Venus Seminars, March 14 2007, 18h00 - 20h00 CET
Risto Linturi, www.linturi.fi
Abstract :
Visionary thinking and creativity have usually been considered personal traits, not results of following certain methods. Gödel proved mathematically that there will always be newly revealed truths, which post hoc are obvious but impossible to find through algorithmic means from an unambiguous earlier axiomatic system. This could mean that the so called Fuzzy Front End of innovation needs to remain fuzzy. Indeed we must accept that the final leap of such creativity is a mistake in comparison with normative thinking as Jacob Bronowski expressed it in his book “On the Origins of Knowledge and Imagination”. However there are methods that greatly increase the probability of successful “mistakes”. Many methods are used in the Fuzzy Front End phase when searching for incremental innovation. Due to efficiency reasons we usually limit this search to existing value propositions. This limits the search costs in a practical and easy to understand manner increasing probability of success. Unfortunately these approaches severely limit potential for radical innovations or visionary thinking. When an industry or an area is in need of reorganization, or facing convergence through enabling technologies or regulatory changes, this is a serious limitation. An approach solving this limitation efficiently is described. It combines three basic fundamentals of strategic thinking. Radical Innovations Triangle method (RIT) limits the search for radical innovations to areas where an organization has higher than normal potential for profitable innovations, without limiting the search to ones existing business area or any previous value proposition. An optional method for visionary thinking is also presented. It is a generalization and further development of the method that Alvin Toffler has followed in his book “The Third Wave”. Experimental proof will not be presented, but the concepts rely on a well researched foundation.
Welcome. This starts as a 25 minute monologue. Usually I use six days for the introduction with 300 slides. Creative systematic thinking is not simple. Now we skip all the details and all but few short examples.
I will talk about creativity and innovativeness in the business context. If academic research in business strategy is not familiar to you, then some of the problems will sound surprising. For example: statistically it does not pay well to be creative in a business context. Generally fast followers make better profits than pioneers.
This world will not survive without radical innovations. We also know business segments that are doomed without radical innovations. And if you have certain first mover advantages, you may beat everyone else by being the first. If you follow the rules close enough, you tend to profit from creativity. For this purpose I will show a less fuzzy, more efficient front end for radical innovations.
Jacob Bronowski describes creativity as finding a likeness between things that previously were considered unlike. Newton found a similarity between apples and the moon. A poet finds similarity between a rosebud and a young maiden. The similarity might be expressed as a formal relation. It might be expressed as a metaphor or analogue. It might just be a word describing a category or an attribute.
Johnson and Lakoff gave a thorough demonstration that all our expressions might originally be based on metaphors. Holyoak and Thagard considered analogues and metaphors as a tool for creativity. A key relates to a door like X relates to a can. Chimpanzees can solve X just like you. Analogical thinking allows both humans and chimpanzees to formulate creative problems. Chimpanzees have an important limitation; they cannot understand relations of relations. It is quite difficult for us, too. But unlike the chimps, we generally understand the right choice when explained.
Let us take a step sideways. Gödel was able to prove that deductive logic is insufficient. Creativity is not an algorithm. New truths will always be found by people who disobey strict deductive rules and normative thinking. This does not mean that algorithms are useless. Individual creativity can be enhanced. Many of these methods are systematic. Chimps need to be taught symbols for different and similar. We benefit from fairytales and other patterns that lend themselves to analogical thinking. Relations of relations we often turn into theories and abstract models. They clearly enhance creativity but are often hard to teach.
In one experiment, students were shown a medical problem. Only one out of ten students could solve the problem without any background material. Then another group of students was first told a number of children’s tales and one of the tales was analogous to the solution. Now twice the number, two out of ten of this test group solved the same problem. And when only the correct fairytale was given as an example to solve the problem, 70 per cent succeeded. The original problem solver won the Nobel price.
My initial proposition is that we use each potential analogue individually and for a moment we try to believe it is just this analogue that will yield a solution. This thoroughness should increase our success rate sevenfold but it also takes indefinite amount of time to get immersed into all possible analogues. Analogical thinking is useful because we transfer properties and relations from well known phenomena to new and poorly understood systems. For example: organizational scientists may use anthills as an inspiration towards developing well-behaved business organizations. Clearly science understands anthills better than we understand human organizations. Organizational scientists should read enough etology if they hope to benefit from this.
It is surprisingly easy to show how we usually think and use words within one frame or context. Post-modern thinking reveals a target by using words from another frame. Try replacing leadership with seduction; you may learn something from both realms.
We are surprisingly capable of maintaining inconsistent beliefs in our minds as long as they occupy different frames. Usually we further hide the inconsistencies from our mind by using slightly different words in different frames. Had we all six days at our disposal, I could make you fall on your face many times. You would slowly unlearn many fallacies we entertain. That is really the only way how you can learn to think in a radically different way. This cannot be taught using concepts and paradigms of your old thinking. Learning must happen through contradictions and self understanding.
Please remind yourselves where we started this inquiry. If you wish to be creative, you must find likeness between things that previously were considered to have nothing in common. Apples and moons obey the same laws.
It is quite natural to limit exploration within your own field of business. You use the customary patterns, categories and data of your own trade. This is how a huge number of incremental innovations have been found. When time passes innovations become more and more incremental and even meaningless. Every once in a while we must explore our potential for radical innovations. But we must still limit our search to be efficient. It takes infinite time to do an unlimited search for all propositions.
When searching for incremental innovations, you anchor the search to your existing customers, products or processes. This we must now forget. One needs to think outside the box, fly over the blue ocean, think laterally or whatever metaphor you wish to use. How should we then limit our search? We still should avoid flying over barren areas or creating ideas that are better suited for others.
