the board. An architect herself, she brings great credibility and visibility to programs of learning and knowledge exchange. An early in-house program called A16 treated 16 junior architects to 16 weeks of intensive training, including knowledge mentorship from highly experienced architects. The educational concepts developed in that program have since evolved into a larger learning program called EYP University, which provides an average of 20 courses a year for architects, engineers, and a combination of the two. Instructors combine traditional lectures with hands-on activities, including challenging participants to solve a difficult problem before they are presented with the solution. This mode of learning embodies what educational researcher Robert Bjork call “desirable difficulty,” compelling learners to fully engage mentally to discover nonobvious answers to problems. Senior thought leaders who are mentors at EYP have to submit a learning plan for their mentees, describing not only goals but also specific tasks the learner will undertake, such as a client presentation. The learners, in turn, provide performance evaluations on their mentors’ skills as a mentor or on their ability to teach and share knowledge through the EYP U curriculum. Moreover, the mentoring flows “up and down” — from juniors to seniors, as well as vice versa. For example, new hires tend to come in knowing building information modeling from school, and can tutor experienced designers and architects in how to incorporate their deep practical knowledge into the software.

Despite its relatively small size (about 600 employees), EYP also supports in-house research projects proposed by employees, which are selected through a competitive process. These knowledge-generation projects, always aimed at solving a challenge faced by clients, are intended to help differentiate EYP from competitors. For example, one such project focuses on the interaction between a building’s functionality and the well-being and productiveness of its occupants. Another aims to create flexible environments that can be adjusted in response to information gathered by sensors placed around the building that record how people are using a given space. For example, temperature and lighting in a room could lower or raise depending on how many people are present and whether they are viewing a presentation or reading.

Contrast the example above with an organization where one manager noted: “I think we are very good at managing information, but not very good at managing knowledge.” It’s an astute observation. Knowledge differs from information in that the former is at least partially based on experience. Organizations that are proactive about managing the flow of knowledge focus on several potentially essential ingredients to future success, such as:

Retaining experience-based know-how, including not only technical knowledge but also so-called “softer” skills, such as project management and maintaining critical relationships inside and outside the organization that have been built up over years. For example, many top sales people know clients personally; subject matter experts know others in their field. Such trusted relationships facilitate communications and speed decision making.
Helping mentors pass along their expertise more effectively and helping mentees learn more efficiently. Mentors can teach through practical problem sets and hands-on diagnoses instead of lectures and presentations. Newcomers can learn more efficiently by keeping “learning logs” that chronicle their experiences and through scheduled feedback sessions with their mentors.
Encouraging reverse mentoring from newcomers to elders, such as having newcomers tutor experienced personnel in social media.
Generating new knowledge by conducting research, benchmarking, or bringing in “resident” artists or scientists whose interactions with employees can spark creativity.
Nurturing this kind of know-how is essential to maintaining the firm’s core capabilities, those unique innovations — whether in marketing, operations, finance, technology, or other areas — that are not easily replicated by competitors. At multiple levels in the organization, key personnel are responsible for such capabilities and hold much of the know-how in their heads. That’s why managing knowledge can be even more challenging than managing information.

The single largest obstacle to managing human knowledge is a lack of time. The more essential the know-how held in the head of an expert or highly experienced manager, the less time he or she has to pass it along to potential successors. Such valuable individuals are pulled into every important client meeting, problem-solving session, and innovation project. The only way that their deep smarts will be retained is if leaders recognize and address that limitation. Specifically, leaders need to:

Tie preservation of critical know-how to corporate strategy
Behave as if developing and retaining knowledge is truly important. Leaders who take time to teach in education programs, or at least start them off, provide visible evidence of seriousness.
Support incentives within the organization that both recognize current expertise and encourage it to be shared
If leaders do not show that knowledge development and preservation is a priority, then they cannot expect that managers lower in the organization will provide the necessary incentives, time, and resources to share, and thus preserve, knowledge across generations, geographies, and corporate silos.

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The luxury watch brand Rolex is the most reputable company in the world, according to the Reputation Institute's annual rankings
The Reputation Institute sorts companies according to the public's perception of their performance in seven areas: products and services, innovation, workplace, governance, citizenship, leadership, and performance.
The chocolate maker The Hershey Company is the most reputable brand in the US, but the brand is much less well known internationally, so it did not make it onto the list. Facebook did not even make it into the top 100. 

After the emissions scandal that engulfed the company last year, Volkswagen dropped from being the 14th most reputable company in the world in 2015 to the 123rd spot this year. 

To compile the rankings, the Reputation Institute collected more than 240,000 ratings from 15 countries.


 

10. Apple. RepTrack Points: 76.6.

A screenshot from the 2004 remake of Apple's iconic 1984 ad.
 Apple
Apple's reputation is getting worse, according to the study. The company has dropped from seventh place in 2014's rankings to eighth in 2015's, and it now sits at 10th. The tech company, however, came out on top in both the innovation and the leadership categories. 

Here's everything Apple announced at its Keynote on Monday, including its new, cheaper-than-ever iPhone. 

9. Sony. RepTrack points: 76.7.

REUTERS/Alessandro Garofalo
Sony proved to be a truly global brand. The company was among the 10 most reputable brands in 10 of the 15 countries surveyed. On this metric, it was beaten only by Rolex. 

This year Sony faced criticism over its failure to release singer Kesha from a six-album contract with one of its record labels, Dr. Luke's Kemosabe Records. Kesha alleged that her producer at the label, Lukasz Gottwald, sexually abused her. 

Aside from music, the Japanese conglomerate makes electronics and produces movies and video games. The company was founded in 1946 by Masaru Ibuka. 

 

8. Canon. RepTrack points: 76.9.

REUTERS/Toshiyuki Aizawa
Canon is the third most reputable brand in Europe, the Middle East, and Africa. 

The world's biggest maker of cameras and printers has been expanding further this year. It just announced that it would buy Toshiba's medical devices unit for nearly $6 billion. 

7. Microsoft. RepTrack points: 77.0.

Satya Nadella, CEO of Microsoft.
 Robert Galbraith/Reuters
Microsoft has returned to the list after it dropped out in 2015. It came out as the third most reputable brand in Asia. Microsoft is performing particularly well in the detachable tablet market, outperforming Apple. 

Microsoft is predicted to take a 74.6% share of the detachable tablet market by 2020. 

The company's biggest businesses in 2016 include the Windows operating system, the Xbox, and Microsoft Office. 

 

6. Lego Group. RepTrack points: 77.4.

Joe Shlabotnik/Flickr
Lego remains the most reputable brand in Europe, the Middle East, and Africa. 

This year Lego faced a serious backlash after the company refused to sell artist Ai Weiwei a bulk order of its plastic bricks. The Chinese artist had planned on using them to make a political point, which went against the company's rules. The toymaker later reversed this policy. 

According to a report by Brand Finance, Lego is the world's second most powerful brand after Disney. 

5. Daimler (Mercedes-Benz). RepTrack points: 77.7

The Mercedes 300SL Gullwing.
 Mercedes-Benz
Daimler dropped from third place to fifth in the global reputation rankings this year. 

