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Turning Risks into Products and Services

world risks report

Anyone looking for ideas for new products and services need look no further than the World Economic Forum, Global Risks Report. Each year a group of experts get together and work out which risks are the most threatening to our existence.

Once upon a time it was pestilence, plague, the weather and other natural disasters such as tsunamis, hurricanes and tornadoes. They have not gone away, but some very clever people have found solutions to these problems, and turned them into business opportunities.

The first modern sewage systems owe their existence to cholera outbreaks in the 1830s, 1840s amd 1850s in London, United Kingdom that killed tens of thousands, as well as the Great Stink of 1858 which resulted from the overpowering smell of excrement in the Thames River. A huge underground network of sewers was built under the city to pipe it away. Later other European cities followed suit, as did cities in Northern America. Today sewage is a trillion dollar business world-wide.

Safe water supplies using chlorination really only got going in 1905, after a typhoid outbreak in Lincoln, England. The first US installation was Boonton, New Jersey in 1908. Another trillion dollar business.

Until the 1800s, millions of people every year died from infections, most of then preventable deaths. It was only when we realized that germs were the basis of disease and that antibiotics such as penicillin could kill them, that most of us began to survive, not one, but multiple infections, routinely.  We have Pasteur, Lister, Fleming and Florey to thank for these discoveries. Sadly, millions in developing countries still die from diseases every year that are preventable in the west. Yet another trillion dollar business. However, our war on germs has caused some bugs to mutate and develop resistance. Think golden staff and TB.

Here’s a list of the top 31 risks according to the 2014 Global Risks Report, and an image from the report (above) which shows the interdependencies between the risks, and how they can impact each other:

  • Fiscal crises in key economies
  • Failure of a major financial mechanism or institution
  • Liquidity crises
  • Structurally high unemployment/underemployment
  • Oil-price shock to the global economy
  • Failure/shortfall of critical infrastructure
  • Decline of importance of the US dollar as a major  currency
  • Greater incidence of extreme weather events  (e.g. floods, storms, fires)
  • Greater incidence of natural catastrophes  (e.g. earthquakes, tsunamis, volcanic eruptions,  geomagnetic storms)
  • Greater incidence of man-made environmental catastrophes (e.g. oil spills, nuclear accidents)
  • Major biodiversity loss and ecosystem collapse (land and ocean)
  • Water crises
  • Failure of climate change mitigation and adaptation
  • Global governance failure
  • Political collapse of a nation of geopolitical importance
  • Increasing corruption
  • Major escalation in organized crime and illicit trade
  • Large-scale terrorist attacks
  • Deployment of weapons of mass destruction
  • Violent inter-state conflict with regional consequences
  • Escalation of economic and resource nationalization
  • Food crises
  • Pandemic outbreak
  • Unmanageable burden of chronic disease
  • Severe income disparity
  • Antibiotic-resistant bacteria
  • Mismanaged urbanization (e.g. planning failures, inadequate infrastructure and supply chains)
  • Profound political and social instability
  • Breakdown of critical information infrastructure and networks
  • Escalation in large-scale cyber attacks
  • Massive incident of data fraud/theft

If you take a close look at the kinds of dangers we now most fear the most, they seem to be breakdowns/failures in the systems we humans have created. They are also mostly in the realm of governance. In the past governance has been the responsibility of our political leaders. And as any avid student of systems thinking will tell you, governance innovation, or the ability to redesign and influence the adoption of the rules of the system, is much more powerful than either product or service innovation.

Here’s a workshop to think about an opportunity creation approach to risk:

Workshop:

1. Brainstorm a list of risks that you, your community or your business face in a normal year. An abnormal year.
2. Choose 5-6 of the most likely or risky events with the potential for the most serious consequence for you, your community or business, and estimate the likely impact, damage etc.
3. Thinking about the 5-6 most damaging, chaotic or disruptive risky events, what if any solutions (technology, services, redundancy, forecasting, early warning, rapid response etc.) are easily or readily available to you. Make a list of the risks and how you can mitigate/reduce or bounce back easily.
4. Thinking about the risks that you cant easily resolve, especially those that have rapid knock on (chaotic effects) what could you do differently to deal with those risky events? What new disciplines might you explore for new and better solutions, or what multiple disciplines and new knowledge from those disciplines could you bring together to deal with the risk in a new way?
5. Thinking about the World Economic Forum Risks Report list of risks, how could you, your business or your community use its expertise/new knowledge/experience to prevent, mitigate, or rapidly respond to/damp down the effects of a risk, and turn it into a product or service for others to buy.
6. Whats a problem/issues you are experiencing in your community which has defied all efforts to make an improvement? In what ways might you be able to deal with this differently and become an expert in its resolution, then supply that service to other organizations or communities?

