I’m at the Linkshare Summit here in San Francisco and Stephen (President of Linkshare) is opening the sessions today. From past events, Stephen explains that Networking is the biggest request coming from previous shows, so this conference will have a networking ratio of 1:1 with affiliate & merchants. This is an excellent session, with Michael Schrage who is a brilliant speaker and captures his audience.
The theme of this year’s summit is “Innovation”. Stephen now introduces author Michael Schrage from MIT Media Labs, I’m going to try and cover his slideshow below:
I research the… “Behavioral Economics’ of Modeling, Experimentation & Innovation in Organizations, via their Models, Prototypes & Simulations. Behavioral Economics maps how people ACTUALLY behave, not how they are supposed to behave.
Our Goal: To transform how you perceive Innovative Risk Management.
Self-Segmentation:
Cheap Innovation
Cost Effective Innovation
Best Value Innovation
Critical Strategic Observation:
Innovation is a Means to an End.
Critical Innovation Emphasis:
From [Greater] ‘Creation of Choice’ to [Greater] ‘Value from Use’.
Means & Ends must result in better Alignment
Good ideas are WAY overvalued! Firms overinvest in ‘Good Ideas’, Strategic Analysis, “Voice of the Customer”, Validation Testing & Speed to Market.
‘Good Ideas’ are Cheap; Good Implementations Aren’t.
Transforming the Economics of Modeling, Prototyping & Experimentation Transforms “How We Invest”.
What is a Model? A relevant approximation of reality - THAT WE USE!
Where is the Model’s value? A ‘Cost-Effective’ ‘Relevant Approximation of Reality’ … that we ‘Cost Effectively’ can use.
Tesco Innovation Strategy:
Better for Customers
Cheaper for Tesco
Simpler for Staff
Ex-P&G CIO Steve David: “We do almost 100% of our concept testing online now”
Warren Buffet Redux: How can we buy $’s of innovation at 50% of the price.
Innovation Economics: 80% of the Information @ 20% of the cost/20% of the time.
What’s the nature of the Resistance? What the barrier to entry? Resistance is by far the clearest window into understanding The Firm’s internal economics of Innovation.
What we ostensibly have is a “Fear of Failure”. We are actually afraid of the cost of failure! So why do we (Really) model, prototype & Experiments? To cheap cheap cheapen, the costs & risks associated with failure = ROU = Reduction of Uncertainty. What kind of uncertainty? Validation, Costs, Trade-Offs, etc.
ROU for/with whom?
Innovators? Clients? Customers? Affiliates?
Spreadsheetification of Product/Process/Marketing Innovation makes the economics of experimentation of small enterprises is so much affordable than for large corporations.
Our Embarrassment of Riches: The more choices you have, the more your values matter.
So what “Innovation” Business are We now in? The experiments business. You need to be the CEO - the Chief Experiments Officer. The CEO’s deliverable: A Portfolio of Testable Hypotheses that Matter!
Twofers : Crafting NLHs (No Lose Hypothesis). Valuable whether or not it tests true or tests false.
In the network area, there is a move to Experiment & Scale, and away from Research & Development.
5×5 ‘X’-Teams - run to get innovation going in the organisation.
5 People/5 Days
5 Experiments
$5000, 5 weeks, $500,00 in growth or savings
Half of the ideas are usually terrible, but 3 or 4 are really good and help the organisation.
The Internet is the greatest medium for rapid prototyping & speedy simulation.
Great talk!
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