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The Best Business Books of 2009

Thursday, December 10th, 2009

In the wake of the worst US economic catastrophe since the Great Depression, everybody realized this: Making money is harder than we thought. So, this year, books on innovation had special resonance. Luckily, there were some great ones out there. So many, in fact, that this year’s best-of list includes two “companion volumes”–other good books from this year that cover similar material from another perspective.

These are the best books I read this year:

1. Design-Driven Innovation – Roberto Verganti. A fascinating book that looks at companies that don’t merely create new products, but develop products and services that create new meaning for customers. Is that important? Well, companies that do it well avoid commoditization and generate outsized profits for long periods of time. Think Apple.

(companion volume: The Design of Business by Roger Martin)

2. Discovery-Driven Growth – Rita Gunther McGrath and Ian MacMillan. Verganti’s book covers the more creative side of innovation, while McGrath and MacMillan discuss the process that established companies should use to improve their innovation efficiency–that is, bringing more successful products to market and spending less on the failures. The central lesson: do more work on paper, and scrupulously document & validate assumptions as you go.

(companion volume: Innovation Tournaments by Christian Terweisch and Karl Ulrich)

3. Enterprise 2.0 – Andrew McAfee. A clear description for the general business audience of how web 2.0 products, like social network software, wikis, messaging services, and the like, can be deployed to help corporations work more effectively. Excellent combination of case studies, theoretical models, and a clear-eyed assessment of the obstacles in the way of wide adoption.

4. Think Again: Why Good Leaders Make Bad Decisions and How to Keep it From Happening to You – Sydney Finkelstein, Jo Whitehead and Andrew Campbell. A timely book that shows how smart, experienced people can make terrible decisions, and what safeguards companies can use to improve their decisionmaking. Illuminates the many cognitive biases at work during the decision process, which helps the reader to understand why so many decisions that look atrocious in hindsight were considered reasonable and logical at the time.

5. Collaboration – Morten Hansen. Discusses how collaboration in business works, and when it doesn’t work, then provides a map for companies to improve their collaborative behavior – including unifying your workforce, nurturing “T-shaped” management and using networks intelligently. Key message: collaboration has a cost, and you need to make sure the payoff of collaboration outweighs it.

—

Tags: collaboration, decisionmaking, design, innovation, reading list, social media
Posted in best-of | Comments

Video review of Andrew McAfee’s “Enterprise 2.0″

Monday, November 30th, 2009

TRANSCRIPT:

We’re here today to talk about “Enterprise 2.0” by Andrew McAfee. He is with MIT, used to be at Harvard Business School. Just switched over a couple of months ago. He writes an excellent blog on IT and business, that I’d recommend you read if you haven’t come across it yet. And so, he’s just produced his first book. To explain the title, Enterprise 2.0 is a term he coined to refer to using web 2.0 tools like Flickr, Facebook, YouTube, Twitter and similar tools in a business context.

The book is a lot like a recent book, “Groundswell,” that explained to general business people how social tools affected customers and markets and how to use those to communicate and listen. Communicating from inside the business to outside. “Enterprise 2.0″ performs a similar task, focusing on using those tools inside the business, more for collaboration and tapping the collective intelligence of employees. And so it takes this marginal topic and moves it to a general management-type discussion. Which I think is really important, to get it out of the IT discussion into the management discussion.

So as part of that objective he does a really good job of explaining how these tools work and also what ties them together because if you think about tools like Flickr or YouTube or a blogging platform or a messaging platform or a wiki there are a lot of differences among those but he’s tied together the common threads, using an acronym called SLATES (search, links, authoring, tags, extensions and signals). Signals, for example, like RSS that allows people who follow these platforms without having to log on to them every single hour to see what’s changed.

Another important part of the book is in putting the different tools into a context in terms of how useful they’d be for different organizational problems. He uses a bullseye metaphor focused on the strength of ties between colleagues to explain that. At the center of the bullseye are strongly-tied colleagues meaning people who work together in the same department, in the same location, all the way out to the edge of the bullseye. meaning colleagues who have no relationship at all. Different tools apply at different levels of the bullseye. In the center, people with strong ties would use tools like wikis, or collaborative development tools, like Google Docs.