 

 

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Beyond Lean: Optimal ways to Eliminate Waste

MUDA

What was originally known as the Toyota Production System (TPS) has evolved into a management philosophy and set of production practices that focuses on the use of resources to create value that a customer is willing to pay for.

As Toyota became more successful around the world, interest in their processes spread. Their set of tools, now know as Lean production or just Lean, were developed to ferret out and eliminate wastes, or Muda.

Basic Lean Workshop

Here’s a set of questions to help you facilitate a workshop to start thinking about ways to reduce the original seven kinds of Muda/waste:

  1. Transportation: In what ways are there unnecessary (non-value added) movement of parts, materials, or information between processes in the system?
  2. Waiting: In what ways are people or parts, systems or facilities idle – waiting for a work cycle to be completed?
  3. Overproduction: In what ways are we producing sooner, faster or in greater quantities than the customer is demanding?
  4. Defects: How and when does the process result in anything that the customer would deem unacceptable?
  5. Inventory: What, if any raw materials, work-in-progress (WIP) or finished goods do NOT have value added to them?
  6. Movement: What, if any, excessive movement of materials, people, equipment and goods occur within a processing step?
  7. Extra Processing: What extra work is performed beyond the standard required by the customer?
  8. Engagement: In what ways, are people disengaged in the process that has an unnecessary impact on the system?

Later on, new wastes were added to the list, including the waste of unused human talent, and wastes that for the time-being are necessary to enable the production system to function, but which can ultimately be designed out of the system. Here are two more questions to consider:

  1. Focus: Which wastes (Muda 1) are unnecessary, that you might eliminate first, or wastes (Muda 2) that are non-value-added but necessary for the system to function which you can minimize until you can eliminate them?
  2. Capacities/passions: In what ways are we under-utilizing people’s capabilities, interests and passions to achieve a synergistic result?

But that’s not all. When production and service delivery systems are considered from a complex adaptive systems perspective, the approach that we at Maverick & Boutique have developed, there are at least five extra Muda to be considered, which offer even “more bangs for the buck” because they involve thinking about systems from the points of highest leverage (Meadows Institute, 2015).

Sub-optimal system transformations: What Lean does not seem to take into account are the transformational shifts that occur in the socio-technological system, which present opportunities for the elimination of wastes. These wastes become apparent when you start to think of production/consumption as a complex adaptive system.

If you adopt a linear perspective to production/consumption rather than a complex adaptive systems perspective, it is quite possible you will not be able to recognize the large scale periodic transformations of the socio-technological system, that keep arriving with ever shorter times-scales.

New technologies, and the systems that support them, come along every so often and largely displace, one or more existing products – best described back in the 1980s by Richard Foster, a former vice-president of McKinsey, in his book, The Attackers Advantage. As each new disruptive technology emerges, after an often clunky start, they race up the experience curve and often achieve productivity gains measured in the hundreds or thousands of percent. Think containerization, the motor car, digital photography, the iPhone, Amazon and the radial tire. At these transitions, the structure of the system changes, not just the technology, but the production and distribution methods, skills required and the theories/models that underpin their development.

The productivity gap between the emerging product system and the previous product system is waste/Muda.

Inadequate Conception of Risks and Solutions: Anyone who works in the risk management world will tell you that occasionally black swans and unknown unknowns or Unk Unks come along to cause major problems. Black swans are events we can imagine, but have never seen before. Unk Unks are not ever on our radar. Think events such as the Japanese tsunami which swept straight over the sea walls, the missing MH370 777, the BP Gulf blow-out which was not supposed to happen, and rise of the Caliphate in the Middle East instead of the Arab Spring. All of these are wastes, sub-optimal expressions of value that the customer does not want to pay for.

