BankerVision

Innovation in 2011 - the end of the Dark Ages

Every year around this time, I write about 4 or 5 things I think will happen in the next. But this year, I only have one thing to say.

I think 2011 is going to be the year when people finally realize the pointlessness of what I call dark ages competitive advantage.

Competitive advantage from the dark ages is anything you do which denies access to resources to competitors.

Denying access to resources is dark ages because it hurts not only competitors but customers as well.

Copyright and patents are a dark ages response to protecting competitive advantage. If you’re the creator of something, you get to tell people when they can use it, usually in exchange for a fee. You get to tell competitors they can’t use it at all.  

But in both cases, all you’re really doing is setting up a situation where everyone you constrain is highly motivated to break your constraints. I mean, you only have to look at the music industry to see this. That’s an industry that trained a whole generation that breaking the law is OK, entirely because of the constraints it attempted to impose.

How dark ages.

Trade secrets are just as silly. You deny access to knowledge by keeping it a secret. This is dark ages because the observation that something can be done, encourages others to do it too.  As soon as they work out how, maybe by reverse engineering, maybe by espionage, or by some jedi mind trick perhaps, that’s any advantage gone.

On the internet, everyone has the capability to observe everything.

Anyway, I think  2011 is the year when people cotton onto the fact that this stuff doesn’t drive value at all. At least, not value that’s long term enough to make all the effort of denying resources to competitors that worthwhile.

There are, however, new sources of competitive advantage available now which are just as potent as the old strategy of denying access. The primary source of this value is relationships that are enabled by products and services, rather than the products and services themselves.

In this new world,  you get more value from a product or service the more you use it. You aren’t penalized for doing so, unlike the traditional model which imposes a tax for use.  That’s what a price is, by the way.

Is there really anything in Facebook that’s all that valuable from a technology perspective? Not really, but it does help practically everyone manage their relationships with each other. The fact that my friends are all on Facebook makes it valuable to me, and the more I use it the more valuable it is.

Why is the iPhone and AppStore such a hit? Not because there’s anything very special in the iPhone, clearly. What is special is iPhone is about managing relationships between customers and providers of Apps. Apps let customers do things that Apple never dreamed of.  The more Apps there are, the more valuable the phone is to me.

There are so many examples of this now. Examples where the product itself isn’t really all that exciting, but where all kinds of relationships are made that create value.

Where the product creates a relationship between customers, or between suppliers and the customer, or between the customer and the product.

Why is this so much better than dark ages stuff?

Because relationships aren’t portable. Once they’re there, embedded in whatever platform they formed on, they’re fixed. Competitors can only win if they can make more powerful relationships than you can.

Relationships are better because they don’t have taxes every time you use them.

And, relationships are better because they’re based on giving things to customers, not taking them away. They’re formed on an ethic of sharing, not of denying access.

So I do think this is the year people will give up on the dark ages stuff they’ve been doing.  Otherwise, I think it’s the year they’ll be going out of business.

Walking with Dinosaurs

Tomorrow, I'm going to be giving a talk to a group of young people who have come to our organisation through our graduate programme. They are all very, very bright, and some of them are just about the most motivated to succeed I've seen in a while.

I love working with people at the start of their careers, and particularly this generation. The reason? They know and accept there are dinosaurs around, and they aren't scared of them.

I know when I was starting out, there were also dinosaurs. They had all this experience, all this knowledge, probably won in the "school of hard knocks". They were all senior, and you would never dream of questioning their determinations and decisions. If you did, there'd be consequences. I mean, what would you know about anything? Why would you be entitled to an opinion? Youngsters, you should listen and learn.

Well, that's over.

The dinosaurs today - and I hope I'm not turning into one myself - are hopelessly ill-equipped in many cases to deal with the way things are now. The problem is their years of experience are now a hindrance in a world where what's really important is freshness in absorbing concepts, ideas, and innovation. Things at which young generations have always excelled.

You can imagine the collective meltdown those words are likely to cause in the established IT community, of which I am a part. We're all in charge because of all those years of experience. How dare I suggest all those years are not that valuable?