Margaret Peteraf has shown that you cannot buy a competitive advantage unless there is limited competition through ex ante limits. In other words; for each new business, we must in advance have some prerequisite for that business. We must start from a favourable position. Otherwise it is pure lottery if we win. This is [our first corner]{.underline}: we search only ideas that bond to a potential ex ante limit, which we already have.
Business strategy is an art or science of adaptation. Strategic thinking is necessary only in respect to the changes in the business environment. Practically all good business opportunities have been found if they have existed for a long time already. Radical business ideas occur simultaneously with a technological or structural change. Thus [our second corner]{.underline} is change. We search ideas than bond to change.
[Our third limiting corner]{.underline} for our triangle we get from basic business understanding. It is always easiest to sell new ideas when they fulfil existing needs.
On these premises, Radical Innovations Triangle Method (RIT) limits the search to areas where the searching organization has potential higher than normal. It does not inhibit radical innovations. A paper mill might end up selling solar panels or energy and an insurance company might start renting and maintaining vehicles.
[We start from the first corner]{.underline}. We analyse each available resource and capability. We select those, which might limit competition in some new business, which we have not yet invented. For an insurance company this starting point might be the databases and understanding of different risks; their causes, probabilities and costs. Certainly that data could be used to build us a safer world. We might find novel business logic for that resource.
[We advance to the second corner]{.underline}, browsing through change. This may take hours, weeks or years depending on the depth of detail and thoroughness. We study and visit each trend, each new technology and each structural change we lay our hands on. As we browse through each cognitive frame – you could also say viewpoint or lens – we keep in mind we only search changes that bond with our anchoring ex ante limit candidate. We should however use enough time with specifics in each frame. For example we might fail to notice that light solar panels and efficient fuel cells might change the mobile operators’ business models. If base stations can fly, there is no need for the excessive and expensive antenna networks in urban areas. The end result of this second phase is a list of changes and resources as coupled pairs.
Now we look at [the third phase]{.underline}. We visit various frames of needs and added values. Each need sets up a frame – hunger is one familiar example. The need for carbon dioxide reduction is clearly another. From these frames we identify roles and value propositions. Each role can be connected through various value propositions to each coupled pair we identified in phase two. Value propositions will include those listed in Maslow’s theories, and generic needs of organizations or global problems, but also mythical needs which are currently satisfied by magical wands only. This phase also uses a large number of lists and generally takes from few hours to few weeks.
I will now illustrate one simple result. I will not go through all the phases as it would bore you. If we were a paper mill, we could identify the roll process as our entry barrier or the ex ante limit and use that to anchor our search. One of the changes we should find is the invention of flexible solar panels. We know that flexible flat surfaces are usually produced very efficiently with a roll process. Now we browse through all the potential needs for flat opaque surfaces or electricity. We are bound to notice our material can potentially replace existing surface material for roofs and outside walls. If that succeeds, business proposition looks quite promising.
As you noticed, this method is not customer oriented; we explore novel value networks. As they are revealed, conventional methods can be used to analyse the optimal business logic. This concludes my first part. You now have an efficient method for the fuzzy front end of radical innovation. Please use it to solve the problem of global warming and other great needs. ([We need a tempo switch here]{.underline})
But now I need to go onwards. I promised also to give an overview of a method to create novel visions. Naturally the triangle method I just told you about will lead to visionary innovations but that is not really what I would consider visionary thinking.
I wish to talk about creating holistic radical visions. The method I describe has been used by Alvin Toffler in his “Third Wave”. I separate utopias and visions more clearly and add some detail to the approach but remain in deep gratitude to Toffler.
Initially you may select the phenomena that you challenge. My claim now is that money is worthless. History explains the original reason for each current practice connected with money. Sumerians did not use money; they are our reference point. They had a well developed system for delayed transactions. Debits and credits were printed to tiles in their temples. Exchange rates were printed on tiles of their own.
Market economy does not function well with fixed prices or in this case with fixed product exchange rates. We also know another reason why money was introduced in Lydia. Merchant soldiers needed to be paid wages when abroad – far from the temples. Weight scales for precious metals were also rare, metal needed to be coined.
After a few weeks of studying, we come to a phase where we could build our utopia or alternative history. If the Sumerians had had computers, cheap instruments, and wireless communication, we would never have invented money. We might still maintain the temple based exchange economy where nobody buys and nobody sells. People would exchange resources and services for their worth compared to each other. My search was a success; I found out that the original reasons no longer exist.
It requires imagination to see how this complex global economy would operate using only exchange economy. All this creative work you need to do to build up the utopia. We might perhaps refer to some common food basket just like we do today when calculating purchase power parity in different countries. Perhaps each person would select the basis for comparison individually. You come up with new categories, new measurements and actually a whole new paradigm with its own language. And this is not the vision we search for, this is a tool to define new categories and measurements.
Now using concepts of the new paradigm, we measure if we are going towards the utopia or further from it. And clearly since 1970’s the number of alliances has grown very rapidly. We have Linux, which can easily be explained through exchange economy but hardly through the existing paradigm. Many new successes share features from Linux. People contribute work and gain something that is not easily measured in monetary terms. Increasingly, specialization and exchange is bypassing Adam Smith and especially his invisible hand of the price mechanism. More and more the exchange contains social elements that Adam Smith disapproved of.
And now finally we are ready to create our vision. We have measured the pace of change. We have invented our new categories. Now we select a date, perhaps 25 years in the future and extrapolate. We should know from our data whether the change is exponential or linear. We clearly have a systematic way to create well founded and even radical visions. As Toffler showed, it leads to good results and also some mistaken deductions. From my own experience I can tell that the system seems to turn upside down every major field of human practice that was not known before farming started. It is fun to use and explain also why it is useful to know your history. This concludes my second topic. Thank you for your attention.
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