Devangshu Dutta
October 16, 2007
BOOK REVIEW: HIDDEN IN PLAIN SIGHT: Erich Joachimsthaler
In the midst of extensive or frequent civil works, fluorescent high-visibility clothing contributes to the invisibility of the individual, and can serve as a superb disguise. Similarly, in the midst of extensive research and in-depth analyses, basic insights can go unnoticed.
Erich Joachimsthaler has plenty of examples in his book Hidden in Plain Sight to drive home the point that attention to stuff that is not so obvious to competition can lead to brilliant success such as Sony’s growth through innovative products (the WalkmanT, for one) that met unexpressed consumer needs. Conversely, an inability to spot this can bring even the leaders down, illustrated once again by Sony’s loss of leadership in mobile personal entertainment to Apple’s iPod.
The challenge for companies is to uncover the hidden opportunities by looking into their business from the outside rather than the usual inside-outwards view, and by accurately defining the ecosystem of demand. For most management professionals, this will be harder than it seems.
The exercise begins with the question, “Why didn’t we think of that?” This is intended to remind the reader of how the obvious escapes attention as we sink deeper and deeper into complex analysis and in developing ever more complicated scenarios. And Joachimsthaler sets out a framework that he believes can help larger companies to innovate in a structured way.
Of course, the reader may feel differently, and quote George Bernard Shaw who divided the world into two kinds of people, the reasonable and the unreasonable, and credited innovation to the latter. Or one may agree with Henry Ford who, apparently, felt that customers did not really know what they wanted. He is reported to have quipped: “If I had asked my customers what they wanted, they would have said, ‘A faster horse'”
Yes, at the cutting edge, innovation may seem to be more about the innovator’s creative desire to do something different, and less about “meeting customer needs”. Yet, it is the unmet and, more importantly, unexpressed customer needs, that offer the greatest source of competitive advantage.
This is why innovation seems to spring more from small companies, or companies that are started up around a specific idea that is unique or new. In such a small company or a start-up, typically the founder/innovator/inventor is drawn from the same pool as the target customer. Therefore, while they may be addressing a need they feel acutely, the innovators are unconsciously plugged into their customer’s unmet/unexpressed needs. There are seldom any silos; the whole team is generally focussed on the one problem to be solved.
However, as companies grow larger, functional specialisation emerges — division of labour based on skill-set is deemed to be a more efficient way of doing things. The design folk design based on “trends”, the marketing folk market as they know best, and the manufacturing folk produce to specification and the “demand” generated.
With this speciality of skills taking over, there is a growing disconnect between their efforts to dig for insight and the gold that is “hidden in plain sight”. While data is available in abundance, real knowledge is scarce, and insight just gets buried in well-structured processes and hand-offs between functional silos.
This trend has only accelerated in the past 15-20 years with pervasive information technology that enables the mundane operational process to the most strategic. Never before have management teams been so focussed on information and analyses. As businesses grow, data warehousing and data mining are defined as the competitive cutting edge, pushed along by interested parties (including IT solution providers, but that is another book!).
However, in reality, excessive information is increasingly passed off as knowledge. An inward focus on the management team”s own objectives is often disguised as insight gained on the customer or the market. Functional specialists analyse the market, the latent needs and the gaps in their own way, and if the company is lucky to have some generalists, some of those dots get joined to form a more complete picture.
It is in reminding management of this reality that Joachimsthaler’s book provides a tremendous service. It presents a well thought out model named, curiously enough, DIG – short for Demand-First Innovation and Growth. The three elements laid out sequentially begin with a framework for defining the demand landscape, identifying the opportunity space within it, and then creating a strategic blueprint for action.
Joachimsthaler’s process to define the demand landscape requires managers to put themselves in the customer’ shoes – a process demonstrated with examples from Proctor and Gamble and Pepsi”s Frito Lay. Using the customer’s goals, actions, priorities (there’s the “GAP”), needs and frustrations, demand clusters can be developed and filled out with additional research. The strategic fit between these demand clusters and the brand can then feed into the next steps of identifying the opportunity space.
The filters, or lenses, as the author calls them, are the “eye of the customer”, the “eye of the market”; and the “eye of the industry”. At every step, assumptions and presumptions need to be challenged. Using these lenses, the sweet spot or spots and the growth platforms can be identified, and extrapolated into the strategy. On the downside, the book is clearly about a framework, which may have been best detailed in an article, rather than being stretched over a book.
