The Value of a Tomato

This should be simple. A commodity, with known nutritional content and availability. Well established supply and demand and therefore pricing. But it’s much more complex.

Obviously the value of any given thing rests with the holder, buyer or seller of the thing. If you don’t like tomatoes, aren’t part of the tomato value chain and don’t invest in tomato sales, you probably don’t give a flying sauce for the value of a tomato.

But this post is about how value is derived. Hater of tomatoes or not, there’s a lesson about the value proposition in this story.

As many entrepreneurial ventures do, it began as I wondered what value growing tomatoes had to me. I start seeds in March, nurture baby plants until they’re ready to go outside in May, pour water and fertilizer on them throughout the summer, and provide support until they yield fruits a compelling shade of red. It’s not deep, blood, pinkish, rosy, blushing, inflamed or sports car red. Just a simple, sunny red. 

To a friend, I lamented that critters ate my tomatoes. She suggested the local grocery store had the solution. Admittedly, they do provide tomatoes, if that’s the only goal.

Why do I grow tomatoes?

  • entertainment – the process of planting, watching for growth, discussing garden progress with fellow gardeners, watching YouTube to cure plant ills and increase yield
  • exercise – gardening provides both heavy (turning over soil) and light exercise (walking about the yard, bending, tying and weeding)
  • challenge – choosing the right varieties of seeds, dealing with varying weather conditions, generally managing the flock (the green flock)
  • thrift – growing your own seems like a more cost effective approach to obtaining tomatoes than the store; however, factoring in water, purchased soil, fertilizer and my time may render this untrue.
  • quality – tomatoes from the garden taste great. No question about superior flavour. I make my own tomato sauce, enough to last the year, which I prefer to the stuff in bottles and cans that the grocery store sells. 
  • satisfaction – there is nothing like the feeling of dashing out to the backyard and picking food you grew yourself, know is healthy, and tastes really good. To me, it feels both natural, like the natural order of the world (I have contributed to nurturing the earth1 while acting as a conscientious member of the global community) and productive – I grow my own food – I am self sufficient. 
  • spiritual – this is who I want to be – the person that is self sustaining, that protects the environment as far as I can. When I grow tomatoes, I find peace. 

I’m a fan of Maslow’s hierarchy of needs2. Fulfilling needs is a central part of the value proposition. Maslow’s theory is that humans are motived by a series of needs that they fulfill sequentially. The type of need grows more complex as the hierarchy is ascended with more complex human goals. Basic needs, required to sustain life like food and water, are at the bottom of the pyramid. Next, come the means to ensure safety and security, like shelter and means of communication. In the middle ground are social aspects, like love and companionship. Near the top are needs to be respected, recognized and free. The pinnacle is self actualization, reflected in the need to grow and achieve the best one can be. Once people have the lower order needs satisfied, they seek to achieve the next level. Have sufficient food, water and a roof over your head, then next you seek a social circle. 

Home grown tomatoes satisfy all levels of need in Maslow’s hierarchy. Here’s Ann’s hierarchy of the value of growing tomatoes:

That’s a whole lot of needs being satisfied by a packet of seeds, tools, soil conditioners, watering cans, straw hats, and other accessories used to grow tomatoes. For many customers, the buying decisions are rooted in a variety of motivations. Has this answered what the value proposition is for home grown tomatoes? It’s complex and likely a different combination of the various aspects illustrated above for every person who grows tomatoes.

Why do I grow tomatoes? 

Bruschetta. Sliced tomatoes on toast. Pasta sauce. Salad. Caponata. Chicken cacciatori. Gumbo. Curries. …ummm

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1Growing food in the backyard not only improves the local ecosystem by increasing the amount of greenery and the CO2 balance but also saves the fossil fuel that I would burn if I drove to buy tomatoes trucked into a store. I also suspect the agricultural approach I take is less invasive to the earth than industrial farming that produces the tomatoes in the canned sauce.

2Here is a general description: https://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs

A Good Collision

Collision from Home is a virtual version of a whole lot more than a tech conference. Having spent 24 hours over three days listening to talks, and virtual speed networking, I need to write about what I heard1 at Collision from Home to understand what the experience meant to me.2

The program was truly awesome; speakers included world leaders, executives from large tech companies, professional athletes, entrepreneurs at all stages of company development, participants from across the globe. Production was very professional and considering the time in which it must have been put together, the program was delivered with few glitches. 

I couldn’t help but notice how impeccably presented the speakers were and wonder if makeup artists were deployed. This may seem shallow but it’s an observation on professionalism and how it is changing during the pandemic. I find myself watching the videos not only for their content but also for delivery, to learn best practices in presentation for our new world.

The talks I enjoyed the most were ones that gave me insight into the business of big tech:

  • Netflix’s vision for growth
  • Uber’s drive to become profitable
  • Twitter’s chat on curating tweets, both for ethical and business reasons
  • proprietary podcasts giving Spotify its competitive voice.

