business strategy

A Simple Heuristic for Managing Technological Change in The Utility Industry.

The electric utility industry is glacial in its adoption of technology. There is evidence of this in never-ending pilot projects with startups that lead nowhere and in product design crowdsourcing campaigns that take a year and end up with products that remind one of the failed healthcare.gov project.

But change the industry must. The new consumer demands it (push) and it is what technology wants (pull). Caught in the middle of this push and pull is a cadre of management that is struggling with understanding who the new consumer is and is hampered by the bureaucracy and hierarchical decision making process in an environment where speed is crucial. Built on a premise that the utility's role was to provide stable power reliably and safely the system, and consequently the industry, has failed to adapt to a time where the consumers definition of safe and reliable power is one that is reasonably priced and sourced from renewables in a digitized economy.

What is required is a decision making approach that facilitates speed without compromising on the need to continue to provide stable power safely and reliably (as newly defined by the consumer). The new approach should factor in the 4P’s and weigh the impact of any new technology based on these four factors below by asking some critical questions. There are a few more questions than the ones listed below and I cover these in my ebook ‘Managing Technological Change in the Utility Industry’. 

  • People: How will the new technology impact consumers and employees?
  • Product: How does the new technology change the product we are providing?
  • Performance: Do our processes change as a result of this new technology?
  • Policy: what are the policy implications of adopting this new technology?

A comprehensive risk and response prioritization assessment of the answers to the questions above. This enables the development of a simple radar chart that enables the manager make the case for the right projects to be implemented at the right speed. An example radar chart for Augmented Reality (AR) is shown below. As easily seen, employees and processes are most affected by AR. This is due to the possibility to train a new employee to address the skills shortage that is quickly becoming a big problem in utilities across the country.

Simple heuristics like the 4Ps also provide a mindset modification to favor speed over ‘paralysis by analysis’. A much needed mindset change in the industry. As the industry moves to a distributed structure, as consumers request a deeper and more customized experience from their utility providers and as technology advances at all layers (from the infrastructure to the interaction layer) the ‘glacial-response-while-we-collect-rent income-business-as-usual-approach' of the utility will no longer work.

It’s what technology wants. And you and I know that technology eventually gets it’s way.

Please like, share and tweet!

Polymathic Weekly #1

Between 2005-2007 I curated a weekly email of books, music, pictures and a pithy quote. It got folk over hump day and became a thing with ~10k views/month*. Life happened, I stopped sending the newsletter and managing the site but kept curating interesting links for friends/colleagues.

It's 2016 and it's back! Every week (if you let me) I'll share great articles, a couple of books and lifehacking products. The goal is to that you get something new and career advancing every week.

This week's picks

Product

  • Boomerang for Gmail - They say 'teach people how to treat you', if that's the case stop sending work emails late on Sunday night and refuel your tank instead. Use Boomerang and schedule that email for Monday morning :) Also never miss sending a follow up email.
  • Bonus: x.ai: Most of my meetings last year were scheduled by Andrew or Amy. Not real people, artificial intelligence. Apart from a few glitches most people couldn't tell they weren't human. Welcome to the future.

Articles

  • Robots Will Take Your Job - Continuing the AI theme, the Boston Globe has a fantastic take on AI/Deep Learning and the impact it will have on our jobs. Read for why "we must seriously start talking about decoupling income from work".
  • 13 Urban Trends: As cities change before our eyes what can we expect and how can we, as individuals, position to benefit. Some of these are playing out in Austin (my new home) now.

Book

  • Your Flying Car Awaits - At $0.99 this book is a steal! There was a time when predictions were the remit of researchers/true experts. They still got a lot wrong. This book is a fascinating look at many of those wrong predictions and some that are no longer fantasy.

Enjoy! Share your thoughts, feedback, send to friends or just say hello...

I'll be at SXSW in two weeks so let me know if you have any particular innovation you are interested in scouting/learning more about.

Till next Sunday, have a fantastic week!

'Seyi 

You can get my Ebooks on Amazon (same price as your daily coffee but with a longer lasting boost) or here at www.asha-labs.com/book/


Systems Thinking (Business) | One Stamp (Novel) | Startups | Alien #2102 (Novel)

 

 

*The image above (circa 2006) is from wayback machine.

