08 juin 2006

What is it all about ?

Edison in business

Innovation is indispensable to growth. Business Week even talks about an economy of creativity. But it’s already an economy in crisis. Innovating like Sony and Nokia doesn’t stop the likes of iPod and Blackberry from coming in and grabbing market share. Is innovation collapsing in large companies?

How can we combine innovation and endurance? Where can we find the idea that enables a company to keep a sustainable competitive advantage? If we look closely at innovative companies, it’s clear that this idea has to be part of the business plan and crystallise into an obsessive desire to produce goods and services with superior usage value. This superiority should be situated at the intersection of three dimensions: company competences and capacities, the company’s image with the public, and product usage. To help company bosses manage this process effectively – if they’re not inventive and media-oriented like Steve Jobs, Richard Branson or Nicolas Hayek – the author suggests the creation of an Edison team. This team should endlessly ensure that the company cultivates self-examination and totally fresh thinking, to reinvent markets and anticipate change. It should be the ultimate authority of company philosophy on sustainable innovation and reinvention. A team, like Edison, that can break accepted norms, create upheavals and transform ideas into gold.
All this is illustrated by case histories from Apple, Senseo, Cirque du Soleil, Virgin, Club Med, Nissan, Ikea, Smart, Bang&Olufsen and Google, combined with a wider view of sustainability from science history and specific industries.

20 avril 2006

Endorsements from early readers

Le livre de Patrick Willemarck est bienvenu, tout comme sa recherche sur le thème de la créativité en entreprise. Car il y a du neuf dans le dossier, comme disent les enquêteurs. Le monde se transforme à un point tel qu'il faut même réinventer la créativité!

Luc de Brabandère, Partner Boston Consulting Group Paris

'De auteur bewijst dat hij een fijne neus heeft voor wat er leeft in managementland. Hij schreef een heel modern boek. Bijzonder inspirerend. Met zeer goede voorbeelden en in een zeer directe stijl.'

Prof. Dr. Marc Buelens, Vlerick Leuven Gent Management School


"Comment rendre mon entreprise indispensable pour ses clients?"
Cette question, tous les patrons se la posent. Dans son livre, Patrick
Willemarck y répond de manière inventive et souvent inattendue, en
truffant sa démonstration d'exemples qui font mouche. Un livre qui
bouscule quelques idées reçues".

Didier Hamann, Directeur Général du groupe Sud-Presse

L’algorithme ou l’heuristique

L’engouement des décideurs vis-à-vis de ces techniques, qui au regard des enseignements formels classiques des sciences économiques et de gestion pourrait sembler suspect, dans la mesure où leurs résultats sont souvent hypothétiques quand ils ne contredisent pas le simple bon sens, s’explique sans doute par le véritable chemin de croix qu’ont dû accepter les meneurs d’entreprise depuis un demi-siècle. Les règles apprises, issues des grands penseurs du management historique, avaient conduit à la construction d’algorithmes de décision dans la conduite des affaires ; les équations multicritères apportaient des réponses satisfaisantes, parfois certes approximatives, mais jamais dangereuses pour la gestion à court et à moyen terme. La sécurité d’un mode de réflexion qui permettait de penser que, mise à part la parcelle psychopathologique de la population, il y avait moyen grâce aux lois de l’homo oeconomicus de dominer les référents. Mais ce livre l’a encore souligné, l’intelligence sociale des travailleurs, des citoyens, des consommateurs et leur réactivité devant les initiatives des acteurs économiques s’est remarquablement développée. La réaction des décideurs n’a pas suivi ; Herbert Simon a obtenu le Nobel sur la base d’idées comme la rationalité limitée des décideurs industriels. Et les algorithmes forts ont perdu de leur crédibilité. « Hello, psychologists, here Houston, we have a problem… »

Le développement de travaux sur la décision à partir d’une analyse des composantes de celle-ci, et l’enseignement au sein des écoles de gestion des procédés heuristiques de résolution qui pouvaient leur être associés conduit aujourd’hui à l’obligation d’une redéfinition des relations entre problème posé et moyens optimaux de résolution . Sur le plan du contenu, la question posée aide toujours à définir des lignes de résolution. Sur le plan de la forme, soit des moyens humains à mettre en œuvre, il faut parier.

Autrement dit, la question doit donc être formulée ainsi : quel type de groupe de décision doit prendre en charge l’innovation désormais dans l’entreprise ? Et la réponse de l’ouvrage penche en faveur d’un groupe Edison ; un groupe Edison, soit une instance interne à l’organisation et formée de sujets motivés, entraînés, et à l’occasion remplacés ; c’est là un gros pari, si l’on devait énumérer toutes les raisons de freinage d’une telle dynamique. L’auteur devrait au demeurant, après nous avoir entraînés sur les indices positifs favorables à cette « innovation de l’innovation », proposer un autre ouvrage – ou mettre en action les prémisses d’une session de formation – consacré à l’ensemble des raisons de blocage en milieu industriel.

Mais il ne peut pas aisément en venir là, car son regard est pénétré d’abord de la perspective du praticien, et de l’analyste du réel dans les situations les plus diverses ; ce regard est celui du facilitateur, non celui du censeur incrédule. Encore faudrait-il convenir comment les tenants de la perspective individualiste et ceux de la perspective gestionnaire vont s’entendre pour définir cette cellule chargée de lourdes responsabilités et y partager le pouvoir ; faudra-t-il former de tels gestionnaires, ou existent-ils à l’état naturel qu’il suffirait de ne pas placer dans le carcan normal de travail. Et pour les déceler ou les entraîner, quelles techniques faudra-t-il mettre en œuvre ?

