The Stranova Blog – Strategic Innovation

To many companies, Strategic Planning is either an annual ritual companies go through or something put off again and again for fear of getting stuck in a massive exercise in analysis paralysis.  Neither the ritual nor the act of putting this off is the right thing for virtually any company.

To a large extent, the challenge with Strategic Planning is somewhat similar to engaging in a regular exercise program.  If you’re already doing it, although you may have started it thoughtfully in all likelihood you have already fallen into a rut — with the original reasons for getting into it long forgotten and you’re running the process “on automatic”, without truly and deeply addressing your now current needs in this area.  On the other hand, if you aren’t doing it already, you are likely daunted by the looming challenge of taking it on and questioning whether you really have the will to follow through on it.

So how do you avoid the rut of a ritualized process and when is “real” Strategic Planning something your organization should do, however small or successful you already are?

Good question, but at the root of both sides of this question is actually a far more fundamental and important one:  when do you need to consider a different sort of planning than has guided you so far, something bigger than your normal tactical planning and something more challenging than just “turning the crank” on last year’s epic meeting process on this subject?

The answers to this are many, but let me set out just a few of the “whens” that may help you justify a strategic leap into a different planning process.

1. When you have the cash to invest in new initiatives and really would like to do more than just “more of the same thing”.
   
2. When your sales growth is slowing even while your competitors seem to keep growing and your customers are interested in more.
   
3. When for some reason or another you’re considering dropping one of the products or services you already have, and you now have an opening to try something new.
   
4. When the strategic path you are on looks like it may require significant shifts in the skill sets required of your organization.
   
5. When it looks like something your company does could be readily outsourced to another and be able to increase quality without higher cost, all at the same time.  This could be an opportunity to retrain resources or deploy existing ones into new territory.
   
6. When an unexpected potential strategic partner reaches out to you to collaborate on a new opportunity.
   
7. And finally (for this “quick list” at least), when you are considering changing what we refer to as the core “essence” of the business. This could include considering shifting what you consider to be the core purpose of the business, the means by which the business delivers its products or services, and/or the values by which it operates.

A good example of this last “when” might be where you have decided to shift to operate in a more Sustainable Manner, with far more attention to principles such as natural resource conservation, recyclability, or use of renewable materials, for example.  Initiating significant changes in how you practice Corporate Social Responsibility, which might include reaching out in bigger ways to your community, for example, would also be a case where your values are changing.  In both cases, those changing values might suggest jettisoning old products or services, creating entirely new ones, and/or changing fundamental ways in which your business operates.

In all these examples, the larger the opportunity the more important it is to consider some deeper approach to figuring out how your organization should grow.  But how do you do that, especially for those with smaller organizations with minimal resources to make this happen?

Unfortunately for all the value that Strategic Planning (and its highly related sibling, Innovation Development) may offer, the traditional approaches to doing this have grown into such a massive commitment and complex process that for most people the only common word to describe the process is inertia — and on a large scale.

Here at Stranova, we have found the trick to avoiding this for your enterprise lies in two key words:  Focus and Will.

By Focus we mean starting with a clear understanding of that essence of your organization — in all the ways we’ve talked about briefly in this essay as well as through some other lenses, as well as about the dynamics of the business ecosystem you operate with.  Then you zoom in on what are the most promising opportunities your essence and ecosystem may be opening up for you.  Your plans do need to be thorough and systemic, but focus will afford you the chance to avoid time-consuming distractions in the planning process.

After all, if one of the “whens” listed earlier in this post is why you’re considering Strategic Planning at all, you probably already have some degree of Focus as to what you want to investigate already.

And by Will we mean taking the time to harness the full power of each and every individual in your organization to move quickly on the strategic initiatives you agree to pursue.  Collective Will can literally move mountains if you have a clear Focus on what you want to make happen, why it’s important, and the process to get you there.

Yes it is hard work.  But once you’ve put your first “new” Strategic Plan in place, you can be assured the value it will create for your company is already taking shape.

Want to know more about how to make this happen in your enterprise, without breaking the bank or slowing down the good things you’re already doing?  We can help.  Contact us at ideas@stranova.com

Sustainability and Social Responsibility are nowadays seen as important business values to embrace, which is a good thing in itself.  It may be, however, that organizing the worldwide business community to take this on systemically may be in fact not only the most promising means to deal with issues such as climate change and human suffering, but also a means for a wave of major new business opportunities that go well beyond just Green Tech and well-meaning community “givebacks”.

A unique three-day virtual conference on the subject of Sustainability as it relates to Information and Communications Technology (“The SmartICT Conference”) just concluded yesterday in cyberspace.  That conference, which I wrote about in an earlier blog entry (“The Important Conference You Can’t Go To”), featured presentations from experts in a variety of information technology areas.  For those that are interested, the excellent presentations from that conference have been archived and will still be available to view for the next several months.

Although the final tallies of those that attended have not been made public, I am sure it included many good corporate citizens and also more than a few “Green Tech” visionaries in attendance.  Each of which was looking to apply the learnings there to lower their corporation’s overall energy consumption and systemic carbon footprint, using the latest breakthroughs in “telepresencing”, Smart Grids, and advanced technologies for data centers such as virtualization.

