Rule # 1 – None of us are as smart as all of us.
The image of a lone genius slaving away in a dimly lit basement or garage is the traditional image of the inventor. However, according to Andrew Hargadon (Assistant Professor of Technology Management at the University of California) this is largely a myth. Moreover, when it comes to innovation, a collective effort is more usually the norm. Andrew Hargadon’s book (How Breakthroughs Happen) says that innovation is largely a result of networks. These are formal and informal collections of people and projects ranging from employees and suppliers to customers and even competitors. These networks are highly social in nature, which means that cultivating relationships is important. Another key observation is the thought that ideas are rarely new. New ideas are usually a recombination of old ideas and thus diversity in terms of people, ideas and experience is key for innovation. Having said all this, the best way to kill a good idea is to involve a committee, so ensure that there’s someone in charge to bang heads together and, if necessary, dislodge the gridlock.

Rule # 2 – Pioneers get scalped.
The theory of first mover advantage is bunk according to Nicolas Carr (author of ‘Does IT Matter’), who says that when a disruptive technology arrives the real growth opportunities lie in fixing the disruption. In other words the pioneers often get scalped. His argument is that the future arrives in “fits and starts” and many of the most profitable innovations are inherently conservative. Ditto companies (look at Toyota or Wal-Mart). Innovators (especially technology innovators) often get too far ahead of customers who are fundamentally change adverse. A good example is the Internet. Many of the early dom.com firms failed, not because they had a bad idea, but because they had an idea too soon and lacked the patience, managerial or marketing smarts to hang around. Another example is Netflix. The company is a wild success because it doesn’t fight current technological restraints. You could set up a movie rental company that delivers films via huge downloads but it’s currently a much better idea to let people order over the Internet and let the US postal service deliver the goods.

Rule # 3 – The more you try, the luckier you get.
As Linus Pauling said: “The best way to have a good idea is to have a lot of ideas.” Innovation is partly a numbers game. Fail often and fail fast and learn from your mistakes. Apple didn’t give up after the Lisa or the Newton. Moreover, don’t punish people when they make mistakes. Punish them when they don’t make enough mistakes or when they repeatedly make the same mistake. Some companies don’t get this. They are on an eternal quest for the perfect solution and spend so long researching and developing single ideas that by the time they’re launched it’s already too late. This conflicts, to some extent, with rule #2, but not much. Timing is everything and generally it’s better to be approximately right and slightly early than perfectly right and very late. Furthermore, the old model of create, edit, publish is rapidly being pushed aside in favour of a new and faster, model which is create, publish, edit (i.e. let the customer co-create the final product). This particularly true where speed to market is important and links into ideas like ‘thin slicing.’

Rule # 4 — Don’t confuse ideas with innovation.
Organizations think they can be great at ideas and innovation, when generally speaking they’re either good at one or the other. Small organizations and start-ups tend to be good with ideas, but can be weak on implementation and scale. With big organizations it’s often the other way around. The trick is to know what you’re good at and then go outside for help with what’s missing. A related thought is that when it comes to long-term success it’s very often the companies that avoid radical innovation that win in the longer term. Innovators who come up with disruptive ideas often go bankrupt or fail to grow beyond a niche position in the market. Thus being a fast follower (using innovation transfer or even M&A) is a perfectly good (if less glamorous) innovation strategy.

Rule # 5 – If you love something, give it away.
Got a good idea? Then give it away. In my experience too many people (especially lone inventors) hide their idea from the world in the belief that someone will steal it. Someone might. But at least if you talk to people it gives you the opportunity to polish the idea by rubbing it between your brain and theirs (see rule #1).

Rule # 6 — Innovation is about breaking rules, so ignore any or all of the above.

Is life getting better or worse? Reading between the lines in my local bookstore there certainly seems to be a new sense of doom and gloom in the air. Bitterness is the new black as they say. But is it really so? Reading magazines like Fast Company and Wired makes me feel like anything is possible — or rather that nothing can’t happen. So here are four things to cheer us all up.

1. Technology
If you can dream about it you will increasingly be able to do it in the future. Think of self-driving cars, space hotels, 500GB memory sticks, child-care robots, sleep surrogates, memory pills, artificial eyes, self-building buildings and full immersion virtual reality suits. What’s more many of these innovations will be widely available and super-cheap.

2. Connectedness
Thanks to the Internet everything will be connected to everything else in the future. This won’t just be people — they are already connected- it means things. Thanks to precise locational information we’ll know precisely where everyone and everything is all of the time. Low cost travel will also mean that we’ll be able to go anywhere in person too. This should bring the world closer together in terms of understanding and create a new ethically based, transparent culture where secrets are harder to keep. Benefits should include customer empowerment and better corporate governance.

3. Globalisation
Distances and boundaries will both be dead. In the future you will be able to have whatever you want whenever you want it. You already can in many places. This means a global melting pot of cultures, experiences and ideas. You will be able to live or work in whatever country you want or sell your own wares from your own home-based mini-multinational thanks to the Internet’s ability to find and connect like-minded individuals and groups. Shopping will be globalized too with easy access to whatever you want anywhere on the planet too thanks to digital delivery and low-cost transportation. A Free Agent and small business owners dream come true.

4. Ageing
What do you want for your hundredth birthday? How about a party with your parents? In the future you will live for longer and look and feel younger for longer too. And imagine what an extra thirty years practice could do for your golf handicap? If this doesn’t float your particular boat then how about living forever inside a machine? From a business opportunity point of view older people not only have time on their hands, they will, increasingly, have money too thanks to booming real estate values and soaring stock markets around the world.

On the other hand:here are four things to really worry about in the future.

1. Technology
Technologically speaking privacy is dead. In the future governments and corporations will know who you are, where you are and what you are doing all of the time. They may even know what you are thinking. Getting lost or not knowing where you are going (sometimes a good thing) will be almost impossible as will anonymity due to digital payments and various embedded tracking technologies. Faster technology will also force life to accelerate making slowness and reflection almost impossible. This will have knock on effects in terms of attention spans, relationships, proper understanding and accidents.