L’ENA avait été érigée pour répondre aux besoins spécifiques du management français selon les règles classique. Pourrait-on proposer une école nationale ou européenne de gestion basée sur le syndrome Edison ? « Libres facilitateurs de Thomas Edison » serait bien sur la colline de Summerhill…

Une autre frontière, et un fameux défi lancé à la réconciliation des partisans de l’approche individuelle et ceux de la vision centralisatrice. Allons, Patrick, tu as commencé, ne reste pas au milieu du gué…

Pierre Salengros
Psychologue du travail, Professeur à l'Université Libre de Bruxelles.

28 mars 2006

Foreword from Luc de Brabandère, Partner Boston Consulting Group, Paris

PREFACE

Creativity is a frame of mind that demands the mistrust of accepted ideas. It is a continual process because there are even generally accepted ideas about creativity itself. One of the most common of these that I have come across in business concerns its application. As soon as the word “creativity” is pronounced, you automatically think of the world of communications or advertising. And yet the challenge of new ideas applies just as much to a computer specialist or legal counsel …

When Patrick Willemarck asked me a few months ago to preface his future book, my first reaction was to decline. No, I said to myself, an author so renowned in the advertising world will only reinforce this accepted idea against which I fight. He will merely serve to reassure people that creativity in a company is the preserve of advertising managers.

But careful reading of his text changed my mind and I am delighted to write this short preface. Right from the first pages, the author detaches himself from what has been his profession for many years. The first concepts, references and examples set the tone of the book. No, it is not a zoom in on a small part of what the imagination can produce; rather it is a wide perspective where creativity appears like a vital jig-saw piece in a puzzle called “change”. Creativity in its rightful place.

The perspective is a double view. Horizontally, it is anchored in the widest possible domains to help us improve our understanding of the essence of creativity. But the approach also has a vertical aspect, searching continuously behind what we see in a changing world for the invariables.

Patrick Willemarck’s book is very welcome, as is his research on the theme of corporate creativity. There is a fresh view in is work. The world is changing so radically that we even have to redefine creativity itself.

There is a beautiful paradox here. Because what is older than ideas and the pleasure of having them? The art of thinking – like all other arts – is modelled by the passage of time. Today, the saturation of “info docs” and the power of available tools are changing the rules of the contemplation game. We can see this in four different dimensions.

1. At the beginning of creativity, we find surprise. It is the spark that lights the imagination. Aristotle had already observed the same years ago: “Science begins” he said “when we are surprised at things being the way they are.” (check quotation) The observation remains valid, but with a nuance. There are in fact two types of surprise: the classical one due to the presence of an astonishing element and another, more subtle, caused by the absence of an expected element. We can be surprised by something which has not yet happened, by an opportunity that has not been seized or a possibility that no-one has foreseen. I suggest that this second type of surprise is now more important to us.

Twenty years ago, being “creative” meant finding an original “how”. But today, being creative increasingly means finding a new “what”. There is a big difference. The solution was the response; now it has become the question.

Creativity, traditionally defined as the art of “thinking out of the box” has to be reinvented because there are, quite simply, fewer and fewer defined boxes in our world.

2. At the beginning of invention, we find a new relationship, a new link between various things, as many people have pointed out. Plato discovered this a long time ago: “A new idea is new form.” His observation also remains valid, but again, with a nuance. The inventor of the steam engine did not discover steam, or the piston. He discovered a new assembly, putting together elements which had until then existed separately. These new matter-to-matter linkages are of course the subjects of research. But an immense new field of possibilities is opening up today with matter-to-information linkages. The automobile industry has begun to develop this resource, with GPS, keyless cars, and others. Information in a car is now becoming a more important differentiating factor than the car itself.

3. At the beginning of economic success, we often find a major idea. This is why soda ash, electricity and vaccines have created long-lasting industrial empires. The creative genius of Solvay, Edison and Pasteur has left its mark on history. Today, the regrouping of the economy around information technology makes these types of exploits ever less likely, for at least two reasons. Firstly, growing uncertainty creates growing prudence and secondly, the informational nature of many new ideas makes them quickly susceptible to imitation. New ideas therefore appear to have shorter life cycles, creating competitive advantages that may last only a few months. As any great chef will tell you, his value does not lie in how many meals he can serve, but in his capacity to invent new ones.

4. Lastly, the most important factor: the incredible power of available technology – nuclear, genetic and computing – makes the ethical question unavoidable. The creativity of “how” and “what” must be accompanied by a philosophy of “why”.

Patrick Willemarck’s book is full of examples of these four dimensions of creativity. He invites the reader to follow him though his reflections on the subject.

It is an invitation that is difficult to refuse.

LUC DE BRABANDÈRE
Partner, the Boston Consulting Group.

25 mars 2006

Introduction

Introduction

« It is said that the average shelf life of a person’s knowledge capital today is less than five years, which means that people have to reinvent themselves at all levels on a daily basis. And that brings me to what I want to talk about. To compete successfully in this fast-moving world, you need a constant flow of new ideas and skills. We must motivate people to change, learn and act. It’s true for a country, for a company, and for you and me as individuals. »

Carlos GHOSN, CEO of Renault and Nissan.
Lecture at the Automotive Academy, London, July 29th 2004.



Do you know the Blackberry? It’s an amazing invention that lets you read and send your emails instantly while you make and receive all the calls you want. A mobile phone and pocket electronic assistant in one. You can’t be a dynamic manager these days without one. And those who use it, let you know: every mail you receive tells you it’s from Blackberry.

And the iPod? It’s an Apple invention: an MP3 walkman that can store thousands of pieces of music, photos, addresses, diary and films – ready for use when you feel like it. On the latest version you can even record yesterday’s TV programmes. It’s pretty and it sells by the million.

How come Nokia didn’t invent the Blackberry? The Finnish company has an armada of designers and engineers. It has even created a special fund to finance inventive start-ups. Aren’t ambition and the means to innovate enough to create an invention that gives you leadership and long-term success?

And why didn’t Sony invent the iPod? Music and miniaturization are the foundations on which this Japanese giant is built. It has more designers and engineers even than Nokia. So tell me why! Is it happy to let the Walkman join the collection of brands that enter the dictionary as common names only to leave the retail list of referenced brands, like the famous Frigidaire?

