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 During my week of conferences a couple of weeks ago, I attended one day of the two-day BIF-5 conference put on by the Business Innovation Factory in Providence. BIF conferences are much like the famed TED conference – each presenter or “storyteller” gets 15 minutes to tell their story, and they are encouraged to tell a story rather than simply making a presentation.

Reviewing my notes and others’ notes (from blogs and Twitter) from this conference, I see that a theme from this conference might be “fostering serendipity.” I talked to a couple of people about this at the conference and via Twitter, where one exchange with a fellow conference attendee went like this:

If we're treating innovation as a discipline, where does "fostering serendipity" fit in?

A way to foster serendipity is to avoid coming to closure. Leave options open for serendipity to happen.

The theme played itself out through a number of the second-day BIF5 talks Science writer Jonah Lehrer, author of How We Decide, described neurobiological research that proves that the mind needs to be quiet and in a state of relaxation to produce insights. In a crisis, he said, “your fear won't save you. You should learn to relax and hear quiet voice of creativity in face of fear.” His research has shown that insights come from the right hemisphere, and you can drown them out by too much focused, by the very attention you pay to the analytical act of problem solving.

Bill Buxton, principal scientist for Microsoft Research, said that creativity and invention are always context-critical and therefore social. We must be able to observe what’s going on around us to be able to create insights. He makes note not just of new ideas he gets, but of the circumstances in which he got them, so he can more easily replicate them. He also said that an applied approach to research rather than a curiosity-driven approach actually reduces productivity. Another reason why curiosity rules, he said, is that innovation doesn’t have a long tail, but rather a long nose. “Any technology that is going to have significant impact over the next 10 years is already at least 10 years old,” he said. The first prototype of a computer mouse appeared in the early 1960s. Success at innovation will be had by those who are able to spot good ideas and develop and nurture them.

Fast Company founder Alan Webber, now author of Rules of Thumb: 52 Truths for Winning at Business Without Losing Yourself, suggested that serendipity can be fostered by paying attention. Keep two lists, he said, one of the things that get you up in the morning, and one with the things that keep you up at night. Pay attention to these things and pay attention to people as well. The key to “making things happen and creating value is to pay attention to other people. There are teachers – and, presumably – lessons everywhere.

Babson College President Leonard Schlesinger talked of the need for all of us to become more “intellectually ambidextrous” and proficient at the moving from “knowing” to “doing” – the hallmark of the entrepreneur “What if we took seriously the notion that we're all entrepreneurs?” he asked. He didn’t mean we are all going to go out and start businesses, but rather we are all in control of our ideas and what we choose to do with them, how and whether we choose to develop them and act on them. He talked about co-creation, which often requires a bit of serendipity to pull off. His very career – moving back and forth between academics and business – if not his talk at BIF5, was a testament to taking ideas from one context and seeing how well they might work and how they change when you apply them in a different context. That’s a lesson in serendipity as well – can you create the conditions of possibility for serendipity to happen by consciously looking at things from different angles?

One of the things we at Innosight often tell clients is that in order to innovate it’s important to question assumptions. Once you start questioning assumptions, that fosters serendipity as well. Former George Washington University president Stephen Trachtenberg discussed that very thing when he talked about innovating the university calendar. Why the agrarian model of summer off? Why four years, or three years for law school? If you start questioning those assumptions, what new ideas can you uncover about how to innovate the university?

I’ve only focused on a few of the talks from a very full day at BIF-5 here. Many of the talks were also about innovating to change the world for good. All in all, BIF conferences provide a very inspiring experience that you can share as well – like TED, all the talks are captured on video and will be posted on the BIF Innovation Story Studio site in the weeks to come.

The AP reported this week that Toshiba Corp. is joining the Blu-ray Disc Association. Why is that such a big deal? Because until last year in the U.S., Toshiba Corp.’s HD-DVD was battling it out with Blu-ray in a standards war.

Across industries, standards wars often accompany the emergence of new technologies, as players pit their proprietary technologies against one another. We’ve all likely experienced this at some point and have had to make the decision of whether to buy now or to hold off until a standard is established. Think Betamax versus VHS or iTunes’ formerly DRM-protected music versus DRM music from other providers.

