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Tag: Anticipatory Organization

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Best Practices Entrepreneurship Management Skills

Five Steps to Change Your Thinking

When you make changes, are they coming at you from the outside in or inside out? In my 30 years of working with top leaders from business, health care, government and education, I have found that the majority of change comes from the outside in. When a new law is passed, you have to make changes in order to comply with it; when a competitor comes in offering lower prices, you probably have to change some aspect of how you do business; and when a new technology comes out that changes customer behavior, you’ll likely request that your IT department get you on the new products ASAP.

Most of us are conditioned in both our personal and professional lives to make changes based on outside factors. For example, when the stock market goes down, people often sell, and when it goes up, they buy.

Whenever change comes from the outside, we are forced to react to it. Rather than being proactive, we find ourselves constantly putting out fires and managing the latest crisis.

Instead, let’s look at two examples. Did the crowd-sourcing disruptor Kickstarter become a dominant force because it was fast to react? Was being reactionary the driving force in Facebook’s dominance in social media? Nope.

One reason for Facebook’s success is that it picked up where the limitations of other platforms left off. Kickstarter developers took a popular altruistic concept – used by Caring Bridge and others – and applied it to entrepreneurship. I sometimes call this approach to innovating a new business going in the opposite direction.

So, how do you stop reacting to outside forces and become a disruptor instead? Think about the Hard Trends that are sure to impact your organization. Think about the problems and opportunities that derive from them. What can you do now to not only pre-solve those problems before they become genuinely disruptive, but also leverage those Hard Trends into game-changing opportunities?

5 Quick Tips for Thinking Inside-Out  

It is essential to spend at least a small portion of time thinking about your future in an opportunity mode.

1. Build thinking time into your schedule. Try spending a minimum of one hour a week unplugging from the present crisis and plugging into future opportunity.

2. Find certainty in chaos. Instead of feeling blocked by all the things you are uncertain about in your work and life, ask yourself: What am I certain about? Those are the Hard Trends.

3. Be Anticipatory. Based on Hard Trends, think through these key questions: What is sure to happen in the next two to three years? What problems will your company be facing? What problems will your customers be facing (and how can you address those pain points)?

4. Dream a Little. Another good question to ask is: What is my ideal future? What are the steps to get there – whether it’s a business goal or a retirement dream? Or, it could be a bit of both.

5. Put Ideas into Motion. Once you are clear on your vision and have identified the Hard Trends that will impact you, spend some of your opportunity time solving problems before they happen.

The level of pervasive disruption that you need comes from the inside out (making the first move) rather than the outside in (moving in response to something). What events and developments can you anticipate by using your inside-out thinking?

If you need help getting started, try my Hard Trend Methodology, which is the mindset I describe in my latest book, The Anticipatory Organization: Turn Disruption and Change into Opportunity and Advantage.

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Best Practices Economics Entrepreneurship Industries Marketing Personal Development Sales Technology

How Technology Changed the Billion-Dollar Ad Game

The advertising industry has had a long and successful history. It has been a very big business, especially for brands like Procter & Gamble, which topped AdAge.com’s list of the world’s five largest advertisers with $10.5 billion in advertising spending.

For decades, the personal care company kept its products front and center in the minds of consumers – on TV, in print and eventually online. The formula was simple: P&G would spend a huge amount on advertising and loyal customers would respond by buying its products.

That is no longer the case. Technology has changed the ad game for P&G – and not in a good way.

Brief Timeline of Advertising Game-Changers

So if your company is like P&G, what should you do? Start with a fresh look at how much technology and advertising have changed over the last 30 years.

As you look at this timeline, pay attention to how technology worked for – or against – advertisers throughout recent history. Then, use my Hard Trends Methodology to predict what’s next.

1990s – Hundreds of cable channels and the Internet launched, and advertisers jumped to buy space wherever their audiences would be.

Early 2000s – TiVo was one of the first disruptors to these seemingly endless advertising avenues. For the first time, consumers had power over when they got their content and began to skip the ads.

2001 – Next came iPods, which could play downloaded media while consumers were on the go.

2004 – Amazon.com launched as a virtual bookstore and began laying the groundwork for online retailers

2006 – Social media pioneer Facebook opened the News Feed, in which anybody – and any brand – could self-publish content. Facebook ads, for which advertisers once again had to “pay to play,” wouldn’t come until later.

2007 – Netflix went from DVD to streaming and never looked back. Consumers could now also choose what to watch, whenever they wanted to.

Also in 2007 – Smartphones came on the scene, allowing consumers to carry all types of media in their hands. The ad industry had to go mobile – often in addition to going traditional. Though it wasn’t easy to navigate at first, by 2015 mobile ad spending would top $28 billion.

