Friday, May 18, 2012

FEI 2012 Review: Keynotes Recap Part 1

Adaptive Business Models, Futurist Physics, Open Sourcing Innovation and Storytelling Dominate Day One Keynotes

By Marc Dresner, IIR USA

Now that FEI 2012 has concluded, it seems prudent to take a moment to reflect on what we heard and learned while it’s fresh. I can think of no better way to do so than by highlighting a few of the defining moments from a handful of this year’s outstanding keynotes. Part 1 of this two-part post will focus on the first official day of the conference general session.

The 10th Annual Front End of Innovation (FEI) general session kicked off old school style Wednesday May 16th with an overhead projector welcoming attendees to 2002—FEI’s inaugural year—courtesy of FEI Chairperson Peter Koen, Director of the Stevens Institute of Technology’s Consortium for Entrepreneurship and Co-Founder of Myideashare, and Kim Rivielle, Managing Director of IIR’s Marketing and Business Strategy Division.

Editor’s note: Congratulations to Kim, an innovator in her own right whose tireless quest to evolve the conference experience at IIR earned her the additional appointment of company-wide Innovation Czar earlier this year!

Koen and Rivielle took us on an amusing and provocative journey through a decade of radical change and beyond—landing the audience squarely in the year 2022—and set the tone for the opening keynote…

Leading Growth and Renewal: A Blueprint for Business Model Innovation

Innosight Co-Founder and Senior Partner Mark Johnson delivered a morning jolt more potent than my double espresso with his incisive take on business model innovation, noting that the average lifespan of S&P companies has been in precipitous decline for decades.

“Even the most successful business models will sooner or later be disrupted,” Johnson said, with a special emphasis on sooner given the accelerating pace of change.

Indeed, one need not strain to find examples of companies that stubbornly refused to change things up and which now reside in the business boneyard. (Remember Smith-Corona’s response to word processing? The electric typewriter. If all you’ve got is a hammer…)

The challenge, Johnson noted, is balancing our current day jobs with our future day jobs.

The need to continually adapt and change your existing business model while simultaneously nurturing and growing it is so crucial to survival that Johnson argued business model innovation is the front of the front end of innovation, Johnson insisted. And it ain’t easy.

Fortunately, Johnson proffered a solution to this universal dilemma.

Four prescriptive steps for organizations to thrive in a state of continuous, disruptive business model bliss:

1. Create a common innovation language across the organization

2. Set strategy

3. Build the right structure to sustain it

4. Create a process

Key takeaways:

Assess and manage your organization’s knowledge-to-assumption ratio. Challenge your business model assumptions by “future-backing”—craft a narrative of what your business and the context in which you exist might look like 20 years out.

Don’t try to predict the future; envision it. Think in terms of an impressionist painting, not a photograph, Johnson advised. Then work backward to understand the path you’ll need to take to arrive successfully at your destination.

Cramming technology into existing business models is not business model innovation, he stressed. The publishing industry—newspapers, in particular—learned this the hard way. They reluctantly reacted to the advent of the Internet by migrating their terrestrial business model online, while the Craigslists and Google AdWords of the world completely changed the game.

Music industry, too. Now Apple owns it.

These massive industry disruptions were enabled by technology, but driven by people who saw possibility and opportunity by looking through a completely different lens in order to upend business models.

Every successful business has rules, norms and metrics. They’re necessary on a day-to-day basis, but they’re also blinders that effectively bind organizations to the status quo. Create a team devoted to breaking them.

One of the biggest problems in modern corporations is that the structure dictates strategy. Co-locate autonomous, business model disruption teams and set them free.

And work outside-in. Keep a constant dialogue with those outside the organization. Identify the “job to be done” and design around it. Meet that unmet need.

And again, Johnson stressed, don’t assume the way you make money today will apply tomorrow.

Unpacking the Physics of the Future

Theoretical physicist and famed futurist Michio Kaku complemented Johnson’s points quite well with a guided tour of the future based on what’s happening in the lab front lines today. My colleague, Valerie Russo, hit the high points well in her live summary on Wednesday.

I would add that Kaku noted science is the source of all wealth and the primary economic driver. It comes in waves and the cycle from invention to bubble to burst is entirely predictable because wealth is restless; it needs to move. Kaku illustrated this using the crashes of 1850, 1929 and 2008, respectively, as examples.

The fourth great wave, he predicted, will occur roughly 80 years from now and will involve nanotech, biotech and artificial intelligence. Look to Moore’s Law for inspiration and confirmation.

The most radical disruption will occur in healthcare. Like Johnson, Kaku cited the publishing and music industries as examples. “Medicine is the next to be digitized,” he said.

Consider that we now have nanoparticles the size of molecules that can locate and precision target cancer cells. “Chemotherapy will be viewed by the modern science of tomorrow much as leeching is viewed today: crude, absurdly inefficient and ineffective and almost cruel in a medieval way.”