All good, indeed, with bottom line profitable benefits while making for a greener overall world if executed well.

At least on the surface, we have indeed come a long way from legendary economist Milton Friedman’s famous (and some would say even notorious) 1970 statement in an essay in the New York Times that “The Social Responsibility of Business is to Increase Its Profits”.  He later of course shortened that to an even more famous quote:  “The Business of Business is Business”.

But how far have we really come?  Unfortunately, maybe not that far at all, at least according to McKinsey Quarterly’s just-published global survey of “How Companies Manage Sustainability”.*  As their top-level survey summary says, while over half of the world’s corporate executives see “Sustainability — the management of environmental, social, or government issues — [as] ‘very’ or ‘extremely’ important”, only 30% of those same executives actively seek ways to either “invest in sustainability” or “embed it in their business practices”.  [All quotes were taken directly from the McKinsey survey article.]  And — sadly — those same executives say the number one reason they are working on Sustainability is for “Maintaining or Improving [their] Corporate Reputation”.  Not because it is good for the planet or those of us whose ancestors might need a place to stay sometime.

Okay.  So maybe Business does not get it completely, and maybe Milton Friedman’s 40 year-old conclusion has passed on to the current generation of Corporate Leaders more than we realize.  What about governments, who have some power to mandate that corporations act differently, or all of us as individuals?

Again, on the surface, governments do seem to be getting the message and are trying to make a difference.  They ask for important bipartisan studies of the world’s various problems and make quite a bit of noise especially on human rights, corporate ethics, and environmental issues on a regular basis.

One of the most impressive of such studies in recent years was a 2006 700-page report developed under the leadership of economist Sir Nicholas Stern for the government of the United Kingdom.  In it he first noted that if we as a human species take no actions on carbon emissions worldwide that there is a 75% chance that worldwide temperatures will rise by 2 to 3 degrees Celsius over the next 50 years.  That could mean rising sea levels with over 200 million people having to move just because of that alone, extreme weather patterns will become far more common, crop yields will decline, water will become even more of a precious resource around the world, and up to 40% of the world’s species might become extinct.

Stern’s report did not just stop there, however dramatic those environmental conclusions are.  He had the wisdom (and also what some would describe as the audacity) to describe the economic impact of such climate change on the world.  As just a few of his conclusions:

• Just the presence of the increased Extreme Weather could reduce the world’s GDP by up to 1%.
• If the 2 to 3 degrees Celsius temperature rise happens, GDP could drop by as much as 3%.  If the number went to 5 degrees Celsius, the GDP could drop by 10% worldwide.
• In the worst case scenarios described above, global consumption per head would drop by 20%.

If just one company “ruled” the business world, you can be sure they would take some serious action when faced with a 20% drop in revenues over time.  And even if the numbers are not completely right, you would think this would shake up a few corporate board members around the world just from considering the impact to their own personal stock portfolios alone.

And a single worldwide government would realize they had to take action too, both to protect their citizens from harm as well as to keep their own economies thriving.  At least you would think so, provided there was a least a little embedded wisdom to help them on their way.

Sadly again, this is not the case, in part precisely because there is no one super-wise company or government overseeing all of this.

In spite of now many reports concluding things as serious as those in Stern’s report — and worse — governments around the world continue to argue inside their own Parliaments and Houses of Congress and with other governments over precisely what must be done.  Major climate change summits come and go but produce little more than suggestions, proclamations, and recommendations.

Conventional politics means protecting your own turf and on a short-term basis as well, it seems.  If there is any question of that, witness the massive pollution China is producing at the same time as it grows faster than anyone else.  So much so that nearby production plants had to be shut down to allow the air to clear enough for athletes to compete in the last summer Olympics;  volunteers were also recruited in large numbers to manually clear the algae and other growths that come with polluted waters along the China coast at the same time.

So if government and business cannot get themselves organized on this, what about organizing the individual citizenry itself, maybe in new ways?  Perhaps NGOs, non-governmental organizations such as the Sierra Club, Greenpeace and others acting on behalf of individual citizens might be able to make a difference, but in the end they are limited by their funding, the breadth of their impact, and the unfortunate “Tower of Babel” challenge of having way too many small groups working all on slightly different objectives.

And as for human individuals themselves, they represent an even more scattered group than the NGOs, with even less depth of understanding of the issues. Some of course make the point even more strongly in the way they describe the limitations of the individual, such as how the U.K.’s  respected newspaper “The Guardian” referred to the situation in their recently-published article, “Humans are too stupid to prevent climate change”.  It featured an interview with James Lovelock, the creator of the world Gaia hypothesis.

Among the many memorable quotes from that interview was the following: “I don’t think we’re yet evolved to the point where we’re clever enough to handle a complex a situation as climate change.”  He went on to blame “human inertia” and democracy as two of the major reasons why nothing meaningful was getting done to deal with this situation.  Lovelock also said he felt only a major catastrophic event, such as the calving of a major glacier in Antarctica, might enough to divert us from our current lemming-like path to destruction.  As result of all that, Lovelock indicated he felt that adaptation measures, such as building seawalls to protect against rising waters, might be the only courses of action we as a species would end up considering seriously and on a large scale.

