Category

Strategy

Is the impact of Agile just a Hawthorne Effect ?

By | Agile, Communication, Strategy | One Comment

L1001888The Hawthorne Effect is a human behavioural theory drawn by various social scientists from trials undertaken between 1927 and 1932 at Western Electric’s Hawthorne Works.

The trials found that improvements in behaviour, and productivity changes observed after adjusting a workplace, were in fact largely just the results of a placebo-type effect – any change seemed to cause improvement.

There were many changes trialled – the first (and possibly most important) were changes in lighting levels (‘the illumination experiment’) in a factory environment. The objective of the experiment was to find the optimum lighting level for productivity – the results showed that more was at work than just changing lumens, every change (up or down in brightness) caused an increase in performance.

Most theorists since have concluded that the improvements are caused by the act of measuring and engaging subjects.  If you missed studying this in your management 101 course, then read this article or take the slightly incomplete wikipedia catch up lesson and then continue reading.  Lets deconstruct the impact of this theory into its parts:

Measurement

We’ve already written about the impact of measurement before.  It’s also pretty well understood that humans perform against whatever KPI you give them, the way they do it may however be surprising or unintended.

Confirmation Bias

Then there is Confirmation Bias, basically the likelihood that you will both find what you’re looking for, and ignore stuff that you’re not.  Elegantly illustrated by this group of Radiologists who can’t find a Gorilla in their scans.  If a team expects a new process to be better, then their perception will likely match their expectation.

Empowered Staff

Finally the staff in the later trials, more focused on workplace layout and reward were engaged, they were part of the process.  They were made to feel special.  We’ve talked about this a fair bit too – though Dan Pink is more fun. Smart people are motivated by Autonomy, Mastery and Purpose. Pink was not the first to the conclusion that money was directly linked to productivity.

In summary, if you measure stuff, look for a change, and then make people feel special – surprise, surprise, you’re going to see a change!  Does this mean that some of the impact of Agile, the dramatic increase in staff engagement and useful productivity are perhaps just caused by the visual changes in the offices and agile rituals, but, in fact are just a ‘Hawthorne Effect’ ? In my heart, I have to say nervously, yes, at least to some extent.

Is this bad ? No.

Ok, but is the change real and sustainable? Yes, the changes and improvement in your team’s performance and culture are real.  Like all placebos, the source of the change might not be real, but the impact is.  If we can come up with better or different ways to achieve the same improvement then we should try them… any good agilista will tell you that anyway.

In the mean time I’ll leave you thinking about a sobering equation Nigel sent me as we’ve been debating this recently.

Hawthorne > Maslow + Deming

hawthorne effect workplace

Agile, Lean and Systems Thinking – What’s the Deal?

By | Agile, Lean, Strategy | No Comments

A Luna Tractor client asked me the other day, “What’s the relationship between Agile and Lean? How do you know which to choose?”  It’s a great question and the answer is actually pretty simple: most of the time you need to apply both. In fact we would add Systems Thinking to the list and suggest that you need to think hard about how to apply the right aspects of all three disciplines to your problem.  So how does it work?

Lean – How to do the least work while maintaining value.

Agile – Habits to create an adaptive, incremental development and learning cycle.

Systems Thinking – Solving problems by viewing the problem as part of a system, rather than a broken part.

What does applying all three look like?

All three value humans as a key part of the system.

All three value customers as the key driver of the system.

Use Systems Thinking to define your approach, use Agile habits to solve problems and use Lean priciples to tune and refine your resulting system.

Ground Hog Day

By | Agile, Disruption, Strategy, Technology | No Comments

I just saw this graphic of American Print Newspaper Advertising (adjusted for inflation) and had a strong sense of deja vu:

Exhibit A: Newspaper Ad Revenue in the US

Exhibit B: US Recorded Music Revenue in the US

Business Insider points to journalist Jay Rosen’s comment that the peak for Newspaper Ad sales lines up with the birth of blogging online.  I find it fascinating and terrifying that we see this same pattern of the rapid disruption of business models, with industries succumbing to seismic changes being repeated time and again across unrelated verticals.

