by Andrea Kates, Founder, Business Genome™

We’ve just finished celebrating National Customer Service Week, and just in time for the occasion, I heard a great story that illustrates how high the bar has been raised when it comes to ingenuity in building customer loyalty. You’ll have to suspend judgment because, yes, this award winning-caliber example comes from a seventeen-year-old boy seeking a date for the homecoming dance, but trust me, there’s a lesson here for business leaders. The story centers on the relative power of two rocks.

My friend’s teenage son, Jake, went beyond Napoleon Dynamite’s “I’ve got skills” approach to getting the prettiest girl in school to say yes to his homecoming dance invitation.

“Nun chuck skills, bow hunting skills, computer hacking skills.  Girls only want boyfriends who have great skills.”” –Napoleon Dynamite, 2004

Here’s what Jake did: he got two rocks, real rocks. The kind that weigh a lot.

Paint “yes” on the small rock.               Paint “no” on the huge rock.

On the smaller one, he painted the word “YES.” That rock weighed about ten pounds. The second rock was so huge that he actually had to borrow a pickup truck to transport it. That rock was painted with the word, “NO,” and weighed 130 pounds.

He delivered both rocks to the girl’s house along with an invitation to the dance. All she had to do was to return the rock with her answer to his house.

Talk about an ingenious incentive for encouraging a yes-based relationship.

How big are the rocks we’re offering to our customers?

That seventeen-year-old’s approach gets to the root of what all business leaders face every day: “How do we make it easier for a person to say yes to a relationship with our companies? How big are our rocks?”

Part of the secret of getting an answer of yes is something called the “wow factor,” which puts our companies head and shoulders above the competition. In this era, where tighter purse strings put new pressures on the consumer, no one can afford to ignore the power of wow.

The wow factor builds on a heritage of customer satisfaction strides over the past ten years, ranging from the introduction of important metrics like Net Promoter scores, customer analytics that integrated sales and operations data, and web 2.0 social networking tools that allowed us to witness our brand through the words of our customers. In past eras, great brands were built on the foundation of customer focus. Nordstrom proved that giving the customer the benefit of the doubt with returns led to loyalty. Enterprise Car Rental demonstrated how a proactive manager who responded promptly and proactively to a dissatisfied customer could transform a naysayer into a raving fan.

Nordstrom was lenient with returns. Enterprise focused on net promoter scores.

But, without wow, there’s a risk that customers will view your “yes” and “no” rocks as equal. And, none of us can afford that.

Empathica Knows Wow

I recently met Mike Amos, Founder, President and CEO of Empathica (http://www.empathica.com/index.html), a company that specializes in customer relationships and uses the tagline, “We Speak Customer.” He shared a couple of new directions in customer insight that companies can build into their strategic toolkit. According to Mike, there is strong evidence that indicates a very high correlation between the customer’s perception of a “wow” experience and the intent to return or purchase again, which is a significant factor in the loyalty equation.

That power of wow leads the forward-thinking executive to measure the wows and focus managers on going for those wows on a very systematic basis.

Zappos Does $900 Million of Wow

Tony Hsieh of Zappos Amped Up Wow

The wow factor multiplies quickly and is the secret behind the success of companies like Zappos, an online shoe store that moved from startup to titan, leading to the sale in July to Amazon.com for $900 million.  Zappos’ (www.zappos.com) special breed of wow is so over-the-top that employees are known for their consistent ability to up the ante on customer wow by doing things like finding the shoes a customer wants anywhere, even if it’s with a competitor. No kidding.

It’s no wonder that Zappos’ founder Tony Hsieh was the headliner at the recent Inc 500/5000 conference: “Wow” quickly multiplies the DNA of a small and medium-sized company, that we call SMB/DNA™, into a powerhouse of impact.

http://www.inc500conference.com/

Tony Hsieh of Zappos

Zappos CEO Tony Hsieh, who agreed in July to sell his business to Amazon.com for $900 million, was the first speaker on the program at the 2009 Inc. 500 conference in National Harbor, Maryland. In a wide-ranging talk, he covered topics as broad as achieving happiness and as specific as customer service. Memorably, he told the story of a Zappos call-center operator who helped a drunk customer identify pizza-delivery services in San Diego in the middle of the night. The goal, he says, of all phone interactions at Zappos is to be as helpful as possible, regardless of whether a sale is on the line. “As unsexy as it might sound, the telephone is one of the best branding devices out there,” Hsieh said.

http://www.inc.com/ss/business-advice-inc-500-conference#0

Wow can be measured and keeps customers coming back for more. With wow in the equation, customers will always give you back the smaller rock that says, “Yes.”

Pack some wow into your toolkit. Now.

Musical Coda
Wow by Kylie Minogue

Read my lips, I’m into you,
I’m into you,
I can’t resist,
You’re so hot (get me into the shade)
The spotlight’s on
You take me to it,
You like it and,
Just the way that you dance,
Just the way that you dance.

(Yeah yeah) Is enough to love you baby,
(Yeah yeah) Is enough to send me crazy,
(Yeah yeah) Such angelic motion,
(Yeah yeah) You know you’re made in heaven.

The way you walk, the rhythm when you’re dancing,
Every inch of you smells of desire,
You’re such a rush; the rush is never ending,
Now,
You got it; you’re wow wow wow wow,
You got it; Wow wow wow wow.

by Andrea Kates, Founder, Business Genome™

This is the way the world ends

This is the way the world ends

This is the way the world ends

Not with a bang but with a whimper

–TS Eliot

Take out your gavel. Now. You’re about to become the judge of the future fate of every business idea you’re currently working on. You’re also about to become brutally honest with yourself about which initiatives you need to smash quickly. This is the moment of truth where you stop letting the pulls of momentum and the sense of inevitability of your product and service innovations drag you down. You’re about to lighten your load, clear out dead wood, and release yourself from the burden of continuing down a path that will lead to extinction. Eventually. You’re going to turn a corner. And it all begins with a simple question:

Are we kidding ourselves believing this idea has legs?

The problem with innovative ideas, rapid prototypes, and cutting-edge experiments is that they have the lure of a beautiful Siren (woman, not alarm), by excelling in seduction and driving sailors (or in this case, business executives) to shipwreck and death.

Innovative ideas are beautiful. Their luster attracts all of the cool folks in the company to bring their best stuff to the table. New ideas yield “initiatives,” where pirate flag-toting mavericks lock themselves behind closed doors and invent. Think of what-if scenarios. Teams working on new experiments envision themselves creating the next Post-it note, Pet Rock, or founding the next FedEx or even Microsoft. They sometimes gain a reputation within our companies for being worthy of a gold star—after all, it takes a special talent to breathe life into a “what-if” scenario that comes from a whiteboard or “ideation” session.

But, how can we tell if the genie has to be rubbed out once it escapes from the lamp?

That’s when you need to take out a calendar. Set a date for a go/no go review. Keep to the discipline of the process. Take out your gavel to make the judgment, and take out your list: The Statute of Limitations on Experiments. If your admission to any of these conditions is “guilty,” you can rest your case.