I myself am not so pessimistic to believe that individuals, NGOs, and governments cannot engage more fully to deal with the massive issue of Climate Change.  I may be naive, but I personally believe that the more those three collective powers engage with the problem of Sustainability and Climate Change, the close we will get to a “tipping point” where human inertia will slowly but inevitably begin to change its direction.

Where I do agree with the pundits, however, is that such a change might take longer than we have available to us.  So where does that leave us — or me — in what we need to do?

What I think is in fact the most powerful course of action is to come back full circle to where I started this essay with business itself as perhaps handling the rudder that just might be able to turn this ship around.  Business in fact represents what has been described as the most widespread social organizing force in the world, even before religion (though I am sure I will get a few letters from that comparison).  As Sir Nicholas Stern also noted, business on a grand scale has a lot to do.  And the largest businesses, such as Wal-Mart and Google, have tremendous power both directly (in Wal-Mart’s case) and indirectly through the power of information (in Google’s case) to cause even the biggest of governments to take heed.  If they so wish, they also have the collective organized leadership capacity to cause even bigger change.

If they want to, of course.

And is this last pronouncement possible?  Some would say yes, especially under the leadership of forums such as the Clinton Global Initiative (CGI), which has produced significant measurable commitments to specific Environmental, Corporate Governance, and Socially-Responsible change, often on a grand scale that individual stakeholders, governments, and even corporate boards could not make on their own.  Coming up on its sixth year, the CGI forum, with its unique blend of corporate, NGO, and individual leadership to deal with such causes, seems to making a major difference in everyone’s lives.  Where else could the leaders of Wal-Mart and Virgin Airlines come together to launch major systemic Sustainable Change initiatives?

That said, once again we cannot just leave it up to one forum or one group of companies.  In spite of Friedman and absolutely in spite of thousands of corporate boards and management teams across the world, I believe every business has the responsibility to step up to the challenge of Sustainability in a big way.  And, further, business may in fact be the first category of social organization to actually realize the critical importance of taking on such a responsibility.

As in any such serious change, they will likely take this on first for their own long-term survival.  It is possible also that they may invest in such businesses because, as the McKinsey survey indicates, it will enhance their corporate reputations.  In the long run, though, I believe they will take it on for the same reason as they have any other major strategic initiative. It will be because it is the right thing to do for their company.

And yes they will also do it because by taking this on their company will be able to do something uniquely and strategically significant for the sustainability of the world.

(The London, New York, and Financial Times newspapers, that is.)

Will charging for online access to newspapers really save them?  Maybe those news companies should be focusing not just on the money but instead on an even bigger opportunity to rise from the ashes.

News International (NI), which owns The London Times, announced this past week that it would begin charging for online access to its newspaper services in June.  It will not be inexpensive either.  According to an article in the March 27th edition of the Times Online website, it will cost you 1£ to read Times Online for a single day, or 2£ for a week of access — but apparently only the U.K.   The article goes on to say that International pricing for the same access will run $2/1.5£ per day or $4/3£ per week.

Rupert Murdoch, whose News Corp owns NI, also apparently plans to implement similar charges for his other UK papers The Sun and The News of the World.

On the other side of the Atlantic, The New York Times made a similar decision to begin charging for online content. Starting in 2011, it will begin charging for access to content after readers have clicked to read more than a set number of online articles in a single month. (See the article here for more details on this.) The Financial Times online service has been following a similar model for some time, blocking access to the site after only a few articles have been accessed per month.

And The Wall Street Journal, another News Corp publication, already has an online pricing model for its newspapers.

The reason for doing all this is of course because the daily newspaper, at least in its printed incarnation, seems to be in a business death spiral. Whether it is because of the busy world we live in where the time to read has drastically diminished, the trade-off of paying for what seems like a high-cost newspaper subscription when something more pressing may seem more important, or because free online news services abound, there is no question that those subscriptions are down dramatically worldwide. When the subscriptions drop, ad revenues drop as well, forcing papers to cut back on the very content that attracted readers in the first place, which in turn convinces still more subscribers to cut off their service. Newspapers are in serious trouble.

How much trouble? According to “The Dire State of the Newspaper Industry”, an excellent summary article by Ben Parr recently published in the online site Mashable, in 2009 newspapers worldwide earned $27.564 billion in advertising revenue (the main source of income), with $24.821 billion of that from print and $2.743 billion from online sources. Sounds good, except when you consider that in 2006 newspapers made $49.275 billion in total revenue. That’s a revenue drop of over 44% in about 4 years.

No wonder your local newspaper is looking a little thin these days.

So the question becomes: will this idea of charging for online access to newspapers turn the tide for what used to be — and still are, for the most part — some of the most important publications in the world?

There is some evidence that this may work to some extent. As one example, according to Michael Massing’s article “A New Horizon for the News”, published in the September 29, 2009 issue of The New York Review of Books, one newspaper, The Arkansas Democrat-Gazette started charging for content in 2002, and as a result has managed to keep its circulation roughly stable at a level of 180,000 while many other newspapers have lost large percentages of subscribers. Other smaller circulation newspaper circulation successes that followed from that experiment appear to show the same result.

And charging for online access can be big business in itself. According to the same article from Massing, The Wall Street Journal has ~100 million subscribers paying between $100 and $140 a year for access to its online content, while the newsprint version is still doing well. The Financial Times, with its model of requiring you subscribe to read more than a few items per month, now has some 117,000 subscribers paying up to $299 per year for that privilege.

