Elephant Painting, example of Free and innovation

December 8, 2008 · Posted in abundance, economics · Comment 

This article will introduce a concept that my next book covers in great detail. It is the biggest problem facing society and the most wonderful opportunity. It’s called Free.

While I was in Thailand I spent two days at Maesa Elephant Camp learning to be a mahout (elephant driver). It was one of the most magical experiences of my life. Interacting with the elephants, the scenery and the way the staff treated us was amazing. One of the things I got to do was make a painting with an elephant.

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Mark Frazier with Kong Kham Painting at Maesa Elephant Camp

Many of these elephants used to work in the timber industry. The need for elephants for logging has dropped so these elephants and the mahouts were out of work. This is an example of how technology advances and makes things free. Elephants once were the cheapest way to harvest logs in terms of time and materials. But now new technology makes it even easier. People used to pay mahouts to ride elephants but they no longer get paid to do that. That is the negative side.

The positive side is timber is much cheaper now so people in general have extra resources to use on other things. And that leads us to the positive effects of Free.

When the real cost, in time and materials of a product or service drop to the point where people don’t put much thought to the cost it is treated like Free. Think of a buffet. People will try a dish they might not because it costs them nothing. And of course the only way that a buffet can work is if the scale of sales make the individual costs cheap enough to let everyone take as much as they want. This is relative Free. An example of absolute Free is a by product of another process. If you were going to throw it away it is free.

Now that no one would pay mahouts to ride elephants some innovation was needed. The solution, charge people to ride elephants. This exact same thing has happened with many industries. Now that people have extra leisure time because the products are so much cheaper they value experiences. They are willing to pay to do something in the old way just to have fun.

After spending two days riding elephants I can assure you that doing it all day every day for a job is not fun. You would have to pay me to do that, but I was more than happy to pay to learn how to ride elephants and enjoy being with them for two days. It was fabulous. A once in a life time experience.

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.