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BP crisis: our shared responsibilities toward a new path to success

By Francis Cholle on June 9, 2010 10:22 PM | Comments | TrackBacks
bp_oil_spill_nearshore_trajectory_june18_2010.jpeg
BP oil spill nearshore trajectory june18 2010


The tragedy in the Gulf continues. By now we’ve all seen the horrendous images of seabirds, fish, dolphins, and other forms of aquatic life - dead or dying, helpless as they slither about covered in oil, an agonizing sight for all the world to see.  We’ve seen the Cajun shrimpers bemoan the loss of their lifestyle, and we are witnessing a slow, lingering devastation - as the sea itself seems to be gasping for breath.

As the spill keeps gushing the questions keep coming:

  • Will Florida be soon deeply affected as well?  
  • Will a hurricane stir up the oil even further?  
  • Will the oil flow around the Florida Keys and wash up on the Eastern seaboard? 
  • When will it end?
  • Will BP pay?
BP is certainly to be held responsible. Some conniving political alliances of the past probably as well. No doubt such a catastrophe could have been avoided if more preventive thinking (North West Blue Quadrant of The Intuitive Compass™) had been involved in the management of this underwater well and if decisions had been made based on sustainable value as opposed to shareholder value. Of course there is nothing wrong with compensating the financial risk of a shareholder or an investor. But the sole focus on financial ROI can easily lead to very unbalanced situations. BP and the oil spill in the Mexican Gulf is one more proof of such limited thinking. The many other global sustainability issues as well.

But rather than focusing on BP as the scapegoat of our anger and sorrows few key facts need to be remembered though in order to draw deeper lessons from the current situation in the Mexican Gulf and bring forth a call for meaningful change. Let’s look at the diagram below.

sourceofoilinocean.png
Average annual contribution to oil in the ocean (1990-1999) from major sources of petroleum in kilotonnes. 
From Oil In The Sea, Ocean Studies Board and Marine Board of the National Academy of Sciences (2003).

Statistics show that above nearly 85 percent of the 29 million gallons of petroleum that enter North American ocean waters each year as a result of human activities comes from land-based runoff, polluted rivers, airplanes, and small boats and jet skis, while less than 8 percent comes from tanker or pipeline spills.

So what BP’s mistake is revealing is that all our  human operations and our system of wealth creation need to be reconsidered when it comes to oceans preservation. 

Not only BP but most of us in business still base our decisions on a very limited perspective and understanding of progress. By focusing primarily - and at times exclusively even - on the North East Yellow Quadrant and the South East Green Quadrant of The Intuitive Compass™ we essentially destroy the foundations of our existence and upset the fundamentals of life on the altar of logic and linear efficiency.

We leave out our best instrument for adaptive and sustainable decisions: Instinct. Simply put neuroscience has now proved that there is intelligence in our guts and we all know that instinct is responsible for our survival; that is its main function.

So even if our brilliant human logical mind has been able to invent amazing technological and scientific solutions all around it is yet very limited when it comes to shift paradigm and emancipate from its own way of reasoning. Logic only knows what’s logical. This is why in the name of logic one can become totally illogical because logic leaves out the part of life that eludes our logical mind. And as we can all testify from experience: life and logic don’t match! It takes imagination and courage to go beyond logic. To engage in a new path status quo needs to be challenged. It costs more effort, more risk taking, more energy and requires independent and creative thinking.

Today that level of in depth and courageous thinking is required. That level of commitment and determination to change is unavoidable.

The good news is: it is possible!

Muhammad Yunus proved it with microcredit. He challenged the status quo. He claimed that poverty is not a necessity of our system of development. He showed that it can be efficiently dealt with. He imagined and thought out a powerful way of empowering poor people to go beyond their limits. He organized lending money for the poor and showed that poor people can be more reliable that solvent people by traditional standards. He shifted the paradigm of credit and made a huge impact: nearly 8 million individuals are members of Grameen Bank (a total of 40 million people impacted when you count their family members). Since its inception thirty three years ago Grameen Bank has lent more than $ 8 billion US dolllars to the poor in Bangladesh. 

So how does one start an enterprise that reaches nearly 40 million people in one’s own country and improves the lives of tens of millions more in replications around the world? How does one create socially sustainable prosperity?

Through imagination, intense feeling, courage (i.e. rage of the heart), and deep thinking while not being afraid of paradoxes and commending a holistic view of life where all count, paying attention to unusual cues into powerful creative solutions, by humbly accepting that we cannot control life but committing to influence our individual and collective destiny. 

This exact same approach also applies to our relationship with Nature, seas and oceans. This equally applies to business model reinvention and innovation. In other words we can innovate and create prosperous businesses even in recession times and their impact can be positive, meaningful and economically, socially, and environmentally sustainable.

It is time to rethink the way we think… Not from a fragmented paradigm where logic and linear efficiency prevail in an exclusive manner but from a holistic and inclusive paradigm that is both creative and sustainable, intelligent and relevant. This is why Intuitive Intelligence and The Intuitive Compass™ were invented. This is why i do what i do.

Michael Schrage and the Intuition Fallacy

By Francis Cholle on June 6, 2010 7:06 AM | Comments | TrackBacks
There's a post on the HBR blog - Tell Your Gut to Please Shut Up - by Michael Schrage, a research fellow at MIT Sloan School's Center for Digital Business, in which he denounces the current trend about intuition as the key to quick, effective, successful decision-making.

Although Schrage's argument seems to make perfect sense, and his ideas are well articulated, I think this is just another false debate about intuition.

To be intuitive does not necessarily make any one a better decision-maker, as much as having access to a lot of data is in and of itself not enough to make a good decision.

Schrage's view is a common misrepresentation of intuition. 