 

 

Zenefits, Uber and Facebook: Who Loses When Innovation & Regulation Collide?

ZenefitsUberFacebook or Internet.org. These companies have dominated tech headlines in the past few days for the issues they are dealing with regarding policy and regulation. In the case of Uber it's been the case pretty much since inception. Some of the coverage positions the regulators as the bad guys stifling innovation: 'Damn those luddites!'. Some paint the technology companies as the villains; 'Travis Kalanick is the evil baron of our time!'. In the case of Zenefits it does seem like there was a lot of negligence and disregard for regulation.

The more thoughtful commentary cuts to the fundamental issue here and that is the conflict between the purpose of government and the purpose of business. The most crucial determinant of a system's behavior (the government or the business in this case) is the system's purpose. I talk more about this in my ebook which is currently free on Amazon. Fundamentally, both sides of regulation (government) and technology (business) pursue their own separate goals. There will always be friction between what was (and how regulation dealt with that) and what is about to be (and the inadequacy of old regulations to deal with this). That will never not be the case. Another example is the inadequacy of utility industry regulation in dealing with consumer energy data in a time when every device captures and stores data.

In all these cases what needs to happen is a shift from the ‘all regulations are constraining’ trope towards helping create enabling regulations. What gets missed in the conversation is the nature of regulation; some are enabling and help to bring the innovation or benefit to life while some are constraining by putting bounds around how much can be impacted as a result of the innovation or technology. The goal is to help inform more enabling regulations, with emphasis on the word inform not influence, and also foster an acceptance that some constraining regulations are actually for our own good! The simplest examples of constraining regulations that have been hugely beneficial that I can think of is traffic control through lane demarcations. Imagine a world where there were no lane markers on the roads because car manufacturers felt it would limit how much driving people could do...

Enabling regulation comes about by utilizing a framework where regulators

  • look at the macro system,
  • make projections about where things are going at the subsystem level (and this is where the technologists or innovators can help)
  • Engage with the citizens they are trying to serve
  • futurecast about what technology wants

and factor in all this information to create policies that enable the government achieve its ultimate aim of creating a thriving citizenry that benefits from the  innovative/new technology that the other side of this conversation is selling.

It starts from working towards the same goal or shared purpose. A greater goal When goals are at odds (as is the case in the 3 examples above) the only real losers are the consumers; they miss out on the benefits the technology can provide while the regulators and businesses are distracted. During these regulation battles the businesses keep figuring out ways to run outside of the regulations (a systems trap called 'Rule Beating') to continue growing while the regulators keep regulating.

A shared goal that will yield benefits for all the subsystems involved, especially the most important element ; you and I.

One can always dream...

Don't Plan Your Career, Lay Out Scenarios Instead

I won't bury the lede on this one; don't plan your career, a better approach is to develop a few scenarios of where you believe your industry is going and acquire the knowledge and skills that will be required to thrive in these scenarios. I'll explain how to do this.

I wrote a few articles in 2015 (OK, a lot) and the ones that got the most views/responses were focused on the future of an industry or company. Unsurprisingly, I got questioned on my ability to predict the future, people disagreed in a few cases. That's fine. My response was the same every time; I'm not actually predicting the future, I'm just laying out strategic scenarios. Second most recurring question was why I felt comfortable sharing my views on where the future lies for industries that I know little about? My response; it's easy when you apply systems thinking because one should be wary of folk who predict the future with certainty.

It’s all about systems thinking. Looking at the industry through the lens of some immutable systems truths and not placing too much weight on the short term beyond where we are in market cycles. It’s the crux of my ebook as I apply it to two industries (education and energy). 