Nokia and Sony are two shining stars in the new economy; two icons of modernity and innovation. But these two giants both beg the same question: is there a threshold beyond which the capacity to innovate seizes up? Who can say how much of their profits will be snatched away by these new troublemakers in their own markets? Can we even still talk about “own markets” when new entrants can jump in, grab success and re-popularise what de Tocqueville thought about revolution? “You can succeed in things that demand qualities you possess. But you can only excel in things where shortcomings are also present” wrote the above-mentioned political thinker and historian, way back in the 19th century.

In the 21st century, all companies – big and small, global and local – know that they are not going to survive by using yesterday’s recipes. The past is no longer a guide to the future. They all know that innovation is the priority. Exchange rate variations, raw material prices, expansion of the EU, geo-politics, … everything over the last couple of years has snowballed into a dangerous cocktail of uncertainty. And this only adds to the market uncertainty that companies have to battle every day, knowing that the competitors, suppliers and distributors of tomorrow will not be the same ones they dealt with yesterday.

Like ocean waves that batter ships at sea, international trends cannot be avoided. You have to learn to understand them so that you can try to anticipate the future, intelligently building breakwaters to soften forces that are potentially disastrous. You have to find a way to resist the unknown by innovating. Your competitors will be doing the same thing, adding further complexity that any manager would happily do without.

It’s not fun. It’s hugely challenging. And it’s only the beginning of the story!

He is Belgian, an artist, and became head of a group of researchers and engineers on a scientific project. It’s a strange mixture. Can you imagine an artist running a department of engineers? Apart from the originality, ask yourself how you could sell this to your board and shareholders! The artist in question and his team produced a machine consisting of six bottles linked by a tube, with pumps operating 24 hours a day. Food passed through the bottles and was transformed by enzymes and bacteria that were injected into the system. Everything was controlled by computer programme to replicate the digestive cycle, from mastication through to evacuation. The machine passed from one museum to another. The odour sometimes offended, but what it produced was packaged and sold. The artist’s name is Wim Delvoye; the machine is called Cloaca. It is exhibited in a museum at Migros, a Swiss supermarket chain that sells almost everything – except what Cloaca produces.

Like many companies, Migros has its own museum. Others sponsor art or have a private collection, showing their enthusiasm for creativity and innovation to the whole world. But it is a detached enthusiasm, displayed outside the company. They invite their clients, press and business prospects to special showings, hoping to improve their corporate image and tighten relationships with key stakeholders.

Why does a company show its appetite for innovation away from its daily business? Is it because the product lacks appeal? By creating funds to finance start-ups which could generate inventions and innovations, Nokia is also going outside the company. It certainly didn’t stop the creation of Blackberry.

If the passion to innovate is outsourced while vague desires for change remain inside, are we seeing the start of a new company structure?

iPod and Sony, Blackberry and Nokia, and Cloaca and Migros are just three of many cases that have contributed to the creation of this book. They prompted me to find a key for the success that mixes artists with engineers and rigour with freedom.

Can art save a company? This was my initial question. The following pages take you through some thoughts that come from trying to answer it. These thoughts are enriched by other discoveries I made on the way and other ideas I unearthed in case histories and meetings with various people. The bottom line is that the art of questioning is essential and totally beneficial. For me as well as for companies.

My questions were aimed at innovative companies like Ikea, Swatch, Apple and Cirque du Soleil which seem resistant to the crises that shake this crazy world. The mere mention of their names creates a refreshing and attractive image in our minds, a unique and irresistible appeal. Do these companies all have something in common? Do they share a secret we can discover? … No, you guessed it, they do not. But if these companies don’t have a secret, they certainly secrete something special for their stakeholders. This touch of magic that runs through everything they do is what creates their difference, although they live in the same uncertain environment as their competitors, suppliers and distributors.

This book takes us in search of what they secrete, because I am convinced that long-term success demands much more than a crash course in product improvement or corporate merger. If we look beyond the product or service they provide, these companies – and others like them – all reveal an inner attitude that is vital to success, and will become even more vital in the future.

(Caption: The art of questioning)

History shows that all industries and companies have highs and lows. It is a fact of life. Like life itself, companies are born, they develop and then they decline; and the ideas in the company follow the same path. This parallel to human life is comforting, but it blocks the imagination. Is this cycle really inevitable for the life of a human company?

Companies consist of men and women. But while humans are living longer and longer, the companies they form and the new products they invent are disappearing faster and faster. Do humans have a monopoly on longevity? Are companies excluded because they lack humanity? I may be over-simplifying, but the paradox is real. So often have we been told that only one new product in ten succeeds, we have come to believe it. Worse than a norm, the concept has become a fixed idea. What a pity!

Why don’t companies open their doors to the abnormal, in order to improve their capacity to manage lasting innovation? The economic history of sectors as different as automobiles and computer science illustrates the virtues of this type of opening. The history of science corroborates it too.

The young and continuing story of Google highlights the need for mixing applied and pure research. The one can’t do without the other. It requires belief, courage and vision, as well as time and money. And these five ingredients will come to nothing unless there is a unique strategic idea, expressed so persuasively by De Bono in his “surpetition” concept. De Bono’s observation is that successful companies move away from competition by developing a different way of doing business; placing themselves in “surpetition” on their own, with a strategic idea that is unique and difficult to copy.

By researching the strategic idea we are able to identify best practices in innovation. We can discover new practices brought about by the need for more profound innovation in companies. And we can study the usage value of innovative products fighting for lasting and complete consumer preference.

In this search for innovation that produces durable competitive advantage, Thomas Edison repeatedly appears as a symbol of proven and easily adoptable solutions. The book is littered with examples, case histories and quotations. I hope that they will inspire readers in their discovery of everything that can make their company – in which they spend so much of their lives – more interesting and more fun, more secure and more reliable, more flexible and faster, more famous and more valuable, more loved and more lovable … and more successful in the future.

