Profitability and Systems Thinking

Stewart: ‘The thing that was really difficult was cutting the brief down.’

Noted commentator and Guardian columnist Jeff Jarvis, who had had breakfast with the team in March and been impressed by them, later on said on BuzzMachine,

I have to say that I was disappointed with the Economist’s Project Red Stripe – in the idea they ended up with and in the fact that it is not yielding a product.


…they ended up, I think, not so much with a business but with a way to improve the world. Their idea, ‘Lughenjo,’…wasn’t intended to be fully altruistic; they thought there was a business here in advertising to these people, maybe. But still, it was about helping the world. And therein lies the danger.


This gives me hope for the essential character of mankind: Give smart people play money and they’ll use it to improve the lots of others. Mind you, I’m all for improving the world. We all should give it a try.


But we also need to improve the lot of journalism. And one crucial way we’re going to do that is to create new, successful, ongoing businesses that maintain and grow journalism. We need profit to do that.


So I would have thrown another requirement on Project Red Stripe or any media company’s innovation incubator: that they start a sustainable – that is, profitable – business.

Interesting points from a respected commentator, but themselves laden with assumptions and preconceptions.

First, Jarvis, here and at greater length in his article, equates The Economist with journalists and journalism. Red Stripe tended throughout to dissociate itself from journalism, to leave the journalism business to the magazine. Red Stripe was working with all The Economist Group brands and businesses and customers as a starting point and was, wisely I think, looking far outside the box for ideas. I’d say it was visionary of the group and of the project team to allow themselves that latitude, especially in the face of concerns that the Economist brand could be damaged, that they had an innovation process already and, more mundanely, that it would be difficult to find people to do the jobs of the six team members for six months. There’s a peculiar convention, outside the department store and hypermarket, that businesses should really only do one thing – ‘core is king’ could be the continuing slogan of this mindset.

Second, Red Stripe came up with a profitable and sustainable model in Lughenjo (though, admittedly, they began by thinking of it as a not-for-profit business). Their reasons for dropping it were only incidentally to do with profitability. In fact, Mike Seery’s conclusion, pace Jeff Jarvis, was that ‘we don’t have a working prototype because we got hooked up on money – that was the thing this project was supposed to avoid.’

Third, any analysis of anything which juxtaposes ‘helping the world’ and ‘improving the lot of journalism’ and sees the former as a danger to the latter seems alarmingly mechanistic and possibly back to front. As Sheldon Rovin says in a piece on Systems Thinking:

…we live in an age of unprecedented possibility… Deplorably, though, you wouldn’t know we live in such an age, judging by the way our politicians, corporate leaders, so-called experts and other authorities go about trying to solve our serious problems. Influenced largely by the thinking of Aristotle, Descartes and especially Newton, that the world is a mechanism awaiting explanation through analysis, taking things apart and studying the parts to understand the whole, they use a piecemeal, get it done fast approach that at best temporises, but more often worsens the problem

Neil McIntosh in his own blog, responded to Jarvis thus:

…’profitable’ is quite a narrow definition of success. I prefer a looser definition of innovation; the successful introduction of something new. ‘Success’ can mean profits, or reputational benefit, or better user experience, or saving the world, or all of those things at the same time. Profits are just one – albeit frequently very important – measure of success.

But one thing that struck me from all this was this: not all innovation needs to be radical. Indeed, most attempts at clean-sheet, big bang innovation fail.


The innovation that normally yields results is the kind that arrives in a light drizzle; small, incremental, building on work done by yourself or others, utterly un-noteworthy to all but the geekiest observer.

‘Success’ is covered elsewhere, but his comment on innovation is nice. We tend to experience innovation as revolution (for example, with the car, the telephone, the iPod, the Internet) because of the way those innovations revolutionised our lives. In fact, of course, the technological innovation that enabled those experienced revolutions was gradual and piecemeal. This is an important thing for innovation teams to know and remember. Several small steps are the most reliable path to a major change. Red Stripe explicitly sought to avoid incremental change. At the outset, Mike said ‘I tend to steer people away from the incremental approach’.

Suw Charman had another angle on this in her blog about Project Red Stripe:

Innovation, like all other forms of creativity, never comes out of nowhere; it comes out of all that’s been before. All the things you’ve read, conversations you’ve had, scenes you’ve witnessed, and – most importantly – all the work other people have done. Creation requires giants upon whose shoulders we can stand; we cannot do it in a vacuum. Indeed, sitting down with a clean sheet of paper, trying to conjure a killer idea out of nowhere is only going to end in tears, mainly of frustration.


When it comes to technical innovation, any developer worth his or her salt will tell you that the best way to come up with a winning idea is to think about a problem that irks you and that you want to solve.

