Peter Fisk

The ability to “pivot” your strategy, maybe to reinvent your entire business, is essential to being able to survive and thrive in fast-changing markets.

We used to define a clear vision, develop a long-term strategy, then move ahead with clarity and confidence. We used to be able to take the past as a guide to the future, then extrapolate forwards. We used to boldly launch our new ideas, determined to deliver, and reluctant to change.

Today’s markets don’t allow such certainty, or blinkered determination. Success lies in the ability to stay agile, to keep testing and learning as we go, to keep a vision in mind but strategy fluid. And most of all, be willing and able to change direction, when or before we have to.

Small businesses are like speedboats, they can chase new opportunities as they emerge, but they can equally move away and to somewhere better, as soon or before they need to. Big companies are more like supertankers, finding it much harder to change direction, hence the need for structural and strategic agility.

In recent years, the best pivots can be seen in digital start-ups. They have adopted a new mindset in everything they do which gives them this agility. They are guided more by a purpose to make life better in some relevant way, rather than by the rigid structures of a product or process-based strategy. They are typically much more virtual, sourcing capabilities rather than developing them in-house. They are much leaner in their implementation, fast and experimental, constantly testing and learning.

• Facebook famously began life as Facemash, the slightly questionable comparison site developed by Zuckerberg for people to vote “hot or not” between two pictures. Whilst he caused uproar amongst Harvard’s female students, he soon pivoted to a path that made him $50 billion.
• Instagram was originally called Burbn, a location based service similar to Foursquare, whether you could share your whereabouts and even earn points for hanging out with friends. Then it realised the $20 million power of the images people were sharing, and changed direction.
• Flickr used to be called Game Never-ending, a massively puller multiplayer game with roleplaying around 2002-2004. Key to the game was the sharing of images which it then realised was much simpler and profitable business. Flickr was sold to Yahoo for $40million in 2007.
• Pinterest started life as Tote, helping people to explore online retailers and sending them updates about prices and availability. It realised users were mainly using the site to build and share ideas lists, and soon shifted course to focus on “pinning”.
• Groupon began as a platform for social action called The Point in late 2007, asking for commitment only when the movement reaches a certain tipping point, before reinventing itself in the crowd-based local coupon business. Now worth $25 billion.
• Ushahida started as an African elections monitoring service, a grassroots response to the unconnected infrastructure of local markets, before growing into a crowdsourced news aggregator which it has become much more successful.
• Twitter emerged out of a mediocre podcasting concept called Odeo that was outshone by iTunes. Having struggled to stand out, the team soon realised that people were communicating in ever shorter messages, but still wanted to speak out to the world. The 140 character tweet was born.
• PayPal started out as Continuity, a cryptography company designed for exchanging money over PalmPilots (remember them?!). It didn’t work, but Peter Thiel, Elon Musk and team soon identified a more lucrative market for taking credit card payments. Sold to eBay for $1.5bn.
• YouTube founder Steve Chen spent his early years trying to make the site work as a video dating portal, before realising that people simply wanted to share videos for entertainment. Eventually he sold YouTube for $1.65bn to Google.

This leaner approach allows them to be much more responsive to change in markets – to anticipate changes in consumer aspiration, competitive challenge or economic turbulence. It allows them to react much faster. It also enables them to detect when ideas are not working well, and what tweaks or more significant changes are required to do better.

Sometimes a shift in strategy, not in everything  but in certain aspects can be significant. Like in engineering, a pivot is a fast and decisive change, executing a sudden shift in strategy that turns hundreds of followers into millions of fans, an evolving idea into a billion-dollar company.

The ability to pivot, be it a subtle shift in direction, or a radical reinvention, is essential to scaling start-ups into commercial businesses.

https://www.youtube.com/watch?v=Ai6iu3WMc-g

 

Fail early and cheaply is a start-up mantra. Use prototypes to learn from customers, such as a paper-based process before investing in detailed coding, a Powerpoint before a website, testing with Google Adword before spending more. And keep learning from customers – insights about why some customers don’t currently get or want your idea, or exploring their real problems and aspirations more deeply.

Find well established partners to co-brand with, reaching out to their audiences, transferring equity from their brand, or maybe creating a better solution. Watch emergent behaviour, particularly people who adapt products for other uses, like engineer codes that become texting, or scarves that become snoods. And above all, stay passionate. If you aren’t truly excited about a concept, it’s unlikely your customers will ever be. Find what really excites you, and the people who will be excited by you.

Even the classic brands of today had to pivot to where they are today.

• Wrigley’s gave away free gum whilst selling soap and baking powder, but found people liked their incentive more than the product.
• Avon has a similar history, a door to door bookseller, that gave away perfume samples to attract women, before moving to a door to door cosmetics retailer.
• Nokia started out as a Finnish forestry business, before moving into shipbuilding, and then into plastic (and wellies!), and then to electronics, most famously mobile phones, and now networks.
• Sony’s first product was a rice cooker, and then an electric blanket. From homewares, they quickly moved to personal electronics, with global success.
• HP focused on industrial solutions before finding consumers, although most recently it has swung back to its origins and separated its business.
• Starbucks focused on selling coffee beans until Howard Shultz visited the coffee houses of Italy, and came back inspired to create his “third place”.

These companies had the focus to find their space, the boldness to shift from their existing world to the better world, and then shaped the market in their own vision.

Explore more about strategic pivots, in the Business Innovation Program which brings together all the relevant concepts to create better strategies and growth for your business:

• Future scanning – finding the best opportunities for growth
• Growth strategies – making the right choices, and defining the limits
• Design thinking – deep diving to find new insights and ideas
• Lean development – fast experimental development and delivery
• Business model design – innovating the whole business to deliver
• Customer value propositions – focusing on the right customers right
• Minimal viable products – starting from the basics then building up
• Virtual ecosystems – bringing the right partners together collaboratively
• Agile leadership – staying strong and directional, flexible and fair
• Exponential growth – turning ideas into fast and profitable growth

Find out more about the Business Innovation Program

 

Pixar is an amazing business. Built on imagination and creativity, it harnesses the potential of digital technologies to create the most engaging characters and films. When writing my latest book “Gamechangers” I got the opportunity to explore what life is really like at Pixar, and the culture that creates the most inspiring stories …

In 1979 Star Wars creator George Lucas and computer scientist Ed Catmull established the foundations of what was initially a digitally-enabled special effects business. Seven years later Steve Jobs acquired the studio, renamed it Pixar, and gave birth to some of the most successful animated films – like Toy Story, Finding Nemo and The Incredibles. Today it is the creative heartbeat of the Disney world, and one of the world’s most innovative businesses.

https://www.youtube.com/watch?v=BjwBdyzsLZU

Pixar is a digital content business, and in many ways that’s what brands are today. Beyond the products and services which they support, brands are about ideas, stories, relationships and communities, and the capturing and sharing of them increasingly digitally, virtual experiences which become reality.

Berlin is rapidly becoming one of Europe’s most exciting tech innovation hubs, not least for financial services.

In my recent “Gamechangers” book, I explored Fidor, the German bank that amongst many ideas, has tried connecting interest rates to Facebook likes … and much more. Number26 and SolarisBank are two other banks worthy of exploring more too.