I was impressed with the inclusion of many talks about the ethics of technology use, such as the recognition of the privacy aspects with tracking apps for COVID transmission and sharing of information across medical and public health agencies. There were also discussions about how to deal with racism and bias. We have a long way to go but the degree of awareness is encouraging.

There was talk of new products and businesses, but the uses of tech are the news rather than the tech itself. The World Health Organization has a COVID chatbot. The American Medical Association recently released updated guidelines on privacy of medical information in response to distrust of big tech and how personal data is used. Hanson Robotics’ Sophia (version 24), a humanized robot, appeared and talked about the difference between humans and AI. I found much of what she said cliched but many humans are also good at speaking in trite truisms.

Of course, there was much, much, much discussion on how the pandemic has and will change industries, demand and employment. Most of this is logical. The supply chain challenges are less intuitive, perhaps because they aren’t visible in everyday life and are intertwined with global trade and shifts in demand caused by the pandemic.

In a discussion about the connected world, I found a recurring theme: privacy. Interestingly, adoption of smart devices for the home has been slower than some anticipated. It was speculated that this is the result of concerns about privacy and where data collected from in-home devices ends up.

This is how it all comes together: I didn’t learn about tech at the Collision from Home tech conference. I learned about society and humanity. Now that’s innovative.

——

1These are my observations and intepretations from the conference. With several parallel sessions at all times, someone else could gather a completely different perspective on Collision from Home.

2Something I’ve noticed about myself in the Zoom environment: I take notes. Handwritten notes. I spontaneously started doing this. Perhaps it’s symbolic of learning how to live again in a new place.

The Restart: Opportunity spotting.

Whispers of restarting the economy are building into conversations and escalating into announcements. Now is a tricky time to be an entrepreneur, or anyone running a business – starting one, restarting one, continuing one.

Business 101 teaches that successful firms deliver what customers1want. One way to spot opportunities is to consider whether customers want the same thing as they wanted B.C.2

Opportunities will exist to deliver on emerging demand. Some businesses are already prepared to supply, others many need to reposition. I see many avenues for shifts in customer needs:

  1. Sudden spikes in things people couldn’t get during isolation. The intensity may be short term but play out over several cycles with phasing in of economic restarts and if there are resurgences of infection.
  2. Specific products related to continuing the fight against the pandemic.
  3. Declining interest in items people realize they don’t actually want or need.
  4. Impacts of economic contraction.
  5. New needs that evolve from whatever odd things we’ve been doing in isolation.
  6. Longer term shifts.

Here’s few of my thoughts on each of the above. There are many more possibilities in each category and likely other categories I haven’t mentioned. The scope of possible opportunities is broad.

1. Sudden huge demands for existing goods and services:

  • Dining out. I’d predict this is a need to share a meal with friends, rather than a need for restaurant food. Many of us have been ordering more takeout than usual to support the restaurant industry.
  • Personal care: haircuts, manicures etc.
  • Healthcare for NON-Covid stuff. Many treatments have been postponed in the past couple of months. There is pent up demand for all the care that has been placed on hold during our isolation, including in allied fields, like dentistry, physiotherapy, and many more.
  • Entertainment: movies, sporting events, concerts, art galleries, museums, etc.
  • Deferred property maintenance. Many office and public buildings have sat unattended over the past two months that will need HVAC, plumbing and other systems upkeep. All this deferred maintenance provides opportunity for new entrants.

Over-demand will eventually be satisfied and decline to ‘normal’ levels of consumption. The opportunity is to attract new customers and a create a stable business, either as a new entrant or incumbent in the industry. If I were a leader in the industry, I’d try to meet the short-term request landslide, as failure to do so is likely to result in decreased marketshare.

2. Ongoing needs to fight the COV.

Clearly, PPE (everyone knows what this means now, right). Vaccines, drugs to treat COV infection. Floor stickers to remind people to stay 6 ft apart. Video conferencing. Health inspections. One of the most creative suggestions I heard recently was a need for pandemic planning for large organizations3. All kinds of services related to keeping us apart, sanitized and isolated if we have active infection.

3. What will we realize we no longer need? Questions that lurk in my mind:

  • how will the concept that pollution has significantly declined while we have all stopped commuting to work and generally running around in our fossil fuel burning conveyances play out?
  • how much working from home will continue as selected firms and employees discover efficiencies?
  • which things that we previously viewed as critical will be abandoned post COV – fancy office settings, pre-made bread, elementary school teachers (unlikely but I had to throw it out there)?

An interesting story I’m drawn to, because I wouldn’t have predicted it: music streaming has decreased (for example https://variety.com/2020/biz/news/music-streams-down-why-spotify-netflix-1203547387/ ) . I would have thought people would have more time to listen to music. The key to finding the opportunity is understanding why something happens, especially if everyone is doing it for the same reason.

Pay attention to what surprises you, there may be opportunity there.

4. The predicted economic fallout suggests that there will be fewer people with employment and even those with a job will be more cautious in their spending habits due to uncertainty and economic downturn. What do cautious people want to buy, compared to optimistic, high-spending people?

Cautious wants: insurance, personal protection devices, low cost goods, value items rather than luxury items, seeds to grow vegetables.