2. Connectedness
Because it will be so easy to instantly find out what everyone thinks in the future a collectivist online majority mind will trample on the thoughts and needs of the minority. Anonymous Internet aggregation will ensure that might is always right and big will always be equated with best. This is dangerous because it’s difficult to bring an anonymous idea or source to account. Connectedness plus speed will also mean that localised stupidities will impact globally and a type of groupthink will develop at the expense of rigorous individual thought and eccentricity.

3. Globalisation
The opportunities are global but so too are the risks. Failure will be networked so local disasters will cascade globally. This means that pandemics will travel almost instantaneously and local economic difficulties will cause ripple effects internationally. If China collapses it will take the US with it and vice versa. The future will also be a less colourful place in the sense that we will all be wearing the same clothes, listening to the same music, seeing the same movies and eating the same food which cannot be good for originality, creativity and disruptive thinking. However, due to impending resource scarcity and nationalism there is every possibility that globalisation will come to an abrupt end leaving people yearning for low interest rates, long-haul foreign holidays and cheap goods from China.

4. Ageing
Living until you are one hundred is all very well but how are you going to pay for it? Equally, retirement has meaning when it follows a long period of work. Its fleeting nature makes it feel special. But what if retirement went on for forty or fifty years? What would you do all day? What if older politicians and business leaders simply refused to go away blocking younger people with newer and better ideas? What if the Rolling Stones never give up touring or you lived with your parents forever?

So what’s the takeaway here? To my mind the key point to remember is that there isn’t just one future. There will be many conflicting and contrasting futures depending on who you are and how you think. Crucially, whichever future you believe will probably come true. So don’t worry, be happy ☺

People divide their lives into work and play. But a clever few realise that if you pick the right work it ceases to be work and becomes play. The trick is finding something that you are passionate about and then devoting your life to it. This won’t necessarily make you a fortune but it will usually make you happy. It may also turn you into a successful innovator because playfulness is an essential prerequisite for invention.

In 1989 58% of people in the UK said they were happy. By 2003 this figure had fallen to 45% despite a 60% increase in average incomes. Also in the UK the Observer newspaper recently claimed that most Briton’s would rather have a cut in working hours than receive an increase in salary. There are various explanations for all of this but one is that people are doing the wrong kind of work. But what does the ‘wrong’ kind of work look like? The answer is highly personal but in my experience it means working with people you dislike, doing something that’s too easy or doing something that’s repetitive. It can also mean having a job that lacks meaning or doesn’t make a difference.

According to Charles Handy there are three forces driving change at work. The first is globalization. As Thomas Friedman argues in his book The World is Flat, there is a single global market emerging for everything from products to people. In theory this means that you’ll soon be competing against everyone else on the planet for your job although in practice there will be a limit to what gets outsourced. Nevertheless, if your job can be done cheaper somewhere else it might be worth looking at other employment opportunities. The flip side of this global village is that if you’re really good at what you do companies will compete globally for your skills, as jobs become more mobile.

The second driver of change is demographics. Most countries face a demographic double-whammy with an ageing workforce colliding with a declining birth rate.According to the Herman Group this means there will be a shortage of 10 million workers in the US by 2010. Employers will therefore have to get smarter about how they attract and retain good people so we can expect to see more flexible working practices and the development of initiatives to attract older workers. For example, B&Q – a Home Depot style retailer in the UK — offers jobs to retired tradesmen. The results are improved customer service and lower employee turnover. Similarly BMW in Germany has designed a factory to attract older workers while Procter & Gamble has developed YourEncore – a network of retirees that it dips into when it needs to crack a problem. Incidentally, one further idea implemented by P&G is ‘reverse mentoring’ to help older workers (especially men) understand the problems faced by newly recruited staff (especially women).

The third driver of change is technology. Thanks to cell-phones, laptops and the Internet work is becoming less tied to a physical location. Instead we are becoming a tribe of digital nomads working whenever and wherever we choose. This means that in the future employment contacts will have to change. Companies will realise that they are buying people for their ideas not their time or physical presence, so annual contracts will be related to objectives met, not hours worked. This will see an increase in sabbaticals and a further blurring between what’s done at home and what happens ‘at work’.

But this is just the beginning. In another twenty or thirty years artificial intelligence and robotics will have displaced another layer of workers. So if your job can be reduced to a set of formal rules that can be learnt by an intelligent and emotionally aware machine it may be worth looking for another career because your current profession could disappear.

In other words we are facing a third industrial revolution. The first swapped fields for factories while the second – the information revolution – replaced brawn with brains. The third revolution will be the shift from left to right-brain economic production. During the last century people were paid to accumulate and apply information. The acquisition and analysis of data is logical left-brain activity but, as Daniel Pink points out, it’s an activity that is disappearing thanks to developments in areas like computing. For instance, speech recognition and GPS systems are replacing people for taxi bookings while sites like completemycase.com are giving mediocre lawyers a run for their money.

One fascinating statistic that I came across recently is that twelve years ago, 61% of McKinsey’s new US recruits had MBAs. Now it’s around 40%. This is partly because of an oversupply of MBAs in the domestic market and the fact that data analysis can be outsouced to cheaper countries. But it’s also because arts graduates are demand. In a globalized world products and services become homogenized and then commoditized. One of the best ways to create differentiation is through innovation but what some people mean when they say innovation is actually design and design involves the application of lateral thinking and physical beauty both of which bring us back to right-brain thinkers.

Of course there are some jobs that cannot be done by a machine or outsourced to India. These include what I’d call ‘high-touch’ jobs like nursing and teaching that involve a high level of emotional intelligence. As I’ve said, it also includes jobs that involve the application of creativity and imagination but as Richard Florida points out these types of jobs don’t work just anywhere. Cities that are attractive to right-brained entrepreneurs and innovators score highly on the Three Ts – Technology, Talent and Tolerance. Technology refers to the proximity of world class research facilities. Talent is the clustering of bright, like-minded people from varied backgrounds and Tolerance is an open progressive culture that embraces ‘outsiders’ and difference.