Fidor and SolarisBank are full banks with banking licenses, whilst Number26, is using components to build a bank including the use of Wirecard Bank to offer bank services and TransferWise to move money across borders. These last points are interesting, as all of these startups are seeing a component-based ecosystem to build their bank offers.

Fidor partners with firms such as Kraken, Ripple and Currency Cloud to drive their payments services and innovations. Meanwhile, solarisBank is offering all of the basics of banking and payments as pieces for fintech and commercial companies to incorporate financial processing into their services without having to deal with the full service bank structures of traditional incumbents.

Purely for the record, here’s an overview of the three companies taken from materials in public domain, along with an overview of Wirecard Bank, which is also innovating as the bank behind not just Number26, but also Holvi and others.

Number26

Founded in ​February 2013 by Valentin Stalf (CEO) and Maximilian Tayenthal (CFO/COO).

• Product launch: ​26 January 2015
• Sector:​ Fintech, retail banking
• Number of employees: ​80
• Number of customers:​ 90,000 (Dec 2015)
• Countries:​ Austria, France, Germany, Greece, Ireland, Italy, Slovakia, and Spain
• Languages: ​German, English
• Collected capital​: €12.6m
• Investors: Earlybird Ventures, Valar Ventures, Redalpine Ventures, Axel Springer Plug and Play, plus various business angels.

Number26 offers a fully­ fledged bank account with MasterCard, which can be handled completely on the smartphone. Number26’s goal is to reimagine banking from the bottom up: easy, fast, and appropriate for the digital age. The account goes along with the user, without any paper forms or processing fees. Intelligent algorithms automatically categorize all expenditures and neatly display them in an overview within the app. So what’s different?

• Only mobile-­first bank account in Germany.
• Open an account in under eight minutes directly on the smartphone without any paper forms, by video identification.
• Intuitive mobile apps for iOS and Android offer full transparency and account control on the smartphone.
• Real-­time banking – all transactions are confirmed instantaneously by push notification.
• Cash deposits and withdrawals at more than 6,000 retail points across Germany, with Cash26 using only the smartphone.
• Intelligent statistics show where the money is going.
• Send money with one click to friends via email or SMS.
• Full control over the bank account thanks to control centre (eg block and unblock your Maestro or MasterCard with one click directly in the app).
• Easy one-click and transparent overdraft protection (only in Germany for now).

It all began with the idea to create a banking experience the way it should: easy, fee-free and available everywhere. It’s the 21st century and a bank account opening takes hours, money transfers are a chore, and banking is nothing we look forward to doing. But it doesn’t have to be this way. Thanks to modern technologies working in the background, Number26 built a simple, transparent bank account for everybody who manages their lives on their smartphone.

In the long run, Number26 will monetize on the products it builds around its bank account. Customers will soon be able to use the best banking products (saving products, investments, insurance, and so on) directly within the app. What differentiates Number26 from traditional banks is a belief that there are many great companies who are creating unique products in banking. In the future, Number26 customers will be able to pick and choose the best products with just one click and full cost transparency, not unlike a market. In other words, a fintech hub.

The bank account is made for people who use a smartphone. Number26 is especially popular with customers between 18 and 35, though more older users open an account. About a third of Number26 customers are over 30. It’s only a question of time until these age groups discover the advantages of mobile banking. It took several years, for example, until people of all ages fully integrated WhatsApp or Facebook into their daily routines. In the end, the bank is a great fit for anybody who’s looking for simple and transparent banking. There’s a reason why their MasterCard is transparent.

 

Number26 is available in the following countries: Germany, Austria, France, Ireland, Italy, Spain, Greece, and Slovakia. Please note that our product, as well as our customer service, is currently available in German and English.

Solaris Bank

SolarisBank is a tech company with a German banking licence. The company has built an API-accessible banking platform for the needs of the digital economy. The Solaris-Platform enables digital companies to create custom solutions for their unique financial needs.

“Our services are like Lego bricks: our partners can pick the bricks they require and assemble custom solutions to fit their business needs. Partners can access Solaris Platform services via our easy-to-implement API. The frictionless and straight-forward integration enables solarisBank partners to launch quickly and concentrate on their core business. Of course, we want to reassure our partners that we are fully committed to data privacy and complying with regulations. In fact, enabling compliance for our partners is one of our key offerings. — Andreas Bittner, MD, solarisBank

The bank aims to fill a gap in the market for fintech and ecommerce firms. Many marketplaces, ecommerce platforms and fintech companies require close cooperation with banking institutions to enable their core services. However, traditional banks don’t have the necessary technology, nor the processes, to meet the growing demand.

“Digital companies can develop new products and financial solutions with us, unlock new opportunities and expand their existing business segments. Of course, in addition to our focus on technological innovation and enabling a new banking paradigm, we meet or exceed all regulatory requirements with our full bank licence,” said co-founder Marko Wenthin. Wenthin previously held international growth roles at Deutsche Handelsbank and Deutsche bank, in addition to founding several companies.

SolarisBank fills the gap as a partner for companies in the fast-growing digital economy. The ecommerce market in Germany alone had revenue of €70bn in 2015. In addition to ecommerce businesses and marketplaces, solarisBank will also serve fintech companies looking to introduce new business models and technologies to the financial industry. Due to stringent legal and regulatory requirements, hardly any fintech firms can operate without relying on partner banks. Until now, these agile startups were dependent on lengthy and cost-intensive analog setup processes with traditional banks. SolarisBank aims to be the central player in the German and European fintech ecosystems by meeting the demand for fast and simple integration of banking services via the Solaris Platform.

Traditional banks have been a drag on the digital economy because they were unable to keep up with the financial needs of companies like Zalando. This caused widespread losses of potential business throughout the industry. We’re fixing this problem by creating Banking as a Platform (BaaP). With solarisBank, businesses don’t need to leave money on the table in order to be compliant any more. We’re open for business – our platform is already fully operational and scalable. — Marko Wenthin (co-founder, solarisBank)

SolarisBank is the first banking platform focused solely on enabling digital business. We don’t consider ourselves a bank – rather, a tech company with a banking licence.

“We provide our partners in the digital economy with the banking and regulatory services they need to realise their visions. Our services are like Lego: they’re modular bricks partners can integrate through our API. Services include consumer credit, escrow, and account management. We also partner with trusted third parties to offer additional services.

We’re especially good partners for fintech startups – we’re fast, flexible and offer individualised terms to help companies grow. One of our main goals is to help companies achieve regulatory compliance by deploying the right services. It’s a core part of our onboarding process.

At solarisBank, we emphasize technological innovation over banking. We’ve explicitly adjusted to the needs of the digital economy and turned the paradigm of traditional banking upside down,” said managing director Andreas Bittner, who previously held roles as managing director of Avaloq Sourcing AG and managing director of Fondsdepot Bank.

We can serve any partner in the European Union due to EU passporting directives.We’re fully operational in Germany and can rapidly (30 days) passport into other EU states based on customer needs.