Daimler sold 2.9 million cars in 2015, up 12% from the previous year, it was announced at the company's annual press conference. 

The Daimler-owned Mercedes could soon become the car brand most closely associated with Uber, as the taxi app just announced an order for 100,000 Mercedes S-Class cars, according to Fortune. 

 

4. BMW Group. RepTrack points: 77.9.

REUTERS/Denis Balibouse
BMW dropped from first place in 2015, but it retains its lead on its fellow German carmaker Daimler. 

BMW celebrated its 100th birthday this year. To celebrate, it released the concept car it predicts everyone will be driving in 100 years. 

As well as producing BMWs, the company makes Mini cars and oversees productions of Rolls-Royce vehicles. 

3. Google. RepTrak points: 78.1.

Scott Brownrigg
Google came top in the performance and workplace categories this year, but it slipped from second place — which it had held in 2015 and 2014. 

The search-ad business has had another important year; in October it reshaped its corporate structure to form a new parent company, Alphabet. 

 

2. The Walt Disney Company. RepTrak points: 78.2.

EURODISNEY-SHAREHOLDERS/ REUTERS/Gonzalo Fuentes
The Walt Disney Company came in the top 10 in each of the seven categories. The huge media and entertainment company came first in the citizenship and governance categories, making it unlucky to miss out on the top spot. 

The company is not afraid to stand up to things it disagrees with. On Wednesday, Disney Film Studios announced that it would boycott Georgia if the state brings into law a bill allowing officials to refuse to conduct same-sex marriages, The Guardian reports. 

The California-based company employs about 185,000 people across various divisions, according to its website. 

1. Rolex. RepTrak points: 78.4

Flickr/Alexandre Prévot
Rolex's position as the most reputable brand in the world is due to its incredibly high reputation for products and services. It was in the top 10 for every category. 

Luxury watch brands have suffered over the past year after facing a declining market in China. Consumers in the country bought 40% fewer Swiss watches — including Rolex, Swatch, and TAG Heuer brands — than they did in 2014, Sky News reported. 

The luxury watch brand was founded in London in 1905 before moving operations to Switzerland at the end of World War I.
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The ingredient that brought 3M and Apple from the brink of failure to achieve such an amazing record of success

In its early years, Minnesota Mining and Manufacturing Company, now known as 3M, was a dismal failure. After years of mining losses and red ink, company founders and investors came to a crossroads. They could close the business, or change course. 3M executives did what most successful executives do when faced with failure. They used it as an opportunity to find a path to success. We're glad they did. Today, the company generates nearly $30 billion in revenue selling over 55,000 products and employing roughly 84,000 people.

When Steve Jobs returned to Apple after his twelve years of wandering, the company needed a controversial $150 million investment from "arch rival" Microsoft to stay afloat. Even worse, when asked what he would do if he were in Jobs's shoes, Michael Dell said, "I'd shut it (the company) down, and give the money back to shareholders." Rather than give up, Jobs was able to use these "indignities" to fuel an amazing comeback. In a very short period of time, Apple grew to the most valuable company ever.

What is the ingredient that brought 3M and Apple from the brink of failure to achieve such an amazing record of success? While there are several candidates, the one that both companies clearly had in common is innovation.

If innovation has this potential, how can you use it as a tool to power your company's success?

Create an Innovation Culture

To create an innovative culture, managers need to make sure that all employees know that innovation is a job requirement. It should be woven into the fabric of the business and given a prominent place in job descriptions, procedures, and performance evaluations. Innovation should be defined to include incremental as well as revolutionary improvements. In a Harvard Business Review interview, Katsuaki Watanabe of Toyota said, "There is no genius in our company. We just do whatever we believe is right, trying every day to improve every little bit and piece. But when 70 years of very small improvements accumulate, they become a revolution." Over a 35-year period, Toyota's innovation culture increased the number of annual suggestions per employee 480-fold from 0.1 to 48.

Create a New Product Development System that rewards Innovation

At 3M, employees are paid for spending 15% of their time creating whatever they want. Once employees believe they have a worthy invention, they can "run it up the flagpole" using 3M's "Champion" new product development system. The Post-It-Note was created by a couple of employees that used their 15% time to generate the idea and champion it through the 3M System. Google has adopted a similar system as part of their innovation framework since it pays employees for spending 20% of their time on whatever projects they want.

Embrace Failure

Innovative companies recognize that failure is an important step in the process of success. They understand that with each failure, the company moves one step closer to success. In this way, failure is given a positive value. For example, if a successful product brings in $1 billion in sales, and it takes 9 failures to achieve each success, each step in the process (including the 9 failures) can be viewed as bringing the company $100 million in additional business - a positive way to look at failure.

Look forward

Kodak invented the digital camera. It didn't commercialize this invention because it wanted to protect its film business. The Company had what I call the "FDH" syndrome. It was Fat, Dumb, and Happy with its success in film. It looked backward instead of forward. As Bill Gates is fond ofsaying, "Success is a lousy teacher. It seduces smart people into thinking they can't lose." To be innovative, you cannot be afraid to obsolete your own products. If you are, others will obsolete them for you. That is what happened to Kodak and many others.

Marketing Information System

The marketplace is constantly evolving and changing. To be successful, you need a system that continuously monitors the marketplace, collects feedback in real time, analyzes the feedback, reports the unvarnished truth to decision makers, and takes corrective action. What worked yesterday, may not work tomorrow, and the information about tomorrow is often available today. Companies need the right telescopes and microscopes to see what is going on and react swiftly once the information is properly analyzed and triangulated.

Passionate Pursuit of Improvement

The Lexus slogan the Passionate Pursuit of Perfection embodies the TQM (total quality management) mantra of continual improvement, or kaizen. This guiding philosophy has propelled Toyota to regaining its lead in global automotive sales in spite of self-destructive missteps and problems caused by the devastating Tsunami of 2011.

While Dell is not recognized as a product innovator, the company was very innovative in its factory processes, supply-chain management, and make-to-order e-commerce systems. Its efficiency strategies worked quite well for a number of years - giving Dell cost and quality advantages over its "IBM-PC compatible" rivals and Fortune 500 status. Dell got FDH, Michael Dell left for a while, and innovation went by the wayside. So did sales.

Necessity is not the only mother of invention

Companies such as 3M and Apple chose innovation at a point in their histories when they did not have much choice. For them, necessity was the mother of invention. 3M institutionalized their innovative ways. Time will tell if Apple will continue to innovate now that Steve Jobs has passed.

We should be most concerned about companies that are currently successful that do not have innovation ingrained in the fabric of their businesses. They are the ones that need to avoid the FDH (fat, dumb, and happy) syndrome, try new things and not rest on their laurels. They have to risk failure to continue to achieve great success. They should know that survival today requires more than treading water, and that many of the companies that were once great are now gone oron their way out largely because they stopped innovating. In fact, according to Forbes, the average lifespan of a successful S&P 500 Company was 67 years in the 1920's. Today it is 15 years. More companies need to innovate to improve these declining numbers.

The innovations do not have to be revolutionary or the exclusive domain of new or improved products. The improvements can be incremental as they are at Toyota, or they can be in business systems and processes as they were at Dell. Innovations can (and should) be in marketing as they have been at Procter & Gamble. Some may recall that the company invented the "soap opera" to sell its soap.