Optimistic wants: loans, vacations, bling for the self, office, and garden, gourmet food experiences.

5. Recovering from the things done in isolation.

Stockpiling of food and cleaning supplies has happened. Either the food banks will be well supplied with canned goods for years to come or there will be a market for creative approaches to utilizing 18 bags of pasta, a dozen cans of peas, and a flat of pineapple chunks.

Similarly, I suspect many people started DIY home renovation projects: Torn out the paneling in the basement, drawn up plans for a second level in the garage, taken the sink apart in the extra bathroom. The appetite for finishing these projects may evapourate when out of the home distractions become available. Home renovation services may expand to finish the unfinished DIYs.

What are we going to do with all the PPE when we don’t need them any more, even after keeping a good supply? There will be a need to recycle a few billion N95 masks soon. There must be a business model for reclaiming the materials in face shields.

6. Long term. One thing that is sure to linger for years is the cost of the government subsidy programs that have kept us afloat during our internment. Ultimately, these will need to be paid for, through higher taxes, probably personal and business. This may mean restrictive economic times in the future.

The cost of business will likely increase. Take home lessons from the current economic situation include that redundancy is smart. J.I.T. is risky. Outsourcing can be tricky if international borders close down or local economies are disrupted. More control, less low cost. I hear inflation rumbling on the horizon, like a thunderstorm on a humid July day.

Rainbows follow the torrential rains of thunderstorms. I hope the world can look new in a good way. Opportunities are out there.

—–

1This applies to either business or individual customers.

2B.C. Before Covid-19.

3Apologies to whoever said it. I’ve been to too many Zoom-inars, gathering fabulous information, and it’s all blurred into the cosmos of great ideas.

Creative Destruction of Promotion

Is there anything an astute consumer can’t find a coupon, discount code or deal for? A proliferation of apps that comparison shop, website archive, or flyer scrape suggests not. We could be on the verge of creative destruction of promotional offers as we know them.

The many sites with ‘best coupon apps’ lists says it all.1Coupon apps are so abundant, we need a directory of directories to sort through them. Meaning there is nothing special about getting a coupon. Anyone with a phone has access to dozens.

Meaning there is a feeding frenzy going on as one business tries to build another business out of the business of being a lower priced business that the other business. Head spinning? Yes – that’s what I think is going on. It could be a pyramid scheme of promotions. Or a usurpting of the original purpose of the coupon.

But wait. The basic idea behind promotion is an enticement to allow consumers to experience the product and learn all its benefits. To turn lookers into buyers. Product manufacturers should benefit from the coupon apps, as their promotions reach a wider audience. Win – win – win. Apps get downloaded – consumers get deals – manufacturers sell stuff.

Why am I prophetizing the end of such promotions?

Back to the strategic importance of marketing for a moment. Retailers issue coupons to draw potential buyers’ attention (build awareness), to remind buyers of their product (attract repeat customers), or make their price competitive (low cost competition).

Currently, customer rewards, or loyalty programs, are over-running retail like bunnies during a fox-pox. Marketers are amped up on attracting repeat customers through loyalty programs. Ideally, these programs bring mutual benefits to the customer and firm, through ongoing association. Customers make their lives simpler through brand loyalty, knowing a trusted vendor to go to buy their things. Businesses enjoy the financial benefits of repeat customers, as the acquistion costs tend to be lower. Loyalty to a well differentiation brand shouldn’t need incentivation, in my opinion. If customers are really getting value from the brand they will be repeat customers, regardless of the coupon. If the only reason a customer has made a purchase is the coupon, the competitive strategy might need reconsideration.

Back to the coupon app destroying the coupon. It’s their general availability that I wonder about. Some implications:

  • First, there’s the target market. Sure, everyone wants a lower price but who do the coupons target? 1. Coupon clippers. People who enjoy spending time searching for deals, collecting them and getting satisfaction from enjoying the rewards (saving money). The apps must take this away from the market segment. There is no effort required any more. But the saving money part is intact. 2. The price conscious consumers. These apps are appealing, but so would any other low price strategy. 
  • Some coupons are offered for social benefit to people who require them. If the apps open this advantage to everyone, it’s no longer a benefit.2
  • If many retailers adopt the ‘we will price match’ tactic, this could be a route to the equivalent of price fixing. Or bankruptcy if retailers are unable to meet low prices in a way that sustains the business. Ubiquituous coupons force all competitors into an everyday low price strategy, rather than a high-low approach, which may be closer to the original intent of coupons. 

There’s a psychological appeal to the coupon. A limited time offer. A limited offer. This is the enticement. It’s special, for some reason, be it loyalty program, circumstance, timing, or target group. Generally, this would be part of the business’ goal in issuing promotions. If the goal is to compete on price, which is the outcome of making coupons broadly available, then execution through coupons is at best deceptive and at worst uncontrolled, and generally unnecessarily awkward (easier to set the low price). Coupons appeal to customers because if they have one, it makes them special. They appeal to the vendor because it’s a short term tactic, not a permanent situation.

