Outthinker Speech to Fortune Gazelles Growth Summit
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This is the one-your keynote we delivered to 600 entrepreneurs in Las Vegas on October 22, 2013. It outlines the key insights for how Outthinkers outthink strategic challenges.
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Outthinker Speech to Fortune Gazelles Growth Summit
- 1. Gazelles Growth Summit Las Vegas, NV October 2013 Kaihan Krippendorff www.kaihan.net www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 2. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 3. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 4. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 5. Ray Kroc www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 6. Mohammad Yunus www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 7. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 8. Tata www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 9. Thomas Edison www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 10. Betsy Johnson www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 11. Richard Branson Oprah Winfrey Dhirubhai Ambani Bill Gates Sōichirō Honda Charles Revson www.kaihan.net Elizabeth Arden Henry Ford 2013 Outthinker LL & Kaihan Krippendorff
- 12. Martin Luther King, Jr. Rosa Parks Mother Teresa Mahatma Gandhi Mohammad Yunus Margaret Thatcher www.kaihan.net Nelson Mandela Benjamin Franklin 2013 Outthinker LL & Kaihan Krippendorff
- 13. Mark Zuckerberg CEO, Facebook Arianna Huffington CEO, Huffington Post Elon Musk CEO, Tesla Motors Susan Lyne CEO, Gilt Groupe Cory Booker Mayor, Newark, NJ, USA Marissa Mayer CEO, Yahoo Wayne Gattinella CEO, WebMD Robert Keane Sabrina Herrera Cofounder, Genomma Lab CEO, Vistaprint Jeff Bezos Founder, Amazon.com Larry Page CEO, Google Ann Hand CEO, Project Frog www.kaihan.net Josh Linkner Founder, ePrize Tom Adams CEO, Rosetta Stone Mark Vadon Founder, Blue Nile 2013 Outthinker LL & Kaihan Krippendorff
- 14. “First they ignore you, then they laugh at you, then they fight you, then you win.” Mohandas Gandhi www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 15. The th 4 Option® The option beyond the obvious choices; the option others do not see, will not consider, and will not respond effectively to. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 16. Climb the walls Wait Go home www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 17. How can we predictably create a 4th Option®? www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 18. Two Standard Approaches Option narrowing Rules 1. 2. 3. 4. 5. 6. X X X Lay out options, apply data, arrive at the optimal option Alkdjfklsdlkj Asdlkfj bou Alsk boiuoidf Goibjhkal dgs Glijgbuu gds gljgoiud Follow proven rules or best practices www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 19. Five Conversations: The Outthinker Process Imagine Dissect Expand Analyze Sell Choose leverage points others overlook Generate more potential strategies Choose strategies competitors will not copy Build buy-in for your strategy Objectives Imagine and commit to realizing a different future www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 20. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 21. URBN Revenue History $ Millions 2,470 2,270 1,840 1,940 1,510 1,090 1,230 830 350 425 2002 2003 550 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Bloomberg & TIAA-CREF www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 22. URBN Results Growth Profitability 5Y Ave.* Revenue CAGR (%) 5Y Ave.* EBITD Margin (%) URBN 13 ANF** 5 Industry 5 20 12 14 * 5 years average as of October 2013 ** Abercrombie & Fitch, closest peer by market capitalization Source: Reuters www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 23. College students only Used clothing Artists not managers in charge Manager freedom Every store different … www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 24. The 8Ps Position Process Price Promotion Product Place Physical experience 0 – no difference 1 – 4 year difference 2 – 5+ year difference People www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 25. Survey www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 26. 8P tool on www.kaihan.net www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 27. How Do Great Strategists See the “Winning Move?” Alexandra Kosteniuk www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 28. Consciousness Phonetic loop Source: Visuo-special sketchpad ??? Baddeley model of short term working memory www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 29. Survey www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 30. Consciousness Phonetic loop Source: Visuo-special sketchpad Episodic buffer Baddeley model of short term working memory www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 31. Relative number of narratives chess players recognize: Grand master Master www.kaihan.net Expert 2013 Outthinker LL & Kaihan Krippendorff
- 32. Europe & Americas – Fairy tales Japan – Koan India – Puranas China – 36 stratagems www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 33. Identifying Outthinkers Revenue growth (CAGR) (EBITDA) Profit margin Value creation (TRS) www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 34. Core Research www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 35. Narratives to Find a Fourth Option #22 Move early to the next battleground #34 Coordinate the uncoordinated #7 Force two-front battle #33 Be good #32 Create something out of nothing www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 36. 22 Move Early to the Next Battleground www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 37. 22 Move Early to the Next Battleground “I just think a future in which anyone can shoot stuff into space is more exciting than one which only the government can.” Elon Musk, founder, SpaceX (2003 interview) www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 38. 22 Move Early to the Next Battleground www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 39. 22 Move Early to the Next Battleground Identify and move early to the next battleground. Where is the next battleground? - Technological trends? - Social shifts? - Geographies? - Buying patterns? - Needs? www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 40. Narratives to Find a Fourth Option #22 Move early to the next battleground #34 Coordinate the uncoordinated #7 Force two-front battle #33 Be good #32 Create something out of nothing www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 41. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 42. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 43. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 44. 34 Coordinate the Uncoordinated www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 45. 34 Coordinate the Uncoordinated www.kaihan.net 50 2013 Outthinker LL & Kaihan Krippendorff
- 46. 34 Coordinate the Uncoordinated Combine and coordinate independent elements within your environment to orchestrate much greater power. Who would we like to coordinate? - Customers - Experts - Employees - Real estate - Regulators - Competitors - Driveways -… www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 47. Narratives to Find a Fourth Option #22 Move early to the next battleground #34 Coordinate the uncoordinated #7 Force two-front battle #33 Be good #32 Create something out of nothing www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 48. 7 Force a Two-Front Battle www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 49. 7 Force a Two-Front Battle “There is no physical analog for what Amazon.com is becoming.” - Jeff Bezos Cloud providers Retail www.kaihan.net Cloud services 2013 Outthinker LL & Kaihan Krippendorff