Midway out the bullseye are colleagues with weak ties. People who know each other but don’t get together often, who don’t talk often, but would like to keep apprised of each other’s activities for the purposes of sharing knowledge, best practices, identifying solutions to problems, and so forth. For that ring of the bullseye, Facebook-like tools are very useful.

At the outer edge of the bullseye, where colleagues have no relationship other than that they work for the same company, a prediction market is a useful tool, that gathers people’s guesses about the possibility of certain things happening like a certain sales volume being reached or likelihood an innovation will succeed in the marketplace and aggregating that information to get a better answer than any individual would come up with themselves.

He doesn’t go overboard in terms of enthusiasm for how great these things are and how it’ll change companies overnight, and he has a pretty clear-eyed view of how difficult it is going to be to bring these tools to wide use. It just takes a long time -and he dwells on that at some extent – how long it takes for revolutionary innovations to take hold, and he doesn’t think this is any different, though he is optimistic that it’ll happen eventually.

And finally in the book he talks about kind of different management models or practices that work well with these tools, and by contrast he talks about typical Model 1 behaviors which are more command-and-control type behaviors, self-protecting behaviors and less-collaborative behaviors, which don’t go well with these new tools. To really utilize these new tools, people have to adopt what he calls Model 2 behaviors, which are collaborative, not so much focused on self-protection but looking out for the best interests of the company. Quite a different model than what most people have seen where they work. And I think that heaps underline the challenges in getting these systems adopted and in wide use.

It’s an excellent book, very well-organized and well-written. It takes an important topic and brings it into the mainstream. I really enjoyed it and I think you will too.

Tags: collaboration, enterprise 2.0, information technology, reading list, social media, web 2.0
Posted in collaboration | Comments

My reading journal: Roger Martin’s “The Design of Business”

Wednesday, November 11th, 2009

“The Design of Business: Why Design Thinking is the Next Competitive Advantage,” by Roger Martin. 2009: Harvard Business Press, 190pp.

When did you read it? November 2009.

Subject: Hot on the heels of Tim Brown’s “Change by Design,” Rotman School dean Roger Martin, author of “The Opposable Mind” discusses how design thinking can help businesses balance exploration (the search for new solutions) and exploitation (extracting value from existing solutions) to improve their innovative capability.

Did you like it? How many stars would you give it (1-5)? 4

Summary: Martin describes the process of innovation in three steps, something he calls the “knowledge funnel”: (1) staring into a mystery; (2) coming up with a heuristic, or rule of thumb, that allows you to address the mystery; (3) systematizing your solution – in Martin’s words, turning the heuristic into an algorithm. This process, to Martin, is design thinking.

He spends time discussing the preference business has for reliability (i.e., consistency and repeatability) over validity (meeting a desired objective). Validity is the starting point for innovation – the discovery of something new that helps illuminate a mystery. Since validity is not predictable or repeatable, and tends to rely on qualitative, intuitive assessments (i.e., pattern matching), companies that rely on quantitative measurement struggle with it. It was easiest for me to understand validity, as Martin uses it, as a synonym for “right-brained” or “artistic.” Successful businesses balance the desire for reliability with a relentless search for new validity.

As Martin described this process – taking mysteries, developing heuristics and then refining algorithms from it, it seemed quite simple. Why doesn’t every company do this? But I also thought that there are lots of mysteries that don’t lend themselves to heuristics, and lots of heuristics that can’t turn into algorithms. There are lots of failures on the way to the next great business algorithm. Not only that, there are lots of successful businesses built on heuristics alone [for example, your favorite restaurant, assuming it's not part of a chain]. Martin’s point, which is not stated explicitly, is that you can’t build large businesses without this transition to algorithms. You can’t have McDonald’s without a cooking and serving system. You couldn’t have Wal-mart without its distribution model.

There’s not a discussion of the cost of algorithmized businesses to society. On my last trip to downtown Boston I was hard pressed to find a business that was not part of a national chain; much different from when I Iived there in the 1990’s. But I digress – Martin isn’t writing as a social critic; he’s a business professor.