The demand for digital banking solutions is growing rapidly: “In the future, almost all big internet companies will depend on digital banking solutions to expand their offerings and achieve regulatory compliance. During our preparations, we couldn’t identify a single bank worldwide that specializes exclusively on technology partnerships with digital companies,” said Jan Beckers, chairman of solarisBank’s supervisory board. “This gap is now filled by solarisBank. Through technology innovation, solarisBank will quickly set new standards.”

 Fidor Bank

You can read the case study of Fidor in “Gamechangers”, so here is a recent interview to explain more:

Business Insider: Do you want to tell me a little bit about the Fidor story and where the bank is coming from?

Matthias Kröner: Well, how much time have you got? First of all, maybe I should share a little bit about why we set up a bank at a time like that. The team that set up Fidor, there’s a core of really dedicated, innovative, rule-breaking guys. We ran a bank before already, this is our second bank. The bank we set up before was a similar direct banking, web-based approached.

BI: What was that called?

MK: DAB Bank. It was a very customer-focused approach, it was rule-breaking. There was a lot of transparency. For the first time, we allowed people a very detailed look at their assets, the market price development and enabled them to act on market developments. It was there, like Fidor today, to primarily service the needs of the customer, not the bank.

Why do I think like that? I don’t know, but I think I started my business life in the hotel industry and hospitality, and this is why I’m interested in concepts. I’m always interested in how you can set it up in a different way.

With Fidor, we thought how can we improve the experience for the customer. With the onset of Web 2.0, we thought this was going to affect retail banking 100%. And on this conviction, we applied for a banking licence. Then the financial crisis started.

BI: Good timing.

MK: Perfect timing. On the one side, we’ve been super-annoyed by that, at one time thinking about stopping. On the other side, we had the chance to witness how the established players are acting and behaving in this environment, which they caused themselves.

We saw the Occupy movement: the ‘we are the 99%’ movement, how people suddenly started to publicly hate bankers, to call them banksters. We thought, well, that’s the biggest starting signal of all. There was a must for Fidor. We received a banking licence in May 2009 and we kicked off our banking business in 2010.

BI: Am I right in thinking you launched here in April?

MK: Yeah, in a very silent, below-the-radar way. Why do we do so? We first of all want to test the temperature, getting familiar with the environment. You have your own rules like everybody. We’ve got a German licence, which means we can passport that, but nevertheless it’s a UK environment.

BI: How’s the water been so far?

MK: To be honest, it’s the second step we’re doing, because we’re very active in our loan book business already in the UK. That was going on way before – I would say three years now. But we are not acting on a Fidor brand name, we’re acting with different loan partners and loan generators and financing and refinancing those parties. Again, we feel very comfortable being in this market. But now it will be Fidor brand.

What is the temperature? So far we feel comfortable. We have the first 100 or so community members, we have the first discussions going on in our community and it will get really interesting when we start to come around with the first products and offerings.

BI: So you haven’t launched any products yet?

MK: No, community only so far. Why? Because as part of putting our toe in the water we’re going to talk to these early adopting customers and users. We don’t talk to them we listen, in order to find out what their priorities will be, what they want to see from a new bank, what they do not want to see. We’re taking a mutual approach.

BI: What products are you planning to launch?

MK: First of all, I would say we’ll come out with a savings product. Then we will have a sequence of rollouts and see how we walk along that. It’s not all planned out. In the community, there’s a lot of conversation going on about bitcoin, so we will see how British regulators handle that. Will it be the top priority? We will see.

We will see what we can do with payments, maybe integrate Ripple. We’re definitely going to come up with an SME product at some point, maybe not now but in the longer-term. But longer-term to us means nine months instead of three months. I’m not talking normal banking longer-term.

You can see what we have today in Germany, which is the current account for retail and corporate that’s very rich in its functionality. It has different ways of sending money, it has peer-to-peer lending as well as normal loan products from us, savings and investments via crowdfunding, FX as well as precious metals.

We’re teaming up with peer-to-peer brokers, crowdfunding partners – the fintech environment – which means the product is as attractive as possible. Fintech we are embracing. We are very happy to integrate them into our product. Our account in the UK will become what it is in Germany, which is a marketplace.

BI: Interesting, so you’re reimagining how a bank works.

MK: Yeah, maybe. We have some core features delivered by us and the rest is from outside partners. But we as the bank take care of regulation, we as a bank take care of our customers’ identity, and we take care of the payment issues. We enable it by API technology. We’ve already had one or two developer days in the UK.

We are, in a nutshell, an infrastructure platform with a banking licence. And this is what creates this kind of flexibility and possibility to ask a community, what do you want to have? We are agnostic. At the end of the day, we are driven by the priority of our customers.

BI: What do you make of the UK’s fintech scene?

MK: In the sense of adoption by the customer, Germany is actually the least developed country in terms of fintech. The German audience is super scared of any tech-driven innovation. They say, why do I need this? They worry we’ll take their data. They’re extremely scared of anything that requires data. Somehow they’ve trapped themselves.

We have almost 300,000 in our community and almost 90,000 fully KYC [know your customer, a legal identity checking requirement] customers. But this is only because we are offering you both – it’s like the Sushi Samba [an Asian fusion restaurant in London]. We offer you traditional banking, but we spice it up with innovation.

The fintech environment in Germany is pretty poor. The UK is way ahead. This, of course, is part of the US influence, because whenever a US peer thinks about going to Europe they think about going to the UK, not knowing that you do not regard yourselves as Europe.

BI: Within Europe, where do you see the UK ranking? Do you see it being one of your top markets?

MK: Absolutely. We see the UK being a core market, like Germany to us. The majority of our loan book is already in the UK. On the other side, we think the banking environment is extremely interesting in the UK. You have a very oligopolistic market in the UK. It’s not a real competitive environment.

BI: You mentioned there’s been quite a lot of talk of bitcoin in the community. You’re quite popular with bitcoin fans in Germany. Do you see bitcoin banking as a big opportunity here?

MK: It really depends on what we define as bitcoin banking. Today, I have to say we don’t touch bitcoin. We think regulators are doing good to understand what it really means. People make a mistake by thinking the euro, the Deutschmark, the pound is given by nature. This isn’t good for you.

On the other side, what I find more interesting to be honest is the blockchain technology [the software that underpins bitcoin and allows transactions]. bitcoin is a use case for the blockchain technology. We also have to talk about what are the use cases for the bitcoin, because besides trading I don’t see a lot.

We need to do way more trial and error on use cases of the blockchain. The objective should be that there’s a huge advantage for the customer using it. Why am I saying that? Because I find even in an innovative environment there’s a lot of dogmatism.

BI: So are you looking at the blockchain and how you can use it?

MK: By integrating Ripple a year ago, we already are. We’re way closer than any other bank, I would say. A bank’s role in future will be protecting your identity. Identity will be the biggest asset.

BI: What does that mean?

MK: I hoped for that question. That means a bank is by law a trusted partner to you. I’m forced to double-check your identity for money laundering reasons. So once I’ve done this, I could go to a fintech company looking for customers and say, look, all of the customers I have are KYC’d. If the customer agrees, we can share the credentials with you.

BI: It goes back to what you were saying earlier about the bank as a marketplace.