Literally, creative destruction would mean someone got creative and destroyed something, which is what I think could happen with coupon apps run amok. The theoretical creative destruction, wherein new products create a new economic order, isn’t in effect here. The new product establishes itself and makes obsolete the previous approaches, like cars and horse-drawn carriages.

Coupon apps may disrupt the strategies of the companies that issue and honour the coupons, which may adversely effect the apps based on them. All fall down?

1For example: https://www.thebalance.com/best-coupon-apps-4160582;https://www.moneycrashers.com/best-mobile-coupon-apps-smartphone/;https://www.huffpost.com/entry/the-7-best-coupon-apps-right-now_n_57d6fa24e4b03d2d459bb3c2 and I could go on.

2This assumes that the offering company was taking a hit to offer the product at a reduced rate to specific customers in need.

An Annual Celebration of Innovation.

Is the concept of an annual celebration of innovation a contradiction? If a thing happens regularly – like the OCE Discoveryconference, can it do justice to the new, the creative, the evolving?

This was my ninth Discovery conference – a wonderful event held each year in Toronto where all things new in technology and business are showcased. A few thousand people attend, from academic researchers, startup and established businesses, to government representatives and other investors that support them. And they bring exhibits of their new technologies. There are talks, speed networking sessions, pitch competitions and plenty of catching up with new and old colleagues.

My first impression of this year was that it wasn’t as exciting as previous years. On reflection, I decided that was the point. And that’s exciting. Disruption isn’t coming from the introduction of a new thing, like mobile phones in 2009 to shift how we talk to each other, or affordable cars in 1913 to allow every person the mobility of owning an automobile. Disruption was coming into everything. Every business. Every industry. Every aspect of life.

Evolving areas of technology represented at the conference included:

  • artificial intelligence, machine learning and big data utilization, 
  • 5G connectivity and synchronous internet connectivity for enhanced user experience, 
  • sustainability and cutting down greenhouse gases, 
  • autonomous vehicles, 
  • internet of things. 

None of these come as a big surprise. The startling part was the myriad applications for these technologies. Here’s a sampling of what I saw:

Innovation in operations in stable, mature industries with sustained product demand:

  • Beer and steel manufacturers optimizing input resource utilization
  • Enhanced sustainability in agriculture production

Industries offering the next version product:

  • Established players in telecommunications getting ready to deliver 5G
  • The introduction of autonomous vehicles marching forward, with an emphasis on testing.

Advances in capabilities of established industries:

  • Applications for monitoring and processing data, especially in healthcare
  • Augmented reality to facilitate retail or business collaboration
  • Artificial intelligence in accounting

All examples of existing businesses and industries incorporating new technologies, primarily to provide the same products to the same customers, only better. For the most part, this is what we call component innovation, rather than architectural innovation which destroys the entire industry. Enhancement rather than destruction.

In the category of new industries, there was crickets as a source of protein, but even this was discussed as a growth business with scale and distribution challenges, rather than an emerging one seeking market acceptance.

And cannabis. Another industry out of its early stage and into a growth phase.

And Space. This surprised me a little, except that space exploration is of interest both as a potential solution to the stretched resources of the Earth and as a new aspect of tourism.

The most startling, clever idea that was perfectly obvious after I saw it but never crossed my mind before that, was the establishment of hazelnut farms in Ontario. Big demand for the product. Uses existing resources (Ontario climate and agricultural history) with a few enabling tweaks (climate change, new cultivars). Incremental technology innovation.

Another great year of discovery at Discovery. Everything old is new again. Now that’s innovation.

A Scientific Approach in Entrepreneurship and Strategy

Thinking like a scientist. This may not be new, especially for scientists. And not so much for entrepreneurs who subscribe to Eric Ries’ Lean Startup method1. But it was a hot topic at the recent Academy of Management (AOM) conference.2

I’m a scientist who has lived in the business world for decades. So, I’m excited to see the scientific method embraced at a business-centred conference. The AOM is an organization of business scholars, or people who study business. However, like every business school I’ve been part of, AOM aims to share knowledge with the practicing community.

First observation: Transparent Logic. The term immediately resonated – I knew exactly what it meant and why it was important in entrepreneurship. Transparent logic is part of a model for teaching social entrepreneurship3 and requires a clear link between the proposed activities and the social problem a venture is tackling. For example, providing water purification devices will decrease the incidence of dysentery, leading to fewer hours of lost labour and therefore people earning a better wage, however, it needs to be clear how people who need the device will get them and continue to use them. For many scientists, cause and effect is utopia. Transparent logic in a social venture seeks this holy grail of cause and effect.

At a session on entrepreneurial strategy4, we heard it was less about SWOT analysis and more about observation leading to hypothesis generation. An entrepreneur sees an unsolved problem and hypothesizes they can solve it with a certain product. The term causal logic came up, followed rapidly by notions of testing. Establishing value, after recognizing opportunities, can have its roots in the scientific method. The entrepreneurial process is scientific.