20 mars 2006

Chapter 1 & 2

Chapter 1: A strategic idea ? What a strange thought !

“What could Socrates teach managers today? The art of questioning of course; basic reasoning and thinking out of the box. In the Menon dialogue, Socrates presents a square to a young slave and asks him how to double its surface area. Naturally, the slave replies that you have to extend each of the sides. But by how much? By a process of questions and answers, the philosopher solves the problem: trace a large square based on the diagonal of the small square. Socrates did not state the answer peremptorily; he merely helped the young man change his beliefs and find the solution.”

LUC DE BRABANDÈRE, Le Sens des Idées, Paris, Dunod, 2004.


“To be a philosopher, you have to solve some of the problems of existence, not only in theory but also in practice.”

THOREAU, in Les Idées des Autres,Simon Leys, Paris, Plon, 2005.





(If there is philosophy in this book, it is like the prose of Monsieur Jourdain: done without realising it.)

According to Luc de Brabandère, philosophy and management have one point in common: change. Alex Kroll, the head of Y&R Worldwide at a time when the agency was still independent, shared the same belief. A worthy successor to Ed Ney, Alex Kroll had a vision of the future of his business that he no longer called advertising, but “ideation” – the production of ideas. That was back in the 80’s, when I started in advertising. The virus of ideas which stand the test of change contaminated me early in life.

Since those years in the 80’s, I have worked with many clients in numerous sectors in Belgium, Europe and elsewhere in the world. They have all worked tenaciously at improving their products, prices, distribution, purchases and internal processes. Some of them have even improved their advertising campaigns and several have recognised that our ideas contributed to their business success. Many have made gains in productivity. But all of them have also had a competitor who copied or even improved their product at a lower price, setting off a spiralling cost-cutting war and a return to the law of the jungle. The result was a continual and costly combat for productivity. Finally, punch-drunk from incessant blows, companies were no longer able to distinguish what lay at the root of the word “productivity” – a seven-letter word called “product”.

The meaning of the word “product” is too often confined to consumer goods, where the copying, improving and promotion can be more interesting than the products themselves.

We should be more respectful to this word “product” and let it define, as was intended, the company’s whole production and know-how. In this way, it can reveal the true source of a company’s productivity; both what it produces and the manner in which it is produced.

But a company may also produce a service. The expression “produce a service” may seem arduous but it does at least have the virtue of separating the word “service” from the word “servile”. The amalgamation of these two words is tempting, especially in the consulting sector, where immediately saying “yes” to every client request earns more time and money. I don’t doubt that this practice generates cash-flow but I have serious doubts about the contribution it makes to the company’s long-term success.

Any loss of productivity reveals a deficiency in either the product or the production process. It is an endless source of recommendation from consultants who are more concerned about keeping clients than solving problems. After all, even consultants must restrict costs. Would they dare to recommend a reinvention of the product or its manufacturing and distribution process? Nothing is less sure. An intricate re-modelling would do the trick perfectly, and fast. All the more if the approach had already proved successful with another client. Everybody therefore ends up fine tuning his product. Rare is the company that practices the real art of questioning on its production, its after-sales life; the “for what” of its creation and the “for who” of its reason for being.

The inventor of the Walkman did not invent the iPod, and yet it is at the centre of his business. Apple did it instead and reaped the rewards, recovering its mythical reputation that was created in an industry far from music. And what about Nokia? Jorma Ollila, the new CEO at the time, wrote in his annual report in 1992 that “the Nokia way of operating is based on a flat, decentralized organization, with emphasis on efficient teamwork and entrepreneurial spirit. Flexibility, being able to innovate, react speedily and make fast and effective decisions are the central features of Nokia’s way of operating ». A great ambition! Wonderful vision! And yet Nokia did not invent the Blackberry that strolled into the “Nokia Communicator” market.

Neither Sony nor Nokia have ever stopped improving their products. On the contrary. Focused on their products and those of their competitors, they have given others the task of innovating in their market and industry.

Does this mean that their research and development investments need to be raised? Not necessarily.
Nokia spends more on R&D than all the universities and colleges in Finland combined. And the Finnish educational system is very well funded. Nokia has registered an incredible number of patents, from almost 800 in 1991 to more than 5,500 in 2000. To put it in context, a company such as 3M, with its 32 laboratories and 600 researchers, registered 585 patents in 2004.

Nevertheless, Nokia thought this comparison was misleading because its research was essentially applied to products whereas universities focus on pure research. Larry Page and Sergey Brin also did pure research, at Stanford University, before going on to found Google. Is going back to basics the key to success? The tidal wave that forces companies to continuously improve faster than their competitors, is it irreversible?

The company is at the heart of change. In a hundred years, the telephone, radio, television, press, cinema, computer, laptop and the Internet have all been invented and popularized. Knowledge and data are everywhere. In the time it takes to read these lines, an idea will have gone right round the world. The speed of this information flow has not brought peace, nor led to equality, but it does frequently and unexpectedly reveal the injustices and irregularities on this earth. Communicated instantly, these revelations can generate enormous tensions, signaling a deep rupture in the evolution of our society. Not only companies are affected; there are today 1.7 billion people with a mobile phone, reachable from one end of the planet to the other. This gives one third of individuals more power than they have ever had before.

Ptolemy and Aristotle strived to put the earth in the centre of the solar system. Today, it is the individual who is central. There are more than 6 billion PCs connected to the Web. Companies, institutions and political groups cannot hope to escape unscathed. Composed of individuals as they are, these structures will need to reinvent themselves and change fundamentally.

Few of us have had the time to measure the radical effects that this acceleration of communication has created. The speed has left us with little time to deal with issues other than restructuring, cost reduction and staff down-sizing.