- 50. 7 Force a Two-Front Battle Traditional CPA firms Resources (Accnts) www.kaihan.net Projects 2013 Outthinker LL & Kaihan Krippendorff
- 51. 7 Force a two-front battle Project your unique capability into a new area. What is your unique advantage/ capability? Into what new area could you project this? www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 52. Narratives to Find a Fourth Option #22 Move early to the next battleground #34 Coordinate the uncoordinated #7 Force two-front battle #33 Be good #32 Create something out of nothing www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 53. 33 Be Good Shareholders Environment Community Corporation Government / country Employees Customers www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 54. 33 Be Good www.kaihan.net 59 2013 Outthinker LL & Kaihan Krippendorff
- 55. The Holstee Manifesto www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 56. 33 Be good Adopt a strategy that Benefits others. How can you profitably benefit key stakeholders that you are not now considering? www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 57. Narratives to Find a Fourth Option #22 Move early to the next battleground #34 Coordinate the uncoordinated #7 Force two-front battle #33 Be good #32 Create something out of nothing www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 58. 32 Create Something Out of Nothing www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 59. 32 Create Something Out of Nothing Julie Pickens www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 60. 32 Create Something Out of Nothing Ingvar Kamprad www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 61. 32 Create Something Out of Nothing www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 62. 32 Create Something Out of Nothing www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 63. 32 Create something out of nothing Add a new piece the board. What would you like to create/ add to the game? - New categories? - New occasions or needs? - New customers? - New suppliers? - New distributors? - New regulations? www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 64. Find More Stratagems at www.kaihan.net www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 65. Narratives to Find a Fourth Option #22 Move early to the next battleground Where is the next battleground? #34 Coordinate the uncoordinated Who could you coordinate? #7 Force two-front battle How can you project into a new sector? #33 Be good How can you be good? #32 Create something out of nothing What can you create? www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 66. “Impossible is a word to be found only in the dictionary of fools.” Napoleon Bonaparte www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 67. Make the impossible possible “Each of these looked like show stoppers” Don’t build handsets Risk of no WiFi David Morken, CEO Bandwidth.com www.kaihan.net Motorola Early adopters Customer Service too costly No one provides service 2013 Outthinker LL & Kaihan Krippendorff
- 68. “It's not that I'm so smart, it's just that I stay with problems longer.” - Albert Einstein www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 69. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 70. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 71. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 72. Ray Kroc www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 73. Mohammad Yunus www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 74. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 75. Ratan Tata www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 76. Thomas Edison www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 77. Betsy Johnson www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 78. kk@kaihan.net www.kaihan.net @kaihan • Register for newsletter, tools, videos • Work out your Fourth Option® • Email me to get presentation • Contact us at Outthinker for more support www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 79. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 80. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 81. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
- 82. www.kaihan.net 2013 Outthinker LL & Kaihan Krippendorff
Editor's Notes
- Outthinkers see these strategic options others don’t see. For example…
- 5 Archetypes Who Get In The Way Of Big IdeasWe’re crossing Mongolia at 660 mph, down from the North Pole toward Singapore, a continuation of an incredible week facilitating 13 strategy sessions, guiding groups toward finding bold, disruptive strategic ideas: fourth options.Whatever you are building--a house, a business, a career, a society--life will ask you to make choices. Wood floors or carpet? Price per hour or day? You can make the obvious choices, building what others have already built. But that never leads to greatness. To create something new, unique, special, you want to be prepared to make a few unorthodox choices. Greatness depends on looking beyond the three obvious options and choosing the fourth option.In Singapore, where I am headed now, the former prime minister, Lee Kwan Yew, took a third-world nation with a GDP per capita of $300 and transformed it into a first-world one, with a GDP per capita of $50,000. He did this by choosing several fourth options such as adopting English rather than Chinese as the national language; paying government workers market salary levels when most countries consider it near charity; preferring order over freedom. Regardless of how you personally feel about Singapore’s choices, they point to a central fact: If you want to create something great, you and your team must have the guts to choose fourth options.As you guide your organization toward finding fourth options, five people will emerge to stand in your way. Look out for them, then get them out of your way. Otherwise you will end up a lemming, a follower, repeating what others have done before.Mr. PracticalTo get your team to see innovative options, you must first allow them to dream. But there is someone on your team, Mr. Practical, who narrows your team’s vision. He wants them to attack the immediate hurdles first. He says, “We don’t have time to dream right now,” or “What we need to do is solve ABC issue,” or “If we don’t solve this problem, we’ll never even survive until tomorrow.” His aim is a good one--to keep your team from overlooking what must be done today. He will have his time, but not at the beginning. Remember, we cannot create what we cannot imagine. You must first imagine a great future to create the possibility of being great.Mr. ObviousAfter imagining a different future, your team will then settle on where to look for the answer. There is the obvious answer, the center of the system, but often the breakthrough ideas come from looking for answers where others do not. Mr. Obvious is confident because he has seen this problem before, and he has solved it. If he is a marketer, he sees a marketing solution. If he is in operations, this is an operational problem. Like a child with hammer seeing everything as a nail, Mr. Obvious knows exactly where the team should bang away for a solution and grows impatient when they want to explore new