MK: Absolutely. It’s a platform, it’s an infrastructure, it’s a marketplace, it’s shielding by a banking licence. All of this is driven by our own propriety technology called Fidor operating system. It’s ring-fenced by our API environment. And that’s modern banking.

Wirecard Bank

As a fully licensed German bank within the Wirecard Group, the Wirecard Bank offers innovative products and services for business and private customers.

Today, it’s important that cashless payments are easy, quick and secure transactions with transparent processes. Good business and advantageous purchases are decided in a matter of seconds. The Wirecard Bank makes life easier with its customized services and solutions.

Whether making cashless payments as a company, online shop operator, customer or buyer, reliable processes are absolutely essential. The Wirecard Bank offers everything business or private customers need from a single source, including payment systems, account management, cards, corporate and private banking and much more, all tailored to individual requirements.

Place your trust in the security standards of the German full-service bank for all your national and global banking operations. The Wirecard Bank is a member of the Deposit Protection Fund of the Association of German Banks (Einlagensicherungsfonds des Bundesverbandes deutscher Banken) and is subject to supervision by the Federal Financial Supervisory Authority (BAFin). As a company in the Wirecard Group, it benefits from innovative technological solutions and comprehensive ecommerce expertise.

The Wirecard Bank is a member of Visa, MasterCard and JCB International, as well as being licensed to conclude credit card acceptance contracts (acquiring) and issue cards (issuing). In addition to established providers such as Visa, MasterCard and JCB International, the bank’s portfolio includes own cards such as the Prepaid Trio and the mywirecard card family for private customers.

With more than 100 transaction and 17 payment currencies and points of acceptance in 124 countries, the Wirecard Bank is a leading international acquirer. Based on its extensive knowledge of business models and processes as well as the country and currency-specific characteristics of many ecommerce sectors, the Wirecard Bank is able to offer a wide range of solutions.

Lesson 1: Evolution and innovation usually happen in the realm of the adjacent possible.

Four billion years ago, carbon atoms mulled around the primordial soup. But as life began, those atoms did not spontaneously arrange themselves into complex life forms like sunflowers or squirrels.

First, they had to form simpler structures like molecules, polymers, proteins, cells, primitive organisms and so forth. Each step along the way opened up possibilities for new combinations, expanding the realm of what was possible, until finally a carbon atom could reside in a sunflower.

Similarly, eBay could not be created in the 1950s. First, someone had to invent computers, then a way to connect those computers, then a World Wide Web for people to browse and then a platform which supported online payments.

Both evolution and innovation tend to happen within the bounds of the adjacent possible, in other words the realm of possibilities available at any given moment.

Great leaps beyond the adjacent possible are rare and doomed to be short-term failures. The environment is simply not ready for them yet. Had YouTube been launched in the 1990s, it would have flopped, since neither the fast internet connections nor the software required to view videos was available then.

The predominance of multiples in innovation highlights how the adjacent possible is constrained by existing parts and knowledge. A multiple occurs when several people independently make the same discovery almost simultaneously.

Joseph Priestley and Carl Wilhelm Scheele isolated oxygen in 1772-1774, unaware of the other’s advancement. But they did share the same starting point, because their search for oxygen could not begin until the gaseous nature of air was first understood. Thus it was inevitable some scientists would reach their discoveries at around the same time.

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Lesson 2: World-changing ideas generally evolve over time as slow hunches rather than sudden breakthroughs.

Although in retrospect great discoveries may seem like single, definable eureka-moments, in reality they tend to fade into view slowly. They are like gradually maturing slow hunches, which demand time and cultivation to bloom.

According to Darwin, the theory of natural selection simply popped into his head when he was contemplating Malthus’ writings on population growth. But Darwin’s notebooks reveal that far before this so-called epiphany, he had already described a very nearly complete theory of natural selection. This slow hunch only matured into a fully-formed theory over time.

Only in retrospect does the idea seem so obvious that it must have come in a flash of insight. Upon hearing of the theory for the first time, a supporter of Darwin even exclaimed “How incredibly stupid not to think of that.”

Another slow hunch led to a revolution in the way we share information today.

As a child, Tim Berners-Lee read a Victorian-era how-to book and was fascinated by the “portal of information” he had found. Well over a decade later, working as a consultant at the Swiss CERN laboratory and partially inspired by the book, he tinkered with a side-project which allow him to store and connect chunks of information, like nodes in a network. Another decade later, CERN officially authorized him to work on the project, which finally matured into a network where documents on different computers could be connected through hypertext links. After decades of Berners-Lee’s slow hunch maturing and developing, the World Wide Web was born.

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Lesson 3: Platforms are like springboards for innovations.

Ecologists use the term keystone species to describe organisms which are disproportionately important to the welfare of the ecosystem. On a small island with no other predators, a pack of wolves keeps the population of sheep under control, thus stopping them from eating the island bare and collapsing the entire ecosystem.

But around two decades ago, ecologists understood that a very specific and important type of keystone species warranted its own term entirely. Ecosystem engineers actually create habitats for other organisms, building platforms from which several others benefit. Consider for example the beavers that dam rivers turning forests into wetlands, or the coral that builds thriving reefs into the middle of the ocean.

Such platforms exist in the sphere if innovation as well, and they are used as springboards to leap into the adjacent possible. The Global Positioning System (GPS) is a good example of such a platform. Originally developed for military use, it has now spurned countless innovations from GPS trackers to location-based services and advertising.

Platforms often stack on top of each other, meaning that one platform provides the foundation for even more platforms, which again produce countless new innovations.

Beavers fell trees that rot and attract woodpeckers to drill nesting holes in them. But once the woodpeckers have left, these holes are occupied by songbirds. The woodpecker has also created a platform.

The story of Twitter is similar: the Web was based on existing protocols, Twitter was built on the Web and now countless apps have been designed on the Twitter platform, the adjacent possible being expanded at every step.

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“Ideas rise in crowds, as Poincaré said. They rise in liquid networks, where connection is valued more than protection.”

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Lesson 4: Innovation and evolution thrive in large networks.

The basis of all life on earth (and likely any extraterrestrial life out there) is carbon, because it is fundamentally good at connecting with other atoms, and can thus construct complex chains of molecules. These connections allow new structures like proteins to emerge. Without carbon, the earth would have likely remained a dead soup of chemicals.

Connections also facilitate ideas. When humans first began to organize themselves into settlements, towns and cities, they became members of networks, which exposed them to new ideas and allowed them to spread their own discoveries. Before this happened, a novel idea by one person could well die with her, since she had no network to spread it to. Great ideas rise in crowds.

To better understand the roots of scientific breakthroughs, in the 1990s psychologists decided to record everything that went on in four molecular biology laboratories. One imagines that in a field like molecular biology, great discoveries are made by peering through a microscope. Strikingly, it turned out the most important ideas arose during regular lab meetings, where the scientists informally discussed their work.

Other studies have shown that the most creative individuals have broad social networks that extend outside their own organization, and hence get new ideas from many different contexts.

Cities facilitate such large networks which allow ideas to be diffused and combined in novel ways. This is one of the reasons why cities are disproportionately more creative than smaller towns. Today though the greatest such creative network is not a city at all, but the World Wide Web, creating, connecting and diffusing ideas more effectively than any network before it.