For all the success that these models would seem to indicate, there are some notable skeptics. As Arianna Huffington, co-founder and editor of The Huffington Post, a highly successful online publication, has repeatedly said, she believes charging for online access is a losing proposition. The argument is that there is too much free material out there to justify long-term online paid subscriptions for these services.

Of course, if “everybody” starts charging than maybe the economics might shift in favor of the big services, or so it seems.

The catch with either side of this argument is, to me at least, that addressing the question of whether or not charging for online access is unfortunately badly oversimplifying the real problem — and the opportunity that it provides.

What is happening, regardless of why, is the continued evolution of a long-term sea change to how we as news consumers access news content. Baby boomers grew up in a generation that read the morning newspaper and eagerly awaited watching either CBS, NBC, or ABC in the U.S., the BBC evening news in the U.K., and equally narrowly-defined choices in other markets worldwide. Now those same news consumers subscribe to far fewer daily papers and can choose from many other broadcast and cable news sources to listen to and/or watch at a time of their choosing. And they do read news online, a great deal.

Just like you who are reading this now.

The TV networks cried about their losses some time ago and one could argue they are still holding on way too tightly to the old model of the “Evening News Anchor” and the half-hour Nightly News. Newspaper publications might actually be considered a bit more agile as they continue to develop their online content, even in the presence of online-only upstarts such as The Huffington Post and other publications.

What is happening to news readership, though, is something that requires more than just re-designing content that can be read on the web, regardless of whether or not you or I pay for it. It is not just that you can get this information online, but also how you engage with the information. The Huffington Post and even some of the higher readership blog sites get and keep their readers because they have a combination of fresher content, typically material with more of an edge to it than perhaps the newspapers are used to, and various means of truly engaging the reader in the online conversation.

People who read on the web are of many kinds, from skimmers who just want the highlights of the news to those who are looking for something to pull them in and get them involved. And it is those who become involved in this new medium who will become the most dedicated long-term news consumers, a phrase which to me applies better than just calling them “readers”.

Why? Because the new brand of news consumers is far from passive, with participation ranging from writing comments online to actually authoring acting as free online editors for those publications. And in case you think this is only in the “new” online services, consider how CNN has moved in a big way to involve citizen journalists with its “iReport” multimedia publications service: edited by CNN, but authored by its customers. Even The Wall Street Journal makes it possible for subscribers to chair their own online discussion forums from within the WSJ community pages on the web.

And yet, for however successful these new online models may be, either for the print newspapers who are testing the “pay to read” waters or the new services who seem to be thriving at this moment, what is clear without question is that how consumers engage with the news is changing. There is an incredible opportunity for strategic innovation in this arena that goes not just beyond publishing the print articles online, but also way beyond even the current approaches of CNN’s iReport, the Huffington Post, and others allowing for online comments to articles, or even inviting readers to host their own services.

The next few years are going to be a wild ride for the news industry. Newspapers may end up closing down and the job of the paper carrier will be in jeopardy. There will, however, always be a strong individual and group interest in the “news”, and true innovators will find a way to meet that need in ways we can only now just begin to imagine.

There are quite a number of nice Smart Grid concept drawings out there, and this one — courtesy of the Department of Energy — strikes me as perhaps one of the best in part because of one thing: it puts the residential customer at the center of the action.

The unfortunate reality, however, is the majority of Smart Grid roll-outs, regardless of the marketing hype and a glut of good intentions, actually end up completely missing any real connection with those customers. Yet in spite of that most of these roll-outs claim the whole reason for the Smart Grid is to make all our lives better from an energy perspective.

For those that think I am overstating the case, consider some of the results from a special survey the Harris Poll conducted with U.S. customers between January 18 and 25, 2010 (see their online summary of the report for more details):

• 68% have never heard of the term Smart Grid
• 63% have never heard of the term Smart Meter

When around two-thirds of all of your perspective customers haven’t heard of your product, it is safe to say you have a communication problem.

The situation, unfortunately, is actually far worse than that. According to the poll, people are far from sure the Smart Grid will increase the use of solar, wind and other sources of renewable electricity (only 39% agreed) and only 33% believe the Smart Grid will improve the reliability of electricity. The poll also notes that only 14% of respondents disagree with the statement “Smart Grid will increase the cost of electricity”, vs. 42% who think Smart Grids will drive up the prices.

Not exactly a stellar connection with the customer.

In addition to the disappointing poll results, even though rollouts of Smart Meters are accelerating throughout the world (see “The Quietest Technology Revolution in History”), so too are the lawsuits from early customers who are in shock from price increases they had not expected. A class-action lawsuit against Wellington Energy, the meter installer for Pacific Gas & Electric in Bakersfield, California, is just one example, For similar reasons, the Texas Public Utilities Commission is also considering putting a moratorium on further installations as well, at least until it can be understood why customers are getting the surprise power bill increases after Smart Meter installations in those areas.

If your customers don’t know even the name of your new product and want to sue you after you’ve installed it, it is also safe to say you don’t exactly have the best relationship going.