2008 – Spotify started running on advertising dollars initially, but also offered premium, ad-free packages to consumers at nominal prices.

2009 – In the late 2000s, YouTube began allowing pre-roll ads; advertisers were once again able to recapture a very captive audience.

2012 – Facebook purchased Instagram. It would be five years before the $1 billion gamble would pay off, but in the meantime, real people became the faces of brands. The newest media-buying currency was the influence of the crafty, hip or carpool moms who had become spokespeople.

2015 – Amazon.com hit a milestone as it accounted for at least half of all e-commerce growth. Many experts attributed sales success to the debut of the company’s one-click ordering.

2018 and beyond – Not only is data-driven advertising becoming more popular, it’s expected in today’s “show me you know me” consumer culture.

If you use my Hard Trends Methodology to look ahead to the future of advertising, you’ll be able to anticipate that the next decade will move even faster. Even more devices are likely to be developed, and they will ultimately be connected to each other as an integral part of our lives.

Now is the time to learn to anticipate the next wave of technology. Start with my book, The Anticipatory Organization, which is fittingly available with one-click ordering on Amazon.com right now.

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Best Practices Culture Economics Entrepreneurship Industries Leadership Marketing Personal Development Technology

To See the Future, Think Both/And

Whenever a new game-changing technology is introduced, our instinct is to assume that the current technology we are using will quickly become obsolete and will vanish from our use.

History has shown that the hottest new breakthrough technologies do not necessarily replace older ones. Instead, they often coexist side by side because the old technology has its own unique profile of functional strengths that the new technology never fully replaces.

How many times have you greeted a new innovation with an either/or assumption? Either you use the old or the new. But this is not an either/or world we live in; it’s a both/and world. It’s a world that is both paper and paperless, online and in-person, old media and new media.

Yes, No or Some of Both

In my latest book, The Anticipatory Organization: Turn Disruption and Change into Opportunity and Advantage, I teach readers how to gain a major competitive edge by learning to accurately anticipate the future. This is a skill that can be learned, and in this blog I’ll share one of the principles I have used for decades to accurately predict the future of technological change, one that you will be able to apply in countless ways: the Both/And Principle.

First, a bit of history. In the early 1980s, I developed the Both/And Principle and started applying it with great success. Here are some examples that will help you to see how to use it yourself.

Either/Or Assumption #1:

The introduction of digital documents meant that we would all be 100% paperless in a few years.

For example, in the late 1980s, when CD-ROMs were introduced, industry experts, the press and futurists predicted that by the mid-1990s, offices would be completely paperless. At the time I applied the Both/And Principle and predicted that we would have increasing amounts of both digital documents as well as paper documents in the future. It’s now 2018 and we are still managing both paper and digital documents.

Why is paper still around? Paper is inexpensive, portable and can be folded and tucked in a pocket or purse. It is an inexpensive display medium that does not need power. In addition, a handwritten paper note of gratitude to an employee is far better than sending a text or an email.  So instead of asking “How can I eliminate all paper?” a better question I had my clients ask was, “What is the best use for paper and the best use for digital?”

Either/Or Assumption #2:

E-commerce will render brick-and-mortar retail stores completely obsolete.

In the mid-1990s, around the time that Netscape, Yahoo!, eBay and many other Web-based businesses started rapidly growing, many futurists and the media predicted that bookstores, auto dealerships, shopping malls and retail stores in general would soon be obsolete.

The logic was that a physical store can only hold a few hundred or several thousand items while a virtual store gives you access to millions of items or titles 24/7.

So why do retail stores continue to survive and why are many even thriving? The answer is that physical shopping is experiential, not just transactional. Brick-and-mortar stores and malls that have continued to elevate the customer experience are social gathering places that create a sense of community, which technology can’t fully replace. In addition, many products are difficult to buy without physically seeing them and trying them out. Others require a knowledgeable person to help you make a decision. Why did Apple open an Apple Store? If you have been there, you know why. Why is Amazon opening brick-and-mortar bookstores? Now you know why.

Either/Or Assumption #3:

Smartphones will replace laptops.

Not that long ago, business publications were having a debate about the future of computing. They asked the question, “With our smartphones and tablets becoming our main personal computers, won’t this make laptops obsolete?” The answer is still “no.”

The reality is, we still have the equivalent of mainframe computers, we just use them differently than 20 – or even five – years ago. If they have a smartphone and/or tablet, the majority of business users are already using their laptop differently, and perhaps much less, but they are still using both.

Introducing Both/And Thinking

While others were predicting the end of laptop computers, printed paper and retail stores, I did not fall into the trap of those bad predictions because I had developed a series of research-based guiding principles that would help avoid such mistakes, and the Both/And Principle is a major one.