territory.Mr. ExpertAfter seeing a new area to explore, you team must then create potential solutions. The more possibilities they create, the greater the likelihood they will find a fourth option. But inevitably someone emerges to cut off their flow. The conversation devolves into a pattern of “What if we did this,” followed by, “We’ve tried that before.” Mr. Expert has seen it all and needs to prove it. His cup is full and cannot fit new ideas. He cannot accept the idea that a group of novices could sit down and find an elegant solution to a problem that he and his expert peers have struggled to solve for years. So, consciously or unconsciously, he won’t let that happen.Mr. What WorksAfter creating possible solutions, your team will want to select a few to work through. This is where Mr. What Works steps in. He knows that whatever problem you are solving has been solved before and so sees it as preferable to go with the solution that works. When your team wants to explore a radically different idea, he says, “Why waste our time thinking that through when we know that simply doing ABC, like so-and-so did before, works?” Great solutions require us to unravel what at first seems impossible, which requires us being willing to set aside, at least temporarily, the solutions that have worked before.Mr. CogIf the idea your team settles on is innovative at all, it will exist in conflict with some prevailing beliefs and assumptions. To get people to buy into the idea--to get a budget, win over your sales force, get distribution--requires you to shape existing dogmas. Mr. Cog sees you as a cog in a wheel, who must roll in the direction the boss directs you. He says, “They’ll never agree to this,” and so wants to give up or take the idea elsewhere.Look out for these five naysayers. Get Mr. Practical to dream, Mr. Obvious to explore, Mr. Expert to empty his cup, Mr. What Works to consider, and Mr. Cog to seize the power your team truly has. You will soon be devising fourth options that disrupt the competition, generate new revenue, solve impossible problems. If it seems like work, picture the soaring glass skyscrapers of Singapore and remember that without the willingness to make unorthodox choices, those buildings might be rice patties and slums.
- Outthinkers see these strategic options others don’t see. For example…
- If we choose a starting year and an initial slate of companies in the Fortune 500 for that year, we can see at each successive year the number of original companies that still remain. Due to the constant change in the economy, this will necessarily decline. By choosing different starting years and plotting the curves of the decline from year to year, we can see how the pace of this turnover has quickened. For example, the list of Fortune 500 companies in 1955 (black curve) declines far more slowly than the list beginning in 1975 (red curve).
- Insight 1: 8Ps not 1. Say "in comparison to" one big idea/ a big bet … no … it is actually lots of Fourth Options. 6 min exercise using 8Ps tool. Transition: so then the Q is HOW do we come up with fourth options?
- The 8 Ps is an interesting framework to think about innovation and where it can come from.Who has heard of the 4Ps of marketing? We simply added 4 more. Notice at the top is position and at the bottom is people. Why would we do that? Positioning: how does the company position itself differently than the competition in the minds of its customers? What characteristics do the company’s clients closely associate with that company? Urban Outfitters (URBN) is the only retailer of its size focused almost exclusively on college students and the only chain that achieves a type of localization in which every store looks a little different than the other. The store near Harvard University looks & feels different than the store near Stanford University.Product: what product features, design elements, and capabilities are unique relative to the competition? These can be things that are protected by intellectual property rights or not. Urban Outfitters sells used clothes and for new clothes it separates merchandizing from design so that URBN’s designers cannot be sure that stores will carry their designs.Processes: what unique processes differentiate the company from its competitors? Process innovations are often overlooked as tactical and operational but they can lead to meaningful and long-term advantages.URBN allows store managers to make decisions on what the store will sell and how it will satisfy customer issuesPhysical experience: how is the sensory experience of the company’s customers different than that of its competitors? Do they see, hear, feel, smell, or taste something different?URBN, mentioned above, is able to make every store a little different while its large competitors make every store look and feel the same.People: what people’s policies in uniqueness does the company implement that support its differentiation? People are the foundational support of the company’s strategy. This dimension includes all elements of the people’s equation including how people are recruited, trained, engaged, and incentivized.Urban Outfitters hires managers from art programs rather than business schools and choose them based on their aesthetic skills rather than their proven management skills.
- The 8 Ps is an interesting framework to think about innovation and where it can come from.Who has heard of the 4Ps of marketing? We simply added 4 more. Notice at the top is position and at the bottom is people. Why would we do that? Positioning: how does the company position itself differently than the competition in the minds of its customers? What characteristics do the company’s clients closely associate with that company? Urban Outfitters (URBN) is the only retailer of its size focused almost exclusively on college students and the only chain that achieves a type of localization in which every store looks a little different than the other. The store near Harvard University looks & feels different than the store near Stanford University.Product: what product features, design elements, and capabilities are unique relative to the competition? These can be things that are protected by intellectual property rights or not. Urban Outfitters sells used clothes and for new clothes it separates merchandizing from design so that URBN’s designers cannot be sure that stores will carry their designs.Processes: what unique processes differentiate the company from its competitors? Process innovations are often overlooked as tactical and operational but they can lead to meaningful and long-term advantages.URBN allows store managers to make decisions on what the store will sell and how it will satisfy customer issuesPhysical experience: how is the sensory experience of the company’s customers different than that of its competitors? Do they see, hear, feel, smell, or taste something different?URBN, mentioned above, is able to make every store a little different while its large competitors make every store look and feel the same.People: what people’s policies in uniqueness does the company implement that support its differentiation? People are the foundational support of the company’s strategy. This dimension includes all elements of the people’s equation including how people are recruited, trained, engaged, and incentivized.Urban Outfitters hires managers from art programs rather than business schools and choose them based on their aesthetic skills rather than their proven management skills.
