Tag: Innovation

The ‘Innovation’ in Innovation Consulting

Posted on September 22, 2016 - 7:33 am by

As a specialist in consulting to companies seeking innovation, I sometimes get the question “What’s so innovative about that?” At one level, it certainly looks the same, with slides, data analysis, and interviews. But innovation consulting has its own idiosyncrasies that differentiate it from what the big firms do. Having worked in both worlds, several lessons stand out, which may have meaning for others whatever their consulting focus.

What’s Distinct?

Crafting strategy for markets that are new or rapidly changing prevents easy application of some of a consultant’s most trusted tools. Market trend lines cannot be extrapolated, financial models compile unknown on unknown, and other firms may become ally, rival, or sometimes both. Different approaches are needed, and I wrote my first book Capturing New Markets to lay out methods for spotting new markets, assessing what doesn’t exist, and developing long-term channel strategies when so much is in flux. The key undercurrent is identifying patterns of market evolution. While many might claim that flexibility should be the watchword, oftentimes you really do need to make a decision. Patterns help to point the way to success.

Innovation clients are also their own genre. Their mandates are often fuzzy (“go make us more innovative!”), so selling to them has to be highly consultative to hone the project scope. At the same time, they often feel uncomfortable with their charge, so having a well-defined process for a project provides reassurance that the results will get delivered. Executing the project with them needs to be participatory; otherwise bold recommendations can feel as though they landed from Mars and have no buy-in for implementation. A recommended suggestion here is to have a client co-lead a focus group with you, or join you on ethnographies, to make the findings visceral and to spark the sort of creative back-and-forth that PowerPoint can struggle to trigger.

What’s Changed?

I entered this field in 2004, when most thinking about innovation was at quite a different level than it is today. Initially, clients wanted idea hunts, having outsiders lead countless brainstorming sessions in search of The One – the big idea that would reshape the company. This was a tall order and had several fatal flaws, but many clients believed they could recreate Edison’s genius in a conference room (never mind that, in reality, Edison networked extensively outside his labs, constantly iterated his creations, and failed innumerable times). Gradually, those beliefs have subsided and there is a growing realization that innovation has to follow a disciplined approach – one that consistently looks outside a company’s typical confines.

Projects also used to have a strong bias toward developing new products, rather than services or internal processes. This is changing, and now I’m doing projects on topics like “The Future of the Supply Chain” which would have been unthinkable a dozen years ago. People are realizing that innovation isn’t just for the white coated lab employees, but for anyone in the corporation.

Like many fields of consulting, innovation has endured fads. Design thinking, for instance, started with what is a valuable approach in certain circumstances and stretched it into fields poorly suited for its methods, or applied it in ways that displayed infatuation for process rather than results. The hype cycle in this case denigrated a valuable methodology, and now after disillusion some clients are applying design thinking techniques in more limited settings and embracing a broader portfolio of approaches elsewhere. People still want silver bullets, of course, but in innovation there really are none. This reality benefits the skilled practitioner who can advise on the right type of approach in the right circumstance.

What’s Coming?

I see three major trends affecting this field in the coming few years.

  1. Strategy and market research are being unified. The traditional division of labor between strategists and researchers falls apart when innovation is the subject. It is essential for strategists to get intimate with the customer. Far from distaining the task of conducting 50 interviews, strategists should embrace it as a chance to gain insight and trigger ideas that printed reports can never equal. This calls for a more senior mix of resources on consulting teams, which is one reason why the big firms struggle in the innovation field – they won’t shift their staffing model.
  2. Clients are increasingly demanding actionability. They have been burnt far too many times by seemingly great ideas that lacked a series of clear next steps. I’ve written my second book, to be published in November, to provide this sort of approach for projects looking to reshape markets or approaches to customer segments. Jobs to be Done: A Roadmap for Customer-Centered Innovation uses the “roadmap” term quite consciously; this is what clients crave.
  3. Finally, there are increasing numbers of engagements with a long-tail backend, in which a consultant is kept on for occasional counsel as innovations progress to market. Clients are recognizing that situations change fast, and that quick iteration of concepts is something counter to most corporate DNA. A skilled outside adviser can keep companies flexible and savvy.

Where’s the Innovation?

To answer the question posed at the start of this article, much in innovation consulting is innovative, and yet the lessons seem more general. Clients increasingly want tailored approaches, extensive participation, deep market insight, actionability, and help in sticking with new plans. These desires benefit a-connect IPs, because they have the experience and flexibility of approach that is often lacking on the standardized case teams of big consulting firms. As clients become ever more sophisticated about their needs, the signs point to a bright future ahead.

Insights from Supporting Clients with their Innovation Agenda

Posted on September 22, 2016 - 4:34 pm by

At a-connect, we work with clients across a range of industries on their innovation agendas. We are always intrigued by the diverse challenges clients face when driving innovation – such as driving impact, achieving cross-company traction and collaboration, and finding the right balance between ideation and processes. Here, we highlight a couple of recent innovation-related projects we have been involved in, and the important takeaways.

Case Study 1: Helping a client revisit their innovation processes to develop strategic foresight

One of our clients – a leading global flavors and fragrances manufacturer – asked a-connect for support in revisiting their regional innovation process. The goal was to optimize the process so as to allow the organization to leverage market insights, sparking innovation that could respond to upcoming consumer trends.

With this goal in mind, a-connect prepared and facilitated a workshop with the regional Innovation Council, which was structured into sessions that triggered the team’s thinking around consumer trends and helped the group bring critical issues around the existing innovation process to the table. During the workshop, the team worked on best practice proposals that would allow the organization to develop strategic foresight around key market trends, with a clear protocol for how to leverage this foresight for new product development and commercialization. In parallel, the group revisited roles and responsibilities within the innovation process, so as to optimize the organizational setup.

Based on the workshop results, the client was able to form task force teams and create roadmaps to formalize and roll out the improved innovation process. Roles and governance were clarified, and the Innovation Council developed a mission statement to drive the innovation efforts going forward.

Case Study 2: Supporting a biopharma client in driving innovation 

We supported one of our biopharma clients in their objective to fuel innovation around their core product portfolio by leveraging services and technology. While they had a sound portfolio, a couple of their flagship products were facing loss-of-exclusivity, and they were therefore looking for new avenues through which to strengthen their market position.