But, for example, have a look at your IT organisation, and especially at your development processes. I bet you'll find they're gummed up with gates, and procedures, and evaluations and reviews. Everything takes ages, and the mantras will be "reuse" and "architecture" and "governance". These are the hallmarks of the dinosaur.

Why do I say that? Because they are mechanisms for controlling rampant spread of technology solutions in an age when doing big systems was expensive. It is still expensive, but only because of  the artifacts that have been left behind when things actually were expensive. It is our control artifacts that are now making us expensive, not the problems we are asked to solve.

This new generation of tech managers we're growing know this. They sit there and sigh when we ask for "one more gate", knowing that the new world is completely throw away. "Just build it", they mutter under their breaths, and could, indeed, fire up their personal laptop and do it overnight probably if they were of a mind to do so.

Don't laugh. We had this group of students show up once and do a hack-day. In about 24 hours they'd accomplished about as much as we'd done with traditional methods in several months. Oh, of course, it wasn't "governed", and "reusable" and "consistent with our architecture". But is was throwaway. Throwaway is what you want when the cost of development is a reducing function.

And it is a reducing function. I am amazed at what young-people start-ups can accomplish with practically no money. They maybe get half a million dollars from an angel investor and a month or two later have a system that's actually really useful and which people are desperate to use.

They go into these ventures serially. They work until something is obviously not working, throw it away, and start again. It is no accident that many of the most successful tech entrepreneurs presently are pretty young. They're not dinosaurs.

Anyway, back to what I'm going to say to these young technology managers I'm going to speaking to tomorrow.

Firstly, I'm going to tell them to recognise there are dinosaurs around. I'm going to tell them their bark is worse than their bite and even if they get bitten, they have years to recover. But of course, the best won't get bitten, because they will be clever about how they get their messages across.

And I'm going to tell them to question everything that comes from dinosaurs. And that their inexperience with the old way of doing things is their best chance to make a huge difference now.

Does the computer experience have to be awful in the workplace?

Its been a few years now that people have been talking about “consumerisation”, which is the idea that you can want and expect the same kind of computing experiences at work as you get at home.

But, as everyone who works in a large company knows, you never get such an experience at work. Everything is a few versions behind, and even when it’s up to date, it all works so slowly. This, in part, is because of all the management, and security, and monitoring, and stuff that IT people feel they have to do to protect their assets.

What are the key changes IT organisations would have to make if they really wanted to deliver a decent consumer computing experience?

1. They’d need to stop imagining that their staff are stupid. I’m always so surprised when I go into meetings and discover the IT people somehow believe that staff forget how to use the web, Google, and standard productivity tools the moment they walk in the door. Is there an idiot-line drawn on the floor by the entrance, and your IQ drops as you cross it? I don’t think so.

2. IT organisations need to stop thinking that the lowest common denominator is the place to aim their technological aspirations. It may be the case that a small minority of staff can’t progress beyond the green-screen, but frankly that’s not a good enough reason to lose the benefits of the modern stuff.

3. IT managers need to accept they don’t have to control everything. It isn’t, for example, necessary to lock down computers to the degree where you can’t even access the screensaver. Why do we do that stuff anyway? Because we think it reduces our support costs and increases reliability. All it does really is make sure that you have to call the helpdesk for everything, even if you know how to fix a problem yourself.

4. IT can’t only be about cost. I am so exhausted by the amount of effort we go to reduce cost. I mean, I’m not advocating that everyone should just go and spend anything they like on shiny gadgets, but really, this laser sharp focus on cost containment prevents you from moving things forward at a decent pace. IT is an asset, a strategic enabler. Do you ask a starving athlete to run faster and longer with less food? Not really.

5. Standardisation may make things easier to manage, but it is also a way to shackle your best people to the lowest common denominator. I suppose that’s OK if you work in an organisation where keeping talent isn’t a key differentiator.  But I don’t know many organisations that have that view and keep on living long.