Favorite quotes:

“Vice President of Marketing” denotes a permanent position with a set of ongoing tasks…. As well suited as that construct is for running known heuristics and algorithms, it is not an effective way to move along the knowledge funnel. That activity is by definition a project; it is a finite effort to move something from mystery to heuristic or from heuristic to algorithm. pp.118-119

Designers produce prototypes for feedback, but managers are accustomed to delivering final products. p.121

Status comes from running large, high-revenue business units whose operations have been reduced to reasonably reliable algorithms that product results on time and on budget. Those are the highest goals, that is, the ones that command the highest compensation. That is why most executives prefer the known to the unknown. p.125

Was it similar to anything you have read before? Of course, there are echoes of “Change by Design” (Brown’s earlier HBR article is referenced). And the idea of “staring into mysteries” reminds me somewhat of “changing the inherent meaning of a product” from Roberto Verganti’s “Design Driven Innovation.” 2009 is definitely the year of design thinking in business!

Martin’s book is less ambitious than Verganti’s, but broader (in a good way) than Brown’s. And his ability to create a powerful, memorable metaphor remains intact (I think I’ll be using “knowledge funnel” and maybe even “validity vs. reliability” in the future).

Will this book end up on your bookshelf or in the library donation pile? The bookshelf.

Tags: creativity, design, innovation, management, reading list
Posted in innovation | Comments

My reading journal: Tim Brown’s “Change By Design”

Thursday, November 5th, 2009

“Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation,” by Tim Brown with Barry Katz. 2009: Harper Business, 264pp.

When did you read it? October 2009.

Subject: A presentation of the idea of “design thinking” – the use of close observation, imagination, and consideration of constraints to conceive and implement innovative solutions to problems in business and society.

Did you like it? How many stars would you give it (1-5)? 3.5

Summary: Brown is the CEO of IDEO, the acclaimed design consultancy that helped Apple create the iPod, designed the MyBook external hard drive for Western Digital and the Palm V, along with countless other products. The first part of the book, “What Is Design Thinking?” reviews the approach that IDEO uses to attack problems and come up with innovative solutions. To Brown, design is far more than putting an attractive package around an existing product – instead, it is a way to start from a ground-level assessment of a customer need and design a total solution to the problem. Emphasis is on going out in the field to observe potential users of products to see what they do (or don’t do), the value of divergent (idea-generating) vs. convergent (integrative) thinking and early and ongoing prototyping.

The second part of the book takes up questions for the future of design thinking, such as: can companies learn to do this themselves? can it improve our broken experiences, such as the dreaded airport security line? and can it help in some of our intractable problems, such as building a sustainable future?

Favorite quote: “Rarely will the everyday people who are the consumers of our products, the customers for our services, the occupants of our buildings, or the users of our digital interfaces be able to tell us what to do. Their actual behaviors, however, can provide us with invaluable clues about their range of unmet needs.” p.41

Did anything surprise you? I was surprised, and frankly a bit disappointed, that the book is focused almost solely on work done by IDEO. While there are occasional references to other thinkers like Peter Drucker, Gary Hamel and William Whyte, they are cursory. There is no bibliography or end notes (instead, there’s a list of IDEO projects referenced, along with people who worked on the projects, for each chapter). The only book discussed at any length is Roger Martin’s “The Opposable Mind.” [Interestingly, Martin has just published his own book on design thinking, called "The Design of Business: Why Design Thinking is the Next Competitive Advantage." I'm reading that now.]

Skating over people (other than a few brief anecdotes) who influenced design thinking and overwhelmingly referring to IDEO projects lends the book the air of a memoir as opposed to a work of scholarship. And given that Brown is IDEO’s CEO, it makes the book feel a bit like public relations. Which is a shame, because the topic is important and timely and Brown’s description of design thinking and case studies are excellent.

Will this book end up on your bookshelf or in the library donation pile? The bookshelf. While it doesn’t reach greatness, it’s a good book on an important topic.

Tags: design, innovation, reading list
Posted in design | Comments

A wide-ranging (and free) e-book on narrative

Wednesday, September 16th, 2009

Kathy Hansen of the A Storied Career blog has been conducting interviews of storytelling figures large and small for nearly two years now, and has collected these into an e-book, available via this link.