The thoughts of company captains – enlightened or otherwise – are focused on other matters.
Every employer, employee and shareholder wants his company to be sustainable. The time when competitors were pressuring you to change and innovate, while communications tried to rally public opinion, has passed. The market still forces change, but it no longer gives you the time. And communications are less and less effective in persuading the billions of people on whom the future of companies depend. It is time to define the “idea” of the company; an idea that leaves no doubt about what it produces and that will give it the chance to achieve its ambition to endure.

Right in the heart of change, the company must reformulate the idea of what it produces.

All companies go through the annual exercise of writing a business plan. Whether they use their own model or one imposed from headquarters doesn’t matter. Most of the time the contents go as follows:

- Background on the sector and competitors;
- Analysis of company performance in this context;
- Development of options that will lead to increased market share by entering new segments, raising frequency of use and/or attracting customers from competitors;
- Recommendations on priority options;
- Possible development of new products to attract non-users of the category;
- Possibilities for improving efficiency in production, delivery and distribution, stock control and human resources.

A budget and timetable are invariably attached to the plan, with dozens of graphs and other Excel sheets. The process involved in preparing this document varies little from one company to another: a slow and lengthy collection of data from various managers and departments. But do the managers communicate with one and other? Do they reach an agreement? Do they share the same vision of the future? It is customary to reply “yes” to these questions, but my experience suggests otherwise. Too often I have seen the opposite. In many cases, the process is purely symbolic. Forms and cases are completed with little thought outside the rigid format imposed. Few companies succeed in summarising their strategy on one page; few employees have a clear vision of the company strategy. The composition of the plan is too often based on an outline of the company, as it is, and its intentions for the future. It lacks a strategic idea, an idea that acts like the magnetic north pole on a compass, pulling all stakeholders towards it. It is not an advertising idea (even though it may help create slogans that makes sense); nor is it a graphic idea for use on the company’s stationery, annual reports and recruitment advertisements. No, the strategic idea does not exist for the pleasure of communicating or condensing everything into a single message. It exists quite simply for survival. If the company doesn’t shape and define its own reason for being, someone else will do it – and that rarely strengthens a competitive position.

The expression of a strategic idea gathers in all the views, tastes and activities of a company towards their single common goal, and is distinctive from competitors. Have 25 years in advertising limited my vision? Maybe. But we have to accept that there is no research showing that long-term advantage is a question of the choice between reducing costs or creating value, between squeezing costs or differentiating the product. Although very common, this definition of strategic options is both too vague and too simplistic. Cost advantage and differentiation can both come from the one and same strategy. Certain companies win their competitive advantage by better management of their resources or supply chain. All these strategies must contribute to a single strategic vision, to a single idea.

Failure to develop this single idea increases the risk of investing where you shouldn’t. Lufthansa only began to ask itself serious questions during the crisis in the early 90’s. Losses in 1991 could be blamed on the recession, but not those of 1992 and 1993. This was when the airline realised that its strategy of differentiation by size of fleet, number of flights, destinations and on-board service was part of the problem and not the solution. The revenue generated by differentiating on these points did not cover the increased costs they demanded. The market and Lufthansa’s vision of it were dragging the company down a spiral that was suicidal for company, shareholders and workforce. By breaking the company down into small business units, the airline realised that its competitive advantage did not lie in the way it transported people, but in maintenance and support processes and services. By reinvesting in these areas of its business (which it subsequently sold on to other companies), Lufthansa stabilised the company and continued to create value for customers and shareholders.

Constrained and under pressure, Lufthansa management examined its business and went back to the basics behind its success. It then conceived and reformulated the company’s strategic idea.

A strategic idea is created from questioning and bringing together the knowledge, resources and inspiration that exist in and around a company. In a world where products and services suffer from both performance parity and over-supply, this type of self-examination is essential. And it’s certainly better not to wait for a crisis before acting.

With consumers today having more and more power (even if only to choose and complain) and the desire to use it, attracting and keeping them long-term is a massive challenge. What company does not dream of developing a sustainable relationship with its customers, suppliers, partners, the planet and the future? The term “sustainable”, popularised by ecologists, reveals the natural and essential need of organisations to survive.

But what if the satisfaction of this need has to pass the test of a re-examination of the usage value of the company’s product? How would this affect the lives of customers and prospects? How would the life of what is produced fit into the life of its users? How would production fit long-term in its social, cultural and ecological environment?

(A double examination which has to help the company be more useful in people’s lives)

The strategic idea is a rallying cry that can only be fulfilled by examination and questioning. I happen to believe that this type of examination is absent in many companies and institutions.

“Philosophy is born from observing change and it searches for whatever resists this change” I read in my notes from a conference with Luc de Brabandère.

This is where the shoe pinches in companies. Developing a strategic idea in a business plan can seem as dangerous as engraving the company philosophy in marble. It creates immobility, while the world outside demands perpetual movement, change and reform. How can we adapt or anticipate change if we decide to define something that will itself never change? The easy solution is to develop a philosophy that says nothing more than what is expected; similar to your competitors but in different words. In other words, many companies have abandoned the search for what is and must remain permanent and long lasting. All companies dream of developing a defence against the revolutionary changes that threaten their very existence. But this ideal of resistance, far removed from the search for sustainability, becomes counter-productive and suffocates pro-activity. And yet there is no innovation without pro-activity. And there is no future without innovation.

Finding the key that resists change and produces long-term profitability is not easy, and most managers are fundamentally unprepared for the task.

For Thalès, water was the element that stood up to change. Pythagorus thought it was figures. Every philosopher has his invincible belief. But do industry heads, research managers, supply chain experts and marketing directors share the same vision of solutions that can resist change and the cost inflation it imposes? Could they ever agree? I have my doubts … unless the company is structured to practice continual and perpetual double questioning. Double questioning means, on one hand, questioning what the company produces that is useful to the public and on the other hand, questioning what will help preserve the relevance of this utility over time and through change. In short, questioning that can create the strategic idea – built around superior usage value – and that can guarantee its relevance, vitality and permanence.