In the same session, a trial to evaluate the impact of the scientific method on startups was presented. Entrepreneurs were randomized into two groups. One was mentored traditionally – entrepreneurs were guided in business methods, product development and organizational development. The other group was tutored in a scientific method, using hypothesis generation, controlled testing and analytical methods to learn from test outcomes. Those using the scientific method pivoted more frequently, acquired and activated more customers and had more revenue generation. From this: the scientific method works for entrepreneurs.

On to a plenary session on strategy.5 There, too, causal identification was presented as a frontier in strategy research. My head started to spin with so many scientific references. I was brought back to objectivity, reminded that physics with its fundamental, timeless certainties such as gravity, was more reliable for test outcomes. The fundamental forces that shape business shift more often. However, like evolution of species, changes in strategic theme occur in leaps and bounds, rather than continuously. An example is the upheaval in retail, with the onset of online shopping. A discrete change in how we shop. It left survivors (Amazon) and the less fortunate (Sears Canada).

The hotness of the scientific method in business strategy looks to me like the mid-point stage on the S-curve6 of adoption of new things (technology, products, buzz-words, sports teams). Following this trajectory, soon it won’t be the new thing, but the common thing.

When I ventured out of the lab many years ago to join an investment bank, I was a foreigner. Welcomed, but in a world of people who thought in different ways. They had vision. Visions of logical explanations. Maybe it’s me that’s catching up, learning that shrewd entrepreneurs see value where other’s don’t.

The scientific method can make sense and compelling arguments out of ideas. It makes it easy to answer hard questions about why you think this new idea you have will make a great business. A great tool for any entrepreneurial business strategist.

——–

1http://theleanstartup.com

2This is a huge conference, attended by thousands of faculty members from business schools all over the world. With two days of symposia, plenary sessions and papers, each with 7 time slots, and an average of 15 sessions to choose from per time slot, this means there are (15) 14 = 2.9 x 1016 different individual selections of talks to attend. Or maybe it should be 15! which is only 1.3x 1012 I’m not exactly sure how to calculate the number of different permutations of the program but any way you do, the number is really big. So my experience may not be typical.

6Not surprisingly, the S curve is S shaped.

In the beginning, a handful people embrace a new thing. The adventurers, the risk-takers, perhaps those in the field who understand the new thing better than most. This is the first stage, the flattish bottom to the S curve.

Then word starts to get around. The new thing is good. It does exciting things. It’s better than the old thing. People jump on board, start adopting the new thing like it’s the best thing since the last new thing. This is the part of the curve that swings up so rapidly that if it was an airplane, everyone on board would pass out.

As time goes on, people remain excited about the new thing, but many people have the new thing, so the adoption curve starts to lessen its assent – the plateauing phase of the vertical rise.

Finally, just about everyone who will ever want the new thing, which isn’t so new any more, has it. The S curve flattens. No additional adoption because everyone loves and appreciates the new thing.

Are you having a Meaningful Relationship with a Brand?

Two things happened to me at about the same time, so they must be related. Right?

Ok, both were about customer service. One was kinda theoretical, the other a real-life experience.

Theory and real life intersecting? There’s always a fundamental interconnectedness.

Here’s what I experienced:

#1. I’m reading the book: ‘If you are in a Dogfight, become a Cat!’ by Leonard Sherman. A great read about business strategy. Page 155 presented me with: “87% of consumers would like to experience a more meaningful relationship with their favourite brand.”

Due to circumstances beyond my control, I didn’t read any further until much later, so I was left to ponder what the heck that meant. I have favourite brands: Apple, Tim Hortons, Lululemon. I can’t fathom how I would develop a more meaningful relationship with them1.

I have relationships with people. We interact in ways that express our mutual affection for, and concern about, each other, and have common goals, interests, and values. How does that translate into something I would do or feel with a brand? If I used the product in the way it was intended and it worked out well, I’d be happy. I can sip my coffee, lean back and enjoy how fabulous it tastes, but that isn’t the same as confiding my fears about funding my retirement with a friend who understands the situation in exactly the same way I do. I don’t get the relationship part. Perhaps I am part of the other 13%.

#2. While still mulling this over, I dropped into a fast food restaurant for some fries and a burger. It was chaos. A special kind of Canadian chaos, with 20 people eagerly anticipating that their order would be delivered next, while bobbing and jostling to stay out of each other’s way but failing because it wasn’t clear where to wait.

We’ve learned to wait in line, confident in the concept that each of us will be served when it is our turn. Most of the time, this is accepted to be in the order we arrived. But that isn’t how it works currently in this food emporium, because there are least four ways to place your order, or perhaps have a meaningful relationship with this brand. Food can be ordered via: drive thru, ordering kiosk, talking to a human the old fashion way, mobile ordering, and using a food delivery service like UberEats or Skip the Dishes.

Experience #2 was distinctly weird. It felt like there was choice but we were all waiting for the same thing (the restaurant’s fare). I didn’t want choice in how I ordered, I wanted the most efficient way to get my food. I was hungry. I parked rather than go through the drive thru to avoid the long line of cars. I ordered at the kiosk because I thought it would be quicker (I can’t explain why I thought it would be quicker – perhaps a belief that is technology is more efficient than humans). Had I know how long I’d have to wait, I might have paid the fee to have the food delivered.

