Retail impacted by digital finally changing business models


Supply chain software, and a minority stake at that, wrote Loretta Chao to WSJ readers made it clear that Nordstrom definitely is intent on preserving their advantages.  As a retailer, they definitely get what digital business means–they are actively engaged in shifting distribution and inventory control, not merely adding data points to track, but redirecting their fulfillment.

Yesterday, the Wall Street Journal also reported shifting focus by big mall developers, who have leveled the mall spots once anchored by top retailers to make room for a new wave of experience magnet attractions. Fewer and fewer people respond to traditional retailer marketing and sales cycles.  Ron Johnson’s early insight that shoppers were ready for greater transparency was ineffectively translated and instead of turning JCPenny’s into a winner, he managed to accelerate its decline.

In a 2013 blog post following a peer discussion of this strategic failure, I wrote:

“The days in which stores stood between buyers and consumer good manufacturers are dwindling. Location or proximity to the consumer may still have an edge but your competition’s ability  to insert themselves into the face to face transaction has dramatically altered the sales dynamic. Mobile communication devices  make it easy for sellers to find buyers anywhere anytime; and yet, the playbook  for many stores , from department stores to specialty retailers,  fail to keep pace with the change in buyer behavior, perception and thus fail to live up to  increased expectations.”

(Click the link for the full post:  For JC Penney and Ron Johnson experience counts, but which one will deliver growth? )

The realization of end-to-end digital retailing has been slow to arrive. True to form, it has not materialized evenly. The latency, or the time interval that separates store buyers’ pre-order of seasonal merchandise, and its staged manufacture, delivery to warehouses and distribution centers before making it to the store created more than one headache for retailer. In a stable environment, where information was as limited as resources , retailers may have been better at holding customer’s captive and thus been more effective in their ability to  forecast, price, track and sell in keeping with customer demand.  The once innovation of a sale to prime the pump, by Ron Johnson’s time had become a fixture in the sales cycle.

Was it really Amazon who introduced the idea of “Drop shipping?” No, as far as I know, Amazon merely managed to take advantage of Chris Anderson‘s description of Long tail distributions as it applies to supply and demand on the internet.  Amazon’s platform that made it easier for interested buyers to find a supplier no matter how rare or plentiful the good. In other words, Amazon freed consumers from the restraints of retailers merchandising and elaborate distribution schemes.

clip_image002Drop Shipping Loretta Chao explains doesn’t merely reduce retailer’s inventory storage and management costs.  Instead it enables retailers to reinvent their old process for securing product and putting it in the hands of consumers. This lets them compete directly with e-commerce players like Amazon and gain the same, if not greater advantage than Amazon’s platform provides.

Personally, I’m just really excited about what else will emerge, and realizing that DropShipping is just one element of the changes that are here but just not evenly distributed. For example, remember why Kickstarter exists? On one hand it represents the unshackling of constraints forced by manufacturers who limited what designs made it to the mass market.  New designers share their idea and get people to pre-pay and pre-order which makes it possible for more alternative goods making it into production.  The presumption of scale still embedded into the calculations that the manufacturers would need a minimum order to make production worthwhile.

Democratizing design is one thing, but imagine a non-inventory business model, one that puts goods in the hands of consumers faster with more control and choice.I recently heard a panel entitled Rethinking the Design Process at a thoght leader summit sponsored by soho house, Samsung and surface magazine, entitled Intersection 2016. Scott Wilson , original maker of MNML design, spoke with Charles Adler (founder of Kickstarter), Jesse Harrington , designer at Autodesk and Dean DiSimone , creator of Othr dedicated to minimizing the environmental footprint of remote manufacturing.

Direct to consumer, suggests that retail as it has existed for the last few centuries is finally catching up to technology, are at least some retailers. If you want to see who, check the panelists recommended you look at the following: Rapha –a completely different sales model; Tesla back to the pre-order and customize and personalized delivery; and finally Story–who boasts “Point of view of a Magazine,Changes like a Gallery, Sells things like a Store.”

If you have any other evidence of the shift, I’d love to hear about them.

 

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Big 3I competencies: Why are they so darn hard to acquire?


Creating value and organic growth opportunities requires uncovering opportunities often hiding in plain sight. Innovations challenge expectations including possible returns on the effort.  We take for granted what’s under our noses even though it may be exactly where we need to pay closer attention. Understanding how perception affects our preferences makes compensation possible. Vigilance helps,  especially awareness of value on multiple dimensions. There’s a monetary aspect and there are ideas we hold near and dear.  Both values motivate human behavior and that’s what makes life interesting.  Let’s begin our exploration  looking at traditional expressions of value  after an introduction to the concept of “fundamental attribution,” or first perceptions.

