Escape Velocity and just Escape
Back massage, manicure, pedicure – back to being human again …
On Monday while in Dublin, I met the guys behind the Digital Hub – www.thedigitalhub.com – this office location houses the leading start-ups of Dublin, and offers them a café like atmosphere to gather together. Like Enterprise Ireland, it is Irish government funded.
Note bien: if you are in Dublin, you want to have lunch or dinner at Bentleys. On a cold day, the fireplace and food is very nice there.
On Tuesday the 11th of November, I chaired the FT Innovate Conference where we had an impressive line-up of speakers. Here are my take-aways:
From Antonio Perez, the Chairman and CEO of Kodak, who led a full transformation of the business from a focus on film to digital:
- He was noticing the IP at Kodak long before he joined them as CEO. He had retired to La Hoja, and was called out of retirement to go to Rochester New York.
- Kodak had invented the digital camera, but hadn’t commercialised it. Perez was quite sympathetic about this saying that if you are making a 75% gross margin, it’s hard to actively cannibalise that.
- Perez said that the digital camera had destroyed the business model of Kodak even though it was Kodak that invented the digital camera. “It happens to people, companies, countries” - the cannibalisation
- So while the experts were writing the obituaries and internally, everyone was in complete denial – with signs saying – “expand the benefits of film” – everywhere in the company, they had a market position of near a monopoly – it was hard to let it go. “There was a strong immune system to the firm – to kill anything unrelated to film”.
- They also had a very hierarchical structure; when Perez joined, he made it a bottom up company.
- There were good people in the firm, but they were attached to their success. Over the last 5 years, Kodak has reduced their employees from 75,000 to 15,000.
- Perez could see that the future of Kodak would be at the intersection of materials science and digital imagery, and they are now one of the top 3 companies at that point.
- He spoke about being late. When he came in to the CEO job, they decided not to get into any market in which they didn’t have a supply chain advantage, differentiation or an innovative business model.
- In the consumer ink jet printer space, although they were 20 years late, their product has a “head” that lasts for life. All you put in to the printer is ink. This was a disruptive innovation.
- When he joined 5 years ago, 85% of the revenue was in film. Today 70% of the revenue is digital and 60% of the profit. 60% of the business is now outside of the US.
- Perez refers to this as the “end of the beginning” for Kodak.
- More of the change came through internal change rather than acquisition, but they did acquire 6 businesses.
- Perez thinks that every business should be managed for cash.
- Perez was asked how he downsized successfully. In one case in France, they organised an industrial park as they shifted Kodak employees into new roles. He had a lovely way about him, Mr Perez in explaining how he would go to these film factories and ask the employees how many of them used film, and everyone would say that no one did. He would say something along the lines of – that’s right, that’s why we have to make changes. I thought it was the touch of a genius of human relations to enlist people into the market realisation in a humane way.
Bilal Kaafarani, SVP, Global Research and Innovation, Coca Cola then spoke, and these are my take-aways:
· Coke is in the relationship business; relationship is another word for collaboration
· They were one of the first global businesses, and one of the first franchise companies with relationships with 300 bottlers
· Santa Claus was created by the Coca Cola company
· In the late 1800’s, free sampling in stores was pioneered by Coke
R. Gopalarkrishnan, Executive Director, Tata Sons then spoke, and here are my notes:
- Tata invented offshore computing in 1968
- Tata has 3 million Indian shareholders, and is owned by 17 charitable trusts; Tata exists for the community
- Gopal spoke about Tata as a social application
- They are 142 years old, and the parent company is unlisted while the children companies are listed; they have done this in order not to be answerable to market quarterly pressure, but to build long-term strategies
- In the current year, they made $6 billion of profit; I believe that 35% of that was given to a charitable trust
- Gopal had some of the most interesting ideas of “nature being the m ost innovative” and unconscious and conscious innovation; he believes that the ultimate type of innovation is high unconscious innovation or “ingenuity”; no one at Tata would think that they are innovative because they are so innovative. Gopal thinks that being innovative is just what doing your job is.