Page 27


Chapter II: The question of Larry and Sergey



« While the flow of new products required to satisfy consumer needs shows no signs of slowing, the process that fuels it is full of flaws. Raising the derisory success rate of innovations should be the top priority for company bosses and marketing people. It won’t be easy: all the trends are against it. »

Roderick WHITE, Admap, n°446.



« The more I practice, the luckier I get. »

Gary PLAYER, golf champion.



Larry Page and Sergey Brin were researchers at Stanford University. They invented the algorithm that ranks web pages in terms of the frequency with which they are referenced by, or linked to other web pages. They called it “Page Rank”. The more web pages that reference a particular page, the more points that particular page receives. This algorithm is based on the conviction that the relevance of a page depends on the number of references made to it on other web pages.

In 1996, Larry and Sergey went off to sell the licence for their new search engine, contacting the owners of large Internet portals. The boss of one these portals recognised the undeniable superiority of their product, but didn’t understand the competitive advantage it could bring his company: “Offering 80% of what my competitors provide is more than enough. My customers just aren’t sufficiently interested in the search function to warrant me buying your licence. Good luck anyway!”

They didn’t strike it lucky right away but their dogged perseverance eventually paid off. The head of Sun Microsystems was the first to see the real potential of their invention and gave them a cheque for $100,000. They created Google Inc.

In 1998, the Beta version was made. The press got hold of the story and awareness snowballed. AOL and Yahoo bought the service. Search engines became media and created what we now call “paid placement” for brands and advertising; a business that makes online search particularly profitable. Yahoo kicked out Google to go it alone with the new version. Microsoft joined the act too.

Without knowing it, they had started something that would turn the worldwide media and advertising scene upside down. Like a surging wave, it put consumers in charge of access and eliminated intermediaries such as agencies and media buying shops.

Search engine operators now gave advertisers access to the most important segment in the history of marketing – the segment of the individual, the “customer is king” segment.

Are you looking for dog food? The search engine puts up an advertising banner for a brand of dog food on the results page. Or maybe somewhere to ski? The engine flashes you the best stations. A dream come true! But should it post all the ski stations and brands of dog food, or just those of the highest advertising bidder? Yahoo didn’t take long to decide. If advertiser X paid the price, its name would head the list for all searches made by users looking for services, information or products in the X category. This was a very attractive idea for the advertiser, but it broke the net etiquette of objectivity expected by surfers. MSN soon came in with the same service for its customers. It would pull back later, influenced no doubt by Google. Because Google refused to be tempted, staying loyal to the commitment published in its brochure when it went to the stock market: “We will do our best to provide the most relevant and useful search results possible, independent of financial incentives.”

This respect for the user was another tidal wave that would wash over the business world in years to come. Right from the start, Google placed usage value of its product above all else. It is a value that the company has maintained ever since.


Superior usage value (SUV) of Google
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“We will do our best to provide the most relevant and useful search results possible, independent of financial incentives.”

Maintaining this standard demands permanent determination and an amazing capacity to invent. Froogle, Google News, Gmail, Picasa, Google Earth, Google Video, Google Talk and Blogger are living proof of the company’s ability to invent and delight its users.

Google Earth, with its zoom-in on satellite photos of the earth, enabled Google to provide geo-local services and subsequently make Yellow Pages obsolete. Google Video could become the window for tomorrow’s television; a universal guide and inventory of the world’s television output combined with millions of amateur videos free from rights. Meanwhile, Google Talk has captured the imagination of on-line chatters.
And so it goes on …

Permanent innovation and the primacy of usage value are the lifeblood of Google’s success. It continues to intrigue its users by inviting them to test new tools: a clever way of researching, while creating rumour and building loyalty for a cool and creative brand.

Who would have believed that our two researchers were practically begging for business less than 10 years ago? In August 2004, they raised more than $1.5 billion on the stock market. Their market value went from $23 billion to $84.5 billion just 10 months later; 50% more than the likes of Disney, News Corp and Yahoo. And their progress continues, in the most competitive markets on this planet.

Google has become the uncontested leader of paid-placement advertising on the Web, a niche that represented 4% of total American advertising expenditure in 2005. But since the web accounts for 20% to 30% of American’s media consumption time – at home and at work – this 4% share will surely grow. Google, which controls 40% of the market, will reap the rewards.

Google has seriously roughed up the market. And when you shuffle the pack in a market, cash cows do not come up trumps. Altavista was a player in the sector, but not any more. Lycos was there too, but no more. Excite, Overture and Inktomi have also disappeared or been bought. But Google’s survival does not please everybody. There are some dark clouds in the sky. Let’s see why …

The media doesn’t like Google
For lack of looking closer, they see it as another media just like themselves. In the scramble for advertising revenue, Google challenged the portals and traditional media. It created a few enemies, although it didn’t seem to hurt the stock price.

- Marketing professionals don’t rate Google
With barely 8% of internauts using Google as their home page, marketing specialists reckon that a change of fortune is a foregone conclusion. In their eyes, the only way forward was for the company to become a portal. After all, this would widen and identify their user base, one of the foundations of effective marketing. Ignoring this rule would be a dangerous risk, if not a marketing crime. Well, they may have to re-write the rules …

Google believes it is more important to be known and admired than to collect and sift user information. Google wants to be loved by everyone, even by those who are not particularly interested in its services. The incredible word of mouth that follows it on the Web appears to justify this belief. What’s the point in being obsessed by data base segmentation when it is the user who chooses what products he wants?

Despite the agreement with AOL, Google will not become a portal. The future will show us if this projection is correct, but meanwhile Google’s stock price is still riding high.