The author does stress at one point that it is not about “brainstorming”, but about structured thinking. However, he seems to do this in a tone that suggests brainstorming as something vaguely distasteful due to the lack of directional structure.
While examples from the companies studied keep the text alive, yet in places one struggles to correlate the examples with the framework. Indeed, there may well be too much structure to this book, and not enough examples of how inter-disciplinary thinking and functioning can actually produce sustained innovation.
Understanding the model itself can be a fairly involved process. The best way to tackle it may be to approach it as a project, and use the DIG framework as a how-to guide for a real problem. If you are a structured, methodical, sequential kind of manager and possibly work in a large company, the book could provide tools to put that thinking to work for innovation in a team. On the other hand, if you are more of a “people person”, you may want to leave this book alone. [For more, here’s the book on Amazon.]
Devangshu Dutta
September 21, 2007
During India ‘s misplaced years post-Independence, business and commercial activity was treated as a ‘necessary evil’. Businessmen were labelled as rapacious, self-interested people who needed to be kept under strict control. And shopkeepers were possibly among the lowest on the social ladder according to the economic and governance pundits.
In the last 20 or so years, fortunately, that tide has turned significantly – the role of business in economic and social growth is publicly acknowledged. Inspiring leaders such as Narayana Murthy of Infosys, Sunil Bharti Mittal of Bharti, and Ratan Tata of Tata Group offer aspirational models for a new generation of Indians.
Yet, retail, for all the zillions of column centimetres and hours of airtime that it gets, is still seen as a slightly dubious activity.
For most planners on the government side, it has been and remains an afterthought. Often, a few poorly developed square feet are allocated when a new community or urban development is being planned. On the other end, a number of massive glitzy shopping malls are being set up by real estate developers that have no correlation to their surroundings and catchment.
To my mind, retail developments need to be seen as part of urban infrastructure and also, more importantly, as part of the social fabric of a town or city. Government at all levels, especially state, district and municipal level, need to understand that the presence of successful retail developments in their population centres are an indication of the social and economic health of their localities.
A well-planned retail centre not only creates income for the local population and the local government, but also provides a very important socio-cultural platform for interaction between the different segments of a community. The presence of successful brands and retailers acts as an attractive beacon for other businesses, small or large.
Internationally several examples exist – especially in Europe – where after decades of suburban growth, town planners are focussing on re-developing ‘inner cities’ with a mix of large and small retailers, in environments that are shopper-friendly in every way. They are rethinking public transport connectivity, planning in pedestrian-only walkways, greening and sheltering, effective lighting, open spaces, and cultural centres. And yet, this mix would be incomplete without food and shopping.
Government bodies also need to realise that it is not productive to simply hand off large chunks of land to private developers to put up concrete-steel-and-glass blocks in the form of shopping centres. One should be able to look back 30-40 years hence, and say that the development added something positive and organic to the urban landscape in that town or city and was truly beneficial to the local population.
Visionary shopping malls like the Kapaliçarsi (“Covered Market” or Grand Bazaar) of Istanbul that was established in 1461, are obviously few and far between. Bluewater near London in the United Kingdom , and inner city developments on continental Europe offer more contemporary examples. However, India ‘s own traditional markets, at least until a few decades ago, also offer points of reference and inspiration.
I believe a rethink of the role of retail is highly overdue. If urban planners in the government and private developers can work together to plan and create more complete and ‘organic’ retail centres for the future, India ‘s urban centres will be far healthier and dynamic places to live in.
Devangshu Dutta
July 25, 2007
REVIEW: DISCORDANT DEMOCRATS: ARUN MAIRA (Penguin Books India)
As I read through Arun Maira’s book, the month unfolded with a number of high-pitched disagreements around the world. In India, quotas and reservations were a hot topic, as was an apparent divergence between the Prime Minister and corporate chiefs on executive income and distribution of wealth. Self-appointed moral police disapproved the expressions of a student of art, while, elsewhere in the world, suicide bombers expressed disapproval of foreigners on their soil.
We are surely not the first to wonder why, after millennia of physiological evolution, societies around the world are still stuck in the same, predictable response: where disagreement (on an issue) translates into disapproval (of a person), more often than not leading to conflict that is frequently violent.
The need to accept differences and the use of democratic dialogue as a process to close the gap is the basis of Arun Maira’s Discordant Democrats. While the book is largely about democracy in India, Maira draws from events, personalities and initiatives around the world to make the case for democracy as the only reasonable mechanism to manage diversity in society, and dialogue as the only reasonable mechanism to sustain it.
