Strategic spaces for social production

There's lots that the public and private sectors cannot deliver, even though we need these things done. Clay Shirky first got me thinking about those limits in his book: Here Comes Everybody. He gave us the visual metaphor of a "Coasian floor" that stops firms from going below what they can afford to do. Yet there lots going on below the floor by volunteers, amateurs and peers. In his follow-up book: Cognitive Surplus, Shirky goes into more detail about the how everybody engaged in social production can be motivated and committed to high quality contributions. His two books have given me optimism about social production picking up the increasing slack from the inherent limitations of most producers with their private and public business models.

Here are some of the other inherent limitations of most forms of public and private production that are not shared by social production.

1. Most producers are eager to scale their enterprise, enlarge their installed base and develop loyal purchasers of additional deliveries. Small is not beautiful for private and public producers. Superior size is the prize and getting bigger moves them toward this goal. Thus we have enormous corporations, governmental agencies and NGO's that cannot address granular problems, micro-contexts and individualized concerns.
2. Most producers reward their employees with paychecks, bonuses, perks and benefits all with cash value. They feed a mass addiction to extrinsic rewards which skews judgement, trashes self motivation, kills creativity and fixates on short term objectives. They cannot realize the wisdom, creativity and long range designs of intrinsically motivated social production.
3. Most producers spell out job responsibilities to to hold employees accountable, to justify terminations and to realize conformity, consistency and mechanical efficiency from their hires. These job designs inspire revenge rather than the desired forms of cooperation. They cannot throw out the job descriptions in favor of varied roles, results-only specifications, emergent teamwork and timeouts to reflect on possible collaborations.
4. Most producers provide layers of management to oversee the underlings, conduct meetings, review the outcome metrics and evaluate performance. They do not allow for self-managed teams, self-directed individuals or unmanageable collaborations with their customers, constituencies or communities.
5. Most producers deliver services that depend on a scarce supply of qualified professionals supported by a large capital investment. in a fixed location. These limitations necessitate bringing the problem to the solution via waiting rooms, waiting lines and waiting lists. It's not feasible to staff, equip and fund a system to provide community outreach, house calls or personalized service on more than an exception basis.
6. Most producers seek a sellers market where they maintain a limited supply, short window of availability or premium version which supports charging higher prices and paying lower prices for inputs. This avoids the slippery slope of discounting the price or commoditizing the exceptional features that often occurs in a buyers market. Yet this strategy also makes enemies of customers looking for a bargain, free trial or entry level involvement at first.
7. Most producers can provide services but not actually serve the public. They can figure out what the customers need and deliver special services for delivery, installation, reconfiguration, customization, repair and replacement. However, they cannot allow the value to be defined "in the eyes of the beholder" or to develop an empathic relationship with each buyer which could establish trust on an individual basis.

These inherent limitations of private and public production define, for me, the slack they cannot pick up. This slack becomes a "blue ocean" or "white space" of untapped demand where unprivate and unpublic business models can set up shop:

• High school and college dropouts who got more emotional baggage to impair their performance, ambition and self-crated opportunities from formal education settings, but who will thrive in informal, peer-to-peer and social production settings for getting prepared for the next economy.
• Citizens in a community who are not sick enough to need a doctor, ER or EMT, but need lots of preventative care, patient education and support for managing chronic symptoms.
• Unemployed workers who will never get their old jobs back and who need to transition into new roles, self concepts and success routines that make a lot of difference and not much money.
• Spiritual seekers who lost their faith in the confines of institutionalized religions, but who could find their faith again in communities of spiritual practice, service to others and caring for the community itself.

Only social production can leverage these opportunities. They are inherently small, resourceful and close to the personal problems. More importantly, they are free of those staggering limitations of most producers.

Where's the mission of an enterprise?

In the many times I've taught Strategic Management to college seniors, I've made a big issue out of the mission of an enterprise. So often, a business will get so caught up in crises it will lose sight of its mission. It loses its sense of purpose, direction and meaning. The dedicated employees feel adrift in a sea of anxiety, pressures and obligations. They characterize themselves as slaves or whores, not as talented individuals worthy of respect. The loss of mission infects their self confidence, intrinsic motivations and eagerness to contribute to the overall effort.

When the mission statement feels lost, top management typically issues a "blanket statement" of platitudes that does nothing to alleviate the fallout. It functions as a wet blanket that puts out the last embers of passion, purpose and participation among the employees. By trying to offend no one, it offends everyone.

This morning I've been visualizing where we find the mission in spatial frameworks. I've concluded the location depends on the business model, strategy and structure in use. Within hierarchal institutions with excessive top-down authority, the mission hangs over everyone at the top. In flat, equally bottom-up/top-down, democratically-run enterprises, the mission provides the solid ground for everyone to stand on. Here's how those two positions for mission statements play out.

It makes sense to top executives in large hierarchies that mission statements belong above everything else. Like their structure with an all-knowing big-brain at the top of the organizational pyramid, the mission dictates from above the strategy to fulfill the mission. That strategy, in turn, defines the lowly tactics to implement the strategy. The mission plays an authoritative role, just like top management. Both presume that the big picture is inaccessible to those in the trenches and needs to be dictated by higher ups to the lower echelons. When employees see the mission, they are looking up to higher levels of consideration, outlook and comprehension.

