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  • What is Outside Innovation?
    It’s when customers lead the design of your business processes, products, services, and business models. It’s when customers roll up their sleeves to co-design their products and your business. It’s when customers attract other customers to build a vital customer-centric ecosystem around your products and services. The good news is that customer-led innovation is one of the most predictably successful innovation processes. The bad news is that many managers and executives don’t yet believe in it. Today, that’s their loss. Ultimately, it may be their downfall.

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      Observations

      • LEAD USERS
        Eric von Hippel coined the term "lead users" to describe a group of both customers and non-customers who are passionate about getting certain things accomplished. They may not know or care about the products or services you offer. But they do care about their project or need. Lead users have already explored innovative ways to get things done. They're usually willing to share their approaches with others.
      • LEAD CUSTOMERS
        I use the term "lead customers" to describe the small percentage of your current customers who are truly innovative. These may not be your most vocal customers, your most profitable customers, or your largest customers. But they are the customers who care deeply about the way in which your products or services could help them achieve something they care about.
      • LEAD CUSTOMERS AND LEAD USERS
        We’ve spent the last 25 years identifying, interviewing, selecting, and grouping customers together to participate in our Customer Scenario® Mapping sessions. Over the years, we’ve learned how to identify the people who will contribute the most to a customer co-design session. These are the same kinds of people you should be recruiting when you set out to harness customer-led innovation.
      • HOW DO YOU WIN IN INNOVATION?
        You no longer win by having the smartest engineers and scientists; you win by having the smartest customers!
      • CUSTOMER CO-DESIGN
        In more than 25 years of business strategy consulting, we’ve found that customer co-design is a woefully under-used capability.
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      « How to Get Customers to Tell Us What Bugs Them? | Main | Microsoft One Ups Google to Win Facebook Deal »

      October 25, 2007

      Patterns in My Head from Talking with Technology Architects

      Last week, I met with our Pioneers—a group of seasoned technology architects who have each designed and deployed advanced distributed applications. Many of the pioneers now have five or ten of these enterprise-scale systems under their belts. Most of their original applications or descendants thereof are still running nuclear power plants, electric utilities, financial derivatives markets, global shipping and logistics systems, banking and financial trading systems, digital phone systems, nanotechnology robotics applications, and, soon, the world’s most powerful supercomputer. As always, my head is spinning from our rich discussions about how these “lead users” view the world and what they’re up to. I thought I’d share a few top-of-mind observations.

      Consumer Technology Platforms Are “Good Enough” for Most Applications. Pioneers favor the use of off-the-shelf technology. While they are operating system agnostic, they prefer Linux for the applications they build and Mac’s for the laptops they use. They love consumer technology—anything they can buy at Wal*Mart or Best Buy. They use open source applications and free services, not because they’re cost-free but because they’re low-risk and well-designed.

      Commodity Services Are Great Building Blocks. These pioneers view most applications as collections of loosely-coupled intelligent objects and software services. The services can be can be sourced from anywhere in the world. They can be located anywhere. They can be swapped in and out. If there are commodity services available, like Google search, Google maps, weather services, traffic services, the collaborative tools of Ning, Facebook, and so on, they just plug them in and use them.

      Virtual Machines Are Hot. Why give yourself the pain of managing software stacks on a lot of physical machines. Think virtual. Provision, deploy, and manage your software in Virtual Machines, preferably those being hosted by someone else (e.g., Amazon’s Elastic Cloud).

      Work at the Highest Layer of Abstraction You Can. Good architecture is about vocabulary and conversations. If you can manage the conversations about the business or industry, you can transform it.

      APIs Are Valuable. The most valuable intellectual property that most of these architects create is the interface definitions they use to plug things together. By defining the interfaces, they’re defining the functionality and the services provided.

      Design the Processes, Not the Application. Pioneers design and understand dynamic process flows. Timing, parallelism, interactions among processes, and messages and events are important to them.

      The Boundaries between Virtual and Physical Are Blurring. Software architects are now designing computer chips. Non-programmer scientists can design and manipulate complex systems at the atomic and sub-atomic levels. If you can model it and simulate it, you can build it. But to do so, you need tools and services that “understand” physics as well as people who can map the abstract to the physical world.

      Businesses and Organizations Are Usually Badly Architected. You may be surprised to learn that we spend much of our time together talking not about technology architecture but about business architecture. How do organizations function? What’s the vocabulary being used to describe the key operations of the business and the industry? Most of these technology architects have become valued business architects. Many of them have moved from business to business redesigning the conversations and the processes to get things back on track. Pioneers understand people as social beings. They focus on the “interface” conversations in business as well as in software systems. For example, at this meeting, we talked about the fact that transfer pricing (the charges between organizational entities) will kill a good deal every time. Every one treats an internal company as a micro- economy, but they are actually deformed micro-economies.”

      Peter Horne, a brilliant technology architect who is now COO of Next Financial in Sydney, Australia, offered this tip: “My best management tool is breakfast conversations. Architecture is just the conversation that technologists have with one another and with business to form and norm about what needs to get done.” If you start your day with strategic conversations about the language of the business, Peter explained, those conversations spawn strategic dialog.”

      My advice: Take an architect to breakfast this week!

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      Comments

      Hey Graham,
      I agree. The metaphor of business levers and process flows works for me, too.. also, I loved Peter Horne's tip about starting strategic conversations over business breakfasts and letting them ripple along throughout the day....

      Peter had another thought I found interesting.. His rule of thumb: no scheduled meetings after 3 pm. That's his reflection time. As he put it: "If I'm not thinking about the business, who is??"

      Patty

      Very insightful as ever. In my own work architecting organisations I have found viewing the organisation as a collection of complementary capabilities to be useful.

      By understanding how each capability is constructed from different processes, technologies, information flows, work routines, etc and how they are linked together in a functioning organisation, I am much better able to identify which business levers to pull to extract more value for the organisation and which processes, technologies, information flows, work routines, etc need to be adapted or developed accordingly.

      Graham Hill
      Independent CRM Consultant
      Interim CRM Manager

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