Finally I’d like to mention something called Psychological Neotency. This is a fascinating new theory that says that the increased level of immaturity among adults is an evolutionary response to increasing levels of change and uncertainty. This initially sounds ridiculous but it does make a certain amount of sense if you stop and think about it. Historically maturity was useful because in a ‘fixed’ environment it indicated wisdom and experience. However, in a rapidly changing environment experience can actually be disabling. What is required in the new economy is child-like receptivity and cognitative flexibility. In other words youthfulness and playfulness may be adaptive responses to change where jobs, skills and technology are all in a state of flux. This could certainly explain the apparently adolescent behaviour of innovators like Richard Branson and Steve Wozniak and, if true, has profound implications for everything from HR policy to office design.

Someone (I think it was Kevin Kelly) once said that in the future all media will be free – we will only pay for functionality and personalisation. I’d like to disagree – but I can’t. I can’t think of a single reason why this statement won’t be true, especially if you take a liberal view of what constitutes payment, functionality and personalisation.

Newspapers are a good example. In 1960, 80% of Americans read a daily newspaper. Today the figure is closer to 50% – and it’s failing. Globally it’s the same story. Between 1995-2003, worldwide newspaper circulation fell by 5%. In 1892 London had 14 evening papers. Now it has just one. Also in the UK, a staggering 19% of all the newspapers delivered to retailers in the first quarter of 2006 came back as returns and three national newspaper titles had return (non sale) rates approaching 50%.If these trends continue the last newspaper will be probably be produced by Grace Murdoch sometime in the year 2040.

However, if newspapers were invented tomorrow they would be hailed as a miracle innovation. They are cheap, paper thin, easy to annotate and don’t use batteries. You can read them in the bath and when you’ve finished with them they can be thrown away and safely recycled. Unfortunately they also go out of date the minute they’re printed, cost a fortune to distribute and user-generated content is limited to the letters page and classified advertising.

Despite predictions of paperless offices and the leisure society we are all working harder than ever. As a result we are time starved and the family breakfast (along with home delivered newspapers) is being replaced by fly-by breakfasts listening to up-to-the-minute cable TV. Either that or it’s a milkshake in the car listening to the radio or a Starbucks and nytimes.com in the office.

In other words we are becoming digital nomads. We read, listen and watch what we want when we want. We no longer have the time (during the working week at least) to read newspapers and readers are shifting their eyes and ears to online sources of information delivered via everything from mobile phones to iPods. Online news is especially useful because it’s usually free and the content can be easily controlled and personalised. If you’re of the active (or exhibitionist) persuasion you can comment on the news through your own blog or send your own homemade entertainment to Youtube. We don’t even trust newspapers these days. Only 59% of Americans believe what they read in the newspapers compared to 80% in 1985.

What used to be a passive one-way conversation is thus turning into an active relationship. Content flows both ways and consumption has time shifted and place shifted.

According to research by comScore, Six Apart and Gawker Media, 50 million people visited blog sites in the US in the first quarter of last year — which is about 30% of all US Internet users or one-sixth of the entire US population. What’s more they weren’t all reading about Ms Hilton – the most popular sites were about politics (sorry Paris).

So are newspapers yesterdays news? Not quite.

Firstly newspapers are using innovation to improve their products. Some of the best ideas include compact formats for commuters (e.g. The Times and The Independent (UK) have been available in a choice of two sizes), there are kids newspapers (e.g. Play Bac Presse in France) and newspapers written entirely by readers (OhMyNews in South Korea is created by 33,000 ‘citizen reporters’ and is read by 2 million South Koreans). In the US the Wisconsin State Journal (the State’s second largest selling paper) asks its readers to go online everyday between 11am and 4pm to vote for the next day’s lead story. Consequences include the fact that sports stories have started to appear on page one.

In other words we are entering what Jonathan Schwartz (COO of Sun Microsystems) has called a new participation age where the traditional boundaries between the creator and the consumer are becoming eroded or disappearing altogether. One of the biggest questions arising from this type of open innovation is who owns openly created content? This question will drive new business models and radically transform the relationship between media owners their audiences.

A second significant innovation in newspapers is the growth of free. Most newspapers create revenue by charging people twice. You pay to buy the paper and you pay to place an ad (e.g. classified ad). The theory is that advertising supports subscriptions and newsstand sales but it won’t for much longer. In the future most weekday newspapers will be free. Early examples of this trend include Metro and 20 Minuten. Alternatively, you can buy a copy of Loot – which costs money – but it’s free to place a classified advertisement. Another future variation on this theme could be ad free quality newspapers available on a paid-for subscription basis.

Moving slightly outside newspapers other interesting developments include a magazine created by Nokia and MTV that is produced entirely by their customers who send in content via text and picture messages. Moving further in the digital future sites like Craig’s List are giving traditional media owners something to think about. Classified revenues from accommodation through to autos and jobs are moving online, as is time sensitive information like stock prices and weather. The New York Times recently announced that is was cutting back its stock market price tables because so many readers were accessing this online. Meanwhile, the Washington Post has announced that it has hired the creator of Chicagocrime.org to create ‘mashups’ for the online edition of the paper.

So who will be delivering tomorrow’s newspaper?

The answer, apart from you and me, will be a mixture of mainstream media companies and brand owners. Mainstream media owners will increasingly divert investment into digital media platforms while companies like Nike and Procter & Gamble will create their own content. For example, see www.joga.com and www.homemadesimple.com

And I don’t believe that newspapers will totally die any more than I think that people will stop reading paperback books or stop visiting movie theatres. Part of the reason for this is historical but it’s also psychological.

It takes time, often a generation, for one innovation to replace another. Newspapers are a ritual purchase and loyalties run deep. If you ask people in focus groups why they read newspapers some people can’t tell you. “Because I’ve always read it” is a typical answer. I once did some work with United News and Media on the UK and found quite a few people reading the Daily Express and the Daily Mail because their parents and grand parents did. That’s brand loyalty.