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Lesson 5: Collaboration is at least as important a driver of innovation as competition.

The ability of inventors and entrepreneurs to capitalize on their discoveries is often cited as a fundamental driver of innovation. But while the commercialization potential of inventions indeed spurs innovation, it also generates patents and other restrictions, thus hindering the circulation and further development of ideas.

Thus with regard to innovation, the very markets which are supposed to guarantee efficiency by rewarding inventors are in fact structurally inefficient, because they artificially prevent ideas from propagating and combining with others.

Over the past 600 years, the way that great inventions and discoveries are made seems to have gravitated increasingly away from individual inventors and toward networks of people. And even as the age of capitalism dawned and bloomed, most great discoveries have gone unrewarded by the markets. The World Wide Web, the theory of relativity, computers, x-rays, pacemakers and penicillin are but a few examples where the inventor has not profited.

Certainly market-spurred innovation has been far more effective than innovation achieved in command economies like the Soviet Union, but that still does not mean it is the optimal way forward. Yes, inventors may well deserve to be rewarded, but the real question should be how to increase innovation in general.

In the Origin of Species, Darwin himself placed equal emphasis on the wonder of complex collaboration between species as on the natural selection that comes from competition for resources. Similarly open networks of connections among innovations can be just as generative as vigorous competition. Free markets have greatly spurred innovation, but so has the collaborative, open way of sharing knowledge in networks.

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Lesson 6: Lucky connections between ideas drive innovation.

The ability of carbon to connect with other atoms was vital for the evolution of life, but a second, randomizing, force was also necessary: water.

Water moves and churns, dissolving and eroding everything in its path, thus fostering new kinds of connections between atoms in the primordial soup. Just as importantly, the strong hydrogen bonds of water molecules helped maintain those new connections.

This mix of turbulence and stability is why liquid networks are optimal both for the evolution of life and for creativity. Innovative networks too must teeter on the brink of chaos, in the fruitful realm between order and anarchy, just like water.

Random connections drive serendipitous discoveries. Dreams for example are the primordial soup of innovation, where ideas connect seemingly at random. In fact, neuroscientists have confirmed that “sleeping on a problem” greatly helps solve it. Centuries ago, the German chemist Kekulé dreamt of a mythological serpent devouring its own tail, and subsequently realized how carbon atoms in a ring formed the molecule benzene.

But it seems chaos and creativity are linked even on a neurological level.

Ideas are in fact manifestations of a complex network of neurons firing in the brain, and new ideas are only possible when new connections are formed.

For some reason, neurons in the brain alternate between states of chaos, where they fire completely out of sync with each other, and more organized phase-lock states where large clusters of neurons fire at exactly the same frequency.

The period of time spent in either state differs from brain to brain. Somewhat counter-intuitively, studies have shown that the longer the spells of chaos a person’s brain tends to experience, the smarter the person usually is.

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Lesson 7: Serendipitous discoveries can be facilitated by a shared intellectual or physical space.

When ideas converge in a shared physical or intellectual space, through for example people from different disciplines meeting, creative collisions happen. Consider the modernist cultural innovations of the 1920s. Many of them were largely a result of artists, poets and writers meeting at the same Parisian cafés. Shared interactions allow ideas to diffuse, circulate and be combined randomly with others.

On an individual level, facilitating such serendipitous connections is simply a matter of simultaneously introducing ideas from different disciplines into your consciousness. Innovators like Benjamin Franklin and Charles Darwin favored working on multiple projects simultaneously, in a kind of slow multitasking mode. One project would take center stage for days at a time, but linger at the back of the mind afterwards too, so connections between projects could be drawn.

The philosopher John Locke understood the importance of cross-referencing as early on as 1652, when he began developing an elaborate system for indexing the content of his commonplace book, essentially a scrapbook of interesting thoughts and findings. Such books formed his repository of ideas and hunches, maturing and waiting to be connected to new ideas.

On an organizational level, the key to innovation and inspiration is a network which allows hunches to mature, scatter and combine with others openly.

The greatest such network in existence is, of course, the World Wide Web, where a wealth of ideas is not only available, but hyper-linked for easy connections between several disciplines.

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Lesson 8: Great innovations emerge from environments that are partly contaminated by error.

Error is present in both the evolution of life and the innovation of great ideas, and it is not always a bad thing.

Consider natural reproduction: genes are passed on from parent to offspring, providing “building instructions” for how the offspring should develop. Without occasional mutations, meaning random errors in those instructions, evolution would have long ago come to a virtual standstill. The elephant’s tusks or peacock’s feathers would have never emerged if only perfect copies of existing genes would have propagated. Mutations endow creatures with new traits. While most of them fail fantastically, these errors also produce a few winners, thus driving evolution.

Similarly, Alexander Fleming only discovered penicillin because of an error: he mistakenly allowed a bacteria sample to be contaminated by mold and began to wonder what had killed the bacteria. In fact, major new scientific theories often begin as pesky little errors in the data which keep demonstrating that something in the dominant theory is wrong.

Unexplained errors force us to adopt new strategies and to abandon our old assumptions.

In a study, psychologist Charlan Nemeth showed two groups of people slides with various colors on them, and asked the subjects to free-associate words after seeing each slide. Here’s the twist: into the second group, Nemeth inserted actors who occasionally claimed to see different colors than the actual one shown, e.g. “green” when the slide was in fact blue.

The first group came up only with the most predictable associations, e.g. “sky” for a blue slide, but the second group was far more creative. The “error” introduced into the group forced them to consider more possibilities than just the obvious ones.

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Lesson 9: Innovation thrives on reinventing and reusing the old.

Evolutionary biologists use the term expatiation to describe the phenomenon where a trait originally developed for a specific purpose is eventually used in a completely different way. Feathers, for example originally evolved as a method for temperature regulation, but today their airfoil-shape helps birds fly.

Ideas are often similarly repurposed along the way. Tim Berners-Lee created the World Wide Web as a tool for scholars, but in the course of time it became a network for shopping, social networking and pornography, among other things. Johannes Gutenberg, on the other hand found an innovative use for a 1000 year-old invention: the wine screw press used to squeeze juice out of grapes. Using this ancient technology and his knowledge of metallurgy, Gutenberg created the world’s first printing press.

Unconventional uses for old, even discarded items and ideas spur innovation. Nairobian cobblers make rubber sandals out of car tires, and Gustave Flaubert wrote Sentimental Education as a contortion of the bildungsroman genre. The old is reshaped into the new.

Discarded spaces are also transformed through innovation. Just like the skeletal structure left behind by dead coral forms the basis of the rich and thriving ecosystem of the reef, abandoned buildings and rundown neighborhoods are often the first homes of innovative urban subcultures. Their unconventional thinking and experimentation often has no place in glitzy mainstream malls and shopping streets initially. Old buildings allow subcultures to interact and generate ideas that then diffuse and spill over into the mainstream.

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The main message of the book in two sentences:

Both evolution and innovation thrive in collaborative networks where opportunities for serendipitous connections exist. Great discoveries often evolve as slow hunches, maturing and connecting to other ideas over time.