- Chess Champion Alexandra Kosteniuk is known for performing something of a media stunt. She lines up 15 chessboards and invites 15 players to sit in front of each one. They sit and look at the chess boards while she stands and moves from one to the next. When she has played her first move for each of the 15 games, she starts over with the first one and makes her second move. This gives each of her opponents a lot of time to think about their next move, whereas she only has a few seconds. She usually wins all of her matches. She is able to look at the board and know the winning move even though her opponent cannot see the move. She is using her repertoire for strategic framing to perform a mathematical trick; she sees a pattern in how the other is playing the game and says: “I’ve seen this before, and the way to win is to…”What enables some innovative thinkers to see solutions that others overlook? The answer is that they overcome a mathematical problem by deploying the mental trick. Studies of expertise and expert performance give us insight into how they do this. If you are playing a game that requires onlythat you consider five options, you can easily think through those options. If you are playing a more complex game, however, one in which you must consider 30 or 100 possible options, you run out of short-term working memory capacity, and your mind then starts hiding options from you. It simply doesn’t have the capacity to show them all. Experts are able to implement more complex strategies by applying a “chunking” process. While a novice might think about moving a specific piece to a specific space on the chess board, his expert opponent is thinking about applying higher order approach. Experts play with more higher order patterns or “strategic narratives” than novices do. To enable you and your team to see options that your competition does not see, you also want to play with the larger and more diverse repertoire of patterns. This means your ability to see strategic options that others don’t see has little to do with your innate intelligence or how creative you are. It is simply a function of the number and variety of frames or narratives you bring to the game.
- Most humans are able to retain between five and nine items in their short-term working memory. If you go to a grocery store, for example, and only have to buy five things, you may not need a grocery list. But if you have to buy 15 things and do not write a list, you’re probably going to forget something. We can really only remember 7 items at a time, +/-2. That’s why phone numbers were originally (before area codes) seven digits. We remember them in three basic ways. Let me give you a number to remember: 60952. Now, how many of you are repeating that number in your head: 60952, 60952…?That’s using the phonetic loop method. Now, how many of you are picturing the number in your head? For those, you are using the visuospecial sketchpad method. Now, how about if I asked you to remember the number 2468?You would probably be using another method; in fact if I wanted to add a number to that combination, you could probably anticipate what that number would be, which is?This we call the episodic buffer; or strategic narratives. It’s about the story. Seeing the number as a story, you say to yourself “I’ve seen this before” and record it as such, even anticipating what will come next!
- The 8 Ps is an interesting framework to think about innovation and where it can come from.Who has heard of the 4Ps of marketing? We simply added 4 more. Notice at the top is position and at the bottom is people. Why would we do that? Positioning: how does the company position itself differently than the competition in the minds of its customers? What characteristics do the company’s clients closely associate with that company? Urban Outfitters (URBN) is the only retailer of its size focused almost exclusively on college students and the only chain that achieves a type of localization in which every store looks a little different than the other. The store near Harvard University looks & feels different than the store near Stanford University.Product: what product features, design elements, and capabilities are unique relative to the competition? These can be things that are protected by intellectual property rights or not. Urban Outfitters sells used clothes and for new clothes it separates merchandizing from design so that URBN’s designers cannot be sure that stores will carry their designs.Processes: what unique processes differentiate the company from its competitors? Process innovations are often overlooked as tactical and operational but they can lead to meaningful and long-term advantages.URBN allows store managers to make decisions on what the store will sell and how it will satisfy customer issuesPhysical experience: how is the sensory experience of the company’s customers different than that of its competitors? Do they see, hear, feel, smell, or taste something different?URBN, mentioned above, is able to make every store a little different while its large competitors make every store look and feel the same.People: what people’s policies in uniqueness does the company implement that support its differentiation? People are the foundational support of the company’s strategy. This dimension includes all elements of the people’s equation including how people are recruited, trained, engaged, and incentivized.Urban Outfitters hires managers from art programs rather than business schools and choose them based on their aesthetic skills rather than their proven management skills.
- Most humans are able to retain between five and nine items in their short-term working memory. If you go to a grocery store, for example, and only have to buy five things, you may not need a grocery list. But if you have to buy 15 things and do not write a list, you’re probably going to forget something. We can really only remember 7 items at a time, +/-2. That’s why phone numbers were originally (before area codes) seven digits. We remember them in three basic ways. Let me give you a number to remember: 60952. Now, how many of you are repeating that number in your head: 60952, 60952…?That’s using the phonetic loop method. Now, how many of you are picturing the number in your head? For those, you are using the visuospecial sketchpad method. Now, how about if I asked you to remember the number 2468?You would probably be using another method; in fact if I wanted to add a number to that combination, you could probably anticipate what that number would be, which is?This we call the episodic buffer; or strategic narratives. It’s about the story. Seeing the number as a story, you say to yourself “I’ve seen this before” and record it as such, even anticipating what will come next!