6. IT needs to give up on the idea that the most important thing is reliability, scalability and security. Those are important things. But if you want a decent computing experience, they are secondary to making the job at hand as easy as possible. Secondary. Our IT experiences are terrible at work because we’ve all forgotten this.

7. People are on their computer for at least a third of their day. I, personally, am on mine for 12 hours a day. I therefore cannot tolerate shoddy equipment that doesn’t do exactly what I need perfectly all the time. When you have to deal with little frustrations 100 times a day, they’re not little any more. They become big and central parts of your life. Personally, I don’t need technological niggles to be the thing I talk about when I finally get off the computer. Dinner conversation: “yes, I made two cups of tea whilst waiting to boot this morning. Then I made two more at lunchtime when the net was slow. And then I had another one waiting to log out. So don’t bother to offer me more tea with desert”.

8. Internet access is not a privilege. Social network access is not something that will suck up otherwise productive work time. Doing social media is not only a home-time activity. Wake up.

Actually, I could keep on going here for ages, but I think you get the point. Those of us who are IT leaders really need to move where the rest of the world is already, and create great computing experiences for staff. The time is coming where they’ll demand great experiences or they’ll leave. I know lots of traditionalists don’t believe that, but have a chat with the fresh talent and see what they think.

Frankly, things have moved. It isn’t about the IT folk and what makes it easy and cheap for us to manage the IT asset any more.

Five IT-Shop Sacred Cows

1. Myth: If you get more “efficient” at IT, you will get a more “efficient” organisation. Reality: The more cost you take out of IT, the worse it is for users and customers. Optimising your cost  base to the point, for example, where users have a PC that is orders of magnitude less capable than their delightful home consumer experience will just cause them to bring their own laptops to work. Then they’ll break all your security rules in order to use them. And what are you going to do about it? Fire them?

2. Myth: You must have IT security people who must approve everything you do in order to secure the organisation and manage your risk. Reality: Most Some IT security people don’t have much understanding of the new stuff they’re asked to adjudicate on. They just make it up as they go along. The worst ones can’t be bothered to keep up because it involves too much work, and anyway,  they always have the ability to just say “no”. This doesn’t manage your risk, all it does is slow you down.On the other hand, count your blessings if you have been lucky enough to get a security group that know how to show you what you can do to do new things safely and efficiently.

3. Myth: High quality on-time and on-budget delivery are the development objectives and this will make you an IT leader. Reality: Who cares about whether you’re an IT leader or not from a development perspective? Superb delivery is a waste of time if what you’re delivering is crap in the first place. Forgive me the arrogance, but my observation is that many traditionalists don’t get the way the new world is changing as a result of technology, so what makes you an IT leader is if you can help them understand that, actually, what they’re trying to build is rubbish.

4. Myth: Most IT projects fail or are late, so we have to improve our failure rate to be successful. Reality: Causing any change whatsoever to happen is a success, since everything is optimised around stopping change in an IT organisation. If improving the “success rate” means doing less new stuff, then you’ve got a big fail coming up when your organisation fails to adapt because IT stopped it doing so. All in the name of improvement.

5. Myth: Governance is the key to discipline and control in an IT organisation. Reality: Governance is like a virus. It grows as swiftly as possible to consume all available resources, and then declares success when there are no project failures. Usually, this will be because there are no projects, or at least, none that have much way of progressing. Why does this happen? Because Governance is a licence for people without much capability to drive change themselves to get in the way of those who can and declare that they’re “part of the journey”.  ‘Tis a rare Governance person who knows when not to govern.

What other sacred cows do you have in your IT-Shop?

The rise of Open Source Hardware

Last week, I attended a speech by Chris Anderson, author of the the Long Tail, and more recently, of Free. In his spare time, he’s also the Editor of Wired.

The speech was not about, however, Wired, or Free, or Long Tails – he was talking all about Open Source Hardware, which is this astoundingly interesting trend which is doing the same for atoms as the previous digital version did for software.

His point was just as the economic barriers to creating digital products have dropped to practically nothing, the barriers – economic mainly – to doing real atoms are dropping to nothing as well.