What is innovation?

Sounds like an easy question. Or should be. But we still stumble over phrases like making ideas happen, solving problems, doing it profitably, or at least with a positive impact.

And of course its easy to resort to Apple, or more specifically, Steve Jobs. Whilst you’ve heard everything about him already, there is one moment worth recalling from that magical Stanford commencement speech he made in 2005. Whilst he talked about life, and making the most of your time, he captured the spirit of innovation in three sentences:

You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something—your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.

https://www.youtube.com/watch?v=E8kHDJKdJXM

Leonardo da Vinci was a great one for making new connections. His greatest breakthroughs came from connecting the unconnected, and in particular, the insights gained by bringing different perspectives together. His expertise in anatomy helped him to create better portraits and sculptures, and also helped him make sense of mechanics and engineering. He himself defined innovation as connecting the unconnected.

Another great disruptor, Albert Einstein was often challenged for making what seemed like absurd connections. Like the connection between energy and mass. Of course, there was no existing logic which suggested such a connection, it needed to be shaped through imagination. Almost every great scientific breakthrough has come about through hypothesis and then making sense through practical demonstration.

Back in the business world, I explored innovation with Sir Richard Branson, and the culture which he seeks to create across his Virgin companies, he reached for a pencil and paper and jotted down his equation of life … A+B+C+D (Always Be Connecting the Dots). Its not about creating newness, but making sense of what you have, maybe in fragments and different places, but can be shaped in new and interesting ways.

We spend much of our time collecting dots – seeking new insights, reading more books, generating more ideas – but too little time connecting dots. This requires confidence and creativity, to think bigger and laterally.

“The magic of connecting dots is that once you learn the techniques, the dots can change but you’ll still be good at connecting them.”

Indeed we live in an incredible world with so many great sources of ideas, insights and inspirations. I spend my exploring the world’s most innovative companies, the new markets which they shape, the business models which they develop, the new experiences they deliver to customers. There are so many ideas out there.

So many dots to connect …

• Connecting ideas with different ideas to create new and unusual concepts
• Connecting diverse people to combine talents, experience and perspectives
• Connecting customers with business to gain insight and engagement
• Connecting partners with business to gain capability and reach
• Connecting customer needs and wants, to solve bigger problems
• Connecting ideas from different places, across geographies and sectors
• Connecting products and services, into richer customer experiences
• Connecting markets in new ways, to operate different and better
• Connecting business with new business models to be more profitable
• Connecting media, channels and market networks to amplify the impact
• Connecting customers with customers to build richer communities

The real skill is to see the bigger picture, the bigger space in which you can make the new connections – and then to make new connections – interesting, unusual, distinctive, better. Even if at first you question how will it work, how will it make money, don’t be disheartened. By adding more connections you will soon find ways to implement and sell your uniqueness, often in ways you never imagined.

And so innovation in every aspect of what you do.

And as I googled for more clarity (as you do), I came across this video:

It finishes with a great few lines, worth remembering for when you’re asked that question about what really is innovation:

So what is innovation?

Those other dots. The ones others miss.
And having the certainty to know that the dots you see are not only valid, but necessary if the world is to move forward.

 

Explore more from Peter Fisk about innovation:

• Introduction: Innovation. Making the best ideas happen successfully.
• Program: Business Innovation. Design Thinking to New Business Models.
• Article: Innovate your business model
• Article: Innovation by Leonardo da Vinci
• Toolkit: Innovation Diagnostic
• Toolkit: Gamechangers Creative Lab

 

 

When Siggi Hilmarsson founded his company in 2004, Americans weren’t thinking critically about food like they do today. Popular foods trends like juicing and paleo diets were nonexistent compared to the mainstream acceptance they experience now. Today’s staples like quinoa, sriracha and kale weren’t yet on the menu. It was during this very different time in food consciousness that Hilmarsson introduced his Icelandic-style yogurt, called “skyr” and characterized for its thickness and creaminess, to his new home in America. Call Hilmarsson a culinary vanguard or not, but he’s been making thick, protein-rich and low-sugar yogurt long before today’s multifarious Greek and good-for-you yogurt brands crowded grocery shelves.

Hilmarsson, 39, moved from his native Iceland to the United States to study economics and business at Colombia Business School in New York City, but, by this time, he had already started thinking critically about food. “After graduation I got a corporate job at Deloitte that I didn’t really like and I started making yogurt as a hobby because I missed eating skyr from home,” he says. Skyr is similar to Greek yogurt because they are both characterized as “strained,” which means whey (a watery byproduct) is taken out during the process. This practice requires four times more milk than it takes to make regular yogurt, which makes it more expensive to produce, but it results in a thicker yogurt with a much higher protein content.

“I missed the texture of skyr and could only find yogurt with a lot of sugar, and lots of ingredients like sucralose and aspartame,” he says. Hilmarsson used his mom’s recipe from home to make batches for himself, his friends and his patrons at a local farmer’s market, but he soon had to up-size to meet demand and maintain product consistency. After working a deal with an Upstate New York dairy plant in the tiny town of Morrisville, Hilmarsson produced his first bulk order, and, shortly thereafter, Siggi’s yogurt landed in its first retail store: Murray’s Cheese in New York’s West Village. After that, bigger retailers came calling.

“I wasn’t prepared for the volume,” he says. “You have to build the infrastructure for success.” As a novice business owner and newcomer to the food industry, Hilmarsson quickly learned what it meant to build a brand and then build it for the future. “Planning for success is important, you have to know what success looks like and know how what you’re doing today can scale,” he says. “Going from five stores to 500 and then 5,000 is a vastly different beast.” Hilmarsson compares scaling to writing a novel, noting that it’s important for the writer to have the end in sight so they can prepare for it throughout the story.

In 2007, Siggi’s yogurt got its first big break. “We got a call from Whole Foods and they said they liked our low-sugar concept and wanted me to come present to them in Austin,” he says. “I was a newbie and I didn’t understand the grocery business. I didn’t understand how huge the opportunity was. Most people start regionally with Whole Foods but we were in half the country’s Whole Foods in 2008. A lot of buyers saw this as a long term trend.” This prediction held true and Siggi directly benefited as a result: according to Nielsen, Siggi’s Dairy is the fastest-growing national yogurt brand in the last year, with 120% growth in sales versus 2014.

“We started here around the same time as Greek yogurt and that was when people still needed to get over the barrier of eating thicker yogurt and eating things that are less sweet,” he says. “It took a while for people to adjust to it. Now, the market has been coming to us.”

With the exploding popularity of healthy alternatives and a growing market for yogurt (which will become a $9.3bn industry in 2017), Hilmarsson says his company’s philosophy hasn’t changed since he started, but the business part has – Siggi’s Dairy is now bigger than he could have hoped for, with his yogurt now available in 11,000 stores, like Target, Wegmans, Shoprite and more.