The speed of the change can result in the digital companies that inherit the previous analogue dinosaur’s world only working in a market a fraction of the size of the old industry. The money, and the consumers, just go elsewhere.

Chaos theory shows us how small changes in the fundamentals can cause such different results in otherwise deterministic systems, and that the changed results are often so dramatically different that it is likely to be impossible to predict. Not even in your 5 year plan you paid consultants to write I’m afraid!

Nigel and I have thought about this quite a lot in the past when we invented our Dalton-Pierce Disruption Quotient.  Indeed it was one of the drivers for starting Luna Tractor itself.  Predicting these changes is one thing, but learning how to respond faster is really the only thing you can control. Resilience and speed to learn are the new competitive advantages.

The lifecycle times for industries and business models are getting shorter too. Maybe they relate to the build time of a dynasty or maybe something else – cultural inertia, stickiness or just a generational change.  Older, more traditional businesses (like newspapers, broadcast TV or music) may take 50 years to build and 10 years to decay.  Younger inventions like fax machines have already come and gone, along with many early dot comm successes (MySpace anyone?).

The early giants of computing are all fading fast or changing their business model. With Apple selling more iPads in the last quarter than any computer-making rival sold laptops or desktops, I’ll have a bet (with anyone that will take it) that computers are next … via Ars Technica

Exhibit C: Sales of Smartphones and Tablets vs Computers.

Apple and their iPhone commands around 80% of the profit from Smartphone sales while all the other makers struggle to sell units at any price (note Samsung is a minor exception to this, Apple and Samsung are the only games in town really, hence the large fuss over their recent court dealings).  Google tells us that we search more on our phones than on our computers now.  Where is the peak for Smartphones, and I wonder what will disrupt them?

WHY ?

By | Agile, Communication, Customers, Development, Disruption, Lean, People, Strategy | No Comments

At various times I’ve heard Fiona, Nigel and myself telling people “If you only adopt one Agile practice make it the retrospectives” … But why ?

The boards are useful, but they are really just give you a prompt when you talk at your stand ups, and those are just an efficient way to make sure everyone is communicating.  While the demos and showcases give some social incentive to produce real things and check your progress over a useful timeframe (weeks not months or years).  But … The retrospectives (or reviews), that for me is where the real magic happens.  If you never stop to check, to ask how things are going and question why things are the way they are, why you are doing things and what you should do next in response then you risk having  the veneer of an Agile process which is either just micromanagement on the wall, Waterfall or perhaps worst of all, no real plan at all.

Being Agile isn’t enough.  Being Lean isn’t enough.

It’s all to easy to build and do the wrong things very well and very quickly using these techniques.  Perhaps the single most important thing is that your CEO, your leaders, your product people and you need to understand, ask and articulate is WHY you’re doing things.

If it’s a statement about profit and growth, start running. The powerful WHYs come from passion and insights from your customer (or potential customers if you’re doing something new).

WHY –> WHAT –> HOW … Simon Sinek

There are two standout statements in Simon’s TED talk.

“People don’t buy what you do, they buy WHY you do it.”

“There are leaders and there are those that lead. Leaders hold a position of power or authority, but those who lead – inspire us. We follow those who lead not because we have to but because we want to, we follow those who lead not for them but for ourselves.”

Too many companies and individuals talk about what they are doing, the great ones talk about why.

Luna USA Field Trip: lessons for the future of retail in Australia

By | Customers, Disruption, Lean, People, Retail, Strategy | No Comments

If I had a dollar for every whinging column-inch where our Australian newspapers copy and paste press releases from Myer, David Jones and Harvey Norman’s PR departments, blaming the dreaded interweb for the end-of-days in our retail stores, I’d be wealthy enough to buy my Levis from DJs all the time. Which is another story, but to be fair, a related one.

As data from Marketing Magazine recently reported, and as I have duly illustrated above, online sales (the pirate) amounted to a mere 4.9% of total retail revenue in Australia. You’d think it was 49% the way the captains of industry are moaning! You would have to take the 15 top-ranked etailers (look away venture capitalists) to beat Myer’s sales in 2011.

