Starbucks, Star Struck with Social Computing?

In many ways, I'm thrilled about "My Starbucks Ideas", which provides Starbucks' customers an opportunity to share ideas on improvements for Starbucks.

On the other hand, I wonder if there is an overly optimistic expectation that this approach will deliver amazing breakthrough results. That some folks might be "star struck" with the notion of social computing.

And although this endeavour should drive value such as improved customer relations and incremental innovation, there are limitations (opportunities) that could be used to enhance the environment and ultimate results. To explain the potential, I'll use the engagement model.


Motivation

Unlike other heralded examples of 2.0 style innovation systems (i.e. GoldCorp, Innocentive), there is no major incentive for someone to provide their ideas to Starbucks. Without any explicit incentives, the motivated respondents will likely be those who are loyal Starbucks enthusiasts. Those willing to go through the effort to establish an ID, and write a description of their idea. Not that they should be ignored, but it does miss out on the opportunities from a more varied set of perspectives that could bring a totally different set of ideas.

So in absence of hard incentives what motivates? How about, what's in it for me (wiifm). It should be no surprise that a good number of the most popular ideas will be about giving "me", free stuff . A quick scan of Starbucks' top 10 most popular ideas show that half of these ideas are about giving me free stuff (whether it's coffee, wi-fi, content). Now who wouldn't vote for free coffee and free wi-fi? I like it!

Although "freeconomics" has been quite a popular topic recently, ultimately, Starbucks needs to understand how this translates into profit. For example, one of the ideas is about giving away free coffee on your birthday. Would this make you spend more money at Starbucks? Would it really make you more loyal? Of course it's popular (voted on), but how can they use this to drive their longer-term business model?

Now what if there was a reward or compensation for an idea that was linked to driving profits? You just might get others motivated to share their insights from a different angle.



Opportunity

On the surface, it appears that customers now have an opportunity to really share their ideas and support their favourite ideas through voting. This is true... to an extent... The opportunity however is only for those that vote favourably on an idea.

Consider a scenario in which Idea X has 100 positive votes and Idea Y also has 100 positive votes. You'd think they were equal right? Not necessarily. We haven't give an opportunity to those that would disagree with an idea. Those that are saying, "if you implement that idea, I'd leave Starbucks!". What if Idea X has 100 votes and 0 Negative votes, but Idea Y has 100 votes and 500 negative votes?

The current model only gives the opportunity to vote in favour for an idea. Digg style voting could come in handy for Starbucks if they want to understand the potential downside in addition to the potential upside of an idea.



Capability

Although there is much to be learned from the wisdom of crowds in prediction markets, can it really be used to identify 'disruptive' concepts? Clayton Christensen's work on the Innovator's Dilemma explains the challenges organizations face in promoting innovation, indicating that shareholders and customers don't want the disruptive innovation, until it's too late. Christensen's work illustrates how once innovative organizations are "held captive" by their existing customers needs.

I recently wrote a post on Steve Jobs & Innovation that quoted Steve Jobs quoting Henry Ford, which I think is useful... 'So you can't go out and ask people, you know, what the next big [thing.] There's a great quote by Henry Ford, right? He said, 'If I'd have asked my customers what they wanted, they would have told me "A faster horse." '

Also previously posted was a conversation I had with a consultant that had worked with Starbucks. He shared a story about how on the surface Starbucks customers, when asked what they wanted, would reply "faster service, more reasonable (cheaper) prices" but after deeper needs analysis they identified that the real reason customers went to Starbucks wasn't because of faster service, or cheaper prices, it was a luxurious escape they could take in an otherwise hectic day. Reducing costs, rushing the experience, and having a proliferation of stores all went against the "specialness" and "luxurious" concepts.

The point here, is that asking customer is good but they may not have the knowledge/capability to give you insight into the next big thing. Digging deeper to uncover needs analysis or root-value analysis can lead to richer and more useful results.

So, I am certain I've added a little controversy to the great Starbucks initiative. Like I said earlier, I actually think their initiative is a good one. It's not that I dislike what they're doing, I just think the coffee cup is only half full :)

How to benefit from "Not Listenting to the Customer".