I’ve been following the interview series with interest and, as mentioned in the title of this post, it’s a very wide-ranging look at storytelling and its uses. As such, there’s some of it that doesn’t speak to me very much. On the other hand, there are parts that I find extremely valuable. Like this…

Cynthia Kurtz on “approaches that don’t respect the integrity of the raw story and end up … injecting the biased interpretations of people outside the community:” There are two positions embedded in that statement — raw stories and self-interpretation — and I can tell a story from my own experience describing how I came to my current understanding of each position. The first position is that raw stories of personal experience are far superior to crafted stories for the things I care about when working with stories. For the purposes of advertising products and services, delivering specific purposeful messages, and entertaining people, crafted stories are often (but not always) best. But for the purposes of helping people learn, think, make decisions, get new ideas, grow, and get along, I’ve found that there is nothing better than a raw story. (NB: The entire interview with Cynthia is so valuable I have printed it out and refer to it regularly.)

and this:

Whitney Quesenbery on storytelling in user experience design: Although user experience [UX] stories are built on insights from research, their purpose is to help create something new. Often, they explore how a new or updated product can change an unsatisfactory experience into a good one. They describe a possible future condition, and in doing so help it become a reality.

This is not all user experience stories, of course. Sometimes, we use stories to present a current or past situation. But the reason we spend time thinking about current experience is to be able to create new experiences — and move us into the future. … Every UX project involves managing a lot of information. Even a small site involves balancing the business goals, user needs, and technical possibilities. When you are working on a large project it’s hard to stay focused on the goal of creating an excellent user experience, because you are managing so many details and (sometimes) conflicting needs. The other difficulty is keeping the “user” in sight. Perhaps that sounds strange for work on the user experience, but typically the users are not part of the design and development team, so it’s easy to ignore them.

With their ability to communicate so effectively, and on such a deep level, stories are one way to manage both challenges. They are a natural way to describe events, brainstorm ideas, engage the imagination, and build community around the new design.

oh, and this (self-promotion alert):

John Caddell: There has been an immense amount of investment in the last 20 years in business-process re-engineering and process standardization and in IT systems and to support those initiatives. We’ve taken process improvement about as far as it can go. In fact, we’ve taken it a bit too far. With companies applying Six Sigma to things like sales processes (???), and not surprisingly achieving poor results, it is time to seek new tools. And narrative is a perfect tool to help shed light on complex questions (Is our reorganization helping the company to perform better? Is this a good or lousy place to work? Why aren’t people buying our new product?).

Here are some of the other contributors whose work I know and respect:
Stephane Dangel
Thaler Pekar
Shawn Callahan
Ardath Albee

So, I’d recommend you take a look; you’ll likely find things that you can use.

Tags: narrative, reading list, storytelling
Posted in narrative | Comments

Follow ups – Netflix & “Harry Potter Marketing”

Tuesday, June 23rd, 2009

Both the above topics, subjects of recent posts, were discussed today in separate articles in the Wall Street Journal.

This article recounts the history of Netflix’s move into on-demand video, with a nice behind-the-scenes view into the thinking of CEO Reed Hastings, and the senior team’s discussions as they pondered trying to make their old business model, delivering DVDs by mail, obsolete. (Here’s our earlier post on the subject.) The story of the development of the device that eventually became Roku is fascinating – demonstrating a collaborative approach and healthy dissent that’s rare in senior teams I’ve known. (In particular, Hastings is candid about his Apple envy–as we learned from “Think Again: Why Good Leaders Make Bad Decisions and How to Keep it From Happening to You,” being aware of how attachments can affect decisions is crucial for avoiding disasters.)

And this piece discusses the relaunch of the Ford Taurus. This one particular quote caught my eye:

“I think Ford is chasing the original Taurus fans with this car, all of which are much older than when that car was at its peak,” said Karl Brauer, editor in chief at Edmunds.com, an auto-sales Web site. “The new model seems more like a Ford Town Car targeted at 45-plus drivers rather than a high-volume family sedan.”

Does this mean that Ford is engaging in “Harry Potter Marketing” – in which a brand ages with its audience? If so, it provides a stark contrast with its competitor GM, whose attempts to reposition Cadillac triggered this recent post.