Hilmarsson doesn’t characterize himself as a risk-tasker, a common attribute among entrepreneurs, but instead he says he’s cautious and careful.“I liked the product so much I didn’t mind failing. I was doing something I was passionate about,” says Hilmarsson. “I wouldn’t mind if I failed because I tried something worthwhile. I thought, this is good, I can stand for this, and if it fails I will still be proud.”

https://www.youtube.com/watch?v=EoA_aNjkj_o

Martin Lindstrom has been called the “Sherlock Holmes of marketing”,  alert to clues in changing consumer behaviour, new attitudes and behaviours, in everything from the way we clean our teeth, to drive our cars and do our laundry.

Martin claims to spend 300 nights a year in strangers homes, carefully observing every detail in order to uncover their hidden desires, and, ultimately, the clues to a multi-million dollar product.  He connects the dots in this globetrotting narrative that will enthrall enterprising marketers, as well as anyone with a curiosity about the endless variations of human behavior. You ll learn

• How a noise reduction headset at 35,000 feet led to the creation of Pepsi’s new trademarked signature sound.
• How a worn down sneaker discovered in the home of an 11-year-old German boy led to Lego’s incredible turnaround.
• How a magnet found on a fridge in Siberia resulted in a U.S. supermarket revolution.
• How a toy stuffed bear in a girl s bedroom helped revolutionize a fashion retailer s 1,000 stores in 20 different countries.
• How an ordinary bracelet helped Jenny Craig increase customer loyalty by 159% in less than a year.
• How the ergonomic layout of a car dashboard led to the redesign of the Roomba vacuum.”

Here’s an extract from a review of Martin’s new book in Forbes magazine:

What’s the most important megatrend today? Ask any CMO, and you might hear, “mobile” or “social media.” Most likely, though, the first answer you get will be “big data.” But, if you ask branding expert and bestselling author Martin Lindstrom, you’ll get a different answer: small data.

The small data approach Lindstrom offers is simple, at least in concept. As a marketer, he says, you should be spending time with real people in their own environments. That, combined with careful observation, can lead to powerful marketing insights.

This approach is the human-centric alternative to Big Data. In each case, one is collecting information to gain insights into behavior, interests, and so on. But, Lindstrom’s approach relies on a mix of keen observation of small samples and applied intuition.

Lindstrom has been affiliated with Lego since age 12. The budding entrepreneur created an elaborate mini-theme park in his backyard using the plastic blocks. Initially, Lego’s attorneys threatened to sue him for trademark infringement. Fortunately, they worked things out and Lindstrom was appointed to an advisory role. He’s been consulting for Lego ever since.

One of Lindstrom’s small data stories is from the Danish block maker. In 2002, their sales were in decline and the company was in serious trouble. A study of their customers revealed the apparent reason: the declining attention span of their customers.

Since creating structures from tiny blocks took painstaking effort, Lego’s solution was to introduce far bigger blocks that could form structures more quickly. Their attention-challenged customers could build a castle in minutes instead of hours. That strategy failed and Lego sales sank further.

This dark moment was when the concept of “small data” was born, said Lindstrom. A team of Lego researchers, in an attempt to better understand customers, visited the home of an 11-year old boy in Germany. Among other things, they asked him what he was most proud of in his room. Lindstrom describes the epiphany:

“This young kid paused for a second and then he points at these sneakers, worn-down sneakers standing on the shelves. He says, ‘This is what I’m most proud of… This sneaker is the evidence that I’m the best skater in town. You see, when I’m skating, I slide down at an angle of twelve and a half degrees. That generates exactly that worn down sole you have on this sneaker. This is my evidence for me being number one in my city.”

The team realized that even members of the instant gratification generation actually would spend thousands of hours on their passion, but only if they were in control.

Lego revamped its strategy based on this insight. They brought back the smaller blocks, for one. And, they decided to put kids back in the driver’s seat, Lindstrom explains, “not just by using storytelling, but also to invent The Lego Movie.”

Today, Lego’s broadly expanded product and media footprint makes them the world’s top toymaker.

A clue from refrigerator magnets

One of the stranger examples of small data Lindstrom offers involves where different cultures place their refrigerator magnets.

Lindstrom spends much of his time visiting consumers in their homes and noticing many small details. One such detail involved refrigerator magnets. These decorations are often mementos that encapsulate emotions and preserve memories, Lindstrom observed. He also noticed that in Saudi Arabia, refrigerator magnets were usually placed high on the refrigerator where small children couldn’t reach them. In contrast, in a lengthy series of visits in Siberia he found that the magnets were usually much lower.

Since Saudi families buy a lot of toys compared to the Siberian families Lindstrom visited, he concluded that in the latter setting the magnets were, in part, a substitute for toys. The outcome of that research was the launch of a new Russian toy company.

The importance of “being present”

Lindstrom spends 300 days a year traveling the globe and snooping around people’s homes. That’s a lifestyle few of us can (or would want to) emulate. When I asked whether non-globe-trotting marketers could use small data techniques, he replied,

“Absolutely. The first thing is that we’re not present anymore. I mean, when you’re standing in a bar waiting for someone what’s the first thing you do if a person is late? You grab your smartphone and you just do something with it, anything with it, to pretend you’re not a loser, right? Also, because we get bored in a matter of seconds, not a matter of hours, so we’re never bored anymore.

But there’s another issue… When you’re not bored, you’re not creative. Creativity comes out of being bored, because that’s where you’re forced to create a story. But it also allows you to be observant, to be present. And we’re not present anymore… That lack of ‘presentness,’ if you could use that word, means that we don’t see things around us.”

So, the first thing you should do is to become present.

Lindstrom has underscored his own commitment to being present by no longer using his smartphone. He reports that it was a “very, very hard detox process.”

You probably aren’t ready to toss your own smartphone. But, take the time to read Lindstrom’s book. Small Data puts humanity back into marketing. Martin Lindstrom will make you a better people-watcher and trend-spotter, and help you gain insights that mere data crunching will never yield.

Another great book. Well done Martin!

 

Blockchain has become the tech buzzword of our time, well at least of recent months. Whilst it was initially conceptualised as the way in which digital (crypto) currencies like Bitcoin work, it has become more than that, with incredible potential. I wanted to make sense of it, and to understand the opportunities it offers for revolutionising almost any type of process.

Origins: from crypto-currencies to wider applications

In 2008, Satoshi Nakamoto published a paper describing “Bitcoin” and how it could be used to digitally send payments between any two willing entities without the need for a third-party financial institution. Each transaction was recorded on the “blockchain” ledger, the newest block tied to the ones before it using a digital signature. To ensure trust in the ledger, participants on the network ran complicated algorithms to verify those digital signatures and add transactions to the blockchain.

The next few years for Bitcoin were tumultuous, including the collapse of the high profile Bitcoin exchange, Mount Gox, and an increasingly sour reputation as the currency feeling the underground online drug bazaar Silk Road. But many companies saw opportunity in the underlying technology – the blockchain – that made Bitcoin’s existence possible.

Definitions: a distributed way of managing transactions

It’s easy to get lost in the technological language. So here, from a variety of sources, are some definitions and perspectives on “blockchain”:

Wall Street Journal: A blockchain is a data structure that makes it possible to create a digital ledger of transactions and share it among a distributed network of computers. It uses cryptography to allow each participant on the network to manipulate the ledger in a secure way without the need for a central authority. Once a block of data is recorded on the blockchain ledger, it’s extremely difficult to change or remove. When someone wants to add to it, participants in the network verify the proposed transaction. If a majority of nodes agree  then the new transaction will be approved and a new block added to the chain.

