Crystal ball says, "In 6 months you'll be laid off." What do you do?

December 26, 2006 · Posted in economics, innovation · Comment 

In the Detroit area the economy has been brutal. A bunch of people have been laid off. Many would have loved 6 months of warning but the truth is almost everyone that’s been laid off had much more than 6 months warning and they didn’t do anything. That’s not to say they were lazy or stupid. Most of these people didn’t know what the warning signs were. And the rest didn’t know what to do so they did nothing and simply watched their financial future go off a cliff. Now they are unemployed, many have experienced bankruptcy and we aren’t even suppose to be in a recession.

It doesn’t have to be that way. There are a few very simple to spot signs and even better there is something you can do if you see the warning signs.

  • Higher price per unit
  • Fewer units sold
  • Fewer opportunities for advancement

Is your per unit pay increasing? If you get paid by the hour or even an annual salary is it going up? This is a very bad sign. Huh? Getting paid more is bad? No, getting paid more is great. Getting paid more per unit is bad. It’s the first step towards the cliff. If you can for a moment, look at it from the customer’s view point. You go to the store and the price of bread goes up. For a while that might be OK. And if the quality of bread gets better then you don’t mind at all. But if the price keeps going up and up you start to think, “hey can I get bread somewhere else without paying as much?”

The most dangerous part of an increasing price per unit situation is when you are making the money, you don’t see the problem coming. You might sell fewer units, in this case that means get more time off, cool. You are making more per hour so your income stays the same or even goes up. You don’t see any problem. And there might not be a problem, but sooner or later someone will move in and do your job for less money than you are doing it. Remember, you used to do your job for less money.

Again, you might not care right away that someone else will do your job for less money. And maybe you are doing a different job or you are more productive so you feel its not an accurate comparison. You still are at risk. You probably did what anyone would do when they made more money. You spent more money. I remember when I was in college. Every week I would take out $20 from my checking account and it would last me all week or more. Now I take out $300 and that doesn’t count the house payments, car insurance, cell phone bill, cable bill, etc. I used to live very happily on $24,000 a year and now I need $80,000 to just pay the bills. How about you? Have your expenses increased? How much do you need now?

So when you are way up at the top of the price per unit scale you discover you can’t go any higher. And there are a bunch of guys below you moving up the ladder right behind you. There isn’t any place to move up and you can’t turn around. And that is when you see the cliff and the pink slip.

What is the solution?

There are two solutions. Both require innovation. But you must first understand that in order to successfully innovate you must provide more value to someone and preferably to more people. Again, picture yourself at the store. If your favorite store consistently lowered their prices you would be very happy. You would tell your friends. If your favorite store lowered their prices and increased quality and service you would never leave. You would probably refuse to shop anywhere else and insist your friends do the same.

That is exactly what you need to do in your life. Provide more, better, with less hassle or cost.

That can’t be done with more time. It only happens with some serious innovation. Aren’t you glad I also teach how to achieve serious innovation?

So the first approach is to recognize early that your on the march up to the top of the price per unit cliff and change directions. What if you can already see the edge coming? What can you do? Easy, choose a different path.

There are lots of customers in the world, 6 billion at last count, with more each day. As each need is met customers look for a new “more, better, for less”. Find one that matches your abilities and start making your new customers happy. In business speak this is creating a new or expanding an existing market. How can you do that?

Use Predictive Innovation.

  1. Identify the ideal product or service
  2. Choose one unmet need
  3. Plug that need into the solution grid to generate at least 15 solutions
  4. Rank the solutions by value
  5. Generate the opportunity map
  6. Follow the opportunity map to satisfy each need in order of value.

Here is a clue if you didn’t already realize it. The same rules apply to businesses. And if you are in charge of a business on the path heading towards the cliff you can prevent that fatal leap. Remember if you don’t stop the business from heading over the cliff its more than one person getting laid off. All the families of the workers depend on you to make a good decision.

Now is the time to learn how to innovate. It isn’t magic and doesn’t require some special creative talent. It just takes learning and applying an effective system, Predictive Innovation can help.