- In Innovating Naturally, he identified 4 characteristics:
- Permeable boundaries
- Minimum critical rules
- Aligned aspirations
- Flexible architecture
He stressed that one of the advantages that Tata has is that “your bosses name will not be on the Fortune list”
They are the largest private employer in the UK
I loved his discussion of Indians being particularly good at innovation because they know how to or are comfortable “wallowing in the grey” as opposed to having things to be black or white
He feels business is too much physics, and not enough biology
To be good at innovation, you have to be comfortable with ambiguity
Then Rajiv Narang, CEO of Erehwon Innovation Consulting spoke, and woke us all up. My take-aways were:
- “Linear Fix” and “Mindset Gravity” – drags down and minimises innovation; one must take on the mindset gravity head on if you want to transform your organisation
- The first problem he outlined was “Deference to Giants”
- Companies need to move from Defender to Attacker, create Historic Challenge, help individuals achieve escape velocity when they are afraid of personal risk
- Think of a challenge and work backwards, not forward from last year’s budget
- Gatekeepers seek Certainty; excite the heart and the mind will follow
- Tip the mind with versioning - a big promise, low cost way of trying something out
- The difference between piloting and versioning is your commitment to success
- Reanchor creativity; move from the size of kingdom to the size of the challenge; from maintenance to creation, from business to cause, from let’s see if it works to how to make it work
- Keep the dream alive – that’s what will drive strong business growth
- Big ideas don’t get killed, they get diluted
- Don’t lower the challenge, raise yourself up to get there
- EREWHON means Nowhere in reverse; I thought this was an odd name for his consultancy, but he had tremendous ideas and delivery.
Tom Schmitt, the CEO of FedEx Global Supply Chain Services, spoke about how as a strong right brain individual he tries to spend more time with left-brain people to stretch himself. When he said that he thinks most Germans are right brain people, I thought – yes, we do know that to be true! J
Iain Gray CEO of the Tech Strategy Board spoke about challenge-based innovation – a term that I believe we’ll hear more about.
Then Howard Rheingold, author of Virtual Reality and The Virtual Community, was beemed in from the Valley, and spoke about Smart Mobs.
Tom Bernardin, the Chairman and CEO of Leo Burnett Worldwide, spoke and showed clips of their work. The most amazing was:
Finally, Anne Rogers of Cargill, Director of Scientific Knowledge Services, gave an overview of how they lead effective idea campaigns at Cargill. The highlights:
- Ask the right question with the right depth
- Frame the right box
- If Cargill only knew, what Cargill knows
Brought it back to Kodak’s Perez sharing that Kodak had discovered the digital camera but didn’t commericalise it.
I am struck repeatedly at how one knows more than what one thinks one does.
Quote for the week: “vision without execution is hallucination”. – Mark Hurd, Hewlett Packard
On Wednesday, I had lunch with Sue Tibbels of the WSFF http://www.wsff.org.uk/ - I hadn’t realised that the big push towards investing in sport had started under John Major’s government. Sue has an interesting challenge to get the message of sport = strength in women is not a zero sum game. I’ve written about this area before: http://www.ariadnecapital.com/journal/v6e2/house_of_ariadne/article_smart_money_is_on_women.htm
On Thursday, I went to the BVCA Gala dinner, and Clive Woodward spoke - http://www.clivewoodward.com/ - about Creating Champions.
He said Champions have 4 things in common:
- Talent
- Teachability – some very smart or talented people are rocks – have stopped being teachable and wanting to learn
- Warrior Drive – They know how to T-CUP – Think Clearly Under Pressure; if you are the leader of the pack, don’t shield your team from pressure; in order to be a champion they need to learn how to deal with it
- Will to Win, and Will is more important than Skill.
It was a fabulous view of creating champions, and he showed a fantastic video from YouTube about an autistic basketball manager – young guy – who was allowed to actually play for the last 6 minutes of a game – highschool basketball, and hit 6 3 point shots. A true champion.
And so to bed…