We get to understand these possibilities by seriously considering a wider range of models/theories from a broader range of experts, who can help us develop a more robust model of the system. Robust Models, says Conant, one of the father’s of complexity theory, are essential to being able to exercise control over a system. If we are still thinking linear and our competitors are thinking ecology, then we are sure to lose.

Inappropriate Scale of the Tools we Use: The use of tools and skills that are inappropriate to the scale of the problem or opportunity is also a source of waste. For example:

  • Expecting a bureaucracy to invent new products.
  • The use of mortars, tanks and fighter planes to develop a better relationship your next door neighbor creates a huge gap in customer satisfaction.
  • Using a sledge hammer to drive home a nail.

Not Preparing for the Future: The new kid on the block is anticipatory awareness. Amazon has perfected, and Big Data is trying to get its head around this idea. Amazon ships products to warehouses near you in anticipation that you (or others) will buy them within a statistically predictable window of time, thereby reducing the time the goods are kept in stock or out for delivery, and reducing waste even further. And although Big Data is trying to do something similar, the data merely confirms the hypothesis. You still need humans to figure out what new models/theories are emerging, and using an out-of-date model to run your organization costs time, which costs money. The difference between a successful and unsuccessful project can easily be the length of time you need to borrow the money. Too long and the cost of servicing the debt becomes a millstone around the project’s neck, which can quickly escalate into seriously expensive Muda.

Lean+ Workshop

Here are some additional workshop questions that help identify the wastes that the original process did not uncover:

  1. Optimal Wise Application of knowledge: How well are we achieving the wise application of knowledge for the entire system, e.g. inadequate pay for staff, negative impact on the environment, resulting in costs to the consumer after use e.g. disposal of hazardous chemicals or remediation of old mine/factory sites, which are paid for by all
  2. Transformation between paradigms: In what ways are we failing to transform all aspects of a system (roles, rules, tools, relationships, culture), so it continues to operate sub-optimally e.g. embedding old coordination, leadership, decision, learning models in a new technology/production system or product/service
  3. Robust model of the system: In what ways do we have an inadequate model of the system by leaving out black swan/unknown unknowns, trans-disciplinary learning features, etc. especially for early stage products; missing out on efficiency/productivity gains by regarding systems as a network, rather than an ecology
  4. Appropriate Scale: In what ways is the production/distribution system unable to adapt to changes in scale required, i.e. production ramp up/ramp down, raw materials shortages, natural disasters e.g. tsunami, hurricane
  5. Anticipatory awareness: In what ways are we not getting a solution to the customer fast enough so the NPV (net present value) is optimal and there is little or no waste due to capital servicing?
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Interaction & Intervention Innovation (i2)

Meet Interaction & Intervention Innovation (i2), a new type of process improvement, which has joined the ranks of proven innovation methods like product, service, business process and business model innovation. This one helps people experience new ways of interacting in order to create new knowledge and innovate successfully in the midst of emergence, complexity and uncertainty, the “new normal” for business today.

The closing session at the 2013 Hargraves Institute conference was an excellent example of this fast-paced, dynamic process. In just 90 minutes of intense conversation, sixty people working in teams created eight clever prototype concepts for healthy living products and services. The high-energy finale was designed just-in-time. The presenters, having met for the first time over lunch, quickly combined their talents to design and jointly facilitate the session without any rehearsal.

John Findlay & Abby Straus of Maverick & Boutique  contributed the Zing collaborative meeting system (which uses the i2 process), their Complexity Model of Change and improv games to warm up the crowd. Michelle Williams, of Ideaction  contributed the guest speaker to brief the audience, a 5-step design process and five customer profiles representing key markets segments, for which participants would design.

Here’s how it went:

The session began in a conventional way, with a five-minute talk by healthy living expert, Peter McCue, head of Healthy Planning, a state-wide New South Wales program designed to deal with the challenge of obesity in modern life.