How to Pull the Plug on Bad Business Ideas

1. Our forecasts say it should be working (but it’s not).
2. You ask yourself, “Am I the only one in this room who thinks this Emperor is wearing no clothes?”
3. How many times should we reapply lipstick to this pig?
4. You allowed your committee to morph the goodness out of this idea and now the idea is heading south.
5. You keep thinking, “Hmmm, our competition seems to be doing this really well. We need to keep at it.”
6. You keep thinking, “Just because [FILL IN THE REVOLUTIONARY CHANGE THAT HAS OCCURRED HERE] (like the appearance of e-commerce) has started to erode our business in this area doesn’t mean we can’t keep doing what we’ve been doing. We just need to build more efficiency into our processes.” (See list below of 25 Things About to Become Extinct in America, like classified ads and the US Post Office.)
7. We’ve already sunk large dollars into this idea—we’ll get it legs to keep it going.

Bang. Envision the dramatic sound of the gavel hitting the table. Gone. Kaput. Pull the plug on that bad idea now, before your business whimpers out of existence. Remember that even huge weddings get canceled, even after the altar has been raised.

In case you need added incentive for the urgency of instituting this discipline, you can refer to the list of 25 Things About to Become Extinct in America, all of which warranted a gavel session at some point in the past. (Note: the list pre-dated Tom Delay’s Dancing With the Stars “Wild Thing” routine.)

Ideas That Do Not Have Legs

US Postal Service, Yellow Pages, Classified Ads, Movie Rental Stores, Dial-Up Internet Access, VCRs, Ham Radio, Answering Machines, Incandescent Bulbs, Stand-Alone Bowling Alleys, The Milkman, Hand-Written Letters, Wild Horses, Personal Checks, Drive-In Theaters, Mumps and Measles, New Magazines and TV News, Analog TV, The Family Farm, Ash Trees, Chesapeake Bay Blue Crabs.

Once you’ve put the “whoa” onto a very bad “giddyup” initiative, the relief will be huge. After the initial deflation of post-bad-idea depression fades, you’ll have renewed energy to try again, this time with a better focus on what would make an idea really take off. There’s also a list for that, but that’s a story for another day.

You know who you are. You’re secure enough to be labeled as the anti-innovator for awhile. Just until the next idea comes along that hits it big.

Musical Coda
50 Ways to Leave Your Lover by Paul Simon

The problem is all inside your head, she said to me
The answer is easy if you take it logically
I’d like to help you in your struggle to be free
There must be fifty ways to leave your lover

She said it’s really not my habit to intrude
Furthermore I hope my meaning won’t be lost or misconstrued
So I repeat myself, at the risk of being crude
There must be fifty ways to leave your lover
Fifty ways to leave your lover

Just slip out the back, Jack, make a new plan, Stan
Don’t need to be coy, Roy, just listen to me
Hop on the bus, Gus, don’t need to discuss much
Just drop off the key, Lee, and get yourself free

She said it grieves me so to see you in such pain
I wish there was something I could do to make you smile again
I said, I appreciate that, and could you please explain
About the fifty ways

She said, why don’t we both just sleep on it tonight
And I believe, in the morning you’ll begin to see the light
And then she kissed me and I realized she probably was right
There must be fifty ways to leave your lover
Fifty ways to leave your lover

by Andrea Kates, Founder, Business Genome™

Con Artists and Bad Raps

Con artists have been getting a bad rap these days. Granted, many of the worst examples of confidence-inspiring have led to massive amounts of fraud and lost fortunes created by charisma gone astray. But just because the likes of Allen Stanford and Bernie Madoff achieved notoriety this year for charisma gone wild doesn’t mean that all the positive attributes of confidence artists should be shunned.

At root, we want to believe con artists. Even when it their promises seem too good to be true.

How can business leaders tap into the good feelings and great business results that come from teams who embrace a confident mindset without falling into the traps and cover-ups that come from unraveling the aftermath of false hopes gone bad?

When is a bit of cranked-up optimism a good trait for business leaders to instill in their colleagues?

Guilty As Charged

I once hired a marketing director who shared many similarities with Tony Soprano.

Just because the marketing guy can handle mob scenes well doesn’t make him a con artist.

His stories were always too good to be true, his resume a bit too stellar, his stories always with that hint of Damon Runyon, his connections shocking—how could you throw a Ben Franklin to a Philadelphia cop and get priority parking at any public event, no matter how crowded? And yet, despite the early indicators that I was dealing with a less-than-upstanding guy, I persisted in my confidence in his skills. I wanted to believe that his optimism was well-founded—I was managing a company that had fallen on hard times and I relished his too-good-to-be-true projections and unrealistic feelings that we were the little engine that could. And, in the end, even when a few of his tricks were exposed and he had to move on to other opportunities, I deeply appreciated one of his core traits—the consistency of his belief that things would work out well in the end.

And, when they did (months after he’d been let go), I attributed a lot of our company’s success to the heightened sense of optimism of the con artist era.

What’s a squeakier-clean version of optimism that can move the needle on positive results business leaders can integrate into their leadership styles to inspire teams, even in rough times?

Losing Confidence in Confidence

According to a recent Wall Street Journal report, it turns out that we’re starting to lose confidence in confidence, or more specifically, the confidence measures we’ve long clung to as the oracles of our business futures. The Journal says that, “confidence is tricky”:

Confidence is tricky. A big jump in Germany’s ZEW indicator of economic sentiment helped propel a recovery in financial markets Tuesday following a global selloff that kicked off a few days before — in part because the University of Michigan’s index of consumer sentiment fell unexpectedly.

The babble of opinions that constitute the market’s “voice” means apportioning swings to this or that survey isn’t something that can be done with a great deal of, um, confidence.

More important, the predictive power of such surveys is open to question. Dissecting the University of Michigan’s index and the Conference Board consumer-confidence index, Professor Sydney Ludvigson of New York University found evidence of a link between them and future household spending. In a study published in 2004, she found lagged values for both indexes explained about 15% of the variation in personal-consumption-expenditure growth in the following quarter.

What isn’t clear, however, is how much of the information in survey results merely reflects other indicators such as payrolls numbers “repackaged” — via respondents’ brains — in another form. Prof. Ludvigson’s own research, as well as a similar study this year by the U.K.’s National Institute of Economic and Social Research, suggests that the “stand-alone” predictive power of confidence surveys is more modest.

Intuitively, confidence tends to breed confidence, just as despair fosters despair. The potential for a high confidence reading to fuel a rise in asset values, thereby raising confidence further, is there. Statistical evidence of this is difficult to come by. But examples of such self-fulfilling spirals abound. One was the U.S. housing boom. The recent market rally may yet prove another.

http://online.wsj.com/article/SB125086405923949373.html

If we can’t believe confidence measures, what are we to believe? Where is the chicken and where is the egg in the scenario of optimistic mindsets and positive business outcomes?

Where does the power of positive thinking apply for business leaders trying to create upticks in results?

How to Tap into Psychology to Fuel Business Growth

Of all the experts on happiness these days, you gotta love Daniel Gilbert, who teaches a very popular course at Harvard on the subject and whose book, Stumbling on Happiness (http://www.randomhouse.com/kvpa/gilbert/index.html), solved many mysteries of the psychology of happiness. It stands to reason that a work place filled with happier employees would drive more positive results than an unhappy work environment. But, figuring out the best way to guide employees toward the sense of possibility calls into play a fundamental, counter-intuitive insight explained by Gilbert:

According to Gilbert, happiness is more closely related to a sense of certainty than to clear indications of positive outcomes to come.

It turns out that it’s more than just cheerleading that leads people to lose their agita and get on with the pursuit of positive change. He quotes multiple scientific studies that all point toward the conclusion that people feel happier when they can stop worrying about uncertainty.

