The need to mix business and design

A great article on Fast Company highlights the need for both business and design skills when faced with tough business challenges: What Both MBAs And MFAs Get Wrong About Solving Business Problems, by Melissa Quinn.

Article outline: Numbers and bullet points aren’t the only things driving executive decision making. And pretty pictures won’t get you there either. Both designers and MBAs have a lot to learn.

Toronto University’s Rotman School of Management has run a design challenge geared at exposing MBA students to the value of design methods in business problem solving. For the past 2 years, the MBAs (Masters of Business Administration) have been trounced by the MFAs (Masters of Fine Arts). How?

With only 15 minutes to convince a skeptical panel of experienced professionals about a new idea that doesn’t exist in the world today, [MFAs] fared significantly better than their MBA counterparts. Why? Because they shared real user insights to engage us emotionally, used narrative and stories to compel us, drew sketches and visualizations to inspire us, and simplified the complex to focus us. It’s proof positive that numbers and bullet points, while important, aren’t necessarily what drive executive decision making

The key message – don’t assume you can teach MBAs to do this stuff well by chucking in a couple of modules as part of their course. Don’t dismiss the years of study that designers undertake to develop these skills.

That said, it wasn’t an entirely happy ending for the MFAs either.

While design students fared much better than their MBA counterparts that Saturday afternoon, I should point out that only the winning team from the Institute of Design at IIT actually charged a fee for the service they developed (a fact that was not overlooked by my final-round co-judge Ray Chun, the senior vice president of retail banking at TD). Some competitors were able to offer a vague notion that their ideas would generally create economic value, but crisp articulations of a profit model and underlying assumptions were hard to come by.

A great article, worth a read. Particularly if you tend to rely on bullet points more than visuals in PowerPoint to explain something you want people to remember. (Side note: but does depend on the type and purpose of presentation. If teaching a technical topic, screenshots and bullet points are usually quite helpful after the event.)

p.s. The image at the top? A book shelf in my home office, containing some of the books that continue to help develop presentations. Story boarding for films has been the latest new topic of study. 🙂 (Half of those books are in Kindle-only format… times change.)

As a good mentor Nicholas Bate likes to say – ‘Always be learning’.

An Imperfect Business

An imperfect road

Three weeks ago I attended the third Social Media for Business DellB2B event, this time held at Google’s offices in London. Then I was supposed to attend Dachis Group’s Social Business Summit, also in London, but ended up watching the Twitter feed instead. Whilst both events included some great sessions, they shared a frustration: utopian quotes that sound great in theory but can be hard to put in to practice. Here’s a sample:

  • By saying nothing, you are saying everything
No. The impact of participating or not in social media is not equal for all businesses or industries.
  • We’re 20 years into the web and most business web sites still suck
Yes, but so do most retail stores, call centres, middle management etc.
  • The future of business isn’t created, it’s co-created
Tell Apple that!

Many organisations could benefit from adopting social media. But it is too often pitched as the new utopia all businesses should aspire too. Businesses have plenty of flaws, not listening too or conversing with customers is just one of them.

Dilbert.com

I’ve seen oodles of research and presentations proving that performance appraisals damage moral, lower producitivy and encourage poor behavoiur. For one example, see Crashing with the nose up (2001). Yet still they are a staple of business life and Dilbert cartoons.

For businesses seeking to benefit from trends and technologies such as social media, it can help to understand, if not overcome, some of the barriers that prevent adoption. And O’Reilly Radar has a great post to help identify them: 5 reasons why we still don’t have invisibility cloaks.

Here are the soundbites: As always, it’s well worth reading the full article.

1. Cost

Decision-makers have many choices when investing scarce dollars on IT projects. Many great ideas fall by the wayside and never make the light of day in favor of more pressing enterprise needs. Social media may not cost much, but it is never free.

2. Complexity

Today, fewer and fewer solutions remain islands. There are often so many inter-dependencies that even a small change has downstream impacts that must be considered. Social media often starts out as an island. Can it justify staying that way?

3. Resistance

Every CIO needs to understand, for his or her organization, the pace at which new capabilities can be deployed. It’s probably a lot slower than we all think.  Social media rarely provides instant hits, think marathon rather than sprint. That does not help speed up internal adoption.

4. Legacy

We are wedded to the past. We like the things we know more than things that are new and unknown. There’s a reason we go back to that tried and tested Excel formula when we know we have the same capability in the latest ERP system. People don’t change their habits over night. And social media is all about changing habits.

5. Politics

Reconciling organizational and individual interests is a messy business. And it’s highly complex. I imagine many of us can tell our own stories of how we observed decisions being made that had little basis in reasonable logic. We’d like to pretend it isn’t a factor, but all too often it is.  And pretending won’t help your social media project.

Five points applicable to all new systems, social media is just one.  Enjoy the memorable quotes at your next conference but never forget, the devil is always in the details.

References/Further Reading

The Education Bubble

boy blowing bubbles (iStockPhoto image)

Sarah Lacy has written article on TechCrunch (link at the end of this post) covering her interview with Peter Thiel. It neatly gets to the heart of the problem with higher education. Although targeting the US. The UK certainly has the same problem, if not other countries too.

Here are some highlights but read the article for the full story:

“A true bubble is when something is overvalued and intensely believed,” he says. “Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”

Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.