- Public authorities aren’t crazy about Google
Unlike other managers of customer relations, Google does not mine information on its customers. This creates intellectual suspicion in some circles: “How can not knowing your customers be right? Isn’t it secretly trying to get to know them through Gmail?” Some people criticise Gmail for not guaranteeing a privacy policy. Everyone has been talking about it, but the stock price hasn’t dipped.

- Apparently, birds of prey don’t fancy Google
47% of Americans search the Net with Google; only 22% via Yahoo. Google could rest on its laurels, but fear of being taken over prevents it. The company could easily become the next Netscape and be bought. Who would be the predator? Yahoo or Microsoft? There are many candidates. And the stock price only strengthens.

Is Google immune from a downturn? Of course not. “Stock market blues will not change the strategy of a group that was so careful to announce, when it went to the market, that it would never place short-term profitability above long-term objectives” stated a journalist with Échos, in France.



- Opportunist imitators are wary.
Google attracts competition like a magnet. In the corporate segment alone, Google has to fight with specialists in data indexation, with Apple and the “spotlight” search engine in its Tiger operating system, and with Microsoft’s “Share-Point” and “Index server”. Google has to battle the Europeans too, notably the Quaero project (“I am looking for” in Latin) supported by Thomson, France Telecom and Deutsche Telekom. Fortunately, Google attracts more talent than its competitors. Just ask anybody at Microsoft.

- And Microsoft doesn’t like Google one bit.
Talent is leaving Microsoft for Google. Because Microsoft is suffering from the same symptoms as Nokia and Sony: it didn’t see the enemy coming behind the substitute. Microsoft’s search engine project is not the killer application it was cracked up to be and it will not take the lion’s share of net advertising. This $5 billion market is growing at 40% a year, enabling Google to recruit talent and develop an abundance of new applications. And these applications are slowly but surely reducing the power of the PC operating system – Microsoft’s Achilles heel.

Google and Microsoft have in fact become the world’s worst enemies. On Friday 22 July 2005, Google announced that the founding president of its new Chinese subsidiary would be none other than Kaï-Fu-Lee, the boss of Microsoft’s laboratory in Japan. This change of camp is just the latest in a long list of migrants from Microsoft to Google. It was a body blow for Microsoft; the man was key and worked closely with Bill Gates himself. Lawyers were summoned immediately. Mr Lee is a specialist in natural language and voice recognition and his mission was to build Microsoft leadership in on-line research. Now Google will profit from his know-how because the company has that special something which makes it more attractive than its competitor. It is the type of magnetism that attracts talent, users and investors.

This magnetic pull has enormous power. Professor Cool of INSEAD calculates that Google has access to only 9% of information that can be digitised today. The remaining 91% gives it gigantic growth potential. Google could also create the new standard for privacy policy: a criticism that has already been made of the company. Success here would be further proof of the company’s loyalty to its superior usage value.

Google is and wishes to remain the preferred provider of universal knowledge. A Californian blogger sums up the company’s philosophy beautifully: “a universal door that opens up immediate knowledge”.

Google is a fabulous success, an amazing achievement, even if a more prudent analyst might define it as an untypical industrial case created by a unique situation due to new technologies, an audacious and unpredictable journey which could never be repeated elsewhere. Traditional entrepreneurs would surely classify Google as abnormal, freakish and inadaptable. What if this reluctance to acknowledge Google’s success proved wrong? What if Google’s success really is a model for companies seeking an idea to guarantee eternal happiness?

Google’s experience surely has universal application. It can serve as a source of vitality for all companies, whatever their sector. We should not be blinded like the portal boss who turned away two researchers in 1996. We must not let ourselves be overwhelmed by the competitive environment in which we operate. We must ask questions. We must be ex-centric.

Is it impossible to imagine products in our sector that integrate superior usage value (SUV) compared to competitors? Of course it isn’t.

The continuous search for what is most useful to the web surfer is Google’s key to success. This SUV is written in the company’s mission: “Organise worldwide information so that it is universally available and useful. Concentrate on the use and the rest will follow” repeated Sergey and Larry to their employees in the company’s 10 commandments.

Why deprive ourselves of a bit of pragmatism? Walter James, an eminent pragmatic philosopher, asserts that the value of a new idea lies in its usage. Pragmatists do not say “I think, so I am” like the Cartesians. Rather, they think about action. “Pragmatists look at usage and the future: a new idea enables you to place yourself in the future because it foreshadows action.” (Luc de Brabandère: The meaning of ideas). It’s worth thinking about.

(Google is obsessed by the continuous search for Superior Usage Value)

In my opinion, “superior usage value” should replace what we traditionally call the “consumer benefit” or the “consumer value proposition”. Value today means usage and convenience. Physically or psychologically, this is what a customer expects from a product – from the moment he enters the store until he throws it away or re-sells it. It is not too late, but we do urgently need to look carefully at the life of a product, in the life of consumers. This is as true for producers and service providers as it is for ONGs, institutions and political parties. Always think about usefulness. Otherwise it is wastefulness.

In our world of democratic consumption, machines that we manipulate are increasingly giving way to information that requires little manipulation. Imagine for a moment that a competitor arrives tomorrow with a more effective search engine and tools which protect the privacy of its users on line. What would you do? The analysts who value Google so highly would certainly take a look at the newcomer. And so would I.

This is why the strategic idea of a company cannot be limited to usage value only. Google shows us that you have to continually search for inspiration at the frontiers of knowledge, the limits of what is known and accepted. Sure, it is an ex-centric attitude, but every company should be able to do it.

It is not a question of doubling research spending or recruiting talent from Microsoft. All companies can combine the original usage value of what they produce with continual search in the unknown. Usage and research are the two vital dimensions in industries where companies are trapped by competition. Remember Lufthansa? The German airline only rediscovered its real force after being exhausted in a battle whose form had been dictated by competitors. A company wears itself down by simply fighting to do better than competitors around it. It forgets to sharpen and develop its own special strengths.