When there is a highly fragmented market without an established technology standard, consumers have to recognize that what they purchase may become obsolete in the short term if a different technology becomes the standard and the product stops being supported. When a victor is about to be declared in a standards war, an opposing company has a few options: 1) they can march on and fight what is likely a losing battle, 2) they can ally themselves with others (‘the enemy of my enemy is my friend’ mentality), or 3) they can cede to the competing technology. Depending on the situation, different paths should be taken.

If the company’s foothold is weak, marching on can lead to wasted resources that could be better used developing or acquiring other technologies. Allying with others can help to fight a strong market leader, but defeating the enemy will mean sharing the market with those allies. Ceding to the competing technology may be favorable if there are few players in the market and there is an upside that can be gained.

Thinking to the future, what kind of standards conflicts might we expect? How about eBook readers that have associated stores with proprietary formats preventing the use of those purchased books on other eBook readers? In the healthcare world, standards wars may play out in hospitals, as a fragmented marketplace offers electronic medical records (EMR) to a wider user base. Will there be a clear winner for EMR adoption? Alternatively, consider the auto industry. The U.S. government just granted billions of dollars for the development of batteries and parts for electric cars. Instead of engaging in a standards war over the charging plugs they use, companies have banded together to create a standard for charging electric cars, which may help adoption of those vehicles.

The fight to become a standard and a leader is all around us. When you consider new or emerging technologies, the competition to establish dominancy is incredibly important. When you don’t become the standard, your options are to join the competition or to come back, alone or with allies, with something bigger, stronger, faster, newer, etcetera. It will be interesting to see how all these technologies evolve — and who knows, these could be the B-school case studies of the future.

I found myself in a store last week that exclusively sells “As Seen on TV” products.  It’s not like I have exercise equipment under my bed, a rotisserie on my kitchen counter, and countless boxes of products designed to simplify my life falling out of the closet….but I was killing some time before a flight.  As I traversed the aisles, mentally noting all the products I had been tempted to buy but hadn’t, I realized I can truly appreciate the intention behind them.  Home inventors, from busy moms to retirees, have created solutions to their important jobs-to-be-done – and sometimes those solutions make it to market.

Channels such as infomercials and the web have made it easier for home inventors to get their creations into the marketplace. Consider how many people adopt compensating behaviors and jury-rig solutions to life’s problems. For instance, have you ever seen someone using a walker with bright green tennis balls on the bottom? It’s a common solution to a defined problem and easy for consumers to find out how to solve. Sure, there are walkers with wheels on them, but cost is often a barrier and when a good-enough solution can be found for $3, why not?

Businesses have sprung up (some more legitimate than others) that make money by helping home inventors to patent and sell their products. Unfortunately, some home inventors don’t realize that there may not be much of a market for that product they came up with. Even if it’s a high-quality solution, the barriers associated with solving a job-to-be-done might not be that high and may be easily overcome, and compensating behaviors could be good enough. Sometimes good enough really is good enough.

The possibility of financial success from invention, as well as altruism to solving people’s problems, keeps a steady stream of new products in the market via non-traditional channels. Those that solve jobs that are truly important, widely-held, and unsatisfied by current offerings or compensating behaviors make it past the TV screens and into our homes.

With the launch of its banking-by-shoebox service, Amsterdam-based bank Insinger de Beaufort created an elegantly simple offering that overcomes the barriers of time and skill that limit consumption of financial services.  While Insinger’s shoebox service targets high-end consumers, could the model be altered to create a low-end disruption?

Here’s how the service works: After meeting with a private banker to discuss financial planning goals, Insinger’s customers receive a shoebox by mail into which they can drop everything from tax return forms, speeding tickets, insurance-related forms, bills to be paid, investment statements, and bank statements.

On a monthly basis, Insinger collects the box via courier service, processes all the paperwork inside, and sends the clients a notice of the resulting transactions within three business days.  Once every quarter, clients receive a full report outlining the status of their transactions, accounts, spending patterns, and overall financial position. This information serves as fodder for annual discussions between the client and his/her banker to assess changes in financial position and planning.

The shoebox service addresses functional jobs, such as “Pay my bills on time,” “Ensure I don’t miss any payments,” “Remove the hassle of handling my finances,” and “Have more time to do what I enjoy.” Just as critical are the emotional jobs addressed by the service, such as “Reassure me that my financial affairs are taken care of and nothing has slipped between the cracks,” and “Know that someone is keeping track of my spending and investments to help me make good financial decisions.”