The premise is simple: Your technology works well for you, but you discover a new app, gadget or process that could significantly transform your business. You don’t want to part with what’s been working for you, but you also don’t want to be left behind.

The Both/And Principle allows you to keep bridging your legacy systems with the new technology or processes. Integrating them in a way that will create higher value than either has by itself provides a pathway forward.

It is a powerful corrective measure to either/or thinking, meaning that the future will only be either one way or the other. The Both/And Principle recognizes the folly of assuming that the “new” will totally supplant the old, and it recognizes that they can be integrated. Once you try it, you will see the Both/And Principle can accelerate your team’s performance because you haven’t settled for one or the other.

Powerful Both/And Duos

Digital documents have powerful strengths; they are here to stay, but so is paper. Here is a short list of Both/And Principle examples:

  • Brick-and-mortar retailers and Internet retailers
  • Digital and analog
  • Paper mail and email
  • Nautical charts and GPS
  • Full service and self service
  • Wiring such as copper and  fiber-optics and wireless
  • Traditional media and digital media
  • Gasoline engines and electric motors
  • Digital music playlists and live concerts
  • Video conferencing and face-to-face meetings

A key success strategy is to integrate the old and the new based on the strengths of each. In fact, the hottest breakthrough technologies tend to coexist and integrate to create new value with their predecessors rather than completely co-opting them. Why? The old technology has its own unique profile of functional strengths.

Case Study: Amazon.com and Kohl’s

In August 2017, Kohl’s announced it would sell Amazon products in its retail stores. But that was just the beginning of this Both/And Principle business maneuver. Kohl’s department stores and Amazon.com have been piloting a retail model that even more perfectly demonstrates an integration of the old and new.

Since September 2017, the two have been running a pilot program in which Amazon.com purchasers who want to return an item can return it to a Kohl’s customer service desk. Customers who bought a product online can now skip the post office and instead return it to an ever-increasing number of Kohl’s stores.

Consumers enjoy the convenience, and according to a number of recent studies, total visits to Kohl’s stores with Amazon’s return program have outperformed other stores in sales by about 8.5%. In other words, customers returning items end up finding more to buy at Kohl’s. Kohl’s also reported an increase in new customers.

Both/And Thinking and You

What are some examples of Both/And thinking that could benefit you? Are there any new technologies that would give you amazing new capabilities that could become something you feel your business could not live without? What are some of the newest technologies that you believe will disrupt and transform your business? What would happen if you combined the old and the new in a way that creates higher value than either has on its own?

If you would like to learn more anticipatory skills so that you can turn disruptive change into your biggest advantage, read my latest book, The Anticipatory Organization: Turn Disruption and Change into Opportunity and Advantage

Click here for a special offer from Daniel Burrus

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Best Practices Growth Management Skills Technology

Elevate Cognitive Performance

By Daniel Burrus and Neil Smith

(In this blog series on how elevating cognitive performance is a game changer for organizations, I’ve invited Neil Smith, CTO at Think Outcomes, to join me in writing on this important topic due to his expertise and the cognitive performance software his firm has created.)

Improving cognitive performance is a strategic imperative for anticipatory leaders. With the availability of data, cognitive technology and performance analytics, stakeholders expect stronger performance, higher transparency, greater controls and clearer communications.

Performance Analytics for Cognitive Work

The transactional operations of an organization have demonstrated how people, process, technology, information and analytics can transform their processes and improve performance before, during and after a customer transaction. A key area that is ripe for improvement is the cognitive operations of an organization where the same principles involving the mind, cognitive processes, cognitive performance technology and performance analytics can transform critical thinking and stakeholder communications.

Cognitive Performance Rings

Business professionals are similar to athletes. Both groups seek to achieve greatness from their actions and get to the top of their game. LeBron James in the NBA, Serena Williams in tennis and Usain Bolt in running at the Olympic Games are all recognized for their individual achievements and team play. They didn’t just arrive. They work every day to close their own performance rings on their journey to greater precision in their craft. The same is possible for professionals. They need to not only outthink their competitors, they need to outperform themselves because they know their last performance is their last impression. Their performance is their memorable stamp on their organization and their industry.

Cognitive performance rings illustrate current and expected effectiveness in cognitive performance.

The activities performed in the minds of critical thinkers, decision makers and stakeholders are represented through cognitive performance rings in the eight performance indicators of cognitive effectiveness below.

From decades of experiences, we recognized the effectiveness of cognitive work across a wide variety of professionals in business, which are shown in the cognitive performance rings below.  Each performance ring illustrates indicators for the common ranges of current effectiveness along with their expected effectiveness.

When reviewing each performance ring, think about where your teams stand with respect to their cognitive effectiveness. Then prioritize which performance rings are important to you and your organization at this time to help it learn, grow and compete more effectively.