Sticking my neck out a bit I’d even suggest that there could a newspaper renaissance around the corner. Many local titles are thriving because they are personalised. The news is local and advertising tends to be localised and highly accountable – which is something that people are making a song and dance about in new media circles. For example, Fox Network is customising its TV ads so that local neighbourhoods can receive tailored TV commercials.

The other reason I think that newspapers could be making a comeback is the ubiquity of online media. Put simply, there is now so much digital content around that it’s becoming valueless. Physical media in contrast — especially content that is thoughtfully written, expertly edited and well designed — cuts through. If you think this is an exaggeration just think about how much e-mail you received today and then consider your response if someone had actually taken the time to send you a letter.

The author William Gibson once said “the future is already here, it’s just unevenly distributed”. In the case of travel this is certainly true. The travel industry has experienced dramatic change post 9/11 but it is the Internet that has really shaken things up. The web has connected new low-cost operators with newly empowered customers with the result that intermediaries like travel agents are becoming increasingly redundant.

So what else is happening and what else can we expect to see in the not too distant future? In terms of airlines the general trend seems to be towards polarisation. On the one hand low-cost operators like JetBlue are expanding low cost services outside the US, while on the other hand national carriers like Virgin Atlantic are upgrading business class services to the point where aeroplanes are starting to resemble hotels and airline lounges are starting to resemble restaurants. Up at the pointy end of the aeroplane we’ve already seen innovations like in-flight mixologists, private fridges, flat beds, in-flight massage, sky-nannies and personal chefs and it won’t be long before we see showers and possibly lockable cabins. Down in economy we’ve got self-check-in, pay-as-you-go lounges, Internet access and pay-TV on some planes so things like seats that inflate and deflate to fit individual body shapes can’t be far off. Other innovations include business class only flights (e.g. Lufthansa and OzJet) and business class only terminals. Interestingly, one consequence of tighter security screening at airports is that people (in the US at least) have started to dress more casually. Gone are lace-up shoes, belts, coats and jewellery and in are more search friendly t-shirts and track pants.

Of course getting from the airport to your hotel can be a bit frustrating so we’ve seen a number of transport innovations here to. These include the Heathrow Express (rumoured to be the most expensive train journey in the world on a per mile basis) and the Maglev (magnetically levitated) train that runs between Pudong airport and Shanghai city centre.

Over in hotels the rate of innovation is not as great but we are still seeing some interesting new concepts. One of the latest ideas is Miniature hotels,(for example easyhotel.com and yotel.com in the UK). These are like boutique hotels but without the frills. Rooms are typically very small (in one case smaller than a prison cell) but they’re also very cheap.In some cases this means no phone, no wardrobe, no toiletries (except soap), no chair and no shelves. If you want to watch TV or have a window that’s extra – as is fresh laundry after your first night. Other recent hotel ‘innovations’ include bath butlers at the Sydney Hilton (to run your bath for you), e-butlers at the Dorchester Hotel in London (to explain how everything in your room works), personal oxygen bottles (Optus hotel in Vancouver), iPod hire (Dream hotel in New York), Wi-Fi access inside elevators (Langham hotel London) and personalised room lighting (Sofitel Paris). However my favourite hotel innovation is the humble room safe at the Langham Palace hotel in Kowloon (China). Not only is the safe large enough to hold a laptop, there’s a cable inside to charge it up. Now that’s what I call a real customer need!

But what about somewhere to go? According to the World Tourism Organization, cultural holidays are the fastest growing sector of the tourism market. In other words more of us are getting tired of just sitting on a beach and want to see something interesting, authentic or both. Hence the growth in ‘holidays that help’ — vacations that combine an interesting location with conservation or making a difference in some other way. We’re also seeing the growth of more exotic destinations (Brazil and Dubai for example), the rise of the mini-break (taking a series of short holidays each year instead of just one due to time pressures), the growth in religious tourism and the emergence of rich-packers (wealthy urban professionals that return to the countries they once visited as penniless back-packers).

And what about the more distant future? One area to watch is socio-economic trends including demographics. In the future there will be less young people, more single person households and more (active) old people.There will also be much more outbound tourism from countries like India and China (in 2003 there were 800 million domestic trips taken in China – that’s approximately the same number of trips taken by the rest of the planet that year). The latter could mean that popular tourist sites (even whole countries) will have to ration access while ecotourism could actually become harmful to the planet. However, looking even further ahead, this issue of growing tourist numbers could be solved by the emerging oil crisis. Put simply, nobody has yet invented an alternative to jet fuel so when the oil really starts to run out travel will once again become the preserve of the ultra-wealthy. For everyone else it will be a case of either staying put or taking your vacation closer to home.

Here are a few other travel related innovations I really like:

1. A company called Vocation Vacations lets people try out other jobs.
2. The ‘whatever, whenever’ desk at W Hotels.
3. Pillow menu at Hilton Hotels (airlines should steal this idea immediately).
4. The double beds on Virgin Atlantic Airways.
5. The women only floor at the Hamilton Crowne Plaza in Washington.
6. Cabin lights in first class on Emirates airline that resemble the night sky.
7. Borrowing a goldfish bowl for your room at the Monaro Hotel in Chicago.
8. Retro-tourism — using the slowest means possible to get from A-B.
9. Space tourism – coming soon to a galaxy near you.
10. The Laboratory of Experimental Tourism (it really exists).

My last column on the benefits of failure prompted one reader to ask whether the converse is true: “do successful companies sow the seeds of their own destruction?” Given that the average lifespan of a top 500 Company in the US is 40 years (12.5 years in Europe) the answer appears to be yes. Nothing recedes quite like success — or, as Bill Gates once said, “success is a lousy teacher, it seduces smart people into thinking they can’t lose”.

All companies start off as an idea. Start-ups are usually small and poor, which tends to create focus and urgency. If they develop a great product or service with an easily communicable point of difference, they usually grow.

And therein lies a problem.