I look forward to following the Taurus’ progress in the marketplace – to see if the target group will buy it enough numbers to inspire further attempts at HPM.

Tags: business models, innovation, marketing, reading list
Posted in innovation | Comments

“The Silver Lining” is a good intro to the new innovation methods

Thursday, June 11th, 2009

While reading Scott Anthony’s new book “The Silver Lining: An Innovation Playbook for Uncertain Times” you get the feeling of a project rushed into production. It’s written as a reaction to the financial crisis and resulting upheaval, which means it’s been less than a year in creation. It’s small-sized and brief (180 pages). As a result it doesn’t go into the depth other recent innovation books do.

Nonetheless, it’s a worthwhile read, especially if you want a quicker overview than you can get with “The Catalyst,” “Discovery-Driven Growth” or “The Innovator’s Guide To Growth” (co-written by Anthony, a book which “The Silver Lining” owes a particular debt to).

Anthony, president of the Innosight consultancy (co-founded by “Innovators’ Dilemma” author Clayton Christensen) is an acolyte for Christensen’s brand of disruptive innovation–which often means developing “good enough” products that do less, for significantly less cost, than incumbent products. A theme of “The Silver Lining,” then, is creating entirely new products without low-value features, as opposed to the incumbent’s default innovation approach–adding new features. This remains an important and underused insight more than a decade after it was first put forth.

My favorite bit of the book has to do with companies’ often distorted view of what the market needs their products to do–views that shape the product’s evolution and often, paradoxically, make it less useful to the customers it intends to serve. Writes Anthony, “A company’s view of performance rarely matches the market’s view of performance” (p.133). My experience with Customers Are Talking projects bears this out. My clients are consistently surprised by (and sometimes upset with) what the marketplace says they’re good, and not so good, at doing.

2009 has been a good year for innovation books so far. If you can only buy one, I’d go with “Discovery-Driven Growth.” If you can afford three, add “The Catalyst” and “The Silver Lining” to the list.

Tags: crisis, disruption, downturn, innovation, reading list
Posted in innovation | Comments

Teams may not be all they’re cracked up to be

Monday, May 4th, 2009

Great interview in HBR (“Why Teams Don’t Work” – $$) this month of J. Richard Hackman, a longtime expert on teams (and co-author of one of my favorite books of 2008, “Senior Leadership Teams“).

Hackman spends much of the interview demolishing myths that have developed around the power of teams:

- Teams usually deliver less than the sum of their resources.

- Team makeup should be changed infrequently if you want to develop a strong team.

- Harmonious teams are not necessarily more effective than disagreeable ones.

- Poor team players can still be excellent contributors (just don’t put them on teams!).

There’s much, much more. Every manager must read this before setting up that next team.

Tags: management, organizational behavior, reading list, teams
Posted in management | Comments

NFL’s Patriots use “Discovery-Driven Growth” formulas

Monday, April 27th, 2009

Despite an overfull schedule and helping get the house prepared for our 8-yr-old’s first Communion next Sunday, I watched bits and pieces of the NFL Draft as it unfolded. It’s a fascinating spectacle and completely dependent on speculation–by the teams, the announcers and fans. Which selections will be great players, which will be OK, and which will be busts? Will the first pick, a quarterback, live up to his signing bonus?

There are two flavors of strategy that teams deploy in the draft. One is the standard approach. Try to pick the perfect star or the perfect player to fill the gap you have in your roster. Exhibit A: The Washington Redskins (who rely on expensive free agents more than the draft). Exhibit B: the New York Jets–who usually draft high and who always disappoint. (Honorable mention: Dallas Cowboys.) Teams in this model often have salary-cap difficulties, given the large contracts their stars command.

The other approach is gaining traction but is still principally practiced by three teams: the New York Giants, the Pittsburgh Steelers and especially the New England Patriots. They eschew high picks and expensive free agents. Instead they stockpile talent, especially in the lower rounds of the draft and with low- and mid-priced free agents. These teams run into salary-cap difficulties much less frequently, and can often keep a stronger team together because they are not devoting a disproportionate amount of their salary cap to a few players.