This is embodied in a quotation that is commonly attributed to French philosopher Voltaire: “I disapprove of what you say, but I will defend to the death your right to say it.” In fact, Maira goes beyond free speech to the need for mass dialogue. While free speech typically stops at the “right to express different opinions”, dialogue is about the free “exchange” that can move people closer. Dialogue, unlike debate or argument, is not about sticking to one’s own point of view but about parties reaching a consensus through a process of mutual expression and understanding.
When comparisons are made between Communist China and democratic India, democracy is presented as the millstone around the neck of India’s development. India has a demographic diversity that is among the highest in the world, and a body politic that is among the most fragmented. It is the disagreements among the various segments, interest and pressure groups that some people often hold up as the biggest hurdle to India’s economic and social progress. On the other hand, the advocates of “democracy in action”; may hold up noisy debate as the true expression of desires of individuals and small, otherwise powerless, groups. And there is little common ground between these two groups.
But, as Maira writes in the preface: “This book is about democracy and about consensus: two ideas that cannot but be associated with India. Indeed, one must wonder whether India could be one country without democracy or without consensus.”
Maira takes a middle path, in differentiating between the “hardware” and the “software” of democracy. He describes the hardware as the mechanisms that we are all familiar with — the Constitution, devolved institutions and the framework of free and fair elections, whereas the software is dialogue and deliberations. The democratic hardware enables the freedom of divergent expression. But it is the democratic software that enables a convergence to consensus and the emergence of a functional rather than dysfunctional society.
This is an important distinction when we examine the relative success or failure of countries that are all apparently democratic in structure. Most elections may be free and fair, but are the results later really representative of the electorate’s wishes? From what we can see around us, the hardware of democracy is robust, but there needs to be greater emphasis on the software.
Maira devotes the latter part of the book to tools that he calls Weapons of Mass Dialogue. Using topical and real-life instances of the dialogue mechanism being applied, he takes the reader through the steps of creating a common aspiration, exploring and identifying the thought anchors of the parties in the dialogue, framing the situation and then arriving at a solution.
As a comparison, the example of a Native American tribe comes to mind. To resolve conflict between members, the tribe follows a structure that requires a member to silently listen to the other’s views and then express that person’s views back to him until he or she concurs that the listener has completely understood what has been said. Only then does the first listener get the opportunity to express his own views, while the first speaker only listens and then reiterates what he or she has heard.
This mechanism may appear lengthy in most modern debates, but when we are dealing with issues as complex as the evolution of our cities or the uplift of disadvantaged castes and socio-economic classes, do we really have any other option?
Our genetic response to crisis is hard-wired from our days in the wild: fight or flight. While the latter is clearly “escape”, the former is also an “exit” because it shows an inability to deal with a discord to a mutually satisfying result. We need to expand this to a trinity of responses that includes “unite” – an integrative process that can help cope with the complex and interrelated world we live in.
The tools may look contrived and slow to those championing the cause of “action” there are few alternatives to dialogue. But in a world where discordant democrats do not often listen to each other, Maira’s Weapons of Mass Dialogue are definitely worth a try. Here it is on Amazon.co.in.
EXCERPT:
We want action. And we want democracy. Sometimes, in despair, when that speedy action is difficult in democracy, he seemed willing to forsake democracy. But that is a cop-out. We have to find a way to have both – speedier action and more democracy. Once again, a very important “either-or” choice is raising its head. We must convert it into a ‘both-and’ solution. As Einstein said, we cannot solve the difficult problems that we face with the same thinking that led us into those problems. Rather, we must look into the theories-in-use that are causing the problem, and develop a new one. In this case, the problem with our theory-in-use of how people can work together to resolve problems that they are all part of. The call for an authority above them, “insulated from the intense pressure of democracy” – a dictator or expert that they would be willing to unquestioningly delegate upwards to – is giving up on the further evolution of humanity’s democratic enterprise.
[Here’s the book on Amazon.co.in.]
Devangshu Dutta
April 20, 2007
A few weeks ago there was an immense buzz about an email that was apparently leaked from Starbucks. Chairman Howard Schultz apparently had written this to CEO Jim Donald, and there was immense speculation about whether it was fake or a genuine leak.
Well, Starbucks itself put that mystery to rest by confirming the e-mail’s authenticity, and that makes it even more interesting. The soul-searching shared by Schultz in the memo, reflects the criticism that Starbucks has faced in recent years.
