As we get older, we change. Attitudes, hair colour, viewing preferences, liking for cabbage, beer, chocolate…
Every day we work through the things that seem important and nothing really changes. Except when we look back and everything has. In fact, everything has changed so much we wonder how we didn’t notice.
Of course, hindsight is perfect. 20:20 every time. But how would we behave in 5, 10, 20 years’ time if we were asked the questions being posed today? Would we be a bit more thoughtful about how we choose to meet our targets? Might we take a longer view of the effect our decisions will have?
A fascinating study at UCLA has looked at how we react to the need to make decisions, depending on our circumstances. We’ve already blogged about hyperbolic discounting*, but this study has shown that, if presented with a vision of ourselves in later life, our tendency to invest in that person changes substantially.
Prof. Hal Hershfield at UCLA has been studying responses to visual avatars, designed to represent older versions of us. The data reveals that, when faced with these images, we have to work hard to recognise ourselves. It’s only when we actually see ourselves as we might be in the future, that we become interested in investing in that future self now. The research found that people’s attitudes changed: that the emotional connection they made with their future self meant they were more prepared to invest or save money now for that person’s future wellbeing than if they continued to see themselves as they are today.
Start-ups and some funders think along similar lines. Why would you hamper your business development by putting up barriers that simply satisfy a randomly selected time-based reporting need? This is where it can help to create scenarios of future states that you can work towards. We paint pictures of the future, informed by evidence of consumer responses to emerging technology and competitor activity. With this information, the strategic decisions you make today take on a whole different complexion.
This is a concept that reflects real life. Investments usually pay a higher dividend later than if you take the benefit now. Usually, this makes hyperbolic discounting unattractive – unless, of course, it helps you hit a target that pays out within this incentive cycle.
SME thinking. Start-up thinking. Boot-strap thinking. Call it what you will, but the idea that real innovation and short term-ism can share the same space is one to consider.
Future thinking: it’s what we do at room44.
Drop us a line at helpme@room44.co.uk and let’s see how we can help each other.
www.room44.co.uk Innovation justified.
*Hyperbolic discounting – the tendency for people to choose a smaller reward sooner over a larger reward later.
The dichotomy between selling a future market position and selling value now is not easily fixed. The pull of the future is less strong than the imperative of the short term.
We know that policy, regulation, crisis and discovery affect us. We know it explicitly but we choose to overlook the knowledge because we need to get through our critical to-do list. Big may be beautiful but in this context, the big picture is no more than abstractly interesting. The £1 in your pocket now is worth more than the £10 you may get next year.
If so, must ‘innovation’ – real innovation – only be practised by the vocational, the well-funded or the artist? Not necessarily. Let’s forget ‘innovation’ as a word. It’s misleading. It alludes to something that delivers benefit in the long term when now is more important.
This is where the concept of hyperbolic discounting* comes into play: the overriding need to create value today by taking whatever is on the table, versus the opportunity to find a solution that fits today’s need and will survive into the future.
Most often in real life, the opposite ends of the equation strike a deal and a goal is achieved, while some of the original ambition and opportunity remains nascent. A working compromise. The pragmatic thing to do.
That being the case, what value do we put on competitive insulation?
Being informed about how future markets may develop has huge merit, not just because it’s interesting or because the insight might shape product design someday.
Having a view of future consumer behaviour, competitive activity and regulatory landscapes can significantly assist today by informing tactical decisions. How to promote, how to communicate with the target audience and how to manoeuvre to your next market position.
The idea that products are developed and launched into their intended strategic position is OK. Lots are. But launching MVPs that grow market share over time by way of design iteration and audience advocacy is now the smart methodology in all markets. Look at any new product and see how its consumer proposition develops over time. This isn’t an accident.
Having a strategy based on data specifically analysed to meet your need is a newly accurate science. The suggestion that innovation is futurism, therefore, doesn’t stack up. Innovation may be a badly defined word, but strategy remains vital, now and for the future.
Doing what is necessary and doing what is right aren’t always mutually exclusive. It’s just a matter of timing.
Future thinking; it’s what we do at room44.
Drop us a line at helpme@room44.co.uk and let’s see how we can help each other.
www.room44.co.uk Innovation justified.
*Hyperbolic discounting – the tendency for people to choose a smaller reward sooner over a larger reward later.
Innovation is really, really simple and really, really hard.
The hardest part of innovation might be to know which of a hundred great ideas to invest in. And then you have to justify your decision. Why invest in this thing over that thing? Why risk anything at all?
Calculating the risk relies on insight, insight, and more insight. We call it future thinking. You might call it scenarios planning or market mapping. Either way, how we anticipate future market development is what sets us apart and it isn’t always a comfortable ride.
We don’t believe in “It’ll all be OK in the end” or “Tomorrow’s another day”. Knowing more than the competition is possible now. Big Data is being gathered all over the place. Some of it is being used, but often it isn’t. If you can expose trends from the data, you can own future market space. And that future doesn’t need to be very far away.