In reality, intuition is not about being right or wrong. Instead, intuition is a human aptitude that allows us to take in information that is not obvious to the conscious part of our mind that responds to logic. In other words, you may perceive something or feel a certain way about someone or a situation, and this perception and/or feeling may seem very real and yet simply does not make sense from the point of view of logic. But the fact that it does not make sense logically does NOT mean that it does not have any value... far from that, actually.

This phenomenon is often the foundation for many meaningful scientific breakthroughs. It is also the reason for great art, and even successful medical diagnoses!

What do you do in the face of information that does not seem to make any sense yet keeps your attention?

This is when your imagination and your capacity for induction as well as your sense of discrimination, your analytical mind, and your experience are all at once put to test.

Our analytical mind and our instinct work together to make successful choices.

Let's remember that a few years ago research at MIT Picower Center for Memory and Learning showed that parts of our reptilian brain (or instinctual brain) participate in sophisticated decision making: simply put there is intelligence in our gut instinct.

For this to occur, we need a medium to exchange data between the conscious and the non conscious planes of our mind. This is the function of intuition: to inform (not to decide). And this is why Intuitive Intelligence is defined as the ability for our analytical mind and our instinct to function in synergy thanks to our intuition

Now why is Intuitive Intelligence a fundamental concept in business today? And why is intuition an important subject that must be well understood, not misrepresented? Why? Because logic alone cannot bring the level of creativity and reinvention we need to innovate and win in the global economy. Breakthrough ideas can only come from our unconscious mind (otherwise they would not be new ideas!) so we need to access the part of us that is beyond our conscious mind. And what's beyond our conscious mind does not respond to logic!

Every entrepreneur who launched a successful business would tell you that at some point he or she made a critical decision based on gut instinct, because when you create something meaningful that does not have any existing equivalent you will have to rely on your own judgement beyond any logical framework of reference. That's the difficulty of launching a new business. You have to step in the unknown.

So to answer Michael Starge's question at the end of his HBR article: "So did I write that based on empirical observation? Or because I'm trusting my gut?

My answer is loud and clear: hopefully, both! Otherwise - with all due respect - "that" runs a high risk of being just another platitude.

The Future of Magazines & Newspapers: A Conversation

By Francis Cholle on June 6, 2010 6:21 AM | Comments | TrackBacks
Not long ago, at the airport, I had a conversation with John - a business man in his early 40s. 

Since I consult in the highly-challenged paper media industry I asked him how he feels about reading magazines and papers.

I assist a major firm identify the fundamentals of the media of the future, facilitate a culture of innovation and accelerate the reinvention of their business model. For those of you less familiar with the challenges of this industry in the US  let me tell you what they are in this digital age:

- increasingly, online destinations attract the attention of large audiences
- most paper magazines have a hard time retaining their audience
- advertising dollars shrink as a consequence
- media company try desperately to expand revenues on the web repurposing a somewhat irrelevant editorial legacy

So let's come back to my conversation with my fellow traveler at the airport. He's a best selling author, considered as a thought-leader in his field of expertise. To respect his privacy, I'll keep his name and further details about his profession confidential.

He tells me that he has not spent a dollar on a newspaper or a magazine for months, probably years!

So I asked him to share with me his reasons for this. He tells me that he already has access to more information than he could read: he receives the NY Times online newsletter everyday, as well as the Economist weekly; he checks the news on Google and the Daily Beast. Three times a week, he watches CNN at the gym for 45 min. as he runs on the treadmill. He browses the web constantly.

Overall, he prefers e-newsletters over online subscriptions because of time constraints - with a subscription he has to wait for the entire digital edition to download on his screen, but with an e-newsletter is only one click away from the information. Time is of essence for him and much more important than the marginal information he can only have via electronic subscriptions or paper versions.

Besides, he flies internationally very regularly and enjoys access to more magazines and newspapers - both US and international - than he could wish for.
He tells me that he prefers electronic information because he can save articles and send them easily to his clients or his assistant.  Simply put, he does not need to buy any general information - a pretty gloomy statement for traditional media owners!

But further into the conversation, I find out that he pays $150 to receive the McKinsey Quarterly. For $150 he can get a yearly online subscription with Newsweek and receive in the mail GQ, Car and Driver, and FT everyday!

So, where's the solution?

As always, the solution will not come from a financial equation alone - there is no imagination in 2+2 = 4 - yet most traditional business thinking comes back to : "what's the business model?" meaning "how do we make money?"

These questions are obviously necessary questions but they're also paralyzing! That's the conventional north-east quadrant approach in the Intuitive Compass™.

The appropriate questions are: "how do i bring value to my readers?" and "what is my reader trying to achieve?"

Let's go back to the roots. What does "media" mean? It means "in the middle" - media stands between people and information and facilitates news and information sharing.

If we come back to my conversation it's not difficult to see how to bring value to John, i.e to stand between John and a world of information in a way that's relevant and significant! He needs:

- cutting edge information to keep ahead of the curve in his business
- quick access and very easy repurposing of information
- a search engine that is customized to his very specific profile (profession, cultural background, revenue, age, lifestyle, consumption preferences, payment modalities, hometown and preferred destinations, travel patterns, etc.)

The media would help him thrive if they could deliver a customized version of their online magazine everyday with information that speaks to him, his lifestyle and saves him time.

it would not take much more content development from the media because in actual facts a lot of this information is already available online and for this he would be willing to pay obviously since we know he pays for the McKinsey Quarterly.

Two other essential complements would bring real added value to John's experience. One, is advertising: what if John could switch on and off access to customized advertising on his page? We let John decide when he wants to see an ad - tough, you'll say! ... how do you sell this to an advertiser?
Well actually, this is what Google does basically - we're simply pushing it one step further. John has control of his exposure to advertising in the same way as people decide if/when they want to sit in the sun. It would mean a pay-per-click type of revenue or even pay-per-lead. But John's perception of the media would be so enhanced - it would clearly raise drastically his loyalty to this medium

The other? User-generated content. He tells me he's looking for a new car; he's considering buying a Porsche Cayman or Boxster. He prefers the line of the Cayman, but living in LA, he thinks a convertible would be really cool, so he's debating between the two.