In his book “Useless bits of information” (Petits savoirs inutiles) (Gallimard), Professor Sojcher tells us what Antonin Artaud understood by this opposition between form and force, and it is no less true for the competitive world of today. “In 1936, Artaud attacked western culture for its separation of form and force. We are confronted by form: we see paintings and sculptures in museums, we go to theatres, we read works of art, and we worship them. We are both passive and adulatory. But we forget one thing: to live and understand their true meaning. We do not see or feel the force behind the form.”

Victor Hugo said that form was nothing more than foundation which had risen to the surface. In our competitive world, form disconnects a company from its foundation and its heart, pulling it away from the origin of its success. In other words, the form penalises the force. Page and Brin were not spared from this fate.

When the door was slammed in their face, they were victims of the form they had inherited. I can well imagine what was said when the door slammed: “… University researchers? Are you crazy? Business is serious!” But the force which fired our two researchers was serious too. History showed us that very quickly.

A few years later, the press gave Google the form of a communication medium: “Google has become the biggest of the media; worth more even than Time-Warner” it wrote. And the press was not wrong. But media was not the real force of Google. It would dig its own grave if it thought it was.

There is always somebody ready to give a company the wrong form; a form that will sap and wear away its natural force. No company is immune. Google is a warning of how careful we should be.

These forms that are given to companies illustrate that a creation is never more than a second version of the original idea. Just as a photograph is only a second expression of what the photographer saw through his lens. And an advertisement is the second creation of the layout that was originally presented by its agency.

Google seen as a “media” is the second creation of what Larry Page and Sergey Brin had dreamed of at Stanford and presented to the boss of Sun Microsystems. Innovation is a two-stroke engine: there is the invention and then its development. The idea followed by its construction. And it is because innovation is a two-stroke engine that a company which is condemned to change must give as much importance to the desire for innovation as the wish to stay with its original superior usage value. The half-measure of “improvement” is not a long-term solution. Because improvement is innovation that stays within the boundaries of what is known. Improvement lacks the vital creative dimension, ex-centric by definition.

As the iPod and Blackberry showed Sony and Nokia, innovation is not achieved by perfecting what already exists. It is achieved only by forcing yourself to venture into the difficult and unknown. Nicholas Negroponte, of MIT Media Lab, confirms that “continuous improvement is the worse enemy of innovation”. Improvement depends on the known, innovation on the unknown. But the unknown creates fear and paralyses people, leading to the lack of innovation that we see in so many companies. The iPod has rapidly become an icon and shows how powerful true innovation can be. Purchased by more than 10 million people, sales increased by 500% between 2003 and 2004. (Patrick, this is now out of date. Update or replace).

All this leads me to a last conclusion: if innovation is two-stroke, then leadership must be as well. Leadership and management are linked together. Leadership is the original idea, management is the second creation. Leadership shows us the direction; management enables us to go down that path effectively. Who today manages his company and takes it in the same direction that he established (the strategic idea)? It’s very rare. Management usually replaces leadership, in the interest of short-term performance, with the result that the capacity to change and innovate is quickly lost. Leadership must be given the force to change the form in which so many industries and companies are stuck. Innovation leads; it does not manage. The process of developing a business plan, described in chapter 1, is strictly managerial. This type of planning lacks any notion of leadership, direction or path into the unknown. As the Chinese proverb says: to overtake your master, you must stop walking in his footsteps!

Asia, digitalisation, ecology, media convergence and telecoms are seen by some as the only positive directions for the future, while others see them only as a source of problems. Where are the growth areas that give a company the energy it needs to endure and succeed? The challenge for management and leadership in the search for innovation is to manage energies. That’s what puzzles me most about Google.
Can it stay faithful to its original superior usage value and passion for the unknown – the two elements that generate energy inside and around a company?

This is not easy. Companies know that change must be embedded right in the heart of their strategy for sustainable growth. But these same companies inevitably develop systemic inertia – resistance to change – which leads only to improvement within the bounds of what is known.
Google has developed a system to overcome this inertia. Its 10 commandments are not a strategic idea but they define on which front Google plans to fight to become the preferred provider. Everyone at Google is galvanised by them.

I don’t pretend that these two elements – superior usage value and passion for the unknown – can change the face of the earth. Every company has its R&D department, sales force and after-sales service; integrating all that under the double concept of “superior usage value” and “desire to search for the unknown” appears like an act of pure “form”; a superficial way of renaming what the company already does to its best ability. As Victor Hugo said, form aims to raise the foundation of a company up to the surface, making it resistant to change. Things, like people, exist when we give them a name. A company must own and live by its strategic idea. It is expressed by crossing the superior usage product with the desire to search in the unknown for the means of continuing to produce it. When Total says that it is not by chance that you visit its petrol stations, it is more than an advertising slogan; it is a public commitment that makes the oil company more useful, and determined to stay that way.

It is easy to encourage people and companies to search in the unknown but in practice this new business philosophy may cause unease. After all, investors are happy if a company continues to make good profits. But increasingly, profits come from geographical expansion, cost cutting, staff reduction, mergers or book-keeping results from real estate transactions. Rarely do they come from a superior usage value for their customers.

Should we therefore wait until there are no more opportunities for geographical expansion and restructuring before turning to superior usage value and innovation? Surely not; it would be far too late. Every company is driven by the eternal obsession to be the first, to maintain leadership and beat competition. And every competitor has exactly the same ambition.

Continuing to fight indefinitely for each fraction of market share, which these battles make more costly and less attractive every day, no longer makes any sense. Fighting to stay in your own market is an increasingly expensive rear-guard action. The market concept needs urgent revision. Indeed, markets themselves won’t survive much longer. Shouldn’t we do as Apple and iPod did? Or Lipton, which entered the soft drinks market? Shouldn’t we try strategic disruption rather than stay with advertising disruption, advocated so eloquently by Jean-Marie Dru, CEO of TBWA Worldwide?