Innovation demands that somebody takes the initial step towards a vision and has the courage and energy to commit.
Knowing why is critical and that’s where we come in.
www.room44.co.uk Innovation justified
“Creativity is thinking up new things. Innovation is doing new things.” Theodore Levitt.
Drop us a line at helpme@room44.co.uk and let’s bring the future closer.
How’s your product pipeline looking? Would it benefit from a health check?
room44 uses intelligent interpretation of market data and innovative insight to review your development plans.
Take a look at these mega and macro trends, gleaned from a variety of sources: how do they make your product plans look?
- Average company life expectancy is 18 years
- By 2027, 75% of the S&P500 will have been replaced by companies we haven’t heard of yet (as at 2013)
- Mobile phones won’t be in common use by 2024
- 30% of the world population will be in water scarcity by 2025
- Before the end of this decade, AI will augment everybody’s lives and non-compliance will be the alternative response
- Cryptocurrencies will be mainstream…
- Most new cars will be self-navigating before the end of this decade
- Resource time in post drops to below 2 years
- The over-65 age group is outgrowing all other age demographics globally.
This is a small selection of the indicators we see and these are the kind of market predictions that should be affecting your strategic planning.
Product success relies on knowing how your consumers will judge your offering, this year, next year or even further out. Scenarios Planning from room44 helps ensure your product positioning is future-ready – ahead of the competition.
If these thoughts begin to shed any doubt on your product positioning and development plans beyond the next 12 months, we’ll be happy to have a chat.
Future thinking; it’s what we do at room44.
Drop us a line at helpme@room44.co.uk and let’s see how we can help each other.
www.room44.co.uk Innovation justified.
Back in 1796, the president of the Royal Academy of Arts was a chap called Benjamin West. He fell foul of one of the most successful hoaxes of all time that became known as the Venetian Secret and which played on the importance of the golden ratio, still recognised in art and photography today.
Basically, he was sold a pup by a father and daughter team who claimed to have discovered the secret formula behind ideal Renaissance paintings. He fell for it and was ultimately exposed, hideously.
Marcel Duchamp shattered the art world in a very different way. He postulated that art is whatever you want it to be rather than what the establishment decides (see Marcel Duchamp’s ‘Fountain’ 1917). Eventually his dissent was rewarded and he is revered as one of art’s most influential characters.
So, what is art?
Back to Duchamp, art is what you decide it is. Andy Warhol’s Brillo boxes? A Roger Dean cover? Martin Elliot’s Tennis Girl?
Piero Manzoni’s Base of the World is a block of metal in a field but otherwise regarded (upside down) it’s the plinth that the world sits on. Abstract? Of course. But so is innovation. What is innovative in one context may be utterly useless elsewhere or passé in another.
When it boils right down to it we value innovations according to the return on investment and connoted worthiness.
In the art world categories are applied to confer perceived value to products: graffiti, commercial art, original art, abstract art, pop art, fine art.
Maybe we should distinguish innovation similarly: product development, innovation, open innovation, fine innovation…
Perhaps product development is only the things we can do that don’t challenge the system too much. Innovation could be those concepts that meet a need in a future market and are of no use at all now but which accelerate the need: SpaceX?
This is all academic… unless the point is that innovation has become a noun used to describe many strata of product and service design. It has become a bastardised, devalued word.
Whatever the eventual outcome of the innovation lifecycle, the fact is that technology is changing our world faster than humans can all keep up. Whatever we call that equation, as Sir Alan Bennet said, “you don’t have to like it all”.
Future thinking; it’s what we do at room44.
Drop us a line at helpme@room44.co.uk and let’s see how we can help each other.
www.room44.co.uk Innovation justified.
Further reading:
Playing to the gallery – Grayson Perry
Marcel Duchamp ‘Fountain’
Piero Manzoni ‘Base of the world’
Benjamin West ‘Venetian Secret’
When we started to look at a holiday I wanted to go to Florida and take the kids to the theme parks. There’s just enough time to get it done in two weeks. Of course, she fancied Costa Rica and the kids have been studying the Romans at school to put in a bid for Rome. But really, Rome in the winter?
We knew we’d have to suck up the cost and go when it was school holidays so the dates were set. And then we heard that our friends were coming to Florida too so we decided that would be great. I guess I won that one.
Oh, and the Disney hotels are so close but you know what you’re going to get because they’re pretty similar to Disneyland Paris so we figured it would be cheaper for us all to stay in a house and get a pool too.
We thought about the time we’d lose on the parks, in the traffic, but decided it was worth it and we probably wouldn’t move for the second week. We’d have a pool for the kids right there.
I know it was a gamble with the weather. We only needed it to be dry so I looked at the reports and do you know what? That week has been dry for the last fifty years. It’s amazing that it’s so predictable.
Honestly, I couldn’t have guessed that the kids would have so much fun but the cost of food took me by surprise. There’s nothing healthy to eat at the parks so we had to buy a bag and carry lunch for four every day.