Like any good bubble, this belief– while rooted in truth– gets pushed to unhealthy levels.

I didn’t go to university for two reasons. 1. I had no idea what I wanted to do (well I kind of did, but I’d blown my chances by being lazy through school and not getting the grades I should have), 2. Going to university meant giving up my horse since neither my parents or me could afford both (they couldn’t really afford either).  The thought of leaving university with any debt at all was enough to put me off going. As it turns out, career-wise everything turned out OK.  I took a partial degree in computer science through evening classes, whilst working full-time and confining horse riding to the weekends. After hitting degree-postered brick walls for a few years, I found myself working at Microsoft. Where people seemed to either have a Ph.D from Oxbridge or no degree like me. And at last I was able to flourish.

A higher education can certainly help ease your path into the world of work. But not at any cost, financially or emotionally. Determined and talented people will still succeed with or without the certificate. One road is just a little bumpier, harder and longer than the other.

…Or at least it used to be. With the rise of tuition fees, debts above £30,000 are going to become the norm for many new graduates. Regardless of university or degree. That’s a lot of baggage to carry into work and a bubble that needs bursting.

The full article on TechCrunch: Peter Thiel: We’re in a Bubble and It’s Not the Internet. It’s Higher Education.

Hidden Business Models

Two factors helped Google become the dominant search engine on the Internet in the early 00s:

  1. It provided better search results than any other search engine at the time
  2. It came up with a business model that helped fund the search engine without detracting from it

When the advertising world began to inhabit the Internet in the late 90s, we all suffered the sparkly annoying banner ads that literally popped up everywhere. Google avoided that route by placing only small text ads around the search results. When it came to figuring out what ads to place next to what results and in what order, well there had to be an algorithm for that… Auctioning keywords became a billion dollar revenue generator. And the model scaled beyond the search engine, as web sites began to include ads managed by Google for a slice of the keyword revenue.

Since then, as new technologies gain mainstream awareness if not adoption, the question always being asked is: What’s the business model? For many, the answer is advertising. It’s the wrong answer.

Facebook is rumoured to be finally in profit. Revenue is claimed to exceed $1 billion this year, up from $700 million-ish last year but the infrastructure to support a 500 million user social network costs a fair bit. The assumption has always been that Facebook needs to find an advertising method that works for social networks the way auctioning keywords works for search and web sites. In the meantime, another company has found a better way to make money from Facebook’s social network.

Zynga creates games for social networks. If you’ve got any friends on Facebook, at least some will have tried to recruit you to join their gang to start a Mafia war, or will be seeking chicken food for their farm in Farmville… simple games can be very addictive and people will pay small amounts of money at regular intervals to keep at the top of the game. Zynga has tapped into that ego/ addiction and is estimated to be earning revenues of $50 million per month with a potential profit margin of 30%.

Google started out as a search technology but the money is made by owning the advertising channel – be it next to search results or on web sites. Facebook started out as a social network but the money needs to be made by owning the transaction channel – Facebook should be an online bank.

…and it looks like that small point hasn’t gone unnoticed. Facebook is planning to introduce credits with a view to taking a 30% cut from applications that use its social network. Not as strong an approach as Google’s auction method, they seem to be looking more to Apple’s model (which takes a 30% cut from all sales on the App store). Time will tell.

Apple’s approach is niche, albeit a big market – they own the devices and developers can only sell apps for the devices through the single App store. With strong market share and a strong brand, Apple have a loyal and large customer base for developers to sell to. Facebook’s network is certainly large but is it loyal to Facebook? Enough to pay artificially high prices that a 30% tax on Facebook apps will create… I’m not so sure. A better approach would be the flexibility of an auction that enables application providers to determine how much of their profit margin they are prepared to lose for access to Facebook’s network. And that approach would scale beyond the Facebook web site, just as Google’s auction scaled beyond the search web site.

References

The Internet of Things

OK, I’m stealing the title from a subject that has a passing relationship with this post. The Internet of Things refers to the networked interconnection of everyday objects, made possible by relatively new technologies such as built-in sensors and wifi. One day my fridge will talk to the Internet without needing me as the conduit and it will all seem perfectly normal. Hecks, maybe even the car will get involved and go pick-up supplies whilst I’m at work.

In the meantime, there’s a simpler version emerging where the sensors are strictly human – peer-to-peer renting of ‘things’.

Clive Thompson has a great article in Wired describing an emerging market place made possible by the Internet. We all have lots of items in our homes that we use only occasionally. If somebody nearby needs a drill for one task, do they buy/rent from a shop or rent/borrow from a neighbour? If the neighbour can’t help, maybe they’ve got a ‘friend’ (<- you can see where this is going 😉  ) who can help. Yes, one service even enables you to share a car not with a stranger, but with a friend of a friend through Facebook Connect.

Read the article for all the details – Clive Thompson on Peer-to-Peer Renting – Wired, Sept 2010

APIs and Future Business Models

Fabulous presentation walking through the history of commerce in the 20th Century and why APIs and developers will increasingly be involved in the successful business models of the 21st Century

 The more information matters to your business, the more important APIs will become to leverage that information and improve services to your customers. Access to great development skills is rapidly becoming a competitive advantage…