The experience wasn’t meaningful, it was like picking a line at many places -grocery store, customs at the airport, toll booth. You pick the slow one. We all pick the slow one. And that doesn’t suggest to me that the brand has the same goals as I do. The brand appears to be trying to be everything to everyone, despite delivering the same options and product to all customers, regardless of how they order. It’s like a gloss of customization smeared over mass production. Mass production isn’t so bad, as long that’s what you’re looking for, like a tank of gas, reinforced concrete in the hockey arena where your kids play little league or enough data to stream all the sports, teenage drama series of choice and pilates videos desired by a family of five simultaneously.

When I got my order, I returned the straw and stack of napkins packed into the bag before I left. That was an opportunity to made a connection with the brand for me – minimizing both plastic and paper waste – things I value, along with the occasional feed of french fries.

The interconnection: I later learned there are many ways for customers to have a meaningful relationship with a brand. The right one depends on the brand, or relates to the customer’s expectations. Companies must understand what the customer wants, rather than offer a bunch of options and hope that provides mass customization. Find out which is most important to customers – choosing how to input their order, being treated fairly, or getting their food quickly. Then develop ways to deliver.

Old fashion values still rule. A devoted customer has a great relationship with the brand, even if they would never describe it that way. They’d say ‘I like the everything about X’, as you might say about someone you had a meaningful relationship with.

1 If asked ‘what do I want from my favourite brands?’ I’d say, more great stuff. The best functional, easy to use, attractive technology, the same coffee and donuts, and athletic gear that looks great on, is stylish and good to exercise in.

Barriers to Innovation

My last post was an optimistic ode to the endless innovation currently possible, due to the state of technology, entrepreneurship and related support systems. But that doesn’t mean it’s easy. Today, I want to discuss some sobering limitations that thwart the introduction and uptake of new things.

Several broad categories of barriers to innovation spring to mind:

  • regulation
  • fitting into existing infrastructure
  • consumer habits
  • figuring out who is going to pay
  • short term vs long term thinking
  • benefit twice removed

To illustrate these, I’ll discuss barriers in a couple of hypothetical situations where delivering a solution seems easy.

Consider the challenges to providing real-time transit information. This was inspired by a comment I overheard: “in X,Y and Z city, you know exactly when the next bus will arrive; why can’t we have that here?”

Why indeed?

The technology exists to track a vehicle, create algorithms to integrate the traffic flow, rate of bus progress, passenger demand and weather conditions to estimate and adjust time of arrival for buses and trains. Multiple options exists for providing this information to transit customers, such as pixel boards at stops, a downloadable app or text message service. The information is useful to customers to plan their commutes and use their time wisely. Providing real time updates enhances the customer experience, because it’s more satisfying knowing that your bus will arrive in 14 minutes than not knowing and having it appear after you have fretted and peered into the traffic for 6 (much longer) minutes. Happier customers are repeat customers. So, there’s value to be shared between provider and customer.

Why can’t they have it everywhere?

I can think of a bunch of (hypothetical) reasons.

1. Perhaps the current fleet of vehicles aren’t GPS enabled. Perhaps there is no way of announcing the information at the stops, since all that currently exists are metal signs. (infrastructure issues)

2. The bus drivers union may object to such a system because it tracks driver performance in an unfair way. Or the legal team could be concerned about liability of promising something not under the control of the transit authority. (regulations)

3. How will the new infrastructure be paid for? Through fare increases, increased bank loans, or decreased dividends to shareholders? Although the value can be seen, is it enough to make people reach into their pockets? (who will pay?)

4. The cost to implement this new system will have to be paid long before rider retention can be proven. (short term vs. long term thinking).

To illustrate the other two barriers, I’ll use plastic utensils, especially straws. Much has been made of the earth- and ocean-clogging features of these implements of consumption lately. We need an alternative. Why do we use straws to consume beverages? (This is customer habit.) Innovations that replace the straw must overcome habit. And why do we have plastic utensils, food containers and other disposable, polluting conveniences? Because they are convenient. Eating your meal and cleaning up afterwards are things you will enjoy right now. Pollution of the oceans may only come to your attention years later. And you’re not sure how plastic in the waters effects the environment. It’s difficult to understand the vastness of the consequences of disposables in the sea when you put a single straw in your bubble tea. (benefit twice removed)

Yes, there can be significant barriers to implementing a genius idea that is good for people, business and society as a whole.

And yet, the answer is innovation. Business innovation. Get around the regulations or change them. Show stakeholders short and long term benefits. If there is value in an innovation, someone will be willing to pay. People only cling to their habits if they don’t see the benefit of changing.

Innovation is possible, if you understand the barriers and come up with ways to get over, under or around them.

Oh, to be an expert. Or not to be an expert.

I went to a talk about marketing1, heard a great story about business strategy2, and learned about The Trouble with Experts, a documentary3  that examines the current ‘Expert’ phenomena. As a big fan of the fundamental interconnectedness of things, the talk inspired me to ramble around the topic of experts while mixing in business strategy and other things.