The client had good success in pockets with some of their drug device combinations and innovations, but believed a systematic approach was lacking in proactively driving innovation by leveraging services and technology. As a consequence, they wished to conduct a more structured and deep review of potential ‘beyond the pill’ type opportunities.

a-connect deployed a small team and helped structure and scope the engagement in different phases, working with a cross-functional stakeholder team to deliver this project. We supported the identification of key unmet needs in stakeholder journeys for one of their therapeutic areas, and used a combination of analysis and workshops to generate and flesh out ideas to address challenges, prioritize ideas into key opportunity areas, and recommend a selection of pilots. The project was highly successful in the implementation of pilots in this therapeutic area, and we also helped develop a playbook of this process that the client could use to roll out to other therapeutic areas.

Key takeaways:

  • It is critical to showcase impact and value: We observed that, in order to ensure the implementation of ideas, you need to demonstrate tangible value. While the ideation process itself can be very exciting, the ‘rubber meets the road’ when you ask for funding from senior management to support these ideas. A lot of these efforts lose traction at this stage. It is therefore key to keep this end in mind, in order to ensure impact while engaging in this process. It is important to align on the level and rigor of the expected business case early on in the process.
  • Clarity on the innovation process is key: No matter how many high-quality ideas are generated within and outside the organization, you need a clear process in order to successfully leverage them. Market insights need to be captured on an ongoing basis, and prioritized based on strategic relevance and revenue potential. The company should not only encourage a culture of innovation, but should also provide clear channels through which ideas can be collected (from within as well as from outside the organization).
  • Innovation needs to be supported by an effective commercialization/go-to-market strategy: In today’s ever-evolving market environment, speed to market is key for a company to stay relevant. As such, there has to be a clear focus on rapid commercialization following the collection, prioritization and use of innovative ideas in new product development.

Talking 100% Entrepreneurship and 0% Bureaucracy with Heiko Fischer

Posted on January 31, 2017 - 8:15 am by

“A company has a responsibility beyond making a profit for stockholders; it has a responsibility to recognize the dignity of its employees as human beings, to the well-being of its customers, and to the community at large.”

– The HP Way, David Packard

Download or stream this as a podcast here for your next commute to work or visit youtube. And subscribe on iTunes, Email, Stitcher or Google Play.

In the 1950s the founders of Hewlett Packard, Dave Packard and Bill Hewlett, who are often referred to as the founders of Silicon Valley, developed what is now known as the HP Way. It was  based on the fundamental belief that in order to excel, you need to create a workplace that fosters teamwork, encourages high achievement, and rewards loyalty. Over 60 years later, Heiko Fischer (referred to by leading management thinker Gary Hamel as the Tony Stark of Human Resources) founded Resourceful Humans (RH), basing it on the HP Way and including management philosophies developed in innovative companies like WL Gore and Ricardo Semler’s Semco Partners, as well as drawing on Heiko’s experience working at eBay, General Motors and Bayer.

During his time at Crytek, Europe’s most successful independent videogames company, Heiko and his team established the RH-Way, which is a management framework built on the mantra of “100% entrepreneurship, 0% bureaucracy”. The business  was designed around a network of entrepreneurial teams contributing autonomously to the best interest of its customers. After the success of the experiment at Crytek, in collaboration with Angela Maus and Markus Tacker, Heiko founded Resourceful Humans in late 2011 to bring the RH-Way into some of the world’s most successful companies. In 2014, RH was awarded the Management Innovation Award for enabling democratic entrepreneurship at HAUFE. RH combines its maverick management framework with cutting edge networking technology like aiRH, to optimize work environments for people and products.

a-connect is sponsoring the latest podcast episode of Innovation Ecosystem, in which Heiko and Mark are discussing how the RH way came into being through Heiko’s time at Crytek, how the core principles behind the RH philosophy “100% entrepreneurship, 0% bureaucracy” work in practice, and how gamification in the workplace can help us solve the problem of unproductive meetings (among other things).

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“LEARN THE 7 STRATEGIES USED BY WORLD-RENOWNED EXECUTIVES TO BUILD INNOVATIVE ORGANISATIONS” with a link to the free report at this page: http://innovationecosystem.com/ebook/

Opportunities and Challenges in Digital Health 2017: The New Frontier in Healthcare

Posted on January 31, 2017 - 11:46 am by

Digital Health is one of the hottest terms of this decade. This should come as no surprise when you combine the increasing power and affordability of computing and communication technology on one hand, and the rising expectations of and pressures on health systems on the other. The healthcare industry has consistently underinvested in the appropriate use of information technology and it lags behind comparable knowledge-intensive industries by about 15 years. Digital Health could well be the next big growth area for many companies.

Global technology giants have signaled a strong interest in the health sector, with companies like IBM and Google in particular making bets measured in the billions. But consider this for a moment: is this just hype created by the tech companies to stimulate their client industries, particularly life sciences and healthcare, to buy their branded picks and shovels for the 21st century gold rush of big data mining? Like many disruptive technological changes of recent times, I feel we might be overestimating the short-term benefits and underestimating the long-term ones.

What exactly is Digital Health?

It is difficult to find a concise definition of Digital Health. Its scope is very wide. I think the Wikipedia definition comes closest to embracing its complexity. I’d like to bravely/foolishly simplify it. Digital Health refers to the information and processes, and technologies and systems, that enable a person to make informed choices about their own health, take action to improve it, and monitor their progress to realize what works for them and what doesn’t. By contributing their own biological and behavioral data to the health system, people can give permission to carefully selected organizations and people in the system to anticipate and respond to their health and care needs, help good things happen and, where possible, prevent bad things from happening.

Why is it important now? 

We are seeing the last of the ‘accidentally well’ people, the pre-war generation that didn’t have to do anything in particular to stay healthy. Today, there are many more people whose ill health can be attributed to rapid changes in lifestyle in our modern society. We have easier access to energy (food) and less opportunity to expend it. Staying healthy now requires some effort that is not directly related to that involved in working or acquiring our food. We need to make conscious choices about food, work, play and rest in order to stay healthy.

The burden of lifestyle-related illness consumes around 70% of healthcare budgets in western economies, and the absolute value of these budgets is set to rise rapidly because of the ageing population in many of these countries. With healthcare budgets at breaking point already, clearly there is a need for a different way. The promise of Digital Health to enable better self-care and prevent or postpone the development of serious disease seems to offer a way out of a difficult situation.