Eight Performance Indicators of Cognitive Effectiveness

How well is your team doing?

Performance indicator 1 — Critical Thinking

How well does your team think critically about risks and benefits?
‘Most people believe their minds lead them down a logical path. Yet, we don’t have a way to challenge the way we think in the moment.

Performance indicator 2 — Stakeholder Communications

How well does your team advance decisions with stakeholders?
‘Our stakeholders increasingly need evidence in a structured way that supports their perspectives and their questions. We don’t have a structured operating process to bring stakeholders into the decision making process easily.’

Performance indicator 3 — Cognitive Collaboration

How well does your team achieve breakthroughs during collaboration?
‘In our meetings, we can’t visualize what’s in each other’s heads. Our current processes don’t provide us a way to arrive at insights and foresights with the amount of time we have together. Frankly, it’s a challenge during this time of expected innovation.’

Performance indicator 4 — Decision Execution

How well does your team execute decisions with foresight?
‘We over rely on our gut instincts. We learn from hindsight. It’s concerning to us because change is no longer constant. It’s accelerating. We need a way to become more anticipatory.’

Performance indicator 5 — Performance Conditions

How well does your team establish upper and lower thresholds for thinking and communications?
‘We don’t share thresholds enough. When we do, we share thresholds verbally and in documents. The only way we shape the cognitive behaviors across our teams is through our review processes by management. This approach affects our culture and we don’t know how to address it.’

Performance indicator 6 — Performance Compliance

How well does your team incorporate performance conditions during thinking and communications?
‘The goals and objectives of our stakeholders aren’t transparent for our team. When we do receive them, we incorporate conditions we remember. We need a systematized way to incorporate conditions into our cognitive work.’

Performance indicator 7 — Uncertainty Monitoring

How well does your team anticipate disruption?
‘We don’t anticipate disruption enough. We are susceptible to external forces as we don’t monitor indicators that can disrupt our business.’

Performance indicator 8 — Performance Advisory

How well does your team strengthen the performance of other teams?
‘We try to lead from experience. Yet, we can’t dedicate the amount of time necessary to accelerate the growth of each individual. We need to provide a way to help them self-learn and deepen their intelligence even more. That would help all of us.’

The performance yield of each ring begins with questions of uncertainty that span outcomes, impact, risk, opportunity, implications, consequences, causation or cause and effect. Performance yields arise from insights and strategic foresights in the minds of professionals. With dashboards presented the way their minds work, professionals lean in and think more deeply about situations. As they access correlated data at the speed of thought, they create performance analytics that challenge the way they think about their current situations. When they visualize indicators and patterns within dashboards about the current and target states of their subject profiles, they work in a software environment to engage their thinking, create their ah-ha moments and generate counterintuitive wisdom.

Tom Brady was selected 199th in the NFL draft by the New England Patriots and became the most decorated quarterback in history. All professionals have an opportunity for greatness. Beyond the physical game, it starts with their cognitive tools.

Learn how to elevate your planning, accelerate innovation and transform results with The Anticipatory Learning System and how to maximize the cognitive performance of your team with Cognitive Performance Software.

Digital transformation has divided us all into two camps: the disruptor and the disrupted. The Anticipatory Organization gives you the tools you need to see disruption before it happens, allowing you to turn change into advantage. Pick up a copy today at www.TheAOBook.com.

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Best Practices Growth Industries Management Skills Technology

Eliminate Cognitive Friction to Maximize Human Performance

By Daniel Burrus and Neil Smith

(In this blog series on how elevating cognitive performance is a game changer for organizations, I’ve invited Neil Smith, CTO at Think Outcomes, to join me in writing on this important topic due to his expertise and the cognitive performance software his firm has created.)

Improving cognitive performance is a strategic imperative for anticipatory leaders. Yet, cognitive performance slows down due to cognitive friction. Cognitive friction occurs when professionals can’t think through uncertainties clearly in their minds. These uncertainties include:

  1. Risks
  2. Opportunities
  3. Outcomes
  4. Consequences
  5. Implications
  6. Impact
  7. Causations
  8. Causes and effects

In an organization, cognitive friction occurs frequently across many professional roles, minds and perspectives. For the 15 areas in a cognitive operation below, cognitive friction not only spans many responsibilities, it also impacts relationships and shapes cultures.