Wherever innovations come from, however they are done, and in whatever part of the business they occur, companies need to continuously innovate or risk dying.

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Adapting your approach to innovation to the problem at hand in an attempt to optimize the process.

One of the best innovation stories I’ve ever heard came to me from a senior executive at a leading tech firm. Apparently, his company had won a million-dollar contract to design a sensor that could detect pollutants at very small concentrations underwater. It was an unusually complex problem, so the firm set up a team of crack microchip designers, and they started putting their heads together.

About 45 minutes into their first working session, the marine biologist assigned to their team walked in with a bag of clams and set them on the table. Seeing the confused looks of the chip designers, he explained that clams can detect pollutants at just a few parts per million, and when that happens, they open their shells.

As it turned out, they didn’t really need a fancy chip to detect pollutants — just a simple one that could alert the system to clams opening their shells. “They saved $999,000 and ate the clams for dinner,” the executive told me.

That, in essence, is the value of open innovation. When you have a really tough problem, it often helps to expand skill domains beyond specialists in a single field. Many believe it is just these kinds of unlikely combinations that are key to coming up with breakthroughs. In fact, a study analyzing 17.9 million scientific papers found that the most highly cited work tended to be mostly rooted within a traditional field, with just a smidgen of insight taken from some unconventional place.

But what if the task had been simply to make a chip that was 30% more efficient? In that case, a marine biologist dropping clams on the table would have been nothing more than a distraction. Or, what if the company needed to identify a new business model? Or what if — as is the case today — current chip technology is nearing its theoretical limits, and a completely new architecture needs to be dreamed up?

In researching my book, Mapping Innovation, I found that every innovation strategy fails eventually, because innovation is, at its core, about solving problems — and there are as many ways to innovate as there are types of problems to solve. There is no one “true” path to innovation.

Yet all too often, organizations act as if there is. They lock themselves into one type of strategy and say, “This is how we innovate.” It works for a while, but eventually it catches up with them. They find themselves locked into a set of solutions that don’t fit the problems they need to solve. Essentially, they become square-peg companies in a round-hole world and lose relevance.

We need to start treating innovation like other business disciplines — as a set of tools that are designed to accomplish specific objectives. Just as we wouldn’t rely on a single marketing tactic or a single source of financing for the entire life of an organization, we need to build up a portfolio of innovation strategies designed for specific tasks.

It was with this in mind that I created the Innovation Matrix to help leaders identify the right type of strategy to solve a problem, by asking two questions: How well can we define the problem? and How well can we define the skill domain(s) needed to solve it?

Sustaining innovation. Most innovation happens here, because most of the time we are seeking to get better at what we’re already doing. We want to improve existing capabilities in existing markets, and we have a pretty clear idea of what problems need to be solved and what skill domains are required to solve them.

For these types of problems, conventional strategies like strategic roadmapping, traditional R&D labs, and using acquisitions to bring new resources and skill sets into the organization are usually effective. Design thinking methods, such as those championed by David Kelley, founder of the design firm IDEOand Stanford’s d.school, can also be enormously helpful if both the problem and the skills needed to solve it are well understood.

Breakthrough innovation. Sometimes, as was the case with the example of detecting pollutants underwater, we run into a well-defined problem that’s just devilishly hard to solve. In cases like these, we need to explore unconventional skill domains, such as adding a marine biologist to a team of chip designers. Open innovation strategies can be highly effective in this regard, because they help to expose the problem to diverse skill domains.

As Thomas Kuhn explained in the The Structure of Scientific Revolutions, we advance in specific fields by creating paradigms, which sometimes can make it very difficult to solve a problem within the domain in which it arose — but the problem may be resolved fairly easily within the paradigm of an adjacent domain.

 

Disruptive innovation. When HBS professor Clayton Christensen introduced the concept of disruptive innovation in his book The Innovator’s Dilemma, it was a revelation. In his study of why good firms fail, he found that what is normally considered best practice — listening to customers, investing in continuous improvement, and focusing on the bottom line — can be lethal in some situations.

In a nutshell, what he discovered is that when the basis of competition changes, because of technological shifts or other changes in the marketplace, companies can find themselves getting better and better at things people want less and less. When that happens, innovating your products won’t help — you have to innovate your business model.

More recently, Steve Blank has developed lean startup methods and Alex Osterwalder has created tools like the business model canvas and value proposition canvas. These are all essential assets for anyone who finds themselves in the situation Christensen described, and they are proving to be effective in a wide variety of contexts.

Basic research. Pathbreaking innovations never arrive fully formed. They always begin with the discovery of some new phenomenon. No one could guess how Einstein’s discoveries would shape the world, or that Alan Turing’s universal computer would someday become a real thing. As Neil deGrasse Tyson said when asked about the impact of a major discovery, “I don’t know, but we’ll probably tax it.” To his point, Einstein’s discoveries now play essential roles in technologies ranging from nuclear energy to computer technologies and GPS satellites.

Some large enterprises, like IBM and Procter & Gamble, have the resources to invest in labs to pursue basic research. Others, like Experian’s DataLabs, encourage researchers and engineers to go to conferences and hold internal seminars on what they learn. Google invites about 30 top researchers to spend a sabbatical year at the company and funds 250 academic projects annually.

Yet one of the best-kept secrets is how even small and medium-size enterprises can access world-class research. The federal government funds a variety of programs, such as the Hollings Manufacturing Extension Partnership, a series of manufacturing hubs to help develop advanced technologies, and Argonne Design Works. Local universities, which have a wealth of scientific talent, can also be a valuable resource.

Taking steps to participate in these types of programs can help small business compete in competitive markets. For example, Mike Wixom of Navitas, a four-year-old battery company that joined the Joint Center for Energy Storage Research (JCESR) as an affiliate, told me, “As a small company, we’re fighting for our survival on a daily basis. Becoming a JCESR affiliate gives us an early peek at technology, and you get to give feedback about what kinds manufacturing issues are likely to come up with any particular chemistry.”

So, clearly, being able to reach out to scientists on the cutting edge can help a business plan for the future, just as the other approaches, such as design thinking, open innovation, business model innovation, and others, can help propel a business forward if applied in the right context. But no one solution fits all problems.

If your innovation strategy is struggling or failing, consider whether it’s because you’ve locked yourself into a single approach. There are always new problems to solve; learn to apply the solution that best fits your current problem.

source hbr.org

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With the speed of technology adoption and a fast-paced global economy, companies rise and fall faster than you can say Alibaba.

In 1955, Fortune Magazine listed the 500 largest companies in a list that’s become synonymous with success. 60 years later, only 71 of those companies still remain.

With the speed of technology adoption and a fast-paced global economy, companies rise and fall faster than you can say Alibaba.

(And ummm, maybe they should've considered using Vocoli to understand their employee voice)

The Secrets to Innovation

So what’s the secret sauce to success (or more accurately, survival)?

First, a strong corporate culture is key, as we’ve talked about [herehere and here]. But in addition to a defined “perfect employee blueprint,” creating an innovatation culture and the ability to market solutions before your competitors is a difference maker.