What are the exciting developments?

IBM and Memorial Sloan Kettering (MSK) have collaborated to create IBM Watson for Oncology. IBM Watson is an artificial intelligence (AI) appliance that is available to large and small companies as a service. Just as IBM trained Watson to win the game show Jeopardy by feeding it all the prior questions and answers so it could learn how to answer future questions, MSK trained Watson using all the data they had available on cancer diagnoses and treatments provided to their patients, and the outcomes experienced. As a result of over two years of training Watson, oncologists around the world now have access to the best oncology brain in the world in the palm of their hand. The service continues to improve with all the data and outcomes it is still gathering.

The creation of AI infrastructures like Watson is spawning a new ecosystem of startups in Digital Health. Consider Talkspace, which provides psychological therapy through instant messaging. Although right now most of the therapy is being provided by a network of human therapists, all the interactions and outcomes are being ingested by Watson. The goal is to create an AI chat bot that will consistently provide high-quality psychological therapy. Babylon Health is attempting something similar in general practice (primary care or family medicine). These are ambitious goals. If they are successful, these ventures will dramatically change how healthcare is delivered in their markets.

There are scores of new ideas and businesses that are emerging every day, and Twitter is a useful tool for keeping up with new developments. Following people like @EricTopol (eminent cardiologist and author of The Creative Destruction of Medicine), @ManeeshJuneja, @Paul_Sonnier, @vgul, and others like them, will help you scan the Digital Health horizon.

What are the challenges?

There isn’t a clear regulatory framework for Digital Health. In the UK, the Care Quality Commission (CQC) and the Medicines and Healthcare Products Regulatory Agency (MHRA) are working hard alongside industry to bring the regulatory framework closer to the emergent technology frontier. There is a clear recognition of the potential of Digital Health to transform public (and private) health and care services. The regulator is keen to see that services are improved and people aren’t exposed to any new harm as a consequence of these innovations. The General Data Protection Regulation (GDPR) is also being updated with clearer guidance for all digital technologies, and particularly for healthcare, where personal and sensitive data is frequently processed.

One of the key challenges in most markets is finding a suitable business model for these great new innovations. Healthcare has a peculiar problem. In other industries, we see that technological innovation increases choices and tends to drive performance up and prices down. In healthcare, innovations increase choice and demand, but generally tend to increase prices. Consequently, healthcare budgets have been rising faster than inflation around the world. Secondly, most healthcare payment or reimbursement tends to be based on activity rather than outcomes (results). So there is usually no incentive to focus on prevention, and it is frequently not in the interest of most people and organizations in the healthcare business anyway. This is a toxic problem for healthcare for which strategic solutions need to be found.

What questions should we be asking our clients?

There is no doubt that healthcare needs to change in order to remain sustainable. An industry cannot remain viable if its customers cannot afford its services. Unless we see dramatic change in the next 10 years, there could be quite shocking economic and social consequences for the entire healthcare ecosystem (which includes life science and medical technology), and for society as a whole. If your clients are in any of these sectors, they are likely to be alive to these seemingly intractable issues. However, it may be worth your while to probe. Has your client considered how their businesses might get disrupted by digital technology? Where do they see the disruption coming from? What are they doing to mitigate the potential damage, quell it, or embrace it? Finally, how are they engaging with customers, regulators and innovators to ensure that their business will have a meaningful role to play in the emergent digital future?

Comments and questions are welcome via Twitter: @4LoyLobo and #ac-digihealth.

Building an agile organization

Posted on October 30, 2017 - 12:00 am by

Many companies that are facing disruptive competition and new, often digitalized business models are reassessing their organizational structure, but not by reshuffling the org chart and moving lines and boxes; rather, organizations are seeking to build the capacity for continuous change into their very setup.

We are experiencing a renaissance of organizational design as a management discipline. Organizations large and small are engaging in organizational experiments. New models are emerging, and being refined and adopted – be they self-management models like Holacracy, the responsive org movement, network organizations, or tribes and squads. The motivation to experiment with new forms is driven by insight that the classic step-change model of reorganization – i.e. where a new overall structure is defined from the top down and implemented through a protracted process, and then repeated – is too slow and inconsequential for many incumbent players in challenged markets.

Take German carmaker Daimler AG. A technological leader in its field, the company is now challenged by at least three major shifts in the car market: 1) digitalization and platform-based disruptions (UBER); 2) automation and driverless cars (Google and Apple); and 3) electrification (Tesla). In the future, fleets may consist of self-driving, electric vehicles and, as such, Daimler AG may only be a fraction of the size it is today – challenging key dimensions of its as-yet superior value proposition. Daimler AG’s CEO, Dieter Zetsche, directly quotes such developments when justifying one of the biggest transformation efforts in the organization’s history – which will see a move toward a network organization, simplified decision-making and more flexible budgeting approaches.

While not all new organization models are radically new, three trends stand out for managers exploring a new approach: 1) a new understanding of hierarchy; 2) a new balance of centralization vs decentralization; and 3) a transformation toward a new setup.

  • A new understanding of hierarchy

The speed of change in the market is drastically reducing the half-life of experience and competence, calling for new models of leadership. Many new approaches challenge traditional organizational hierarchies, and propose shared and shifting leadership and the distribution of classical leadership roles.

In discarding hard-coded hierarchies, new models throw out one of the oldest coordination mechanisms of large-scale organizations: the fact that bosses used to be put in place based on their superior qualification (experience and competence) and their ability to coordinate work across units and functions. In today’s insecure, rapidly changing context, such superior qualification is hard to obtain. Consider a senior manager in a company heavily affected by digitalization saying, in private, that his organization’s executive board frequently has to make decisions that it barely understands the implications of.

As such, new forms of organization change the role of leadership. The classic org chart (even the two-dimensional matrix version of it) calls for a fully integrated leader–manager role that acts as the connection between units, functions and layers. Prime examples of agile organization take this integrated role apart – Holacracy differentiates between the rep link, lead link, facilitator and secretary; and Spotify’s tribes and squads have the task owner, chapter lead, tribe lead and agile coach – each of which has distinct remits and accountabilities. The differentiation of leadership roles, if set up in the right way, allows teams to self-direct their focus on value creation, without being slowed down by constant alignment with higher levels of the hierarchy.