Next, John Findlay and Abby Straus introduced their Complexity Model of Change to explain the “the obesity epidemic”, which has occurred, in part, as consequence of widespread adoption of brain work and the replacement much physical work in the Knowledge Age. Another key factor is the invention of labor saving tools and transportation methods that enable people to get only a fraction of the daily exercise our ancestors got just a century ago.

The Zing wireless keyboard collaboration system and i2 methodology were used to help participants create a rich picture of health trends and issues. Then, Michelle Williams stepped the teams through five rapid-fire, five-minute long mini-activities, with each team designing a product or service that would appeal to one of five customer profiles representing the different market segments.

The teams were encouraged to use any medium at hand to present their prototypes: poetry, improvisation, movement, graphics, etc. The new concepts included:

  • An exercise cycle to generate electricity in order to watch TV,
  • Trekking adventures for life fulfillment and purpose,
  • A spiced-up date night event app with options for romance, active and casual interactions,
  • A smart phone pedometer app that delivers a daily report on diet and exercise,
  •  A life coaching service for a healthier lifestyle taking in the outdoors, dog walking, food education and prioritizing relationships, and
  • A Lifestyle Innovation program for women to achieve a better life-work balance with child care support provided by the employer.

Participants used Zing and i2 to capture ideas and report back on their new products and services. They also gave lively and entertaining demonstrations of what they had in mind.

i2 is increasingly being used by conference organizers to switch the focus from sessions dominated by experts to interactive events, such as this one at the Hargraves Institute conference, where the audience is facilitated in creating new knowledge on the spot.

The i2 method is built on two key concepts:

1. “Simple rules of interaction” (SRI): a concept, borrowed from the science of complexity, which we commonly observed in nature when birds flock and fish shoal. Following just three simple rules—stay a fixed distance from others, fly/swim at a specific angle and turn when others do—huge groups of animals are able to execute breathtakingly beautiful and complex feats of coordinated movement.

Examples of SRI in human interaction are the “Yes-and” rule from Improv that encourages people to add value to each other’s ideas and the Talk-Type-Read-Review etiquette, designed for the Zing team meeting process, which helps dozens to hundreds of people work efficiently and productively on the same issue at the same time.

2. The conversion of models, methods and thinking processes into a series of rich, open-ended questions, which encourages each person’s brain to become his/her own “personal Google”. Participants make creative connections and develop new ideas, which they share with others in conversation in small groups, and then with the larger group in a process of synthesis and integration. When everyone works in parallel this way, they are able to perform complex thinking and creative tasks with surprising ease.

When events are conducted using this method, everyone in the room interacts in a synchronized way, no one talks at cross-purposes and all interests are valued and recognized. People from diverse disciplines and community groups can reliably deal with any kind of complex problem, even “wicked” ones, and reach broad agreement about what to do.

Shifting between the collective wisdom of the group, provided by the Zing collaboration method and localized team work, provided by the 5 step rapid fire sessions, allowed a shift from macro/big thinking to micro perspectives of problem solving and innovation.

With Zing, the participants can see the entire community’s collective wisdom and build on those ideas for this process. The report is easily generated after the session allowing for extra analysis together with a plan for immediate action. The 5-step process allowed everyone to work on a wicked problem that affects everyone in a way that removed people from their current mode of thinking outside the restrictions of KPI’s set by their organizations. It also helped the participants innovate more deeply and in more detail and develop their personal capacity for creativity and innovation.

The fields of mathematics, biology, neuroscience, psychology and systems thinking are fertile ground for the new conversation and decision methods developed using i2. Sources of inspiration include academics and thought leaders, especially those who present at Aspen Institute, PopTech or TED.com conferences. You can see examples at www.colorfulconversations.blogspot.com.

Common examples of these methods are SWOT Analysis, Six Thinking Hats from Dr. Edward De Bono, Polarity Thinking from Dr. Barry Johnson and The Choice Trilogy of Keep-Abandon -Reinvent from Maverick & Boutique.