“Why would we prefer to know the worst than to suspect it? Because when we get bad news we weep for a while, and then get busy making the best of it. We change our behavior, we change our attitudes. We raise our consciousness and lower our standards. We find our bootstraps and tug. But we can’t come to terms with circumstances whose terms we don’t yet know. An uncertain future leaves us stranded in an unhappy present with nothing to do but wait.”

http://online.wsj.com/article/SB125086405923949373.html

Combine that insight with the con artist optimism, and you end up with a compelling (and somewhat novel) formula for a leader who is trying to drive positive change.

How to Be a Master Corporate Pro-Artist

Step 1. Remove the nagging fear of uncertainty. Clearly describe even a half-empty glass exactly as it is—no what-ifs or worries embedded in the statement of the facts.

Step 2. Imbue the team with a sense of responsiveness and nimbleness with regard to any possibility that could confront them in the future. Lead them through several what-if scenarios that allow them to see that their focus needs to be on responding early to the signs of change in the competitive environment.

Step 3. Apply a bit of the glass half full optimism to the team, that outlook that’s gotten such a bad rap because of confidence artists who take the attitude to the extreme. Demonstrate how a sense of possibility can lead a group toward great results.

Step 4. Every time you hit a naysayer ask, “Under what conditions would this work?”  Then, challenge the team to drive toward conditions that would foster success.

Are we endorsing false hopes? No. Dishonesty? Never. But, what a business leader can instill in the team is a “jolt to their systems” that recharges the positive terminals in their batteries and leads them, and as a byproduct the company, toward new levels of success.

Every once in awhile, it’s not a bad idea to check into a laughing academy.

Anthony ‘Tony’ Soprano Sr.: Lithium, Prozac. When’s it gonna end?
Dr. Jennifer Melfi: We’re trying to give a jolt to your system. Give it a… a little kick-start.
Anthony ‘Tony’ Soprano Sr.: You got any idea what my life would be worth if certain people found out I checked into a laughing academy?

Musical Coda
Laughing Academy by Punishment of Luxury

Max Wall move along – Einstein, glad you could find time
Galileo’s getting off the bus
Leonardo’s in the rest room, there’s a meal soon.

Chorus:
Haaaas to be laughing Acaaaademy, Laughing
Acaaaademy etc.
(I want to be there, blind people see there)

The stocks in the market-place (with a snigger)
they chuckle you away

Talking to yourself (talking to yourself)
Talking to the animals, talking to the plants
It’s a loony with a polygraph (what a giggle)
The press-gang’s seeking out your weak points
But you’re in good company, ha-ha-harmony
Is it all a … state of mind? No.

by Andrea Kates, Founder, Business Genome™

For years we believed we knew how to describe the basic components of taste: salty, sweet, bitter, sour. Then, in 1985, the western world was officially exposed to the description of another dimension of taste and flavor, umami, defined as one of the five generally recognized basic tastes sensed by specialized receptor cells present on the human tongue.

To be fair, for centuries Eastern cultures were well-aware of the sensation, described as a unique combination of pungent, savory, tangy, or meaty. But imagine the feeling of awakening and Eureka! when gastronomes in the western world discovered a whole new flavor profile and had a term to call it, leading to the first international umami symposium in 1985. And, once the world was exposed to this concept, lots of food industry folks could jump on the bandwagon (http://chemse.oxfordjournals.org/cgi/content/full/30/suppl_1/i21).

Cross over to the world of business, where companies have been trying to uncover “latent customer needs” for decades. Using the inspiration of umami, you can imagine business innovators trying to get in touch with a “fifth sense” about what the consumer needs. How many times have ingenious, forward-looking companies started whole new enterprises based on their ability to tap into that fifth sense of what is happening in the realm of consumer taste—companies that can piece together new sensations, desires, attitudes, and preferences, and translate them into a new business opportunity?

How can business leaders anticipate the next customer need and develop products and services that match those needs yet to be defined?

What is it, exactly, that customers would buy if we offered it? Where is the next microwave oven no one thought they needed until it was invented, the next FedEx in the world of US Postal Service options, or the next handheld food in the world of restaurant offerings?

Automatic Meets Dogmatic

Every innovation, from the first introduction of automatic windows in the 1940 Packard 180 series to handheld food, starts with a hunch on the part of an observant person who puts together two ideas, sometimes representing different categories altogether. The inventors have a fifth sense, the sense of a new nuance of customer demand that hasn’t necessarily been officially named yet. And, when the solution appears, Eureka!, it catches on with a spirit of “what took you so long.” In the case of cars, it was the feeling that those pre-1940 windows made it nearly impossible, especially for women, to crank them open and shut.

In the case of food, if you’re a restaurateur, you start with the June 2007 insight by the NPD Group about the growing percentage of meals eaten in cars and on the go (think walking down the streets of New York). Then sleep on it for awhile:

“Of prepared meals and snacks purchased from retail outlets, 36 percent are eaten at home, 29 percent are eaten in the car, 24 percent are eaten at work and 10 percent are eaten elsewhere.” http://findarticles.com/p/articles/mi_m3190/is_23_41/ai_n19206471/

If you’re a person like Jeremy Spector, founder of Dogmatic, you translate that statistic into a great concept for handheld food that customers had been dying for. It takes a special attitude to uncover untapped customer desires, name them, and make a business out of them. Mr. Spector’s uncovering of that new trend led him to develop the 21st century alternative to the hot dog—dripless, a modern taste profile, and healthier ingredients. Voila! Dogmatic Dogs. Handheld food’s next generation, made possible through the discovery of the fifth sense: Dogmatic Dogs tapped into the latent customer demand for something that didn’t even have a name yet (http://nymag.com/listings/restaurant/dogmatic-dogs/).

“Dogmatic serves its sausages not on squishy buns but on crusty, pliant demi-baguettes that are hollowed out and heated on a metal-spiked contraption that looks like a piece of Uncle Fester’s Posturepedic. Makes it easy to hold, easy to eat on the run, and, if New Yorkers drove cars, easy to eat in a car.”

What’s the umami that your company can identify that will give it an edge?

Business Genome Innovation 101: How to Uncover Your Umami

1. Look for signs of a new customer appetite that isn’t being met by your current offerings: customer defection, shrinking margins, flat sales.
2. Peek into trends in adjacent areas and substitute areas. Ask yourself: What is the state-of-the-art in the adjacent industry and how might we tap into that success? For example, when women entered the workforce, kitchen convenience moved up the priority list. Companies that seized the moment thrived.
3. Cobble together some rapid prototypes that tap into your hunches about your fifth sense: test out your ideas and see what resonates with the customer.

Whatever you do, don’t ask customers why they’re buying your stuff now and don’t ask them to help you invent the microwave. Customers don’t know what it is until they see it, and then, they can’t get enough of it. It’s time to lead the horses to your new water.

Musical Coda
Wannabe by Spice Girls

Yo, I’ll tell you what I want, what I really really want,
So tell me what you want, what you really really want,
I’ll tell you what I want, what I really really want,
So tell me what you want, what you really really want,
I wanna ha, I wanna ha, I wanna ha, I wanna ha, I wanna really
really really wanna zigazig ah.

If you want my future forget my past,
If you wanna get with me better make it fast,
Now don’t go wasting, my precious time,
Get your act together we can be just fine.

I’ll tell you what I want, what I really really want,
So tell me what you want, what you really really want,
I wanna, I wanna, I wanna, I wanna, I wanna really
really really wanna zigazig ah.