  • A new balance of centralization vs decentralization

Digital transformation can put paradoxical demands on your organization design agenda. Faced with digitalization, large incumbent companies are often forced to centralize and decentralize at the same time.

Org design and novel forms of decentralized setups generally involve integration, common platforms and shared frameworks. This applies to management systems, support functions, policies and regulatory non-negotiables.

The build-up of digital capabilities may involve building a global business platform; it will also require market-based innovation activities, especially if the nature of the products implies market- or segment-specific customization. The organization pushes simultaneously for centralization and decentralization. Building common platforms and data models is a topic of centralization; the question is how should platforms be integrated at the point of cross-functional teams? Teams may share features of the joint platform and data model, enabling them to leverage central development work and standards while achieving customer-centric innovation. A case in point is a sales force: in a non-digital model, it would focus on selling a pre-defined product; it now needs to bring customer relationships and insights to product innovation workshops.

New forms of organization are about striking this balance: building scale through shared centralized frameworks while leveraging assets adaptably through dispersed development or delivery teams.

  • A transformation toward a new setup

The objectives of agile organization are widely shared, but the nature and context of value creation are important. There is a huge difference between giving task autonomy to the smallest unit at an assembly line, busting organizational silos for task-focused collaboration in what Stanley McChrystal calls a “team of teams”, and integrating digital capabilities with business functions. Such factors can be used to explore parallel logic to identify common denominators.

Creating an agile setup across an organization requires building a model that fits the unique market conditions, strategic challenges and context of an organization. Existing models are important sources of inspiration and learning; no dominant new paradigm has yet emerged.

Learning new forms of organization can be supported by running experiments within select teams and divisions – not switching suddenly to a new ‘all in’ model.

Such experiments should conform to four conditions:

  • They should leverage the self-selection of individual leaders willing to spearhead efforts in their teams.
  • They should manage interfaces with the rest of the organization, avoiding culture clashes, and frictions in information flow and decision-making.
  • They should ensure structured attendance and support to capture learnings and scale best practices.
  • They should benefit from substantial top management support, based on a shared understanding of the organization’s purpose and value creation.

You can find more information on how to approach the transformation toward an agile organization here.

Blockchain-ing the Money Machine

Posted on October 31, 2017 - 2:35 pm by

State of the banks

The financial services industry is today arguably the world’s most powerful industry. The global financial system is responsible for moving trillions of dollars every day, serving billions of people, and supporting a world economy worth more than $100 trillion. A closer inspection of this omnipresent money machine, however, reveals the haphazard ways in which it has evolved. Most notably, the machine is plagued by a helter-skelter patchwork of new technology welded onto old infrastructure. Take, for instance, the somewhat strange co-existence of internet banking and paper check issuance at banks that run on mainframe computing infrastructure from the 1970s. Or the fact that, when a customer uses Apple Pay to buy a drink at Starbucks, the money goes through some five different intermediaries before finally reaching the coffee chain’s bank account – the transaction clears in seconds, but takes days to settle.

Such bizarre ways of working are widespread in the industry. Stock and bond trades clear almost instantly but take two to three days to settle. A foreign laborer in Singapore earning daily wages could wire his money home and, in the process, have to tolerate absurd transaction costs and a long wait, as if it were physical notes making their way across the world. Worse still, such daily wage laborers – part of the almost one billion people around the world living on less than two dollars a day – are seen as unattractive for banks to take on.

The crux of these problems lies with the fact that the gears of the financial services industry are powerful centralized intermediaries that consolidate capital and enforce monopoly economics. This makes the industry exclusive and centralized, leaving billions unbanked and the industry vulnerable to Equifax-like data breaches.

So how can we make today’s money machine efficient, secure and truly global in scope?

In cryptography we trust

In the wake of the global financial crisis was unveiled the world’s first cryptocurrency, bitcoin, by an anonymous person (or persons) under the pseudonym Satoshi Nakamoto. The fundamental message in Nakamoto’s white paper ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ resonated with the belief that the mass adoption of virtual currencies would ultimately obliterate the institutions – intermediaries such as banks and other ‘trusted’ third parties – that, one could argue, were responsible for the crisis. The white paper proposed a breakthrough approach to owning, exchanging and accounting for value.

So what is bitcoin? It is a digital currency with a security system run by a massive network of total strangers. The technology that underpins bitcoin represents one of the greatest innovations of our time – a true revolution in distributed computing that eliminates the need for trust. This technology, called the blockchain, is an open and immutable digital ledger that stores the history of financial transactions in a decentralized and distributed manner. Because blockchain can be adapted to store any kind of digital information conceivable, systems like bitcoin could be the future of all secure digital transactions, and thus overhaul how today’s money machine works.

How do bitcoin and the blockchain really work?

The blockchain is a decentralized, distributed and secure digital ledger of all past transactions ever made using a digital currency or token such as bitcoin. Owners of bitcoins have a digital signature represented by a two-part key. The private key, kept safe from view, proves ownership, while the public key is stored on the blockchain, which is accessible to anyone with a computer and an internet connection. Individual blocks of the blockchain – components of the ledger – contain multiple transactions, each of which stores a reference to an earlier record in the chain.

Using bitcoin to pay for something triggers a request to update the ledger. This request is sent to a specific class of participants on the distributed network, called miners. Miners are responsible for detecting transaction requests from users, aggregating them into a block, and ultimately ensuring the irreversibility of new transactions. Specifically, they run the new block and all previous blocks through a set of energy-intensive mathematical calculations called hash functions. Here, all miners compete to solve a complex cryptographic puzzle; the more computing power a miner uses, the more likely they are to solve the puzzle first. The first miner to solve a block tags it onto the end of the blockchain and broadcasts it to all other miners, who then check to verify the accuracy of the hash function. Once verified through a 50 percent consensus mechanism, the ledger is updated and the miner that solved the block is rewarded with newly minted bitcoins (12.5 bitcoins or about $75,000 per block today). New blocks are created on average every 10 minutes. Also, the supply of the currency is limited so that there will only ever be 21 million bitcoins.

