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A leading innovation and marketing blog from Braden Kelley of Business Strategy Innovation

Monday, October 27, 2008

BiF-4 Insights - Tony Hsieh - Zappos.com

We have a Kentucky warehouse with 4 million pairs of shoes.

Importance of striking an emotional connection with customers.

Tony started LinkExchange before selling it to Microsoft:
  • Sold it because it went from five people to 100 people

  • Hired people without the thought of cultural fit

  • After the sale, formed an investment fund and invested in 20 companies including Zappos.com

Now we have 9 million customers and a focus on having the best customer service:
  • We sell clothing, handbags, and electronics now

  • We also look at Virgin for inspiration

  • We give a lot of customers free upgrades to overnight shipping

  • Our number one growth driver is repeat sales and word-of-mouth (WOM)

  • We want to talk to our customers (we put an 800# on all of our web pages)

  • We run our warehouse 24/7 to maximize speed even though it is not the most cost effective way to operate it

  • We are focused on building lifelong relationships, not on maximizing transactions

Our number one priority is not customer service, it's company culture:
  • No call scripts, we hire well and trust our employees to serve the customers

  • Get the culture right to better control brand and customer service rather than planning every process

  • Treat customers like people (funeral and flowers story)

  • We do two different sets of interviews

    • Hiring manager and team

    • HR team does culture fit interview

    • Have to pass both interviews

  • We will also fire people if they are harming the culture

  • Everybody goes through the same four weeks of training, then weeks on the phone and one week in the warehouse in Kentucky

    • We have even fired people during training

Story about customer purchasing a wallet, trying it, and returning it:
  • The person left $150 in the wallet when they returned it

  • The person had been blaming their kids for the $150 disappearing

  • Warehouse worker sent letter to customer about the $150

  • Woman was very grateful and stopped thinking her kids took it

Core Values should be things you are willing to commit to, including your hire/fire decisions.

For more information on the talk, go here.


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BiF-4 Insights - David Rockwell - Architect

Consider the impact of calling someone to congratulate them versus e-mailing them.

In designing a building, he starts by talking to the people who will be living in the building and identifying what their experience might be (what would they like).

We have a lab focused on craft and technology. We know it is not a profit center, but we think it is important to our desired outcome of designing great spaces.

Design is about embracing the central core elements and infusing them throughout.

We only go to theater for the memory (from a speech on "Theater and Architecture" connections).

Reasons people come together:
  • A mission bigger than themselves

  • To connect to other people

I see more festivals happening in the near term:
  • An increasing need for public spectacle

Storytelling is still telling people whether or not they want to listen to it.

Importance of mocking up what's important to the people you are designing for.

Listening is important but prompting a key skill:
  • To try and pull out important insights from the interviewee

Latest mission is re-inventing playgrounds

For more information on the talk, go here.


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BiF-4 Insights - Dennis Littky - The Big Picture Company

Dennis was doing a great job as a high school principal in New Hampshire (dropout rate down, college rate up), but then a new conservative board came in and fired him for doing the same things that made him successful.

There a was a big drama over this and a book was written and titled "Doc" which unfortunately turned out to be the title of a book about a serial killer that came out at the same time, so the book was renamed "Teacher" and then years later, renamed to "Doc" again.

A movie was made from the book:

Then he was hired to create a new high school approach at the Met High School in the Providence area:
  • What's best for students? (Our mantra)

  • What would school look like if we closed our eyes and designed one from scratch

  • Classes three days a week and internships in the community on the other two days

  • The Gates Foundation then became aware of our school, visited and then asked him to create another 15 schools and funded their creation, then they came back and gave more funding for more schools

  • There are now 72 schools around the world (mostly in USA, but also seven in the Netherlands and two in Australia)

    • We were also asked to do a high school in Liberia

Now we are looking at re-imagining the college because of the high college dropout rates among minorities
  • Going to call it College Unbound

  • Partnering with Unity College

For more information on the talk, go here.


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BiF-4 Insights - John Wolpert - Best Buy

Impact of BBC Connections television program on his life (hosted by James Burke).

We have to share, but what do we share?
  • Do we know what we need to share?

  • It is one thing to share inventions, it is another thing to share intentions

An innovation changes how people organize, how they do business, and/or how people live their lives.