One of the first issues to arise in a growing company is that management gets separated from innovation. Peter Drucker made this point many years ago, although he used the term entrepreneurship. Although these activities are different dimensions of the same thing, most companies regard them as separate. Moreover, as the urgency to stay alive evaporates, the focus shifts to internal management issues. But without continuing to innovate, companies die.

There are other challenges too. As companies grow, senior managers become physically separated from their customers. The entire board of one of the major Banks in Australia takes calls from customers every week, but this is a rare exception. A recent survey by Bain & Company found that 80% of companies believed that their firm delivered superior service. Only 8% of their customers agreed. Perhaps senior managers are confusing profitable customers with happy ones. Departments like sales and customer service are usually close to the needs of customers. Hence they are close to one of the primary sources of innovation. Managers generally aren’t – they are close to the needs of management.

The culture of an organization can also contribute to failure. The dominant culture of most successful companies is conservative – to avoid risk and to proceed in an orderly fashion. This is fine in the short term, but longer-term, what made your company successful in the past may not do so in the future.

Eventually a kind of ‘corporate immune system’ develops that resists innovation and tries to free itself from any form of obligation to adapt, even when change is clearly on the horizon. IBM failing to see the rise of desktop computing is a good example of such Group Think. One suspects that Sony’s loss of the portable music and entertainment market might be another. I’d say that most banks and newspapers are similarly in denial.

You can spot such organizations a mile off because they tend to distrust people from the outside (including their own customers). They also think that they have absolutely nothing to learn from anyone or anywhere else. A classic mistake is only recruiting from the inside. I once worked with a retailer that strongly favoured home-grown talent over external hires. Nothing wrong with that, except in this case it reinforced the arrogant and complacent attitude that there was anything to learn from the outside.

There is also the issue of creating the reality you want, rather than seeing what is really happening. It is not uncommon for senior managers to ‘edit’ news before it reaches board level — so things appear much better than they really are. There’s even a story about a supermarket chain in the US that repainted its stores, and hired extra staff, just before the CEO was due to make a visit. I don’t think the company ever went as far as hiring customers for the day, but once you start editing reality where do you stop?

In addition to corporate culture, corporate structure often gives rise to another problem. As Clayton Christensen points out, large organizations are generally structured on departmental levels. As a result most innovation is incremental. For example, most innovation inside fast moving consumer goods (FMCG) companies is endless line extensions to existing products. Unfortunately, young start-ups have no respect for these boundaries, so it is generally they who invent new categories and business models in response to changing conditions or new customer attitudes and behaviour.

In other words, unless you can look at innovation from a whole business perspective and make innovation truly cross-functional (twinning designers with R&D staff as Procter & Gamble now does for instance) innovation will never get beyond the component or existing category/product level.

But perhaps none of this is a bad thing. After all, survival is not compulsory. Perhaps everything (individuals, organizations, markets, countries) need to die — or at least be threatened with extinction – so that the cycle of innovation can begin again.

Here are a few quick tips to prevent your organization from doing dumb stuff and dying too young.

1. Water your roots. Re-discover the entrepreneurial zeal and focus that founded your company in the first place.
2. Think about how a start-up would operate in your market. How could you apply this thinking to make your own organization more resilient?
3. Don’t just look at what the big guys are doing. Study what the start-ups are doing, especially those on the fringes of your market.
4. History repeats itself. Companies and markets tend to operate in cycles, so know where you are and act accordingly.

I’ve been using a cool thinking tool for many years, which seems to capture peoples’ imagination. Here’s how it works.

Picture the scene. You’ve organised a focus group to figure out how people buy cars. Or perhaps you’ve put together a brainstorm to develop ideas for a new model. You’ve got a room and you’ve got the usual suspects – and as a result you get all the usual ideas.

Nothing wrong with this up to a point, especially if you’re looking for incremental innovation. But I’d suggest that both approaches are next to useless if you want to uncover some really deep insights or develop something entirely new.

For example, what if instead of running the focus group with ‘ordinary’ people you jumped into a car with a series of extraordinary people and went to visit a few auto dealers unannounced? This is something I did for a Japanese company a few years ago. The unusual suspects included an architect, a product designer, an anthropologist, a psychologist, an MBA student, an insurance salesman, a supermarket space planner and an assorted bag of iconoclasts and revolutionaries. Half were men; half were women and ages ranged from 21 to over 60. Crucially, all of the people were an expert in a field other than auto sales or marketing.

On another occasion I put together a similarly eclectic group to talk about the future of aesthetics for a paint company that was interested in trends that were driving paint colours and finishes — only this time the meeting of minds met for a dinner discussion inside an art gallery. Why an art gallery? – partly because it was full of paint and aesthetics, but largely because it was an inspiring and usual space which I believe directly influenced the quality of the debate. Of course, you have to pay attention to what the group is saying (or doing) – or, as Procter & Gamble’s VP for Design and Innovation Strategy puts it, you have to “listen with your eyes”.

OK, so it sounds fun, but what are the practical benefits of such melting pots?

First, the groups are incredibly diverse in terms of skills and experience. This means you get a high level of cross-fertilisation, which results in new perspectives and horizons. People are also highly articulate and enjoy meeting people from outside their own discipline, which again sparks the conversation.

Second, the groups are not run as formal meetings with agendas, discussion guides or set timeframes. Groups are usually run in the evening, often over dinner, and the result is a relaxed atmosphere out of which come casual conversation, insights and ideas. There is obviously an objective buried deep beneath the surface and there is moderation too, but this is kept to a minimum. The best groups I’ve organised haven’t needed moderation beyond an introduction and the discussion has continued into the early hours.

Third, because ‘innocent experts’ are outsiders, they have no knowledge of what is politically correct or expedient within the host company. As a result they tend to ask quite fundamental or naive questions. They have no knowledge of ‘the rules’ and are therefore quite fearless. A good example of this was an innocent expert (in this case an historian) who asked a water (utility) company what it was for and what business it was in. The client (the head of R&D, who on this occasion attended the group) was at first insulted by the apparent stupidity of both questions, but eventually realised that they were catalysts for thinking about where the company could go in the future.