Prior knowledge separates surprise from distraction.  A sudden unanticipated event will jolt our senses. Our sudden vigilant state will recede when we recognize familiar people, or cues, associated with things we know make us happy. Surprise includes circumstances or context that make us expect what comes next and so we relax our guard. The fundamental attribution idea literally draws on internal experience. Stored knowledge takes care of us, finding a fit to situations and environments we meet. That doesn’t mean we pick the best fit. Often familiar,  frequently used ideas come to mind faster. Logical or rational alternatives follow, too late to be useful. That’s where intention, pausing before reacting, offers the pre-frontal cortex time to process. This internal tradeoff makes humans wonderfully complex and predictably irrational.

The trick is to understand how circumstances get people to do what you want and avoid them blowing up in your face.  Psst, the answer goes beyond data analytic competencies, though that’s important.

Perception and preference the Big What?

Data comes in one flavor, but tastes differently to consumers than it does to product and service providers.  Everyday, more code and identifiers amplify specific and ambient details associated with activities such as tracking goods, service use etc. The convenience, cost and time savings provided by standard identifiers like bar codes, account numbers, social security numbers, email addresses and phone numbers also simplify providers, up and down the supply chain, catering to our unconscious preferences. Every day, we compromise a little more of our privacy and anonymity in the process.

The sheer volume, veracity and velocity of all this raw, “Big” data makes navigating the future possible. The tricks require exploring past and present relationships between variables. Predictive Models use that deeper understanding of variable relationships  and their interactions to create opportunities, control risk producing conditions and optimize sources of marginal profit. The results enrich our lives and few of us feel oppressed by this Business Intelligence (BI).  Big Brother does exist, but so does Big Sister, Big Doctor, Best Friend, Old Roommate, Big Pen Pal etc. In other words, government  surveillance creating the old FBI style dossiers, pales to the knowledge stored about you by your bank, Google, Facebook, Amazon and other retailers. Healthcare regulations and practices preserved the privacy of your information, and their slowed migration to electronic medical records. Their failure to keep up with the wider digital data practices have also slowed  diagnostic advances and cost saving opportunities.

Real innovations begin with insight, once the province of small tests and strictly the domain of human intelligence.  Today Big Insight crowds out the spotlight occupied by BI. Cheap storage and faster processing makes data mining possible for anyone, but it is the strategic opportunists  with the foresight to be serious players and accumulators that continue to change the world.  Recently, GigaOM  identified several use cases  while highlighting Terradata, the makers of the first terabyte scaled database. The full list is worth reading, as I mention only a few.

  1. Steve Jobs infamous statement that Apple doesn’t do customer research no longer holds true.  Terradata named Apple as its first customer to exceed a petabyte of storage. Apple rapidly accumulates  transactional information on their customers to understand customers across product groups.
  2. WalMart’s data processing and analytic capabilities go beyond simple sales efficiency. The data helps instruct and educate its suppliers with insights about packaging dimensions as well as shelf space location etc.

Intelligence to Influence requires insight

The ongoing arrival of new technologies and embedded tracking codes continue to fuel the race to understand and use real-time ambient data to influence transactions. More data makes it easier to see deeper underlying patterns more clearly.  With greater awareness, trends can be spotted and tracked more readily and the impact of different interventions tested simply and more thoroughly.

Understanding the data requires more than iterative recombination, it takes expertise. With knowledge and experience patterns can be understood by both people and machines (see Earlier post: understanding-aint-believing-and-yes-there-are-economic-consequences).  But it takes  curiosity to explore different dimensions and generate insights.  Here are two different takes:

Luis Arnal of InSitum explains what holds back many of us. Please listen to his Design Research Conference in 2011 complete  presentation, absent the charming slides. This summary doesn’t do justice to his talk, but  I wanted to share some of his key reflections and lessons on the steps to developing insights

Begin with data, or information records that represent your observations from field research. After collection, the data needs to be categorized, clustered.  Begin the analysis process using a simple scatter plot to understand the landscape or context of observations relative to the categories selected.  Using  intuition and prior knowledge, the dimensions you choose to contrast also leads to the direction in which you develop associations between the data points.  What, if any, possible connections exist?  Using imagination and creativity  lines of connection appear as  part of an effort to FIT the dots to a model.  Of course the interpretations vary. Time and patience make possible “a fidelity of meaning” and the underlying pattern comes into focus. The data’s added value  suggest patterns that slowly develop into solutions. Insights, Luis explains contain  30% Data, 30% inspiration, 30% perspiration and 10% luck.   Insights facilitate the transition from confusion to help resolve the initial problem. They are the links between what Is and What If, they help us imagine how when we don’t or can’t know.