IBM Alphaworks:
  • Average lifespan of an innovation program is three years, maybe five years at the outside, but Alphaworks is now thirteen years old

  • Reason is the crossing of the membrane of the firm and connecting to external companies

    • This makes it more valuable and difficult to dislodge

Personal Journey
  • Alphaworks -> Extreme Blue -> Innovation XChange Network -> YCombinator

Extreme Blue is a ten year old talent program:
  • Reported to heads of HR, Technology, and Business Strategy

Innovation XChange Network in Australia
  • Hiring trusted intermediaries and implanting people into companies that could share with other implanted intermediaries but not with companies

  • We brought together a healthcare company and technology company looking for overlap

    • People started sharing nouns (their technology) and then crickets chirping

    • People wouldn't share their verbs (their intentions)

    • We should have brought the interns (experienced people have a hesitancy to share)

There are always that 1-3% chomping at the bit to start something new.

The talent program I've built for Best Buy involves some of the same keys as the Extreme Blue program I worked on for IBM:
  • 10 weeks

  • Live and work together

  • A small investment

    • Give people more money and they'll spend it

    • Restricting the investment and basing additional funding on meeting certain milestones is better

For more information on the talk, go here.


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Saturday, October 25, 2008

BiF-4 Insights - David Berry - Flagship Ventures

Sequoia Capital is asking CEOs (Partners) to take 20% pay cuts and people earning over $100,000 to take 10% pay cuts:
  • This is a really bad time to raise VC funds

  • Sequoia sees this slowdown lasting up to 8 yrs

Flagship ventures does traditional VC work, but also does building of companies from scratch or building of companies around a professor or innovation:
  • One example is LS9 - 60 people in South San Francisco

    • Sugar goes in and petroleum comes out

      • Uses e-coli bacteria that have been modified

What if you could turn CO2 into oil?
  • Joule Biotechnologies

    • Using organism created from scratch

Don't want to sell out to or take investment from big oil:
  • Other countries are interested in these technologies but also states in the USA because the inputs are otherwise waste products in states like Tennessee

We are also investing in genome sequencing and understanding genome mutations:
  • 60 year old male has hundreds of thousands of mutations at the cell level in the heart by this time of his life, and these are non-dividing cells...

94% of cancer deaths come from metastacies and yet we typically only treat the primary cause.

For more information on the talk, go here.


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BiF-4 Insights - Joe Coughlin - Age Lab (MIT)

We are going to be living longer but we haven't thought about how.

How do we realign individual behavior or expectations?

We enjoy living longer because we can do things.

How will transportation evolve?
  • 70% of Americans live with no access to public transport or a lousy level of service

How do we reinvent caregiving and self-care?

How are we going to define a flexible workplace and older people choosing to do a kind of work they haven't done?

How are we going to keep older workers trained and available?

For more information on the talk, go here.


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BiF-4 Insights - Richard Saul Wurman - Author and founder of TED Conference

Currently working on a project called 19.20.21
  • Founding principle is that it is currently impossible to compare city data or city maps across cities

This may seem crazy that you can't, but it was actually 99 years after the publishing of the Bible by Gutenberg before pagination was invented.

Storytelling must set context:
  • You must start from the point of view of understanding that people don't understand

Lack of information and understanding as a driver of social behavior
  • Reality is that a lot of people go into nursing homes because of incontinence

  • A lot of people aren't good care receivers

    • Through the eyes of the patient

    • Through the eyes of the caregiver

      • Looking through both eyes as a way for understanding

Title of his new book is "The Gap"

Tango = Curiosity + Ignorance
-> Nobody knows how ignorant they are like I do

Check out his fable from 1975/76 timeframe - sounds very interesting

Public information should be public
  • Available, understandable

"Department of waiting to be wanted"

For more information on the talk, go here.


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BiF-4 Insights - Blue Shirt Nation

Steve Bendt and Gary Koelling both came from an advertising background and so we went out and started pitching this idea we had of a social network for employees (Blue Shirt Nation)
  • Everyone we talked to was supportive and referred us to someone else, until we went in a big circle

  • But nobody wanted to put up any money

  • So we just went and built it on the open source Drupal and got two years of hosting for $100

  • Lawyers and HR said it looked fine

  • But we got a lot of feedback from the stores that said it sucked

  • Not unexpected because we didn't know what we were doing

  • People also came in and were trying to sort out what the power arrangement was in this community (Is this still top-down corporate?)