The sad part is this is indeed all about a revolution that will make life better for all of us. The Smart Meter will in the end provide the end customer with better understanding of their energy usage on an hourly basis, while at the same time allowing the utilities to charge more when the available supply of energy is more strained (something that in theory should help drive down demand or move it to a different time of day). Further enhancements to the system will allow residential users with smart appliances to monitor time-of-day usage and automatically adjust settings to help minimize energy costs. When residents begin to install solar panels and mini wind turbines that generate energy, the same Smart Meters will allow flow of excess power generated out of the home and into the grid, while at the same time giving home users additional credits.

The two phrases I hear about most often connected with the problems consumers are experiencing are “we need to educate customers more” or that they need to “manage customer expectations better”. Unfortunately, the problem with both of those statements is that they have built into them the idea that this is something that the utilities or government officials driving for these new systems need to do “to” the customers. Get them more leaflets, more brochures. Spend more on a PR campaign to increase awareness.

This is the wrong approach, in my opinion. This isn’t about building awareness about a disease that’s coming or setting off the alarms to warn of an incoming tsunami. It also isn’t about sending out more letters or broadcasting more public service messages. This is about building a true partnership with all members of the Smart Grid, from the generators of electricity (regardless of where they may be) to the distributors and the consumers.

Building such a true partnership requires more than just “managing expectations”. It also involves far more than just making sure customers are better educated as to what may happen when the Smart Meters go in. What you want in such a partnership is a co-creative engagement of all parties involved to help with everything from system requirements definition all the way to design, deployment, and ongoing management of the system. And guess what? This is hard work.

This is about a public trust, one in which the Global Village we are all part of needs to work together to make the most of the powerful systems technology known as the Smart Grid.

It is NOT about having our “expectations” managed for us by third parties.

What it IS all about is putting the customer back in the center of the picture. It is not easy, but no great revolution ever was.

Part I:  Leverage Assets at Off-Peak Hours to Increase Revenues and Launch New Business Ventures

A new U.K.-based startup called “The Newspaper Club”, which allows micro publishers access to some of the U.K.’s biggest newspaper presses, reminded me again of the power of time as an inspiration for product and service innovation.

Since I am sure that last sentence probably left a few people lost, let me explain first by telling you more about this interesting startup.  It was founded by Russell Davies, a former ad executive, Ben Terrett, a designer, and some software colleagues.  The true start for their venture happened when they formed something called “The Really Interesting Group”, a group of bloggers who wanted to publish a newspaper of their own back in 2008.  Which they did using an available local printing press.

“So far, so what?”, right?  The key innovation here isn’t that a group of bloggers put together a mini newspaper, printed it, and mailed it out.  It is about how they arranged to get it printed.

What they did was to contact not just a good low-volume printing company.  Instead they contacted operators of some of the largest commercial printing presses in the U.K., presses used to print some of the bigger newspapers there (such as The Sun with its 3 Million copies printed per day), and negotiated low-cost rates to use that same equipment during off-peak hours. They started it as a single run for themselves of something called “Things Our Friends Have Written on the Internet”, but soon realized the broader commercial potential of the whole idea of being able to print this high a quality of product by leasing time on the big presses in between daily print runs.

Their startup, which offers combination low cost print-and-delivery services via an easily-navigated online portal, offers delivery throughout all of mainland U.K. for prices that will surprise you. Obviously there had to be good business execution and low-cost widespread access of the service to make this work, but the real enabler for the innovation involved making use of a resource during off-peak hours.  It meant “The Newspaper Group” could leverage high quality and various packaging services at a price that would have been previously untouchable. It also means that the printing companies are making additional potentially high-margin revenue off equipment which before was just sitting around all day, dormant.  The capital equipment represents a sunk cost for them and the variable costs of doing the additional printing are minimal, especially because of the highly-automated nature of modern printing equipment. (You can read more about this startup in the excellent BBC online article here.)

Besides what “The Newspaper Group” discovered, other examples of this category of Strategy Innovation are all around you.  Here are just a few:

In the early 1970s, McDonald’s Corporation was looking for a way to get more revenue out its existing restaurants around the world.  They had an established strong business in lunch and dinner services, and kept trying new products with their customers.  It worked to some extent, but it was not until they finally introduced an entire new “time category” of product — breakfast — that they were able to make a major breakthrough in increased revenues. The breakfast menu was in fact driven to a significant part simply by the idea of finding a way to make use of the core restaurant real estate in more hours of the day.  Yes it did require the new menu items and some rearrangement of the kitchen, but those costs were more than compensated for by what continues to be one of the most successful “breakfast restaurants” in the world.

More recently, National Cinema Media (or NCM), whose ads you often see in AMC Theaters across the United States, began a campaign for off-hours utilization of its movie facilities — for things other than movies.  With comfortable seats, great audio/visual facilities, easy provisions for refreshments for attendees, and often excellent parking facilities, NCM quickly learned it could make significant incremental dollars by signing up corporations, non-profits, and community organizations of all kinds for organizational meetings held in their theaters.  If you are interested in learning more about this, check out the part of NCM’s website which describes these offerings here.

Especially as companies are able to more tightly manage use of their own facilities and equipment for other reasons, the concept is spreading as a product or service innovation strategy, and you may just find that by thinking about when your own capital intensive resources are just “lying around” that there is an opportunity for you to add some incremental revenue to the bottom line, possibly even at a high incremental margin as well.