So here’s a story from A to Z, you wanna get with me
you gotta listen carefully.

by Andrea Kates, Founder, Business Genome™

A Piece of the Rock: Setting the Stage for a Shift in the Economics of Distribution

I find myself pondering what lessons we can learn about business from the music industry.  Is it the outdoors rock concert I was at last week?  Or what Pandora is doing to the recording industry?  In either case, I feel compelled to explore the lessons from a clever business strategy conceived by a rock star, and then sold to Wall Street.

David Bowie. 1997. Bowie Bonds. A small revolution that set the stage for a new way of thinking about the food chain of intellectual property, and who could and should benefit from the economic successes of creation.

David Bowie established himself as an innovator in the world of finance when he came out with Bowie Bonds, a financial instrument allowing investors to bet on the future worth of Bowie’s creations by purchasing asset-backed securities linked to Bowie’s future revenues. Bowie’s vision for shifting the economic equation closer to cha-ching for the musical creators was a revolution at the time, representing a new mechanism for rewarding the inventors of content at a higher level than the traditional music studio and album distribution model allowed for at the time.

Rock Stock

http://en.wikipedia.org/wiki/Bowie_Bonds

Bowie Bonds are asset-backed securities of current and future revenues of 25 albums (287 songs) that David Bowie recorded before 1990.

Issued in 1997, the bonds were bought for US$55 million by the Prudential Insurance Company. They paid an interest rate of 7.9%. Collateral was royalties from the 25 albums. The average life of the bonds was ten years.

By forfeiting ten years worth of royalties, Bowie was able to receive US$55 million up front. Part of the money was used to buy out some rights to Bowie’s songs owned by a former manager. Bowie was able to issue the bonds because, unlike many artists, he had kept control of his copyrights and master recordings.

The Bowie Bond issuance was perhaps the first instance of intellectual property rights securitization.

Fast forward to 2009, and we can see another wrinkle in the quest to capture value from creative ideas. Atlantic Monthly recently reported on a start-up that enables crowd-sourced support for bands who want seed funding to record albums: SellaBand.

http://correspondents.theatlantic.com/richard_florida/2009/06/sellaband.php

Dutch start-up SellaBand has built a platform that allows artists to crowd-source funding from music-lovers around the world. Established in 2006 by two Sony-BMG music executives, it provides a Bowie-bond like process for up-and-coming bands to raise $50,000 to record their album by selling ten-dollar “parts” to online “believers.”

Economist Ajay Agrawal has been studying SellaBand’s business model as part of a new MPI program on Innovation and Creativity. He recently hosted an evening featuring a performance from the first Canadian to record with SellaBand, Angie Arsenault.

It is clear from examples like SellaBand and similar ventures that the inventors and creators of content will have new options for getting closer to direct economic benefit from their works.

Based on the reading of these trend tea leaves, it’s time for business leaders to consider the broader concept of the food chain of creation: Who should benefit how much from which aspects of the commercial success of creative invention?

The Crumbling of the Next Bedrock of Commercialization: From Invention to Distribution

The economic food chain of creation depends on a couple of basic factors: invention + distribution. The relative worth of each of these forces shifted significantly since Bowie’s 1997 innovation. One key driver of this shift comes from the rise in Internet usage–in 1997 there were only 16 million Internet users versus 1.5 billion today. 2003 marked the first iTunes download capability, shifting economic power away from the traditional music distribution companies.

In 2009, the next bedrock of distribution for creative expression, the publishing house, now finds itself under siege. Adam L. Penenberg wrote an article in Fast Company magazine this month (http://www.fastcompany.com/node/1297929/print) that described the potentially doomed fate of book publishing houses, at risk of extinction due to a couple of seismic shifts in their world: Amazon’s Kindle (now) and Apple’s touch-screen media tablet (rumored to be coming soon). Both of those relatively new technologies are destined to put pressure on the role of the traditional publishing houses, thereby minimizing the potential power of the publisher’s place in the book food chain.

What will be the fate of a business like the publishing houses that sits on the precipice, as their competitive advantage is at risk? What choices do they have? When is their fate sealed, making it too late to respond effectively to the new competitive ecosystem’s forces?

A lesson might be learned from Jeff Bezos himself, founder of Amazon and introducer of the Kindle, who shared his insights in the Fast Company article about the importance of establishing a “hammerlock on the distribution system before another deep-pocketed foe enters the game.”

Amazon was never able to catch the wave in online music once iTunes set the pace.

“Even after establishing Amazon as a major online player in sales of compact discs, he (Bezos) was too late for digital downloads. He wasn’t likely to make that mistake with e-books.”

How to Avoid Fossilization

Adam Penenberg’s article points to a universal concern facing all business leaders: Are we facing extinction because of a new force in the competitive landscape? Will we become like the trilobites, a species that became extinct after 300 million years, because new predators appear or because of big shifts in our business ecosystems?

The Business Genome advice to avoid fossilization is simple:

1. No resting on perceived laurels of past success.

2. Read trend tea leaves early.

3. Follow shifts in the dollars from one place in the distribution food chain to another.

4. Lock in advantage in one critical aspect of distribution.

5. Watch your back.

Musical Coda
Changes by David Bowie

I still don’t know what I was waiting for
And my time was running wild
A million dead-end streets
Every time I thought I’d got it made
It seemed the taste was not so sweet
So I turned myself to face me
But I’ve never caught a glimpse
Of how the others must see the faker
I’m much too fast to take that test

Ch-ch-ch-ch-Changes
(Turn and face the strain)
Ch-ch-Changes
Don’t want to be a richer man
Ch-ch-ch-ch-Changes
(Turn and face the strain)
Ch-ch-Changes
Just gonna have to be a different man
Time may change me
But I can’t trace time

I watch the ripples change their size
But never leave the stream
Of warm impermanence and
So the days float through my eyes
But still the days seem the same
And these children that you spit on
As they try to change their worlds
Are immune to your consultations
They’re quite aware of what they’re going through

Ch-ch-ch-ch-Changes
(Turn and face the strain)
Ch-ch-Changes
Don’t tell t hem to grow up and out of it
Ch-ch-ch-ch-Changes
(Turn and face the strain)
Ch-ch-Changes
Where’s your shame
You’ve left us up to our necks in it
Time may change me
But you can’t trace time

Strange fascination, fascinating me
Changes are taking the pace I’m going through

Ch-ch-ch-ch-Changes
(Turn and face the strain)
Ch-ch-Changes
Oh, look out you rock ‘n rollers
Ch-ch-ch-ch-Changes
(Turn and face the strain)
Ch-ch-Changes
Pretty soon you’re gonna get a little older
Time may change me
But I can’t trace time
I said that time may change me
But I can’t trace time

by Andrea Kates, Founder, Business Genome™

Part One: Free Radicals

A long time ago, Steal This Book set a radical, revolutionary tone for commerce, a book that told readers to steal something that traditionally cost money. What economic system could possibly support valuing a good or service at free?

In 1984, Stewart Brand established the tone for the debate, especially when it comes to information: “Information wants to be free. Information also wants to be expensive. That tension will not go away.”

In 2008, Chris Anderson wrote an article in Wired that focused on the concept of free and he recently published a book, Free: The Future of a Radical Price. His premise is that “in the digital realm you can try to keep Free at bay, but eventually the force of economic gravity will win.” Anderson used examples, ranging from the free razor blades that led to Gillette’s market leadership in razor sales to  monetary benefits of Craigslist enjoyed not only by Craig Newmark but to all participants, to build his case that price is set (and value defined) not by two parties—a single buyer and a single seller with a single market—but by a new set of forces in what he terms an “ecosystem with many parties, only some of which exchange cash.”