Solving the cryptographic puzzles on the blockchain is so complex that every new block makes the previous blocks and the whole blockchain more secure. Hacking the blockchain would require tremendous computing power and speed. In order to alter just one past transaction, an attacker would have to change the information in that block and every block that comes after it before the blockchain is updated. With countless miners working on the chain simultaneously, corrupting the ledger would require massive amounts of computing power – more than half of the power being committed to the bitcoin network at any given time. This immutability feature makes the blockchain a database that everyone can see and add to, but nobody can destroy. Additionally, because computers belonging to many different entities enforce these rules, no single party is in charge and there is no need for a central entity such as a bank.

The world computer

Bitcoin is far from the only application that uses blockchain technology. In 2013, a 19-year-old cryptocurrency researcher and programmer, Vitalik Buterin, developed Ethereum. Ethereum is a decentralized platform on which one can build and deploy virtually any kind of decentralized application. The breakthrough with Ethereum is that it allows one to build smart contracts – digital triggers that self-execute and manage enforcement, performance and payouts. Applications deployed on Ethereum, called decentralized applications or ÐApps, run exactly as programmed without the threat of downtime, censorship, or third-party interference, thereby enabling secure and transparent governance for communities and businesses.

The Ethereum protocol, which is powered by a digital currency called Ether, makes the process of creating blockchain applications easier than ever before. Instead of having to build new blockchains for every application from scratch, Ethereum enables the development of any application imaginable on one single platform. For this reason, the Ethereum protocol is often referred to as the ‘world computer’. ÐApps have the potential to profoundly disrupt a wide range of industries – from financial services, healthcare and ride-hailing to social media and music.

The great upheaval

With its decentralized and distributed features, blockchain technology has clear potential to bring about a profound paradigm shift, busting the monopoly of large powerful intermediaries and offering end-users the chance to shape how they want to manage their money. One of its greatest advantages is the consensus mechanism that eliminates the need for trust. This has implications for today’s banks and insurance firms. ÐApps have already demonstrated the power of blockchains to make banking truly digital and distributed, secure and tamper-proof, inexpensive and inclusive, and able to run intelligently with significantly fewer intermediaries.

We now have the power to transform not only the payments world, as bitcoin has shown, but also other parts of the machine such as insurance, risk management, securities trading, capital raising, accounting, and auditing. There are essentially five core functions of the money machine that are ripe for blockchain-based disruption. These are as follows.

  1. Authenticating identity: The banking industry is, at its core, a trust broker. These intermediaries ultimately decide who gets to access banking services via establishing trust and verifying identity. The blockchain eliminates the need for trust altogether by relying on cryptographic technology, and enables peers to establish identity that is verifiable and cryptographically secure. Blockstack, a blockchain startup, uses a blockchain to track usernames and encryption keys – the basis of a new identity system that relies on decentralized information not tied to any single social network or other website. Using a similar system, banks can collaborate to authenticate identity, lower their compliance costs of individually having to perform Anti-Money Laundering (AML) and Know Your Customer (KYC) checks, and more easily provide services to a segment that was previously ignored.
  2. Moving and exchanging value: The financial services industry is responsible for moving money around the world, ensuring no double-spending. The blockchain does exactly this for anything of value, but at a much lower cost, regardless of geographical borders. Given that several intermediaries can be eliminated, the blockchain can cut settlement times on all transactions from days and sometimes weeks to mere minutes. Further, in countries with low financial inclusion, building a blockchain payment rail and connecting it to mobile phones can enable billions of currently unbanked individuals to send funds across borders quickly and cheaply, and participate in the world economy. Coins, a mobile-first, blockchain-based platform in the Philippines, does precisely this; it has partnered with financial services firms and retail outlets to create a distribution network of more than 22,000 cash disbursement and collection locations. Over half a million users use Coins for remittances, bill payments and mobile airtime top-ups.
  3. Managing risk: Risk management is intended to protect against uncertainty, but a common complaint is a lack of transparency of how risk is measured, especially in the developing world. Blockchain-based insurance systems have the power to run more transparently, simplify cumbersome claims processes and lower premiums. A distributed ledger can enable the insurer and any third parties to instantly and seamlessly access and update relevant information such as claim forms, police reports and third-party review reports. BITPARK, a blockchain-based startup, strives to provide an insurance service that is both transparent and user-directed by offering a peer-to-peer insurance model. Built on smart contract technology, the service offers customers fulfillment of contractual obligations, an approval and compensation system managed between users, a user-based evaluation system, and more.
  4. Funding, investing and lending: Raising capital has traditionally required intermediaries such as investment bankers and venture capitalists. Initial Coin Offerings (ICOs) – new crowd-funded ways to raise capital on the blockchain – are fast replacing venture capitalists. ICOs have raised a combined $3 billion to date, with more than $800 million of that raised in September 2017 alone. In addition, on the blockchain, anyone will be able to issue, trade and settle traditional debt instruments, allowing consumers to seamlessly access loans from peers. The blockchain automates many functions of investing such as making dividend and coupon payments but in an efficient and secure way through the use of smart contracts.
  5. Accounting for value: Accounting is a multi-billion dollar industry, but there are questions over whether it can survive the velocity and complexity of modern finance. The blockchain ledger is an already audited trail. Blockchain-based accounting methods will make auditing and financial reporting transparent and able to occur in real time, thereby dramatically improving the way regulators can scrutinize financial actions in large corporations. Since the data stored in distributed ledgers is continually updated, it offers finance teams the possibility of real-time reporting to both management and external auditors. This could free up auditors to offer more value-added services to their clients.

Is any of this possible today?

We have a banking system that is in dire need of overhaul, and what seems to be the perfect, foolproof approach for disrupting the machine. So what is stopping us from going full steam ahead? Several factors, such as enormous electricity usage (if bitcoin were a country, it would rank 69th in the world for annual electricity usage), limited scalability, and the lack of a well-defined and universally accepted regulatory framework all pose challenges to the blockchain technology going mainstream.

Of these, limited scalability is a particularly hard problem to solve. To put things in perspective, PayPal clears 200 transactions per second, Visa manages 1,700 transactions per second, and the Shanghai Stock Exchange clears significantly more than 10,000 transactions per second. The most promising blockchains of today are orders of magnitude away – the bitcoin blockchain is realistically limited to seven small or three complex transactions per second. Ethereum fares marginally better at between seven and twenty per second.

The scalability limitation is a side effect of decentralization; the consensus mechanism necessitates that every fully participating computer in the network process and validate every transaction and maintain a copy of the ledger. As a blockchain grows in size, the requirements for speed, bandwidth and computing power required by the network will increase exponentially. This could reach a point where it becomes unfeasible for every node in the network to play the same role, leading to the risk of centralization.