So we asked people "What would we have to change to make you tell other people to use it?"
  • We also discovered that the users are going to have to be in charge or we're screwed

  • People are going to have to volunteer to use it

  • Gradually we grew from 1,000 members to 2k to 12k to 15k to 24,000 members today

  • One of the key catalysts ended up being corporate making a change to the employee discount policy

  • People had no other place to voice their opposition so they came to Blue Shirt Nation

    • Change was announced on a Tuesday

    • But the story broke on Blue Shirt Nation the day before the announcement (Monday)

    • People voiced the business reasons why it shouldn't change (employee trial, improved product knowledge, improved advocacy, recruiting tool, etc.)

The employee discount controversy not only helped to make Blue Shirt Nation a success, but it also spawned an outburst of Wikis and Idea Marketplaces.

The controversy also helped people understand the additional sources of value from things like the employee discount and why they should view them as more of an investment than as a pure cost.

For more information on the talk, go here.


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BiF-4 Insights - Dave Kusek - Berklee College of Music

Technology has changed everything with music, which used to be free:
  • Radio (still free)

  • Records fixed music at a moment in time (hear the same song, played the exact same way, over and over)

  • TV led to mass-marketing of music

Artists as brands
  • People want to have relationships with artists not record companies

For more information on the talk, go here.


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BiF-4 Insights - Richard Satava - University of Washington

Permission to fail and not micro-managing R&D teams is key.

Have to think about shrink-wrapping maintenance and long-term service.

Operationalizing technology is not easy
- Many projects fail in operationalization

"Technology Readiness Levels"
- Learn More

Once a technology reaches consumer acceptance, potentially innovation stops.

Gas to induce suspended animation?
- Learn More

For more information on the talk, go here.


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BiF-4 Insights - James Ludwig - Steelcase

Gen Y Research:
  • We now will have four generations in the workplace at same time

  • How they work

  • How they interact

  • Tech savvy

  • Have a lot of experiences

  • They demand the best in technology immediately

  • Gen Y is more motivated by having access to the latest than by money

  • They also enjoy accessibility and collaboration

Collaboration is now part of the newer design schooling.

The youngest employees could have the best potential to teach CEO's how to successfully change culture.

"If you are 1-2 degrees off your course at the beginning, years down the line you are miles off-course."

Multi-generational teams (if you can pull it off) can be very capable and effective.

Designers gain insights and turn those into physical expressions:
  • What are the tools to describe conceptual work? (film, etc.)

Roger Martin - Design-based business thinking
  • Reliability-based people - They like title, etc.

  • Validity-based people - Seeking outcomes

Deliver the message in the language that can be heard.

Gen Y - "Alternative Postures"

"At work" versus "On work"

Flow Shifting:
  • multi-tasking a part of their time compartmentalization

"More important to have a distruptive point of view than a disruptive technology"

"How do we determine whether we have a powerful, distinct insight versus an imitative or idiotic one?"

For more information on the talk, go here.


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Thursday, October 23, 2008

BiF-4 Insights - Jason Fried - 37Signals

Jason Fried of 37Signals.com told a story about his decision to learn how to cook. What he found is that he ended up buying his cooking gear from people who were teaching him things. The cookbooks and the cooking gear were from famous chefs.

"Why don't companies have cooking shows?"

"Can you out-teach or out-share the competition?"

The 37signals hiring philosophy is not to hire people who don't use Macs or who make spelling mistakes on their resumes.

37signals tries to create an audience by teaching and sharing rather than spending money trying to reach people in the traditional manner.

"People are coming to us"

You can even create and stream video at places like justin.tv.

"We've put up about 100 essays on how we do things" - for free, but at the same time:
  • PDF -> $500k in income (packaged up free content)

  • Book -> We sell a few thousand a month (same free content)

  • Workshops -> about $1 million of income (same content - repackaged)

The importance of "saying no more than you say yes" in keeping products simple

For more information on the talk, go here.


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BiF-4 Insights - Alexander Tsiaras - TheVisualMD.com

TheVisualMD site will be useful for both physicians and consumers.

We are starting with hypertension and then will continue to build out the site one condition at a time.

I encourage everyone to check out the site.

Good use of storytelling to make things more compelling than the text-based competition.

"We need to inspire people to take control of their lives."

For more information on the talk, go here.