Action Items

  • Look for the warning signs in your job, business, and industry.
  • Think of at least one part of your product or service which is less than ideal.
  • List three ways to improve that one feature that is less than ideal (you don’t need to know how to achieve it, just the basic approach)
  • Sign up to receive free reports about Predictive Innovation

Side notes: Even high tech companies like Sun experience lay offs and the people moved past it by finding new markets for their skills and talents.

Time Out for a Laugh

December 21, 2006 · Posted in sharing · Comment 

This is a mash up video of Star Trek and Monty Python’s Holy Grail is just too funny not to share. It probably violates a million copyrights but the world is a much better place because someone made this.


BBC moves to file-sharing sites

Hundreds of episodes of BBC programmes will be made available (legally) on a file-sharing network for the first time, the corporation has announced.

The move follows a deal between the commercial arm of the organisation, BBC Worldwide, and technology BitTorrent firm Azureus through their Zudeo service.
Zudeo users will be able to download copies of Red Dwarf

read the full story.

This is really great news. People all over the world have enjoyed BBC programming but its sometimes hard to get it. In the US BBC television is mostly available through public television. And more recently through file sharing. Its great to see the BBC recognize the value of global distribution made possible using BitTorrent.

I’ve been involved with BitTorrent since 1999, my business partner The Shad0w created BitTornado, a BitTorrent client, to enhance the protocol. Many of BitTornado’s enhancements have been accepted as standards to the protocol.

The original reason we got involved in BitTorrent was to create alternative business models to allow artists to get paid for their work. We realized that file sharing was the natural state and trying to stop it was impossible. So how can artists get paid if making copies is free? We tried to help performers get concert gigs and built a web site that allowed you to audition performers online and then book them for performances. We found paying for bandwidth was too expensive at the time; this led Shad0w to work on the BitTorrent open source project and became one of the major contributors to the technology.

I continued working on business models, and discovered there are four basic types of business models for information. The key factors are:

  Paid Before Creation Paid After Creation
Paid By Consumer
  • Concerts
  • Subscription
  • Selling copies (CD/DVD/MP3)
  • Merchandising
Paid By Another Person
  • Advertising
  • Charity
  • Patronage
  • Licensing
  • Royalties

Copyrights focus on paying after creation or publication. By focusing on business models the pay the artist before creation or publication sharing isn’t a problem, and in general is helpful.

Advertising benefits from file sharing. I spent a lot of time promoting integrated advertising also known as branded entertainment. The Apprentice was one of the biggest successes of branded entertainment. I was unable to get the idea to widely catch on. Oddly enough it wasn’t people rejecting the idea, it was because companies didn’t know how to purchase it. The advertising world is based around the idea of empty space. You buy empty space and place your ad in the empty space. Since branded entertainment is the content there isn’t an empty space to fill with a 30 second spot. The big companies didn’t know which department should handle it. And is the case with most innovations, if its disruptive they ignore it.

We have seen an interim solution with such companies as Revver.com. They tack an ad on the end of videos. So far this is missing the important content targeting to make the ad beneficial to the viewer. Viewers HATE commercials. The post roll approach used by Revver is better than others because the ad is at the end so there is no interruption but advertisers don’t want to pay for something that isn’t seen. There isn’t a strong win-win-win feedback loop.

Patronage and charity are very similar but patronage is more interesting. A patron gains benefit from having the work created. And now that copying and sharing is free groups of people can be patrons of an artist and everyone get a copy of the work. A method of doing this is The Street Performer Protocol. I believe this is the next big innovation, its already being used and I’ll discuss it more in future posts. I’m currently working on a service to make patronage easy and reliable. This will allow consumers to directly fund new movies, books, music, and software that can then be released with a Creative Commons license. No ads, total artistic freedom and consumers choose what is made.

After seeing Zudeo and the ability deliver HD content with an easy to use interface it is one of the outlets we will use for distribution.

Action Items

  • Visit Zudeo and try the Azureus client to download high quality video.
  • Visit Inagada.com, read about the project and sign up for the newsletter to stay informed of the progress.

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