PwC:  At a very high level, the blockchain is a decentralised ledger, or list, of all transactions across a peer-to-peer network. This is the technology underlying Bitcoin and other cryptocurrencies, and it has the potential to disrupt a wide variety of business processes.  If the Internet is the foundation for digital innovation of all kinds, blockchain technology is the underpinning of a radical rethinking of how we pay for things—as well as how we verify who owns what and who has the right to buy and sell it.

IBM: Blockchain is a technology for a new generation of transactional applications that establishes trust, accountability and transparency while streamlining business processes. It is a design pattern made famous by bitcoin, but its uses go far beyond. With it, we can re-imagine the world’s most fundamental business interactions and open the door to invent new styles of digital interactions. It has the potential to vastly reduce the cost and complexity of cross-enterprise business processes. The distributed ledger makes it easier to create cost-efficient business networks where virtually anything of value can be tracked and traded—without requiring a central point of control.

Blockchain Institute: We should think about the blockchain as another class of thing like the Internet – a comprehensive information technology with tiered technical levels and multiple classes of applications for any form of asset registry, inventory, and exchange, including every area of finance, economics, and money; hard assets (physical property); and intangible assets (votes, ideas, reputation, intention, health data, information, etc.). In fact the blockchain concept is even more, it is a new organising paradigm.

Applications: transforming finance and much more

Here are just some of the categories where blockchain could have a revolutionary impact on almost every walk of life, through effective innovation of technology, business models and customer experiences:

Currency: Bitcoin began as a P2P electronic cash system. Anyone can hold bitcoin and pay anyone without a middle man. Examples include Bitcoin, Litecoin.

Payments: Using Bitcoin to send money around the world is slightly different than using bitcoin as a currency. Uses include merchant processing and remittances. Examples include BitPay, Abra.

Digital Assets: The blockchain can be used to create digital assets such as stocks, bonds, land titles, and frequent flyer miles.  Examples include Chain, NASDAQ.

Identity: Companies offer blockchain IDs that can be used to sign in to apps and websites, digitally sign documents, or even create the future of passports etc. Examples include Onename, Keybase

Verifiable data: Create a verifiable record of any data, file, or business process on the blockchain. This includes the future of reviews and endorsements. Examples: Tierion, Proof of Existence.

Market Makers: Creating the future in your own vision

The vision and potential of applying blockchain to almost every type of transaction, and therefore every industry, is immense and diverse. Like the early days of the internet, there is no common view or coordinating structure. It is future being shaped as we sit here. Who will be the “market maker”? Who will define the future playing field, bring the relevant standards, simplicity and serious commercialisation to blockchain? And how will emerge and evolve?

Explore more about Market Maker: Strategies that disrupt markets for new growth

Explore the full and updated list of 250 Gamechanger Brands

Explore more sectors including  FutureBank

Explore more topics for  keynotes

Gong Hey Fat Choy!  This Chinese new year is all about innovation.

My Chinese father in law tells me that the red fire monkey represents leadership and creativity, and values the fortune of nurturing those who you lead. By engendering the spirit of success, the monkey zodiac is considered to be a symbol of business property, inspiring confidence amongst business leaders.

More generally people born in the lunar year of the monkey are characterised as lively, quick-witted, curious, innovative and mischievous. They are said to be smart, clever and intelligent, especially in their career and wealth. And, apparently, their gentleness and honesty bring them an everlasting love life.

Whilst China’s exponential business growth has certainly slowed in recent times, it has also changed.

China’s GDP growth reached 7.4% in 2014 (the first time the target was not exceeded). Chinese growth has been slowing, as has investment. This slowdown could reflect the limits put on credit to manage the real estate boom or could actually signal a more structural and long term trend of deceleration. What is not up for debate is the rebalancing taking place in the Chinese economy, with private consumption contributing more to GDP. Rising income and social safety net reform will accelerate this trend, leading to even more consumption and lower savings. As the Chinese population ages, healthcare spending is likely to rise.

Read this: A Rebalancing of the Chinese Economy

As its citizens become more used to urban and material lifestyles, expectations and aspirations have changed. Smartphones and digital media have become the norm within cities, whilst luxury is more accessible, and even local. Rather than a rush to produce, to be cheap, the best Chinese companies have started to think bigger and different. To innovate.

Two months ago I spent a great few days with Kaiser Kuo, the director of international communications at Baidu. Three Chinese technology businesses are battling to shape the future of business in China, and far beyond. In many ways, Alibaba, Baidu and Tencent are set to shape the next decade in a similar way to which Amazon, Facebook and Google shaped the last. Whilst Alibaba is more retail, Tencent social, and Baidu search, the difference is that they all combine the components of social media, online retail, search and payment. They are also all searching to extend beyond the internet, and beyond China too. The rapid evolution of technology and new business models on the back of China’s economic revolution is fascinating, and in particular, the explosion of O2O businesses.

Read this: Baidu, the future of Asian tech and 020 business models

Here are some more of the Chinese businesses and their innovations which have caught my eye, and think the rest of the world could learn from:

Alibaba

Alibaba is a trading platform for the new world order, enabling a small business in remote China to deal directly with a large corporate, for any entrepreneur to access a global marketplace. Jack Ma grew up in Hangzhou, China. Having twice failed the entrance exam, he trained to be a teacher, but soon found himself, at the age of 25, lecturing in international trade. Friends in the USA helped him develop his first website, China Yellow Pages, which friends back home were amazed by. But Jack had bigger ambitions, for himself, and Chinese business. Alibaba has created around $220bn value in 15 years.

Alibaba is one of the 100 case studies in Gamechangers.

https://www.youtube.com/watch?v=9RC3T7U9P3U

Haier 

Haier is the world’s largest white goods business. The Chinese company was born out of old and bankrupt manufacturing business, but used a spirit of entrepreneurship – and a structure that created hundreds of profit-sharing small business units – to revitalise itself and grow rapidly. From affordable cookers and fridges, it has stretched far and wide, from robotics to new ways to do life’s essential tasks. One example is Codo, the world’s first “pocket washing machine” along with a rapid stream of innovations.

https://www.youtube.com/watch?v=ysPtIplTN5o

Xiaomi 

Lei Jun is often called the new Steve Jobs, not least because of the way he sees the future, and inspires the crowds to come with him to explore innovations they never realised they needed. 3 years after launching his first smartphone, the MiPhone, Xiaomi is now the world’s third largest smartphone brand. But that’s not even Lei Jun’s business, he sees himself much more in the knowledge business, harnessing digital media and information to make life better. The $10 MiBand fitness tracker is just one example, available now worldwide at a fraction of the price of the Jawbone or Fitbit. Health and fitness is addictive, and the data that flows from the user, is a highly accessible way for consumers to start exploring the Xiaomi ecosystem.

Xiaomi is one of the 100 case studies in Gamechangers.

https://www.youtube.com/watch?v=efTrZOmqW9I