And, in the July 6^th New Yorker, Malcolm Gladwell contributed his perspective on free, with a slightly different twist on the facts and his view of the future for business in this land of the free. He takes exception to Anderson’s approach and offers a different view of the same facts, with an emphasis on several examples where commerce is heading in the opposite direction of free. For example, Gladwell points out that some things that had once been free to the consumer, like broadcast television, are struggling, while other outlets for similar entertainment, like premium cable, are thriving.

One thing is clear: The concept of free goods and services is still radical and the debate will continue on how prices will be embraced by the consumer. If some things that used to cost money are now more abundant, should they be cheaper? If the forces in your business have shifted (think newspaper content being distributed electronically), are you, as a business leader, adjusting your pricing? If the prices you used to be able to charge are now softening, has your product or service become a permanent commodity or are there ways to follow the money and capture more dollars by figuring out what the consumer IS willing to pay more for and how you can shift up the value chain?

But, I’m getting ahead of myself. Let’s start with the fundamentals of free, and the facts of the debate.

Part Two: Pulp Friction

Pity the newspaper industry.  All pain, little gain these days. The once-central source of information seems to be the newest industry to go extinct. At least in its traditional form. Subscriptions are down; ad revenues have shifted. Their core business, reporting and delivering the news, is threatened by new sources, crowd sourcing, and more nimble distribution channels.

According to a recent report by the Newspaper Association of America, the following statistics describe the dismal state of newspapers in 2009:
- Real estate classified advertising slumped 45.6% to $336.9 million.
- Automotive classified advertising swooned 43.4% to $332.8 million.
- National advertising slipped 25.9% to $1.1 billion.
- Retail advertising tumbled 23.7% to $3.3 billion.
- Other classified advertising slid 16.5% to $587.7 million.

http://www.naa.org/TrendsandNumbers/Advertising-Expenditures.aspx

At the same time, online readership rose by 16% last year.

Chuck Schilling, research director of agency and media for Nielsen Online, noted in a statement:

Nine of the top 10 newspaper web sites experienced positive year-over-year growth.

News coverage in December ranged from how the 2008 holiday season would be affected by the weakening economy to Obama’s latest nomination for his administration, all of which helped to drive this impressive growth.

The New York Times posted a 6 percent increase in its December Internet traffic to 18.2 million unique visitors, compared with the same time a year ago, according to the report.

USA Today jumped 15 percent to 11.4 million unique visitors and The Washington Post climbed 12 percent to 9.5 million.

Publications posting substantial increases included the New York Daily News with a staggering 99 percent increase to 5.9 million, the Los Angeles Times with a 73 percent jump to 8 million and the New York Post with a 60 percent increase to 4.6 million.

Despite such gains, the Audit Bureau of Circulations, which audits the paid circulation figures of publications, noted the six-month average for the top 25 U.S. Sunday newspapers, dropped by 3.2 percent to 7.2 percent for the period ending in September, over year ago figures. The Washington Post fell 3.2 percent, while the New York Daily News dropped 7.2 percent.

Schilling noted:

The challenge for newspaper publishers today is to learn how to capitalize on this active online readership and translate their increasing engagement into revenue.

http://news.cnet.com/8301-1023_3-10150884-93.html

According to Malcolm Gladwell’s July 6^th article in the New Yorker, Priced to Sell: Is Free the Future? (http://www.newyorker.com/arts/critics/books/2009/07/06/090706crbo_books_gladwell) the publisher of The Dallas Morning News recently negotiated with Kindle, Amazon’s new electronic reader, and explained that Kindle wants “seventy per cent of the subscription revenue…including the right to republish (the Morning News’ content) to any portable device.” Based on scenarios like these, the public has determined that the reporting, content development and physical distribution of newspapers now takes a back seat in the value vehicle and the electronic delivery of the information is in the driver’s seat.

The perception of value for news reporting and the physical distribution of newspapers have taken the back seat. The traditional newspaper industry has been swallowed by the world of electronic distribution.

Part Three: How to Fend off Free

The value of what you sell shifts from very valuable to not so valuable based on new factors and new competitive forces. How can you keep your products from being perceived as being worth only free?

The Business Genome™ approach lets you look objectively at the value your customer places on what you have to offer and shows you how to be brutally honest with yourself (and quick on the draw) about shifts in their perceptions, by asking yourself four basic questions:

1. Are you selling something that is suddenly being offered by someone else in a new way, something that resonates more powerfully with your customers (like news on your mobile phone as a more convenient option than news at a news stand)?

2. Have your customers found substitutes for what you’re offering (like Kindles versus books)?

3. Are those substitutes gaining momentum as an option?

4. What can you do to get back in the front seat of the value vehicle?

These lessons apply far beyond the newspaper industry. I remember a chemical company that specialized in special chemical cleaners for underground pipes which suddenly found itself out of luck when a competitor developed a turnkey solution to pipe cleaning that included the chemical cleaners for free.

The companies that win in the game of “free” trace the value of what they offer from the point of view of their customers to confront the realities of what matters most.

What matters most to your customers? How close are you to being the next “free?”

Musical Coda
I’m Worth It by Brea

I think I’m worth it
I’m worth all of the good things you say to me yeah
I think I’m worth it
I’m worth all of the things that I can be oh

Yeah I don’t care where you are
I don’t care that you’re chillin’
I don’t care what your friends say
And that they’re waiting
I don’t care what your friends say
That they’re waiting

I’m worth it you know it
Yeah you make it so real that I like what you do
I’m worth it oh
And I know it for sure that I’m perfect for you
I’m worth it yeah

by Andrea Kates, Founder, Business Genome™

It’s amazing to me that a guy getting booed off the stage in Ann Arbor, Michigan would lead to a passionate personal belief in business as the best hope for hope. And even more amazing that I would feel almost patriotic in my belief that many of the most impressive individuals who are changing the world in major ways are business leaders, entrepreneurs, and basically working people. Are companies really in a position to change the world?

The story begins, well, a long time ago. I was in college, about to hear a speech by Ralph Nader, a guy with the reputation for being anti-establishment and rallying around causes like consumer rights. A grassroots kind of guy.

Or, so I thought.

The place was Ann Arbor and it was an era before MBAs were considered cool, a time when business majors were called “suits.” Corporations were viewed as the quintessential symbol of the anti-individualist. We had read about Billy Babbitt and Willy Loman in high school, and had visions of corporate America as a place that would suck our individualism from our bodies and turn us into Mad Men or the Leonardo DiCaprio in Revolutionary Road.

We entered the auditorium in Ann Arbor full of hope that Ralph Nader would help all of us understand how our rising generation of idealists could change the world, make a contribution, and make a difference.

Imagine our surprise when he opened his speech with this audacious and provocative declaration (albeit paraphrases a bit):

“If you want to change the world, you need to learn as much as you can about corporate America. Who do I think is in the absolute best position to really end world hunger? Coca Cola. With bottling plants, sterilization, distribution, advertising, access and technology distributed all over the globe, all they need to do is to make Coke nutritious and they’d virtually end world hunger overnight.”

Suffice it to say, after the booing stopped and the place had cleared out, there remained only a handful of us left in that auditorium to hear the rest of what he had to say (at least that’s my recollection). But, the message was clear and indelible: business was the place to grow heroes, even heroes with a heart. Granted, not the only place, but an environment with the power to make things move in a big way. And, big business wasn’t the only way—entrepreneurs could have just as much of an opportunity to provide beacons of hope through innovation and great ideas.