On the contrary, it makes sense to servant leaders and mentors in flat organizations that the mission is the lowest common denominator. Like the structure that balances bottom-up with top-down flows of authority, the mission arises from those closest to the work, customers, delays, overruns and setbacks. It reminds everyone "why we're here", "what difference we're making", and "what our success depends upon". It puts all those varied efforts on solid ground. Individuals look down to the footing, basis and support for their efforts. The mission gives purpose, context and meaning to the daily grind, crises du jour and imposed changes. Because the mission weaves together so many different perspectives, it's more like a patchwork quilt, than a blanket. It speaks to the diversity of the community with commitments that ring true, rather than platitudes than cause eyes to roll.

Those at the top of hierarchies cannot handle a mission below everything. It would cause profound cognitive dissonance to place so much power, control and superiority far from themselves. Likewise, those relating among equals cannot cope with a mission above everything. It would disrupt the culture to centralize the authority, vision and responsiveness so far away from those in the know. So both positions for the mission endure, rather than migrate or flip/flop.

Designing a shopping experience

I'm in the midst of designing the experience of uncovering the value proposition I'm offering to college dropouts. In this post, I'll share my thought process in designing their shopping experiences that applies to both brick and click environments.

When potential customers already know exactly what they are looking for, the shopping experience needs to be simple and straightforward. Their desired selection needs to be easy to find. The customers are in a frame of mind to filter out distractions from their focused pursuit. They will value the ease of getting in and getting out. They will resent the intrusion of add-on or up-selling pitches.

Whenever we assume that potential customers already know exactly what they are looking for, we are usually wrong. We've oversimplified the design challenge to make it easy on ourselves, but far from user friendly. We're passing up opportunities to:

• serve the potential customers' own constituencies who may question their purchase, challenge the price, or doubt the credibility of the value proposition
• help them make up their minds, resolve personal dilemmas or improve the quality of their decision when they hesitate to reach a conclusion
• consult their attempts to solve a bigger problem and select the right tool for that job, rather than simply sell tools for any job
• explore and refine their own benefit logics which define what they filter out, what catches their attention and how they appreciate what they do notice

When potential customers don't even know what to look for, they are easily put-off or put-out by designs to serve knowledgeable customers. Without getting stigmatized for being a neophyte, these customers need a different experience to explore. More than a menu of alternatives, they need to start with structure to help them look at:

• what do they think they actually need in their particular context
• what is changing in their world that defines, increases or modifies this need
• what facets of this need are questionable or challenged by others
• what does this need say about the customer or give off an impression to others
• what does this need depend on, connect to or get caught up in
• what does this need lead to, cause or impact if left unmet
• what fallout, ripple effects or spin-offs could come from satisfying this need

When we imagine potential customers are showing up with ill-formed questions in mind, we can design an experience of both getting answers and better questions to ask. We expect the offering to present them with several unknowns, blind spots and mysteries. We can help them feel safe not already being "in the know" and well-informed, unlike manipulative sales tactics which exploit ignorance.

When we envision the learning process of potential customers, we can frame the value proposition as a series of partial understandings. This allows them to self-select which facets they learn on their own, how much depth they explore and at what pace the acquire their particular understandings. This allows the design to anticipate misunderstandings and often overlooked facets of a complete understanding. Together, the experience will feel more like a "guide on the side" than one of those preachy "sage on stage".

All these considerations make for a better shopping experience for a larger number of potential customers.

Getting the motivation thing right

In his recent book: Building Social Business, Muhammad Yunus advises us to launch enterprises where investors only break even and all profits are kept as retained earnings. No one the outside the enterprise can get extrinsically rewarded through passive income with this approach. This wisely avoids the problems that Dan Pink has alerted us to in his recent book: Drive. Here that list of what Dan Pink tells us may go wrong when we rely upon performance-contingent extrinsic rewards (with my additions in parentheses):

1. Extinguish intrinsic motivation (that was already yielding lots of "unrewarded" initiative and cooperation)
2. Diminish performance (that was getting rewarded to increase it)
3. Crush creativity (that could otherwise solve problems more efficiently, ingeniously or synergistically)
4. Crowd out good behavior (with schemes to exploit loopholes, moods to rip off others and urges to act greedy)
5. Encourage cheating, shortcuts and unethical behavior (because the reward system sees that it pays those who bend the rules)
6. Becomes addictive (as if more extrinsic rewards can compensate for the endless lack of meaning, purpose and fulfillment in life)
7. Foster short term thinking (in order to maximize rewards and minimize risk)

I find Yunus's approach contradicts his own advice when he then addresses the hiring, compensating and promoting employees. He says he wants to create sustainable enterprises and then he appears (by error of omission) to trash the renewable source of motivation. He wants employees to get creative, take a long view and care for others but treats them to industry-commensurate pay scales. It's as if he carefully conceived of how to grow organic produce and then prepares it with MSG, saturated fats and white sugar. Perhaps this occurred because he was not consciously avoiding these listed problems with extrinsic rewards. He was simply avoiding familiar interference with an enterprise from investors, stockholders and security analysts who typically profit from their self-interested involvements.