Recent article in HBR by Thomas Davenport,  another worthwhile read, emphasizes a different set of talents and experiences.  Particularly helpful for positioning your firm is one of the closing observations about the capabilities housed within your organization and the opportunities they present.

“….their greatest opportunity to add value is not in creating reports or presentations for senior executives but in innovating with customer-facing products and processes….

LinkedIn isn’t the only company to use data scientists to generate ideas for products, features, and value-adding services. At Intuit data scientists are asked to develop insights for small-business customers and consumers and report to a new senior vice president of big data, social design, and marketing. GE is already using data science to optimize the service contracts and maintenance intervals for industrial products. Google, of course, uses data scientists to refine its core search and ad-serving algorithms. Zynga uses data scientists to optimize the game experience for both long-term engagement and revenue. Netflix created the well-known Netflix Prize, given to the data science team that developed the best way to improve the company’s movie recommendation system. The test-preparation firm Kaplan uses its data scientists to uncover effective learning strategies.”

What’s the common denominator linking Davenport and Arnal?  Both reference visual thinking or the conceptual translation of ideas into tangible representations.  Again,a  mastery difficult to acquire and beyond the bounds of computers, even those as powerful as IBM Watson. I don’t think Siri creates flow charts, but she might learn.

I did and so can and do others. When hiring for analytics teams I managed, three criteria or competencies were essential: SAS skills—statistical coding; knowledge of the business; and an ability to think through new problems. i never thought to ask someone if they could draw.  One of my teams pioneered new strategies to improve profitability.  Initially, that meant differentiating credit worthiness.  Managing the portfolio however required alternative methods to promote profitability by optimizing costs and simultaneously minimize risks.  At the time, combination of competencies we needed were rare. Above all we needed flexible thinkers to tackle complex problems  and create more sustainable solutions. We learned to bet on those who offered two of the three. In time, we came to realize that the third criteria, thinking, was one we couldn’t teach.  It became the minimum requirement. In the late 80’s, we sought out academics with  conceptual modeling experience and bypassed MBAs.  Banking wasn’t the only employers seeking these skills but we were much more flexible in hiring them.

Today, the combination of technical skills proving most valuable continue to be found among individuals who have studied complex data and demonstrate visual thinking, again not MBAs. Not all designers capabilities include assembly of a sophisticated social network analysis model, but they sure do a great job of communicating conceptual ideas tangibly.

This post began talking about value.  Should the value consumers derive match the value producers derive? Absolutely not. In business the preoccupation with return on investment makes sense for private equity focused on upside and early exit. This contrasts with Warren Buffet, who grew wealthy ” thanks to his ability to learn the value of various securities and then buy them for less, a concept at the core of value investing. “Price,” he has said, “is what you pay. Value is what you get.”

Remember the fundamental attribution concept?  Buffet’s remarks on value and his actions show how easily we mistake motive and behavior.  Companies that obsess about cost risk missing key insights.  Case in point, the recent rise and fall of JCPenney’s CEO, a man clearly familiar with the power of BIs (insight and intelligence analytics) to achieve innovation. How people interpret observed behavior matter. The more detail and the more attention to context , increases chances to uncover key actionable insights.  James Surowiecki, a notable observer of the slippery slope of over reliance on analytics, recent New Yorker column , shared comments on the widely touted and now vilified  Ron Johnson, by Mark Cohen, a former C.E.O. of Sears Canada, and now a professor at Columbia”

“In most of the retail universe, price is the most powerful motivator,” Cohen said. “This game of cat and mouse with regular, ever-changing discounts is illogical, but it’s one that lots of consumers like to play. Johnson just ignored all that.”

Conclusion?

Playing effectively with Big Data analytics requires an unusual mix of capabilities. More than sheer brute processing power, modeling, imagining and speculating requires artistic license.  Machines will find patterns of relationship quickly, but not clear they will find the direct relationship between cause and effect. The reasons and thought processes that drive the behavior, remain domains where humans excel.

Its’ hard to believe that the same analysis that led Johnson and his team to create the square fair pricing missed recognizing coupons significance to their customers. I agree with  Surowiecki, who  suggests the impact of one  fundamental attribution created a rippling effect producing one error after another. The first error made by the board in selecting Johnson, created further error by  decision-makers and Johnson himself  in choosing  to push their half-baked strategy forward prematurely.