In our experience, there are several reasons for stifled innovation:

  • Fixating on one successful offering without accepting something better can (and will) come along
  • Only focusing on the customer of today without anticipating their needs for the future
  • Failure to update technology and change with the times

We’ve highlighted 10 companies that had success but ultimately missed opportunities due to one or more oversights:

Blockbuster

It’s a shame that future generations won’t be able to understand the soul-crushing experience of a sold-out Blockbuster movie. Aside from the endless parade of late fees, Blockbuster was a weekend night tradition for most families.

Then Netflix happened.

Netflix sent videos you would’ve rented through Blockbuster straight to your home without due dates or late fees. Blockbuster was unconcerned and even had the opportunity to buy Netflix for $50 million in 2000. They decided to meander along and not change a thing for the next four years while Netflix became more and more popular, and eventually went from a mail-order service to a streaming one.

In 2004 Netflix finally offered an online option, but it was too late.

On September 23, 2010 Blockbuster filed for bankruptcy. But I still have a VHS tape that has their “Please be kind, rewind” slogan, just as a precious memento.

Xerox

In 1959, Xerox launched the Xerox 914 photocopier revolutionized the document-copying industry.

According to Wikipedia: “One of the most successful Xerox products ever, a 914 model could make 100,000 copies per month (one copy every 26.4 seconds, or ~136 copies/hour.)”

But most everyone knows the story of PARC (or the Palo Alto Research Center). PARC’s inventions include the mouse, the laser printer, and a windows/icon-based user interface (sound familiar?).And they gave it away. For years , Xerox management did absolutely nothing with their cutting-edge inventions and continued to profit off of the 914 photocopier.

Meanwhile, Apple, Microsoft and Hewlett-Packard ”borrowed” their technology and made billions off of it.

Borders Books

When Borders Books launched its first store in Ann Arbor, Michigan in 1971, the world was a different place. A kindle was a pile of sticks used to start a fire, and a nook was that tiny part of the kitchen in the corner where you eat breakfast.

40 years later, you can read books on your phone, on a tablet or via the web. And Borders’ competitors (Amazon and Barnes and Noble, to a lesser extent), saw this trend. They launched tablet devices to strengthen their relationship with readers.

On the other hand, Borders didn’t adopt any of new technologies (and according to this Time article, focused on music sales). In doing so, they wrote their obituary.

Blackberry

Do you remember your first “CrackBerry?” There was a time when the primary mode of business communication was BBM and everyone wanted to know your PIN. It was the phone to have in the mid- to late-2000’s (in 2007 it had more than half of the marketshare of phones in the US.)

But on June 29, 2007 the iPhone was released.

At first, Blackberry ignored touch screen based technology insisting their phones would remain the de-facto standard for enterprises especially since the iPhone struggled early with solid enterprise email security. But by dominating in the consumer market and slowly promoting Bring Your Own Device (BYOD) standards within companies, Apple redefines the market and left Blackberry stumbling and blinded by their own success.

Their initial inaction snowballed into a succession of failed attempts to innovate. Blackberry currently has 0.8% of the Smartphone market share according to IDC.

Rumor has it that they are now working on a Siri-Like feature called Blackberry Assistant. They might be a little bit behind the curve on that one.

Yahoo

In 2005, Yahoo owned 21% of the online advertising market, #1 among all players. Yet today, they’re struggling maintain their #4 position behind Google, Facebook and Microsoft.

In fact, Yahoo could’ve done just about anything differently and they could still be #1. First, their desire to be an online portal instead of a dominant search player led them to outsource their search engine to Microsoft Bing.

They were supposed to be what Google ended up being but got distracted along the way. They didn’t see the importance of search and instead focused on becoming a media giant.

Just a few of their missed innovations:

  • Google. In 2002 there was reportedly a deal struck for Yahoo to buy Google for $5 billion dollars. Then CEO Terry Semel refused to shell out the cash and the deal was squashed.
  • DoubleClick. DoubleClick was the dominant player in display ads throughout the late ‘90s and early 2000’s. Buying DoubleClick would’ve helped Yahoo strengthen their display ads as Google was gaining on them. Unfortunately they didn’t move quick enough and Google pounced on this opportunity.
  • Facebook. In 2006, Yahoo had a deal to buy the company for $1 billion. They then lowered their offer and Mark Zuckerburg backed out. Facebook is now valued x150 times their original asking price. Whoops.

Being a technology giant requires strategic mergers and acquisitions (and the innovative ideas they bring). Had a few of these situations gone differently, we might be “yahooing” instead of “googling.”

United States Postal Service

UPS, FedEx and not mention email—and the USPS has sat by and done just about nothing. If you Google “USPS” you will find approximately 10,000+ articles on why it can’t be saved. The market shifted and unfortunately due to government regulations the USPS was stuck.

And thus USPS is overshadowed by UPS and FedEx, left only to deliver some bills that aren’t paperless and wedding invitations.

Polaroid

In the last 10 years who has actually taken a serious Polaroid? Yeah they’re cool to have around at birthday parties as something out of the ordinary, but convenience is the name of the game for everyday use.

They started out as an innovative brand that brought instant photography into the playing field. However, Polaroid didn’t realize that digital cameras were going to be the way of the future and once they did it was way too late. Film photography is now a niche field at best and Polaroid filed for bankruptcy in 2001.

MySpace

MySpace was born and died all very quickly. It goes to show you how important the evolution of user experience is, seeing as how Facebook swooped in where Myspace had already made decent ground.

Here is one graph showing Google Trends of Myspace over the years:

Myspace Interest Overtime.PNG

Now here is that same time period with Facebook included:

Myspace and Facebook.PNG

Looks pretty comical in comparison.

Facebook saw what Myspace didn’t: people need to connect on more than one level—through shared interests and groups (not just random bands trying to get signed.) And so, everyone migrated over to Facebook and never looked back.

However, they do have over a million likes on Facebook but that’s mostly people shell shocked that they’re still around.

Hostess

Why change the perfection that is the Twinkie? It was something that you could find in every child’s lunchbox in the 1970’s. Unfortunately, times change and so do eating habits—“eat clean, train mean.” Hostess continued to churn out highly processed foods that aren’t bought as often in this healthy eating craze.

Hostess made two major errors in the last 20 years: failure to innovate new and healthier foods and marketing that didn’t even attempt to make their brand relevant. Hostess closed its doors in 2012 after two bankruptcies (and the eBay mad-dash started for Twinkies) and then re-opened as a new company Hostess Brands, LLC. Hopefully the third time’s the charm. Whole wheat Ding Dongs anyone?

The Entire Publishing Industry

We’ve been watching for awhile as publishers desperately cling to the prospects of print sales. It’s very clear that it’s not going to happen and electronic print is the way of the future (duh.) Instead of embracing the digital generation, publishers have been dragging their heels trying to slow it—wasting both time and money in the process.

While they’re over there fighting a losing battle, the market has shifted. People no longer look in the classifieds for jobs. Instead, they log in to LinkedIn or browse Craigslist for listings. If the public wants to catch up on the news they can get their updates from the web or their mobile phone. The New York Times crossword puzzle is a thing of the past (there’s an app for that!)