Three quarters of those etailers are Australian based (like recent Melbourne niche startup Oola Toys, catering for quality kid’s toys online), belying the hysteria that the foreign pirate devils are plundering our shores.

Like pirates, etailers are moving fast and nimbly, growing 29% per year, but it’s a perilously small base, and although the power of compound growth of that kind is well-noted by economists, the pirate’s flag was visible from a great distance.

In the long run, can ye olde worlde Australian retail survive this onslaught from the internet? Will websites that enable people to self-serve, in their own good time (websites rarely snear “you’s been fixed?” while texting their mates on their iPhone), with near perfect information on price and quality, put bricks and mortar to the sword?

What’s particularly disturbing as Luna Tractorites, is that while we wait for the millionaire boys club to figure it out, the Australian retail experience just seems to get worse, accelerating our move online. As management consultants advise the command and control CEO-classes that the only sure-fire road to profit is cost reductions, they cut wages, staff numbers, staff benefits, premises and service.

I just don’t buy all their complaints about retail rents and wages. As this report on the state of Australian retail by The Australia Institute shows (yes, I know, they have an axe to grind and I should declare, distantly linked to my new employers), there is plenty of misinformation being spread at present to discombobulate us all.

Australian CEOs should know by now that by their very nature, big consulting firms will only recommend a cost-cutting program, since a well-known result of an ideas or innovation-based strategy is that some of the ideas won’t work. Cost cutting always gets a result for a CEO, and since they’re only going to be in the job 2 years, the next guy can handle the fallout.

The less than 5% of Australian retail sales that ecommerce plunders appears to have undone the psyche of the highly paid leaders of our big retailers. Their inability to grasp pure online is only surpassed by their choking over their morning tea and tim-tams trying to figure out how to make online and bricks & mortar stores work together. Which the rest of the world has had a better go at I might add – according to the Marketing article, 13 of the top 15 etailers have a bricks and mortar presence of some kind.

The web is growing fast too, off that tiny 4.9% base, and it appears nobody near the top of big retail has a single good idea to play. Remind me again why we pay them so much?

To add final insult to big retail’s EBIT injuries, the Australian ecommerce industry is still sexy, bright and cool 12 years later – and still attracting talent and investment. And more often than not, attacking using small teams moving fast and agile.

Luna Tractor sent me to the USA in May 2012, the land of BIG retail, and I am pleased to report that whilst on assignment, I have seen the future.

Knowing a fair few camera nerds (James, Gus, Jamie, Steve I am looking at you all), they often recommend a website called B&H Cameras, based in the USA, as trustworthy, value for money and easy to deal with. The 3 horsemen of the retail apocalypse.

And thus, being in Manhattan for a few days, I felt duty bound to check them out.

The approach, from Penn Station through roadworks and fairly drab streets did not auger well. The only retailers in this area were basic, small and a bit sad looking.

Eventually I spotted a nondescript B&H sign, and a couple of traditonally dressed and coiffed Jewish guys sitting outside the door to a loading dock, looking exhausted from their morning’s work, and seemingly pleased to be in the open air. Hmmm. Entrance round the corner. Okayyyy.

Round the corner, in the front doors and BAM! Like a cross between Penn Station and Willy Wonka’s factory, there are people everywhere, and the zziiippp, zzziiiippp sound of machines, rollers and gears. I look up to see green boxes flying around gantries above our heads at high speed, like a Terry Gilliam film.

Photo from wikipedia

With electronics gear everywhere. It’s about the size of a decent JB HiFi store in Australia. On each level!

It is immediately explained to me I should check my hand-luggage in at the concierge, and then I’m free to head into the store.

Nondescript on the outside, treasure trove on the inside. Hundreds of customers, and dozens more of those mysterious traditionally-dressed Hasidic Jewish men. They are everywhere, chatting to each other, chatting to customers, laughing, looking serious,

Level 1 of B&H

debating, calling out to one another. I quickly get the picture they own and run the business.