It's far more difficult to apply the same wisdom about extrinsic rewards to internal operations. We cannot eliminate paychecks, bonuses, promotions or pay increases like we can delete earnings on investments. Here's some of what we need to consider:

• Converting business relationships (how much is this going to cost me?) to social relationships (how are feeling about this?)
• Replacing distance, disrespect and objectivity with dignity, trust and validation in each relationship.
• Characterizing jobs to get done only in terms of results while leaving the process up to each performer's individual judgment
• Taking suggestion boxes up a level to a dialogue about ideas worth pursuing and project assignments to pull that off
• Supporting the evolution of communities of practice, support groups and peer coaching where each can give and receive in return
• Approaching changes in strategy and/or structure as a design challenge needing lots of input, varied viewpoints and playfulness
• Attending to employment experience as a prototype of customer experience that both need fine tuning to get it right

Each of these considerations amp up intrinsic rewards and while getting the carrots off the table. They alleviate that entire list of fallout from the misuse of performance-contingent extrinsic rewards. In short, they do the do the right for the enterprise and all those people inside and out.

Setbacks in social business creation

Last week on PBS I watched The New Recruits. Jeff Trexler, consultant to the production, has given us a valuable perspective on the "warts and all" documentary about Acumen Fund fellows launching social businesses. Last week, I also finished reading Muhammad Yunus's new book: Building Social Business. Both experiences left me feeling distressed and dismayed. The ventures revealed in the documentary and book seem to be classic cases of failing to escape the incumbent space. Everyone we're being shown as creating social businesses appears to be playing a rule book that states:

1. Manage the brand. Make this a "social business" in name only while acting like a typical product delivery system with a learning disability.
2. Businesses require hierarchies. Get started on a right foot with that winning combination of superiors and subordinates, policy enforcement and power-over others.
3. Customers are clueless. Don't listen to customers when inventing the products or designing a sales/service strategy.
4. Employees learn best by formal instruction. Don't mentor individuals, coach personal development or set up peer support systems.
5. Value is provided by the goods sold. Don't allow for value to be intrinsic to the experience of the individual customers in their own contexts.
6. Work against what customers are already doing for themselves. Generate innovations that are too creative, different and unfamiliar to gain acceptance among users.
7. Make the business financially sustainable. Generate enough sales to cover the expanding overhead without considering ecologies, communities and infrastructures

I was astonished by the documentary and the book. Is no one launching a social business reading Clayton Christensen, Jeff Jarvis, Chris Anderson or Umair Haque? Aren't business models getting revised by technologies, connectivity and lessons from the global recession? Isn't this 2010?

Upon further reflection, I suspect these entrepreneurs are college graduates who have been prepared to function in the previous century with empirically verified practices. Higher ed cannot prepare them for the next economy because the research has not been done yet on changes that have yet to occur.

Assessing blog book tours

Karl Kapp has requested some feedback from those of us who contributed to his and Tony O'Driscoll's blog book tour at the start of 2010. I read every blog review on the tour for Learning in 3D and gained a lot of perspective about blog tours in general. I had also contributed to Karl's previous tour for Gadgets, Games and Gizmos for Learning back in September 2007 and read the other contributions to that tour.

From my perspective, blog book tours do several things very well:

1. The blog tour makes it obvious to the subscribers and visitors to any of the participating blogs that the book got a personal recommendation that can be trusted more than paid advertising.
2. A particular blog post draws attention to the book on the basis of it being new and "fresh off the press" much like book reviews written by professional journalists, but written with more passion than what gets written for hire.
3. Each blogger is free to ferret out the particular portions or perspectives of the book which fit their own expertise and ability to make use of the book, rather than getting told what to talking points to cover.
4. The write-ups also give potential readers/buyers a clear sense of how they may find the book to be equally useful, valuable and worth the time/money spent on it.
5. The transparency of each blog review and its follow-up comments enables the bloggers later in the tour to build on the previous reviews or take different approaches to avoid duplication.
6. The incredible variety of blog reviews in a tour reveals how a book is valued by many different frames of reference, potential users and situations that can take advantage of it's message.
7. The entire tour contributes to the authors' sense of how their project is getting perceived, how effectively their own intentions got realized and how to best get on the wavelength of future audiences.
8. This blog book tour generates considerable buzz (social marketing) which lends credibility to the book in the minds of gatekeepers who are deciding whether to book interviews and conference sessions with the authors.
9. The subsequent crossover to live and recorded presentations about the book is likely to enjoy greater quantity and quality of exposure following the groundwork laid by the blog book tour.
10. The indications of the book's success beyond the blog tour provides each participant with some intrinsic reward for contributing to this community facet of the overall promotion effort.

All this suggests that blog book tours is the way to go, not only replacing the faltering marketing efforts of print publishers, but giving new books more traction during their launch than costly campaigns realized for anything short of a blockbuster title.

Beware of blobs

Most business models fail to capture relationships at all, much less show how they evolve. The models usually focus on economic things like assets, sales and capital investments. They may list issues yet to be resolved, and people already on board, but not what's going on between participants in the success of the enterprise. If these essential dimensions of surviving and thriving was put onto a diagram of enterprise components, they would likely appear as blobs.

We cannot relate to blobs. There's nothing there to ask about, keep in mind, mention the next time or launch off of into new areas of mutual exploration. There's too many globules that make up any blob to deal with them one at a time. The amorphous shape of blobs justifies an enterprise's disconnect with customers, employees, internal departments, suppliers, journalists, legislators and many other constituencies. When one of the blobs starts acting up or acting out, most enterprises install a commando-type personality to bully the blob into submission. Blobs morph into enemies when given the silent treatment, cold shoulder or sense there's a battle ahead.

