The Markets Institute

You might note that I haven’t posted for a while. While I would like to say that I’ve been busy at the Winter Olympics, the truth is I’ve been heads-down on the launch of a new non-profit, non-partisan research unit, The Markets Institute.

The idea for the Institute came from the incredible amount of data continually collected by Moddition. While we focus on clients, to do what we do, we literally have to track virtually every industry, every sector, from their ideas to the final sales of their products and services.

With all that incoming information and analysis that goes into extracting useful understanding, there was a great deal of value that could come from looking at the big picture, rather than just at solutions for a specific client.

In this case, I had two ways to approach this. Following Moddition’s own cardinal rules, I could create a new set of information products that cover the issues and the solutions, and sell them to businesses. This would leverage what we already have in place to create new income streams.

However, I chose another direction.

I realized the answer was in something I had done for many years at the Institute for Security and Intelligence (Stanford, CA) as a Senior Research Fellow: identify emerging issues and challenges, develop solutions for them, and educate the appropriate constituency on implementing the solutions.

Instead of packaging the research and solutions for sale, I created a non-profit unit that will present the information to the general public. Moddition will fully fund the Institute, so there is never a concern about fund raising.

My CXO friends who live by Ayn Rand may not appreciate the decision. But the truth is, our national economy is in a most precarious state. There is no small number of new challenges on the horizon as well. The next number of years will be tenuous at best, and success, let alone a recovery, depends in great measure on learning the new rules. Rules that even now are being discovered, rather than written.

That being said, the big issues we cover need to be released openly. I view it as a duty to help us get through these times, and get to where we need to be in the future. I want to ensure that future is about success, not succumb.

After all, you can’t sell if there are no customers to buy.

Check out the Markets Institute at www.MarketsInstitute.org and our first analysis project on how new buying behaviors are using social networks and leveraging social media to quickly hype deals, build hope, and then abandon deals in a flock, at www.MicrobubbleEconomy.com.

Dubai World vs. Innovation?

Let’s get past the credit issues of Dubai, which will get cleared up, and look at what the Emirate can do to create a long-term, viable future of providing real  value. Up front, it won’t be about tall buildings or unique landscaping — it’s about global problem solving. These ideas apply to any company, anywhere.

As background Dubai has been working for years now to create a global center of trade motivated primarily by its diminishing oil deposits. Rather than wait for its oil to dry up, the monarchy determined to turn Dubai into something unusual — a cross between a trading and shipping port and a theme park. The purpose was to create an area so attractive to global businesses that Dubai would become the place to transact business and enjoy a premium lifestyle.

When Dubai’s incredible ambitions were publicized the reaction was frenetic and near frantic: Dubai was the new “It. ” And if you weren’t a part of It you would be left behind. Dubai, viewing the nearly insane response, borrowed and built to keep up with what appeared to be a global onslaught of demand.

Unfortunately the truth was that the hype being generated for Dubai (not by Dubai) was self-feeding and not solidly connected to reality. Like a snake eating its own tail, eventually the hype could not sustain itself and died.

So in viewing Dubai as a company, it was literally duped by artificial indications of demand that lead to massive over-production. Whether we’re talking about over-building of warehouses in Phoenix, AZ who believed it would become the Southwest’s hub of transportation and storage, or warehouses full of over-production of products that never sold, the error is not unique and as old as business itself.

Hindsight is always 20/20, so now what can the Emirate do to get past the hype and allow them to realize their dreams of non-dependence on oil revenue?

Address Needs and Create Value

Architectural and geographical novelty is good for hype but not much beyond that. Bragging rights buy you momentary enthusiasm but little else. You can see this time after time in companies that push features or specifications that are amazing — and totally irrelevant to their buyers. Dubai is working on the tallest building in the world — but will that truly satisfy any business need other than ego? And one lesson that is hard learned but always proven to be true: ego plays are always short-lived. In every challenging time, ego plays are the first to go.

International CXT--the largest production pickup truck. More than hype?

But don’t blame Dubai for thinking that bigger — even outlandishly bigger — is going to solve anything. Just look at U.S. manufacturer International’s decision to make the biggest pickup truck in the world. It too generated a great deal of hype — Hollywood stars would buy it, it would be the new It. But at the end of the day, did it solve any real needs?