What do you think?

 

Social Media great for insights not prediction


An example of the share buttons common to many...

An example of the share buttons common to many social web pages. Thanks to http://www.nouveller.com for the free icon pack image. The author (Benjamin Reid) releases the image into the public domain, with the following text available at the source page: “You can use them anywhere you like, absolutely anywhere, anything. No attribution, 100% free.”. (Photo credit: Wikipedia)

Is it really surprising that on social media, generally speaking, people share more emotionally linked thoughts?

What People Really Want vs. What They Share on Social Media.

For my money this is not much of an insight.  After all, humans, like many other animals, are social creatures. From birth, our lives depend on others. In time, those who bring us along and introduce us to the ways of the world nurture specific beliefs and frame our understanding of the world.  Our connections to others are vital to our survival, happiness and success.

Social media simplifies our ability to share and connect. The social impulse that compels us to take part naturally mirrors underlying, maybe even unconscious emotions. The result is a natural  association between content and intention rooted in sentiment. Following the tradition of anthropology, or design research, self-reported assertions such as our tweets or Facebook updates can prove revealing. Tracking and tallying these qualitative data crumbs outline a wider system of association linkages and are wonderful additions to descriptive analysis. Whether linked specifically to more traditional demographic variables or not, they show characteristics,  detect relationships about something or someone; but are no proportional in their representation.

Infographic on how Social Media are being used...

Infographic on how Social Media are being used, and how everything is changed by them. (Photo credit: Wikipedia)

So what’s the problem? Insights don’t scale. The accompanying graphics suggests that there’s added value, and maybe there is for the casual observer, but at the moment I’m not convinced.

Problem Re-framed

Last week, I shared lunch with a group of people familiar with both quantitative and qualitative research methods to talk about big data.  Design, or anthropology, research methods focus on observing very small groups of subjects in natural conditions.  Watching people as they shop, work, make dinner, go to work etc. The data and analysis skews to the qualitative. Watching what people do has always proved to be more reliable a predictor than asking what they think. Researchers long ago discovered the knowing vs. doing gap.

For the less statistically inclined, probability sampling is necessary but not itself sufficient to make claims about a larger population group.  Exercising diligence in selecting a random sample to ask a series of questions, or observe them can still produce bias or large errors in the results if input from those who respond or were readily available are included.  All surveys include a margin of error due to sampling. National voter exit polls, for example, carefully sample to keep their  margin of error for a 95% confidence interval low, e.g. about +/- 3% . ( For further information check out: Edison research on exit polls)  The margin of error on public opinion polls asking what people believe and for whom they plan to vote is wider than the post voting survey results taken at the polls.

Diary studies illustrate the value in subjective research. Sure, the results are challenging to extend and difficult to scale as the richness of this data does not easily lend to classic systems analysis.  Often in the hands of the experienced researcher, the subtle presence or absence of contextual cues lead to new insights, or deeper understanding of the situation, or present circumstances responsible for a behavior.  Researchers isolating the specific cues come closer to understanding our inner nature and then developing insights into cause and effect.

Build it and….

The inspiration implied in the phrase if you build it they will come, suggests knowledge of what and how to build, this intuition may come from subjective research.  Note, the phrase is neither strategic or predictive of the number or timing of visitors.  Contrast anecdotal indicators to an algorithm churning through significant quantities of transactions to find common elements, the co-related information.  Observational data offer context, while the algorithm provides the measure of total significance.

Cover of

Cover via Amazon

If we’ve learned anything from the work of the behavioral economists, humans are predictably irrational.  Why?  The relative strength of an emotion can but doesn’t necessarily overcome reason.  The contextual elements trigger both specific behaviors, as well as unexpected associations and very different behaviors.

We are far from understanding how to successfully integrate expressed wants social media provides with analysis of objective, aggregate data.

As Steve Smith, of Pegasus Capital Advisors suggests, there is great power in pushing the economics analysis up the value chain.  Social media doesn’t create the transaction, the risks focus on reputation which has implications but has yet to disrupt the flow or more accurately allocation of capital.

I’m looking forward to seeing the continuing evolution of social media and the teams of marketing analysts familiar with statistical sampling to help chart a new course. It would be

great if they can help lead the charge toward a more robust metric of success.  One that favors the quadruple bottom line and thus captures Environmental, Social, Cultural (including governance) and. Economic factors.

