Point: Looking at the opposites of everyday constraints yields new opportunities for innovation.

Story: Companies typically see time, space and matter as constraints. That’s not surprising — those three elements define the boundaries of our everyday reality. But what if we  saw them not as constraints but as malleable resources for innovation?

That’s the mind-bending proposition Joe Pine presented at Dassault Systèmes’ 3DEXPERIENCE Forum. Lest you dismiss Pine as a wide-eyed dreamer, recall that his book, Mass Customization, introduced a seemingly impossible paradox when it was released in 1992, but that concept is now so widely implemented that it’s a de rigueur business practice.  The fusion of opposites provides opportunities for innovation.

So how do we utilize time, space and matter for innovation? Pine lays out the steps in his latest book, Infinite Possibility. The way forward, Pine says, is to play with the opposites of time, space and matter, namely no-time, no-space and no-matter.  Whereas time, space and matter constitute our usual realm of Reality, no-time, no-space and no-matter constitute a new realm of pure Virtual Reality

If we fuse reality and virtual reality in various mix-and-match combinations, then we can come up with a host of new products, services and, most importantly, customer experiences.  Using these three dimensions, Pine details an eight-realm new universe (“multiverse”) that pairs eight combinations of time vs. no-time, space vs. no-space, matter vs. no-matter.

Let’s start by exploring a realm that is only one step removed from reality, what Pine calls “Augmented Reality.”  Compared to reality, which has time, space and matter, Augmented Reality has time, space and no-matter.  The “no-matter” condition refers to the information that is overlaid onto reality.

Here’s an example: say you’re driving down the street in a city unfamiliar to you. You are in a real space and in a real time. But, you can use a device to overlay information (“no-matter”) onto that current reality. That is, you can use a GPS navigation aid to show you where the nearest bakery is.  The GPS gives you data (“no-matter”) that you can’t see yet in the real world (a bakery around the corner a few blocks away). With that information, your reality is augmented — you can navigate to the bakery and get the cupcake you crave. 

Companies can apply these concepts to new product development. For example, what new products or enhanced experiences could you create in Augmented Reality? Dassault Systemes’ CEO Bernard Charles demonstrated one such product, 3DParis.  With this app, you can stroll the streets of Paris and see an overlay of your current street in olden times — 2000 years of Parisian history showing you how the street you’re walking down looked, say during the time of the French Revolution in 1789.

That’s a playful consumer app; the same principles apply to hardcore business operations, such as airplane repair.  Consider an app that lets mechanics point an iPhone at a distant airplane on the tarmac and get an immediate overlay of the maintenance and repairs that need to be done for that specific plane. 

Action

• Look for ways to virtualize your product, service, or business along one or more of the three dimensions of time, space and matter.  Break the constraints on the “when,” “where,” and “what.”
• Consider ways to replace or enhance the matter of a product, service, or business with data, graphics, and manipulated versions of reality

Point: Create new business models using a visual, collaborative tool like Alex Osterwalder’s Business Model Canvas.
Story:  Business models are complex, which makes them hard to talk about. A business has many interrelated moving pieces.  It’s easy for you and your team to miss something when creating one. And with so much complexity and so many possibilities, it’s easy misunderstand each other when we try to invent new business models.
Luckily, there’s a solution. Alex Osterwalder’s Business Model Canvas is a visual tool that helps structure our thinking about business models.

At Osterwalder’s Business Model workshop at BIF8 last week, I saw the power of his Business Model Canvas firsthand.  Osterwalder outlined the Canvas method and gave the group the assignment to generate a business model for a specific startup.  Small groups clustered around their canvas and the room buzzed with discussion and the squeak of markers as participants took turns sketching out ideas.  As we worked, I was struck by three key features of Osterwalder’s approach.

The first key feature was that Osterwalder encouraged sketching, not just making lists of words. “Any problem can be made clearer with a picture,” he said. The visual artifact lets people react to something concrete.  To encourage people who think they can’t draw, Osterwalder pointed out that people can interpret a stick figure more easily than an abstract concept. “Drawing something, however badly, makes an abstract concept concrete, giving people an opportunity to react to it,” Osterwalder said. Visual thinking helps with understanding, dialogue, exploration and communication.

The second key feature was that Alex had us make our sketches and notes on Post-It® notes.  We then stuck these to the Canvas.  The key part was that then we could move the notes around as we figured out where on the canvas they belonged. “Post-It® notes are like containers of ideas,” Osterwalder said, that can be easily picked up and moved around.  Thus, we could reconfigure our ideas as we refined them.