Understanding the fundamental drivers and where your industry is going will enable you acquire the skills you need to thrive in your industry whatever the outcome of your  situation with your current company or with the company itself. It's a simple process

  1. Read and gather information on the game changing technologies within and outside your industry.
  2. Apply some Systems Thinking to the information you've gathered (I give some examples below)
  3. Lay out 2-3 scenarios for where things might go
  4. Research to gain better understanding of what skills you need to acquire  to play a leadership role in the scenarios you've laid out (#SkillsGap)
  5. Go about acquiring those skills.
  6. Stay learning

Systems Thinking Concepts to Apply for Scenario building

In the Fifth Discipline, Peter Senge advocates for the value of learning organizations. The same learning mentality applies in your acquisition of knowledge about technological advancements and the skills that will be required. Some things will always hold true, regardless of whether some of the technological advances come to be, because some systems concepts (I borrow from Donella Meadows here) will always be true. Here a few that you can use to develop your scenarios

  • Honor, respect and distribute information: the business model for some industries (e.g. insurance or credit ratings) is based on lack of transparency and hiding information from customers. Such industries, and companies that are thriving in such industries, can only do so for so long because information will always seek a way 'out'. For example the healthcare industry will end up with our individual health records belonging to us and not the insurance companies or the healthcare systems. Develop scenarios that respect this systems concept.
  • Listen to the wisdom of the systems: similar to the concept above, analog industries to yours that are further along in the system cycle will provide you a sense for possible scenarios in your industry. For example; the utility industry is moving from a centralized to a distributed generation and supply structure, similar to what happened to the telecommunications industry about 15 years ago. Listen to the systems. This concept also suggests that cross industry expertise is going to be critical in any scenario you come up with as competition will come not just from within your industry but from outsiders as well. An example is Myfitnesspal (acquired by UnderArmour) which has data on the food habits of ~80M users, expect this company to compete with insurance or health care data companies in the not so distant future . The future of companies and careers will be ruled by those who combine skills from several areas of expertise and augment it with technology to achieve their goals. Develop scenarios that recognize this.
  • Expand the time horizons: In 2013 there was a lot of talk about drones. In 2014 there was a lot of talk about drones. In 2015 there was a lot of talk about drones. In 2016.. you guessed it, there will be a lot of talk about drones. This is not because people don’t have things to talk about, it’s because until a technology becomes ubiquitous we continue to be fascinated by the possibilities. When developing scenarios, extend your time horizons to include a timeframe when the fascinating technologies of today become regular parts of our lives and work. 

Using some of these concepts you will be able to futurecast, develop scenarios and define what you need to learn to cover your #SkillsGaps and it also helps you develop a learning mentality (due to the amount of research you will have to do).  Even if none of your scenarios come to be you would have learned a lot and gained skills. You’ll need it to thrive regardless of the changes that happen around you…

Get my ebook on Systems Thinking and Scenarios here or for the interactive version check out Amazon.

Why Tesla Is Not Disruptive; A Systems Thinking Assessment.

Watch Bloomberg West and you would be forgiven if you came away with the impression that Tesla recalling all 90,000 Model S cars is good news. It is quite interesting to watch how commentators fawn over Elon Musk and all thedisruption he's causing. Don't get me wrong I’m not suggesting we all pile on, I know it is terribly difficult to build a business (or 3), but let’s stop calling Tesla disruptive.

Tesla is impressively innovative (with a CTO at the top of his game) but the company is not disrupting the automobile industry. Disruptive innovation is not what we think it is. Tesla’s innovation is in bringing a beautifully designed electric car to the market but for the company to be disruptive it would have to have entered the automobile market one of two ways.

  1. 'Low-end footholds that occur because of the incumbents focus on their most profitable and demanding customers with ever improving products and services'. Tesla is selling products that are well above the annual wage of the average American. There is no low-end foothold in a product that only the 1% can afford. Even moving into the low-end of the market with new cheaper products does not make this count as a disruption to the status quo, it’s just the natural trajectory of any competitor in a market like this.
  2. 'New market footholds of creating a market where none existed before': in this entry mode Tesla also fails to disrupt. Wealthy consumers were going to buy expensive cars regardless of the fuel source. Fantastic design and great marketing doth not a disruptive product make (even thought it maketh a more sustainable world). Tesla captures market share, making it competitive, but I’ll suggest it has not created a market where none existed before as people were buying electric cars before Tesla came along. The majority of consumers who were not thinking of buying an electric car (or able to afford one) are not about to buy or lease a Tesla.