He tells me he goes online to find info about the cars. John says he'd like to know how green these cars are and how much it actually costs to drive and maintain them. Here are his three choices:

- the official Porsche website
- car magazines such as Car and Driver or Road and Track
- blogs and users generated reviews

The first two don't really answer these questions in a straightforward way.

Car magazines usually write about the new features of the car and in a style that's supposed to be appealing to the largest audience, while the Porsche website gives data that don't match up with real life.

But when it comes to users' reviews it's not easy either:  John has to go through a lot of shallow comments and irrelevant information before he can access what he needs: mpg data, maintenance cost, etc.

So what about a media company that develops a system to collect user-generated content and sort it out and find a way to establish a hierarchy so that shallow comments go to the end of the list and relevant serious information comes to the top?

This is something John would really value. It would save him time and give him access to real conversations with like-minded people who own and drive the cars he's considering. And this could be done on all other topics John would tell his media company he would like to hear about.

So why not including in the media of tomorrow a way to curate content?  To feed readers with user-generated content filtered and organized in a way that's relevant to the profile and aspirations of each readers.

This is typically a north-west quadrant / south-east quadrant type of approach grounded in the south-west quadrant: open creative thinking applied to improve performance based first and foremost on consumer value creation.

So the media still has a critical role to play.  There's still a lot to do and a lot of potential to enhance the media industry for both readers and magazines.

But please don't start your internal conversations talking about how you're going to make money; it will not take you very far! Start thinking about value and meaning to reach deeper long lasting creative solutions that will eventually lead to profit without a doubt.  

"Intuitive Intelligence" on iTunes U: Top Download

By Francis Cholle on June 6, 2010 6:13 AM | Comments | TrackBacks
The "Intuitive Intelligence" conference I put together for HEC MBA - first business school in Europe per FT ranking over the past 5 years - has become one of the top global downloads for iTunes U.  

You can download it for free >>


iTunes U gathers more than 250,000 free podcasts of lectures, films, interviews from 600 prestigious universities and institutions from all over the world. The weekly statistics provided by Apple, routinely show 60,000 to 70,000 visitors.

"Digital Intuition" versus Intuitive Intelligence: Where's the Digital Trust?

By Francis Cholle on March 28, 2010 12:09 PM | Comments | TrackBacks
One of the latest ideas to hit the buzz circuit is the concept of "digital intuition" - introduced by my6sense, a company which has developed a tool that serves up the most relevant information for us. They've developed a recommendation engine which TechCrunch says "separates the signal from the noise and helps users shift their attention to the content they care about most."

The application learns what you like, then finds more.

The Independent describes it as follows:

It compiles RSS feeds, tweets, and online blog articles - intuitively ranking them according to your browsing habits. Within a few days (and without any explicit intervention on your behalf) the application optimizes the content to fit your specific tastes; the most relevant and interesting information is automatically displayed at the top.

In my view, m6sense is misleading when calling this type of assistance "Digital Intuition."  It's a recommendation engine, plain and simple. And it may be a very good one at that.  But let's not call this intuition.

Let's look at the difference more closely. 

A recommendation engine basically tells you what you want to know based on your past behavior.  So it learns by watching you, your clickstream, and creates inferences based on your habits. It learns your habitual preferences by predicting the "questions" you are likely to ask, and tracking a history of "answers" you deem sufficient.

Intuition is exactly the opposite.  We rely on intuition to make decisions in new, unfamiliar situations. No recommendation engine can do this for us, period. How can it?  In the case of intuition, we may not even know the right "questions" to ask, let alone the "answers."

Intuitive Intelligence, as we explain earlier: lies beyond the boundaries of science and analytics. It bridges the realms of reality and imagination, reason and instinct, material and spiritual dimensions of human existence. Intuitive Intelligence is non-linear, a key skill for success in the new economy, an economy driven by constant disruption and chaos.

Thus the phrase "digital intuition" is a misnomer.  A good marketing ploy, perhaps, but not intuition.

This leads me to a second point: Trust.  In this case, let's look at "digital trust."

Can you trust a recommendation engine maintained by a third-party (in this case in Israel) to track your online behavior, study your patterns, and feed you information it "selects" for you?  How will you know these recommendations are unbiased? How will you know that they're not marketing feeds from marketers anxious to understand your buying behavior?  How can you be assured of privacy?  Where will your behavioral data be stored? Who can access it?  Will it be sold?

These are the questions that need to be answered before a service like my6sense goes mainstream.  Incidentlly, these are the same questions all cloud based services are going to have to answer - from Google, to Microsoft, to Facebook, to my6sense.

And you will have to use some of that intuitive intelligence to answer the question: "can I trust them?"  




Intuitive Decision-Making: How Google Bought YouTube

By Francis Cholle on March 7, 2010 6:31 PM | Comments | TrackBacks

How does an analytic company like Google make its most important decisions?

 If we are to believe the Google myth, we learn, first and foremost, that they test everything:

We test everything at Google. While any company would prefer real-life data to hunches and guesses, Google is more focused than most (or any) on getting conclusive proof that a new feature or function improves the user experience. We release many of our products in beta on Google Labs to get this kind of feedback early in the process so that we can influence the design and iterate quickly.

The ability to test lots of products and features on hundreds of millions of users is enormously valuable. This test-bed of users (otherwise known as google.com) provides Google with an incredible advantage over enterprise-only search vendors. Bad ideas can be discarded quickly and great ideas can be implemented rapidly, because we have confidence and data to show that they'll improve the user experience.

Of course, when all decision-making is data-driven, it can lead to "madness."