Slowly but surely

The blockchain technology is still in its infancy. To truly overhaul the money machine, the crypto-technology world would need to first figure out a way to scale while keeping power consumption in check. Regulators would need to develop strong legal frameworks and agree on how inherently decentralized protocols should be governed. In addition, the financial services industry would have to agree on standards, develop easy-to-use programming modules, and clarify regulatory uncertainties.

As innovation in the space progresses at breakneck speed, governments and various factions of the crypto-technology and financial services industries are currently working to solve these complex problems. In the meantime, the industry and both its users and non-users should prepare for an inevitable revolution in the way they manage anything of value. 

References:

[1] Blockchain Revolution by Don Tapscott and Alex Tapscott

[2] https://hackernoon.com/blockchains-dont-scale-not-today-at-least-but-there-s-hope-2cb43946551a

[3] https://www.weforum.org/agenda/2017/06/3-ways-blockchain-can-accelerate-financial-inclusion

[4] https://www.cbinsights.com/research/report/blockchain-trends-opportunities/

[5] https://digiconomist.net/bitcoin-energy-consumption

Create your very own robo-intern battalion

Posted on January 22, 2018 - 12:00 am by

On January 20th 2017, independent consultant Andrea Sutter lost yet another project to a larger consulting firm. She was baffled. Her skills and experience perfectly suited the client’s requirements. Her pitch was flawless. She was sure that her proposal was much more cost-effective than that of her larger competitor. Still, after the effort, all that she got was a polite rejection note and maybe some goodwill for a future attempt. The reason for the loss: a “lack of analytical breadth”.

A lack of confidence in one-person operations

The project was a market entry study focused on China’s FMCG industry – her specialty. However, it required a large-scale analysis of competition, pricing and product offerings in seven Chinese cities. While she had already delivered over a dozen studies on the topic for other corporations, the client’s executives challenged her capacity as a one-woman show to research a landscape of around 3,500 products with enough detail. They were probably right.

Independent consultants often face this challenge when developing business or executing projects. They can have the right practical training, often honed during years at top-tier management consulting firms. They can present an outstanding value-for-money proposition. However, when they are independent, they are also alone. They miss the wealth of information available to peers at bigger firms and the access to junior analysts to support research and content development work.

Enhancing the independent consultant’s capabilities

That is precisely where artificial intelligence (AI) and automation technologies can help. Independent consultants can benefit from them to gain productivity and analytical muscle, compensating the small scale of their operations. What is important is for them to correctly frame AI use cases within their business. For example, after the setback outlined above, Andrea recognized three ways in which she could leverage these emerging technologies in similar projects.

First, she realized that she could have applied an AI-based data mining system to automate the collection and classification of online information on FMCG products. Prices, user reviews, product characteristics, technical specifications and images of thousands of products can be automatically saved to an Excel spreadsheet for further analysis. This saves the independent consultant from having to pay for access to specialized databases or hire additional team members to support data collection. Andrea calculated that, for a portfolio of close to 3,500 products, the total time required to integrate the information would be reduced by at least a factor of 10. Furthermore, once the system was set up, human intervention in the data collection process would be minimal.

Second, beyond standard spreadsheet analysis, Andrea understood she could have used machine learning to analyze pricing ranges, consumer behavior and competitor clusters in the dataset. For example, classification and sentiment analysis algorithms could have been used to link product characteristics to positive customer sentiment, spot unmet needs and sources of negative sentiment, and establish sensitivity to pricing based on consumer experience. All variables in the product portfolio could have been classified according to their influence on each other, allowing Andrea to deliver hard evidence on key purchase factors and propose new product profiles with high market potential.

Third, Andrea could have deployed an automated PPT slide design system to generate both detailed profiles for each of the products reviewed and overview analyses for each of the clusters recognized. The system would have allowed fast development of customized reports for different product management and marketing teams within the client organization. With minimal manual work, she would have been able to facilitate market entry planning at both the strategic and the tactical level.

Building your robo-intern battalion

Given Andrea’s example, how can independent consultants brainstorm AI use cases to increase their productivity? A good starting point is to identify what data collection, data analysis and data reporting tasks might normally be assigned to an intern. That is, what work requires human level cognitive skills but might be lengthy or repetitive? Then consider AI as a way to build a battalion of robo-interns to tackle the challenge. Thinking this way is the first step for independent consultants to greatly expand their project delivery capacities and gain new business. Hopefully it will also make the tasks assigned to talented interns more interesting.

The parallel lives of our IPs #4

Posted on August 27, 2018 - 12:00 am by

When you are not working as an IP, what do you do?

I am the co-CEO of the social startup, Direct Coffee, that I founded with my wife, Marie, two and half years ago. We import forest coffee directly from African smallholders, roast it in Switzerland and sell it online on directcoffee.net as beans, powder or biodegradable Nespresso-compatible capsules.

I spend hours in the Jeep on bumpy roads in Ethiopia or Madagascar, going to remote places to find stunning forest coffees and meet the people who grow it. I speak with the farmers, cooperative leaders and with members of the community to figure out their reality. From these experiences, the coffee is 100% traceable and each one has a story that goes beyond the obvious: What is it like to live as a coffee farmer? What do they love about it? What are their challenges as a farmer, as a cooperative and as a community?

The direct trade allows us to make sure that the maximum amount of money stays with the farmers’ families and does not end up in the pockets of middlemen. In addition, for each package our customers buy, they support one child of the coffee farmers through health and education projects we implement with technical partners.

We call our concept Fairtrade 2.0 – as our customers do not rely on anonymous labels and have the opportunity to join us on a coffee trip to meet the producer communities in Ethiopia. By exchanging with the people at the other end of the value chain, consumers and producers are usually surprised about how much they have in common and about their previous misconceptions. The trip also acts as a trustworthy signal for all our customers who know they can meet our partners and see with their own eyes that their coffee is a good deal for everyone involved – including nature.

How did you come up with the idea of starting a social start-up?

It all started in July of 2015, during our honeymoon trip in Ethiopia. We fell in love with the country, its cultural richness and open-minded, entrepreneurial people. Ethiopia is the biological birthplace of Arabica coffee and we quickly came up with the idea to sell this incredible product to finance social projects.