The third key feature was that the Canvas with its Post-It® notes ensures you don’t miss an important area. Because business models are so complex, with many interlocking pieces, it’s hard to hold all the pieces in memory and see their interactions and dependencies. The Canvas helps everyone see all the pieces and confirm that they work together and make sense. People can use different colors of Post-It notes for different business models, which lets them compare alternate models on the same Canvas. This side-by-side comparison can help to then pick the most promising model to test.

Action:

• If you’re working in a group, print the Canvas in large format (we used 3′ x 4′ at the workshop).
• Most people start on the righthand side of the Canvas, which is the customer side of your business model. It has the “Customer Segments,” “Channels,” and “Customer Relationships” areas. The lefthand side defines the infrastructure of the business with “Key Activities,” “Key Resources,” and “Partner Networks.” A central “Value Proposition” sits between the infrastructure areas that deliver on the proposition and the customer areas that receive the value. Finally, the “Cost Structure” and “Revenue Streams” areas on the bottom sit respectively under the infrastructure and customer sides of the canvas to define the financial side of the model.
• Play with different kinds of models. For example, Nestlé (in its Nespresso business) tested a model in which Nestlé sold its espresso machine through retail but sold the individual “pods” of coffee directly to consumers. Going direct was new to Nestlé but proved to be very lucrative because Nestle didn’t have to share revenue with the retailer.
• Keep interdependencies in mind. Every revenue stream, for example, must have a customer segment with an accompanying value proposition that makes it clear why they would pay.  And every activity, resource, or partner might incur costs.

Sources:
Alex Osterwalder’s bestselling Business Model Generation book is a must!

Alex Osterwalder’s Business Model workshop at BIF8.  See his calendar of upcoming speeches and workshops.
Alex Osterwalder’s slides on SlideShare, such as

Point: Fast-cycle experiments let companies create the best product/service offering with the least risk.

Story: At the World Innovation Forum, Scott Cook, co-founder of Intuit, described his company’s culture of high-velocity experimentation. Intuit uses an experiment-driven decision-making process throughout the organization. Rather than expect executives and managers to know all the answers, Intuit uses large numbers of low-cost experiments to test new product, service, and marketing ideas.

To illustrate how high-velocity experimentation works in organizations, Cook described how the concept works in Intuit’s 20-person online TurboTax unit.  In the past, this unit ran about 7 experiments during the annual three-month tax filing season.  Now they run 140 experiments.  Not only do they run more experiments, but they run each experiment on a fast cycle so that they can accumulate results and grow more knowledge during each season. Intuit created a weekly cycle for developing, testing, and analyzing experiments that lets each experiment create new information that feeds into the next set of experiments the next week.

Fast experimentation also improves employees’ sense of engagement and ownership.  In the past when the 20-person team did only seven experiments per year, the average team member might only have one of “their” experiments run once every three years.  But with new high-velocity approach, each employee creates and tests a new idea once every two weeks.

Paradoxially, running more experiments and getting more failures lowers the fear and cost of failure.  When a company runs only a few experiments — and every change or new product really is an experiment — then each experiment matters a lot more to the company and to the employees working on that experiment.  If an employee works for more than a year on a single big experiment, then the failure of that experiment surely has an impact on the employee’s career, even if the company professes to permit failure.  But if an employee works on many quick experiments that steadily improve organizational performance, then the success or failure of individual experiments matters little.

In Intuit’s case, 89% of experiments fail, and yet the online TurboTax unit increased conversions by 50% and successfully created a widely-lauded smartphone app that lets people do their entire tax preparation — from taking photos of tax documents, to automatically putting numbers in the right boxes, to electronically filing their forms — all on a smartphone.  The hundreds of tiny experiments let the TurboTax unit tweak and test many variations to come up with the best offering.

Action

• Trust experiments rather than experts to find the truth in a dynamic and volatile business environment.
• Teach individuals how to perform cheap experiments by finding and testing the key assumptions behind every new idea rather than building one big new product.
• Use large numbers of low-cost experiments to both grow knowledge and improve employee engagement.
• Create an accelerated cycle of experiments to reduce time-to-knowledge and time-to-market.
• Coach executives to become experiment-seekers — to use experimentation as a key decision-making tool.