Seth Godin recently posted an article called "Making Your Customers Uncomfortable" in which he explains the upside of making your customers uncomfortable. As proof points, he uses examples of Black Friday and Southwest Airlines.


It reminded me of Betty Crocker & General Mill's story about how they had "invented" a scientific marvel that allowed homemakers to create great tasting cakes in a fraction of the time. The invention... "Cake Mix". Just add water, mix and bake!


After all, don't consumers want ease and simplicity? Then why didn't it sell originally? Perhaps the quality wasn't good. Well, according to their market research, the quality (taste) of the cakes in blind studies rated very highly in comparison to cakes made from scratch. So what seems to be the problem? Foodtimeline provides this piece of information..


"General Mills considered the market research of the business psychologists Dr. Burleigh Gardner and Dr. Ernest Dichter to explain the mediocre sales of cake mixes. The problem, according to the psychologists, was eggs. Dichter, in particular, believed that powdered eggs, often used in cake mixes, should be left out, so women could add a few fresh eggs into the batter, giving them a sense of creative contribution. He believed...that baking a cake was an act of love on the woman's part; a cake mix that only needed water cheapened that love. Whether the psychologists were right, or whether cakes made with fresh eggs simply taste better than cakes made with dried eggs, General Mills decided to play up the fact that Betty Crocker's cake mixes did not contain...dried eggs of any kind...Before long, cake mix started to gain some acceptance and notoriety."

Interesting how forcing the customer to do more work, so they have to add eggs to the mix resulted in greater sales.


I also met with a gentlemen from Synectics, an innovation organization that has consulted with Starbucks. They had explained that when asking consumers what they wanted from Starbucks, they would get the responses, "Faster Service, Lower Costs, Higher Quality". The standard responses... So why is that we still wait in line at Starbucks and pay high prices? Have they not been able to figure it out?

Well, according to Synectics, the real thing customers wanted were moments of indulgence.

If Starbucks took customer responses at face value and sped the line up or lowered their costs, they would have reduced the already short "moment" and cheapened the "indulgence". Understanding deeper has provided Starbucks their winning formula.


Perhaps the title for this post is a little misleading... Perhaps the real title should have been, "How to really listen to the customer beyond what they say and achieve the results even at their 'discomfort'. In any case, think twice before assuming "the customer is always right".

Jumping the Innovation Curve

Denise recently sent me a video of Guy Kawasaki's Top Ten on Innovation. One of the items he discusses is the concept of "Jumping the Curve". Basically, according to Guy, innovation is really about "disruptive" innovation versus "incremental" innovation (i.e. 10X Better not 10% Better). Guy also explains that "real" innovation is emotive and will divide people. If you attempt to be all things to all people with your innovation, you will result is mediocrity and fail.



If his arguments are correct, what does this mean to those attempting to harness the power of the masses for innovation? Wouldn't Guy basically be saying, don't listen to the masses move to the radical and evangelize even if nobody else understands it (yet). Doesn't that sound a little counter to mass collaboration?

Not necessarily. Mass collaboration isn't for everything. The optimal decision making capability is based on a symbiotic relationship between the visionaries and the masses. Providing opportunity for millions in a way that channels their creative force is good. It helps identify the visionaries. Assuming that those same millions of people will push the "best" concepts forward will not always yield the optimal answer. Perhaps over time, the crowd would be able to select the best innovative concepts but by then it may be too late.

In any regards, if your serious about innovation, I suggest you watch Guy's video.

Kindergarten Creativity: How to break out of the box!

A group of concerned executives of a large firm gathered together to address a pressing issue that could literally destroy their company. They needed to collaborate.

"How many of you are, artists?" asked the facilitator

2 of the 30 put up their hands.

"If I had asked that same question to a group of Kindergarten kids, all of them would have raised their hands." responded the facilitator.

Over time, we incorrectly "grow out of" being artists and transform ourselves into professionals. As if these two things need to be separate. This chips away at our ability to be creative.

We learn from experience, how to get things done, and we validate it every time we apply a proven process to resolve a problem. We become experts in our fields of choice. The more success we have, the more confident we are in our capabilities and skills.

