The importance of critical conversations

Yesterday, I was delighted to be a guest at a World 50 event for very senior executives.  The organizations creates a forum in which people can have honest, open dialogues and share best practices.  The day looked at how difficult it is to anticipate massive changes that can affect entire industry segments.  Among the conclusions was that having honest, candid conversations with people who have insight into the future is a key issue for senior executives.  Those conversations, unfortunately, often don't take place until the situations is truly dire.

 

The topic of critical conversations was one I raised in a recent Long Range Planning article on business models.  It caught the eye of consultant Matt Stocker, who blogged about the idea as well. 

The core concept is to make sure that you are continuously exposed to people with a different perspective than your own, people who are either experts in technologies, new markets, or transformations that could potentially be disruptive to your business so that you pick up the early warning signals quickly. 

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• Posted Rita McGrath on April 11, 2012

Ron Adner’s response to my “Better Place” question

As promised, I asked Ron what he thought about A Better Place, a company that I'm very struck with that has the potential to transform our relationship with energy.  Turns out he'd given them a lot of thought already - here's what he said:

 

To date, the electric car has been a poster child for ecosystem mismanagement.  We’ve seen a lot of great innovation in the individual pieces: improved batteries, cars, charge spot deployments, etc.  But what has been desperately lacking is a strategy for pulling them together on terms that make sense to mainstream buyers.

 

Better Place breaks the mold in this regard.  They are doing something so interesting that I dedicated an entire chapter (chapter 7) of my book, The Wide Lens (www.TheWideLensBook.com) to exploring their strategy. 

 The power of the Better Place model is that that they are not trying to innovate the electric car, but rather to innovate the ecosystem around the car. 

 Two broad elements stand out.  First is the way in which they have completely reconfigured the e-car ecosystem to overcome the six key problems that undermine the traditional approach to the electric car in the mass market. (see http://articles.businessinsider.com/2012-03-23/news/31227987_1_electric-cars-blind-spot-nissan-leaf)  By applying what is essentially a mobile telephone operator model to the context of automobiles, selling multi year contracts based on Note, however, that this entails controlling the urge to grow – first achieving commercial success in the early markets, and only then moving forward to pursue the bigger fish.  That takes a lot of discipline.

 

In the language of ecosystems, Israel and Denmark offer Better Place the opportunity to establish their minimum viable footprint. And from this position, they can leverage ecosystem carryover to accelerate their success in adjacent markets.

 

Their success is not guaranteed.  But they have a better shot than any other player on the field.

 

 

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• Posted Rita McGrath on April 03, 2012

Rediscovering the importance of institutions - “Why Nations Fail”

Tom Friedman had a fascinating column in Sunday's New York Times on the book "Why Nations Fail."  The main thesis of the book is that institutions that promote greater access to economic activity and that are associated with greater income equality also are good for the nations that sponsor them.  I was rather struck by this notion, as it is almost the same thesis that William Baumol suggests are associated with the promotion of entrepreneurship.  Things like transparency, the existence of property rights, open exchanges...  A book that touches on this is:

The Free Market Innovation Machine: Analyzing the Growth Miracle of Capitalism, 2002.

Baumol essentially argues that innovation, not price competition, is the growth engine behind the miracle of capitalism.  Innovation is also fostered by access to opportunities and a regime that rewards innovators. 

It is worrying that we seem to have lost this thread somewhere.

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• Posted Rita McGrath on April 03, 2012

Speaking at Emerging Leaders Forum, April 12th, 1 pm, NYC

On April 12, 1 pm, at the 92nd Street Y, I will be participating in an Emerging Leaders Forum:

Daniel Altman, chief economist of Big Think and best-selling author of Outrageous Fortunes: The Twelve Surprising Trends That Will Reshape the Global Economy.

Monique Coleman, first ever UN Youth Champion, philanthropist, entrepreneur and actress best known for her role in High School Musical and Dancing with the Stars.

Rita McGrath, best-selling author of Discovery Driven Growth and strategy professor at Columbia University who's recognized as one of the top 20 business thinkers of the world by Thinkers 50.

Jonathon Prince, "athlivist" and runner who runs across the country to raise money for causes. September 2011 Jonathon announced plans to be the first man to run a mile on the moon by 2016.

Dr. Hans Keirstead, world-renowned scientist dubbed as the "Pied Piper in Stem Cell Science." Keirstead's patented treatment for regenerating damaged spinal cords successfully allowed rats to walk within six weeks and is preparing for human clinical trails.

Dr. Samuel Chand, listed as one of the top leadership gurus in the world. Chand counsels CEO's, senior executives, and ministries on leadership and strategy.

Tickets are limited, and can be purchased here.

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• Posted Admin on March 30, 2012

Ron Adner’s great new book “The Wide Lens” highlights two important risks for innovation

My good friend (and sometime intellectual sparring partner), Ron Adner, has just released a new book, the Wide Lens, which highlights a major problem for companies seeking to innovate:  The essence is that they focus too narrowly on the admittedly difficult job of getting their own innovations up to speed, while ignoring two other ecosystem based challenges that have to be overcome if an innovation is to truly take off. 

The first is what Ron calls Co-innovation Risk, meaning the extent to which the success of a partiuclar innovation depends on other innovations being successfully commercialized.  The trouble is that when you are depending on someone else to do their part, and that someone is not under your own control,  you can find yourself with a really expensive launch budget that is slowly getting spent before a 'complete' product can be ready.  Why did MP3 players not really take off until Apple invented the iPod?  Because there was no easy (and legal) way to get digital music for the mainstream.

The second kind of risk Ron highlights is what he calls Adoption Chain Risk.  This is the risk to which you are exposed if you have to first sell the idea to some third party before your ultimate customers can judge how good your offer really is.  Many stalled innovations have struggled with this dilemma.  One that I'm following closely at the moment is alternative energy ecosystem company A Better Place.  If you meet, as I have, with their senior leaders, you'll be  utterly convinced that they have cracked a workable, sustainable solution to the electric-car problem, suitable for mass adoption and ready to shift our habits forever.  One small problem is that they are having trouble getting the other value chain partners in a row.  Powerful, entrenched interests such as those of existing energy companies are proving a powerful force of inertia. 

Maybe I should ask Ron what they should do - will keep you posted on what he says!

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• Posted Rita McGrath on March 28, 2012

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