Years went by and cynicism set in about the motives of business leaders (think Enron, Madoff) and the soon-to-become-oxymoronic phrase: business ethics. Years of first-hand exposure to the complexity of business motives exposed me to the rationale behind the belief that competing interests like quarterly earnings requirements would stifle the vision and innovative spark of corporate executives. Companies putting their own self-interests far ahead of interests like local community needs had fallen short of that Nader-described vision of Coke saving the world.

Or, so it seemed.

But lately, I’m noticing more talk about the hope for the future resting on the shoulders of big business leaders and entrepreneurs. It’s becoming clearer that the idealistic visions of sustainability and better quality of life have got to involve business. People are pointing to the post-Depression companies that rose from the ashes of economic disaster and fueled economic opportunities. They are pointing to economic hardship as the catalyst for new companies to thrive like 3M and FedEx. Thomas Friedman just wrote an article called “Invent, Invent, Invent,” where he reminds us that “historically, recessions have been a time when new companies, like Microsoft, get born, and good companies separate themselves from their competition.” He goes on to make a strong case for the importance of business innovation: “We need to do all we can now to get more brains connected to more capital to spawn more new companies faster.”

http://www.nytimes.com/2009/06/28/opinion/28friedman.html

And the same day his editorial appeared, I went to another presentation, years after the Ralph Nader experience. One of the key topics was the new age of transparency in reporting progress in global sustainability, featuring metrics from Wal-Mart’s Global Sustainability Report.

http://walmartstores.com/Sustainability/7951.aspx

The Oracle at Ann Arbor spoke the truth. Big business is in fact leading the way on many important issues that affect the people they make the products for, the people who work for them, and the people who live near the manufacturing plants. And, it even seems that popular media is embracing that same possibility that business can save the world. Renee Zellweger’s latest movie character in New in Town uses her MBA to change the world (or at least a Midwest town that contributes to the world). She’s portrayed as a symbol of hope (Hollywood, unreal though she may be) through capitalism that takes us far from the image of Babbitt and Willy Loman.

Could it be that business heroes are in vogue? Could it be that the coming era will be one that embraces invention and where people in business are acknowledged for their ability to have real impact on quality of life?

A couple of years ago, Coke did add nutrients to Diet Coke (called Diet Coke Plus) but didn’t get great response, either with the public or the press. But, that’s what we’re all here to do (at least in the world of Business Genome™): share the best business ideas so that good ideas can lead to better outcomes, for people and for the bottom line.

Business leaders saving the world. Boo no more.

Musical Coda
We Are Here to Change the World by Michael Jackson
(from “Captain EO”)

We’re on a mission
In the everlasting light that shines
A revelation
Of the truth in chapters of our minds

So long, bad times
We’re gonna shake it up and break it up
We’re sharing light brighter than the sun
Hello , good times
We’re here to simulate, eliminate
An’ congregate, illuminate

(We are here to change the world)
Gonna change the world, Hee
(We are here to change the world)
Gonna change the world, Ooo

So do surrender
‘Cause the power’s deep inside my soul
Sing it

(We are here to change the world)
Gonna change the world, Sing it
(We are here to change the world)
Hee, Gonna change the world, Ooo

(We are here to change the world)
We’re gonna change the world, girl
(We are here to change the world)
My brothers my brother Na
We’re gonna change the world
(We are here to change the world)
Hee, Deep down in my body,
deep down in my soul, Baby
(We are here to change the world)
Hee, We’re gonna change the world,
Ooo

by Andrea Kates, Founder, Business Genome™

This isn’t an article about guns and ammo. It is about how to pack a meaner and leaner Remington …the typewriter. And what you can learn from the typewriter’s QWERTY keyboard, a fundamental business lesson that Business Genome™ is pouncing on with new tools…

…because many of us are still running our companies with old assumptions that have bred culturally-ingrained, tired habits that now dominate our thinking and rule our decisions.

1878 Typewriter Patent Drawing, featuring the QWERTY Keyboard

The story behind the QWERTY keyboard teaches us that failing to examine the “why” behind history-driven practices in our own businesses can foster institutional inefficiencies and may sometimes lead to the very extinction of our companies. The QWERTY story starts with the design of a writing machine in the 1860s and ends with a more timely, urgent tale of what Netflix will do with its original secret sauce now that a new era is upon them. But, let’s start at the beginning—the ABCs (or more appropriately, the “ASDs”) behind the original typewriter keyboard.

Once upon a time in the 1860s, a newspaper man and inventor named C.L. Sholes put together some prototypes for a writing machine with letters on the ends of rods. The design of the original machine had a downside: If two keys were struck in sequence, they were likely to jam.

The Persistence of Memory by Salvador Dali

So, Sholes systematically developed an ingenious way to avert the jam—the arrangement of the QWERTY keyboard. There are many urban myths, academic papers, theories, and fables about the attempts over time to change that QWERTY meme, but it still persists.

The QWERTY meme lives on despite the fact that non-typewriter devices don’t contain rods that might jam.

Business Genome™ won’t join the debate as to whether or not the QWERTY design is the logical choice for the new devices and gizmos that use it as a standard. We acknowledge that the pain of changing to something that might be slightly better might not be worth it. However, we believe that the failure of business leaders to at least question the fundamental reasons behind some of their core decisions can, in some cases, lead to the extinction of their companies.

This brings us to the Netflix prototype. Here is a company that revolutionized the movie watching industry just a few years ago. Very simply put, they figured out that in a world that brought us the FedEx standard, where things “absolutely, positively had to be there overnight,” and cocooning, where staying home to watch movies in the days from Blockbuster, and Amazon online ordering and recommendation engines, “if you liked this, you might like that,” all they needed to do was to put together three or four key trends and, voila, they had a killer business model. Netflix has contributed vast knowledge to the world of commerce through the Netflix Prize, an open source competition for the killer app that would predict the next movie that John Q. Public would want to buy. They have developed cool algorithms for customer service. Netflix is clearly a trend-focused company, with nimbleness to respond to opportunity.

But last week, Reed Hastings was quoted in the Wall Street Journal as saying that his core business is doomed. DOOMED? NETFLIX? Could this be a sign of a coming apocalypse for the rest of us?

Netflix’s chief executive officer, Reed Hastings, thinks his core business is doomed. As soon as four years from now, he predicts, the business that generates most of Netflix’s revenue today will begin to decline, as DVDs delivered by mail steadily lose ground to movies sent straight over the Internet. So Mr. Hastings, who co-founded the company, is quickly trying to shift Netflix’s business — seeking to make more videos available online and cutting deals with electronics makers so consumers can play those movies on television sets.

http://online.wsj.com/article/SB124570665631638633.html

Hastings is questioning his company’s own “QWERTY configuration” and coming to the conclusion that the unknown pain of changing trumps the known pain of potential extinction.

The Netflix response to the trends over the horizon is inspiring. It reinforces the importance of sensing the changes in our ecosystems and the mission-critical nature of embracing strategies based on responsiveness, both of which lie at the core of Business Genome™.

The Netflix saga is captured in Business Genome™ terms as the Parable of the Two Snorkelers.

Once upon a time, there were two snorkelers, happily swimming in warm water. After a while, they both looked up and saw something unpredictable and unusual. On the not-too-distant horizon was a polar bear, floating on a lily-pad shaped slab of ice.

One snorkeler decided that this polar bear was an illusion—not on the maps, not anything he was prepared for. The other snorkeler thought, “Maybe the sighting of that polar bear is an early warning sign of colder waters ahead.”