As creatures of habit, we apply mental shortcuts without even knowing it. We identify common patterns and resolve problems as we always have. We see what we want to see, and dismiss those things that don't fit into our paradigm. This is usually a good thing, since most of the problems we'll face are variations of problems we already solved so we are thinking efficiently without having to "re-invent the wheel" every time.

A challenge occurs though when we're suddenly faced with a problem that our mental shortcuts can't resolve. The rules, and logic we've built over time will not allow us to resolve the problem. We are unable to be "creative."

"The only thing that interferes with my learning is my education." - Einstein

It's in these situations that we most need to gain new perspectives, some of them radically different then our own.

But how does one "change their thinking"?

One of the most effective ways is to concede that it will be extremely difficult for you to truly change your thinking. You are a product of your experiences. So instead of struggling, reach out to others who have different experiences and perspectives. Collaborate!

The Gold Corp story that Tapscott references, illustrates this. Through mass collaboration, radical ideas and concepts ultimately saved Gold Corp from bankruptcy. These solutions did not come from their expert geologists but from groups of people who may never have spent a day in the mining industry but were experts in all-together different disciplines with completely different ways of thinking.

It doesn't have to be mass collaboration either. In several situations, mass collaboration is completely in-appropriate. Collaboration in any size can produce creative breakthroughs. The challenge in any type of collaboration is how to ensure people are capable of understanding the perspectives of others, especially when they run counter to ones own paradigm.

A technique that's been used for several years is graphic facilitation. The use of images and graphics, often allows us overcome the limitations of language as we each try to articulate our concepts. You might be surprised by what happens when 2 people are arguing over a point and you ask them to draw their point. They often gain a completely different level of understanding and retention. Sometimes they realize they were actually arguing the same point.

As the 2.0 world grows, so does the opportunity to achieve creative breakthroughs as long as we're willing to accept that there are "multiple versions of the truth".

"We cannot solve our problems with the same thinking we used when we created them." - Einstein again...

Thanks to Lisa, Disa and Caroline for the inspiration for this post.

Collaboration in the Enterprise

I recently did a podcast with Stephen Hayward of Project X. We talked about collaboration in the enterprise beyond the "touchy feely" concepts and within the framework of driving the customer experience through innovation, agility, holistic understanding, and employee engagement.

Here is the background and link to the Podcast on Collaboration in the Enterprise

Enjoy...

Applied social computing for disaster alerting in the wake of Virginia Tech

I can't accept that a 2 hour delay in getting out critical information to the students of Virginia Tech is justified. If a simple obscenity is removed from Wikipedia on average in a couple of minutes, this horrendous massacre that took place at Virginia Tech, should have been communicated much quicker.

According to the Associated Press, students were notified by an "e-mail at 9:26 a.m., more than two hours after the first shooting. The e-mail had few details. It read: "A shooting incident occurred at West Amber Johnston earlier this morning. Police are on the scene and are investigating."

Considering the ubiquity of wireless technology and pervasiveness of social networking & chatter tools available to us there must be better, more innovative ways to get the communications out.

Yes, I realize the need to not create panic and yes, I realize that the complexities are still being understood and part of the problem was lack of decision making but what are the possibilities? Last Friday, Don Tapscott talked about the use of Google Maps in the New Orleans disaster by the general public to identify geographical locations of those needing help because the "authorities" were not able to do so. He also discussed the speed of which information was updated in Wikipedia following the bombings in London.

There is an excellent article in Wired this morning called " Lessons from Virginia Tech: A Disaster Alert System that works" that goes through several options, and how various authorities are starting to take advantage of social computing.

I don't have any concluding thoughts on this topic just a belief that we can leverage "social technology" for the societal good.

Crowdsourcing not just for technology...

It was my turn to feed my youngest daughter today and I picked up the new jar of baby food my wife had purchased and realized a new label... It was Heinz's "Mom's Recipe"(TM) and it was a quick reminder that crowdsourcing was not limited to just technology. Here is Heinz, being innovative by creating new baby foods based on recipes submitted by real moms.

Other examples I've blogged about in the past include the multitude of reality television shows where the audience selects the winner (American Idol et al), and CrowdSpirit which uses crowdsourcing for consumer electronics. Another interesting crowdsouring example is Fluevog's open source shoes where you design the shoe and several other examples are discussed on the Read/WriteWeb blog.