In its current form, the shoebox service is a sustaining offering, given that it targets the most profitable, demanding banking customers with a high-cost service (rumored to run €415 to €850 per month, depending on service level).

However, many of the jobs and barriers addressed by the service are ones also found amongst low-end non-consumers of financial services.  While the low end of the market may not have as many jobs related to investment management, these potential customers are also constrained by time and skill when trying to satisfy jobs related to bill payment and financial management.

Could a similar service have disruptive potential at the low end of the market by using a different business model? At Innosight, we would ask the following types of questions to assess the feasibility of such a model:

• Which components of the service are critical for meeting the jobs most important to low-end customers and, therefore, need to be retained? Which components can be cut without diminishing the value to low-end customers? For example, could the personalized financial planning service be stripped out and replaced with templated trend reports of a customer’s spending and investments, along with automated recommendations based on those trends?
• Could the service be offered through a low-cost business model relative to Insinger’s labor-intensive, personalized approach? For example, could the transfer of documents, bill payment, or trend analysis be automated to avoid the costs of couriers and manual processing?
• Are there distinct jobs and barriers for low-end consumers that should be considered in designing the product? For example, is there an additional job of, “Make sure I don’t overdraft on my bank account” that is related to the cash-flow challenge faced by many low-end consumers and is important/unsatisfied for this market? Could this job drive development of a new feature to provide a credit cushion to customers or otherwise prevent overdrawing on accounts, or is the cash-flow challenge a big enough barrier to prevent such a service from taking hold with the masses?
• Are there potential partners with capabilities that could minimize the investment required for an initial service offering and that would be motivated to support the model? For example, would Intuit (maker of TurboTax) be interested and able to provide automated report generation capabilities or input on selling the service as a subscription or as a software product?

If the questions above can be answered favorably, a viable opportunity may well exist for a disruptive product that could enter the low-end market and eventually develop into a good-enough alternative to more traditional, expensive financial services.

By Rebecca Waber

Recently, I took a vacation to Europe with my little brother, a trip I was determined to keep inexpensive despite the weak dollar. This goal turned out to be particularly difficult in Stockholm, where a McDonald’s value meal will set you back $11. Because of the prices, I took a local friend’s suggestion and booked a private room in a youth hostel. Never having stayed in a hostel before, I was unsure about what this cheap alternative would be like.

Actually, it turned out to be a great experience. It was a comfortable, perfectly “good-enough” place to sleep. I began to reflect upon what one gets from staying in a hotel.

It occurred to me that I was perfectly happy without a maid’s “turn-down service” and a private bathroom, and that for a vacation like this, a traditional hotel overshot my needs. What’s more, I discovered that I valued the benefits along new dimensions of having access to a kitchen and being in a casual, friendly atmosphere.

I think the important lesson here is that until I became aware of and experienced a hostel as a potential “European trip lodging solution,” I didn’t realize that I was overshot by hotels, and I didn’t realize that I valued the new ancillary benefits offered by hostels.

I felt surprised and delighted to find a solution that was a better fit than I even knew existed, but I couldn’t have articulated this solution, or even the need for a new solution, beforehand. This is part of why it’s largely impossible to calculate the size of a market that doesn’t yet exist — it’s hard for an individual person to know, a priori, their precise requirements and desires when it comes to different aspects of performance.

And yet after finding that a particular solution is a perfect fit, a person can retrospectively see where in the market spectrum they fall. This is why the task of uncovering the fundamental jobs-to-be-done in a given market context tends to require sophistication and multiple research approaches.

Ultimately, my hostel experience makes me wonder what other, potentially disruptive solutions out there might be a better fit for me than the one I’m using, that I just haven’t experienced yet! Companies that are able to intuit what consumers value, but are unable to articulate, hold the keys to innovation success. 

One of the trickiest bits of the disruptive innovation puzzle comes once a company launches or acquires a disruptive business: How to integrate the new venture into the parent company while protecting what made it work in the first place. We refer to it as “avoiding institutional antibodies” — making sure that entrenched rules or nit-picking comments (“…But we don’t do it that way!”) don’t prematurely kill innovation efforts.