My genuine requirement (and yes, there is one my dear family) is a couple of packs of Polaroid’s new zero ink ‘Zink’ printer paper, for the gorgeous little GL-10 portable printer we use. It is portable, battery powered, and most importantly, emulates the look of a genuine old Polaroid camera print. Essential cool.

Having bought the printer at Michaels in Melbourne, I figured I would acquire more paper on the road in the USA easily enough. I figured 100% wrong, as I found in San Francisco, Minneapolis and Boston. “Polaroid?” they all said. “What’s that?” or “they went out of business”.  Even the specialist camera stores blanked. At worst I got the surly ‘haveaniceday’ which translates to ‘whydidIwastetimeonyouloser’.

I wandered upstairs at B&H, seeing the family safely despatched to check out the world’s largest 3D televisions, and am once again taken aback by the sight. Not dozens of Jewish men, but hundreds.

Product is divided by brand, and by categeory. A whole shop-sized stand of Canon cameras, of Nikons, Leica, and Olympus. Printers arranged accordingly. Historical displays. Apple computers, Sony, you name a brand, it’s there. I am drawn to the Polaroid and instant camera stand, and to my utter disappointment see their old Pogo printer and a paper rack saying ‘out of stock, new product coming soon’. Images of the Lady Gaga designed GL-10 printer as a paper weight flash into my brain.

“Sir, you look like you saw ghosts” says a man at my elbow. I explain my problem, what I want, and he steers me by the elbow – “it’s not my area, but come over to where the printers are, we’ll see what we can do”. I am introduced to the 3 printer guys, who have the tiny range of Polaroids (there are only 2 printers, and a couple of cameras) on their shelves.

Then my server shocks me – he opens the freaking company website on a computer on the stand! I quickly jump to the conclusion that the game is over, and I’m about to be sent home to order it on the web.

To have a retailer even admit they have a website is rare enough, but using the site within the store to actually assist a customer even rarer. There’s no commission on that sale surely! Having got a visual check on what I want through the use of a quick search, the guy CTRL-C’s the product SKU, alt-tabs to another boring old mainframe looking screen, pastes it in, and whammo, we have an order.

“Were you thinking of anything else on today’s visit?” he asks. As it happens, I have ummed and ahhed over a simple 50mm f1.4 lens for shooting indoors for a while. “Do I have to go somewhere else for lenses?” I ask. “No, no, if you know what you want we’ll find it” comes the confident reply. One website search, visual confirmation, cut and paste of the SKU, and I am done.

The B&H service counters where you inspect the goods brought up from the warehouse. Spot any queues here?

I now expect my guy to take me to a till and ring it up. Silly me. Nor does he point and tell me to wait in the queue over there. He TAKES me to a free service person at the biggest customer service counter I have ever seen (I counted about 70 stations), and introduces me to the next guy in the chain. Then he waves goodbye and goes back to the printer display.

I have a small ticker-tape printout in my hand of the items, with a bar code. I am greeted, the serving guy simply scans the code and suggests I try one of their delicious candies, as the goods will be a couple of minutes. Ummm, so where are they then?

In under 2 minutes, 2 green boxes with my lens and paper arrive on the invisible railway underneath this gigantic service desk. I get my credit card out, ready to pay. “Oh no Sir” he waves my card away, “we’re just going to let you check the items are what you wanted – you will pay downstairs at the next step…”

Now really intrigued, I decide to race the items downstairs. My effort to beat them will doubtless be foiled by a queue at the payment counter though. Except there isn’t one. In fact, I have not seen a queue anywhere in the entire store. Payments is only the second place I have seen any women in the store at all (the first was bag check). Six checkouts for credit cards, 4 for cash and cheques.

Having paid, I am ushered over to the collection counter, where my items, with warranty cards filled out, my receipt stapled to them, have been delivered by the magic railway and are in a bag ready to collect.

Boggling.

So what has happened here? Well, given that these guys have been in business for decades, I have just learned where Steve Jobs got his Apple Store commerce and Genius Bar service processes from.