Revenue in the industry is expected to decline at an average rate of 4.2 percent per year for the next five years according to IBISWorld. The newspaper and publishing industry can combat these losses using paywalls through application stores across various platforms.

These companies used to be considered some of the brightest in their industry but their failure to innovate led to their ultimate (or eventual) demise. Tunnel vision (or Big Company Syndrome) is common today. When companies are successful quickly, they assume that they should just keep doing what they’re doing and it will be fine. Which isn’t completely untrue, you should definitely champion your best products. But what separates good companies from the best companies is innovation and always trying to find ways to improve.

source: vocoli.com

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Strategy is often thought of as the exclusive preserve of top management, but organizational alignment is impossible without everyone’s participation.

“The purpose of an organization is to get ordinary people to do extraordinary things,” management guru Peter Drucker once wrote.

But that’s only part of the story. For these “extraordinary things” to enhance the organization’s competitive effectiveness they must directly support the organization’s strategic goals. If a strategy exists only at the top of an organization, it will have little effect. To produce unity of action, strategy must be translated to and acted on at every level within the organization. No one is exempt.

An apt metaphor is the teamwork that propels a rowing eight. Any rower who falls out of rhythm or reduces the team’s pulling power will impede the progress of the boat. Everyone must, quite literally, pull their weight. There is simply no room for passengers.

Yet most companies fail to achieve this level of strategic alignment. A survey by Right Management Consultants found that two-thirds of employees either do not know or do not understand their company’s strategy, and only one-third felt fully engaged with their jobs and their company.

There is a connection between these outcomes. Employees cannot engage with companies that cannot express a sense of purpose. The cost of this engagement deficit is heavy. A 2013 Gallup survey found that companies in the top quartile for employee engagement achieved 10 percent higher customer ratings and 22 percent greater profitability.

This challenge goes to the heart of what it takes to be a leader. We cannot think of strategy and leadership as separate domains. They are essential parts of each other. Every failure of strategy is a failure of leadership — either to set the right priorities or to mobilize the hearts and minds of employees. It is strategy and leadership working hand in hand that is the key to success.

For a strategy to be translated to every unit in an organization, there needs to be a shared understanding of the process by which this will be achieved. The graphic below describes a method I have found to be successful in numerous companies I have worked with.

to win at value, a deep connection between each unit and the business's overall strategy is vital

For strategy to lead to effective value creation, it must be translated throughout the organization.

Here is the logic: Strategy is about harnessing insight to make choices on where to compete and how to win the competition for value creation in an organization’s chosen markets. At the corporate level, the primary choices on those questions must be made. Then within each organizational unit, these primary choices need to be translated into derived choices in a process of systematic alignment.

Within each organizational unit the first order of business is to develop a clear line of sight to the corporation’s strategic goals and then to use this as the springboard and inspiration for this process of translation. In military parlance an operating unit must first understand the “commander’s intent” and then set priorities and commit resources accordingly.

Executives in staff functions sometimes ask why they need to have a strategy since they don’t generate revenue, and are therefore simply cost centers. My response is to counsel them not to think of themselves as cost centers but as value centers. With this change of mindset, their mission becomes clear: to generate greater value than the costs they incur. If they fail to do this, they will simply be reducing their company’s profits.

I often hear managers complain that their executives have not clarified the organization’s strategic goals. But we need to accept that leaders are not perfect, and do not always present this kind of clarity on a plate. Life is messy. The answer is not just to sit back and complain, or simply take shots in the dark. That is victimhood, not leadership. Effective managers take responsibility for finding clarity through dialogue with their leaders; they are able to lead both up and down. They know they owe this to their teams.

Organizations create their future through the strategies they pursue. In a dynamic world, this invariably involves change and uncertainty. As employees seek clarity of purpose, there are always three questions in their minds. At times of change, the need for clear answers is intensified:

  1. What are we aiming to achieve, and why should I care?
  2. Where does my department fit in, and what is expected of me?
  3. How will we measure success, and what’s in it for me?

The task of strategic leadership at every level is to ensure that these questions are answered honestly and clearly, and that everyone has the chance to contribute meaningfully to the end result. As Henry Kissinger once observed, “No strategy, no matter how ingenious, has any chance of succeeding if it is born in the minds of a few and carried in the hearts of none.”

a gearbox is an effective metaphor for the deep connection between all units necessary for effective strategy

© Andrew Walch | Flickr

In a seminar I ran for a major corporation one of the participants asked the CEO how he saw his role as the head of such a big enterprise. He walked up to a flip chart and drew a gearbox. Then he explained: “I see my responsibility as controlling the large wheel in a gearbox. The role of a gearbox is to transmit power. Every time I turn that large wheel just one notch, all the smaller wheels will spin progressively faster. Those smaller wheels are you and your teams. My most important job is to turn the big wheel on just the right issues so that all the energies of the company are driving the few things that matter most to our success.” He paused for a moment, and went on to make the clinching point: “All of you also have your hands on a large wheel, and you owe it to your teams to turn that wheel on just the right issues — those that line up with our corporate priorities.”

Whenever the challenge of strategic alignment comes up in that company, the executives remind themselves of “the parable of the gearbox.”

All too often top leaders believe that their key task is to “communicate” the strategy to the organization in a one-way process. But just telling people what to do produces compliance at best — and resentment at worst. It is a fact of life that people will support what they help to build. As the German philosopher Friedrich Nietzsche wrote, “people will do almost any what if you give them a good why.” 

True commitment comes from the dedication to a cause greater than ourselves combined with the knowledge that we can make a difference that matters. All motivational research points to one fundamental truth. Success resides in the gap between compliance and commitment.

Willie Pietersen is the faculty director of Columbia Business School’s Executive Education program Implementing Winning Strategies: The Breakthrough Strategic Learning Process.

 
 
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So what is it that makes some big multinational corporations so successful? One answer can be found in their ability to control networks.

The latest round of quarterly results have recently come out and the likes of Apple and Boeing have announced bumper profits. Others such as Sainsbury’s and Samsung have not fared so well. So what is it that makes some big multinational corporations so successful? One answer can be found in their ability to control networks.

The global economy is made up of a series of networks that link customers with providers from all corners of the world. These networks consist of chains of linked corporations that bring these products to our doorsteps – from coffee growers in Columbia through logistics companies to the coffee burner at Nestle and the shop around the corner. Once companies have gained a strong position in these networks, they can then enhance and modify them to suit their business.

Companies that succeed position themselves at the centre of these networks and then manipulate their structure and foundations. Mostly, entrepreneurship rests on three forms of networking and network building: controlling the network they are part of, bridging it with others and creating new one.

Gaining control

Good entrepreneurs seek to occupy positions of control and power in the economic networks in which they operate. They do so by occupying the profitable “middleman” position between producers and customers in the networks that make up our global economy.

These middleman positions are very profitable, based on the control they can exert over the trade flows in their network. Companies can build and maintain this position through tactically acquiring competitors – this explains the numerous mergers and takeovers that have taken place over the past decade. Acquisition strategies by AppleFacebook and Google show how mergers and takeovers can also be used to pre-emptively counter the emergence of any potential competitor.