But the second week was lovely. To get away from theme parks and just sit while the kids played in the water was totally unexpected.
I don’t think we had any idea at all what we’d let ourselves in for.”
Clues to the future and the shape of the market are everywhere. It just depends how (and if) you look for them. Read the holiday brochures and everything about Florida is great. Look at TripAdvisor and maybe your plan needs to be thought about a bit more. Look at local planning notices and you can see if the route between your house and the parks is disrupted with roadworks that week and what the travel time will be. Even the weather is relatively predictable from historical data.
Do you know what you’ll be doing six months from now? Probably not exactly. The signs are that it’ll be pretty much the same as you’re doing today, for most people. Unless you look at it differently.
It’s what we do at room44: future thinking. Innovation justified.
www.room44.co.uk Innovation justified.
www.room44.co.uk Innovation justified.
If you want a reason to innovate, try survival.
The assertion that “change creates incompetence” (Seth Godin) may be validated by some numbers from a variety of sources that seem to agree on one point: we can’t predict the success of a company beyond its middle age.
In 2014 some figures were published reporting the life expectancy of companies listed on the S&P 500 to be 18 years. Otherwise put, 75% of the companies listed on the index at that time would be replaced by new businesses we haven’t even heard of within 10 years.
These figures were generated before the current rate of change really got going. Figures are hard to find now but let’s take a wild guess (call it a forecast if you like) and suggest that this outlook might be overly positive for some companies.
We like this list from World Economic Forum
- The right strategic vision is critical – in addition to anticipating what your customers are going to want, you need to define the depth and scope of the changes and redesign your internal processes and broader ecosystem.
- Execution is the hardest part of transformation – more than half of all companies undertaking transformation will fail to achieve their desired outcomes. One of the most common stumbling blocks is underestimating the operating model refinements that will be required across the organisation.
- Beware leaders who are clinging to past or current successes – this is the hypnotic siren song of the status quo. Transformation needs to be a continuous, never-ending process rather than a distinct ‘event’.
So, accepting that the markets we operate within are changing beneath our feet and that companies must change to survive, does this really affect you?
If you can imagine a Nasdaq 500 company not being able to react to disruption inside a year, there’s a great future for innovation and creative competition. Thank you, Michael Schrage: “Great companies make change for a living.”
Drop us a line at helpme@room44.co.uk and let’s see how we can help each other.
Intelligent application of artificial intelligence. Innovation justified.
Links to the sources of data this blog uses here and here but there are many more.
The point of innovation is to challenge the status quo and push on to a better condition.
The point of business is to make money today and tomorrow.
The equation and the system are balanced in favour of not changing.
The following insights are just a very few of the things we heard this week. They underline the need to look up and look long.
- Peak oil production has probably already occurred. From here it’s all downhill.
- For every calorie of food that is produced, 10 calories of fossil fuel energy are put into the system to grow that food.
- Peak water has been and gone. According to, well, lots of people, useable water availability from sustainable sources will put 30% of the world’s population into water scarcity by 2025 and the rest of us will face water stress.
- Artificial intelligence is influencing our behaviours now and augmenting our potential to function efficiently, creatively and effectively.
- Robotic process automation is reducing the amount of repetitive work but also replacing the need for people numbers in the workplace. It is predicted that 3 million jobs will be replaced by RPA in the UK by 2020 and this is affecting the decisions students are making at GCSE Options selection in schools now.
From conversations we’ve had this week with three open innovation managers and VPs, from different companies, consolidated and only slightly paraphrased:
- We only want to see insight and concepts that can affect our 12-month business performance. Anything beyond that is not going to attract budget.
Innovation justified.
Drop us a line at helpme@room44.co.uk and let’s see how we can help each other.
New technologies are developed every day. How they impact us takes a bit longer to filter through. When the BBC used to show Formula 1, we could hear about car technologies so advanced as to be beyond reach (apologies if you were born after 1984 and are puzzled by the idea of getting your news from the TV). Blink – and fly-by-wire appeared in family saloons. That was when mechanicals and electronics were almost understandable by the weekend mechanic.
So now that Moore’s Law looks like it is being outrun by the pace of change, how do we keep up?
First, get down to the IMAX. If you think that virtual reality isn’t going to bother you or your business, go and get an eyeful of the immersive movie experiences now possible. 3D took the cinema visit to the next level and 4D has taken it up another notch.
In the UK, 10-year-olds are exposed to virtual reality teaching aids: immersive natural history lessons – visit the gorilla kingdom by putting on a headset. Suddenly lessons really do come alive. These are your customers in the mid-term.
Second, look up. Just because you make what you make today, it doesn’t guarantee you a rosy future. If you make tea cups, maybe your next obvious product line is teapots or spoons. Maybe it should be something a bit more radical? Maybe you need to know why.
Drop us a line at helpme@room44.co.uk and let’s see how we can help each other.
Intelligent application of artificial intelligence. Innovation justified.
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