 Here's how Douglas Bowman explains why he quit Google:

When a company is filled with engineers, it turns to engineering to solve problems. Reduce each decision to a simple logic problem. Remove all subjectivity and just look at the data. Data in your favor? Ok, launch it. Data shows negative effects? Back to the drawing board. And that data eventually becomes a crutch for every decision, paralyzing the company and preventing it from making any daring design decisions.

In the end, said Bowman, he "won't miss a design philosophy that lives or dies strictly by the sword of data."

The testing culture doesn't end there.  On the Google Testing blog, James Whittaker describes the testing frameworks he's observed among the job applicants he's looking to hire:

  • Input Domain Framework
  • Divide and Conquer Framework
  • Fishbowl Framework
  • Storybook Framework
  • Pessimists Framework

Which one of these frameworks will be best for Google, asks Whittaker.

 Which leads us to the topic of this blog post: Just how do the executives at Google make decisions?

Do they base their decisions on the data?  Let's look at one well publicized executive decision and the executive decision-maker: Eric Schmidt and his decision to buy YouTube.

On October 9, 2006, in a deal valued at $1.65 billion, Google outbid a number of other competitors to snag YouTube, the online video site which was growing at a rate far outpacing Google's own Video site.

The official Google line was as follows:

The YouTube team has built an exciting and powerful media platform that complements Google's mission to organize the world's information and make it universally accessible and useful," said Eric Schmidt, Chief Executive Officer of Google.  "Our companies share similar values; we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers."

 So how did Eric Schmidt value Google?  Was he analytical, precise, objective?

By his own admission, Schmidt says, in a deposition by lawyers in the Viacom copyright lawsuit, that there was very little revenue coming into YouTube to justify the price his company paid.

Schmidt says that he told his company's board of that YouTube was worth $600 million to $700 million.

Via CNET, we get Schmidt's own words:

Viacom attorney Stuart Jay Baskin: And what was management's valuation?

Eric Schmidt: Much lower than we paid for it.

Baskin: And how was that communicated to the board?

Schmidt: I told them.

Baskin: So why don't you tell us what you remember telling the board in connection with the valuation?

Schmidt: I believe YouTube was worth somewhere around $600 million to $700 million.

...
Baskin: What methodology did you use to come up with that number?

John P. Mancini, an attorney working for Google, objects.

Schmidt: My judgment.

Baskin: Was it based on cash flow analysis? Comparable companies? What were you using as the basis for your judgment?

Mancini objects.

Schmidt: It's just my judgment. I've been doing this a long time.

...
Baskin: I'm not very good at math, but I think that would be $1 billion or so more than you thought the company was, in fact, worth.

Mancini objects.

Schmidt: That is correct.

Later...

Baskin: Can you tell us what reasoning you explained?

Schmidt: Sure, this is a company with very little revenue, growing quickly with user adoption, growing much faster than Google Video, which was the product that Google had. And they had indicated to us that they would be sold, and we believed that there would be a competing offer--because of who Google was--paying much more than they were worth. In the deal dynamics, the price, remember, is not set by my judgment or by financial model or discounted cash flow. It's set by what people are willing to pay. And we ultimately concluded that $1.65 billion included a premium for moving quickly and making sure that we could participate in the user success in YouTube.


What this tells us is that even in the most analytic company in the world, the big decisions are still made on intuition.

Here's why. Analytics can only tell us about the past. We have no data on the future.  So Eric Schmidt was making an intuitive decision about Google's own future through examining the intangibles.

For example:

1. YouTube's popularity was sky-rocketing, making it the runaway market leader among video-sharing sites.
2. It was crushing his company's own site, Google Video.
3. YouTube was up for auction and would be sold to a competitor unless Google jumped first.
4. Google overbid to ensure YouTube didn't fall into rival hands.

And that doesn't take into account two other points which made the deal a winner.  From the very beginning, the Google philosophy has been - get attention first, then monetize it.  And that is what this bet was all about.

Schmidt saw the attention trajectory in YouTube's growth, and he knew that if anyone could monetize that attention it would be Google.  To leave YouTube for Murdoch, Microsoft, or Yahoo was not an option.

In hindsight, it may have been a brilliant move.  Although the monetization has proved difficult, Google is breaking even today, which is far better than what has happened at MySpace, for example.

The Strategic Role of Human Resources in the New Economy

By Francis Cholle on February 27, 2010 8:23 AM | Comments | TrackBacks
A while back, I published a short article on the strategic role of Human Resources in the new economy.  The article: Le rôle stratégique des DRH dans les 10 ans à venir is in French, but since I get so many requests to talk about this issue, I've translated it here for you.  The main point I'm making is that in today's disruptive economic climate, HR can and must become a critical differentiator.

The strategic role of Human Resources in the coming years
 
To generate creative added value is one of the surest ways for companies to win in the global competition today. Innovation is the new imperative. And in some industries business model reinvention is mandatory. A new approach to human capital is necessary to succeed in the new economy.

Because of the complexity of the new economy human capital becomes increasingly important for a company to succeed.

Let's explain why.

-    The global economy is becoming more and more global, competition is steeper, speed to market is accelerating and barriers to entry into an industry are much lower
-    More consumers are now becoming better informed and more discriminating  "prosumers" with stronger values and higher expectations for return on their dollar
-    The impact of technology tears down business models and transforms industries (media, music, financial services, etc.) and leads to powerful knowledge networks which creates active communities (Facebook, LinkedIn, etc.) and boosts innovation  (open models)

For these three reasons, creative added value is the safest path to beat competition.

Innovation is now part of every CEO's mandate and in many industries it's all about business model reinvention.

A new approach to efficiency needs to emerge... fast!

As we well know innovations comes from executives' ability to generate new ideas. But idea generating does not follow a linear path! Studies show that on the average an executive generates 80% of his daily value in 20% of his or her time at work.  So it's really not that effective to impose tight working schedules on your team members.