One of the challenges with crowdsourcing however is when it comes to truly disruptive technology or radical designs. Crowds may not be able to comprehend the concepts that a visionary provides. Steve Jobs for example was adamant that there be NO ON/OFF button on the IPod even though all the designers thought it was a must do. Some popular musicians also experienced harsh initial criticism prior to mass adoption.

All I can say is that my daughter really really liked her dinner so in this case, it seems to have paid off.

Does Mass Collaboration = Mediocre Innovation?

One common concern I hear from people around mass collaboration is that it will result in perpetuating the average and mediocre. For those truly breakthrough concepts, truly disruptive innovations, mass collaboration drowns out those voices. Could it be that we're not really tapping into the long tail for most of the web 2.0 but really just growing the mass market?

It all depends on the situation and application. This is one of the reasons a "do nothing and Enterprise 2.0 will just happen anyways" tactic concerns me. For some applications in the E2.0 space it really isn't about innovation. For example, Wikipedia is about facts not creativity. There should only be 1 answer and given enough people to draw from we should be able to get to those facts faster. Innovation really doesn't matter.

In other situations, let's use American Idol as an example that is looking to sell you a product from a limited number of products versus creating new products, again, innovation doesn't matter as much. (Yes I realize I used American Idol in a discussion of E2.0... Yikes...)

But if you are trying to tap into the masses to create a future disruptor is it possible? The nature of disruption is that it's not easily understood. That the "many" may vote it down, because it is beyond their comprehension or perhaps anybody's comprehension for that matter.

The design of the next breed of collaborative tools for the enterprise will need to tap into the long tail to provide as many diverse possible combinations of concepts and original ideas, but it equally needs to design a model that allows for those radical concepts to be identified and nurtured.

How do you do this? Perhaps it's combing E2.0 with closed collaboration of experts to drive the next set of breakthroughs. Wouldn't you rather have a group of the top surgeons come up with the cure for a medical problem you have versus putting it open to the world to pick the best treatment? Of course, you'd want as many different options as possible for them to select from and elaborate on.

Innovation: The Difference between Communication & Collaboration

I sometimes refer to collaboration as communication 2.0. Just because we can connect two or more people together and share information does not mean we are collaborating. The difference between communication and collaboration is when new concepts emerge through that exchange in knowledge & creativity.

This is not to say the individual is void of their own creativity or ability to think "out of the box" but they are limited to their own insight and understanding. Only through the introduction of new information can they go beyond that.

The opportunities are astounding. We've all heard the "1+1=3" saying but if we wanted to think about it mathematically, it is indeed true. In fact it's even greater than that. If we take every concept person A has and matched that with every concept person B has we could create some very interesting formulas. To keep it simple, assume the number of ideas (x) is the same for all the people (n) collaborating and that we will only look at pairing of ideas. The resulting formula would be: = "x^n+n(x)^(n-1)+(n-1)x^(n-2)+…"

This would mean that 1+1=3.5, and 1+1+1= 14.5... Now consider mass collaboration where n=1,000,000... Yikes! An analogy would be to consider every individual idea as one of the chemical elements (of which there are only 92 natural ones) and every physical thing on this entire planet is made up of only these 92 elements or combinations of them.

So what are the implications? Well here are 5 and there are several others.

1) Just one more person adds tremendous opportunity.

2) The more diverse the individuals the more ideas in the funnel.

3) Effective convergent thinking is extremely crucial.

4) The "pipe" to connect people really is a "dumb pipe."

5) Brainstorming can be enhanced by techniques that merge concepts.

I want to thank Dan & Kathleen for the seeds to this blog even though they were separate conversations across time & space. It's an example of the integration of concepts. Dan & I had an interesting discussion about what really is "thinking out of the box" and Kathleen & I had an interesting discussion on the chemical elements.

The Balance Between Efficiency & Creativity

When does efficiency impede innovation? Or does it? Hasn't "kaizen" (continuous improvement) been a key component in creating the dominance of Japanese manufacturing? Isn't every improvement that drives efficiency an "innovation"? Efficiency means delivering more output, faster and/or at a lower cost. Seems pretty good...