When enterprises act as if they are dealing with a bunch of blobs, they also cannot listen to what the blobs have to say. They shoot the messenger who brings news of the blob's concerns, suggestions, complaints and unmet needs. None of it sounds respectable, valuable or strategic to the ears of an enterprise keeping a safe distance from any gooey mess. Anyone on in the inside that listens to the blob is held under suspicion of being a traitor, saboteur or complete idiot. Bringing news of the blob gets regarded as an act of disloyalty or insanity. It's not telling the leadership what they want to hear or "managing up" effectively.

There's no solution to this problem at the level of handling the blob better. The blob must be transformed into real individuals with authentic concerns, varied experiences and potential contributions. That usually takes a lot more time and energy than it took to maintain a disconnect with the blobs. It sends a favorable message to take that time and show that interest. It says relating has become a real possibility.

Wanting to be famous

Cynical observers of our current culture presume its creatives are foolish to seek 30 seconds of fame. The cynics have labeled the the pattern narcissism, as if seeking fame is deeply dysfunctional and comprised of phenomenal levels of blatant exhibitionism. The critics probably had no choice of diagnoses or interpretations. They could only make what they see as wrong so they could be right. The cynics do not seek fame, have uses for fame or value being famous.

Thomas De Zengotita raises a very different possibility in his book: Mediated. He quotes one of his professors from Columbia who considered every member of any tribe as famous. He suggests that seeking fame goes hand in hand with membership in close-knit gatherings. High school students make these patterns obvious in their cliques.

This possibility got my mind to leap from the intersection of tribal-fame to the space of Marshall McLuhan's prediction that a global village would emerge from all forms of instantaneous electronic information flows. He foretold that we would leave our "print heads" and wedded bliss with all things mechanical behind us. A return to oral/aural/acoustic sensibilities would dominate our apprehension of situations. We make perceive reality and sense differently than we have throughout the Industrial Revolution.

McLuhan had a a lot to say about artists recognizing the shift in perceptual patterns ahead of the curve of consumers, employers and others profiting from the old order. I have no recollection of McLuhan addressing the issue of fame or predicting the explosion of "fame-seeking" we currently experiencing. He did, however, foresee the change in our sensibilities as becoming "cool" in his unusual use of the term. We would participate in what seemed incomplete to us, much like we listen more attentively when we catch the drift of something that interests us. He considered electronic media far more engaging than print, machines and film. We expected we would get used to being entertained and immersed rather than informed by keeping our distance.

I have not succeeded in making a connection between tribal gatherings and fame seeking. However, I do see a robust connection between oral cultures and fame seeking. Perhaps the current abundance of fame seeking ties into our change in media diets from print (like this text) to multimedia (like I'm preparing) rather than emerging from the increasingly pervasive connectedness.

Imagine if we had no archived material. What if everything was transmitted by word of mouth and gestures? We couldn't have a reputation on file that others could look up. We wouldn't be known for abstract accomplishments that had been certified and verified by authorities. To be known as qualified or exceptional in this world would depend on oral transmissions. We would be hounds for fame and successful at getting it. We would relentlessly seek word-of-mouth mention of what we did, what we're good at and how we differ from others that makes us exceptionally valuable to others. Thus the more we spend time immersed in media other than print, the more we will seek and find fame.

When we want to make a difference

There are times when other's want us to make a difference in their lives. We receive questions, requests or proposals from them. We respond and our response is welcomed, valued and translated to fit their initial request. The responsiveness to the initial demand creates more demand. Together we've started in a good place and ended up in a better place that does not stop there.

There are other times when we want to make unsolicited differences in other's lives. We've set ourselves up to heroically deliver from our inventory, push our product and insist on what we have to offer. It's a hit or miss proposition whether our offering is welcomed and valued by the others. Without the others on board, we've started from a bad place and ended up in a worse place. This is the condition of most business models, competitive strategies and institutionalized enterprises.

There's much that goes on in the minds of the others as they cope with unsolicited attempts to make a difference in their lives:

• They get defensive about being made to look stupid, incompetent of lacking in ambition
• They become wary of getting framed as a real problem or blamed for needing this help
• They suspect they are getting into more trouble by getting entangled in a manipulative obligation
• They are anxious for this encounter to be over, dismissed or stopped in its tracks
• They find themselves getting bored, disenchanted and resentful in spite of trying to appear agreeable
• They experience their thought processes becoming more intolerant, judgmental or antagonistic
• They feel a sudden need to be right without question, in control and overpowering the attempt to make a difference

All this occurs because the attempts to make an unsolicited difference creates a dangerous situation. We were all born fully equipped with an automatic safety program that shuts down our higher order reasoning in favor of quick-minded survival tactics.

All this defensiveness can be alleviated with value propositions and business models that only deliver in response to solicited requests. This gets the others on board from the start. They know what to expect since they asked for it. Their minds open to add-ons and revisions that they perceive as better serving them than what they initially requested. They trust the process of learning as they go, collaborating on value creation and taking more responsibility for their own satisfaction. This inherent collaboration works for every participant on several levels.

Reading the emergent cultural changes

Cultural changes emerge from complexity. We cannot make those changes happen directly, instrumentally or methodically. Rather they happen to us, occur as we interact among us and come about through us. Our job is to watch for emerging shifts and play along with them. Coming up with successful business models calls for a good read on the ways that our cultural changes are emerging.

Some fantasize that media moguls or high-profile cultural icons are making cultural changes happen. If they could do their thing without needing a paying audience, it could be argued that they have power over us and control over the culture. But they are appeasing their viewers (listeners, readers, subscribers, attendees, fans, etc.) and doing what sells. Together we're in charge with the power distributed and symmetrical.