Fast forward, two months later, we were walking through the coffee forests, cupping to select “our” coffee, making a deal with the farmers to import 2 tons and meeting partners to implement our social projects. And in June 2016 our coffee arrived! We chose the roast profile with our maître-torréfacteur and delivered to our first customers. As coffee is a daily treat, we decided to offer a flexible subscription: sustainable coffee freshly roasted, delivered to your mailbox as often as needed, for homes and for offices.

How does being an IP influence your social start-up and how does your social start-up influence your IP-career?

To be free and do the things the way we think makes the most sense, we chose to bootstrap (and we are still self-funded so far). We put all our eggs in one basket, both working 100% for Direct Coffee. That allowed us to focus – but also put us under pressure to create a product that attracts and keeps our customers to generate cash flows. And it worked out: most of our subscribers say they could not imagine getting coffee from somewhere else and word-of-mouth is our first source of new clients. Now that the business is up and running, being an IP allows me to deep dive in other topics, meet and work with other people. Through working with talented people, I get new ideas and challenging discussions regarding my business model and growth strategy. As an IP, I can take a step back from the day-to-day duties in order to come back with fresh ideas and motivation. In addition, it generates extra cash that I can invest to try new products or marketing instruments.

As an IP, your work is leveraged and likely has a larger impact. However, as an entrepreneur, you are responsible for success from A to Z, and you are obliged to find pragmatic solutions focusing on execution. As a social startup, we systematically include business, human and nature in our decisions. I believe that all this affects the way I work with clients as an IP.

What was your best moment since you founded Direct Coffee in 2016?

The time spent in Africa. We were able to organize a professional eye check for 2500 kids and offer them adapted glasses at a subsidized price. Given the frontal chalk-and-talk teaching style in Ethiopia, the students who cannot read the black board are excluded and more likely to drop out of school.

We put a lot of effort in the preparation of these health days, but did not know if the coffee farmers would be willing to pay for eyeglasses, as they did not realize that children might need them. We did not want to provide the glasses for free, as everybody would have taken them. Therefore, we put many efforts upfront in communicating with the community and getting trust leaders to explain the utility for shortsighted kids. When I saw one of the girls with the eyeglasses her father had just bought, it was an incredible relief. I knew that it would work. Finally, all the kids who needed eyeglasses got their parents to buy them. I always come back from Africa with a huge amount of energy, motivation and optimism.

What were the biggest challenges since you founded Direct Coffee in 2016?

Reaching new customers. As we did not have any marketing budget at the beginning, we needed to find creative ways to get our voice heard in the middle of industry giants. Fortunately, it seems that the people liked our open approach to sustainability and felt inspired by our story. We received a lot of engaged support from our customers: some organized a collective coffee purchase to present us to their colleagues; others invited us to do a slideshow cum degustation at their place, or recommended to their bartender friend to contact us.

Another challenge has been to differentiate our communication from our competitors so that people feel a true connection with farmers thousands of kilometers away. For that, I can count on my talented wife and business partner, Marie! We form a good team: I love asking questions and finding out how the things work, while Marie is unbeatable in narration. In addition, through the eyes of our coffee-trip participants, we reach another level of authenticity.

Any advice from one entrepreneurial IP to the others?

I want to motivate all the IPs who feel they have an entrepreneurial spirit who may not have explored it yet: go ahead and do it! A career as an IP offers the perfect balance to launch your venture. Focus on your business when you want to launch new products and partnerships, and then work as an IP to give the business time to develop with a reliable partner.

And last but not the least, are you drinking more or less coffee now?

I am drinking better coffee, but not more coffee. Usually three coffees per day. Two in the morning and one after lunch. I enjoy experimenting with brewing methods such as a Chemex filter, Aeropress or Cold brew. We offer the accessories we prefer in our shop. The only trouble is that I cannot drink coffee from standard office machines anymore… professional bias I guess!

 


AGILE – The art of adapting to change and innovation

Posted on September 5, 2019 - 12:00 am by

Today’s world of work is a fast-paced race in a complex and uncertain global field. Companies around the world are facing new competitive threats, changing market dynamics, technological disruption and the ever-changing needs of empowered customers. The pressure is on for companies to adapt to change and more quickly deliver better products and services to customer. Traditional leadership thinking and practices are failing to meet today’s challenges. Leaders must more effectively engage employees, foster creativity, speed up delivery and mitigate risks to outpace the competition.

Until recently, Agile was seen as a set of management practices relevant only to software development. That’s because Agile’s initial advocates were software developers and its foundational document was the 2001 Manifesto for Agile Software Development. Agile’s emergence as a global movement extending beyond software is driven by the discovery that the only way for organizations to cope with today’s turbulent, customer-driven marketplace is to become Agile. Agile enables organizations to master continuous change. It permits firms to flourish in a world that is increasingly volatile, uncertain, complex and ambiguous.

Since its inception, Agile has been used across industries to develop software, hardware, networks of interacting functions, autonomous vehicles, schools, hospitals, governments and marketing, and to manage the operations of organizations and almost everything we use in our daily lives.

Today, Agile methodologies are widely used for:

  • The development of products and services
  • Strategic planning activities
  • Supply chain management and management of the parent organizations

Conditions are ripe for Agile teams in any situation where problems are complex, solutions are at first unclear, project requirements are likely to change, close collaboration with end users is feasible, and creative teams will outperform command-and-control groups.

 

What is Agile?

The fundamental essence of Agile processes is adaptivity

The word ‘agile’ means ‘the ability to move, think and understand very quickly’. It generally signifies a highly skilled behavior, in both life and business contexts. In fact, the term ‘agile’ has a reputation for being overused and used incorrectly not always in the way it was meant to.

Agile is a collective concept that includes different techniques that provide the ability to adapt quickly to new conditions. Agile methodology focuses on delivering the features that have the greatest business value first, and then communicating with customers in real time to enable direct feedback from them. Agile also requires strict management of the cost, time and scope of projects.

Coming back to its origins, Agile reflects the view of visionary software developers who believed that “uncovering better ways of developing software” would require a reversal of some fundamental assumptions of 20th-century management. They valued “individuals and interactions over processes and tools, working software over comprehensive documentation, customer collaboration over contract negotiation and responding to change over following a plan.”

As Agile is increasingly applied to large-scale projects, the gains that become possible at firms are dramatic, particularly the ability to deliver instant, frictionless, personalized responsiveness at scale, such as Spotify’s Discover Weekly.