15 Areas of a Cognitive Operation

Cognitive Friction Across Perspectives

Cognitive friction occurs when two or more professionals are challenged to get on the same page. They must resolve their perspectives — which can be very challenging. In business, professionals:

  • Perform critical thinking
  • Make decisions
  • Communicate with stakeholders
  • Collaborate with other professionals
  • React to uncertainties
  • Work with peers and stakeholders to address situational challenges
  • Advise other professionals about their cognitive work
  • Evaluate the thoroughness to think through situations in the minds of their thinkers
  • Review the risk-reward trade-offs among their team members

Cognitive Friction Within the Mind of a Professional

Cognitive friction exists within the minds of professionals and creates undue stress. The six reasons friction occurs is due to:

  1. The processing limitations in the mind
  2. Ineffective communications
  3. Unproductive collaborations
  4. Uncertainties in their minds
  5. Lack of cognitive insights and foresights
  6. Bias that leads to cognitive divisiveness


Processing Limitations in the Mind

When processing multiple data points in the mind, cognitive work can become a highly stressful activity. It’s amazing how many leaders are not equipped with cognitive tools to manage uncertainty across situations, close their knowledge gaps and achieve expected results. When a situation includes more than seven variables, it’s well-known that the human mind is not able to process this level of complexity. Think how we receive, process and remember phone numbers. Our minds are not wired to synthesize 10 or more digits at a time. In the U.S., people think about the 10 digits in a pattern of a 3-digit area code, a 3-digit prefix and 4-digits for the line number; our minds consume, process and recall smaller chunks of information.

Try this exercise in your mind to see how complexity increases quickly: spin all the digits of five phone numbers in your mind as if the numbers were on a slot machine. Can you keep track of the numbers? Most of us cannot; our minds get overwhelmed right away.

When multiple changing variables exist, that’s the type of stress professionals experience every day in their minds as they perform their risk-reward trade-offs. Without additional cognitive capabilities, leaders turn to their gut as a place to find answers; often, though, the gut isn’t a very good logic engine. Operating risk is introduced when critical thinkers and decision makers do not have access to complementary, cognitive tools to perform their cognitive activities at their best.

Effective Communications Accelerate Buy-in and Decisions

The challenges increase further for critical thinkers and decision makers when they communicate with their stakeholders, peers and dependents to gain agreement about multiple, interdependent variables. These heterogeneous thinkers add new perspectives to the decision process, which increases the complexity.

That’s when members of decision teams communicate from their emotional viewpoints. Decisions stall, lasting impressions impact culture and relationships, and people experience an impasse.

Productive Collaborations are Needed to Achieve Better Outcomes

Google Hangouts, Skype and Zoom represent a step forward in collaboration and reduce travel costs. Yet, as professionals move between face-to-face and online meetings, they still struggle to innovate with breakthrough thinking.

Often, we hear professionals say, “if I could see what’s in the minds of the people I’m working with, that would help me address the challenges I’m aware of, too.” Yet, given human limitations, most professionals can’t bridge that gap effectively. If meetings involved the ability to demonstrate thinking patterns, that would help professionals overcome this human hurdle.

As professionals join meetings, they commonly bring their mental models and biases from years of experience. Their mental models create barriers to synthesizing other people’s perspectives as well as new ways of thinking into their own thinking. Where they use their voices and presentation software to convey their thinking, most attendees try to follow the logic rather than elevate their own thinking. If they had a way to unify their thinking through the visualization of evidence that focused on addressing questions of uncertainty and their critical thoughts, they’d optimize their time, learn to pre-solve issues and focus on better outcomes together. That would advance productivity in thinking in a visual way.

When professionals conclude their meetings with follow-on questions, leaders wonder which questions weren’t brought up? Are their teams going down the wrong paths? How do these questions connect to the stakeholders’ objectives? Are they considering the Hard Trends based on future facts that are shaping the future? Professionals expend valuable time to get to clarity as they reflect on their learnings when they need insights and foresights more quickly. Anticipatory leaders seek to institute advanced collaboration processes that yield greater productivity among their teams. They see everyday innovation and breakthrough thinking as a competitive advantage today as well as tomorrow.

Uncertainties, Cognitive Insights and Foresights

As connected teams in today’s data-driven world, data scientists and stakeholders strive for better outcomes together. Where data scientists focus on big data and use machine learning to ask questions about data, stakeholders focus on decision information and ask questions to solve situational challenges. The minds of stakeholders are as effective as the:

  1. Quality of their questions to resolve their problems and uncertainties
  2. Cognitive insights and foresights that arise from their mental models

Bias and Cognitive Divisiveness

In the minds of professionals, cognitive friction results from their cognitive biases and the synthesis of disparate data. Cognitive divisiveness exists among professionals as data synthesis and bias differ across perspectives. Cognitive friction and divisiveness affect velocity and outcomes.