Yet conventional management and most companies are still operating under the belief that productivity and time spent at your desk follow a linear correlation and not a variable correlation... Here is food for thought for all heads of HR if their companies believe innovation is a key driver of growth.

I recommend Ricardo Semler's book The 7 day week-end - changing the way work works. He's been so successful in his own company in Brazil that he wrote this book to share his no non-sense approach to efficiency and teaches it at Harvard Business School.

Inertia: the greatest stumbling block on the way to innovation

Designing smart innovative business solutions can be challenging but the real deal with innovation is implementation! Why? Because to implement new stuff you need to be able to change... and human nature does not like change... Actually it has a pretty reliable ability to resist change and this ability is called inertia. Any change entails some fear at some level, whether individual or collective, because it threatens our wellbeing and eventually our survival, even if it is ever so subtle.

Our propensity to inertia is linked our capacity for survival, i.e. our instinct. Inertia in an organization is all the more so powerful that it is exponentially cumulative with the number of people involved with a decision. It's easy to see how difficult it is to change mentalities and behaviors in large organizations with thousands of employees...

There are highly effective solutions to deal with inertia but once again they're not about logic. It is rare to get another person to be convinced and motivated to change behavior simply based on a lgical argument. People change because their environment is conducive of change.

People will let themselves be influenced all the more so easily that they feel emotionally motivated and their feelings are taken into account. I always wonder when I hear long impersonal rhetorical speeches at corporate gatherings where too many statistics and metrics are exhibited in tidy power point presentations. What's the strategy behind them? Aren't big collective changes often enough triggered by speeches with powerful emotions and great staging?

Recent research at MIT shows that 20% only of our grey matter is dedicated to conscious thinking and 80% to non-conscious thoughts. The best way to mobilize people is through symbols, rituals that impacts our senses and emotions and reaches our unconscious.  Steve Jobs understands it well and long before him popes in Rome. Many companies seem to understand this much better when it comes to consumers than when it is about communicating to their employees. And few only are actually convincing in this arena.
Some food for thought for heads of HR to put on the top of their 2010 new resolutions list to accelerate change and foster innovation.

Profit alone is no longer enough. Actually it's on its way to become the biggest stumbling block to innovation.

Last point, even more important than the above mentioned. To drive innovation and reinvention the most important factor today is to factor in sustainable development into the mission of the company and its strategy.

The sustainability challenge is a mega trend - if not the biggest one in our economy - and it is nowhere close to disappearing. It will affect many generations to come. Its ripple effects are felt on many levels and far beyond and deeper than our conscious mind since they directly affect our wellbeing and potentially threaten our survival as a species.

Therefore they directly and powerfully impact our capacity for imagination, and change. The fastest and most compelling way to facilitate innovation and change in an organization is to move beyond the usual objective of higher profit (which in itself is quite legitimate and necessary of course) to focus on sustainable value creation, which of course entails financial profitability but is not limited to it.

Sustainable value adds on top of profit the notion of the prosperity of all employees, associates, and partners of the company and respect of all ecosystems whether societal, cultural or environmental.

Here is, in my opinion, a third hot topic for any head of HR who values innovation and its impact to drive growth in the organization or reinvent a failing business model.

It is possible!

This holistic approach to corporate mission and strategic management may seem daunting and remote from the day to day concerns of business unit managers in the trenches, busy fighting for their market shares. But the ROI is exponential and reaches far beyond traditional strategic management favored by logic. Based on personal experience both as business leader and advisor to prominent CEOs this approach engages people beyond imagination. Companies like Google, Danone, Toyota or today Renault with its electric car have proved this quite eloquently.

It is time to bring back human capital where it belongs... to the core of corporate strategy, mission and culture. Only intuition can blend the efficacy of logic with the power of instinct.

Intuitive Intelligence is the optimum ability to innovate and help directors of HR in their  strategic mandate.

Les Echos: Les neurosciences au service de l'entreprise

By Francis Cholle on October 17, 2009 3:19 PM | Comments | TrackBacks
A short article in Les Echos:

Les-Echos-13-08-2009.gif

Translated:

Another way to manage and lead
Neurosciences in the service of business

Francis Cholle author of L'Intelligence Intuitive recommends to executives to combine their analytical mind with their intuitive aptitudes to gain further consumer insight and improve business performance.

From our correspondent in the Sillicon Valley, Laetitia Mailhes
 
For beauty and fashion executives time has come to reconsider every aspect of business. "The economy is changing consumers' behaviors, independently from the evolution of incomes, explains NY Fashion Institute of Technology Professor Stephan Kanlian. To open their wallet consumers today want more than brand prestige. They demand more and more added value and a greater match between products they buy and their own values." But the business community is not well prepared to adapt to such a radical change.

"Obsession for financial return has led leaders to often forget they share a common humanity with consumers," says Francis Cholle, author of L'Intelligence Intuitive, innovation consultant for large corporations and advisor to their C-Level executives. A graduate of the best European business school, HEC (Ecoles des Hautes Commerciales) Francis Cholle insists that sustainable value creation requires the necessary synergy between analysis and ROI on the one hand and play and instinct, on the other (see graph below of The Intuitive Compass™).

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The role of intuitive intelligence

"Neuroscience showed in 2005 that parts of our brain traditionally associated with our instinct are involved in our most sophisticated decisions" says our expert in reference to MIT Picower Institute for Learning and Memory research on our reptilian brain aka instinctual brain, published in the  scientific journal Nature. "It is very noticeable in consumer behaviors. For this exact reason if a company wants to understand its market and meet its expectations, it is necessary that they  understand how intuition works and integrate an intuitive process in their business approach," adds Francis Cholle. His message is well received. "My daily conversations with Francis Cholle greatly deepen my thinking at a particularly critical time for our company" says Ralph Lauren Fragrances and Beauty President Guillaume de Lesquen, based in New York to orchestrate the brand development on the world stage. 