- Research into this expertise and expert performance has actually been measured. Master chess players recognize twice as many patterns as when they took up the game; grand masters are able to recognize 10 times as many.For us, it’s a matter of how many strategic narratives can we bring to the game to find our fourth option and strategic differentiators.
- When we hear “Trojan Horse”, we don’t just see a horse but know the story that comes with it. Those stories in America & Europe are known as “fairy tales”, in Japan, India other names. Kaihan Krippendorff’s research uses the “36 Stratagems” as the foundation of these stories or narratives. For the past 12 years, he has been working with this set of “strategic narratives” found in an ancient Chinese text called the 36 Stratagems. This collection of strategic metaphors was written sometime between 500 and 1500 A.D. Nobody knows the author of the stratagems. They were developed over a period of 1000 years through the process of oral tradition. Our research into the competitive dynamics of corporate competition indicates that the stratagems represent a complete vocabulary for describing and managing competition.
- Space X was founded in 2002. Kaihan interviewed him one year after the founding. From Wikipedia: Space Exploration Technologies Corporation, or SpaceX, is a space transport company headquartered in Hawthorne, California. It was founded in 2002 by former PayPal entrepreneur Elon Musk. It has developed the Falcon 1 and Falcon 9launch vehicles, both of which were designed from conception to eventually become reusable. SpaceX also developed the Dragon spacecraft to be flown into orbit by the Falcon 9 launch vehicle, initially transporting cargo and later planned to carry humans. On 25 May 2012, SpaceX made history as the world's first privately held company to send a cargo payload, carried on the Dragon spacecraft, to the International Space Station.[4]In order to control quality and costs, SpaceX designs, tests and fabricates the majority of its components in-house, including the Merlin, Kestrel, and Draco rocket engines used on the Falcon launch vehicles and the Dragon spacecraft. In 2006, NASA awarded the company a Commercial Orbital Transportation Services (COTS) contract to design and demonstrate a launch system to resupply cargo to the International Space Station (ISS). On 9 December 2010, the launch of the COTS Demo Flight 1 mission, SpaceX became the first privately funded company to successfully launch, orbit and recover a spacecraft. On 22 May 2012, SpaceX's Falcon 9 rocket carried the unmanned Dragon capsule into space, marking the first time a private company has sent a spacecraft to the space station. The unmanned, cone-shaped capsule became the first privately built and operated vehicle to ever dock with the orbiting outpost.NASA has also awarded SpaceX a contract to develop and demonstrate a human-rated Dragon as part of its Commercial Crew Development (CCDev) program to transport crew to the ISS. SpaceX is planning its first crewed Dragon/Falcon9 flight in 2015, when it expects to have a fully certified, human-rated launch escape system incorporated into the spacecraft.Besides NASA contracts, SpaceX has signed contracts with private sector companies, non-American government agencies and the American military for its launch services. It has already launched, for a paying customer, a low earth orbiting satellite with its Falcon 1 booster in 2009.[5] The company plans to launch its first commercial geostationary satellite in 2013 from a Falcon 9.Future projects that are in the planning stages or in development include the Falcon Heavy launch system, as well as a NASA robotic mission to Mars in 2018. The Heavy is based on Falcon 9 technology, and if construction goes as planned, it will be the most powerful rocket in the American inventory since the Apollo-era Saturn V. Falcon Heavy can be used to send a crewed Dragon spacecraft on lunar orbiting missions – such as the Apollo 8 mission; or be used to send a modified unpiloted Dragon on a Mars landing mission. Musk has stated that his intention for the company is to help in the creation of a permanent human presence on Mars.Elon Musk has stated the personal goal of eventually enabling human exploration and settlement of Mars.[21] He stated in a 2011 interview that he hopes to send humans to Mars' surface within 10–20 years.[21]As of May 2012[update], SpaceX has operated on total funding of approximately $1 billion in its first ten years of operation. Of this, private equity provided about $200M, with Musk investing approximately $100M and other investors having put in about $100M (Founders Fund, Draper Fisher Jurvetson, ...).[22] The remainder has come from progress payments on long-term launch contracts and development contracts. As of April 2012[update], NASA had put in about $400–500M of this amount, with most of that as progress payments on launch contracts.[23
- Power To The People: New Mobile Apps Connect Buyers And Sellers On The Go The Smartphone boom helps clever companies turn ephemeral real-world resources into marketable goods.By Farhad Manjoo | May 18, 2011Chad Mayer and Omid Saadati met at a Bay Area coffee shop about a year ago, and the two young entrepreneurs immediately began talking about what everyone in San Francisco talks about when they first meet: how long it had taken to find parking. "We'd both been going around and around the block, and we'd seen all these prime parking spaces that we couldn't use," Meyer says. The prime spots were privately owned – driveways, carports, parking lots attached to apartment buildings – and many were unoccupied while their owners were off at work or on vacation or just out to the store. "We thought, wouldn't it be great if there was some way that we could communicate with those owners and say, 'Hey, here's 10 bucks, here's 20 bucks. Can I just park in your space for two hours while I go to a restaurant?'"In January, Meyer and Saadati launched Park Circa, a service that does just that. An owner registers his parking space, its availability, and his asking price on the site; drivers use their smartphones to search for spaces while they're looking for a spot. When a parker sees one in her price range, she checks into it on her phone. After she checks out, Park Circa transfers her payment to the owner, taking a 25% cut of its own. "We made it a simple process," Meyer says. "It doesn't require much work from anyone.