Over the weekend, I was rereading Thomas De Zengotita's insightful book: Mediated. This morning I've been pondering what cultural changes I'm sensing to be emerging from the complexity of life in the 21st century. Here's ten migratory trends I came up with:

1. From the print culture transmitted via reading comprehension to an oral culture transmitted by immersive multimedia experiences
2. From taking situations literally and objectively to taking situations panoramically and hypothetically
3. From going to work for getting jobs done to performing roles in improvisational dramas that arise from the contingencies in each moment
4. From following sequences for arriving at goals to going in iterative spirals to come from higher spaces, outlooks and premises
5. From making progress and news of those advances to enacting rituals, sacred cycles and replays
6. From facing reality with no choices to getting the irony of set-ups and biased presentations of reality
7. From privatizing scarce mechanistic solutions to sharing abundant organic solutions
8. From antagonistically defending well-defined territories to collaboratively exploring intersections between fuzzy territories
9. From building up investments in fixed entities to letting go of fixations, necessities and hang-ups
10. From identifying with accomplishments and results over time to being a presence that makes a difference here and now

All these trends suggest we will have many new ways to formulate value propositions. Our next generation of business models will occur in spaces that support these migrations. They will come from these better places and resonate with market demand to experience these cultural shifts.

Escaping the incumbent space

Here we are in the market space of incumbent providers. We want to get to a new market space of innovative offerings. The incumbent space is holding us back as if it's having a powerful effect on what we experience as conceivable, practical and feasible. Note those are experiences in our minds. That tells me we should postpone venturing out from the incumbent space and venture up into conceptual space above. It's very likely the incumbent space is fallout from the conceptual space at a level above it.

Getting above the incumbent space defies the gravitational pull of the market dictates. This transcendence poses a similar challenge to not only getting Joe out of the trailer park but also getting the trailer park out of Joe. Getting into the conceptual space above expects to find viable choices where we've made up our minds to have no choices at all.

Whenever I explore the conceptual space of incumbents, there's much I find that impedes their escape from business-as-usual. Here's some of the usual findings in the conceptual space of an incumbent provider:

1. fears of going out of business, getting beat by rivals or getting ambushed by upstarts
2. fears of falling below quality standards, making big mistakes or trashing the brand name
3. fears of a steep decline in the demand for their offerings from changes in the techno-cultural landscape
4. effects of those fears on their thought processes and conceivable options
5. closing their minds to consideration of disturbing alternatives that might prove them wrong or embarrass them
6. making unavoidably bad decisions by the incessant production of worries, paranoid fantasies and symptoms of hypertension
7. arguing "for limitation/against liberation" with tired rationalizations, justifications and excuses
8. depending on extrinsic rewards to motivate their commitments, efforts and relationships
9. expecting more of those predictable white swans and dismissing the prospect of black swans

All these features of the incumbents' conceptual space has the effect of confining themselves to innovation for show or for self-preservation. They cannot venture out into innovation for impact or cooperation until they change their minds in significant ways. Revising their conceptual space begins with increasing their awareness of its current perpetual state. It then becomes possible to into the conceptual space surrounding their own. We explore how it's possible to be clear of fear, open to possibilities, accepting of opposing alternatives and receptive to exploring unknowns. As they take up residence in this expanded conceptual space, they discover they've successfully escaped the incumbent space below. They are in a place where innovations for impact and cooperation come to mind, seem very conceivable and spawn intrinsic motivations to develop them further.

Touring innovation space

Welcome inside the space of varied enterprise innovations. On our tour, we will visit each of the four domains with their unique approaches to innovation. We'll take the time to comprehend why each approach makes sense within its own parameters and endures among the competing approaches.

First we come to the realm of innovations for show. These innovations become short-lived fads. They serve little purpose besides offering newness, variety and thrilling unknowns at first. They get old quickly and generate no loyalty from those who get excited by their introduction. The success of innovations for show depend on making a big splash at the initial launch, release or rollout. They appeal to trend setters, fashionistas and early adopters. They rely on the same reaction patterns as mating instincts in nature. The innovation does a courtship dance, display of plumage or mating call to attract new fans. Once the thrill is gone, the fans get bored and move on. They call for a more showy innovation the next time around.

Next we arrive at the realm of innovations for self-preservation. Some of these innovations become the next industry standards that others feel compelled to imitate. They add new features and benefits to an established brand, product category or business model. They keep the established providers and industry structure in place. They offer such comprehensive service, support and follow through that they appeal to our herding instincts. Everyone who is seeking safety in numbers, thinking alike and following the crowd -- will favor these low-risk innovations. They attract buyers known for their loyalty, routine purchases, stockpiles of supplies. These innovations are prone to feature creep, excessive sophistication and loss of user-friendliness until the herd rejects the innovations and favors the previous version.

Now we find ourselves in the realm of innovations for impact. These innovations create new market spaces. They find customers in their space which reveals how to provide something far more valuable, effective, useful and creative. These innovations make a different difference than innovations for show or self-preservation. They successfully get into the customers' heads to see what is: the real problem to solve, the real issues behind lingering hesitation and the real concerns underlying complaints. The new product/service mix works with the buyers as if the innovation is on their team, in their corner or watching their back. The value realized by users is intrinsic and tied to the strength of the relationship with the seller. They become self-motivated to try it before they buy it, consider bigger purchases and tell their friends about their satisfaction with their experience. These innovations appeal to the hunting instinct which learns to accurately judge unfamiliar characters, opportunities and potential ambushes.