It occurred to me this weekend that the Patriots’ approach is very much in line with the principles of “Discovery-Driven Growth” by Rita McGrath and Ian MacMillan. The Patriots presume they can’t perfectly identify which players will turn into great pros, so they make a host of small bets and expect some (many) of them not to work out. Yet some will, and some of those will turn out to be good or great players (say Matt Cassel and Tom Brady, both very low-round picks).

This year the Patriots traded their first-round pick for a lower first-rounder, then traded that one for a second-round pick. The Patriots ended up with no first-round picks but four second-rounders.

As prescribed in “Discovery-Driven Growth,” the Patriots are also ruthless in separating from players who aren’t paying off. It’s not nice, but it’s effective. They also experiment with shifting a player’s position, in order to find the best place for a particular talent. (Dan Klecko, a Patriots draftee at defensive line, started at fullback for the Philadelphia Eagles last season.)

All the above is dependent, of course, on the Patriots having a strong vision of the kind of players that work in their system. For example, they look for athletes on the offensive line, even if they lack football experience (Stephen Neal, a former wrestler, or this year’s pick Sebastian Vollmer). Within that system, though, there are many different types of players that can excel.

The Patriots cast a wide net, make lots of cheap bets, don’t stay too long with something that’s not working. What do you say, Rita? Are they a “Discovery-Driven Growth” exemplar?

Tags: business, growth, innovation, reading list, sports
Posted in innovation | Comments

Catalyst #2 – launch new ventures with real customers

Thursday, April 16th, 2009

I posted earlier this week on the new book, “The Catalyst,” but there are a couple of more points I’d like to share before I leave it. The book, by Jeanne Liedtka, Robert Rosen and Robert Wiltbank, investigates the mindset needed to grow new businesses at established companies. It’s highly recommended, especially as a companion piece to McGrath and MacMillan’s “Discovery-Driven Growth,” which tackles the new-business question from a methodological perspective.

The authors assert in “The Catalyst” that successful new businesses should start with addressing a need of a real customer, one who provides a level of commitment to using the product. They call this an “early yes” and illustrate that it helps galvanize support for a fledgling project.

The customer’s commitment is important. Since launch customers have a stake in the project, they take it seriously and provide more focused and useful feedback than prospects would provide:

Demanding an early yes provides a reality check on customers and partners. Importantly, looking for an early yes minimizes the influence of potential customers. Potential customers are a false positive: They act like customers, they look like customers, but they may not be actual customers. We use the word potential in a pejorative sense here. Potential customers may lead you down a primrose path that involves investment on your part, with only the promise of future business that may or may not materialize. To weed these out, the Catalysts place some demands on those who have the privilege of influencing the growth opportunity. They want to influence and be influenced only by actual customers and actual partners.

Vitally, the close working relationship with an actual customer forces the project team to get out of theory and conjecture and get real: “They are able to work around forecasts and predictions, because direct involvement with others gives them much more specific and useful information.”

I’ve seen the problems with building new products around the need of potential customers. In the 1990’s, I was the product manager on a prepaid cellular product (before such a thing even existed). We had an important launch customer (a large market of what is now AT&T). I worked with the design team and customer to come up with specifications, test prototypes, etc. After several months of this effort, we were no closer to getting the customer committed to using the product. Yet they continued to provide feedback and we continued to rework the product in hope of getting them to install and use it in production.

Eventually the customer’s focus moved onto other projects. Our management killed the project, and we put our code on the shelf. A couple of years later, of course, this type of product emerged (from another company) and became very successful.

To this day, I believe the customer’s option (them being a potential customer, not an actual customer) prevented the product from being installed and used, which would have provided critical momentum to help us continue to develop and improve the product, and for the customer to gain revenue from their customers for this new offering.

Tags: business development, customers, growth, reading list
Posted in innovation | Comments

John Caddell's blog

Posts Tagged ‘reading list’

My reading journal: Roger Martin’s “The Design of Business”

My reading journal: Tim Brown’s “Change By Design”

A wide-ranging (and free) e-book on narrative

Follow ups – Netflix & “Harry Potter Marketing”

“The Silver Lining” is a good intro to the new innovation methods

Teams may not be all they’re cracked up to be

NFL’s Patriots use “Discovery-Driven Growth” formulas

Catalyst #2 – launch new ventures with real customers

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