What Dubai needs to create is real value. A real, legitimate reason for business to be there beyond “everyone who’s anyone will be there.” And that will take more than hotels, clever architectural and landscape layouts and other novelty approaches.

What does the world need right now? Real, true innovation. New ideas, new approaches. New technologies and new methodologies. If Dubai is smart they will turn their Emirate into an innovation nexus, bringing together brilliant minds from Asia, the Middle East, Europe, and throughout the world. Use some of that amazing housing to motivate the world’s best people to work, develop, design, and innovate in Dubai. Not for the indoor skiing, but for the opportunity to create something great in a work culture like no other in the world.

I’m not talking about the various technical centers already in place — the need is for a unique innovation nexus that spans all sciences, mathematics and technologies so they literally cannot be pigeon-holed into Internet, Media, or Studio Cities (free economic zones). With a completely new approach to designing an omni- and cross-disciplined innovation nexus with “discipline diversity” and an entirely commercial orientation, there would be little need to fear about oil — or hotel — revenue. The Middle East needs a center like that to compete with centers in the West and emerging centers in the Far East.

Over the next perhaps 100 years — and truly indefinitely — there will be an increasing need for innovation to solve problems at the individual, community, national and global levels. By assembling a cross-section of the world’s brightest seasoned and new minds, enormous heights can be reached. And that will be most profitable indeed.

Oil will run out, and hotel rooms will be empty as the next “hot” region comes into play. But building Dubai into an innovation nexus is something that would feed and grow itself — without eating its own tail. All while creating fortunes for those involved.

For International, they knew enough to pull the biggest production pickup truck from the market when the hype passed and the energy crisis made the truck obscene. Likewise, the tallest building will never be the real draw Dubai needs now that the global downturn has changed perceptions of what is “reasonable.” This recession is rather unique whereby the super-wealthy have seriously cut back — devastating for any ultra-premium location.

The Spotlight is Just as Bright — It’s Focus is Different

There is an amazing opportunity here for Dubai — but like any company, they will have to focus on need and value. Only that will build the Emirate — and any company — into all it can and should be.

If Dubai is smart they can turn this mess — a mess which will turn into a catastrophe for them if things aren’t changed — into a success that will create the true jewel of the Middle East. And I do believe they are very smart indeed.

This same logic applies to any company now that is willing to look beyond old plans and see where they can change themselves, change their plans, and change the world.

I’m ready for a dialog — are you?

After my father passed in February following a very full, very accomplished 88 years, I had the less-than-pleasant opportunity to sift through his personal possessions. Amongst a multitude of books, printouts and miscellanea of his hobbies were some very old-school tools of design. Mechanical pencils and a large round cast iron sharpener, French curve templates, guides and so on. All from his days designing everything from trade show displays to R&D labs to battleships.

My father was an innovator. He subscribed to no particular codified “body of knowledge” but his results were inspiring. The majority of his great work preceded ubiquitous CAD/CAM installations. As a testament to what simply “got done” without technology, he had designed and built an enormous miniature model city for use in a military flight simulator, long before the existence of a computer that could render scenic imagery in real time. Quite literally he designed a system where a video camera “flew over” a terrestrial model while the video was piped to a CRT in the simulator’s cockpit.

Back in his home office there was colored lead, measuring devices, T-squares, grid and tracing papers. From these came enormous military vehicles and trendy advertising displays. Things that mattered; things that moved product and saved lives. All powered by a large metal desk rather than Autodesk.

As I rummaged through these items, and considered the generations of people that have manned, traveled in, and simply utilized all that he had designed without the aid of today’s technology, I am once again schooled. Not old schooled, not new schooled, just schooled.

Designing great products, innovating, creating, improving, maximizing, optimizing, doesn’t require complex tools (or corporate conformity — he was a instigator for progress). It requires a great ear to what the customer wants (even if they don’t know), ingenuity to create a solution, and the mojo to make it happen in the face of layered mediocrity. My father had all of that, and I like to think I continue in that line. I’m very proud of all he has created, and I let him know that. He was never shy to let me know of his pride in my creations.