The second snorkeler went ashore and put on a wet suit. Two hours later, only the wet-suited snorkeler could keep swimming.

Business Genome™ is committed to saving business leaders from the sense of complacency that would lead them to ignore signs of change in the competitive landscape, market conditions, or customer preferences. Because Business Genome™believes that all business leaders should be equipped to swim forward.

In the spirit of translating the Parable of the Two Snorkelers into an “add water and stir” applicability, we introduce: The Top 7 Signs that Your Business Needs a Wet Suit:

1.       You’re starting to see some disconnects between customer satisfaction scores and sales: they say that they still love you, but they’ve stopped buying.

2.       You’re reading news about businesses who do something sort of like what you do but are offering new products or services, like when Blockbuster noticed Netflix mailing DVDs direct to people’s homes.

3.       Your pricing has become a commodity: people aren’t willing to pay a premium for the same things they used to, like a slightly cooler pastrami sandwich. They’re substituting a less cool sandwich for a lower price.

4.       Your competition is innovating and you’re not.

5.       You introduced a price increase that led to increased top line revenues at first, but now customers are disappearing.

6.       There’s a new world order that could have a huge impact on your company (recession, globalization) and you haven’t been hit with a wake-up call yet.

7.       Everyone in the company culture is more committed to “that’s how we’ve always done it” than “that’s how we’re keeping up with new market pressures.”

And, if you need more ammunition, just circulate the pictures of the snorkelers and the polar bear.

Musical Coda
Cold as Ice by Foreigner

You’re as cold as ice, you’re willing to sacrifice our love
You never take advice, someday you’ll pay the price, I know

I’ve seen it before, it happens all the time
You’re closing the door, you leave the world behind
You’re digging for gold, you’re throwing away
A fortune in feelings, but someday you’ll pay

You’re as cold as ice, you’re willing to sacrifice our love
You want paradise, but someday you’ll pay the price, I know

I’ve seen it before, it happens all the time
You’re closing the door, you leave the world behind
You’re digging for gold, you’re throwing away
A fortune in feelings, but someday you’ll pay
Cold as ice – you know that you are
Cold as ice – as cold as ice to me
Cold as ice

You’re as cold as ice, cold as ice, I know, yes I know
You’re as cold as ice, cold as ice, I know, oh yes I know
You’re as cold as ice, cold as ice, I know, oh yes I know
You’re as cold as ice… (to fade)

by Andrea Kates, Founder, Business Genome™

In 1944, Jorge Luis Borges wrote a story called The Library of Babel. Borges’ work celebrated a library containing all of the knowledge of the universe and particularly the excitement it fostered. The down side: This magical library had no index, which led to mystery, frustration, depression, and yes, even insanity for the people trying to crack the code.

Don’t stop reading yet: this does have something to do with you and there’s a happy ending for business leaders in 2009. Sure, we’re facing information overload like never before. Our fundamental business advantage can’t be earned by simply having more information, or less symmetrical information, than our competition. (Think of the old ticker tapes that allowed stock brokers to be ahead of their customers.)

Those days are over.

But fear not: there is a powerful new approach to information that will provide the missing link between what we need to know and what we have to search through to find it.

Let’s start at the end of the story for most business leaders. Our search is not for information, per se. We really want to use information to solve the mystery of South Park’s Underwear Gnomes, whose business plan contained the classic puzzle cleverly reduced to shorthand ever since its exposure to television audiences: How do we solve Phase 2? These were well-intentioned gnomes who knew their core business strength was to collect underpants and their goal was to profit. Their only problem was the big question mark under their Phase 2 game plan: What comes in-between?

A Look to the Future: Where to Begin?

What all good Underwear Gnomes need is the ability to take the basic genomic sequence that makes their companies sing, buzz, profit, and grow today, and marry that genomic sequence with a look to the future: Where are the next customers going to come from? Who will our competition be tomorrow? How can we be ahead of the curve in anticipating future trends? What will it take to be a market leader in the next phase of our business? Where are some untapped opportunities?

In this context, access to infinite information with no way to sort through it is only part of the solution. The frustrating part.

What would change everything? An index of business innovations that have worked, combined with a kick-ass way to sort through the ideas, flipping and diving through the vast warehouse with ease. So that business leaders could imagine new ways to solve Phase 2.

Which brings us from gnomes to genomes.

Business genomes are patterns that describe the unique fingerprint of your company that you can now feed into a big shared library. Open source in nature so they can be shared and applied across industries. The Business Genome™ library, equipped with an evergreen index. That’s what we’re building. And, we’re inviting everyone to contribute.

With the Business Genome™ library, business leaders will no longer have to go crazy in a Library of Babel where they stare and stare at reports, but can’t figure out which of the many options for Phase 2 will be the right one.

Business Genome™ index would have allowed the head of Jiffy Lube to escape from his world view of WD-40 and lubricants, and start sniffing out ideas for waiting room experiences from Starbucks, health clinics, and banks.

The Business Genome™ index would allow the designers of a hospital emergency room to analyze the inner workings of a NASCAR pit crew to see how teams under pressure to coordinate tire changes under life-and-death circumstances made the whole process work. That emergency room design team could have sorted through the Business Genome™  index to glean some valuable lessons in how to rethink the emergency room to improve precision, save time, and save lives.

The Business Genome™ library, with its unique index, will reduce the risk of exploring new ideas because it will guide the search, by directing business leaders to who has done something like this before, like in the case of Jiffy Lube, who has created a fantastic waiting room experience for consumers. What can we learn from them that can lead to kick-ass results?

What’s great about the Business Genome™ library and index is that you don’t have to know what you’re looking for before you set out to be informed and inspired by the answers you’ll find. You can enter the Genome Zone with a hunch:

“I wonder why our customers aren’t buying desserts anymore. I wonder how we could still keep our check average at the same level as before.”

With the Business Genome™ library, your wondering will lead you down a path of information you can actually use to the best next action.

How are we building this vast library and index? We’re building it the new-fashioned way—with input from all the innovative leaders who are responsible for coming up with great ideas and making them work. The Business Genome™ is embarking on the pursuit of the most inspiring and effective examples of business innovations that have moved companies forward—business genomes, or unique patterns of business data. And, Business Genome™ is constructing an engine that will capture, sort, and store these genomes in an open-source structure that can be shared, searched, and recombined to make new businesses grow in the future.

We’ve studied the best ideas from the Encyclopedia of Life, the XPrize, Architecture for Humanity, Wikipedia, Pandora, the Netflix Prize. And other initiatives that have cracked the code on crowd-sourced engines. What all of these projects have in common is that they started with a simple idea, just like Edward O. Wilson’s original inspiration for the Encyclopedia of Life:

“Imagine an electronic page for each species of organism on Earth.”

And these projects have built their repositories, engines, and ecosystems of ideas, and in so doing, have allowed communities to make sense of information in new ways.

Over the next few months, we’ll start populating the Business Genome™ engine with stories, best practices, data, business fingerprints, and ideas that will encourage everyone to contribute, reward the most innovative ideas, and enable everyone to finally find something they’re looking for to solve the mystery of the Underwear Gnomes.

Business Genomes for gnomes. And, for the rest of us.

It’s an idea that will change everything. Stay tuned.