We’re also on our way to producing MRI technology the size of cell phones.

And by the way, we’re growing organs. Today. Donor cards will in 50 years be completely unnecessary.

Tissue engineering thanks to gene sequencing—think of it as an owner’s manual for your body—will enable healthcare providers to produce a new heart or liver customized to you inside of 48 hrs.

Lastly, cancer will be flushed down the toilet, literally. Your commode will come equipped with a DNA chip that can identify cancer colonies 10 yrs before they become tumors.

In summary, there will be more computing power in your can and your cell phone than in most major hospitals today.

Sounds like science fiction, but it’s already on its way to becoming fact.

“The future is a lot closer than you think!” said Kaku.

Open Sourcing Opens Pandora’s Box?

Yours truly had to sit out Chris Anderson’s initial talk because I was in our private studio conducting interviews for the 2012-13 FEI TV series. Stay tuned!

What I do know is that the Editor-in-Chief of Wired and author of the legendary “Long Tail” and other best sellers gave a whopper of a presentation. The place was absolutely buzzing about it!

I did manage to get a seat in the interactive dialogue that followed Anderson’s speech, which took place in FEI’s “Greenroom” topical session—aptly fresh and one of eight such breakout learning forums unique to FEI.

Unscripted, uninhibited and entirely interactive, the session turned Anderson loose on the audience and vice-versa.

Much of the dialogue centered on open sourcing and the democratization of information and production via online communities and CAD.

Editor’s note: Anderson is also founder and chairman of DIYDrones/3D Robotics, an open source community of amateur inventors focused on unmanned aerial vehicles (UAVs) and robotics. UAV aficionados and DIYers can purchase parts, plans and complete kits at the DIYDrones online superstore.

Complex and controversial fun! We wrangled with:

Q: When you open-source hardware and software innovation, how do you avoid piracy?

A: “We don’t. The same things that empower the community empower pirates. The Chinese steal and replicate typically in fewer than 7 days and sell at 30% less. We compete on brand—for lack of a better term. The value is captured via trust in the equity of the community, not the intellectual property.”

Q: What about regulation?

A: “Regulators can’t keep up, and the open source format allows us to skirt much of the regulatory barriers that encumber major corporations. If your technology is public domain, you have a huge advantage here. My kids can fly drone prototypes in the park.”

Q: Liability?

A: Nil. Almost. Anderson said software and hardware created by a community for free eliminates a lot of liability. Of course, there’s always a danger of some rogue high-schooler flying an unmanned drone over the White House. Open-sourcing gene sequencing can also be a hazardous proposition (another DIY “hobbyist” community). Anderson and his organization work closely with the law enforcement community. Misbehavior can also be discouraged within the community; members police one another.

Also covered:

- The risk of disintermediation is most threatening to less complex products. “If you’re in the hardware industry and your business depends on product IP, open sourcing is a hammer and sooner or later you’re going to get hit…You’ll see some Kodak-style bankruptcies in plastics 10 years from now,” Anderson predicted.

- Reverse engineering consumer commercial goods: How long until it’s considered infringement?

- Atoms are the new bits. E.g., Aerospace physical instrumentation in the cockpit is being converted to apps.

- “We can’t put the genie back in the bottle, but in five years I wouldn’t be surprised if I were called before a Congressional hearing because a community member misused something we open sourced. It’ll be something big and they’ll be shocked by how little they knew about what has been happening in this space—right out in the open—for years. They can lock me up, but they can’t shut ‘it’ down.”

- Medicine is next. “We have high school kids out there synthesizing DNA.”

True Innovation Stories, Told Live

Storytelling was a major theme throughout the event, so I feel obliged to close with a nod to a keynote that drew the audience in like moths to a flame. (Apologies, but I can’t resist a bad pun.)

Acclaimed not-for-profit The Moth imparted a lesson in how to flaut conventional storytelling, literally (an actual flute was employed; no one was harmed).

The Moth’s “live” storytelling methodology opened the door to narratives that might not have been surfaced in a traditional presentation.

Of course, given the innovation theme and crowd, there were some predictable outcomes: rule-breaking, failure (and putting it in proper perspective), embracing uncertainty and stepping outside one’s comfort zone were prized qualities.

Most of all, though, the session provided the audience with a different way of thinking about how they communicate in a business context—an asset well worth investment.

That wraps Part 1 of my FEI 2012 keynote review and recap. Stay tuned for Part 2, which will cover a handful of the final day’s sessions. And keep a look out for FEI’s upcoming executive summary!

Marc Dresner is IIR USA’s senior editor and special communication project lead. He is the former executive editor of Research Business Report, a confidential newsletter for the market research industry. He may be reached at Follow him @mdrezz.

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