The answer to ‘What business?” included discussions about the transport of liquids, networks, telemetry, environmental monitoring, infrastructure development, purity, waste, drinking water, and even the role of women as gatekeepers to family health (the company was at the time exclusively run by male engineers despite the fact that over half their customers were women). Each of these ideas was then used as a springboard to develop potential strategies, products and services.

Where do you find these great people? As they say, there is no short cut to anyplace worth going, so you’ll need to do some research. There are a handful of companies like Fresh Minds www.freshminds.co.uk that can help you source some bright young people, but there’s really no substitute for building a brain bank of innocent experts yourself.

Obviously you need to be careful that innocent experts are not so removed from the area under discussion that they can’t contribute. This was a point made by Malcolm Gladwell a few years ago, who argued that “innovation comes from the interactions of people at a comfortable distance from one another — neither too close or too far”. I partly agree.
One of the problems with internal brainstorms is that people are too close to each other and meetings lack diversity and freshness. There probably is a sweet spot somewhere between knowing too much and too little, but my experience is that the more removed you are from a problem the greater your clarity of thinking. Knowing just enough has its uses, especially for evolutionary or incremental innovation, but naivety is probably what you really want if you are pursuing a more radical agenda. That’s why most paradigm shifts don’t come from industry incumbents or people with the most experience.

So what are my top 5 tips for using your own innocent experts’?

1. Spend time finding the right people. You can’t conjure up a great network overnight
2. Invest money on an inspiring thinking space or event. It will pay dividends
3. Watch the group dynamic and never mix people that are close in terms of skill
4. Don’t be afraid to let the group run — if it’s working don’t stop it or interfere
5. Innocent experts are generally more turned on by whom they’ll meet, the subject matter and quality of the discussion, than by how much you’re paying them.

Take a trip to the small town of Rheinburg in Germany. It’s home to a 4,000 square metre supermarket created by Metro, the world’s fifth largest retailer. If you believe the hype, you are looking at the future of supermarket shopping.

In this store you’ll find the latest retail innovations, including intelligent weighing scales that can identify and price fruit and vegetables by sight (whether loose or packed in plastic). You’ll also find tablet computers that can be attached to shopping trolleys and switched on by inserting a customer loyalty card. Once activated you can download your shopping list (which you emailed to the store earlier), check your favourites list, print out personalised special offers or get map directions to the washing powder aisle.

There are also information terminals scattered around the store to help you find out a bit more about a particular brand of wine, get a print-out on a new type of toothpaste or request a recipe for the chicken you’ve just bought. Needless to say the store uses RFID technology to ensure that the shelves are never empty.

Moving forward a few years, an advertisement might start playing the moment you pick up a bottle of Pantene shampoo – or if the aisle recognises you as a heavy shampoo buyer (the Prada store in New York already shows footage of models wearing certain clothes if you hold the clothes up to a nearby screen). You might be greeted by name as you enter the store or be directed to a loyalty queue for a speedy check out. Or perhaps there won’t be a checkout because an RFID reader will automatically scan your bags as you exit the store with the bill being automatically sent to your credit card company or your e-wallet.

But do customers really want such high-tech innovations?

In the future there will be lots more old people – and old people don’t like technology. But they might like stores with better lighting, non-slip floors, lots of seats and big easy to read prices (you’ll find all of these innovations in the Adeg Aktiv 50+ food market in Salzburg, Austria). Future migration back to cities and the rise in single person households means that low-tech convenience stores, 24/7 kiosks and giant vending machines (like the McDonald’s owned Tik Tok Easy Shop in Washington DC) may be more in touch with customer needs too.

In other words, perhaps rolling out identical retail formats is history.

For example, giant enclosed shopping malls are already starting to look like dinosaurs because shoppers are too busy and too tired to fight their way through giant car parks and endless corridors just to buy a pair of shoes. In the last 10 years the number of women who consider shopping a “pick me up” has fallen from 45% to 21% in the US while another survey said 53% of shoppers “hate the experience”.

Why is this the case? One reason is that most shopping centres have no authentic identity or sense of self (‘anywhere places’ I’d call them – because the look and feel is the same from Boston to Bangkok).

Making shopping more theatrical is one way of breaking this monotony, so it’s no surprise that supermarkets are now trying to capture the sights, sounds and smells of French markets, while mall operators are trying to theme developments along the lines of thousand-year-old Moroccan bazaars.

Selfridges’s department store in London even describes itself as a theme park where customers are encouraged to buy ‘souvenirs’ of their visit. Recent foot-fall generators
have included a regional food festival, a Brazilian event and a conceptual art installation where 600 naked people rode up and down on the escalators.

Similarly, shoppers are getting fed up with giant retailers bulldozing local communities and turning streets into homogenised strips that are devoid of life after dark (75% of people in Britain think that supermarkets like Tesco – which takes £1 for every £8 spent in Britain – have become too powerful and would support stricter government controls). This is a fact that has not escaped the attention of the world’s largest retailer, which is testing smaller neighbourhood stores dubbed ‘Small-Marts’.

So maybe the future is ‘stealth retail’ — shops that don’t operate like shops and malls that don’t look like malls. This is not a new idea. Back in the 1960s Victor Gruen, the architect of the modern mall, was calling for retailers to “incorporate civic and educational facilities” into shopping centers. In other words, shopping malls and supermarkets should function more like old-fashioned town centres, with non-retail elements like schools, doctors, libraries, churches and sport facilities. A good example is a Swiss retailer called Migros that has created health and education centres.

But connecting with the local community doesn’t just mean parents collecting tokens for school computers. It means placing the school alongside the supermarket (like Sainsbury’ have done in the UK by teaming up with a company called Explore Learning) or using retail space for community purposes like Tesco has done by putting a Police Station inside a supermarket in Essex (UK). Going local also means utilising local labour and selling local produce. Farmers markets have been so successful in recent years that there has even been talk of allowing them to use supermarket car parks after hours.