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BiF-4 Insights - Curt Columbus - Trinity Rep

Curt Columbus heads up Providence's Trinity Rep theater company and started off his talk speaking about Robert D. Putnam's book "Bowling Alone".

Here are some of they key insights from Curt's storytelling session:

"We lack places for random interaction."

"We sit on airplanes next to people we never talk to..."

"The end of democracy lies in that isolation from random interaction..."

Trinity Rep has instituted post-show discussions of the performance, theatergoer to theatergoer (no experts), and fully 30% of attendees now stay after to discuss with their fellow audience members what they just saw.

"The death of culture is when it becomes something you purchase..."

Trinity Rep is trying to move from a transaction funding model to an ownership funding model because people naturally show more care for the things they own than the things they rent. They are also trying to move from mass media selling to social selling, which begs the question:

Can selling to your base and explicitly asking them to help you expand it actually work?

For more information on the talk, go here.


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Tuesday, October 21, 2008

BiF-4 Insights - Mark Ecko Show 'n' Tell

Mark Ecko, leader of Mark Ecko enterprises gave a show and tell about how he came up with the Rhino as the symbol for the Ecko brand.

It was interesting to hear about how he went from airbrushing t-shirts in his garage in high school and a start as a pharmacy student at Rutgers to eventually creating a major urban fashion house.

Apparently the Rhino came from playing with Star Wars action figures as a kid and his friend getting a Ton-Ton for Christmas but him not getting one for Hanukah, so he used one of his father's driftwood rhinos and he always kicked his friend's Ton-Ton's ass when they fought.

He then told a story about how the Star Wars Storm Trooper hoodie (and other Star Wars licensed line came to be). Briefly:
  • Mark was in Japan and saw an unauthorized George Lucas action figure

  • He bought the action figure

  • Mark had bought a table at a fundraising event that George Lucas was attending or hosting (can't remember)

  • At the last minute, Mark couldn't go

  • Mark asked someone to send the George Lucas action figure in his place

  • Mark asked someone to get a picture of little George with George Lucas

  • This person made these somewhat unusual requests actually happen in his absence

  • Mark later contacted George Lucas and asked if he remembered this event

  • George Lucas did remember

  • Conversation continued and Ecko ended up getting license to do Star Wars clothing line

  • The Star Wars Storm Trooper hoodie now exists

The morals of the story?

  1. Don't be afraid to drop out of something safe and secure like pharmacy school if your passions lie elsewhere

  2. People love to hear good stories

  3. People build emotional connections to people and brands who tell good stories

  4. You can't tell good stories if you don't make memories

  5. Making memories requires two things - vision and chutzpah

  6. Turn these memories into stories and share them

If you make memories and tell stories that people can identify with (rhino story, Barry Bonds baseball) or be inspired by (storm trooper hoodie story, Air Force One tagging video), they will identify with or be inspired by your organization and maybe even help to promote it.

For more information on the talk, go here.


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Business Innovation Factory (BiF-4) Opening

Saul Kaplan, Chief Catalyst of Business Innovation Factory kicked off the conference and here are the key insights from his opening salvo to the innovation conference:

"It's time to stop admiring the problems."

"Innovation is not about invention, but about creating more value."
(a view I share)

"Find the opportunity in the grey areas inbetween our silos."

"Successful leaders will experiment with new ways of delivering value and test alternative business models."

Question from me:

Can organizations successfully run an experimental business organization in parallel with their current way of doing business, and then transform the organization to the new business model if it proves itself in the marketplace?

Who has done this successfully?

United and Delta both tried the first half of this strategy and failed.

Anyone have good examples of an organization that had a winning business model experiment and then successfully transformed the entire parent organization to match the experiment?

For more information on the talk, go here.


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Wednesday, October 15, 2008

Business Innovation Factory (BIF-4) - Day One

Day One at Business Innovation Factory (BIF-4) was quite interesting. The storytelling format was interesting and a bit of a departure from the canned Microsoft PowerPoint routine.