An article in the New York Times a couple weeks ago gave a surprising example of successful institutional antibody avoidance. Disney and Pixar: The Power of the Prenup outlined the various ways those two wildly divergent companies have worked to maintain the spirit of Pixar since their 2006 merger.

“When Disney bought its rival, Pixar, in 2006 for $7.4 billion, many people assumed the deal would play out like most big media takeovers: abysmally,” wrote Brooks Barnes in the June 1 article. “The worries were twofold: that either Disney would trample Pixar’s esprit de corps (turning Mr. Lasseter into a drone, chanting “Hi Ho” en route to Mickey’s animation mines) or that Pixar animators would act like spoiled brats and rebuke their new owner.”

In fact, so far the companies seem to be getting on well, and Disney’s stock has made welcome gains in recent months. Some of the successful tactics Barnes described include drafting an explicit statement of what would not change at Pixar, including the retention of superior benefits packages, no contracts and no move from Emeryville to Burbank. Meanwhile, the company has conceded to Disney’s push for sequels to popular movies like Cars, ramping up its production schedule and outsourcing some animation.

It should give others who are facing the institutional antibodies challenge hope: If Disney and Pixar — who spent years before the merger embroiled in personality clashes and combat over partnership deals — can make it work, anyone can.

We (and many others) have been tracking Googles steadily expanding low-end disruptive challenge to Microsoft Office. A year ago Google acquired online document server Writely, then it launched an online spreadsheet app, and then combined the two into a free software bundle that lacked many of the advanced features of Word and Excel, but enabled universal access, online collaboration, free storage, platform independence, and automatic version control. Now, unsurprisingly, comes word that Google is readying low-end, online, collaborative presentation softwareputting PowerPoint in the cross-hairs.

Microsoft, clearly, faces an Innovator's Dilemma. What can it do to respond? Has anyone here used the new collaboration tools embedded into Office 2007? Are they good enough to obviate some of the advantages of Google Apps? Or are they clunky, complex, slow...?

Lifecasting was born on March 19, 2007 when 23-year-old Yale-graduate Justin Kan launched his new website Justin.tv, a 24/7 live streaming broadcast of his life. With a mobile webcam strapped to a baseball hat, a high-speech cellular uplink and a battery pack in tow, Kan broadcasts his daily activities which can range from checking his email at an internet caf, going on dates with Justin.tv fans, or discussing the business strategy with Justin.tv co-founders.

Justin.tv was conceived six months ago as a new business venture and has entered the budding internet video space with a low-end disruptive strategy. After a brief scan over comments left by Justin.tv fans, it appears as though Justins lifecast addresses the consumer "job -- "make my workday more interesting and website designer Emmett Shear has equipped the website to get this job done. The audio/video quality is far from perfect and often stutters and freezes, but the quality is "good enough for those who are interested in getting a peek inside a day in the life of a stranger. When Justins activities are particularly mundane, viewers can discuss Justins life in one of the 23 embedded chatrooms, watch clips from earlier broadcasts, check out Justins daily schedule, or post suggestions on what Justin should do next. At any point in the workday, Justin.tv fans have multiple options for engaging with Justin and other fans.

Ultimately, Kan and friends will package and sell the mobile webcam technology and personal website to consumers who want to stream their own live video diary. In time Justin hopes to create a community of lifecasters whose websites will mimic television channels. With multiple simultaneous lifecasts, viewers can "tune in to their favorite personality, chat with others about the content, or directly interact with the lifecaster via text or instant message.

After appearances on the Today Show and ABCs Nightline, Justin.tv has gained its share of fans as well as critics. Many predict Justins lifecast will end once the novelty wears off. But what appears to be an exercise in vanity is in fact the collaborative effort of a few twenty-somethings to democratize the media. In an interview with the San Francisco Chronicle, Kan identifies the potential applications for live video broadcasting in different contexts, "Imagine what you could do if you had the ability to broadcast live video from anywhere, anytime. It changes the way news is gathered. It makes a whole new kind of travel show possible. It allows the broadcast for sports that arent large enough for ESPN. With this statement in mind, Id like to hear about some of your ideas about the other potential applications of this technology. Is there a future for lifecasting?

See:
"Asian Pop: Man with a Cam. SFGate.com. March 27, 2007.
"Justin Kan Vlogs 24/7 at Justin.tv. Washingtonpost.com. March 27, 2007.
Justin.tv