Another important trend is Everyday Low Pricing (EDLP), but low prices often carry a high cost for other countries. Moreover, increased consumption doesn’t seem to be where people are heading (read Growth Fetish by Clive Hamilton and Status Anxiety by Alain De Botton). If you put a coat and bag checking service into a store people would be able to carry (thus buy) more. True, but this misses the bigger picture. People are beginning to realise that buying more things doesn’t make them happier.

In 1989 58% of people in the UK said they were happy. By 2003 this figure had dropped to 45%, despite the fact that average incomes had risen by 60% over the same period.

So perhaps the ultimate solution is for retailers be more than just shopkeepers.Maybe their higher purpose is to build and support communities. This would mean creating aesthetically pleasing environments that are integrated with all aspects of the local area. It would also mean employing friendly people rather than impersonal machines. This may add to the cost of goods, but you can’t build a cut-price community.

So what are my top 5 predictions for retail over the next decade?

1. Department stores will be reinvented to appeal to an older demographic
2. i-tags and RFIDs will trigger a revolution in mobile and contactless payment
3. More people will buy online for basics allowing retailers to focus on experiences
4. People will look to retailers to edit (curate) the plethora of products that are available
5. Wireless devices will allow shoppers to interrogate products and companies on shelf (often with negative consequences).

Like predictions about the paperless office, forecasts about a cashless society have been around for a while. For example, AC Nielsen research says that only 10% of transactions in the US will be cash by the year 2020. Logically this makes sense because e-commerce is at it’s most powerful in information processing industries like financial services.

The idea is essentially that notes, coins and cheques are all hugely inefficient and will be replaced by digital money, which is easier to process. Governments love the idea of getting rid of cash because up to 25% of all cash in circulation globally is used for illegal purposes (in the US a staggering 25-30% of people don’t have bank accounts). Companies also love the idea because e-payments are faster and much cheaper.And as far as multi-nationals are concerned the sooner there’s a single global currency the better.

From a technological point of view the cashless society is certainly getting closer. PayPal already has 150 million accounts, which makes it bigger than most national banks. In South Korea 4 million banking transactions were carried out via cellphones in June of last year and 300,000 people have bought cellphones into which you can plug a memory card securely encrypted with financial data. In Finland and Japan you can pay for train journeys and restaurant meals by simply waving your phone in front of a payment terminal. Meanwhile in Australia and Austria you can buy car-parking spaces using your phone. Hello mobile micro-payments and bye-bye cash.

Back in South Korea more people own cellphones than computers so it’s pretty easy to see why phone companies could be the banks of the future. Or, as Bill Joy has pointed out, your phone will become your wallet and a bank or credit card company will give it to you for free. And don’t forget that in the future all phones will be GPS equipped so products like motor or holiday insurance could be sold by the minute on a pay as you go basis. Why? – because your insurance company would know where you are in real time and could calculate risk and payments accordingly. Thus the scene with Tom Cruise in Minority Report suddenly becomes very real with the prospect of retailers (including banks) knowing who you are and what you’re worth (or at least what you spent last time) the second you step into their store.

Could the cashless society really happen? Yes. Early signs include the fact that 14% of Britons regularly throw away coins because they can’t be bothered to carry them around.In the US electronic payments (including debit and credit cards) surpassed cheque payments in December 2004 for the first time in history, while in Australia cheque usage has fallen from 50 per person in 1998 to 30 per person in 2003.

Other signals include the fact that Air Miles are now the world’s second largest currency according to The Economist. Better still, Everquest currency is now more valuable than the Japanese Yen and is regularly traded for real US Dollars according to Edward Castronova, Associate Professor of Economics at California State University(see gamingopenmarket.com).

Indeed it sometimes seems that the only people who like ‘real’ money are older change averse people and they won’t be around forever. Nevertheless, all but the most geekish members of Generation Y would have to admit that there is something inherently substantial and emotionally reassuring about paper (and metal) money that’s difficult to replicate in cyberspace. Logically paper books and newspapers should have been replaced by e-books and e-news a long time ago. But they haven’t. Thousands of years of tradition, human nature and practicality have put he brakes on these innovations.

Then there’s the issue of trust. There are lots of trends that can be used to support a scenario where banks become extinct — acceleration of technology, product convergence, convenience, new channels and brand promiscuity to name just a few. But remember most people don’t just dislike banks. They hate them. They hate the queues, the fees and the lack of any meaningful choice. In the UK there’s even a web-based service that allows customers to record conversations with their bank to provide evidence of poor service or misleading advice.

So if Toyota or Yahoo branch out into financial services (as they’ve done in Japan) the banks could be in for a pretty rough ride. And that’s before Microsoft, Apple or Vodafone start to offer banking services based on emerging technologies like digital signatures. Hello hyper-competition. Bye-bye margins.

So is it the beginning of the end for physical banks? Not necessarily. In the US branch expansion is a major trend. In Australia local community banks (and conversely private banks) are all the rage.100 years ago the bigger a bank was the better. Now the opposite is increasingly true. As globalisation and virtual worlds take hold people are being drawn back to local businesses and physical contact. People are also craving simplicity, which is why banks like HBOS (UK) offer a limited choice of easy to understand products. This is good for customers, staff and profits.

Equally most markets are polarising between low cost providers and premium suppliers offering personalised solutions. So cheap Internet banking via a cellphone can happily exist next to branches with people offering advice on big-ticket items like home loans.
If you’re rich you can have the best of both worlds — phone banking with instant access to a personal assistant and swipe card entry to flagship branches offering legendary customer service. And somewhere in the middle you currently have 7-Eleven’s Vcom
24-hour bill pay kiosks.

But we’re back to trust again. UK supermarket Tesco has been successful in offering basic products like ‘cash back’ and car loans but supermarket credibility is strained when you start talking about more complex matters such as wealth management. Or take the fact that whilst we regularly take money out of ATMs only 5-10% of us are happy to deposit money back in. Then there’s the issue of identity theft — a $56 billion problem in the US and up 600% in the past 5 years in the UK.

ID theft is a problem that could bring the cashless society to its knees, but it’s also spawning a number of innovations like identitytheft911.com (Citibank) and ID theft insurance (progeny/AIG).