Help others tell your story


Every time we open our mouths words come out. But people listen and naturally attend to stories. Really,  they do, they are far more effective, persuasive and enjoyable. let me explain. There is a pattern and a sequence that is far more subtle than merely having a beginning, middle and end. A story is a summary of an experience.

If you are lucky enough to spend time with three-year old children, you will notice that they typically don’t bother with  pretense, they go straight for the action.  They don’t care who as much as what someone else is doing, and then they pretty quickly want to do it themselves. We begin to mimic others as babies and by the time we push past toddling, we have enough language and ability to connect our movements to get what we want or more specifically compels us to do, to take, to grab and engage.

Direct experience in my mind remains  the best way to learn; but it’s also what gives voice to the stories we share. It’s exactly why if you’re not telling stories that your customers, clients and friends can repeat about you, then you are missing opportunities.

I know, because my story is malleable, liquid. It took me a long time to suppress my enthusiasm and obsession with detail to notice that I was losing my audience. Then again, we often are quick to qualify if not underestimate our audience as well by not giving them a clear handle on our interests, capabilities.  A one word label isn’t a story, but a simple gesture generates responses that put you on a path to a shared story.

Map of Chicago's community areas, grouped by c...

Map of Chicago's community areas, grouped by color by "side" (Photo credit: Wikipedia)

A neutral simple question such as where do you live can open or close the conversation.  When people ask me, I try to honor their knowledge by asking a question that helps me formulate a meaningful response.  I could simply answer with the name of my neighborhood, or even the town where I grew up, but very few people find them familiar.  I offer them a couple of larger landmarks or reference points and then lead them to my place.  But I don’t stop there.  Because I want to share a little of how it feels to live with south and east facing windows a mile or so from the center and magnificent skyline that characterizes Chicago,  I paint that picture.  Then I add in something about the diverse ethnicity and history of my neighborhood.  How the first time I stepped out on my balcony, the building was still under construction missing interior walls, and I discovered it was my destiny to live here.  That day in February was typically cold and overcast.  My eyes took in the panorama and tracked past the major intersection, gravitating east and focusing on the storefronts until in the middle of my frame, a billboard separated the street and the dramatic skyline.  For me an iconic image came into focus on this west-facing wall.  The bold black letters read Kaplan’s against a fading wash of yellow.  I suspected it was my great-uncle Dave’s store , which I instantly confirmed with a phone call to one of my older brothers.  I looked to live in this neighborhood because it was near where my mother had grown up, and the coincident discovery that I was between my parents childhood travels I realized I found my new home.

Were you listening? or was your mind painting some pictures?  The brain, cognitive psychologists explain, backed up by work in neuroscience, psychology and economic research, loves stories.  Rather than demanding attention or confronting people with facts and figures to present your case, tell a story.

Help your customers, clients feel at home with you, your products and services by taking them there.  Are you telling them the what, or the hows without the why?  In an era of information and sensory overload, consumers are finding it simpler to control, filter or ignore your message.  The brain’s two systems–the limbic and neo-cortex (or the sensory and thought processors) naturally filter input based on prior experience and novelty .

Think of the limbic system as the bouncer, it only allows the sensory data that passes muster to get through tho the neocortex for further processing.  In those moments where you can’t think straight?  Paradoxically, you must be pretty “safe” or the limbic system‘s antennae would shut down access.  Conversely, our multitasking abilities  support several functions at once, and make it possible for us to daydream while driving, walking, reading , cooking etc.  Data is instantly routed and cues up behavior that after the first experience quickly  reverts to routine processing. Uncannily, we can simultaneously breathe, walk with great coordination, even whistle, listen to birds, notice the flyers and traffic as we gently negotiate our surroundings, think about a novel we are reading,  or dinner scheduled later with friends while half listening to the chatter of a child who is holding our hand.  That is until you’re confronted, disrupted or challenged.  “Are you listening to me?”

The challenges are ever-present. Each of us want our own messages to be heard, our presence known, fully considered; yet we also want some natural escape and respite from the omnipresent sensory assault on our bearings. Story, regardless of the subject or language, our brain finds them comforting.  We relax and naturally attenuate to stories.

More often it’s the emotions not the facts and figures that sway our conscious brain to check in. Few stories in our lives begin with once upon a time or end in happily ever after sentiments.  They don’t need a formula, yet there is a pattern.