We’re steeped in information: long posts, short posts, vlogs, interviews, testimonials, opinions – individual, journalistic, shared and trending-, spewing forth every second of every day and night. To add to the confusion, ironically by trying to clarify it, is a preponderance expert opinion about every news story. How does one get membership in this exclusive expert club, garnering the right to earning big bucks just by expressing an opinion?

I’d like to disagree and then agree with The Trouble with Experts on its analysis of various expert groups, including wine tasters, economists, and management consultants.

As told in The Trouble with Experts, studies have been done to test the ability of the wine tasters to distinguish disguised wines and economists to predict the economic future. The wine experts weren’t able to tell expensive from cheap wine when the bottles were switched, and the predictions of economists weren’t often right. In my opinion, although soundly executed, the studies didn’t do justice to the professionals. Wine tasters likely know many things about wine. Like most of us, they are human, and swayed by their expectations, in this case created by the label of a renowned vineyard on the bottle. Economists are trained to analyze and recognize economic trends, patterns that have occurred historically, which we all know are no guarantee of future performance.

The next group the documentary took to task was management consultants, which hit close enough to my home to make me uncomfortable. An interviewee suggested there is no data to suggest business strategists make good recommendations. Funny thing about business strategy: it often boils down to a simple recommendation (for example, produce original media content, or expand into a European market rather than a US one), which sounds like someone came up it in a moment’s thought.

Choosing a strategic direction is a prediction of sorts, but a prediction based on many facts, such as the economic environment, fluctuations in consumer demand, technological advances and competitive landscape. These are all real, quantifiable, and of critical importance for managing any business.

The presentation that inspired this post reminded me how real business strategy is, with a real life example: Most drug stores sold cigarettes a few decades ago, until legislation put a stop to it. That presented a certain large drug store chain with the challenge of deciding which of its remaining products to enhance to serve a regular stream of customers that weren’t looking to get their prescriptions filled. The solution, to highlight cosmetics, was genius. Understanding the full impact of taking away tobacco sales on the drugstore’s business required expertise. The focus on cosmetics was never guaranteed to work. But it apparently has. The expert who suggested it is a hero even though it was a prediction. But a prediction based on analysis of industry characteristics, consumer demand, what the competition offers, combined with knowing what the organization could do.

What’s realistic to expect of an expert? Very few humans can predict the future, regardless of their area of expertise. Those trained in a field will recognize patterns, flavours, or trends sooner than the general public, and are able to understand and explain events in their field. However, experts are often asked to gaze into the hazy future and conjure the outcome of current events.

Most of us who claim expertise do so because we understand an area through decades of work and study. Voicing an opinion about something, like the effectiveness of vaccines or the function of air filtration systems, does not require expertise. However, explaining how infectious disease is limited by vaccination or the parameters that govern air flow and particulate removal, does. Reading controlled studies about vaccine trials or the physics of airflow through ducts doesn’t provide a license to predict the future, but does provide a unique grasp on the subject matter.

The Trouble with Experts ends by exploring the most curious aspect of the Expert phenomena: training to become an expert. Modern experts can be created by a perverse version of natural selection. Popular media promotes the most personable, show-worthy individual to speak on a subject. Becoming this sort of expert requires only passion, poise and an unshakable attitude that you are right, about something, like life on Venus, the nutritional value of donuts, or the horse that will win the Kentucky Derby.

This is what we’ve come to. He or she who shouts loudest, with greatest emotion, is right. They may have a deep understanding of their field, or they many not. That isn’t the criteria. It’s sounding credible.

Let’s put the expert back in expertise. Being an expert means a person understands, not that they can predict the future. We’re all entitled to our opinions. The critical thing is to differentiate between expertise and opinion. All of us, listeners and pontificators alike, can make it better. It’s about promoting the truth. Not trending.

And on that note, here are a few sites where I’m experting:

1. As reviewer of business pitches for OCE and Ministry of Economic Development and Growth’s young entrepreneurs

2. As a mentor for entrepreneurs at The Community Innovation Lab

3. As an entrepreneur, in the Core21 community of entrepreneurs (in the video)

1This was part of a new series, called UP! Practical Sales Talks, from the BACD , aimed at inspiring local business people to do better business. If you’re in the neighbourhood, I’d highly recommend it.

2The presentation I attended, from Shawn Palmer, Director of Sales and Marketing, Classic Gourmet Coffee, hit most topics I teach in my business strategy cases, serving as a brilliant reminder of how real business strategy is. More about this later in the post.

3I want to call it a docu-pinion, to reflect a piece with the documentary style of investigative journalism and a conclusion that might be found in an opinion piece. I’m probably insulting someone here, but I think the point of the piece was the question of how experts are defined, which if applied to the documentary, could mean that many of the interviewees in the piece who provided their expertise could be questioned, and therefore the commentary provided was, at best, opinion. I’m slightly dizzy thinking about it.

Abandoning Science Fiction. Embracing Science Fiction.