He started out by explaining how, over the course of the last few years, he’d created a group of enthusiasts who build unmanned aerial vehicles, complete with sensors, GPS, and every other thing that a typical military version has. This group now produces components for others to make UAVs, and they’re in constant evolution. The current generation, apparently, is very sophisticated.

Everyone contributed their time and expertise for nothing, including the world’s pre-eminent expert on model plane GPS, who apparently (according to Chris) dropped out of high school and then proceeded to get a pH.d level education using little more than Google.

All the tools they use are open source, including the printed circuit board layout software, the CAD, and simulators they use before starting to make real hardware.

Then, came the interesting part, and it was about turning all these designs into real atoms.

As it happens, its simple these days, apparently, to manufacture practically anything. For example, there’s the MakerBot (pictured) which is a kit you can build (also open source!) that can extrude anything in plastic, supposing you give it a design.

Chris talked about how he and his kids dreamed up some new device over the holidays to do something-or-other, and how they just modelled the whole thing in three-d, and then hit print. Then he explained how his kinds just assumed that being able to print out any object was quite a normal thing, and they were already being frustrated with the limitations of plastic extrusion.

I checked MakerBot Industries, the group who’ve been working in this machine, and the kit is only $900 USD. That’s a pretty amazing price for a device that can make, well, almost anything.

The discussion then moved on to more active components, and how simple it is just to upload electronics designs to firms that could do small, one off runs of boards and components. For practically no money. We’re talking dollars per unit here.

Even at the manufacturing stage, things are changing. Apparently, there are now sites in China where you can upload your designs (which you’ve prototyped and made work, obviously, using things like MakerBot and the other tools) and they’ll give you, 24 hours a day, an immediate price to manufacture a set quantity of product in a certain time frame. In fact, the sites he showed me enabled Chinese manufacturers to bid against each other for the work.

If anyone is interested, I’ve got the list of the sites, but as am on a plane right now, can’t list them off the top of my head.

You can see where this is going.

With the barriers to entry for companies making new physical products falling, everything becomes about talent and innovation, rather than control of industrial age assets such as finance and manufacturing capacity. This is a world shift we’ve already seen in digital products, obviously. Now we have it for physical ones as well.

The future of Australian banking

Over the past week, I’ve had the chance to reconnect with some of my Australian banking colleagues. Australia is very unusual from a financial services perspective – they were largely untouched during the global financial crisis, and my suspicion is this has made them a bit complacent.

Whilst the rest of the industry has started its thinking around the future of the industry, and in some cases, has started to modify itself, I couldn’t help but feel I was stepping back in time a bit last week. Nothing much has changed in Australia since I left it six years ago.

Mind you, not all that much has changed in the thinking of traditional banks here, either.

For example, everyone is still parroting on about “customer experience” and “customer relationship”. I say parroting because both of those terms imply something which just doesn’t exist in banks: a cultural imperative to put the needs of customers first.

Working in banks, it is never first about the customer. It is first about revenue and share of wallet. Anything a bank does in terms of relationship and experience is all about making more money under the guise of helping, and this sets up a relationship which is false. Its like the motor mechanic guy who says he wants to help you to your face, but actually cares about working out how to get as much money possible out of you for as little effort as possible. That situation feels false to customers, and when you translate it to banks, it feels just as false.

I mean, why not just admit to customers that you’re out to make money from them, and get rid of the falseness about it all? Banks aren’t there to help customers, they’re there to help shareholders. Would anyone really mind a bit of candour about this?

So I actually said all this to banking people when I was visiting last week, and most of them didn’t get it. Not only did they not get it, they didn’t even agree that their first imperative in all things was to make more money and reduce cost, not to service customers.

Theirs is the extremely dated view that “bank at centre of financial universe” is still appropriate today. It might have been the way things have been in the last several hundred years, but today things are changing.

Banks, today, should be aiming to be invisible, not the centre of all value. When you get a mortgage, the point is the house you’re buying, not the financial services product. You go to the bank as a consequence of house-buying, not because you want a multiple decade loan for its own sake.