In their roles, professionals:

  • Are often unable to access data structured the way they think about risk-reward trade-offs
  • Don’t know what they don’t know during decision making
  • Are challenged many times to demonstrate their points of view
  • Are frequently challenged to see alternative points of view during communications
  • Struggle to shape the thinking of team members due to predefined mental models
  • Are challenged to arrive at strategic foresights and engineer outcomes

A Critical Thinking Advantage

To gain an advantage in today’s world, cognitive teams must pre-solve issues through a continuous flow of cognitive insights and foresights. To achieve their objectives, they must find new wisdom within the cognitive gaps in their minds — i.e., to get from “here” to “there.” “Here” is where they are today in context to their cognitive responsibilities. “There” is where they need to go. This cognitive gap represents their current state and target state of their subject profiles. Their stakeholders depend on actionable knowledge and wisdom from their team of thinkers to improve business results. This starts with the capabilities of their cognitive resources and tools.

Learn how to elevate your planning, accelerate innovation and transform results with The Anticipatory Learning System and how to maximize the cognitive performance of your team with Cognitive Performance Software.

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Best Practices Growth Management Personal Development

Converting Information into Knowledge-Based Assets

When I developed my forecasting model in the early 1980s, I could see that a digital revolution would unfold, and as it did, an advanced form of capitalism would emerge, one where ideas and knowledge stimulated economic growth even more so than labor, land, money or other tangibles. It later became known as the Knowledge Era – or the Knowledge Age – in contrast to the Industrial Age.

A Few Strategic Questions to Consider

There is a big difference between data, information, knowledge and wisdom. Today we are all focused on big data, and we should be because it provides the foundation for the three higher levels. We all have a database, and as we all know, there is no shortage of information, but do you have a knowledgebase? Is your organization creating new revenue streams by converting information into actionable knowledge, sharing that knowledge internally to increase its value, and then selling it in non-competing industries? I helped a large global organization do this several years ago and they generated over $100 million in the first year. All too often we fail to see the hidden value of the people part of the business. Are you actively using web-based technology to leverage the talents, knowledge and wisdom of employees to create new high-margin products, as well as solve problems faster?

All too often, as we grow larger and move faster, we can easily lose track of the wide variety of intellectual property (IP) we have created. Are you actively formalizing, capturing and leveraging your intellectual property(IP) to create higher value assets? Using today’s digital tools, it has never been easier for any organization, regardless of size, to create new revenue streams by leveraging their enhanced IP.

Three Must-Have Components to Leverage Intellectual Capital

1. Everyone in the organization must see the tremendous opportunity and added value in going beyond the current activity of converting data into information, to higher levels of value by creating and delivering actionable knowledge and wisdom. In addition, auditing and evaluating intellectual assets must be seen as a strategic direction.

2. Everyone in the organization must see that its technology infrastructure and organizational culture are the keys to unlocking the vast wealth of knowledge within the organization, both for the organization and your clients. Knowledge increases in value when it is shared within the organization, and that means shifting from being an Information Age organization to entering the Communication Age. Informing is a one-way activity that does not always produce a result. Communicating is two-way and dynamic and almost always causes action. That’s why social media has grown so fast; it is a Communication Age enabling technology. An internal knowledge-sharing strategy, focused on fostering two-way communication and dialog, is crucial because as I said earlier, knowledge increases in value when it is shared.

3. Everyone in the organization must see their participation as essential to building a strong foundation for the enhancement, sharing and delivery of knowledge. When we have collective knowledge and wisdom at out fingertips, everyone can accomplish their work with less time and effort.

Keep in mind that you get the behaviors you reward; therefore, there must be a rewards system for sharing knowledge. Remember, there are many ways to reward people and not all have to involve money.

If you would like to learn more about how to convert information to knowledge and then productize it for revenue, I recommend reading my latest bestselling book, The Anticipatory Organization.

Categories
Best Practices Growth Personal Development

Monetizing Intellectual Capital

Your most valuable business asset may not be the raw materials, cash reserves, or even the technology found within your company. It’s the knowledge of the people on your team. Yet, a good number of executives overlook the value of this collective knowledge, commonly called Intellectual Capital.

Case in point: Several years ago, I attended a meeting with executives and managers from one of the largest automobile manufacturers in the world. One of the top executives stood before the large crowd and exclaimed that their most valuable asset was their brand recognition. At that point, I knew this company was heading for trouble.

As I watched the business news headlines over the next couple of years, I could see how this icon of American manufacturing struggled to survive.

The lesson: Brand recognition is very important, but there are other things that are even more valuable to a company’s health and longevity. One of those things is something less tangible, but extremely impactful.

Intellectual Capital can be Leveraged 

Intellectual capital is a term that covers the value of intangible assets. The three dimensions of intellectual capital are Human, Relational and Structural.

These are all exactly how they sound – human resources are your company’s people; relational capital is comprised of your relationships with customers, vendors and other constituents; and your business structure includes infrastructure, processes, and databases of information. An example of structural capital is intellectual property.