I will have to post my detailed thoughts tomorrow as I had to do a bit of work for my large software company and marketing agency clients before I could start blogging tonight. So in the meantime, here is a run-down of the Day One speaker line-up and what they spoke about:

  1. Saul Kaplan (Chief Catalyst - Business Innovation Factory)
    - Welcome

  2. John Abele(Co-Founder - Boston Scientific)
    - Finding the USS Grunion

  3. Mark Ecko (Founder - Ecko Enterprises)
    - How Ecko and its logo came to be

  4. Curt Columbus (Trinity Repertory Company)
    - The need for random interaction

  5. Alexander Tsiaras (Founder - thevisualmd.com)
    - Visual anatomy

  6. Jacqueline Novogratz (Founder - Acumen Fund)
    - Social capitalism

  7. Jason Fried (Co-Founder - 37Signals)
    - Building an audience

  8. Matt Cottam (Business Innovation Factory)
    - Nursing Home of the Future project

  9. James Ludwig (Steelcase)
    - Generation Y

  10. Richard Satava (Surgeon - University of Washington)
    - The importance of failure

  11. Dave Kusek (Berklee Music)
    - The impact of technology on music

  12. Gary Koelling/Steve Bendt (Best Buy)
    - Innovation by accident

  13. Richard Saul Wurman (Author, Founder of TED Conference)
    - The dearth of comparable city information

  14. Joseph Coughlin (MIT)
    - Meeting the demands of an aging population

  15. Lewis Gordon Pugh (Swimmer/Adventurer)
    - Saving the Arctic (1st distance swim at the north pole)

What will tomorrow hold?


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Blogging from Business Innovation Factory

This week I will be attending the Business Innovation Factory (BIF-4) conference in Providence, Rhode Island. The focus of the conference is of course innovation, but seeking to bring it to life with storytelling. I will do my best to bring you highlights from some of the most interesting stories and the most intriguing insights.

If you happen to also be attending this conference, look for me or send me your details via the "Contact Us" part of the web site, I'd love to hear:
  • What you think of the blog

  • Your thoughts on innovation

  • What you would like to see me write about

Happy Innovating!


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Sunday, October 12, 2008

Blogging Innovation Now Part of Innovation Community

We'd like to announce that Blogging Innovation is now part of the exclusive Innovation Community, where you'll find feeds and videos from today's top innovation luminaries.

Members can contribute to the discussion forum, upload their favorite innovation videos, suggest books for the community book shelf, or start a chat with other online members.

Join the community now!


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Follow Blogging Innovation on Twitter

If you'd like to be automatically notified every time Braden Kelley makes a new post to Blogging Innovation then please sign up to follow him on twitter at http://www.twitter.com/innovate and you'll be automatically notified every time he posts a new blog entry.

That way you'll be sure not to miss your chance to read and comment on the latest posts.

If you find this blog valuable please, recommend it to your friends, add it to your blog roll, post comments or suggest topics you would like Braden Kelley to write about.

Thank you participating in this innovation conversation with us.

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Saturday, October 04, 2008

Raising Expectations - A Hotel Innovation

People used to take it for granted that when it came to airlines and hotels that you bought an anonymous seat or room, and you bought site unseen. Then the traditional airlines came along and introduced seat picking applications that allowed you to pick exactly the seat you wanted or see how full a flight was (helpful if you're on the fence).

Now Homewood Suites has introduced the same concept to the hotel industry and taken it a step further by showing you photos of the room you might be choosing and how close it is to the ice machine or the elevator.

Some people may find room picking to be an incremental improvement, but I would like to make a case for this to be seen as an industry innovation, and here's why:
  1. It changes the conversation - It's no longer "is a room available", it's "what are my choices"

  2. It improves the customer experience - now the customer feels in control

  3. It improves transparency

  4. It increases the perceived value of the hotel's web site versus those of aggregators like Expedia or Hotwire

  5. Further enhancements could swing the industry balance of power towards hotels and away from airlines

So what do all of these things mean together?

Providing a customer with choices and transparency inspires trust, and increases follow-through. Customers who perceive that a hotel web site provides choices an aggregator does not are more likely to start and finish their purchasing journey on a hotel web site.

If customers start to place more emphasis on getting the hotel room they want first, then airlines might have to start advertising on hotel sites instead of the other way around. That would be a huge sea change, and boost the profitability of the hotels at the expense of the airlines.

Resort or view hotels should be looking at this development and pushing the envelope in this area. Imagine a video with all the boring bits cut out that showed the experience of driving up to the hotel, walking into the hotel lobby, to the room, into the room, looking around, checking out the view, and then relaxing. This could be quite compelling when shopping for a vacation or something a little special for your business trip.

Homewood Suites' efforts are a first step, who will take the next step?

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