Bankers should try embedding the loan into the house buying process so that the money part was as invisible as possible. Why is it even necessary that the bank has a brand on that, anyway? Loans are all about price, and you care about brand and stuff only if you’re going to have a “relationship”. That’s all part of the falseness, of course.

Clever institutions – including one in the UK -  are already starting to get the fact that the best strategic option is to integrate their stuff into things customers really care about, not be the centre of the universe themselves. If nothing else, it removes them from the falseness of their traditional approaches to customers.

Yes, that means giving up on owning the customer. Yes, it means giving up these dated notions that customers actually want a relationship with a bank beyond it working properly. And, yes, it means that the new game is courting people who will integrate your services, not those who will eventually be using them.

This last is the most important point, actually. I’m of the view that the bank that gets the largest number of organisations to integrate with them will win in a particular market. They’ll have a critical mass that makes it more attractive for more people to join up with them. Everyone else will be left in the dust to pick up crumbs.

Now, of course, in Australia, this is not going to happen any time soon. They haven’t had the burning platform the rest of us have had to make change. It is simple and easy to continue the way things always have.

But I will say this: the time is coming when a global major is going to show up and do this. It may not be soon, because there are bigger profit pools available right now. But it will happen, and they will be great at integrating businesses with them.  They are already working out they need to be invisible, not the centre of everything.

So, Australian Banks, if you want to play in this new world order, you need to start getting to this stuff soon. The problem you have is you don’t know how much time you have.

Local knowledge is everything

As I mentioned in my last post, I was doing work on the frontline with some our staff in JobCentre Plus last week. I was in a disadvantaged area in Scotland, somewhere around Glasgow, and  as I said before, the experience was incredibly valuable.

It is so easy to imagine how things will work in production when you’re remote, but you don’t really know how they’re going to work in practice. That’s why (as I said in my last post) you see good people at the frontline who cover over the cracks with manual workarounds, paper based systems, and their own home-built IT.

I mean, let’s face it. No matter how many requirements you gather, no system is going to be perfect for every single user in every single situation. I suppose the art is to get as many use cases that suit as many people as possible whilst minimising the inconvenience you cause to everyone else.

But there was a particular eye-opening, smack in the face, ah-ha moment in the whole week for me. And I know, as I relate it to you, you’re going to say “well, duh!”, especially given the fact that I do work in the trend space as part of my day job.

Here it is: Local knowledge is everything. 

There is a particular stage in the present back-to-work regime in the UK that requires people who’ve not worked  for about two months to attend a 1 hour group session with a staff member for Job Centre Plus, who explains to them what they’re required to do from a benefits perspective, and who provides a basic refresher on what to do to get a job.

There is a script full of guidance notes on what to say, and you have to be trained specially to give the session.

Anyway, so I sat in on one of these, and got to watch.

The script, had it been given verbatim, would not have provided all that much additional value at all to the attendees, I suspect. But the presenter in my session had detailed local knowledge of who was hiring, who wasn’t, and what facilities were available in the local community to help job-seekers. Questions weren’t answered in generalities: there were specific, do-right-now action points. The local stuff made all the difference, and you could see the attendees going from disinterested, to interested, to pleased they’d attended.

I mean, I don’t know why I was surprised at how valuable locality turned out to be, because we’ve all been talking hyper-local on social sites for a few years. But to see it in action for people suffering the recession: well, it made me recognise the value of all this stuff more than intellectually. I mean, I believed in it before, but now I believe it.

The value of local knowledge is no great revelation I suppose. But it certainly is good to get reminded of the fact that at the edges, small things – like which specific building sites are hiring today - are the most important things.

Now, of course, there is a lesson here for those of us who are responsible for building systems. When we build them, rigidly prescribing every sequence and every transaction, what we tend to do is eliminate the value of locality.

We seek to use systems to impose standards of service and uniformity across the offering. “People are unreliable!”, we scream as we write as much discretion away from users as possible, thinking, as we do so, that we are serving both them and the customers.