Finally we arrive in the realm of innovations for cooperation. These appeal to our adaptation instinct amidst new constraints, invasions, hardships and setbacks. We find ways to combine resources, share surpluses and realize new solutions. These innovations can enter new ground like pioneer species, They can grow in inhospitable places and make way for subsequent developments. These innovations deconstruct formal roles and identities. The customers act like employees some of the time while employees get served like internal customers. The outsiders become sources of innovations that get internalized as revised products, services, bundles, and systems. The insiders becomes explorers of new territories like the customers' customers, the buyers' own constituencies and the decision maker's battles to get full use of the purchase. Micro innovations support the dissemination "on the ground" or in each niche of specialized considerations.

When you're thinking about developing an innovation, you'd be wise to consider these four realms. Your innovation will likely come from one of these and appeal to a particular "instinct" and not the other three. It will be apparent to the market which of these realms your innovation is coming from and which interest of theirs you're attempting to arouse. You can now proceed with a deliberate intention to realize a particular appeal or get surprised by the reaction your innovation gets. That concludes this tour.

Lost in their own space

Sometimes potential customers are lost in their own space. They are immersed in their problems, setbacks, frustrations and obstacles. They don't know which way to turn, what to think or how to ease their own pain. They are not in a position to structure their experience, choose wisely or value sophisticated solutions. They are playing the part of unhappy campers, underdogs or losers in some tragic tale of their personal misfortune.

This puts any of us value providers in a precarious position. Customers lost in their own space set us up to be controlling, overbearing and domineering. Their lack of self-structuring baits us to provide too much structure. We then enable their dependency on those who provide excessive structure. We cannot get a sense of how much structure to provide from the customers need for structure. Their lack of structure appears in a stuck place that offers no escape. The customers appear to be unreliable, moody and incapable of getting into their own problem-solving space. There's no obvious way to work with these customers, only work on them, against them or occasionally for them.

This is the biggest hurdle I face in designing a system that gives college dropouts a second chance. My potential customers have internalized countless negative experiences from years of schooling, socializing and working. Most of them are lost in their own space and setting me up to tell them what to think, say and do to excess. Yuk! If I insist they think for themselves, decide what works for themselves and do what it takes to make those changes, they'll draw a proverbial blank in their minds. Yuk again!

Whenever the alternatives under consideration appear to be this far apart, it's time to settle for some middle ground. We cannot get there from from the space that sees the problem because the middle ground of a combined solution is on a different level. We need to rise above the apparent contradictions, limitations and expectations.

At the level above their lack of self-structuring and their bait to provide too much structure, the ecology of interdependencies becomes obvious. Providers of structure depend on those who need structure just as much as those without structure depend on those with enough to share. Those who provide structure also provide examples of having enough structure, providing others with structure and seeing what structure to provide.

The providers of structure offer an alternative space to come inside and play around a bit. They show a way to join the game that provides the right kind and amount of structure to those in need. The space supports requests for structure and resourceful responses to those requests. The dynamism of "ask and receive" works both ways for the givers and takers in the moment. Everybody gets their needs met and those needs evolve in the process. The middle ground works both ways for all the participants. Everyone takes turns requesting/receiving responses and responding/reciprocating. The problems of excesses work themselves out indirectly on this common ground of shared interests.

Finding customers in their space

It's easy to find customers outside their own space. This is really bad news for any of us wanting to spawn disruptive innovations and create new market spaces. Outside their own space, customers will say anything to get attention, get approval or get rewarded. They dish out tons of misleading information when they fill out customer satisfaction forms, get interviewed by marketers or attend focus groups. The customers do not think outside their own space like they do inside their space.

To develop innovations that create more demand, we need to start where they customers are really at. Where they say they're at is not it. Actions speak much louder than words. Customer-talk comes cheaply. In their own space, customers will show us what difficulties they're having, what problems have been left unsolved and what is not working for them. They will also reveal how they get by with what they've got, cope with their adversity and adapt to their situation as best they can. If we have the eyes to see and ears to hear, customers show us how to serve them when they are in this space. We get where they are really at and how to make a difference in that space. We're conceiving of solutions to the problems they are currently experiencing, rather than chasing after what they say they want or say are their preferences.

I've found it's far better to visualize this challenge as spaces than as "untapped demand", "non-consumers" or "niche market opportunities". When we're speaking of spaces, it's much easier to see where the customers are at, where we're coming from and how to get to them in their space. We stop assuming any input from customers is valid. We first question whether we've found potential customers inside or outside their own space.

When we've found potential customers in their space, we're in a much better place than most inventors and marketers. We're setting up a value proposition that sells itself, rather than a tough sell that takes tons of convincing, promotion and sales expenditures. We coming from that place that speaks their minds, tells their stories and supports their aspirations. We give the potential customers the experience of feeling understood. They give us the same in return. They understand we want to make a difference and make a sale. They feel we deserve respect, trust and cooperation since we've given them that experience from the start. They meet us in this good place we're coming from to get where they are really at.

Creating new market spaces

We begin in a market space where there is a demand for new information. Lots of varied information providers come to this space with their wares. The most prolific providers offer information that is so new, that it is new to everyone and gets called the latest "news". Others provide new information that is targeted to specific niches in this market space that need cutting edge data in their fields of endeavor. The remaining provide information that is new to those consumers who are getting an education or preparing themselves for new pursuits, but not new to others who are already informed. All the entrants to this market space take the demand for new information at face value. The market demands new information and so that's what the providers deliver consistently, reliably and unquestioningly . The value is presumed to be in the newness or in the information itself. The value is considered to be "extrinsic", meaning it's external to those users of the information or the newness of it.