Assessing Tesla through a simple Systems Thinking lens

From an innovation frame Tesla is not disruptive. What about from a systems thinking perspective? A method we can use is what I call zooming (in and out). Through this lens we also see that Tesla, while innovative, is not disruptive.

    • If we zoom into the company (squint) and pick one of the component parts - let’s go with manufacturing - we see a company that is using new technology, robots and humans to build an electric car (video below). For most people who haven’t visited a car manufacturing plant this all looks cool and great. I almost ended up working in one of these manufacturing plants in 2001 and I can assure you the plants in the midlands of the UK that I visited had technology, robots and humans building their cars too. A state of the art car manufacturing plant, as evidenced below, is innovative but it is not disruptive. 


  • Zooming out of the company and putting on a systems lens you see that Tesla's supply chain (sourcing parts from 200 global partners), distribution channels (company owned stores), service coverage (high quality no questions asked) and type of vehicle (electric) all differ from that of traditional auto manufacturers. But the elements of the business model are basically the same as that of said traditional auto manufacturers. Most engineers would look at a Tesla manufacturing plant and recognize every element of the plant. What might be new is the level of technology applied to what is a traditional plant. Again, innovative but not disruptive.

Like Clayton Christensen (an innovation sage), in his HBR article that fueled this post, I’m not suggesting that Tesla isn't doing amazing work. As a systems thinker what I worry about is how we devalue words (and the work that underlies the work) by ascribing it where it is not applicable. There are people doing truly disruptive works across all industries and you yourself might have an idea and can use the framework above to assess whether your product or service is truly disruptive.

Innovation abounds around us. But disruption? It’s actually pretty hard..

In technology, things change but things stay the same

In 1971, 44 years ago, Intel introduced the first 'computer on a chip'.

In 1981, 34 Years ago, the operating system DOS 1.0 was fired up.

In 1991, 24 years ago, the world wide web was opened up to the general public. Amazon was launched 3 years later.

In 1997, 18 years ago, IBM released Deep Blue (which beat Gary Kasparov in chess) which had the 32-bit copper chip that also powered the Sojourner Rover/Pathfinder mission to Mars. Also in 1997/1998 Google (essentially the gateway to the world wide web that was publicly released 5 years prior) was born.

In 2007, 8 years ago, Apple released the iPhone

One looks at this timeline and three things pop into mind pretty quickly. 3 things that give us a sense for where technology or (more precisely) technology companies are going.

  1. Every one of these major technology releases was the beginning of a 'platform' business. One or a few companies were the 'platform' providers of that technology. These platform providers are still some of the biggest companies in the world right now.
  2. Each release of a technology led to an ecosystem of businesses built around that platform. Many of the best companies around the platform also became huge businesses.
  3. The platform defining technologies have benefited greatly from Moore's Law which explains the exponential accelerating rate of the reducing cost and increasing capacity of computing power over the last 5 decades.

We are getting closer to 5th decade of  said Moore's Law (even though some thinkMoore's Law is stalling/no longer applies) i.e. computing power will exponentially increase and get cheaper over the next few years. Even cheaper than it currently is. This is why we are hearing more about Artificial Intelligence (AI), Machine Learning (ML), Virtual Reality (VR), The Internet of Things etc. all technological advancements that are benefitting fundamentally from exponential reductions in processing power at cheaper costs.

Apple (with cars), Google (with cars/robots and AI), Facebook (with AI and VR) and Amazon (with Alexa and Voice Control) are all banking on the increased predicted capacity and have all picked a platform to 'own'. Of course IBM (with Watson), Microsoft (with Hololens) and Intel (with Skylake, their new processor) are also banking on becoming the next platform business.

What's odd about that list up there (save Facebook) is that it's the same companies in that timeline I've drawn above.

And it is truly odd that as things change (at the platform level), things seem to stay the same in the technology industry...Not sure how I feel about this... what do you think?

Do You Understand The Power of Systems Thinking + Storytelling Like Great Leaders?

My Masters thesis Professor at Warwick University once called me the woolliestsystems engineer he’d ever met. He said I wrapped a story around every concept or system I was discussing or writing about. I just did it again.

For a period this bothered me.

