Habit - The Enemy Of Evolution

If evolution is a natural state, so is habit. They're a tricky pair, evolution and habit - but in my view, they are remarkably prevalent.

Evolution needs to be understood to understand how business value is created and sustained.  Good business ideas (that create value) are rarely thought up out of nothing - they build on what came before - they are the product of evolution.  Evolution brings constant change and adaptation to the changing environment - and this can generate new value.

Habit needs to be understood to realise why value gets eroded.  Habits are repetitive, with no change and adaptation to the changing environment - and habits can erode existing value by failing to adapt to changing circumstances.

We typically think of evolution from a Darwinist perspective - that is - we relate evolutionary theory to how species have changed over time.  Even people who don't agree that this is how we came to be (e.g. have a creationist bias), they still understand what evolutionary theory proposes.

Evolution can be summarised in three words: "differentiate, select, amplify" - are these three words our code not only for surviving, but for progressing, succeeding and winning?

To recap, Darwin suggested that "Favourable variations would tend to be preserved and unfavourable ones to be destroyed".  Note the word "variations".  This is the essence of evolutionary theory.  Take something, create a few variants, see which variant works best in that environment.

I suggest that anything created is built upon what was created before.  We see ideas, we merge them, we use tools and techniques to re-purpose those ideas into something new.  However, the "new idea" that takes the market by storm is only new and relevant at that moment in time for that market in those conditions.  Just like pop stars, if they are to survive they must continually anticipate and adapt to the market.

How to adapt? A simple method: evolution.  Differentiate, select, amplify.

Differentiate.  Do something different.  A new product, a new service, a new model, a new flavour.  Test the variants.   Lots of variants.  Constant iteration.

Select. Figure out which one of the variants hits the sweet spot and gets good results.

Amplify.  Do more of this.  Push resources into building / marketing / selling the new variant.

The point is though is that the new variant will never be the best it can possibly be.  It can always be even better by evolving some more.  Keep changing.  Because with evolution, we never design the "best" up front - we continuously discover "better" by trial and error.

The environment in which we operate changes on a daily basis.  What was the best effort 3 months ago is probably less likely to be as good as it could be now.  As someone once said to me "doing more of what you did to get you here isn't enough to get you over there".  So we need to constantly change and adapt.

In this changing world habit is our worst enemy.  Habit holds back evolution because we stop creating new variants.  Of course, there's a reason for habit.  It helps efficiency and for repeatable tasks, processes get tighter and more effective.  That is - if the environment in which they operate remain constant.

The world is innovating faster and faster.  As the world accelerates with new technology, innovation and social trends, we will need to be even more nimble if we are to adapt and succeed.  Failing to adapt means our ideas, our business models or solutions will become dinosaurs - extinct.

I believe this thinking can be applied on so many levels.  To corporate life, to product management, to government, to family life, to careers, to sport.

To live in the present, to evolve and adapt - it requires having some process (habit), but only just enough.

Burning Down The House

"I was in the house when the house burned down".

So sang Warren Zevon on his Album "Life'll kill Ya" in 2000.

Now I've never lived through a world war, but I've had my share of family losses and lived at more than 20 addresses. At work I've lived through two recessions, the dot com bubble burst, and 9/11 (when working in travel).  I've been in 5 companies that have been acquired and three that have had to lay off staff.  I've been through several VC funding rounds.  As an Ops Manager in travel and eCommerce I've had to fire staff, lay off staff and deal with; the death of my customers, vehicle crashes, flight delays, server outages, terrorism threats and avalanches.

So, when I heard Zevon's lyrics, it kind of made me feel - well - old.

Also - I realised that all that experience at the sharp end does make for better intuition and decision making.  Looking back at the younger me coming out of university in the early nineties - I hardly recognise him  - but it's still the same old me.

The thing is - when you're young, you have no way of knowing that something won't work, so you go for it anyway.  Business rewards risk that succeeds - and some of our best entrepreneurs and innovators are young, ballsy and blissfully ignorant of burning houses.  Passionate, energetic - and full of belief.

Increasingly I'm seeing that pairing up experienced hands with youthful vision and energy surely must be the best ingredients for start-up success.  I guess that's why Silicon Valley is a magnet for start ups; experienced VCs mentoring and funding youthful creativity.

If I ever go into business on my own, I'll be Butch Cassidy to a mother-f crazy Sundance Kid.

Embracing Order And Chaos

Ever heard the phrase "living on the edge".

What does it say to you?
- stress, out of control, barely surviving?
OR
- dynamic, exciting, feeling alive?

I often say to colleagues and friends that it's good to live on the edge of chaos.

Coming from someone that is naturally organised and likes to get things done well, this may seem like a contradiction.  Maybe it is.  Increasingly I find though that you can always have too much or indeed too little of almost anything.  For example; fun, pain, sleep, wakefulness, work, play, beer, food, heat, cold.  Add to that list order and chaos.