Over the past 35 years, I have observed that the most valuable assets of an organization tend to be the knowledge, talent, experience, capabilities, and vision of the people within the organization. These, coupled with the value of their patents, customer bases, and good will, equal what is called their intellectual assets.

Managing Intellectual Capital

When leaders understand how to formalize, capture, and leverage their intellectual capital to produce higher-valued assets, their profits tend to soar. There is even an emerging business strategy that focuses on creating, shaping, updating and taking “stock” of intellectual capital.

It requires having the strategic vision to blend all dimensions of intellectual capital (people, relationships, and structure) to develop a management system that is measurable, yet pliable enough to change how the intellectual capital dimensions are blended.

There is more to the process than will fit into this one article, but the concept is this: By using a multiple stage process that is governed by evolutionary logic, the intellectual capital management includes interconnected sets of practices: strategic alignment, exploration and exploitation, measurement and reporting.

The Knowledge Era Put A Focus On Intellectual Assets

One important part of capitalizing intellectual capital is to keep the knowledge pipeline full. One of the best ways to do that is to convert information into actionable knowledge.

In 1990, I predicted organizations worldwide would increasingly create new economic value by converting information into knowledge, sharing that knowledge internally to increase its value, and then selling it in non-competing industries to a global client base. When the icon-based, user-friendly World Wide Web spawned a new digital industry in a short length of time, organizations began to want their intellectual property formalized, captured and leveraged for higher values. And they wanted it online.

It became known as the Knowledge Era or Knowledge Age, in contrast to the Industrial Age. By the end of the 21stCentury, we saw an advanced form of capitalism; one where ideas and knowledge stimulated economic growth even more  than did labor, land, money or other tangible resources.

Around the same time computer companies saw their profits shift from hardware manufacturing in the 1980s to software creation in the 1990s and beyond, businesses of all sizes and in all industries started using web-based technology to leverage the talents, knowledge and wisdom of employees to create high-margin products.

Three Must-Have Components to Create Intellectual Capital

When I consult with executives today, it’s often important to review the components that are necessary to leverage a process for monetizing intellectual capital to make sure they have them in place.

1. Everyone in the organization must see the tremendous opportunity and added value in going beyond the current activity of converting data into information, to higher levels of value, by creating and delivering knowledge and wisdom, which clients can quickly act upon. In addition, auditing and evaluating intellectual assets must be seen as a strategic direction.

2. Everyone in the organization must see that its technology infrastructure and organization are the keys to unlocking the vast wealth the Knowledge Era had to offer, both for the organization and your clients. Knowledge increases in value when it is shared within the organization, and that means the Communication Age could not have come at a better time. Informing someone of your knowledge is very different than communicating with them. That’s why a knowledge-sharing technology strategy, focused on fostering two-way communication and dialog, is so crucial to organizations in achieving their goals.

3. Everyone in the organization must see the importance of his or her own participation as essential to building a strong foundation for the enhancement, sharing and delivery of knowledge. You get the behaviors you reward; there must be a reward system for sharing knowledge. I like to remind my consulting clients that there are many ways to reward people, and not all of them have to involve money.

At this point in time, technology is no longer a barrier to creating a Knowledge Era enterprise. Below is a case study about a knowledge-based product that was created in the midst of this era, and serves as a great example of the value of intellectual capital.

An Early Example: Mayo Clinic’s First Knowledge-Based Product

In the 1990s, one of the largest health systems in the country, Mayo Clinic, was looking at a future of decreasing reimbursements for Medicare and Medicaid, and increasing losses in their emergency rooms. For the Mayo Clinic and other health systems, the future looked bleak.

In a consultation with their executives, I asked a simple question: “Why don’t you sell your knowledge?” Though their initial response was skeptical, further thinking led them to put Mayo Clinic knowledge on a CD, which was a relatively new technology at the time.  That meant that any time, day or night, people who purchased the CD could put it in their PC and determine if, for example, their child’s rash and fever required just aspirin, or a trip to the emergency room.

The Mayo Clinic put a $100 price tag on their CD product when it first came out, and in the first year, I was told they sold 670,000 copies. A light went on for the clinic executives; leveraging internal knowledge could create value.

It was their first-ever knowledge-based product, and it was a precursor to not only MayoClinic.org, but also to a host of other online consumer health information portals that are heavily used today. One side benefit they discovered was the impact on their brand; by using knowledge as an asset, Mayo Clinic developed a new and powerful image in the health care marketplace that they continue to leverage right up to the present.

Knowledge is (Branding) Power

Before putting actionable knowledge on a CD (keep in mind this was before people were on-line), in order to get help from the Mayo Clinic, you had to go to one of their locations. But with a CD of knowledge that was then translated into French, German, Spanish, and Japanese, the clinic could help people anywhere around the world at any time. And, keep in mind, this was long before the phrase 24/7 accessibility became popular.