Long before the economic recession Francis Cholle started to advocate the role of intuitive aptitudes and their impact on value creation. Biotherm for Men global marketing director, Charles Haddad is quite satisfied that he could attend one of Francis Cholle's seminar and acquire tools that explain in a simple language many key aspects of brand development and marketing that he could confusedly feel but could not clearly understand even less so replicate. Today Charles Haddad  encourages in his team " free and spontaneous communication. We then select what we feel is relevant". "It is not about leaving behind our marketing objectives but rather about dissolving automatic censorship mechanism often inherent to corporate structures."

Armand de Villoutreys, CEO of Firmenich in Paris and president of Firmenich Fine Fragrance World Division, asserts that he has "learned to approach differently his leadership role in a creative corporation." And it showed very tangible results! "We started four years ago to integrate into our management practices the principles of Intuitive Intelligence," says the French executive. "We have been happy to see an accelerated growth of our financial results across continents well above market average." 

© Les Echos n° 20486 dated 08-13-2009 p. 06 (Authorized translation by Peter Camo)

The Deloitte Big Shift Index 2009: What's Missing?

By Francis Cholle on July 14, 2009 9:15 PM | Comments | TrackBacks

If you have not already read "The Big Shift Index" report from The Deloitte Center for the Edge led by John Hagel III, John Seely Brown, and Lang Davison you should do so immediately.

 

This first release of the Shift Index reveals a startling fact: the return on assets (ROA) for U.S. firms has steadily fallen to almost one-quarter of 1965 levels; at the same time,  the researchers found modest improvements in labor productivity.


Grim news, indeed. The report also finds:


- The ROA performance gap between winners and losers has increased over time, with the "winners" barely maintaining previous performance levels, while the losers experience rapid deterioration in performance.


- The "topple rate," at which big companies lose their leadership positions, has more than doubled, suggesting that "winners" have increasingly precarious positions.


- U.S. competitive intensity has more than doubled during the last 40 years.


- While the performance of U.S. firms is deteriorating, the benefits of productivity improvements appear to be captured in part by creative talent, which is experiencing greater growth in total compensation. Customers also appear to be gaining and using power as reflected in increasing customer disloyalty.


- The exponentially advancing price/performance capability of computing, storage, and bandwidth is driving an adoption rate for our new "digital infrastructure" that is two to five times faster than previous infrastructures, such as electricity and telephone networks.
                                     

The Shift Index consists of three indices: Foundation, Flow, and Impact, and 25 metrics that together quantify the stock, pace, and implications of the shift. The index enables analysts to anticipate changes, identify bottlenecks, and guide strategy. Not everyone, of course, will choose to monitor the same metrics or assign them the same weights.  Thus, the Shift Index is less a single measure and more an informational platform that will give rise to a diversity of models and, a stronger collective sense about the pace and nature of change, constraints and opportunities within that system.  As constraints fall away and opportunities increase, old configurations become unstable and new structures emerge.

 

A number of key ideas in the report resonated with our observations at The Human Company:


- the importance of creativity and innovation in ROA

- information "flows" over information "stocks"

- passion as a driver for higher productivity

- more and more discriminating consumers

- consistently declining return on assets

- increasing rate at which big companies lose their leadership positions

- rising executive turnover tied to increasing performance pressures

 

However, I was surprised to find one element missing in their measurement model.


What's missing? Sustainability and its impact on the economy.


Sustainability is the business imperative for our time. From global-warming to competition for natural resources, sustainability must necessarily sit at the core of any sound business strategy. The sooner businesses understand this the better.


Organizations will have no choice but to follow government regulations and anticipate consumers reactions and merciless communication via ever more powerful social networks aiming at securing a healthy future.


More importantly employers who align their businesses to create a more sustainable world will also attract, retain and empower more and better employees. Sustainability challenges have become so pressing that they not only affect us at a rational and emotional level but they also threaten our survival instincts. And  as such they are bound to impact employee productivity, loyalty, and creativity. Meaning is the underpinning and decisive factor of human efficiency. How could a corporation careless of its employees' and employees' children future ever encounter long term success in a flat world?


In order to maintain competitivity, growth and profitability organizations will have to build sustainable blueprints for the future. Take a look at Adam Werbach's latest book: Strategy for Sustainability.

The Deloitte report is an example of a brilliant work conceived in an intellectual tradition largely limited to our analytical minds. Yes, they do mention creativity and talent and yes, they talk about information flows, but I wish they had mentioned sustainability. A quick glance at the Intuitive Compass™ shows us that Deloitte overlooked the South West Quadrant. Regrettably, this is often the case with our business thinking.

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Going forward, we cannot leave out the importance of our reptilian brain in its relentless ability to impact every second of our lives and its superior intelligence to sustain our species and hence help us make the best business decisions for a sustainable future (1).

Here's looking forward to the the 2010 Shift Index; I hope to see a section on sustainability and a study on the decisive intangible dimensions of value creation which intuitive intelligence is designed to help us reckon with.

(1) In 2004 MIT School of Science Picower Insititute for Learning and Memory has shown that the basal ganglia which are parts of our reptilian brain are involved in our most sophisticated decision processes (Nature, Feb 24 2005)

Case Study: Creativity versus Results at L'Oréal

By Francis Cholle on May 28, 2009 10:21 AM | Comments | TrackBacks
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According to a recent report in the Wall Street Journal, L'Oréal SA, the world's largest cosmetics maker, reported flat sales for the first quarter of 2009 as consumers shied away from its luxury skin creams and shampoos in favor of its cheaper brands. The maker of products ranging from Giorgio Armani perfume to Lancôme skin cream and Maybelline eye shadows said sales increased 0.3% to €4.37 billion ($5.83 billion) in the first three months of 2009. Jean-Paul Agon, L'Oréal's chief executive, said that he would not offer specific guidance for the year but that results would "improve" during 2009.