Maybe — it is time to start thinking about time management of your own resources in a new way.

The Measurement Dilemma for Sustainable Business

Peter Drucker once remarked that if the business of your company was primarily about improving profits you are focussing on the wrong things.

What he meant by that was that if your business is doing the right things anyway profits will follow.  What he was warning about is letting the metric of profits become the driving force of the business and distorting all else.  Letting the tail wag the dog.

There is a similar concern as companies move into the brave new world of Sustainable Business Practices.  Not about profits, of course.  Companies will make sure they are watching those very closely as they take their early steps in this area.  It is instead that they will latch onto meeting the latest set of “sustainability metrics” as the driver about what they are doing, and lose track of the bigger and more complex sustainable problem in front of them.

Consider:

If emissions are what your business is about, you’re hiring the big accounting people to help you figure your Carbon Footprint or Carbon Emissions, figure out if “Cap & Trade” applies, if you need to buy credits or can sell credits, and what tax deductions might apply for what you are doing to make the numbers you’re chasing sound even better.

If your goals are more generally about energy efficiency, you’re calculating that and showing how investing in solar panels or installing that new centralized supercomputer has lowered your overall consumption in this area.

If what you’re interested in is about waste reduction, you’re managing your business to encourage the use of recyclable and renewable materials, reuse your own scrap, and minimize producing even more waste, whether toxic or not.

Although the intentions may be laudable in achieving each of these goals, the problem with these metrics is that, once companies start down the road of meeting the numbers, they rather quickly lose track about becoming a true agent of systemic or revolutionary change in the area of Sustainability.

“Just meeting the numbers” is part of why many in the United States want to legislate support for switching to domestic biofuels made of grasses instead of relying on imported oil.  But have you considered how inefficient burning biomass is compared to using petroleum-based fuels (meaning that emissions could actually be much higher for the “sustainable” solution)?  Or about how much biomass might need to be grown in order to the U.S.’s annual needs?  (Hint:  it is MUCH bigger than you think.)  Do you realize how much water, fertilizer, and other environmental expense is required to grow, harvest, and convert all that biomass for use?  Biomass has its place, but probably not on as grand a scale as some people imagine.

“Just meeting the numbers” is also part of why many people get excited about solar energy and how much money they are saving using it without realizing the highly energy-intensive process needed to create solar cells in the first place.  The “system” solution here involves looking at the full cradle-to-grave lifecycle involved.

And “Just meeting the numbers” is why even regulators sometimes put rules in place that intuitively sound good but when you study the systemic implications there is actually a counterintuitive solution that would actually serve the world better.  Such as insisting on renewable materials in a product when emphasizing recyclability may in fact be the better sustainability choice.

The problem with “Just Meeting the Numbers”, especially when you’re launching a Sustainability Initiative, is that it is all too easy to focus on details rather than a systemic whole.  Even worse, we are all so conditioned by conventional business practices to want to meet numerical objectives that, when we find an objective that may indeed stretch us, is measurable, involves sustainability in at least some way, and is one we feel uniquely able to “beat” as a goal, we readily get hooked on the idea of meeting that objective instead of the systemic challenge.  Easier than we might imagine, we become as hooked on elemental sustainability metrics as companies Drucker was referring to became addicted to concentrating “just” on profits.

It is understandable that one can fall into this trap.  Systems are not easy either to understand or to model.  It is especially challenging with Sustainability Issues since there are so many players and interactive processes.

It requires thought, planning, initiative, and vision.  And a stubbornness of sorts to continue to follow all the threads and consider all the processes that may impact the particular systemic Sustainable change you want to make in the world.  You may end up  spending far more time and money than you expected to stay on top of it all, and you may need far more help from others to achieve your goals.  You may even learn that you are not the one that is going to be “in charge” as much as you thought, and that you may need to cede some power to others in the process.

But that’s what big change is all about, isn’t it?  Think of how good you are going to feel when that change is well on its way.  As well as how all that careful planning and consideration will actually enable your company to be even more successful than a “Just meeting the numbers” strategy might have done for you on its own.

The Smart Grid Explosion, with 631,647,134 Smart Meters & Counting

Just as it is hard to imagine a world without personal computers and wireless access to the internet, some day it will be equally difficult to imagine a world without smart meters,  smart energy distribution grids, home power generation, and bidirectional power management in and out of the home.

There are other similarities to the internet as well, especially with regards to how long it took before the general public even knew it existed — and even longer to start using it on a widespread basis.  All while the entire infrastructure was in place, data was humming back and forth between its nodes, and multiple companies were already marking their turf to make billions of dollars in this emerging field.

Getting even more specific for this example, a recent Harris Poll said that 68% of people in the U.S. don’t know the term “Smart Grid” and 63% don’t know what a Smart Meter is. (See “The Smart Grid is Coming!  What’s a Smart Grid?” for more details.)