Well, we’re not. What we’re actually doing is eliminating those things that would really make what we do thrill customers. At the edge, where people meet real customers, such a standard offering doesn’t thrill anyone. It may provide some value to most people. But I suspect that only outliers would actually be thrilled.

And, yes, I do think it is possible even for job-seekers to be thrilled in their interaction with a government department.

Anyway, the fact of the matter is that  people recognise this and find their own ways to generate thrill. That’s why you see all this stuff springing up around the systems, service, and processes that get provided centrally. 

Thank you, Jobcentre Plus, for reminding me of something so fundamental as this.

Halfway through my week at the front line

As you know, if you’ve been following me on Twitter, this week, I’ve been working at the front line of the Department – in a Job Centre in a challenging area in Scotland.

Banking readers: Job Centres are the UK goverment’s centres that help unemployed people find work. They are also the face to face contact points for administration of benefits that the govermment pays to people out of work.

Anyway, in my Job Centre, I’ve been working with the staff as they’ve dealt with a range of things, from bereavements to people with no money at all (as they’ve lost their benefit payments, and now may be sleeping out in the snow).

Did you know there are money illegal money lenders walking the streets, who forcibly take the money people on benefits get? They hover around outside and take away what people get to pay for food and shelter.

It is presently snowing here.

So you get all these people coming in who have nothing, who explain that they’ve “lost their money”, because they are worried what will happen to them if anyone from the Government knows they’ve dealt with an illegal financial service.

When you are sitting around after a crisis loan interview, hearing what is likely going on behind the face the customer has presented, the experience is extremely eye-opening. Staff were telling me about the (regular) times they’ve had to tap on the glass to wake up drug-affected people in interviews, for example.

Drug dealers and money lenders. Two financial traps for vulnerable people. You can imagine my wide-eyed response, having sat in my nice comfortable cocoon in London all this time.

But here is another thing I’ve found in this Job Centre, and it is something I’m not surprised about.

Staff build their own stuff to get around the limitations of systems we provide. There are Excel based spreadsheets which are used for diary management (“oh, I can’t have this open too long, otherwise no-one else will be able to make appointments”). There is email based workflow, where each step is a new inbox that gets manually monitored. And there’s any number of self-made data capturing things that are used for statistics and business reporting.

And all of it is stitched together with another technology: paper. They create their own forms, and their own paper based systems in order to supplement their jobs.

Consequently, the work is processed in a highly efficient way. I’d make a guess that each JobCentre does things slightly differently, depending on how good their custom additions to each of our centrally provided processes are.

If there was ever proof needed that decentralisation of the core is a good thing, then I’ve been immersed in it for the week so far.

I wonder what would happen if we put the appropriate end-user computing tools in the hands of these people and said “design the perfect Job Centre system”. My guess would be something good.

An open letter to the business

My dear Colleague,

I heard on the grapevine the other day that you think your information technologists are getting a bit above their station. Apparently, they’ve made some suggestions which don’t have much to do with technology. I realise that’s outrageous, and I quite sympathise with your annoyance.

I mean, how dare they. They may actually have business and management degrees, but they work for information technology. The very idea that they’d know anything about the way business works is patently absurd. After all, you can only trust an information technologist to plug wires into a wall, I quite agree with you on that. You certainly don’t want them to take on anything more complicated, because lets face it, when you’ve given them complicated tasks in the past, all you got was fail, fail, fail.

That big system that didn’t deliver? You know that if you’d just had different technologists, everything would have been fine. Or maybe they were personally OK, but they chose the wrong technology. Whatever the reason, the IT folk are personally, absolutely to blame. I mean, you tried to tell them what you wanted, didn’t you? But they were all too bits-of-tin and spools-of-wire to understand.

The best thing to do is treat your IT colleagues like glorified order takers. Like, for example, you’re in some really expensive restaurant. You want them to show up, and ask you what you want, and go away and get it. You want them to do it often enough that you never want for anything, but not so often you get annoyed by all the attention. I mean, the best IT person is the one that just does what they’re told, right? Even better if they’re like that perfect waiter in the perfect restaurant that knows what you want without  even being told.