Workshop

If you would like more information about Interaction Innovation or to engage Maverick & Boutique or Ideaction to design and facilitate a workshop, seminar or other or interactive event. Here how it works:

1. Create customer profiles, for example:

  • Mary: 65 years retiree. A bit overweight. Enjoys gardening. Likes swimming and dancing. Wants to lose weight so she can live a long and productive live. Takes walks in the park.
  • Tom: 55 year-old, former construction worker, with bad back, now on light duties in the warehouse. Weights 120 Kg. Drinks lots of beer. Watches the football on TV.
  • Samantha: 22 year old girl about town. Works in public relations. Time poor. Always eating out. Exercises seven times a week.
  • Jane: 35 years old, fitness instructor. Eats a balanced diet of fruit, vegetables, meat, grains and nuts. Has not yet met the man of her dreams, who also has to be fit and eat well, but not a narcissist or macho man.
  • John: 30 years old manager on the way up. Works 70-80 hours a week. Numerous meetings, often early and late. Eats out, or buys take-away on way home. Kids are in bed when he arrived home. Wife also works. No time for play. No time for exercise.

2. Ask each group to choose a role.

3. Ask a series of questions, one question per five minutes.

  • Context: What are major trends (e.g. time pressures, new and growing lifestyle diseases) occurring in the world around health, lifestyles, quality of life etc.?
  • Challenges: What lifestyle or health challenges might your customer demographic face? What personal challenges might they face?\
  • Needs/interests: What are the likely unmet work/home/life needs or interests of your customer demographic?
  • Product/Service: What kind of product or service would appeal to your customer segment that helps them deal successfully with their life/work situation? Think outside the box.
  • Prepare for Report back: What novel, unusual way could you report back. Song, Dance, Improv, Movie, Skit, Poem, Report, Haiku. You have sixty seconds.

4. Report back: Report back in any way you like – Song, Dance, Improv, Movie, Skit, Poem, Report, Haiku. You have sixty seconds.

5. Ask the question: What did we learn from this experience?

 

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Deliberate Team Formation

Organizations around the world will spend $US3,300 per hire (Forbes, 2013) on recruiting yet spend just a few hundred dollars, a small fraction, on the equally important task of setting up their teams for success.

Mostly the on-boarding process focuses on socializing people into an organization’s, culture, learning “how we do things around here”. But often the process requires the new arrival to adopt the organization’s identity while downplaying their own, which can be “psychologically depleting” (Cable, Gino & Staats, 2013).

This “don’t rock the boat” approach may be ideal for firms in slow moving backwaters of the world economy, but in a rapidly changing world it is an organization replenishment opportunity foregone.

New, more mobile arrivals, whose average time in a job is now 4.6 years, bring to an organization a rich diversity of cultural knowledge, mental models and experiences. They are often better able to work across ever-evolving or transforming boundaries than incumbents who have been at the firm for many years. Their adaptability skills may as valuable to their new firm, as the skills for which they have been hired.

The problem is most acute in the world of complex project management, where innovation, change and increasing complexity is the order of the day. Projects, by their nature, occur at the pointy end of the economy, where new systems are developed that are often so leading edge, the details are not fully worked out until the contract has been awarded and implementation is underway.

In a way, starting a project is like recruiting a band of mercenaries. Project people are used to working in temporary organisations for short term assignments. They also know disruptive change, because when their work is done, they are often rewarded by losing their jobs, until the next project comes along.

So how do you socialize the engineers and technologists who design and implement new projects, who are expected to be very adaptable and flexible, but also be perfectionists, to guarantee the system they build will work, not just reliably, but without harming anyone?

Another challenge is to create the infrastructure, system, technologies or tools which will serve a useful purpose for not only the current way we do things, but for the next 30-50 years. On time, on-budget and fit for the purpose.

This means that the leadership of complex projects often must recruit a mix of talents that are on the one hand creative and daring and on the other very conservative or risk averse. They include introverts such as programmers and extroverts such as team leaders plus a handful of cowboys and geeks. They come from a diverse variety of disciplines, in order to create new systems with many moving parts, often made or built in a wide variety of locations, remote from each other, anywhere in the world.

Add to this potentially difficult mix, accelerating knowledge creation and implementation, and growing complexity and you have what could easily turn into a conflict and contradiction nightmare.