Innovators create new market spaces. The established market spaces appear to be overcrowded. The value propositions appear flawed, limited, shortsighted or bogus. The journey to create a new market space begins with a trip to a space of inquiry and discovery. The value propositions, delivery systems and market demand all need to be questioned in this space. Assumptions get challenged, Nothing gets taken for granted. Possibilities get explored as if different what-if questions will reveal new avenues of adventure. Suspiciousness generates new theories, hypotheses and scenarios.

My own exploration of this inquiry space has uncovered a bunch of possibilities. Here's a few of them:

1. The demand for new information disregards the contexts of end usage or the idiosyncratic functions of that information for those who consume it.
2. Many are using the new information for thrill seeking, escaping their inner conflicts and distracting themselves from what's on their baggage-laden minds.
3. New information is easily forgotten if it does not get followed by personal reflection, application or conversation.
4. New information is not nearly as useful as more accessible, memorable or engaging information.

These hypotheses lead to be new market space with a different demand profile. In this space, people don't need new information so much as they need information that:

1. comes at a good time for them personally
2. ties into well to what they are already considering or trying to resolve
3. gives them more to think about and relate to their current understandings
4. spawns new inquiries and discoveries in their intrinsically motivated quest for new comprehension and capabilities
5. sets them up to be helpful to others in their network who have made requests, revealed needs or posed problems
6. supports unlearning what they've incorrectly assumed or over-simplified in their minds
7. relieves the stress of getting bombarded with too much information of no immediate use, relevance or connections

Meeting this demands calls for non-print, non-broadcast and non-news providers. The value will be created intrinsically, in the eyes of each beholder. The uses of will be extremely varied, timely and appropriate for each user. Each user will be inclined to tell their friends. The demand in this market space will likely fit a pattern of increasing returns where more demand gets created by the initial demand. The new market space will get co-created with all the participants.

Killing the viral launch

This morning I was asked what I had learned from my reading of Viral Loop: from Facebook to Twitter, how today’ smartest businesses grow themselves by Adam L Penenberg. My first takeaway was how much work is involved in launching any new online venture that scales exponentially. The challenges posed to the IT crew are staggering. Projects that build infrastructure for three years prior to launch (like ning) are designed to scale far better than those that cobble some servers together at first and cope with scaling after it occurs. This posed a stark contrast in my mind between formal systems on dedicated platforms with user login protocols and informal systems that require no login and are free to be distributed over any and all social networking platforms.

My bigger takeaway dealt with four ways to kill a viral launch before it begins to takeoff. Each of these are approaches that closed minds would formulate confidently:

• Develop a delivery system for a product/service mix designed for end users. The interaction is completely over when the customers make use of it. There's nothing to share with others or invite others to join. Consuming products and services is the main activity.
• Keep the development process opaque to the public. Conduct design sessions, in house dialogues and internal debates in private. Avoid any process transparency that could inadvertently develop trust in the offering, identification with the team members or faith in their noble intentions. Keep people from talking about the evolving story in the quixotic product development process or the struggles in getting to launch.
• Offer complete answers, solutions and systems to the unreliable public. Leave nothing to chance, misinterpretation or tampering. Forestall any conversations that might question the value, interpret the offer creatively, challenge the propaganda insightfully or explore other innovative uses.
• Overcharge for the offering -- using the freebie as mere bait, deception and temptation. Eliminate any continual free use by forcing everyone to pay after an initial trial period. Preclude any large following where a small percentage value the premium version and subsequently pay for all the others.

To think this way, all we have do is close our minds. The details will take care of themselves. There no need to consider how to be controlling, how to dehumanize others or how to send the wrong message to eager early adopters. Keeping focused on the launch of the perfect product after a long production effort will do everything required to kill the viral launch.

Buffering the core technology

I've been working on the internal processes for the business model that gives college dropouts a second chance. As I've explored different ways to conceptualize those processes, I've come back to a favorite model of mine from the field of "sociotechnical systems". The model is comprised of a core technology that gets buffered by a requisite variety response capabilities to deal with environmental turbulence. Lets unpack that one piece at a time.

A core technology is something we want to keep doing regardless of changing circumstances. Our body functions are a core technology. We want to keep breathing, circulating blood cells, replacing dead cells, eating, etc. regardless of how crazy things get around us.

Environmental turbulence is the craziness unlike "business as usual" that can disrupt a core technology. Our body functions experience getting suffocated or stabbed with a knife as turbulence which jeopardizes our core technology of bodily functions.

Response capabilities deal with the environmental turbulence so the craziness does not disrupt the core technology. Our abilities to fight off attackers and evade confrontations are response capabilities that keep us from passing out or bleeding out.

Buffering the core technology occurs when we have enough different response capabilities (requisite variety) to deal with the full range of assaults we may encounter.

We each have many different core technologies in use personally. Production systems contain numerous core technologies also. When we're caring for others, there are core technologies between us that make it possible to have positive effects on others and ourselves. As I will explore in some of my future posts here, each of these core technologies can be buffered by response capabilities to avoid disruption by environmental turbulence.