“Park Circa is an example of a new trend in startups: Call it "people commerce," because in Silicon Valley, no new trend is worth mentioning unless it's been blessed with insider jargon. When we consider the economic potential of smartphones, we usually think of ways our phones will help us connect to the likes of Starbucks, Gap and Home Depot. But the bigger story may be in how they give us the power to digitize the real world – to catalog the price and real-time availability of things that some people own and other people want, but which have so far been logistically impossible to trade.Urban parking spaces are a classic example. There are about 320,000 census-defined households in San Francisco, and while 30% of them own no cars, the rest of the city owns enough vehicles to make up for the abstainers, meaning that on average, there's more than one car per household in the city. Yet there are only about 280,000 street-side parking spaces available. Meyer argues that if it works, a system like Park Circa could revolutionize parking in cities – suddenly, there'd be tens of thousands more spaces available, while owners would make money on their otherwise empty spots.Indeed, people commerce has the potential to solve some of our most vexing transportation problems. A startup called Avego is one of several firms looking to reinvent carpooling through mobile apps. Not only does it let drivers and riders find each other on their phones, but it also – crucially – seamlessly splits the costs of the ride between them. Another company, Uber, wants to streamline the private-car business by allowing drivers with cars and free time to offer up their services to those who need a ride.For companies looking to connect buyers and sellers on the go, the biggest hurdles might not be technological – they're more likely to be social and, in some cases, even legal. Park Circa is still in a very early beta phase, and Meyer says the main obstacle to its success is convincing homeowners that it's safe to let strangers use their parking spots. In some ways, then, people commerce might resemble the early days of trying to get people to buy stuff on the web. How scared were you the first time you bid on an eBay auction?That wariness didn't last long. By developing reputation and insurance systems, sites like eBay and StubHub were able to create new marketplaces between ordinary folks. Mobile people commerce will likely evolve in the same way – and because it's everywhere, all the time, it could prove to be a much bigger deal.
- Autodesk: The Secret Star Behind Oscar-Winning Visual EffectsBy E.B. Boyd | February 25, 2011No matter which film walks away with the Oscar for Best Visual Effects on Sunday, one organization that has previously made Fast Company’s Most Innovative Companies list will be a clear winner: Autodesk. Every single movie nominated this year—from Alice in Wonderland to Harry Potter and the Deathly Hallows, Part 1, [from]Hereafter to Inception to Iron Man 2—used its software to craft some portion of their effects.And while Autodesk is best known for its architecture tools, less well known is its Media & Entertainment line of products, which are used to create effects in films, television and video games. The tools are so [highly] valued within the industry that they have been part of the toolbox used to construct scenes in every single film that has won Best Visual Effects at the Academy Awards in the last 15 years.Autodesk’s MotionBuilder, for example, was central to last year’s Avatar. The tool was able to instantly transform the motion data it was capturing into an image of what the characters and scene would look like in the final film. So while Sam Worthington and Zoe Saldana romped around the set in black suits and funny-looking headgear, director James Cameron could watch a monitor where blue Na’vi characters were performing the scene against the Pandora landscape. That meant he could see the movie—in real-time—essentially as it was going to appear in its final form and make any adjustments right there and then.Autodesk’s Maya was used to map Brad Pitt’s performance onto the older version of himself in 2008’s The Curious Case of Benjamin Button. MudBox, which was originally created by New Zealand’s Skymatter and later acquired by Autodesk, was used to sculpt the ape in 2005’s King Kong. And Maya was used as far back as 1997, in Titanic, to place virtual characters on top of the doomed ship as it sailed out of harbor. That film also used Inferno, a compositing software that allowed the filmmakers, for example, to add smoke to the Titanic’s smokestack and have it track tightly with the ship’s movement.Much of the core competency Autodesk brings to the table lies in developing complicated mathematical models of how objects look and behave in the real world, then baking that into the software, so that artists and designers can essentially push a button to run an algorithm and have the result applied to the element on screen—a much more sophisticated version of what happens when you apply an effect to an image in photo editing software.“Our job,” Jos Stam, senior research scientist at Autodesk and inventor of Maya Fluid Effects, tells Fast Company, “is to hide all the math.”But he’s humble about the tools’ ultimate contribution to what viewers see at the movies.“We create these tools,” he says, “and I’m always amazed by what the artists can do with them. It’s like creating brushes and then seeing a Rembrandt. You can improve the brushes, but it still takes an artist to really create amazing effects.”http://www.fastcompany.com/1731618/autodesk-the-secret-star-behind-oscar-winning-visual-effects
- Best Doctors offers an innovative health benefit. When you get sick and get a doctor’s diagnosis, you can call Best Doctors if your employer is a client, and get a free second opinion from a network of the best generalists and specialists in the country … at no cost to you. It has grown from about $5M to nearly $100M in revenue in the past ten years. One way it has been able to achieve such phenomenal growth is that it positions itself as being helpful to would-be competitors by doing the grunt work, washing the dirty dishes. Much of Best Doctors' work is laborious. After an employee from one of Best Doctors' clients, such as Home Depot, Boeing or ConAgra, calls them, a specially trained analyst from Best Doctors collects the patient's medical records. It's the kind of work few have the patience for or skill to embark on. As Evan Falchuk, president and chief strategy officer says, "That can be a nightmare, a lot of work, but we do it well." By putting together medical data that other doctors do not, Best Doctors can give its network of expert doctors a more complete picture and thus a better chance of making the right diagnosis. Evan says that when other doctors make a mistake in their diagnosis – Best Doctors finds something wrong in about 20% of the cases they investigate – the "key issue is cognitive; you give them [doctors] partial information and rush them, they get it wrong." By doing the tough data-gathering work few others flock to, Best Doctors gives its physicians more information and more time. Google grew into the number one search business by doing search when others (Yahoo! and Alta Vista) didn't want to do it anymore. Microsoft became the world's dominant operating system by offering an OS when few others wanted to take on the hassle. If you can do something no one else wants to do, you avoid competition. Try to think of one thing that people in your industry would gladly outsource and consider becoming the best at that one thing.