This week, Northwestern University’s Kellogg school of Business and Segal Institute of Design hosted a conference.  Academics and business minded professional came to hear about the ROI of Design.  The accomplished presenters demonstrated how their focus on bettering experiential elements created comfortable contexts and reference points of customers and the financial performance gains that followed.  Each presenter shared stories of the transformations in their respective businesses, from the perspective of their customers.

Sure, there is much more to storytelling than discerning a beginning, middle and end. The more we appreciate and acknowledge the value of the experiential elements on our customer and audience, the more stories become the byproduct.  Your customers will be telling and sharing stories about you–what are you doing to help them tell good, if not great ones?

I promise I won’t leave you hanging wondering how to be better at story making, but in the interim go test this hypothesis.  Take some time to be a better listener and surprisingly you’ll discover how you will naturally find a story that matches what you are hearing, but the story will be yours, authentic to you…not because you lived it but you own it.

Fostering intersections for value creation


Intersections are some of my favorite haunts.  Maybe it’s because I have a bird’s-eye view of a vibrant intersection in West Town, just at the SE edge of Chicago’s First Ward.

Intersections aren’t just about studying traffic patterns; rather they are a wonderful place to watch and engage in value creation.  Major thoroughfares mean lots of traffic, people exiting one bus in exchange for another, drivers changing their heading from east/ west to head north/ south.  But if all they did was merely pass through and keep their focus on their destination, there would be no story.

In my neighborhood  a tiny specialty pie shop has managed to not only make people stop but now brings lots of new people into the neighborhood, as it has become a destination.  Similarly, the now open Senior center and local library branch in  a rejuvenated old department store, complete with WiFi, has also helped alter the mix of people on the street.  Of course, the pre-existing establishments call to other regular patrons, such as  the MoneyGram, the live chicken store or the competing packaged liquor stores.  It is precisely that intersection of the old with the new that marks the evolutionary changes in the few blocks of my local community area.

In the virtual world, Twitter creates  intersections too.  I happen to follow  @HelenWalters, who last week tweeted  a direct response to another tweet. A reference inside the sufficiently roused my curiosity; and made me stop and track down the originators. After a few steps off my beaten feed, pleasantly I found the following link:  From STEM to STEAM.  The story describes the vitality possible when inserting Art into a more technical engineering setting and system.   A tweet  furthered my own connections to others and the emerging value interdisciplinary efforts make possible.  As the soft electronic murmuring of the Chicago Ave bus announced itself to the corner passers-by floated through my open window,  the convergence of virtual intersection and reality struck me as similar experiences.

In my own tangible geographic circle of connections, I  recently connected two Chicago academic champions/leaders, one representing   medicine, economics and public policy, the other Design.  In this case, I created an intersection by introducing independent journeymen, both of whom had noticed and were open to the exchange of value, but the opportunity had not arisen. Sad, how two very prominent institutions in the same geography with similar social goals have no simple means to connect and share. Why aren’t there more established venues for sharing, where it is as easy for the pie minded and the seniors to engage with the high school students as they change direction and catch their transfer bus?  Or the leading institutions don’t have a little more shared summits, or at the very least a central bulletin board.  In the virtual world, there is more than one of these…yet that takes more intention than providing a simple intersection like my corner.

Community development whether it is tangible or virtual needs some birds eye perspectives and active connectors.  Maybe it’s culture and maybe it’s just people, but our primary motivation seems focused on the prospect of gain, or advancement of our current position and not sharing for mutual gain.  There has been a series of conferences held in Chicago that all describe the richness of the region.  The city of Chicago’s boundaries make clear how far its services extend; yet Chicago is also a metropolitan area whose residents pay Federal taxes. In exchange, the region benefits from ngoing infrastructure connections, such as our interstate highway system, support for the electricity grid, our national currency and bank wire system etc.  Public private planning partnerships in Chicago extend  back to the first Burnham plan, which produced shared rewards and fostered the character and physical attributes that make Chicago a world-class destination.

Personally, it’s no longer enough to hope that good intersections will foster community development.  My corner is a good example of what can happen from limited or case by case planning.  Synergy doesn’t happen by itself, it needs more than the road bed for people to connect and it is through connection that exchange happens and with it community development.  I’m cheering on adding art into the traditional venues where science, technology, engineering and math are highly concentrated and can’t help but bump into each other.

My  hope in the coming weeks is  to share more  stories, especially those that relates to my growing efforts  in Design Policy.  With the help of students and colleagues, I am actively trying to set about laying plumb lines to connect different perspectives and help lay solid foundations to further intersect  public policy and design.  Happy to have you join me, or share your own stories and experiences in engaging people around natural intersections.