After accounting for the effect of currency fluctuations, sales fell 9.3% in Western Europe and 5% in North America. This shortfall was partly offset by an increase in revenue in Asia.

Sales at L'Oréal's luxury cosmetics division fell, while sales of its consumer drugstore lines increased slightly.

This is an unfortunate turn for L'Oréal which has always been known for its commitment to scientific research and exceptional financial results.

In fact, you might say there is an unresolved tension in its culture between creativity and business results. This tension is visible even on its website. If you read about the "profiles they are looking for" under the marketing category, here's a description you'll find:

Creativity, imagination, openness to new ideas - coupled with the highest professionalism.
• Project-oriented, natural team player, at ease working with others in an environment of entrepreneurial challenge.
• Global-minded, flexible, able to juggle multiple priorities.
• Strong analytical thinker, excellent communicator.

You have a keen eye on the latest fashions, a finger on the pulse of emerging consumer and cultural trends. Highly developed interpersonal skills, a passion for results. The personality to make a difference.

Diagnosis: L'Oréal - When East dominates West...                

For the past few years I have been working with L'Oréal to change this dynamic.

The challenge: help marketers and managers develop a sensitivity to the creative nature of the beauty product development process and specifically gain an understanding for the process of research and development.

When the cosmetic group decided to develop a world wide talent appraisal process Sir Lindsay Owen Jones articulated the need to develop a competence key to the success of the group in the eye of the CEO, and that is: sensitivity to métier. What Sir Lindsay Owen Jones was aiming for was to develop a global, shared understanding for beauty products development, for L'Oréal customers, and for a number of other confidential important characteristics identified by the CEO as key factors for success in the beauty industry.

The Human Company was commissioned to research how to define this specific aptitude and how to develop it and train for it. We developed an international training track that is seen today as one of the most successful and inspiring training program available at L'Oréal.

Our approach consists in helping marketers understand how to engage and inspire creative people to contribute the best of their creativity.  We used the The Intuitive Compass™ to highlight the tension between results-driven managers and creative teams.

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Our analysis: L'Oréal has a product innovation driven business model whereas most of its competitors have often a market-driven model. The company believes in scientific innovation to promote growth. Its founder was a scientist. It is how L'Oréal sustained 20 years of double-digit growth and became the world leader in cosmetics. There is, as I mentioned earlier, a tension in its culture between creativity and business results.

Results: We helped L'Oréal's teams understand the perspective of the different teams.  The creative teams learned about the business aspects they had neglected, while the managers and marketers were helped to understand the creative process. The bridge is intuitive intelligence. Our training program is seen today as one of the most successful and inspiring training program available at L'Oréal. (Average rating: 19.5/20) because it is very relevant with the innovation imperative prevailing in the beauty Industry, articulated by the CEO Jean Paul Agon in his mandate. 

FIT: New Intelligence for the New Economy

By Francis Cholle on May 13, 2009 7:06 PM | Comments | TrackBacks
I just got back from delivering the keynote at the Fashion Institute of Technology's 2009 Capstone Presentations and Graduation Reception.

Over the past few weeks, I've seen how teams of students have used the ideas we discussed, both on creativity and applied intuitive intelligence, to learn more about the possibilities for exploring new avenues for growth. They are full of enthusiasm and passion for their work - and that is what true education is about. May they keep the fire with them always!

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Thanks to everyone for such a wonderful evening: FIT's Dr. Joyce Brown and Professor Stephan Kanlian, our gracious hosts;  my industry colleagues: Karen Grant, Marc Gobe, Candace Corlett, and Mark Pritchard; and of course, Ellen Byron from the Wall Street Journal.

And most importantly, thank you to the students.  Yours is the task of building a tomorrow that keeps us alive, hopeful, and yes, sometimes, truly joyful!

My keynote presentation is available here >>

The Intuitive Compass™: A Framework for Intuitive Intelligence

By Francis Cholle on May 13, 2009 11:24 AM | Comments | TrackBacks
We know that innovation is more about people and culture than it is about process and structures. Yet many executives find themselves unable to inspire their teams and foster a culture of innovation. This is not a new theme in management thinking, but it is one that has never been more important.

Early on, as my work took me deep into this realm - the world of intuitive intelligence -  I struggled to build a model to explain why this was so.  And so it was by accident, and by now we know that there are no accidents, that the model of The Intuitive Compass™ took shape:

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Oddly enough, I was using Cartesian coordinates to explain the flaws in our linear thinking. The two principal axes, Play-Results and Instinct-Reason, give us four quadrants (NE, SE, SW, NW). Each of these quadrants represents a function or even a mindset in an organization. Let's make a few generalizations to explain the framework:

The NE quadrant is the area where reason and results prevail. This is the realm of business administration and management. Most companies excel in this department, led by teh twin beacons of "maximizing shareholder value" and "cost management."

The SE quadrant is the area where instinct is at the core and results are the rule of the game. This is the mindset one finds in a sales department, or in an athlete.

The NW quadrant is the area where reason engages in a creative thinking process as in strategic planning or marketing (think of an architectural firm or engineering company).

Finally, the SW quadrant is the area where instincts are at the heart of the creative process to invent and create from the unknown and the depth of the unconscious. This is where creators, scientists, researchers, and inventors experience eureka moments. Most executives and almost all companies, even those engaged in creative fields, lack a way to connect this quadrant back into the rest of the business.

The Intuitive Compass™ becomes a tool we can apply to assess and chart progress as companies (and executives) learn to harness intuitive intelligence in four key areas:

Strategy: how to employ intuitive intelligence to create sustainable, innovative business models which deliver real value to customers in their local environment.

Leadership: the transformative power of intuitive intelligence energizes, and builds movements - with clarity of vision and purpose.

Work Culture: the ecosystem health of your business culture is reflected in your bottom line results. The Intuitive Compass™ helps create the open culture you need to succeed in the intelligent economy.