- The 4 Questions That Help You See--And Dominate--A Market OpportunityYou’ve heard the story before, a generic narrative with a thousand faces, the sort of entrepreneur’s “hero’s journey” (http://www.amazon.com/Joseph-Campbell-The-Heros-Journey/dp/B000K7UEMW). A woman stops working to take care of her children and is exposed to a whole new set of consumer needs that only new parents are privy to. Her entrepreneurial drive to get back to work fights against motherly instincts and – she just can’t help it – she comes up with something that all mothers in the world would want to have and no one is providing! So she launches a funky, new company/brand that sells organic baby food or hypoallergenic baby socks. It’s just a hobby, something to give her some grownup interaction, but the world’s moms demand more and more, so the hobby becomes a fully operational business.Well, Julie Pickens’ story may sound the same, but it is beautifully different in at least four ways. You can download my entire interview with Julie for free on my website (go to http://www.kaihan.net/tools.html and click on “Interviews”). Like the “Hero Mom Entrepreneur,” Julie, founder and CEO of Boogie Wipes (http://www.boogiewipes.com/our-story/), was fully engaged in a successful career, helping her father run his sales and distribution company. When her family sold its business, she got involved in several franchises including Cold Stone Creamery. After she had three girls, she decided to “do the mom thing” for a while and take her foot off the gas. Her “aha” moment hit when she decided she wanted a natural alternative to the usual perfumed antiseptic baby wipes. She searched for wipes treated with saline and when she couldn’t find any, Julie decided to explore creating it herself. This is where her story veers. Instead of making some in her basement for home use and sharing them with her friends as the “Hero Mom Entrepreneur” is supposed to do, Julie made four uncommon choices to outthink even the largest, most well-funded baby consumer products companies. As a result of these four choices, Julie’s company now owns its category niche, holds a position too expensive for competitors to copy, and has inked a collaboration partnership with Proctor & Gamble to bring her creativity and innovation into yet a larger opportunity.Outthinking your competition begins with looking past the obvious choices, beyond the logical, reasonable ones your competition and industry experts have settled on, and choosing something different. Here are four strategic patterns that Julie put in place to set her on her path to success:Focus on what others ignore: Julie and her business partner recognized the wipes market was saturated, so instead of jumping in to compete for baby’s bottoms, they decided to design baby saline wipes for use on baby’s noses. What are your competitors ignoring and what would happen if you embraced that?Command an input: From day one, Julie began working on building proprietary technology. She and her business partner pooled together $20,000 and hired a chemist to formulate a product. Then they refined and refined. The result? A patent that severely complicates any competitors’ efforts to copy their innovation and create a similar wet wipe or tissue. What critical input would your competitors need to copy you and how could you control that?Step in where others step out: When Julie’s company Boogie Wipes (www.boogiewipes.com) launched in 2008, they enjoyed a nice headwind. Some traditional pharma companies with cold and cough solutions were pulling off the shelves because of health concerns, and customers were looking for natural solutions. Saline wipes were perfectly positioned to fill this gap. How are competitors reacting to market trends and what opportunity does this create for you?Create repeated occasions: Venture capitalists put a higher value on repeated revenue than on one-time revenue. You should too. So look to attach to, or create, repeated occasions. Julie shared with me, “[We looked at] how people are using tissues. Most people use it to blot their face or blow their nose. A lot of people buy it for the cute box. I sort of took all those elements and said, ‘If we are going to talk about expanded use, what would we do?’” This gave her one of her boldest ideas yet. She licensed Proctor & Gamble’s “Puff” brand to create the first wet tissue, which was just launched, available at Target, under the name Puff Fresh Faces (http://www.puffsfreshfaces.com/). What repeated occasion can you link to … or create? Ask these four questions, and you may see an opening past the competition. What are others ignoring? What input can you control? Where are others stepping away? What repeated occasion can you create? And then? “Plan,” says Julie. “There are a lot of great ideas but how you make them come to life is you plan. Be ready to dig your heels in and know it’s going to be a ton of work. People look at me like a deer in their headlights when I say this, but write a business plan, create a pro-forma [financial projection].” This last piece of advice is so good, it would make an entrepreneurship professor cry.
- Then in 1955, Ingvar Kamprad had another setback. Competitors, feeling threatened by his growing success, grouped together and pressured suppliers to stop supporting him. Unable to source supplies and banned from trade fairs, Kamprad's sales were drying up. He responded by buying his own exhibition centres, creating different furniture exhibits to give visitors choice - even though every exhibit was owned by him. The IKEA store was born
- Apple continually creates new categories rather than playing in existing categories. The iPad, for example, was not a tablet PC; the iPod was not an MP3 player; and now the “iCloud” seems to be doing the same.
