Systematic Innovation

The thing that set’s Peter F. Drucker’s legacy apart from all the pop management books is one thing: Empiricism. Peter concentrated on observable, reproducible, systematic methodology. And he took the same attitude in Innovation and Entrepreneurship.

The secret to successful innovation and entrepreneurship for a private enterprise, a public enterprise or a fledgling enterprise involved pre-planning before any attempt to realize the idea took place. The success stories in Peter’s book took an idea that was not even necessarily their own and took the time to foresee the requirements for possibility, compatibility, reliability, affordability, distributability and ubiquity before they entered the life cycle of the product or service. They built a management team to achieve each of these milestones before they entered the life cycle as well. Only then did they execute, because there was no turning back.

It is just like a volley in tennis. The ball (opportunity) approaches and the tennis player observes that ball, positions herself, assesses her capabilities, decides where the return will land and only then makes her power curve lead into the ball, singularity contact, and power curve follow through, all the time never letting her eye off the ball until that volley’s life cycle ends.

Like I said to Seth Godin’s book, The Dip, you don’t make your decisions mid-stroke. It is not empirical and it is bad physics. Peter would say the same thing. He would say it is bad management as well.


Romanticism vs. Empiricism

I’ve just finished reading The Long Tail by Chris Anderson as well as a fine article “Should you invest in the long tail?” in the Economist by Anita Elberse. Although I take both pieces of writing with a grain of salt one thing stands out. The scientist, Chris, conjured up a theory without any supporting data and the marketer, Anita, provided substantial supporting data and conjured up a conclusion. Chris said the long tail is fatter, while Anita found the tail is flatter. On the surface, what we have is a romantic physicist and an empirical marketer. But what lies deeper? It is a third party that Anita brings into play: William M. McPhee.

I could not find a book cover image for Formal Theories of Mass Behavior or a photo of William online, but his research is very interesting. In his Theory of Expousure, two concepts stand out: “Natural Monopoly” and “Double Jeopardy”. Natural monopoly says light users simply buy the most popular product. Double jeopardy says heavy users buy less popular products and like them less.  Another way to say it is 20 percent of us are polarized (double jeopardy) while 80 percent of us choose what the polarized like (natural monopoly).

This can be looked at in the context of a tipping point. Heavy users (Mavins, Connectors, Salesmen) will experiment with more products with a low benefit and high cost and light users (Accountants, Secretaries, Receptionists) will experiment with fewer products with a low cost and high benefit. It ain’t rocket science.

The same goes for stores, but in an interesting way. Heavy users will experiment with more stores with few products and light users will experiment with fewer stores with many products. Store count is regarded as cost and product selection is regarded as benefit.

Chris Anderson’s book appeals to a demographic that wants the benefits of heavy users and the costs of light users.

Anita Elbrese’s article appeals to a demographic that wants the costs of heavy users and the benefits of light users.

William M McPhee’s book appeals to a third demographic that says we ultimately all end up with much the same thing.