B&H are basically masters of FLOW, and ensuring that value is accruing the whole time for the customer.

B&H have counter-intuitively divided up the value stream into discrete parts that are delivered rapidly by discrete people. In a time where everyone else is cutting staff numbers, training and service levels, they are dialing those factors to 11.

They have worked out the bottlenecks in their store flow, and simply calculated the required ratio of servers, inspection staff, cashiers, help desk and collection staff based on the pull of customer demand.

They also have a booming website business, shipping huge quantities of product across America and the world, with integrated logistics partners like Fedex. To comply with traditional Jewish law, they are shut on Saturday, and do not even process internet orders placed on a Saturday. The system just queues them up for Sunday.

Now, I’m not saying they are perfect. According to Wikipedia they are defending a 2009 lawsuit focused on the lack of progress opportunities for women in the store. I can see how that arose!

But between innovators like Zara (right next door to our David Jones in Melbourne’s Bourke Street Mall, and as busy as DJ’s is quiet), Michaels and B&H, there’s hope that a retail shopping experience in Australia can still be a pleasant, and profitable one.

Just don’t expect any consultants to recommend that strategy any time soon.

Luna USA Field trip: more skunkworks reflections

By | Agile, Disruption, People, Strategy, Technology | No Comments

Like so many exhibits in the Smithsonian Air and Space Museum, this plane is not a replica, a copy, or a later model. This actual plane is the very first jet fighter produced by Lockheed Martin’s skunkworks team.

The 14 rules of the Skunkworks, written by Kelly Johnson of Lockheed Martin in the 1940s are are clear antecedents of the 2001 Agile Manifesto, and the Agile Principles behind the manifesto.

Kelly Johnson congratulates the test pilot for the new Lockheed Martin jet fighter, the same plane pictured above 60 years later.

James talks about Skunkworks in our YOW! presentation, which you can view here on the YOW! site.

Kelly Johnson, the leader of the Skunkworks organisation, had one core principle – everyone needed for the design, build, testing and launch of a plane would be in the team, and in the room. Engineers, pilots, welders, engine-makers, contractors.

This principle was brought to bear on the Allies’ big business problem in 1943 – the Germans had developed a jet fighter, capable of 50% more speed than a British Spitfire and the famed US P51-D. Eschewing the usual ‘big design up front’ period for a new plane, they went to work in a hangar and 143 days later were flying the first US-manufactured jet.

One of the secrets of the speed to market of the design was the way the plane was constructed. The tail piece, which contains the engine, could be folded back in several simple panels to reveal the entire jet unit for servicing or replacement, allowing rapid changeover and trying alternate designs.

The customer problem. For solution, see above.

At the Smithsonian, they have the problem and the solution arranged side by side in an exhibition honouring the jet engine and the Lockheed Martin’s amazing new approach to product development.

Luna USA Field Trip: Wright Brothers – less money, less resources, more innovative

By | Agile, Disruption, Strategy, Technology | No Comments

The Smithsonian Air and Space Museum in Washington DC, a treasure trove of lean and agile lessons for Luna Tractorites.

Simon Sinek has a great talk on the rivalry at play in the early part of the 20th century to successfully fly a heavier than air, powered aircraft.

It is an important tale for agilists, as the small budget and time/ weather constraints faced by the Wright’s forced them into a design that was low cost, modular, easily repaired, and could be iterated on very rapidly. With which they killed the competition. I won’t repeat it – check out the Ted Talk I have linked above.

Having generated the design for the innovative flexible wing surface to allow more control, the Wright brothers developed tools to hypothesise, test and redeploy elements of the planes in days and weeks, where the opposition (funded 20x better) took months.

Their work with a primitive wind tunnel enabled them to test quickly, and they questioned everything – including apparently proven mathematical formulae for key factors like lift co-efficients.

This image of the brothers’ workshop taken from the Smithsonian exhibition.

In the Smithsonian Air and Space Museum there is an exhibition devoted to the brilliance of the Wright brothers, which attributes their success to genius, and the short cycles of innovation and testing real, flying, machines.