The importance of these middleman positions explains as well how companies exercise control over trade conditions in their own supply chain networks. Imposing strict costing on suppliers might cause exploitative work conditions in the plants in which many of the company’s products are produced. But this enables them to keep their costs to a minimum.

Retail giants such as Walmart, Amazon and Tesco are well known for exercising close control of their supply chains and for imposing trade conditions on their suppliers that allows them to operate at lower costs than their competitors. The same holds for Apple, which outsources the production of its devices to giant corporations such as Foxconn in China. This allows Apple to operate at much lower costs, increasing its profit margin.

Apple outsources its production, while maintaining control of the network. Steve Jurvetson/flickrCC BY

Finally, positioning your company in the networks through relationships with the right partners results in more control and power to affect the business environment. Historical entrepreneurs such as John D Rockefeller were masters of developing these strategies. Rockefeller built a controlling position in the oil market at the end of the 19th century by procuring competing oil producers in the US and to integrating them into his Standard Oil corporation.

Bridging networks

Successful companies are adept at bridging their network with others in the global economy by exploiting things they have in common. As Ronald Burt explained in his “structural holes” theory, people or companies that can connect across different groups can be more creative and innovative.

Son Apple is able to tie different products and activities into comprehensive packages of services to their customers. Instead of just producing a personal computer or its operating software, Apple pioneered a vision of delivering the whole package of hardware and software to its customers – with great care given to design too. Although in the 1980s and 1990s this strategy was less effective and Microsoft was the more successful company, Steve Jobs’s persistence in following his vision ultimately succeeded. Indeed, Apple’s vision has become the most successful in the 21st century, since this approach is anchored in the networked nature of our global economy.

Creating new networks

The most successful corporations are able to create new networks through an innovative vision that executes a business strategy that fits with the prevailing philosophy of life. Apple is again the most prominent example of this aspect of entrepreneurship since it sells a world view in which hardware devices are linked with providing content in a beautiful design. Apple gets us communicating with friends through social networks, listening to music, making and modifying photographs, playing games and “looking cool” in a single vision of what a successful 21st century person aspires to.

Apple created new economic networks through the introduction of iTunes, their App Store, iPods, iPhones and iPads, resulting in a world view that people bought into. The latest additions to these services are the iCloud storage service and Apple Watch, which can communicate information of one’s body and health status to other devices. Then there’s Apple Pay, which will enable customers to increasingly control their finances through their Apple devices.

Although proposed and pioneered by others, it is Apple’s total vision of what a successful 21st century life should be that enables them to reap the profits from their products and make us “addicted” to them.

It is the success of Apple in this third aspect of entrepreneurship in a network economy that sets the company apart from its competitors, and whose lead aspiring businesses should follow.

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I recently wrote an article about why so many strategies fail. Today though, I want to focus on the flip-side of that coin. I want to share with you my personal top 5 picks for the best business strategies of all time. Enjoy and more importantly, add your own examples in the comments below! - Tom Wright

1. Airbnb Forget All About Scalability

I love the story of Airbnb. We know them today as one of the fastest growing tech companies, valued at over $10bn, who have changed the way we travel probably forever. But did you know that they started out about as low tech as you can get?

The first Airbnb rental that ever took place, was the renting out of 3 air mattresses on the floor of co-founders Brian and Joe’s apartment. They made $80 per guest. It seemed like a great idea for a startup, so they put up a website and started inviting other people to list their own mattresses for hire.

They got a few bookings here and there – but for the most part, things didn’t go well. So much so, that in 2008, they resorted to selling cereal to make some extra cash (you can still see the original page on their site).

They had plenty of listings on the site, and plenty of site traffic – but too few people were actually making bookings. They were frustrated about the lack of effort they perceived in the listings people were making. So they took matters into their own hands.

The co-founders grabbed their camera, and went to knock on the doors of each and every one of their NYC listings. When someone answered the door, they would persuade the owner to let them in, and then take a ton of photographs of the inside. They touched up the photos a bit and uploaded them to the website in place of the old photos the owners had taken. Within a month of starting this strategy – sales doubled. Then tripled. Then….well, the rest is history.

Best Business Strategies: Airbnb

 

What can we learn from Airbnb?

The thing I love the most about this story, is that it confounds one of the most commonly stated principles of building a tech startup – that you must make everything scalable. What Brian & Joe did was anything but scalable. But it got them enough traction to prove that their concept could work. Later, they did find a way to make this solution scalable, by hiring young photographers in major locations and paying them to take professional photos of owner’s listings (at no charge to the owner).

 

2. Toyota Proves that Humility can be the Best Business Strategy

In the year 1973, the ‘Big Three’ car makers in the USA had over 82% of the market share. Today they have less than 50%. The main reason for this, is the aggressive (and unexpected) entry of Japanese car makers, led by Toyota into the US market in the 1970’s.

Cars are big, heavy and expensive to move around. That’s one of the reasons why the US market was so surprised when Toyota started selling Japanese-made cars in the US, at prices far lower than they could match. The car industry was a huge contributor to the US economy, so one of the first reactions from the government was to implement protectionist taxes on all imports of cars – thus making Japanese cars as expensive as locally made cars.

But the tactic failed. Within a few years, Toyota (and by now others too) had managed to establish production plants on US soil, thus eliminating the need to pay any of the hefty new import taxes. At first, US car makers weren’t all that worried. Surely by having to move production to the US, the production costs for the Japanese car makers would rise up to be roughly the same as those of the local car makers. But that didn’t happen. Toyota continued to output cars (now made locally on US soil) for significantly cheaper than US companies could.

Their finely honed production processes were so efficient and lean that they were able to beat US car makers at their own game. You’ve probably heard of the notion of ‘continuous improvement‘. In the world of manufacturing, Toyota are pretty much the grandfather of exactly this.

Best Business Strategies: Toyota

What can we learn from Toyota?

Most business success stories that you read – especially in the western world, involve bold moves and against-all-odds tales of bravery. Which is what makes this particular story so unique. Toyota spent years studying the production lines of American car makers such as Ford. They knew that the US car industry was more advanced and more efficient than the Japanese one. So they waited. They studied their competitors and tried to copy what the Americans did so well. They blended these processes with the strengths of their own, and came up with something even better.

Toyota proved that knowing their own weaknesses can be the key to success – and be one of the best business strategies you can ever deploy.

Not just that. Can you name a single famous executive at Toyota? I can’t. And one of the reasons is that Toyota’s number one corporate value is humility. Not even the most senior plant executives have named car spaces of their own. The humility that helped them to crack the US market runs deep in the organization, from the executives to the assembly workers.

 

3. HubSpot Creates an Industry then Dominates it

HubSpot aren’t as famous as Airbnb or Toyota. But, they’re worth over $2bn, and more impressively, they’ve achieved that valuation in an industry that didn’t even exist before they invented it themselves. That industry is known as ‘inbound marketing’.

Most of the marketing that we experience is known as ‘interruption’ marketing. This is where adverts are pushed out to you whether you like it or not. Think tv adverts, billboards, Google Adwords, etc. In 2004, HubSpot created a software platform that aimed to turn this concept of marketing on its head. The HubSpot marketing platform helped companies to write blog posts, create eBooks and share their content on social media. The theory was that if you could produce enough good quality content to pull people to your website, then just enough of them might stick around to take a look at the product you’re actually selling (behind the blog).