Regular readers of this blog are definitely more “up” on new technologies and strategic innovation than the general public, of course.  They understand the basics of the Smart Meter itself which, in its initial incarnation, allows for time-of-day monitoring of power use in homes and commercial buildings.  They are also aware that other versions will be able to dynamically and remotely turn appliances on and off to regulate peak demand, to monitor excess power being generated by a home’s own power sources (which might include Solar Cells and micro Wind Turbines, among other things) and even regulate the transmission of that power into and out of the regional Smart (Electric) Grid, and even to provide on demand home power management information via the Internet.  All of which they realize will enable dramatic power savings worldwide while creating the next wave of technology billionaires in the process.

What even those who are this aware probably do not realize about this industry is already how fast it is grown, so quietly in the background and even in their own backyard.

Did you know, for example, that Pacific Gas & Electric of California has installed 4.6 million Smart Meters as of January 2010. and that they also plan to install a total of 12 million Smart Meters covering some 80% of the state’s population by 2012?

On a worldwide scale, the number and complexity of Smart Grid projects is even more staggering.  Before I give you the numbers, I invite you to play around with the following Google Map Mashup put together by Meterpedia.com.  Wait for it to load, then check out the massive number of circles shown on the map, each of which marks the geographical center location for a given specific project.  Click on any of the colored circles on the map and you will see further details and links to the specific Smart Grid activities in that region.
View Smart Metering Projects Map in a larger map

Zoom in and you’ll see more projects.  Zoom out, move the map around, and you’ll see projects scattered in almost all major (and many minor) population centers around the world.

How big is all of what is shown in this map display?  245 projects representing over 630 million Smart Meters and with project budgets running to $35 billion. (Data again provided by Meterpedia.com.)

And… what is not yet on the map is even bigger.  Pike Research, just one of many marketing firms studying this area, has recently estimated that over $200 billion will be spent in this technology area between the years of 2008 and 2015.

With proper system design and integration and with effective systems management protocols in place, these Smart Meters and Smart Grids are already changing how, when, and at what cost we use power in our homes, offices, and production facilities throughout the globe.  All on a scale probably very few of you even imagined.

And so it is also that the last paragraph will also bring us to another topic for a future blog, about how poor systems strategy, sloppy tactical implementation, and inadequate engagement of the consumers themselves could dramatically curtail the ultimate effectiveness of such a Smart Grid revolution if we are not careful.

If that happens, you can be sure the failures in this arena will be far more noisy than the current very quiet success of the initial Smart Grid rollouts.

Our follow-up blog on this topic will be out during the week of March 15. (Update: The follow-up blog post was published. See “The Customer at the Center of the Smart Grid“.)

What Happens When Your Competitor Does Your Marketing For You

Apple’s iPad® tablet computer is coming.  And so are a lot of others who would like you to buy their tablet computers instead.  Including a certain company called Google with either its Android or Chrome Operating System, that other software enterprise called Microsoft, and a wide range of strategic partners.

In classic business jargon, what these others are doing is called the “fast follower” strategy.  Compaq did it early in the world of computers, taking what IBM’s early personal computer group created and following on quickly with their own line of high-performing PCs that often outsold those of its groundbreaking competitor.  In the Japanese consumer electronics industry, Sharp Electronics learned quickly what sold well from innovator Sony and quickly flooded the market with colorful and fun alternatives of its own.

If you are the innovator, being first to market brings with it the opportunity to set the rules of the game, especially if you are changing the way an industry does what it does.  If you are far enough ahead of your competitors, you can even tie up some of the key strategic partnerships long before others can even realize what partnerships are needed.  You can also lock up important intellectual property to block others from entering the field.  Add all that to strong execution and you can hold your lead position for years.

This has been the story of Apple with its iPhone, which introduced its game-changing product only a few years ago and has taken massive market share especially in the U.S.  They are now under attack as virtually every major mobile phone manufacturer has begun to flood the market with its own touch-screen enabled handset and even its own cellular-network driven “App Store”.  But in spite of such strong competition, Apple’s continued innovation juggernaut, strong relationships with key strategic partners in both sourcing (including music, video, and even the App Store itself) and distribution looks like it should enable it to keep its lead for a long time.

So if the Apple iPad is the innovator in the latest generation of Tablet computers, what does past history and theory say about the likely competitive scenarios involving other tablet devices running either an OS from Google (Android or Chrome) or Microsoft Windows?  Wouldn’t we see history beginning to repeat itself?

The early answer appears to be no.  The why behind that conclusion comes in three parts.

The first is that the iPad, at least as currently unveiled, is nowhere near as innovative a device as its iPhone sibling. It uses basically the same OS as the iPhone, with a more elaborate touch-screen system and probably a few tricks Apple has not unveiled yet.  It still runs basically only one App at a time and all Apps must be purchased and/or downloaded via the Apple-controlled App Store.  So even if it picks up iPhone-like calling features, it still isn’t doing things significantly differently than the iPhone device.

The second is that system concept for the iPad, which it is true might be fun for browsing, playing larger format games compared to the iPhone, running single-point business applications, and reading books, is really an odd combination of features.  You cannot multitask, something that to me is a major barrier to utilization of the larger-format device, and the restriction that all apps come through the App Store makes this way too controlled to be used as a general-purpose computer device.

So on this second point, the big question is really why someone would buy a larger-format device like the iPad and be willing to accept the many restrictions involved, especially when a laptop computer would seem to offer much more flexibility and the ability to install virtually any type of application you might want.