Only when I ran Power2Switch (great team, a couple thousand customers in 5 states) subconsciously utilizing systems theory (diagram below) did I understand the value of compelling narratives as part of the output of a business. I came to understand (and aspire to) the ability of great leaders to take the inputs (ideas and people), run it through their strategy and processes (system) and generate two important outputs

  1. their actual product/service and (equally important)
  2. the story or narrative of their business. 

This inputs -> system -> output structure is the core tenet of systems theory/thinking and great leaders apply it without even thinking about it.

System thinking is most simply the analysis of the interaction between all the elements of a system. The system can be combinatorially complex (airline schedules across multiple destinations for multiple planes) or dynamically complex due to the changes that occur with the movement of time (like in the case of a business).

 

Diagram from Systems Thinking for Business by Rich Jolly

Most business leaders do not think about their companies using a systems approach, this leads to missed opportunities for improved products, inefficiencies and consequently lost revenue. This is both an issue at the company system level (what inputs do you need to create the output) and at an industry system level (what systems are fundamentally changing within your industry? how does that affect your company?).  

Good leaders/business people inadequately think about their business through a basic systems lens, the effects are felt in the form of plateaus in revenue and lack of growth.

Great leaders and successful business people on the other hand very carefully think about their companies through a systems lens and augment that with, what I think is the killer sauce, a compelling narrative that combines their personal stories with the business. Think about it; Mohamed Yunus of Grameen Bank, Oprah Winfrey, Coco Chanel, Henry Ford, Sara Blakely of Spanks, Estée Lauder, pick a Gandhi, Richard Branson, etc and the master of the narrative Steve Jobs. We think of all these leaders as much for their products/service (output) as we do for the narrative they crafted around said product or service.

It is that compelling narrative that elevates the simple input, systems, output structure into an unforgettable part of a customers consciousness. I see this everyday, through Asha Labs I work with business owners and their companies to get those inputs right (and some of these leaders are geniuses in their fields), to put in place the systems and processes to create a great product/service and (most importantly) help them craft a compelling narrative so the world knows and is drawn to the what, why and who of their business.

So I say thanks Prof, without you I wouldn't have learned systems thinking. And thanks especially for clueing me in on my woolliness and the super powers of well crafted and authentic narratives...

ps: the systems thinking approach to business also applies to career planning, just replace the inputs and outputs.

How To Solve Problems: It's all about 'Key logs'...

I have a friend/entrepreneur who built one of the more successful board games/idea guy whom I grab lunch with about once a year. It's always a great conversation covering everything and nothing.The conversations leave me inspired. He leaves me with great ideas and at least one priceless nugget.  My most recent conversation with him was no different, all because of key logs...

During our discussion about everything and nothing he shared a summer camp story when his camp leader taught him about the key log and how important it is in unclogging a logjam. My friend is a story teller and I could visualize the logjam,  a crowded mass of logs blocking a river (like below), as he told me the story.

That jam started from one log. Despite how crazy the jam is (like most jams) it starts from one log. The jam comes from one log intersecting with another log. That one log is called the key log. Move that log and, even though there is still some log moving to do, the jam is loosened. Therein lies the core point

The real work of clearing a log jam is not in moving logs around, the real work is in finding and moving or removing the key log. 


Same thinking applies to most business problems. No matter how complicated the problem, there is a core issue. Find that core issue and the secondary issues become easier to deal with. Most people I know (who aren't consultants :)) are wired/react to problems by immediately jumping to solutions before getting a real understanding of the core of the problem. I see it all the time

  • Sales is slow or is suffering. So we fire the salesperson. Might the key log/core issue actually be that the product is no longer serving the customers need? Or that the product isn't a good one?
  • Personal example: Your son is rebelling and you ground the child. Maybe thekey log/core issue is that you need to spend more time with the child?
  • Customers are not signing up for your website so you spend more on social media ads. Might the real issue be that you haven't clearly articulated or figured out the value proposition for your business?

There is still a lot of work after moving or solving the key log or core issue but the work is made easier once you've taken a step back to figure out the key issue.

This simple key log heuristic applies to all forms of problem solving.  You do not need to be crazy smart, trained or certified to take the simple step of pausing and getting to the core of a problem before going about trying to solve it. It's served my friend very well personally and professionally.

It might just serve you as well..