This was a big deal. I can tell you from personal experience, that ‘interruption marketing’ is really really expensive. We pay Google around $10 each time someone clicks onto one of our AdWords adverts. Remember, that’s $10 per click not per sale. That adds up pretty fast. On the other hand, this blog receives approaching one million clicks per year – at a cost of zero. I’ve written before about how inbound marketing basically saved our business – so it’s fair to say that this example is pretty close to my heart!

They coined the term ‘inbound marketing’ – and long story short, they’re now one of the biggest SaaS companies in the world. But that’s not the interesting part of the story.

Best Business Strategies: HubSpot

What can we learn from HubSpot?

The interesting part of the story is this: HubSpot created a new type of marketing. They then used that type of marketing to market their own company, who’s sole purpose was to sell a platform that created that new type of marketing. Head hurting yet? Mine too.

In a nut-shell, HubSpot had an idea for a cool new way of marketing. Most companies would have taken that new way of marketing, and applied it to something that they were already selling. But instead, the HubSpot guys decided to monetize the marketing strategy itself. They took a whole bunch of concepts that already existed (blogging, eBooks, etc) and packaged them into a ‘new way of doing things’. Not only that, but they created an awesome narrative, and then proved how powerful this new way of marketing could be, by building a $2bn business from it. They smoked their own dope, and made themselves very very rich in the process.

 

4. Apple’s iPhone Launch Shows Tremendous Restraint

Ok I hear you – this is such an obvious inclusion for the ‘best business strategies’. But as one of the first people to adopt smartphones when they came out in the 1990’s this is something else that’s pretty close to my heart. I remember using Windows Mobile (the original version) on a touchscreen phone with a stylus – and it was horrible. I loved the fact that I had access to my email and my calendar on my phone. But I hated the fact that my phone was the size of a house, and required you to press the screen with ox-like strength before any kind of input would register.

Thankfully, a few years later, BlackBerry came along started released phones that were not only smart, but much more usable. Sony Ericsson, Nokia, HTC and a whole host of other manufacturers all came out with reasonably solid smartphones, all well before 2007 when Apple finally released the iPhone.

I remember arriving at the office one day and my boss had somehow gotten his hands on one of the first iPhones to be sold in the UK. I was shocked. Normally I was the early adopter. I was the one showing people what the future looked like. And yet, here was this guy in his mid 50’s, with his thick glasses, showing off a bit of technology that I’d never even seen before.

And that is the masterstroke that is the iPhone. The reason why every single smartphone I’d ever owned had sucked in comparison to the iPhone, is because there’s no real market in selling phones to geeks like me. We’re too few and far between – and either too poor or too stingy to drop any real cash on new tech. Apple could easily have created a phone much earlier than it did and sold it to me. But it didn’t. Instead it waited until the technology was mature enough to be able to sell to my boss. Someone who is far less tech savvy than me. But also far more financially equipped.

Best Business Strategies: Apple

What can we learn from Apple?

The big learning here is that first mover advantage is often not an advantage. A well executed ‘follower’ strategy will outperform a less well executed ‘first mover’ strategy every single time. One of the most common misconceptions in the startup world is the concept that it’s the ‘idea’ that matters the most. The truth is, the world’s most successful companies were rarely the first ones to innovate. I’m looking at you Nokia. At you Kodak. And at you too, Yahoo.

In fact, being first is probably a disadvantage more often than it’s an advantage. Why?

  • Your market isn’t well defined and doesn’t even know your product type exists
  • If you have a market, it’s probably the early adopters – by definition, that’s a niche market
  • The technology will hold you back rather than power you to success
  • Every single person that comes after you will have the advantage of learning from your mistakes

People, and especially tech companies, get carried away with being first. But you need to think very seriously about whether ‘first mover’ or ‘smart follower’ are the best business strategies for you.

 

5. PayPal Dared to Challenge the Status Quo

There are certain industries that you just don’t mess with. Industries like Aerospace, big Supermarkets, Semi Conductors, and Banking. Actually, banking is probably the hardest industry of all to try to disrupt, because the barriers to entry are huge. You need mountains of capital, a ton of regulatory approval, and years of building trust with your customers around their most important asset – their cash.

Banks are old. Their business models are largely unchanged in hundreds of years, and they make huge amounts of profit, without actually making a single thing. They’re insanely powerful and almost impossible to displace. But for some stupid crazy reason – PayPal didn’t seem to care. I can tell you from personal experience (I worked for a bank), that the name that strikes the most fear into the executives of the banks is PayPal. Here’s why:

  1. PayPal spends less money on technology than even a medium sized bank does. Yet its technology platform is far superior.
  2. Consumers trust PayPal as much if not more than they trust their bank. Even though PayPal has been around for a fraction of the time.
  3. When a customer buys with their PayPal account, the bank has no clue what the customer actually bought. The transaction appears on the bank statement as merely ‘PayPal’. That gives PayPal all the power when it comes to data mining.
  4. PayPal is quicker to market with just about any kind of payment innovation going.
  5. PayPal refuses to partner directly with banks – instead opting to partner with retailers directly.

In a very small space of time, PayPal has managed to insert itself as a whole new method of payment on the internet (and offline) – giving a very real alternative to your trusty debit or credit card. But how the heck did it manage to do it? Let’s take a look at why PayPal had one of the best business strategies ever.

Best Business Strategies: PayPal

What can we learn from PayPal?

There are two huge pillars of success to PayPal’s story. The first is simple – stone-cold balls. They got a fairly lucky break when they accidentally became the favored payment provider for eBay transactions. This was followed a few years later by their $1.5bn acquisition by eBay themselves. eBay were smart enough to mostly leave them alone, and their newfound sense of boldness saw them strike a series of deals with other online retailers to try and replicate the success they’d had with eBay.

This is where the second pillar of their success comes in. Partnerships. Banks had always been wary about forming partnerships directly with retailers – instead they relied on their scheme partners (Visa / MasterCard) to do that for them. They didn’t want the hassle of managing so many different relationships, and were extremely confident about the fact that credit and debit cards would always be at the heart of the financial payment system. But the problem was that MasterCard themselves were already working on a partnership with PayPal. Leaving the banks out in the cold. Today, PayPal commends an amazing 20% market share of online payments in the US – and 62.7% of the eWallet space. Almost all of that growth has come from their direct relationships with merchants large and small.

 

What are the Best Business Strategies You’ve Ever Seen?

Ok, so that’s my top 5. Now it’s your turn. Tell me about the best business strategies you’ve come across. The ones that made you smile and say ‘damn they were smart’. Add you own to the comments below, or share them with me via social media.

Over to you!

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Design thinking is a framework that combines critical thinking, cross functional collaboration, empathy, iteration, and curiosity to deliver innovative solutions. Many companies are leveraging design thinking principles to grow their businesses.

Here are some of our favorite examples.

1) Airbnb

In 2009, Airbnb’s revenue income was limping. At one point the company was earning a mere $200 a week. What happened? How did Airbnb go from anemic to titanic?