It doesn’t take vast and complex technical tools, resources, or personnel to create an amazing product, service, marketing piece or anything else.  It just takes what my father called “the big room – the room for improvement.” That thinking leaves you ever unsatisfied, and you have to know when to stop — but knowing there’s always that room, you never come to rest. And that’s a very good thing.

Once I pass and if there’s someplace like heaven, I’m certain he’ll have been working to thoroughly modernize those pearly gates and triple the tactical maneuverability of angel’s wings.

In the spirit of my Dad, we should all endeavor to make every product, service, process and organization we touch, better. Never be satisfied. That was his legacy, and that is mine. I hope it’s yours too.

With computer or drafting pencil, the results are the same: what can we make better?

[Miss you Dad]

You don't need much to get to that "Ah-Ha" moment

Survive the recession but not the recovery? File that under “most unfortunate irony.”

“Innovation” is thrown around today like re-engineering was in the ’90’s — as something magical that will cure every economic and company woe. Innovation is expected in products, services, business processes, research, social communications, and of course technology. We know that without rethinking just about everything we do, we’re never get going, let alone get ahead.

But what I run into every day are businesses balking at innovating anything besides ways to cut costs — and those tendencies are understandable. Many companies are purely in survival mode, having let go everyone they could, reeled in every cost and cut back every activity possible. And that latter item is a real problem — cutting back on every activity often means cutting back on innovation.

As someone who has designed a great many products and services I know that it can take some serious cash to innovate and create. Money that just isn’t available right now for too many companies.

But I also know that you can accomplish a great deal of real innovation and creation with virtually no budget at all. For every company just waiting out the recession, there’s a 20-something in Silicon Valley eating ramen noodles, using open source (free) software and just their smarts to create something new. Without venture or angel funding they’re starting to build something they believe will turn into a product or service of great value.

They aren’t waiting for funding before they start building. They’re not letting the recession and lack of financial backing prevent them from innovating. So when the economy does get back on track, many will be ready to roll, get funded and create real revenue for their investors and customers.

But for now, they’re living on just about nothing and focusing completely on innovation and execution.

When the budget's gone, innovation takes innovation

But most businesses aren’t software or web-based, and any kind of innovation takes hard dollars. But that does not mean you cannot innovate beyond simply cost cutting. When the budget is empty, innovation takes…some innovation.

Here are some ideas on how you can use the resources you have right now to innovate, regardless of your budget:

• Start re-evaluating your product line. When we emerge from the recession, buying behaviors of both consumers and businesses will change, in many cases dramatically. A “new practicality” will set in, and that which is perceived as overly indulgent, frivolous, or unnecessary will become obsolete. Don’t expect that poor sales for an offering during a recession will necessarily improve after the recession is over.
• Look at new ways of producing your offerings. As more attention is turned to value – “better” is more saleable than “more” — will you still want to produce overseas where quality can be an issue? Post-recession, would having your services produced in the near to home be an actual selling point, as you will be creating jobs? You might find that incremental sales due to interests in higher quality and building at home far exceed any incremental costs.
• Evaluate the profitability of “greening” your offerings and your company. Enormous energy cost increases are in our future — whether due to regulation, taxation, shortages, political strife — you name it. It’s not ideology, it’s  reality. We’re going to get hammered, and soon, whatever the source of the problem. Can your offerings and your processes be made more efficient? You may like gasoline or wind or nuclear, but whatever your preference, the less you use the less it will cost you. The closer you are to your suppliers, the more efficient your operations, the more you’ll be saving. Once the real crunches start — and they will be starting in 2010 — the costs to design and fix your energy inefficiencies will spike enormously with demand for those services. If you start planning now you can save yourself a fortune later.
  • Likewise start planning to make your products and offerings more efficient. A green perception will be helpful for sales, but if you’ll be able to save your customers money when the crunch comes, you will be in a much better competitive position.
• What free/low cost tools can you use to improve your operations and offerings? The more you can move operations and information to the web, the more you can save if done properly. There have never been more free and low-cost tools to help you sell, operate, and communicate as there are today. Take advantage of what you can by trying them out now and implementing where you can.
• Get every measure of value out of your offerings. I’ve yet to find a company that truly leveraged their offerings in every possible way. In the creation of a product or service you create more than just a widget — everything that goes into that offering has value you should exploit. And every product or service you create may be able to reach new people in new ways. Post recession, don’t expect all your old customers to be there. Now is the time to consider who else you could be selling to — even if it’s in ways you are not serving now.