From there, Mayo Clinic decided to customize the knowledge product for various audiences, including elementary schools, high schools, medical schools, and nursing homes.

The result was new value and new revenue; they had opened their customer base up, not only to people who were geographically close, but also to the world. And in the case of the Mayo Clinic, the name recognition isn’t regional or national anymore; it became international.

This history lesson illustrates the power of using new tools to create new income streams and elevate your brand in powerful new ways.  It doesn’t matter what industry you are in; we all have intellectual capital that can be formalized, captured and leveraged using today’s new and powerful tools.

Are you leveraging the most valuable assets in your organization?

If not, what are some ways you can convert information to actionable knowledge and then productize it for revenue? In today’s mobile, social, virtual online world, you are  limited only by your mindset.  If you feel stuck, I recommend subscribing to my Anticipatory Leader System to determine what intellectual assets will be important to your consumers in the next 5 years and beyond.

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Four Big Brands Blindsided by Accelerated Change

It’s one of life’s universal lessons: Look both ways before crossing the street. Parents have been impressing its importance on every generation since Henry Ford tinkered with the internal combustion engine. However, many of us forgot that good advice, or assumed it didn’t apply, when crossing from one decade of business into the next.

From the 1970s into the 1980s, 1990s and 2000s, the prevailing assumption was that the future would be relatively similar to the past, and that major changes only took place over long stretches of time, which provided plenty of leeway to adjust.

We stepped off the curb, looking straight ahead—and wham! Individuals and organizations were blindsided by massive changes. It happened to big companies like IBM, Motorola, Research In Motion, Sears and countless others.

Four Big Brands That Were Blindsided

IBM. The original computer giant was late to act on the Hard Trends shaping the future of computing and missed the huge need for personal computers, entering the market late. Then in 2005, IBM sold its personal computer portfolio of products, including the popular ThinkPad brand, to Lenovo, which is now the world’s largest personal computing vendor. IBM was also late to embrace the Hard Trends of increasing use of mobility and the cloud.

Motorola. Similarly, the historic telecommunications company failed to anticipate exponential changes of the early 21st century, though it had many telecom firsts—first car radio, first handheld mobile phones in the early 1970s and the first smartphone using the Google Android OS. Unfortunately, the Motorola Mobility branch relied on being Agile, reacting after a disruption occurs, while leading companies were Anticipatory, using Hard Trends to see the future first and jump ahead and stay there.

Research In Motion. The company’s BlackBerry was the undisputed leader in business mobility, with a highly usable mini keyboard and tight integration of mobile email and calendar functionality. When Apple released the first iPhone, Research In Motion’s leadership failed to see the new future Apple had enabled and focused instead on making improvements instead of embracing the Hard Trends that were shaping the future of mobility and taking its loyal user base into the smartphone future.

Sears. Widely considered the first “everything” store, Sears had a winning business strategy: a notoriously large selection of goods in a catalog that was mailed to just about everyone. Products that were ordered were delivered right to the customer’s home. Like many big brands blindsided by game-changing Hard Trends followed by disruptive innovation, Sears didn’t see how serious competition had become—for both brick and mortars like Walmart and online-only retailer Amazon. Their past success and organizational ego limited their view of the future.

Based on these and other painful experiences, the prevailing assumption was dramatically adjusted: Change is speeding up—get used to it. But then with each passing decade, crossing the street of change became an exercise in advanced risk analysis. Dodging oncoming traffic was the name of the game.

Seeing Change Is Only Part of the Solution

Spotting technology-driven change provides only part of the solution, however. Literally thousands of important high-tech breakthroughs are zooming at us from left and right. Not only do we need to carefully look both ways, it is essential to actually see and understand the ramifications of what’s coming.

Hopping out of the way in a panic or jumping onboard the next new thing isn’t the answer; nor is taking a wait-and-see attitude. By reinventing how welookat technology-driven change, it is possible to reinvent the way we thinkabout change. Once that happens, the reinvention of how we actin response to change takes place.

Look. Think. Act. These distinct steps are the key to both finding and profiting from the many new opportunities that are headed our way.

Look at the Hard Trends that willhappen and the game-changing opportunities they represent. Look at the Soft Trends that might happen and the opportunities to influence them.

Think about your list of opportunities and refine them into a few Must-Do actions.

Pick at least one opportunity and act on it now, because if you don’t do it, someone else will!

Today, agility—reacting quickly after a problem occurs or after a disruption disrupts, is not good enough. It’s time to learn how to become Anticipatory, using Hard Trends to anticipate disruptions beforethey happen, turning disruption and change into a choice.

If you would like to learn more, check out my latest bestseller, The Anticipatory Organization: How to Turn Change and Disruption Into Opportunity and Advantage.