The third problem is that both Google and Microsoft are far from your usual fast follower types.

Google in particular is actively targeting this part of the market with its new Chrome OS (not to be confused with its Chrome Browser), has its own growing “App Store” enterprise (developed for Android, but likely easily repositioned for Chrome), has a powerful set of cloud-computing fundamental business applications at its disposal, and strong strategic partners.

Microsoft, the other contender in this game, is also working this market in several ways, including its recent release of Windows 7, the first of its Operating Systems that has multitouch control capabilities built into the core functions of the OS.  And, perhaps even more so than even Google, it has the financial resources and marketing clout to do just about anything its sets its mind to.

So as Google and/or Microsoft decide to go head-to-head with Apple in this category (in partnership with a wide variety of licensed hardware partners — including HP, Dell, and Acer, for example), they can easily come up with not only credible but also possibly much better product offerings than Apple’s iPad (including multitasking and flexible app sourcing) as early as only a few months from now.  The market share is more theirs to lose than necessarily all that tough a battle.

In addition there will be the side effect that Apple’s own iPad marketing campaign (which will likely help drive demand for the entire category of Tablet computers) will have had the inadvertent effect of encouraging demand for its competitors’ products as well. HP has even leveraged that marketing with a recent mini-marketing push and “slate” viral video of their own that touts HP’s support for the “tablet” category, builds on its over 5 years of having invested in development for this product type, and pokes some justifiable holes in the usability of Apple’s creation along the way.

Now don’t get me wrong.  Apple will likely do quite well with this new product because its business model leverages high revenues from the App Store and iTunes side of things.  The product is also going to be beautiful, with that attention to industrial design that does set Apple products apart, and that alone will drive some demand.

But as a standalone device Apple’s iPad should be watching its back.

2010′s Sustainability Summits

There is only one catch to this incredible event:  you can’t actually GO to the conference.  At least not in the normal sense.  No one is going to get on a plane to attend,  No one is going to have to fight for a taxi to get to the conference center.  And not a single hotel room will be booked.

Silicon Microwires:  A Powerful Lesson in Technology Strategy

As the world’s supplies of conventional energy sources run lower and the problems of greenhouse gas emissions have become better known, the business opportunities for alternative energy sources have skyrocketed.

The challenge with many of those opportunities, however, is that they often have significant environmental costs of their own that must be dealt with.  As a well-known example, nuclear power, however clean it might be able to operate provided all safeguards are considered, still leaves a mass of nuclear waste to dispose of in the long term.  As another example, the battery systems of hybrid cars may present toxic disposal problems at end of their lives — and become a costly accumulation as adoption rates for these kind of vehicles increase.

Though these examples are fairly obvious, one of the surprises to many who begin to investigate the full lifecycle issues with many so-called “green” or “low carbon footprint” technologies is how dirty some of those really are, especially as compared to the amount of energy they can provide.

As one recent study looking at alternative energy in the U.K. recently noted, if you consider full lifecycle carbon footprint implications (including all emissions from initial manufacturing and/or harvesting of raw materials all the way to eventual waste disposal), direction combustion of grass (for bioreactor energy) contributed almost 80 grams CO2 per kWh of energy eventually delivered.  On the other end of the spectrum, Nuclear Energy produced only around 5 grams CO2 per kWh of energy.

Perhaps those numbers aren’t a surprise, but one that certainly will be to me is that current Photovoltaic Cell technology is actually fairly high in carbon footprint, with some 58 grams of CO2 produced per kWh of energy for installations based in the U.K.  (The reference to the U.K. location is because total energy produced by solar cells is a function of how much sunlight is available for the cells to receive.)  Comparatively, then, using a so-called “clean” solar cell produces almost 75% of the CO2 that burning grass in biomass reactors would produce.

Why are the Photovoltaic numbers so high?  Because it takes a great deal of energy to produce solar cells in the first place.  Once produced, the carbon emissions are lower, but the carbon footprint is already established and the damage is done.

To improve on this, many companies and research facilities have investigated the making of ultra thin film Photocell technology, which of course lowers both costs and overall carbon footprint.  According to the Department of Energy, conventional single-crystal silicon cells produce approximately 10 X the energy required to produce them.  Multicrystalline silicon can produce between 12 X and 16 X the energy required to produce them, depending on whether or not they are in a ribbon form.

Those are mportant steps forward, but perhaps one of the most exciting of recent strategic innovations in this field is the one recently announced by graduate student Michael Kelzenberg and other materials scientists at CalTech in the February 14th issue of Nature Materials.  (See also the related Scientific American article about the same work.)  Their system reforms silicon into vertical “microwires” of crystalline structures (shown in the attached picture here).  These microwires, which also include embedded nanoparticles of aluminum oxide to reflect more light inside (and therefore increase the efficiency of the systems), capture as much as 85% of the available solar spectrum while requiring only around 1% of the silicon conventional wafers would need.

This is of course only an early result and will take some time before moving from the lab to production reality.  It is, however, an example of how asking the right strategic question of precisely the right group of people can make the biggest possible business impact.  We look forward to hearing how this breakthrough innovation develops over the next few years.  It will likely make a major difference in all of our lives — and make this part of “Green Technology” even greener than ever before.