- Here is an example. Bandwidth.com which had built one of the largest competitive local exchange carriers (CLECs) saw something was wrong. They know that you can make phone calls with your native dialer directly using WiFi. But no one was doing it. Why? Because the industry value chain was motivated to drive people to use their data plans. So you had skype and other apps that helped people make VOiPWiFi calls, but you could not directly dial from your phone. So they decided to create republic wireless. They got into the Android OS layer and altered it to allow direct WiFi calls. It would search for WiFi and if it found it would route your calls through that. When you are not near WiFi, they use a data service. But no one was going to open either OS to let them build an app “I wish I could just offer software to anyone with an unlocked phone”, which means they needed to actually build a hand-set and alter it, and they didn’t know how to do that. If they COULD build a ahdn set, there was a risk that they would lose money on people who are not around WiFi. And finally, the customer service challenge would be too huge. All of these hurdles looked like show stoppers. But then tafter months, they convinced Motorola to build a hand set for them with an altered OS. They did market research and found that people were actually away from WiFi rarely and for their early adopters WiFi would be even more prevalent. Finally, they tested the hypothesis “others don’t do customer service.” They found it to be true. Other mobile service providers push custoemrs heavily to use self service.
- 5 Archetypes Who Get In The Way Of Big IdeasWe’re crossing Mongolia at 660 mph, down from the North Pole toward Singapore, a continuation of an incredible week facilitating 13 strategy sessions, guiding groups toward finding bold, disruptive strategic ideas: fourth options.Whatever you are building--a house, a business, a career, a society--life will ask you to make choices. Wood floors or carpet? Price per hour or day? You can make the obvious choices, building what others have already built. But that never leads to greatness. To create something new, unique, special, you want to be prepared to make a few unorthodox choices. Greatness depends on looking beyond the three obvious options and choosing the fourth option.In Singapore, where I am headed now, the former prime minister, Lee Kwan Yew, took a third-world nation with a GDP per capita of $300 and transformed it into a first-world one, with a GDP per capita of $50,000. He did this by choosing several fourth options such as adopting English rather than Chinese as the national language; paying government workers market salary levels when most countries consider it near charity; preferring order over freedom. Regardless of how you personally feel about Singapore’s choices, they point to a central fact: If you want to create something great, you and your team must have the guts to choose fourth options.As you guide your organization toward finding fourth options, five people will emerge to stand in your way. Look out for them, then get them out of your way. Otherwise you will end up a lemming, a follower, repeating what others have done before.Mr. PracticalTo get your team to see innovative options, you must first allow them to dream. But there is someone on your team, Mr. Practical, who narrows your team’s vision. He wants them to attack the immediate hurdles first. He says, “We don’t have time to dream right now,” or “What we need to do is solve ABC issue,” or “If we don’t solve this problem, we’ll never even survive until tomorrow.” His aim is a good one--to keep your team from overlooking what must be done today. He will have his time, but not at the beginning. Remember, we cannot create what we cannot imagine. You must first imagine a great future to create the possibility of being great.Mr. ObviousAfter imagining a different future, your team will then settle on where to look for the answer. There is the obvious answer, the center of the system, but often the breakthrough ideas come from looking for answers where others do not. Mr. Obvious is confident because he has seen this problem before, and he has solved it. If he is a marketer, he sees a marketing solution. If he is in operations, this is an operational problem. Like a child with hammer seeing everything as a nail, Mr. Obvious knows exactly where the team should bang away for a solution and grows impatient when they want to explore new territory.Mr. ExpertAfter seeing a new area to explore, you team must then create potential solutions. The more possibilities they create, the greater the likelihood they will find a fourth option. But inevitably someone emerges to cut off their flow. The conversation devolves into a pattern of “What if we did this,” followed by, “We’ve tried that before.” Mr. Expert has seen it all and needs to prove it. His cup is full and cannot fit new ideas. He cannot accept the idea that a group of novices could sit down and find an elegant solution to a problem that he and his expert peers have struggled to solve for years. So, consciously or unconsciously, he won’t let that happen.Mr. What WorksAfter creating possible solutions, your team will want to select a few to work through. This is where Mr. What Works steps in. He knows that whatever problem you are solving has been solved before and so sees it as preferable to go with the solution that works. When your team wants to explore a radically different idea, he says, “Why waste our time thinking that through when we know that simply doing ABC, like so-and-so did before, works?” Great solutions require us to unravel what at first seems impossible, which requires us being willing to set aside, at least temporarily, the solutions that have worked before.Mr. CogIf the idea your team settles on is innovative at all, it will exist in conflict with some prevailing beliefs and assumptions. To get people to buy into the idea--to get a budget, win over your sales force, get distribution--requires you to shape existing dogmas. Mr. Cog sees you as a cog in a wheel, who must roll in the direction the boss directs you. He says, “They’ll never agree to this,” and so wants to give up or take the idea elsewhere.Look out for these five naysayers. Get Mr. Practical to dream, Mr. Obvious to explore, Mr. Expert to empty his cup, Mr. What Works to consider, and Mr. Cog to seize the power your team truly has. You will soon be devising fourth options that disrupt the competition, generate new revenue, solve impossible problems. If it seems like work, picture the soaring glass skyscrapers of Singapore and remember that without the willingness to make unorthodox choices, those buildings might be rice patties and slums.
- This is being development internally in our ecosystems engineering group right now! Very cool!