Additionally, as software itself becomes a critical driver in almost all businesses, Agile is now spreading to many kinds of organizations and functions, as recognized in 2016 by Harvard Business Review in the article ‘Embracing Agile’.

 

How does Agile work?

Mindset & individuals over tools & processes

There are several Agile methodologies that can be used to manage a project – Scrum being the most widely used and the one that we will explain further.

Agile methodologies, particularly Scrum, are based on a set of values, principles, team roles, events (meetings) and artifacts, and the rules that bind them together. Agile methodologies are alternatives to command-and-control management styles. The essence of Scrum is a small, self-governing team (a Scrum Team) of 4–9 people, which is highly flexible, adaptive and cross-functional. Scrum uses the concept of timeboxing to define the amount of time the team should allocate for each event. The Scrum team members should have all the knowledge and skills they need to achieve the agreed goals. The teams autonomously decide the priorities and resource allocations, and are designed to stay close to the customers and adapt quickly to changing conditions.

Here are some of the main components of Agile methodology implementation:

  • A Scrum Team – with a Product Owner, Development Team and Scrum Master – is set up and empowered by leadership to take decisions
  • The Scrum Team follows three principles: 1) transparency (the work must be visible at all times); 2) inspection (the Scrum team must frequently inspect the work and progress towards the sprint goal to detect undesirable variances); and 3) adaptation (if one or more aspects deviate outside unacceptable limits, an adjustment must be done as soon as possible to minimize further deviation)
  • The team completes the following Scrum events: the Sprint, Sprint Planning, Daily Scrum, Sprint Review and Sprint Retrospective (all these events are timeboxed, so the team knows the maximum duration of each meeting)
  • The Scrum Team completes small intervals (Sprints) of active cooperation. These Sprints should not exceed four weeks and should have a specific goal. During these intervals, the Scrum Team should complete daily status meetings (Daily Scrums) of no more than 15 minutes
  • At the end of each Sprint, the customer receives the result (in the Sprint Review), which is already suitable to use in their business. The Scrum Team’s processes and ways of working are then analyzed for improvement (in the Sprint Retrospective)
  • The Scrum Team works closely with the customer throughout the development process and delivers all the work agreed to accomplish the Sprint goal
  • The team is always ready to review and adapt at any stage of the project, and can easily implement changes to improve the final product

Unlike classic project management methods, Scrum focuses more on personal responsibility. The individuals that are performing the tasks are the ones taking ownership and estimating the completion times.

With the right, competent approach to the implementation of the system, the development of any project – even the most complex and energy-consuming project – can turn into a well-functioning mechanism and real collaborative work.

 

What are the advantages of Agile?

Scrum improves how we work in several ways:

  • It produces higher product quality, due to constant testing and continuous improvement as small increments of the work are performed
  • It results in higher customer satisfaction, as a result of the constant demonstration of improvements to customers, and the fact that customers are kept engaged with the project
  • It offers increased project control – for example, with the Daily Scrum meetings
  • There are reduced risks because of the short Sprints, the brief time between feature development, and the constant adaption to the client’s/customer’s needs and preferences throughout the development process
  • It provides faster ROI because it focuses on business value, allows the client/customer to determine the priority of features, and creates a functional, ready-to-market product with just a few iterations

 

How can you implement Agile? And in what situations can you use Agile methodology?

Start small and let the word spread

Large companies typically launch change programs as massive efforts. However, the most successful introductions of Agile usually start small. They often begin in IT, where software developers are likely to be familiar with the principles. Agile might then spread to another function, with the original practitioners acting as coaches. Success achieved in one or more departments tends to create a group of passionate evangelists who can hardly wait to tell others in the organization how well Agile works.

Successful Agile implementation requires a mindset change, real commitment from teams and leadership, and perseverance to remove the potential bottlenecks that will occur due to the existing organizational structure, which has several layers of management and bureaucracy.

The top three factors that are most helpful in scaling Agile are: 1) internal Agile coaches; 2) executive sponsorship; and 3) training programs provided by the company.

 

Conclusion

Scrum can create a safe environment that enables teams to experiment and, most importantly, learn from their test results and continuously improve. Instead of doing an extensive phase of planning at the beginning and only testing at the end (like the waterfall approach), Scrum simply provides the space for teams to try, test and innovate faster based on repetitive cycles of input from the customer. The team plans just enough to have a reasonable hypothesis of what may work and goes with it.

We have recently gone through the Scrum Alliance certification experience, which included attending a live training session. Although many of the concepts, rules, thinking and methods we have learned can be easily understood from the Scrum Guide, we have found it valuable to simulate a Sprint. The main insights for us were:

  • It takes time for teams to internalize the concept of self-governing teams, where your title and seniority within an organization no longer matters – just the work you deliver
  • In the beginning, you get the feeling that everything is chaotic and that you are losing control, so you can imagine how this might be one of the blockers for implementation
  • Scrum is easy to understand but takes time to master, and a test-and-learn mindset is as critical as being open to failing fast and then improving
  • Constant feedback is one of the core elements of Scrum and that is why being transparent is so important
  • For Scrum to work, leadership needs to be onboard and support and understand the process during implementation. It should empower the Scrum Team and not overturn team decisions or add review layers and controls to ensure that mistakes aren’t repeated. Failure should be a part of the process. With the best of intentions, such interventions erode the benefits that Agile innovation can deliver

Implementing Agile can be a step forward. It involves a lot of work, and emotions and passions run high as people and processes collide. Hiring an Agile coach may help companies maneuver these challenges but not without effort from the entire organization – from the executives and senior management to the programmers. As with any good harvest, the yield from Agile depends on the efforts that go into implementation. 

If you are interested in getting a Scrum certification, here are some suggestions (non-exhaustive list):

https://www.scrumguides.org/docs/scrumguide/v2017/2017-Scrum-Guide-US.pdf

https://www.scrum.org/professional-scrum-certifications/professional-scrum-master-assessments

https://www.scrumalliance.org/learn-about-scrum?gclid=CjwKCAjw1_PqBRBIEiwA71rmtW8WKca9IeMoCM1jQ46w0wTjIUongwmveG_d9xpv8DxA3t2iEnrHqxoC5TQQAvD_BwE

https://www.scaledagile.com/