The Airbnb team realized that rental listings had poor quality pictures. So, several of the team members flew out to New York and took their own high quality pictures which they then placed on their website. The result? A 100% increase in revenue ($400). Instead of focusing on scalability, the team turned inward and asked ‘what does the customer need?’ By applying a design thinking methodology to their business, Airbnb had turned a corner.

Their New York experience became a miniature experiment from which the team learnt some big lessons, one of which was that empathy could be just as important as code for a business’ success

 

2) Ericsson’s Innova

The Swedish telecom giant has leveraged design thinking principles to build its own innovation center called Innova. Innova is similar to a startup incubator but only runs within the company. Internal ideas run through funding rounds (similar to VC financing).

Innova emphasizes the importance of rapid prototyping to get an MVP (minimum viable product) in front of the stakeholders. Furthermore, Innova creates cross functional teams in order to connect the teams with company partners and customers.

Since its creation over five years ago, 4000 ideas have been submitted to Innova, with 450 getting first round funding, 45 receiving second round funding, and 5 ideas having become products.

 

3) Burberry

Burberry, located in London, is a global luxury fashion producing clothing, fashion accessories, fragrances, cosmetics, and sunglasses. In 2006, the global fashion, accessory, and fragrance company’s sales were tepid as Burberry was growing at a mere 2% per year.

In order to grow revenue, the new CEO Angela Arhendts understood that the company need to connect with a digital demographic that reaches for their phone in moments of want or need. Design thinking hammers home the importance of designing with the end user in mind. Empathy can unlock new potential for a company.

Angela and her team decided to innovate around Burberry’s core heritage while reaching out to “the luxury customers of the future: millennials.” The company crafted a marketing strategy that connected with the values of a younger customer base, that was “cool and innovative,” and would convince younger people to become loyal customers.

 

Burberry created a personalized marketing campaign that connected with a younger demographic. For example, the company invested in building their social media presence, with their Facebook page gaining more than 1 million followers by 2011, the largest at that time for a luxury brand.   

By the end of 2012, revenues had risen to $3 billion, and Burberry had transformed itself into one of the most digitally innovative brands. The insights gained from developing empathy with a business’ end user can lift the organization. Though Burberry does not use the phrase “design thinking,” their human centered approach draws from its most important processes and principles.

 

4) Mint.com

Mint.com, a web-based personal financial management website, allows users to see where their money is, where it moving, and to view each separate account from their phone, computer or tablet. Bank accounts, investments, and credit cards can easily be synchronized on Mint, which then categorizes the expenses to help the user visualize their spending.

Drawing on a human-centered insight, the team noticed that financial software was time-consuming and cumbersome. The team designed an easy to use software that implemented a mobile platform and aggregated data.

Part of Mint.com’s success is that the creators employed empathy to design a website that enables to easily track how they are spending money. Even though the company does not specifically refer to design thinking in its creative process, their human-centered design demonstrates they built a product that illustrates a core principle of design thinking: truly understanding the position and mindset of the user.

Mint.com quickly became a success. Within 2 years the company had 1.5 million customers and was purchased by Intuit for $170 million.

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As the world’s best-selling manufacturer of luxury cars, creativity has been important to the success of the BMW Group. A century-old company, it has achieved an impressive tradition of innovation.

Now, however, as a tidal wave of change is sweeping through its industry, the need for rapid innovation at BMW has become more urgent than ever before. For example, as a result of autonomous driving, they expect their business to change more over the next decade than it has during the past 30 years. The escalating reality of cars without a human driver means coming to terms with new customer habits and expectations, changing global markets and all-new competitors as tech companies foray into their industry.

To stay ahead, BMW realized the importance of accelerating its innovation process into a more systematic approach, and they also quickly understood that the workplace could play a pivotal role in that effort.

The BMW Innovationswerk facility, in a suburb just north of the Munich headquarters, is a new center where innovations and new technologies can occur in a novel way. With the help of their design partner for spatial strategies Die Planstelle, Steelcase and IDEO, it was purposefully planned for cross-functional teams doing forward-facing explorations into the cars of the future. Here, the essential modes of creative work — focusing, collaborating, socializing and respite – are optimally supported.

“We wanted to create a special place to innovate with users at the center to support the process. And this is exactly what the space does,” says Sebastian Schelper, who headed the Innovationswerk project for the BMW Group from 2013 till 2016.

 

A HUMAN PLACE

According to Schelper, to reinforce the importance of fluid thinking, there are no right-angle walls anywhere at Innovationswerk. Natural materials such as wood walls blend with industrial surfaces such as concrete floors. The furniture was carefully chosen to add stimulating color and texture. Most important, Innovationswerk was designed to holistically support the creative process across the full spectrum of their workplace needs. “It’s a human place,” is Schelper’s simplest explanation for why Innovationswerk works so well.
The heart of the facility is three large enclosed team rooms. They are the primary workspaces for teams that iterate a project over several months or up to a year. Integrated large-scale boards provide persistent visibility for photos, notes, sketches, reactions and ideas – a wealth of informational and inspirational content gained during primary observational research. The boards become a tangible, immersive context for the work of the team. They also serve as an interactive canvas where the teams can synthesize diverse streams of information into actionable opportunities.

Nearby, a small “tinker lab” allows teams to quickly prototype their concepts, and a videoconferencing room means they can easily connect with people outside the facility to collaborate and gain expertise.

“We wanted to create a special place to innovate with users at the center to support the process. And this is exactly what the space does,” SEBASTIAN SCHELPER Head of Innovationswerk project, BMW

 

SUPPORTING I & WE

Just outside the team rooms is a large open area where smaller groups can break away to focus on specific problems. Alternatively, an entire team can use this space as a secondary focus area if the scope of their work has outgrown their room, or if they want to put their work in a different context to gain a different perspective. There’s plenty of room for prototypes here—even an entire car can be driven into the space.

A much smaller space that’s equally important to the creative process is an enclosed meditation room offering inspiring views of nearby trees and fields. “When you’re dealing with so much information, it’s easy to feel overwhelmed,” explains Schelper. “You can go into the meditation room to take a break, center your thoughts or get connected with your intuition. You can even take a nap here. It’s part of the whole ecosystem of spaces that support people’s needs.”

Near the entrance is an open kitchen and lounge area. This is a place for informal collaboration and socializing, with teammates as well as colleagues from BMW Munich locations who use Innovationswerk as an occasional drop-in workspace. In this way, the facility is “a unique magnet,” says Schelper, where serendipitous interactions often result in gaining useful knowledge and perspectives.

As important as each of the Innovationswerk spaces is to the process of creative work, it’s their immediate adjacencies that assure a holistic solution. When spaces are too far away from each other, Schelper notes, they don’t get used often. As a result, some important aspects of creative work are underserved. Nurturing creative work means supporting a multiplicity of thinking modes and needs, without prioritizing one over another.

“A key thing I’ve learned from this project is that creativity is really a combination of analytical pondering of a problem as well as letting your inspiration and intuition flow,” Schelper concludes. “It’s the combination of both that is facilitated by this space and makes it a success.”


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