The star of the exhibition is the original plane. Yes, the exact original, with new canvas stretched onto the frame in the 1980s to replace the rotted old 1903 covering. Three hundred feet in the air, strung up in a wooden, wire and canvas device, it is the best definition of a ‘commit’ that I can imagine.

Perhaps the most remarkable thing is not the first flight in 1903 – but that only 10 years later, a plane successfully crossed the Atlantic. The next big barrier, a private plane in space, was 100 years away.

Luna USA Field Trip: Space Shuttle – a monumental engineering achievement

By | Space, Strategy, Technology | No Comments

In our YOW! 2011 talk we discussed the space shuttle era that began in the late 1970s – an era of USA and Soviet rivalry based foolishly on strategic parity (‘our goal is just to have what they have’). Horrifically, many dot com genius business plans are still based on the futility of strategic parity, in short they read: ‘__________ <insert successful website name> but with ________ <insert tiny variation with no proven customer value>’

The Soviets soon abandoned their own space shuttle, which is bizarrely similar in design to the USA model (clearly, they downloaded the plans from pirate bay), in favour of the Soyuz rockets they developed in the 1960s and still fly today.

With the first American astronauts eschewing their shuttle program in favour of hitching a (much cheaper) lift to the International Space Station aboard a Soyuz this week, it was timely that I had the chance to see the Discovery first hand at the Smithsonian.

Like the SR-71, you have probably underestimated how big the shuttle is from the TV pictures.

The body is at least the size of a 2-3 story Melbourne house (those long, thin 5-6m wide terrace houses). Shiny and glowing on TV, it is a beaten and battered workhorse on the outside. The tile pattern is infinitely complex, the white paintwork burnt and worn. It is hell to photograph without diminishing it in scale somehow.

Locked in to such a monumental design, it is easy to see how you would avoid change at all costs on this piece of technology, and why the cost of ownership was so high, that in the end, it was retired with the same conclusion the Russians had drawn 30 years before – just too much money to run and innovate as a platform.

Sound familiar to anyone?

EXCLUSIVE! Australian incubator launches Airbed.com, hot new social travel transaction platform

By | Disruption, Strategy | One Comment

1 April 2012

Luna Tractor has been leaked advance details of the hottest new internet property to emerge from The Y-Axis, Melbourne’s most successful  incubator and startup investor, proof positive of the benefits flowing from one of the nation’s first NBN hotspots in Brunswick.

“Airbnb were so conservative, they  never really showed signs of being brave enough to take their platform to its logical limits” say the Airbed.com founders in their embargoed press release. “It’s all very well letting out your front room, or your sister’s apartment while she is away for the

The bed as a platform.

weekend, and saying how cool and social it will be – but we all know what that really means for travellers! It’s about the bed as a social platform, stupid!”

It follows then that Airbed.com will be far more ‘mocoloso’ (mobile-cool-local-social) as a platform than any of its competitors. Mocoloso was the key term being used by the VC Community at this years SXSW trans-media conference somewhere in the USA, which none of the airbed.com founders could actually find, but they have been to America.

Slavishly following the Eric Ries ‘Lean Startup’ model, Airbed.com operate 100% in the cloud with virtually no servers, no software (“code is SO last Thursday” says the CEO), use an agile methodology, and focus heavily on the use of RESTful APIs. “Soap APIs were frightening off some of the bohemian clients from the Northside in our user trials” says the airbed.com CEO in the leaked release.

The startup team has ‘pivoted’ once already – their first website was called airbnd.com, a social travel guide that enabled travellers to locate and access B&D (bondage and discipline) services. “We ran into the iTunes store, and some silly issues over the logo, so we pivoted immediately.”

When asked about the obvious similarities to established Californian social travel business airbnb, the founders countered quickly: “this is the Y-Axis incubator’s innovation secret sauce – we’re fast followers. Mostly we like to copy people’s websites and use Powerpoint to cut and paste new logos and stuff over the top of old ones.”