Challenging the norm


Often, I find myself baffled by gaps in common understanding. The result has been a divisive congress, general discontent and a bit of general stagnation.  Why do my visceral reactions to events, and the news as it unfolds, differ so dramatically

On the instinctive level  we are very similar.  For example, flight is the adrenaline fueled response to the sense of fear.  But then we don’t all have the same fears do we?  Anyone out there enjoy the smell of fresh skunk?  My guess is that most find the scent unpleasant and I suspect that our degree of discomfort correlates   with the strength of the smell and the strength of  sensitivity to scent  which in turn varies the reaction.  Did your nose wrinkle a little at the sight of these cuties?

Word choices too have a way of triggering mental images or associations.  Speakers and listeners can easily find themselves connecting to very different ideas, as these varying images of ice in water illustrate.

Intuitive leaps, or the manner in which we understand or attach meaning to our observations in the world can quickly diverge. It is easy to understand how one missed connection can lead to dramatically different conclusions. Few people follow the same process when problem solving.  In fact, in business there are hundreds of possible strategic  frameworks.  The  approach chosen, merely extends from our own unique chain of prior experience and  perception of fit within the associated context.  The likelihood that my choice match your solution set depends on the degree of overlap in our experience set. Variation in our choices is healthy all the way around, as long as we are each willing to learn, or accept the possibility of more than one right answer, method or  result.

Communicating and orienting everyone to the same mental model or construct is a particularly telling and ongoing leadership and political challenge.  How do you help your organization or constituents adapt when the situation or circumstances change? How do you help construct and leverage the mental model of how things work, whether they could be made better or differently? Or even how do you help establish a common accepted set of norms?

Last week, graduate students in the communication workshop I co-lead, shared some key findings from their small participant sample research into electricity practice and awareness.  No matter what the age, many people referenced lessons learned from the continuous message or directives received from their parents.  The almost universally assimilated message was that flipping the light switch cost money.  Many of the research participants were able to recall the message, some even pass it on to their children;  but few managed to question the basic premise or get any further research to support the supposition.  In fact, this idea could be found as the basis for many of their other conclusions about electricity conservation and costs.  Little dissonance exists around the relationship between turning on lights and added electricity costs. The shared experience, or valued experience of frugality appear  almost universal.

In contrast, yesterday’s NY Times, page one headline asked “Taking Loaded Gun into Bar? In 4 States, It’s Already Legal. ” The profiled Gun rights advocate, Mr. Ringenberg, expressed that carrying loaded guns protected him from other people’s guns.  Whereas an individual patron in one of the bars felt differently: “It opens the door to trouble.  Its’ giving you the right to be Wyatt Earp.”

Guns in bars?

 

The absence of a universal or shared consciousness about guns baffles me. Similarly baffling are the public opinion poll results attesting that a significant proportion of Americans  believe that our president is a Muslim, or that he is not an American citizen, the latter of which is an impossibility under the constitution.  Perhaps, the answer lies in the nature of our construction of mental models, or the means by which we construct reality.  Wikipedia explains mental models as thought processes that help us interpret the world around us as well as shape our behavior.  Our mental models or the manner in which we conceptualize the task play a large role in how we view ourselves and the world.  Our decision-making chain and the construction of norms, which evolve according to personal psychological dispositions, often impair social efficiency. We don’t realize the full benefits of a fully congenial society, because our individual construction or acceptance of distinctive norms about people and their behaviors  lead to diverse expectations that  need neither objective logic or facts as their basis.  If you are paranoid or easily threatened, I imagine your mental models may foster a resolve to take control and lead you to connect self-preservation with gun advocacy. Or you may simply be a strong believer in individual liberties and thus you connect freedom with gun advocacy. In contrast, a belief that though freedom is a right, there are some boundaries in which society takes on the larger requirements of preservation.  Just as I can’t do everything alone, so too my participation in greater community assures that my basic needs, including protection, are met more broadly.  In the same way that I don’t have to grow my food or hide my money under the mattress. In exchange for my own labors, I can interact and benefit from the services provided by the police, the grocer and  the banker.  My mental model connects freedom to a more complex set of benefits and dissociates the person from the weapon of harm, e.g. a gun.  This doesn’t make us passive, though in the presence of someone with a weapon,  my not having one  may prove a less effective life-preserving strategy. But critical to my life-preserving strategy is the belief that everyone accepts and honors the basic concept ” thou shall not kill,” and it is the collective belief that will keep me safe.  I’d certainly like to learn how to further the formation of common norms in our thinking and allow us to move from conflict to a more cooperative if not coördinated  system of interaction.