Freedom from too much information

The abundance of free content gave me another idea for a possible scarcity to spawn a freemium business model. What if the abundance of free content gets old? What if we begin to experience the negative side of all that abundance? What if we begin to throw up red flags when we're feeling overwhelmed by the abundance like:

• I didn't ask for this information!
• This is too much information!
• I'm not ready for all this content!
• This comes at a bad time for me!

To throw up red flags like this is a healthy sign. We are exhibiting a sense of an independent self with healthy boundaries from recurring abuse. We've disentangled ourselves from entrapments that fail to honor, respect and value us. We are standing up for what represents who we intend to be and how we want to relate to the world. We are acting on choices found within rather than reacting with fear, guilt or obligatory limitations to what gets imposed on us.

Within this possibility, freedom from "too much information" is a new scarcity created by the abundance of content. The abundance is easy to come by, the freedom from it is not. It's no problem to drink from the fire hose. It's a big problem to shut it off or distance ourselves from getting blasted.

Within this possibility, the abundance of content is free. It then will be worth some added expense to:

• get information only when we request it
• get the right amount of information for our immediate purposes
• get the content when we're ready for it
• get to postpone receiving or inventory content for later use when the timing is right

This business model would then function as a disruptive innovation for enterprises that:
deliver content on it's own broadcasting schedule in formats that cannot be time-shifted
publish content in bound volumes that cannot be searched, tagged or bookmarked
aggregate large quantities of digital resources that do not support searches for personal uses
push too much content onto audiences that wanted "just a little for now"

The goal posts would then be moved. The game would be changed to providing answers to questions, responses to requests and possibilities to generate further questions. Free content would remain free, but freedom from it's timing, excesses and lack of selection options would be costly.

Free answers - costly questions

When we're formulating a "freemium" business model, we need to become well travelled along the boundary between abundance and scarcity. Any new abundance creates new scarcities while rendering previous scarcities as obsolete, contrived or controlling. The new abundance also heightens our appreciation of the potential value, benefits and uses of a new scarcity. We recognize how some of the new scarcity is cheap, over-priced or useless.

This morning I've been exploring how "quality questions" might become the new scarcity amidst the abundance of free content, answers, finds, resources and solutions. It initially occurred to me that there are plenty of cheap questions, throwaway questions and unrewarding questions. We don't need "consumer education" to recognize questions that create value while satisfying our love our mysteries, adventures and ongoing explorations.

I then realized that most of my best questions have dawned on me in the midst of intense thought processes. Questions seem to arise like emergent outcomes of complex adaptive systems. When I'm describing this process I say things like:

Reflecting on all those recent developments that I'm seeing suddenly gave me a new question to explore.
Changing my point of view revealed a new question I was not previously considering.
Making use of that new concept raised a whole new set of questions for me to get answered.
Comparing these alternatives uncovered many deeper questions to ponder.

When I'm saying things like this, I'm expressing a profound appreciation for quality questions. I regard them as relatively scarce compared to the abundance of further explorations. I value them as gifts, treasures and gems. The value of these questions seems genuine to me, not artificial, contrived or hyped. I'm using the questions to support processes that I trust while get me where I want to go.

I then entertained a new question: could the right kind of question change our minds? I thought of several different ways to ask the question:

• How can challenging questions open closed minds that have adopted a stance of "no further questions your Honor"?
• How could an insightful question shatter long-held assumptions which have denied the reality of the situation?
• How can penetrating questions revise reasoning that has relied on "either/or" binary explanations?
• How could several disturbing questions transform a draining vicious cycle into an energizing virtuous cycle?

I then noticed how I was framing valuable questions as challenging, insightful, penetrating and disturbing. I was setting myself up to appreciate scarce questions, discriminate between different qualities of questions, and regard the right questions for the job as inherently useful. By seeking valued outcomes from my use of questions, I was both open to benefiting from the abundance of answers and guarded against cheap, throwaway and unrewarding questions.

This seems to me like the start of a freemium business model that works with "content wanting to be free".

Forecasting the flip

Another way to assess the likelihood of scaling an innovation eluded my searching yesterday. This morning I found it in Chapter Four of the book: Disrupting Class - How disruptive innovation will change the way the world learns by Clayton Christensen, Michael  B. Horn and Curtis W. Johnson. In the words of the authors:

It turns out there is a way to forecast the flip. ... one must plot on the vertical axis the ratio of market shares held by the new, divided by the old (if each has 50 percent, this ratio will be 1.0). Second, the vertical axis needs to be arrayed on a logarithmic scale—so that .0001, .001, .01, .1, 1.0, and 10.0 are all equidistant. When plotted in this way, the data always fall on a straight line. If the first four or five points do not lie in a line, it is a signal that there is no compelling driver for substitution. But the line is always straight if a disruption is occurring. Sometimes the line slopes upward steeply, and sometimes it is more gradual. The reason the line is straight is that the mathematics "linearizes" the S‑curve. When the substitution pace is plotted in this way, one can tell what the slope of the line is even when the new approach accounts for only 2 to 3 percent of the total. That makes it easy to extend the line into the future to get a sense of when the innovation will account for 25 percent,50 percent, and 90 percent of the total. We call this line a "substitution curve." (pages 97-98)

The compelling driver for "the innovation replacing the incumbent" is evident in the early market share data. Scaling of the innovation is simply the accumulation of the ongoing logarithmic increases. The S curve flips from "curving up" to "bending over". That turning point has been compared to "taking swings at beach balls where you can't miss", "getting caught up in a tornado" and "hitting the first bowling pin that knocks over all the others".