To make matters worse, some project teams just jump straight into the work because they are focused on getting results. Others party until the cows come home, and cant get started until they have a perfect solution that solves everyone’s problems.. Kumbaya on steroids.

Our recipe for success is a balance between results AND relationships. 

On day one, get to know one another, and build systemic connections across the team. Then and only then do we engage in an initial round of strategic planning to clarify the purpose of the project/program, develop shared goals and a create a plan of action.

Workshop

Here’s a workshop to help a team prepare for success:

1. Warm-up: In 25 words or more, tell us the story of the most amazing, crazy or dangerous thing you have ever done. What you learned from the experience?
2. Passions: In 25-words or more, what are your excited or passionate about?
3. Life story: What’s the story of your life? Name of the movie and the plot.
4. Your interests: Why did you join the team? What do you hope to get out of the project if it is very successful?
5. Skills and tools: What skills, methods, tools etc. do you bring to the project and how could they contribute to its success?
6. Biggest issues you have faced: Give an example of a big issue or challenge that you have had to deal with in your work/life that you would really like to have better answers for in the future.
7. Helping others: Thinking about all the other members of the team and their interests, and the challenges or issues they face, who could you help and what could you do to help them?

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Conference Call, Anyone?

Just watch this!

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Viva la Difference! How diversity makes us smarter

It can be challenging to interact with people whose perspectives and opinions differ from ours, but there are many benefits, including making us smarter. In this Washington Post entry, Gregory Rodriguez explains why this is so.

 

 

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American International School of Rotterdam (AISR)

Opportunities & Challenges:

To develop a vision for American International School of Rotterdam (AISR), as well as action steps to realize the vision and guiding principles that will inform the thought and action of the school community. Accreditation guidelines require that the entire school population must be represented in the process, including board, faculty, staff, students and parents.

What we did:

M&B partnered with the Cleveland Consulting Group to facilitate the event. On each of the first two days, groups of about 70 persons, representing a diverse mix from our community—students from grades 5-12 (including learning support and EAL students), faculty, staff, parents and board members—were lead through an interactive process to explore our collective values and aspirations, how we might make our school an even better place to learn and teach, how we might express the essence of AISR and how we will put our values into action.

The knowledge we created in the first two sessions was correlated by our facilitators and presented on the third day to a plenary group consisting of participants from the first two days. This group then collaborated to craft working vision and mission statements for the school, and language for our guiding principles.

The beauty of this process is that the new knowledge produced is made—and owned— by the whole community, rather than by a few individuals. Everyone is represented and acknowledged and has an equal part to play in the outcome. The process itself has helped to build capacity in our community for cross-boundary/group collaboration, helping us to hear and understand each other and to work together to achieve our goals.

Thoughts from Participants:

At the end of the first two days, we asked for thoughts and feelings about the day from each participant. These are included in the report you may download. At the end of Day Three, we asked for comments from anyone in the group who would like to contribute their thoughts about the entire event. Here is what we received:

“I think it’s good we all got to share our opinions of the school and how we can improve.”

“We’ve grown together as a school. Not often do we get to sit down together to work on a common task and have everybody heard.”

“It was very interesting to go through the process and see what everyone’s perspective is. Provide everyone the opportunity to think about what the school is and should give more meaning every day when people walk through the gate.”

“AISR is a unique place to work and it was nice to meet students I didn’t know. We’re are a small school and have the chance to interact with others.”

“The teachers and parents should commend the students on their hard work.”

“Unique process that allowed all of us together to come up with something meaningful. I really enjoyed meeting the students and to see how creative you all are.”

“I am very excited to go this school and meet a lot of friendly students and friends. And let’s let the school be better to complete our dreams.”

“I think it’s great to see that even though there are some differences of what the school can improve upon, there are a lot of ideas that everyone agrees on.”

“I wanted to complement the school on the organization of getting this done and working with this method. We needed to stretch ourselves to come up with the results we came up with today. I’m thrilled and touched to see how committed everybody is.”

“It’s a big opportunity to be at this school because it’s a safe one. I really enjoy this school when many other children don’t have the opportunity. It’s perfect.”

Deliverable:

See the event report here!

View a short video feature on the event:

 

 

 

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