Resolving what are increasing complex problems requires close examination of the components or constructs that we hold but may have never questioned. Our challenge is not to let our own knowledge, or mental models, however acquired when left unchallenged can sink us.

Jobs, Ironing and Innovation


This morning, Peter Orzag’s impending resignation caught my attention; but a headline about ironing boards in the Washington Post awakened my curiosity. Reader comments spurred further thoughts. In spite of the usual descent into a reckless hash slinging competition, I found some tasty bites along the way. References to IIT inspired me to add my own two cents. My reactive comments included questions I had not seen addressed –either by readers or in the original author’s complete circle of points identifying the challenges and options the Indiana manufacturer faced in its quest to keep its 200 remaining jobs. In my tweet of the story, I put out a call for innovation to rescue the company. I also thought I’d take a few more minutes to quell my increased curiosity.

Who was Home Products International, HPI, other than the Chicago based parent company? Being privately held since 2004, I checked out the hedge funds who bought them. Neither the majority stake holder, Third Avenue Management, or HPI,  struck me as holding ideas painted in the original article as typical of  American manufacturers –e.g. eager for protection in the face of the inevitable onslaught of globalism. What exactly did a value based investment company such as Third Avenue find valuable enough to acquire a company painted as nearly doomed by The Washington Post article?  I persisted in my cursory research with the intent to assemble a case study to share with future clients; or better, I might include HPI as a prospect or future client. Increasingly, I found it harder to reconcile the article’s attributions of the Indiana company’s image and management team with what I was reading on the home pages of the investor holding company or that of Home products itself.

HPI is an international consumer products company specializing in the design, marketing and manufacture of quality, innovative housewares products.

Home products sells not just one ironing board, but among their 20 variations in ironing boards they also are the proud creator of an innovation in ironing. Yep,  HOMZ features this innovation in ironing boards on their landing page!   In the war for profits,  I was ready to offer a series of  ideas to help the company pursue innovation as a competitive tool in their arsenal.  Home products however, seems to have mastered the basics of innovation quite admirably. Here’s what core77 had to say about the Homz Revolution 360 ironing board in May 2008:

“Not only is its shape more akin to the human torso, not only does it hold shirts taut across its surface, but the entire ironing bed rotates so you don’t have to keep flipping the darn shirt. (Not horizontally, it rotates on the same axis as one of those kayak-rollers.)”

Take a look, judge for yourself!

a rotating axis that matches the human torso?

The suggested retail price is $99, currently exclusive at Bed Bath and Beyond for $129…a far cry from the simple $7 variety mentioned in the Post this morning. I tried reaching the Indiana plant this morning to learn just which of the 20 varieties of ironing boards available they manufacture. I count a voice mail asking to leave a message so I don’t have the answer.

How and why it is that The Washington Post chose this little Indiana ironing board manufacturer to profile this morning, I don’t know.  Certainly,  there are lots of little towns with small plants struggling to survive.   The article suggests  futility when choosing to innovate using traditional approaches that lower costs by introducing process efficiencies, or streamlining distribution or economizing along their supply chain. In the battle to equalize the basic costs, against emerging economies like China, India or any of the Central and S. American countries, these little American plants wont’ be able to survive using these tactics alone. Should the US continue the artificial supports that tariffs offer but complicate larger trade relationships?  These companies need to find the means and show themselves as competitors who lead not merely follow. They need to use some of their more promising tools in the innovation box…such as a new business model, or as HOMZ demonstrated product innovation that inspires us a little.

Home Products new ironing board inspires me, renewing my faith that positive rewards flow to those who innovate in the full sense of the word. Does it inspire me sufficiently to buy a replacement for my standard 30-year-old model? Well, not yet. I haven’t been able to track down whether it is or isn’t manufactured in the US. I know that it’s price tag is far from the $7 quoted in the article; which I did not find for sale at Target …their lowest price model is $23.99 online. Using Google as my first research tool, I inadvertently discovered that Williams Sonoma sells a very high-end ironing board for $180 manufactured by Brabantia, a Dutch company with locations all over the globe. Relative to the HOMZ product, it offers a resting shelf for completely ironed and folded items…not really revolutionary, and not reason enough for me to spend an extra $172. If I want to buy American, keep jobs and help the economy I still have some research to do. The questions for the policy makers trying to sort out these issues requires that we all learn more about the ironing board business, and how to find the equilibrium between creating or maintaining some domestic jobs based on innovation! I’m open to suggestions.