This is just a small sampling of ideas to get you started. Yes, it takes some innovation to innovate when you have no budget. But when the sun finally does come up, you’ll be looking at a different world. Those that haven’t been innovating during this time may never emerge from the dark.

Look at it this way — using your brain is free. And as long as we have some ramen noodles, that’s all the energy we need to keep on innovating.

Frozen with fear — that’s one way to describe the state most American businesses are in today. No different than most American consumers. Virtually everyone is afraid to move forward as the future is so uncertain. So we wait to see what’s going to happen. If the banks will start loaning. If demand will pick up. If the market will rally for a while.

In that waiting, people seek the silver bullet, which during this tough time seems to be “innovation,” as if the very term would resurrect the economy just by our focusing on “it.” One would think somehow that innovation, which has always been a hallmark of American business, was something entirely new that we have not been doing, or not doing nearly enough of. And that by simply being innovative we could end our economic woes.

In fact we’ve now so over-used, over-hyped, and over-exposed the term that it has essentially lost its meaning.

The truth is innovation is neither something new nor is it magic bullet. It will not save the economy.

Innovation is a de rigueur component of American business now as it has been for over 233 years. Innovation is what built this country and made us the richest nation on the planet. In fact, innovation twisted and corrupted, is what lead to our current economic debacle. As hard as it is, if you seriously look at the complexity of the derivatives and packaged funds the financial community created you will find true business innovation. It was not the innovation component that created its enormous financial scale nor was innovation its downfall.

Consider the new iPhone, a new drug that prevents 30% of users from contracting AIDS, the use of high-brightness LEDs that will vastly lower power requirements and improve quality for everything from TVs to home and office lighting. There is no lack of innovation to be had here.

My clients, partners, and greater network are distributed throughout the U.S. and the globe. I connect with an ever-growing number of smart and talented people every day, and all of them, all of them, are innovative. We’re all singly and in groups, formally and informally, directly and indirectly, innovating and creating continually. We have and always have had innovation galore. And we absolutely do need it.

But innovation is not what will get us out of this mess.

What we need now is something very different, something we as Americans also have always had, though we seem to have forgotten about them: cojones.

We’ve forgotten that which made us win our freedom as a nation, made us fight for equality, made us fight to get to the moon, made us the most powerful and innovative country in the world.

But today in business amongst all the fear, all the waiting, all the hunkering down, we’ve forgotten we’ve had them. And until we find them, we can talk innovation all we want.

But nothing will happen.

Perhaps you don’t care for the word cojones — so allow me to dig further back into Latin for Audaces fortuna iuvat: “Fortune favors the bold.”

Thinking and waiting produce nothing — only doing does. That doing requires businesses to stand up and be bold. By that I do not mean the kind of cojones/boldness/innovation with unchecked risk taking that got us into trouble in the first place. Instead, I mean real contribution and real value. Products and services that do something. That make something happen. Not necessarily tangible, but nonetheless valuable.

With capital, loans, and demand so tight, it will require you and your company to be bold. To make something happen.

While so many companies and consumers sit on their hands waiting for something to happen, you must find your cojones and be bold. Take some intelligent risks. Add to the juice that will jumpstart the economy. Like a car dead in the street, it’s not going to start itself.

Fortune favors the bold. When things do begin rolling, and they will if the right, smart people are bold enough to get it started. And those men and women will find fortune that those waiting on the sidelines will never catch up to.

So I respectfully submit that you decide: will you and your business sit on the sidelines, or will you leverage all that you have done, are doing, and can do to make something happen right now and make a bold move? Will you make something happen rather than waiting for something to happen?

Fortune has always favored the bold, particularly in harsh times.  As they say, who will join me to not whine, find their cojones, and boldly create our future?

Let me know what you are doing to be bold today.

Here’s to rediscovering what makes us great,

Barry C. Collin, IDSA
CEO, Moddition, Inc.