Traditionally, science fiction imagined the impacts of emerging technology decades and centuries into the future, suggesting fanciful, outrageous possibilities. These were generally ignored as figments of, well, science fiction.

No more. Lots of people are paying attention to science fiction. We can’t dismiss the potential of technology as surreal anymore. It’s real, as real as your online medical history, or app-controlled crockpot.

Science fiction has snuck into, and taken a starring role in, mainstream entertainment: Starwars, Game of Thrones, Dr. Who, and countless other movies and TV shows. Best books of 2016 include science fiction and fantasy titles. While some might debate the purity of this popular scifi, a heightened awareness of technology permeates popular culture, perhaps as a collective intuition of the urgency to understand what’s coming.

In classic titles like 1984 (information technology), Brave New World (human engineering), and Blade Runner (artificial intelligence), science fiction explored the frontiers of advancing technology. The time has past for the implications of emerging technologies be left to the philosophers in their ivory towers or visionaries in their chrome think tanks. Jaw-dropping new technology barrels towards us like a runaway locomotive, and threatens to overwhelm us like deer in the headlights.

My mission is to make science and technology accessible. In 2004, I took up writing scifi to help people understand science, both how it worked and its potential outcomes. By mid 2015, it seemed to me the field of scifi had undergone a tectonic shift. Currently popular stories seems less to hypothesize the impacts and ethics of emerging technologies than to explore human nature. All good, but not my fundamental driving force.

I took another path, focused on another passion – using business strategy to turn scientific developments into useful products for people1. Ironically, this is now a better place to achieve my goal to bring science to people. We are poised on the edge of many technological advances with the potential to change life as we know it, probably sometime next week, or year. Definitely now-ish.

At one of my recent business meetings, the light, closing banter considered whether bitcoin would become a solid currency. Bitcoin, or entirely digital currency, is an attractive concept, as a global, non-political, apparently secure2 and completely portable form of money. Many commentators expect it to disrupt banking as we know it. Not science fiction. Business.

I credit the book (from the business section of the bookstore) ‘Industries of the Future’ by Alec Ross3 with coalescing my thoughts about science fiction. In this book, the list of emerging technologies was no surprise and included self driving cars, the Internet of Things, big data and the associated privacy or lack thereof, genetic profiles, and cyberwarfare. Ross’ genius is coupling the astonishing capability of the technology with current uses and impacts.

Technology is becoming mainstream faster than it can become science fiction.

Today you can place your order as you walk towards your favourite coffee shop, pay for it before you open the door and whizz by the barista as you grab the cuppa with your name on it. Tomorrow, someone could hack your fridge to steal your identity or you might never find another job once your genetic profile has been uploaded into Monster.

No more is 19844 fiction. Fifty years ago, although horrified by the notion of being monitored constantly, we stood back and debated whether it would ever really happen. No more debate – the capacity exists. Now. Most of us are fortunate that such intel is not used against us. It’s only used to sell us things.

Issac Asimov wrote about robots5. While countless manufacturing jobs have been lost to automation, the real question is: how far it will go? Will robots replace teachers, lawyers, doctors, or spouses? This is about more than lost jobs, it’s about what it is to be human.

GATTACA6 (1997) was a movie about a young man who wanted to be an astronaut, but it wasn’t in his DNA, literally. The movie’s premise is that people’s occupations are determined by genetic profiling. In GATTACA, our hero fakes his genetic makeup to live his dream. Genetic profiling is close enough to reality that the Canadian government is working on genetic privacy legislation, while businesses that provide health insurance want to use genetic information to determine policy premiums.

Cory Doctorow, in Down and Out in the Magic Kingdom7, wrote about a system called Whuffie. The basic concept was that a score like karma, based on how many good things you did and how many people liked you, followed you around and determined your fate. How different is this from celebrity influencers on social media, who might have a more pervasive impact on medical products that knowledgeable medical professionals?

Countless scifi stories show people being identified by their fingerprints or retinal scan. How close is this to reality? Ask Bionym, a Canadian company that authenticates identity by heartbeat8.

Artificial intelligence is coming. In the classic scifi tale, 2001 Space Odyssey,9 an evil computer took over a spaceship because a human tried to shut it down. Watson, IBM’s super computer, knows more about medical advances10 than any of our physicians possibly could, and it won on Jeopardy!11 Meanwhile, Google can predict pancreatic cancer more efficiently than medical tests12, and Twitter can divine which movies will be hits before the box office opens to sell the first ticket to a showing13.

Business brings us new technology, whether we are ready or not. Realizing the potential consequences can’t be left to science fiction. We need to understand all the ethical, secondary and broader environment effects in real time, when the technology is in its infancy or sooner. Simultaneously, science fiction has moved on to deal with some of the most challenging social issues this world currently faces.

To understand technology, I abandon science fiction for business, but I embrace science fiction for wisdom to understand people.

——–

1I consider this the fundamental interconnectedness of all things, and of course credit Douglas Adams with bestowing on me an understanding of the universe.

2The experts claim that digital currencies are unhackable, but that just sounds to me like a giant invitational to hackers.

4The book by George Orwell, written in 1949.