Consumer Needs: map your customers needs and wants using The Intuitive Compass™ - creating a value innovation agenda for your customers.

The bottom line is convergence - with customers, employees, management and leadership.

Going forward, we'll use The Intuitive Compass™ to chart how companies and leaders can use intuitive intelligence to shape the future - both in their industries and in the larger world.

Definition: What is Intuitive Intelligence?

By Francis Cholle on May 8, 2009 1:31 AM | Comments | TrackBacks
How many times do we see a business leader make a decision without a lot of data, seemingly without deliberation, and make the right call?

Not very often, in the "western" world.

But every so often we encounter that rare leader who makes impossible decisions and, time and again, gets it right. This is not an accident, we tell ourselves, as we look for clues to try to understand this phenomenon we are witnessing.

What we are experiencing is Intuitive Intelligence in action.

Intuitive Intelligence lies beyond the boundaries of science and analytics. It bridges the realms of reality and imagination, reason and instinct, material and spiritual dimensions of human existence. Intuitive Intelligence is non-linear, a key skill for success in the new economy, an economy driven by constant disruption and chaos.

Intuitive Intelligence is defined as the combination of 4 abilities:

-  The ability to think holistically

-  The ability to think paradoxically

-  The ability to listen and connect to oneself and others

-  The ability to lead by influence rather than design


THINK HOLISTICALLY

Business is not about money. It's not even about shareholder value (ask Jack Welch!).

Business is about servicing our communities and allowing people to express their talents and genius for the betterment of our society.

Money is one very necessary component of business and it keeps the human engine going but it is not the engine.

Business success is achieved through the power of human creativity and organization and depends on individuals - people - complex beings in relationship with an unpredictable environment called nature. No human experience can be fully represented by a mathematical equation (ask artificial intelligence experts!) and the unpredictability of nature cannot be comprehended, let alone mastered.

Yet we realized only recently that besides the financial bottom line there should be other criteria to set business goals and measure the results of human organizations. The business impact on the surrounding ecosystems and its influence on humans are factors rarely placed at the center of corporate strategy.  Intuitive Intelligence™ helps us move from a conservative fragmented business approach that focuses on financial results as the ultimate goal, to a wholesome business view where people, society and natural ecosystems are all part of the  picture, with money seen as only simply a resource, a means to an end. All aspects of business are inseparably taken into account as a whole for maximum efficiency and sustainability.


THINK PARADOXICALLY

As much as business can be taught, it is still a rather random process similar in this to the creative process of life. Many leaders focus on economic results believing that it is the shortest way to achieve their goals. The paradox is that empowering people and relationships are the key to better financial results. In 2004 neuroscience was finally able to establish a fact known for millennia by ancient civilizations: the human mind is more unconscious than it is conscious. For that matter, engaging the unconscious in people is more effective than focusing on the conscious part of their mind. This is the paradoxical thought process.  As psychologist David G. Myer puts it: "under the surface lies a lot of intelligence above a lot of delusion."


LISTEN FOR THE UNUSUAL

In order to be in touch with the unconscious aspect of our lives we need to pay attention to subtle details and to our emotions, which are indicative of our perceptions, whether conscious or unconscious. Our emotions fashion our thoughts, which lead to our actions; our actions turn into habits that finally shape our character. And as we know, character is essential to leadership. A charismatic leader will communicate without necessarily taking in the other person's emotions, perceptions and environment and will attract dedicated followers; a leader who demonstrates self-awareness and manifests empathy will empower and inspire people with character who are more likely to take risk and think autonomously - two attitudes well needed to succeed in times of radical change.

This kind of sensitivity operates at a fundamental level of equality between individuals and induces trust, respect, and interdependence three necessary factors to foster creativity and lead a culture of high performance. Moreover when a leader is able to listen to others and oneself with such a sensitivity he or she takes in all sorts of creative information about consumers and their environment, about an industry and its trends.


LEAD BY INFLUENCE

Innovation is one of the most critical factors for success in today global economy. It relies on systems and processes, yet it depends even more on the creativity of people and corporate cultures.  Creativity finds its inspiration beyond the motivation of financial gain or economic achievement. It stems from dreams and ideals and pertains more to utopia than pragmatism.

Organizations seeking innovation cannot rely only on a pragmatic leadership model rooted in a purely economic approach (leadership by design).  Such a leadership model sets goals and objectives, covers budgets and schedules and relies on the alignment of teams to execute the corporate vision. Leadership by influence, however, is on the opposite side of the spectrum. It perceives any human organization as a living interconnected web and the relationship with consumers as a dynamic collaborative system. And for that matter it focuses on facilitating and guiding the natural emergence of creativity to reach innovative business solutions. It puts the emphasis on engaging and influencing teams and consumers rather than motivating and controlling them. It conveys a strong sense of meaning within visions and goals to reach that place in each one of us where creativity thrives and can be awakened.  In practical terms, a leader guided by intuitive intelligence ensures that all systems and processes are in the service of the human factor and its ecosystem rather than an isolated attempt to rationalize business and reach financial goals. He or she inspires uniquely magnetic organizations fired up with enthusiasm and a strong sense of possibility. In this way, leading with intuitive intelligence creates virtuous circles and enables teams to believe, manifest autonomy, and succeed.

Intuitive Intelligence is a powerful leadership attribute. It is not a tool to devise the future, but an instrument that points our attention towards the invisible. Intuitive Intelligence brings us closer to understand the transformative and creative nature of our organizations as well as their interdependence with their environments. It is a means to take in unexpected information or paradoxical data and to feed our analytical and rational thinking with subtle creative perceptions. In this way intuitive intelligence bridges the rational and the irrational realms, the conscious and unconscious dimensions, the inner and the outer, the material and immaterial aspects of any business and allows for truly evolutionary leadership.

In our next post we'll introduce a new tool to help foster Intuitive Intelligence, both in organizations and individuals: The Intuitive Compass™.
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