Oh, and I know you’ll agree with me that you can’t ever like the price you’re charged no matter what. Yes, its an expensive restaurant, and you can, like, buy the whole place if you want, but you have a duty to drive value. Because you just know, no matter what you say, that once your IT folk and their vendor friends get together, there’s going to be some kind of cash-spend party where they buy just anything with a few blinking lights that takes their fancy.

But anyway, lets get back to the point, which is ensuring that IT doesn’t get out of its box.

You know, there was a time when we didn’t even need the box. But now, all these upstarted IT people think they know the business as well as we do. They imagine that just because they’ve built a few systems that happen to work and which we now rely on completely, they understand what it was they were doing when they designed those systems.

So I understand how offensive it is when they come yammering away at how they can improve a particular business process, or implement a new customer channel or something.

And don’t even get me started on the subject of digital. Yes, I get the fact that the internet is, well, technology, but lets not forget that we know more about the business and the customer than anyone. That makes us uniquely qualified to be the font of all knowledge on how we will do digital, even though I know that some of those techies have actually run scale digital businesses of their own.

Anyway, any kind of business that techies could be involved in are not the same as the ones we’re involved in, right?

Anyway, I think I’m at the point where we almost don’t even need the techies. I know that you – like me – are on twitter constantly, have our own Facebook pages, and can even build workflows on Sharepoint. I know we used to ask the techies to do that stuff for us, but these days, I just get a few business grads in who’ve done a few technology subjects to do the work.

So much easier than asking those people with business degrees over in the IT group. Somehow, I just feel better knowing that they aren’t employed there.

Frankly, its obvious the time has come for us to stand up for ourselves. Just the other day I caught our CEO having a business meeting with the IT guy. You know that if we don’t take action soon, its going to be totally game over.

Anyway, dear colleague, I just wanted to write this to show my support for you. The way those people in Information Technology are going, they’ll think there’s no difference between them and us soon. Next, they’ll be wanting to our jobs directly. Or, even worse, build things we didn’t ask for and don’t control. We can’t have that, now, can we?

We face the sundering of the great wall we built between us and them during the nineties. I know you agree with me when I say I can’t imagine anything more awful than it come down whilst on our watch.

My best regards

Your fellow IT user from the business.

The innovation economy

You should read this article that argues another phase change is occurring: from a knowledge economy to an Innovation economy. It’s suggesting that even when you have great structural capital (factories, assets, and all that stuff), great financial capital (money!) and great intellectual capital (knowledge and know-how) you will still not be a successful organisation.

Nothing really happens unless you also have innovation capital,  which are the assets you build up that let you do value creation.

Now, of course, since the discipline of corporate innovation is still so young, we’re as far away from a decent system of valuation of Innovation Capital as we are from manned starhips that cross the void. At least with intellectual captial you can compare the difference between the book value of all the assets on the balance sheet and the market valuation of a firm and say “yep, that’s how much our know-how is worth!”.

This is a concept that resonates strongly with me. I’ve worked in banks and technology companies – both Lloyds and Microsoft for example – where all of the traditional assets were available in spades. How come, then, neither of these companies has truly produced anything that was game changingly value creating in the last decade?

Organic growth is not the same thing, even though its highly desirable, obviously.

I’m of the view that both lack Innovation Capital, and furthermore, that almost all organisations do. Lloyds has spent the last couple of years building its Innovation Capital up, and it may be we’ll start seeing some interesting new stuff eventually.

I’ve been away from Microsoft too long to have any insight about its capabilities in this area, but no-one is stupid there, so I’d not be surprised to discover they get this also.

Anyway, the point of al this, if its true, is that the role of innovation groups suddenly fits neatly into the value hierarchy of an organisation in the same way that accountants and marketers do.

But I’m also thinking that without a reasonable system for the valuation of Innovation capital, we’re going to be nowhere for a while yet.

Academics and other big-brained people… do you care to take on the challenge?