Musical Coda
The Laughing Gnome by David Bowie

I was walking down the High Street
When I heard footsteps behind me
And there was a little old man (Hello)
In scarlet and grey, shuffling away (laughter)
Well he trotted back to my house
And he sat beside the telly (Oaah..)
With his tiny hands on his tummy
Chuckling away, laughing all day (laughter)

Oh, I ought to report you to the Gnome office
(Gnome Office)
Yes
(Hahahahaha)

CHORUS
Ha ha ha, hee hee hee
“I’m a laughing Gnome and you can’t catch me”
Ha ha ha, hee hee hee
“I’m a laughing Gnome and you can’t catch me”
Said the laughing Gnome

Well I gave him roasted toadstools and a glass of dandelion wine (Burp, pardon)
Then I put him on a train to Eastbourne
Carried his bag and gave him a fag
(Haven’t you got a light boy?)
“Here, where do you come from?”
(Gnome-man’s land, hahihihi)
“Oh, really?”

In the morning when I woke up
He was sitting on the edge of my bed
With his brother whose name was Fred
He’d bought him along to sing me a song

Right, let’s hear it
Here, what’s that clicking noise?
(That’s Fred, he’s a “metrognome”, haha)

Ha ha ha, hee hee hee
“I’m a laughing Gnome and you don’t catch me”
Ha ha ha, hee hee hee
“I’m a laughing Gnome and you can’t catch me”

(Own up, I’m a gnome, ain’t I right, haha)
“Haven’t you got an ‘ome to go to?”
(No, we’re gnomads)
“Didn’t they teach you to get your hair cut at school?
you look like a rolling gnome.”
(No, not at the London School of Ecognomics)

Now they’re staying up the chimney
And we’re living on caviar and honey (hooray!)
Cause they’re earning me lots of money
Writing comedy prose for radio shows
It’s the-er (what?)
It’s the Gnome service of course

Ha ha ha, hee hee hee
“I’m a laughing Gnome and you don’t catch me”
Ha ha ha, oh, dear me

(Ha ha ha, hee hee hee
“I’m a laughing Gnome and you can’t catch me”
Ha ha ha, hee hee hee
“I’m a laughing Gnome and you can’t catch me”)

(One more time, yeah.)

by Andrea Kates, Founder, Business Genome™

Long Live Reach Out and Drive Innovation

Tough times teach us valuable lessons. For one, warts in our business models come to the forefront—no hiding behind good luck and claiming it as sharp strategy. For another, once we come face-to-face with our greatest fears of shrinking margins, declining customer loyalty, eroding market share, and disappearing revenue streams, we are left with one fundamental question (and no, it’s not, can I go home now?):

How can I harness the fire power, intelligence, experience, expertise and collective wisdom of the sharpest minds on the planet to help me frame my challenges and figure out a new path?

That is why I spent two days in New York last week at the i2i Conference (http://www.xprize.org/media-center/features/x-prize-foundation-announces-the-incentive-2-innovate-i2i-conference-june-8-9-), sponsored by the X Prize Foundation in conjunction with BT, the John Templeton Foundation, and the United Nations Office for Partnerships.

I learned a lot from the speakers like Don Tapscott, who opened up the world’s thinking about global collaboration in his book, Wikinomics: How Mass Collaboration Changes Everything, Reid Hoffman, the founder and CEO of LinkedIn, Peter Diamandis, the Chairman and CEO of X Prize Foundation. I enjoyed the “pinch yourself” moments, like when I listened to a three-person panel on innovation and realized that the first two speakers were from one, the government (Steve Isakowitz from the US Department of Energy) and two, the insurance industry (Glenn Renwick, President & CEO, The Progressive Corporation). I reflected on the fact that while many of us have been living in old models of how to bring our strategic brainstorming muscle to bear on the vexing issues facing our companies, others, like the people assembled at the i2i Conference, were taking a different tack.

In many fundamental ways, the i2i Conference represented the death, wake, and burial of a once-revered business model where corporate advantage in innovation that was at one time enjoyed by the companies with the most heft or most investment in internal research (think Bell Labs) was being replaced with a new competitive weapon: the ability to reach out to brilliant minds and enterprising folks around the world to drive innovation.

As Don Tapscott reminded us with the introduction of his latest book, Grown Up Digital: How the Net Generation is Changing Your World (http://www.grownupdigital.com/), the ideas that will win in this next business era are more likely to come from the business leaders who know how to articulate their challenges, reach out to the world of ideas to get input, and have the savvy and the tools to integrate the best of the ideas into their own frameworks for figuring out what to do next.

Don Tapscott, author, “Grown Up Digital”, and Andrea Kates, Business Genome™, at i2i Conference, New York (photo credit: Ramon Estevanell)

No one can afford to rely on their own, internally-generated R & D as the exclusive source of invention. No one can afford to be blindsided or even surprised by new ideas that arrive on the scene because they are too internally focused or sluggish in their response to change. How long will it take us to realize that our customers stopped ordering desserts months ago? And, what are some great options for what to do about it?

So, here’s the bottom line of how this new R & D works. Let’s take the example of a challenge to build a better mousetrap. The X Prize approach is to create a cash incentive and design a competition for the people who can solve the problem  (http://www.xprize.org/). They’ve challenged the world to develop efficient sequencing of genomes and cars that don’t rely on gasoline.

The New R & D: Reach Out and Drive Innovation

The X Prize model includes big incentives and attracts a bazillion participants to the competition. But, it turns out that it’s not the incentive alone that drives participation. What was proven again and again is that, in these competitions, the winner of the prize isn’t the only winner. The quest for technology creates a sea change of impact on the thinking within the entire field based on the fact that everyone is thinking hard about solving an important challenge.

Corporate leaders Neil Blakesley from BT and Marthin de Beer from Cisco echoed that sentiment. They’ve been using a less sexy, but equally effective, approach within their own companies to reach out to the world of problem solvers and include outside—the-organization thinking in their respective corporate problem solving. They’ve set up crowd-sourced innovation jams to drive corporate growth and to open up the thinking of their organizations to new approaches. They’ve sped up their development from Mach 1 to Mach 5. They’ve learned that the most effective solutions haven’t come from traditional teams. And, they’ve discovered that whether you’re trying to find diapers that biodegrade or washing machines that use less energy, companies have to get up to speed quickly on the new model for R & D or they’ll be left behind.

The Business Genome Guide to Reaching Out and Driving Innovation

The biggest wake up call for business leaders is that the world is flatter, faster, and more linked in than before. Period. That’s the reality that should drive our thinking about our biggest challenges. We need to ask ourselves: How can we harness the power of the changed world to reach out and drive Innovation?

Musical Coda
Across the Universe by The Beatles

Words are flying out like
endless rain into a paper cup
They slither while they pass
They slip away across the universe
Pools of sorrow waves of joy
are drifting thorough my open mind
Possessing and caressing me

Jai guru deva om
Nothing’s gonna change my world
Nothing’s gonna change my world
Nothing’s gonna change my world
Nothing’s gonna change my world

Images of broken light which
dance before me like a million eyes
That call me on and on across the universe
Thoughts meander like a
restless wind inside a letter box
they tumble blindly as
they make their way across the universe

Jai guru deva om
Nothing’s gonna change my world
Nothing’s gonna change my world
Nothing’s gonna change my world
Nothing’s gonna change my world

Sounds of laughter shades of life
are ringing through my open ears
exciting and inviting me
Limitless undying love which
shines around me like a million suns
It calls me on and on across the universe

Jai guru deva om
Nothing’s gonna change my world
Nothing’s gonna change my world
Nothing’s gonna change my world
Nothing’s gonna change my world
Jai guru deva
Jai guru deva