Jeff Jarvis (whose blog started this chapter) responded with this thought:

So I think there is a need sometimes to take people who are ready to make change and to build some sort of net around them to experiment without fear or the crushing pressure of corporate inertia. Maybe The Economist should have sent their team off not with the magnificently open challenge – create something innovative and of the web; that was it – but instead with a problem to solve and a few hypotheses to try out.

I talk about options like this in The Last Fart of the Ferret. But, staying with incremental change and innovation for a moment, I notice that the question of ordinariness connects with Red Stripe’s reservation about incremental change.

I began thinking about the twin towers of specialness and ordinariness when contemplating my shaking hands, flushed cheeks and growling stomach as I awaited my turn to ‘say my name and a little bit about me’ at a recent workshop. ‘This’, I thought, ‘really shouldn’t be such a big deal any more’.

Then, in a recent interview, the 12th Earl of Drogheda reveals that he didn’t join a dramatic society at university. ‘Now why would that be?’, the interviewer enquires. The conventional and anticipated reason (too shy) comes first: ‘I think this was because of a mixture of insecurity…’

The second, and rather unexpected, one comes next: ‘…and fear of not being given star roles.’

Hold it. Fear? Of not being given star roles? That looks like an unusual fear. Even in a world where we discover new phobias daily. But it echoes my conviction that much shyness and holding back reflects not our discomfort at being the objection of attention per se, but our grandiosity: our fear that we won’t be seen to be as clever, important, noteworthy, funny, beautiful as we think we really are – or could be.

It reflects our unspoken expectation that we should be not just good, but significantly better than the others. So, we’re embarrassed to speak in public because we would like to be not just good enough but the finest orator in the land. And the Red Stripe collective clearly wanted a big success, even if they were nervous about saying this out loud. Tom, of course, wasn’t. At the outset, he said he wanted a massive success. So did Mike: ‘I want something fantastic’. And the team, in an early exercise where they considered what failure would look like, named ‘boring’, ‘incremental’ and ‘old business model’ as aspects of failure. Tom also made the connection with shame: if they failed there would be shame attached to that failure. Of course. Brave to say it, though.

Tom’s naming of the word ‘shame’ is also a reminder of one downside of the very public profile that Project Red Stripe adopted. If the almost inevitable desire to aim high, to go for gold rather than settle for bronze, can become self-limiting when it means that teams exclude modest ideas that might lead eventually to revolution, then it can be all the more dangerous in the glare of publicity, where spectacular success is to be prized even more highly.

The narcissism induced by publicity (and I use narcissism in its pseudotechnical sense rather than in its more common, pejorative sense) has been described by Cornell’s Professor Robert Millman as Acquired Situational Narcissism – a form of narcissism that develops in late adolescence or adulthood, and is brought on by wealth, fame and the other trappings of celebrity.

So here, again, there’s perhaps a case to be made for a formal public face for the innovation team. The charm, flattery and seductiveness of the rhetoric of the goddess Peitha/Suadela needs to be carefully harnessed.

Emmy van Deurzen also talks indirectly of narcissism when she discusses ‘living in tune with your intentions’. She cites the case of someone who wanted to be in control but tended to give up because she could never be fully in control. In Emmy’s view, she needed need to recognise the ‘limitations on being in charge, rather than a striving for absolutes.’ Striving for absolutes is the striving for specialness as against a recognition and acceptance of ordinariness.

This recognition of limitations involves both a recognition of quantitative limitations (we can strive to be rich without striving to be the richest person in the world) and of the limitations of reality (in a fantasy world we may be able to fly, drink from the fountain of eternal youth or whatever, but in the real world we very probably can’t).

In both cases, we can see the need for some tightening of the brief, some imposition of limitation on expectations, for the innovation team.

Dilemmas

• A focus on profitability may be good for innovation, but it isn’t necessarily helpful for creativity. On the other hand, since we’re talking about business, almost any focus that isn’t on profitability might be seen as a distraction. On yet another hand, Tom Peters was just one of many to assert that businesses should focus on delighting their customers, allowing the profits to follow in their wake.

These next four are all closely related:

• Most innovation is incremental and emergent in nature, even if it looks revolutionary to the customer. As a result, looking for ‘quantum leap’ innovation may be self-defeating if it assumes technological or other changes that haven’t yet taken place. On the other hand, an innovation project predicated on ‘quantum leap’ innovation won’t get anywhere if it simply looks at incremental change.
• The desire to aim high can be self-limiting if it precludes picking ‘the low-hanging’ fruit.
• The oxygen of publicity brings in ideas but can induce a greater fear of failure than is necessary.
• Tightening the brief helps team members focus but precludes at least some potential ideas – there’s an inevitable trade-off between the two.