Order is great when it's obvious when what needs to happen.  Controlled processes are perfect for things like tax returns, train timetables, airline safety and manufacturing efficiency.

Chaos however is very useful when is not obvious about what needs to happen next.

Innovation and the entrepreneurial spirit that pushes our society and economy forward requires a certain randomness to succeed.  Through conflict of opinion, through chance encounters in the corridor, through exposure to different cultures, industries and methods, through trial and error it's through these unordered experiences that we build insight that helps us progress.

Then, ideas are worth nothing without execution, so you need to get ordered to see any results.

In my experience, it generally pays to have process, but only just enough process.

An unstructured mind needs to embrace order to see value come from their ideas.  A structured mind needs to embrace chaos to create the conditions for success.

Managers in an organisation can help construct a culture that leans towards order or chaos.  At any time in the history of a movement, the balance will need to lean towards one or the other.

Get Your Platform Shoes On

Finding a business model that scales is increasingly important in the modern world.

What does that mean, and how do we do it?

First of all, scaling. I'm using scaling in the broadest sense. In my definition, it's a case of where revenues per unit grow faster than cost per unit. An example would be; say I need 2 programmers and 3 web servers to make 1,000 online sales a day. If I do 10 times as many sales, I don't want to spend 10 times as much on programmers and servers. So instead of 20 programmers and 30 servers, maybe I can do it with 3 programmers and 4 web servers. The cost of doing business gets more efficient the more volume I add.

This is a particularly important concept for tech-media companies, because often in a start-up mode they are running at a loss. They are still investable businesses though because if the sales and marketing bring the volumes, not only do you get to a point where the company starts to break even, but the growth in profitability thereafter is extremely impressive.

Secondly, the modern world. Increasingly we are seeing business models that transcend borders. They can be run primarily from one central location with small local teams for international presence. Not just in tech (Google, Facebook, Amazon, eBay), but also in telephony (Vodafone, Orange, Nokia, HTC), consumer electronics (Sony, Samsung, Apple) and supermarkets (Wal-Mart/Asda, Carrefour, Tesco). A business model that scales has a huge advantage over one that doesn't when competing on world stage.

So, if scale is important to compete in the modern world, how should we think about business investments into this environment?

I always ask myself, "is this a platform business?"

If the answer is yes, I'm interested. If no, you'll need to work hard to get my interest.

A platform. Not 1970's funky shoes, but a prism through which to view to judge almost any business investment.

A platform is a place where supply and demand are aggregated. Lots of buyers connect to lots of sellers through a central marketplace or hub.

There are platforms all around you.

iTunes: Hundreds of millions of music consumers connected to almost every music publisher
Google: Millions of searchers connected to millions of advertisers
eBay: Millions of private sellers connected to millions of buyers
And there's more... Autotrader, Match.com, Amazon - and of course Livebookings (my day job) - where we connect millions of diners to thousands of restaurants.

These are all platforms. The more supply you add, the more interesting you are to buyers. The more buyers you can provide access to (consumers), the more interesting you are to sellers. You gain market power - because the owner of the marketplace can charge people for attending the marketplace and for transactions that happen in the marketplace.

In any business model like this, the potential is exciting. The keys to success are; seeding the platform with sufficient product to get consumers interested, have a diminishing cost of sale by adding more inventory over time and having inherent viral effects that customers create more customers. That's all about execution. Having a great idea is one thing - doing it is always harder.

To get past that "is this a good idea?" phase, I always ask myself, "does this solve a real need", "is this a platform" and "will it scale?".

Then - I get my platform shoes on - and go for a boogie.

Can I Ride In Your Airship Please?

Earlier this week I was priviledged to hear Richard Seymour give a talk.

Richard is one of the world's most respected product designers. He lives in the future. I mean, he's not Doctor Who or anything like that - but his perspective is very different to your average man in the street. You see, his job is to make the future happen.

Make the future happen? Yes. The future is not something that happens to us, it's something that we bring about ourselves. Richard is working on some fantastic projects that might be 2 years, 6 years or 10 years away from being a reality. But they're being worked on right now.

Someone - or some people - creates change and future comes about.

The world wide web didn't just happen by itself.
Nor did Facebook, Google or Amazon.
Or IVF treatment, open heart surgery or antibiotics.

People are creating the future every day. The future might not quite be what we expect when we get there, but our current reality is the result of decisions made in the past, by ourselves and by others.

We can see the future coming if we look hard enough.

In 2012, The Olympics
In 2018, Crossrail
This decade - Space tourism
Or how about - an airship to cruise between The Serengeti and The North Pole?

Check it out.



Fancy a ride?