We started with some predictions so let’s finish with a few more. Nobody can be really sure what will happen in the future although it’s a fair bet that change will happen.
Here are a few ideas you can bank on.

1. We’re on the verge of a technological explosion that will benefit new entrants.
2. Mobile micropayments will revolutionise the shopping experience.
3. Physical banks and customer service are not going away any time soon.
4. If cash disappears private currencies and barter schemes will flourish.
5. Digitised money will eventually be embedded in everything from clothes to people.

1. The past is more important than the future.
It’s been said many times that history is no guide to the future. I disagree. It is also unsaid that companies do not need to understand where they have been to see where they’re going.
Hence most commercial organisations have very little sense of their own history and what happened last year is so yesterday. This is a tragic mistake because memory and experience can prevent us from making the same mistake twice. It is also a shame because whilst many things change the fundamentals often do not. People act and react with the same primeval instincts that they‘ve always done. On a practical level older employees were a source of knowledge before the term knowledge management was invented. Equally, looking at the history of products and markets often uncovers insights buried beneath the service. Add to this the fact that many trends are cyclical and you might start to see how to use history to invent the future. If, for example, you looked at the history of newspapers you would discover that they were first sold in coffee houses in the 1700s. So maybe that’s where Starbucks got the idea? Or how about aerosol paint? That idea was first thought of about 40,000 years ago.

2. The end of outsourcing?
If companies are outsourcing strategy, innovation, R&D, manufacturing, logistics and distribution what exactly are they left with? Sure, outsourcing saves money in the short term and specialists tend to be better than generalists. But as Tom Peters says you can’t shrink your way to greatness. So maybe 2005 will see a move back to in-house innovation and a realisation that whilst ideas, provocations and catalysts can come from the outside, research, development and implementation can’t.

3. Conversations as catalysts for change.
Theodore Zeldin will readily admit that most of his ideas will fail. But let’s face it, so will most of us. And anyway, surely it’s better to go out in a blaze of glory as a beautiful failure than an invisible and mediocre success. Zeldin’s ideas are mostly focussed around work and ways of making work more satisfying. He is also a champion of conversation and says that if more people talked to each other properly they would discover new interests. Shared interests and conversation spark ideas and idea can change the world.

4. To thy own self be true.
There are some people who believe that you can make anyone creative. The aim of all organisations in 2005 and beyond should therefore be to pursue radical creativity and innovation. Putting to one side for a moment the question of whether all people can be creative, there is a significant amount of evidence to suggest that all companies can’t. Most radical innovations (some say as many as 70%) come from guys in garages, not industry incumbents. Inventors are creative precisely because they don’t sit inside inertia ridden corporate structures. However, inventors are usually hopeless at implementation whilst this (along with incremental improvement) is exactly what big companies are good at. So maybe the best innovation process for big companies is simply to spot good ideas from elsewhere and either adapt or licence the idea or buy the company. In other words, know what you’re good at and don’t try to be something that you’re not.

5. The need for speed
There are at least a dozen ‘megatrends’ out there at the moment but if I had to pick one for 2005 it would be speed. Technology is speeding up and so are we. 15% of meals in the US are now eaten in cars and apparently 50% of soup is now eaten out of home. Hence the rush by food companies to create portable products and the continued growth of 24/7 availability.
But like most big trends there’s a counter trend. In Europe The Campaign for Slow Cities want to slow things down while in Australia 25% of people say they have ‘downshifted’ in the last year to readdress their work-life balance.

6. Happiness on the agenda
According to sci-fi writer and futurist Bruce Sterling everything we own in the future will be cuddly. I don’t know about this but maybe we’ll want everything to make us happy. Happiness is an emerging trend that’s set to take of in 2005. There’s an Institute of Happiness in Australia and writers like Alain de Botton (Status Anxiety) and Clive Hamilton (Growth Fetish) are challenging the idea that growth and material possessions automatically make us ‘richer’.
A Study by the Henley Centre (UK) found that in 1989 58% of people were ‘happy’ compared to 45% in 2003 despite a 60% increase in average incomes. Meanwhile a study by Cornell and the University of Colorado found that spending on experiences is more fulfilling than spending on possessions. So if you’ve got a product you’d better get busy turning it into an experience. This idea also has serious consequences for companies who have always assumed that the way to keep employees happy is to promise them more money.

7. Charles Handy.
If you’re interested in the future of work get your hands on a few books by management thinker and social philosopher Charles Handy. His track record is impressive with stints at Shell and the London Business School. His forecasts are spot on too with predictions like the decline of the traditional organisation and the growth of portfolio careers.

8. Older younger and younger for longer.
In the future children will grow up faster while adults will stay younger for longer. There will be less young people around but they will be more sophisticated and experienced. This is a dream come true for some advertisers but there will be negative social impacts too.
Girls are maturing earlier sexually and children having kids will effect policy in areas like education and employment. Conversely, there will be more older people around which will be good news for industries like medicine, travel, home improvement and leisure. However, it could be bad news for innovators because older people tend to be conservative and reject anything new. Or maybe not. 17% of Sony Playstation users in the US are aged over 50.

9. Open source innovation.
Someone once said that to get a good idea you need to have a lot of ideas. Suggestion boxes are a bit old hat these days but the principal of asking everyone for ideas is very sound.
However, most companies still seem to run innovation as a (small) department and consider the aims, processes and outcomes as some kind of state secret. A model for the future could be the open source software movement. So instead of doing everything your self why not open up the search for ideas and on-going research and development to customers and suppliers? A good example of how to do this is the global ideas bank where anyone can submit or vote for an idea.

10. Problems looking for solutions
Here’s an innovation tool that’s often hidden in plain sight. If you’ve looking for new ideas don’t. Look for problems instead. Go and talk to whoever runs the customer complaints department and ask for a list of the top 10 moans and groans. Alternatively ask some customers . Or maybe grab a product designer, an psychologist and a social anthropologist and watch people using your product or service. What doesn’t work and what could be improved from a customer experience point of view?