Picasso once said, "Computers are useless... All they can do is give you an answers". Interesting, since answers are usually quite useful. My interpretation is that important piece of the equation is in the question. More importantly asking those creative questions lead us to creative breakthroughs.

When we drive efficiency, we automate more. We drive out the need for human intervention. For those cases where we can't eliminate the human aspect, we try to control it. We measure it. We time it. We provide a very detailed script and try to control as much of the process as possible. We program them.

The impact of this is that we treat our people as computers. This robs them of their ability to be creative. Even worse is when we ask them to go and be creative, but please do it while we penalize you for not meeting a performance objective.

Let's do an analogy... Imagine you are a pizza delivery person. But when you get an order, you are given the exact specific directions even timed to the minute. As you're driving let's say you have a countdown alarm timer and for every minute you are late, you lose $1.

Chances are, you're not going to be looking around for new better ways to drive to the destination. You are never asked for your opinion. Even if you see a flaw in the directions do you offer it up? Even glaringly obvious opportunities are missed as the focus is on the script.

Chances are that if something unexpected comes up your ability to respond is diminished. Problem solving isn't in the job description.

Chances are that if the cook asks you to do him a big favour and pick up some ingredients on your trip back, you are less likely to help him. We reinforce silos and boundaries. You are not rewarded for helping others. Even if the most valuable thing you could do was stop what you're doing to help another piece of the organization. You get penalized for this. This is a collaboration killer.

Is efficiency bad? Of course not. Just don't let it be the only focus if you really want to be innovative.

Why Best Practices can Kill Innovation.

Not too long ago, I was asked to take a look at what SAP was doing and see if I was interested in helping define how our company could leverage their "Next Generation" of ERP. To be honest, the thought of working on SAP was less than thrilling. But, I knew my boss, and I very much respected him so if he asked, then he must have seen something and the minimum I could do was look at it.

My hesitation stemmed from the perception of SAP as simply an ERP. SAP is a whole business built on defining the world's "best practices". The logic went like this... SAP's business is defining the "best ways" to handle functions which are not "core" to other businesses. Since these functions are core to SAP, they are able to spend massive amounts of R&D on these functions and with a customer footprint as large as SAP's, they are able to define best practice and productionize it into their product suite. The clients of SAP therefore benefit from best practices.

What I disliked about this is that, by definition, a best practice is a system/process which has already been done and repeated and proven to drive efficiency across several organizations. It runs counter to innovation. By implementing these best practices you will be as good as anyone else who also implemented these practices.

Now some would argue, that if it's not "core" to your business (aka "context"), then why would you care? Instead of wasting R&D on these, just focus on core competency of your organization and allow others define best practices for everything else. For example how many companies write their own Word Processors? This is true. But as the processes become larger and larger, they encroach on areas that are core to an organization and in the quest for efficiency, we turn a blind eye to opportunities for creating true differentiators. For example, if a company differentiates itself on it's "customer service" and it has implemented a best practice CRM suite, they have successfully become as good as everyone else who has implemented this suite.

By implementing the best of the best, they ignore opportunities to change their processes and truly differentiate the experience with the customer. Instead, they've become dependant on a third party to innovate on their behalf. Where is the line between context and core? And could there be elements in the context which can brought into the core?

So do you throw out everything and start from scratch? No. The key is to use it as a starting point only and allow for innovation from there. In some situations, if it's really core to your business then you may indeed have to start from scratch. Consider Google... Their "core" was in their proprietary advanced search engine algorithm. Google's business was not about servers or massive data warehouses. BUT rather than using "best practices" in data warehousing technology, and purchasing a massive data warehousing environment like IBM, Oracle or Teradata, they took many many many PC's, stripped them down, strung them together and created their own proprietary datawarehousing. NOT core to their business.... OR was it?

So back to SAP... It turns out that those clever folks at SAP have realized this as well. Their proprietary nature has given way to open standards which if their vision pans out, means we should be able to use their best practices as starting points. Through the SAP NetWeaver technology (SOA based ERP), companies will be able to to dis-assemble best practices and build unique and differentiated processes which can lead to a competitive advantage.