37 Signals website fails to use the Y-Axis standard font of Helvetica. "It's a wonder they are still in business with that UX" say airbed.com founders.

“We saw the US dot com industry was now just duplicating 37Signal’s website as a standard business model. We tried that of course – but our Macs have had all the fonts deleted apart from Helvetica, which led us to airbnb’s site – they truly understand design in the Brunswick sense”.

There are already mature interfaces to travel social dating services like Grindr, and strong rumours of a 4Square API in the summer. “Essentially, airbed.com have totally out-localled the specialists with this offer” says internet commentator Buzz Reilly. “A room? That is yesterday’s business model – nothing could be more local than a bed. With a local in it, preferably”.

The iPhone app is planned to be in store in the next few weeks, with ‘epic’ new interfaces to accommodate its use when intoxicated. There are also strong rumours of a corporate platform being developed, though the rumoured partnership with Blackberry have been scotched by commentators. The likelihood of any of the airbed.com services catching virally is considered extremely high according to their PR Agency.

Airbed.com are looking to raise around $20m for Series B, having begun their business using only the Burger King sponsored free wifi on the 86 Tram and two iPads, occasionally having to get off to avoid MYKI inspectors and to source long macs.

“Actually, we were hoping for a big mezzanine, but some douche put it on airbnb.com, some Japanese college students booked it, and there was no room for us” notes the disappointed airbed.com CFO and founder.

From Insight to Strategy to Innovation – while standing at the Toyworld Checkout

By | Communication, Customers, Disruption, People, Strategy | 2 Comments

Listen up lean and agile thinkers. This is a simple illustration of the kind of things that make innovation and strategy easy – a gift from someone on a toy shop counter that probably earns less than $20 an hour. Are you this smart? This brave?

With a 10 year old in my household, it’s little wonder I am a fan of Lego. From my own childhood memories, to their inspiring recovery from a near death business experience (after their long-standing patent for bricks expired) just by listening to customers and innovating the product accordingly, it is all good.

One of their recent products puzzled and infuriated me though. It is a single Lego minifigure in an opaque cellophane packet – ideal for for party bags for kid’s birthdays; the child at the checkout who MUST spend their pocket money on something (and they are cheap, $4 to $5 each); or perhaps the serious collector to get some custom mini figure accessories and body parts.

Yet, you can’t see which one of the 16 in the series you are going to end up with.

I will thus confess to having spent far too much time at many a big store’s Lego counter with Mr 10, eyes shut, feeling the packets to detect the slightest variation in the components to figure out if the character is Jane Torvill (uncool!) or Toxic Space Engineer (cool!).

Children’s (and collecter of greater years, ahem) ingenuity and social network savvy soon solved it – for Series 1 and 2 they quickly figured out the bar codes were different and published the key. So Lego moved the goalposts, using a single bar code and a system of dots on the packaging to differentiate figures in Series 3. The kids cracked it again.

Series 4 onwards you have no chance of detecting the difference from the packaging. The secondary market on eBay for these figures erupted, and the popularity of the series continued to grow. Business is booming. Yet I’m still grumpy about it. Why?

Why did Lego want the figure to be a surprise? Was that part of their strategy for the product? Perhaps I will never know, and Mr 10 and I quickly became disenfranchised by the whole thing.

So imagine my surprise, when dropping into Toyworld Palmerston North in NZ last week to find the Lego minifigure packets on the checkout counter, with each figure individually labeled with a hand-written number against the official Lego key. “You can’t do that”; “that’s naughty”; “that’s against the rules” were all thoughts that leapt into my rule-obeying lizard brain. Flabbergasted, I managed to regain enough English language ask why they’d done it.

And for the readers who are struggling with why the hell I am writing about toyshops, this is called INSIGHT and is the most valuable commodity you can possess when developing something new. It is Dan Pink’s ‘purpose’ and Simon Sinek’s ‘why’ in the words of a 20 year old shop clerk:

“I just saw the looks on the faces of the kids – so disappointed that they got a cheerleader when they wanted a deep sea diver, and the conflict they had, knowing they had to be grateful, but had chosen a useless gift”.