As a pioneer of “the third place” experience, it must be especially painful for Schultz to admit that the quality of experience now is below what the consumer would (or should) expect. In the quest for scale and efficiency, he says:
“…we have had to make a series of decisions that have lead to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand.”
He acknowledges ownership for the decisions, which he says…
“…were probably right at the time, and on their own merit would not have created the dilution of the experience; but in this case, the sum is unfortunately much more damaging than the individual pieces.”
As a brand with over 13,000 locations, clearly Starbucks needs to be able to work with a model which is consistent across locations, can be implemented quickly, and delivers the product quickly and at controlled costs. Automation and packaging are two major areas that have given it that capability, but have also become the weak point of the experience from the perspective of coffee connoisseurs, or even people who would just enjoy a “rich and personal” experience.
Schultz quotes some specific cases that are especially powerful illustrators of what is right AND wrong with the business model.
“…when we went to automatic espresso machines, we solved a major problem in terms of speed of service and efficiency but removed much of the romance and theatre that was in play with the use of the La Marzocca machines. This specific became even more damaging when the height of the machines, which are now in thousands of stores, blocked the visual sight line the customer previously had to watch the drink being made, and for the intimate experience with the barista.”
Clearly the automatic machines improve the consistency of coffee delivered in each cup of Starbucks, and also reduce time the customer waits (a huge issue in many of the stores where peak-hour traffic can result in customer queues right to the door). But it is that much more generic an experience. And one would imagine that the barista behind the counter is also just that bit less involved (dare we say, less passionate) about the cup.
Creating a process (and better still, automating it) reduces the dependency on individual skill in any business, and is a strategy followed by all businesses that want to scale up without losing quality. However, an experience that is supposed to be “personal” and unique, needs to retain the human touch to a far greater degree.
Schultz talks about moving to flavour-locked packaging – again a great decision to retain the quality of the product across the chain of stores, while creating an efficient supply chain from procurement, through roasting, bagging and shipment to stores. Each of the outlets receive the coffee with a optimal shelf life left in the product. However, as Schultz says,
“…I believe we overlooked the cause and the affect of flavour lock in our stores. We achieved fresh roasted bagged coffee, but at what cost? The loss of aroma — perhaps the most powerful non-verbal signal we had in our stores; the loss of our people scooping fresh coffee from the bins and grinding it fresh in front of the customer, and once again stripping the store of tradition and our heritage?”
When Schultz took over Starbucks there were hardly any significant competitors – it was either personalised, neighbourhood cafes or fast food joints serving low-grade motor oil masquerading as a beverage. The product itself that Schultz wanted to sell was not just the coffee, but the possibility of someone having a beverage in a relaxed environment outside home or a bar.
Today, Starbucks has itself upgraded the customer’s tastes and expectations, but risks losing that product leadership to smaller competitors, even as the fast food chains are improving the coffee that is served on the go, at prices often cheaper than Starbucks, and also as other “third place” options emerge.
It is the closing of the memo that shows a ray of light…
“…we desperately need to realize it’s time to get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks experience. I have said for 20 years that our success is not an entitlement and now it’s proving to be a reality…Let’s get back to the core. Push for innovation and do the things necessary to once again differentiate Starbucks from all others. We source and buy the highest quality coffee. We have built the most trusted brand in coffee in the world, and we have an enormous responsibility to both the people who have come before us and 150,000 partners and their families who are relying on our stewardship.”
From reactions from various quarters, it seems that a lot of people not only agree with Schultz, but also admire him for his frank assessment of Starbucks’ weakening brand leadership and authenticity. When the leadership is honest with itself, there must be hope for the brand and the company.
An acquaintance who works with Starbucks expressed it eloquently when she identified the challenge of “staying small, while growing big” and said, “I’m glad our leadership hasn’t forgotten the qualities that have made us who we are.”
Starbucks remains a market leader by far, in terms of retail footprint worldwide and can only grow stronger by sorting out these issues which are at the core of the business.
Devangshu Dutta
February 26, 2007
It often seems like “Scaling Up = Dumbing Down.”
As an organisation starts to scale up, the challenge is getting everyone to work the same way as earlier. And Process with a capital “P” takes over.
In the absence of inspiring and totally involved leadership, it often is just a hop and a skip from Bureaucracy.
If a lot of people feel the same way, there may yet be hope for small businesses and the more personalized touch.