The big question though.... Will companies actually drive innovation now and take advantage of best practices as only a starting point? With all the hype SAP is putting behind NetWeaver, and the hype around SOA? I suspect for most big companies the answer is "no". Well at least not immediately. Why? Well, that's another blog for another time but it has something to do with our fascination on efficiency.

SOA - D.O.A.?

Are you tired of hearing about Services Oriented Architecture aka SOA yet? Like anything that gets as hyped as SOA, the term is becoming less and less helpful. My biggest concern with SOA however is that it's often being driven by the technologically oriented... Why the term itself drips of techno-speak... The potential offered by SOA is much more than technology it's about agile business process on-demand.

What's wrong with the technical approach to SOA? Simply put, the problem weighs the advantages of organizational efficiency greater than that of organizational effectiveness. We view SOA as a means to reduce costs through re-usable services allowing for faster application development. To do this we look at infrastructure components such as hubs, protocols, standards, repositories, development practices, etc... Yes, reducing costs to the organization and being able develop applications faster are good outcomes but it's only one aspect and quite frankly only a short-term advantage.

As organizations drive efficiencies in their applications through SOA, standardization and re-usability, they reach a point where the innovation they originally heralded as breakthrough becomes replicated en masses. At this point, trying to maintain this innovativeness becomes hugely cost in-effective as other organizations, with the sole purpose of delivering a 'best practice' arise and start to accelerate R&D and drive efficiencies. Geofferey Moore talks about this as moving from core to context. and Clayton Christenson discusses the shift from 'disruptive' to 'sustainable'. In other words if your focus on SOA is about driving efficiencies, it will eventually be replicated and further advanced through organizations that will specialize on this. Google recently addressed this as well in their call to CIO's to outsource almost everything.

So if SOA drives efficiency but that is only a short-term advantage what more is there? The answer is that SOA isn't just about developing new apps faster. It's about providing a Process driven fluid application. It's the intersection of SOA and BPM that will result in a sustainable competitive advantage. It's not just about building applications focused around end-to-end processes but the acceptance that those processes are subject to change and re-change and re-change. They will change in response to the environment. They will change because the focus for SOA should be on innovation. "Best Practices" in end-to-end processes will be sure fire way to eventually become average!

If we start with Business Process though we design our services around the processes. Either building services or buying services or sharing services are all possibilities. The breakthrough happens around an organizations ability to then rapidly re-adapt it's processes when it sees fit. This means we are not constrained to slow and costly IT to have the business transform. Wrap this with tools designed to move away from code and go to modelling and you start to create a platform for business process. Using innovation specific to your organization (NOT the industry) will allow you to do something your competitors can not simply buy off the shelf.

This could have catastrophic implications to companies such as SAP that have had for years provided us with "best practices" through proprietary means. That's another blog, but I will leave it that SAP is transforming though to capitalize on the potential. IF they can make their vision work...

If we don't move away from SOA as a technology focus to SOA as the platform for BPM focus, the rewards will only be a fraction of the opportunity.

6 Degrees of Innovation

I recently presented at the McMaster University World Congress of Innovation on the topic of social computing at Bell Canada. You can read about it on Martin's blog.

http://martin.cleaver.org/blog/2007/01/28/mcmaster-congress-enterprise-20-id-ah-at-bell-systems-and-technology/

In this presentation, I discussed a recent episode of Dateline that examined the theory of "6 Degrees of Separation" and how they randomly took people from around the world and demonstrated they were connected through a series of people (a social network). Over and over, people have been demonstrating this phenomenon to support the theory. An interesting point from a collaboration & innovation perspective is it means that ANY piece of data, ANY piece of insight, ANY piece knowledge or creative thought is ONLY 6 steps away from me. If one could harness this, imagine the breakthroughs!!!
But that's the question isn't it? How does one navigate this social network?

Well one answer is that you don't. Instead let the path come to you. You can open it up to the world and let the millions of people come to you. Theory only? Absolutely not. Pick up Don Tapscott's most recent book, "Wikinomics" and you'll read several examples of this. Good, Bad or Indifferent, those barriers that enabled the few to control the message has shifted in new and evocative ways.