Now, agilists, here comes the STRATEGY bit – how will you do something about that problem your customer savvy product owner has found a really sharp insight about:

“Did you get an official cheat sheet from Lego on how to do it?” I asked.

“No, no – there isn’t one. We just had time while on the checkout and watching the door, so we checked each one individually, just like the kids would do.”

INNOVATION simply comes from making this a habit now, knowing things like there are only 2 robots in the latest boxes of 100 or so mini-figures, and thinking about which of their customers might really value that robot.

“The hair on number 3 in that set there is cool for making Call of Duty characters” trots out Mr 10 to the girl behind the counter. “Really? My brother is so into Call of Duty – he’ll love that one”. Minifigure #3, the uncool, pyjama-clad kid with the teddy bear just went from ‘can’t shift’ to ‘can’t keep in stock’.

That is called GROWTH.

If you’re smart, you’ll be down to Toyworld in Palmy and hire that lady on the counter for your agile innovation team. She gets it 100%.

Eric Ries – ‘pivoting’ immortalised in a New Yorker cartoon

By | Agile, Disruption, Strategy | One Comment

James and I recently had the pleasure of hearing Eric Ries speak on innovation and product development, through an excellent event called Thoughtworks Live here in Melbourne.

Eric Ries has written a great book called The Lean Startup, which was an important book on our list of 33 texts you should read to get your Luna MBA. His presentation last week did a great job of pointing out how the book is as applicable to innovation within big companies and organisations, as it is the garage-based ‘startups’ – the more popular sense of the term.

One of the most enjoyable moments was Eric’s reflection that he never set out to add a word to the global lexicon of buzzwords around startups, and how the term ‘pivot’ had become painfully over-used over the last 2 years. It is still a key concept in the book, but to some extent obsession with it has distracted from the many other great ideas. Pivoting is all about the moment you have learned your startup idea really sucks, and (in James’ words) ‘you need to take your investor’s cash and try something completely different, quickly and without them panicking and taking all their money back’.

When there’s a New Yorker cartoon based on your new buzzword, you know you’ve made it.

Is this why your boss wants to be Agile?

By | Agile, People, Strategy | 4 Comments

There are 2 words in business more loaded with double meanings than an entire season of Benny Hill – agile, and lean.

No pointy headed boss worth their MBA (or salt) is going to ignore someone who says they would like to try to become more lean. That simply translates in their mind to ‘do more with less staff’, and focusing on cost reduction – ergo, more shareholder value and bigger bonus for the boss. If you’re not more explicit, they’ll be adjusting their Excel budget and 5 year plan PowerPoint while you’re still in their office explaining the actual guts of your idea being about changing work practices.

And in terms of agility, the PHB misinterpretation most common is that you will help them change direction in their strategy all the time. Agile = limber = flexible = ability to dance about randomly.

If you’re suffering from executive miscommunication over agile in particular, I suspect this article from the McKinsey Quarterly a few years ago (you’ll need a login to see it I’m afraid, but they’re free – search for ‘Building a nimble organization: a McKinsey Global Survey) might also be a contributor to your pain. Here’s the key issue of misinterpretation of ‘agility’ in a diagram:

Now, those things are all good, but the bottom of the ladder finishing spot of employee satisfaction and innovation is a disaster in understanding what and how agile really works. It works by creating a good system for people to work within. If you’re good at doing that, and learning in short cycles, then you might well see the benefits of higher revenues, customer satisfaction, market share and operational efficiency.

Bizarrely, if you built your organisation focusing on the stream of benefits being read in reverse order from the bottom up, I’m certain you’d have a good chance of winning. Yet these are the things CEO’s expect to be of least value in their lives.

A bad system will defeat a good employee every time. Focus on the system – people, machines, knowledge working in unison for end customers. Stop obsessing and reporting solely on revenue, efficiency and market share. They’re only a by-product of a great system.

Quote of the week

The new competitive advantage is the ability to anticipate, respond and adapt to change.

Recent Luna Posts

Become Remarkable.