Business musings

£52 million a month—that’s not a small figure by any standard. And yet, as stated on a couple of leaflets that have dropped through our door during the last year or so, that’s the figure that WaterAid are aiming to raise.

This figure is even bigger when you consider that for the last financial year (2011/12), WaterAid raised £55.8 million in income—for the whole year! This target moves that figure to every single month.

You may remember that I’ve previously written about Jim Collins and Jerry Porras’ concept of BHAGs (Big, Hairy, Audacious Goals). Well, WaterAid, this goal is certainly Big, Hairy and Audacious. And I commend you for it.

Big, hairy, audacious—and achievable

Although big, hairy and audacious, it is also somewhat brilliant in its simplicity. Reading the leaflets that bear this slogan, we discover that WaterAid are not looking to raise this figure in large, one-off, lump sums but rather they are looking for every household in the country to give just £2 a month. £2 a month—that’s not a lot to ask. And, on it’s own, this goal wouldn’t be that ambitious. But getting every single household in the country to donate, now that’s a different ball game. And yet, for every additional household that does donate, WaterAid gets a little bit closer to their goal.

The charity’s audaciousness does not end at their fundraising either. Their overall vision is…

…of a world where everyone has access to safe water and sanitation.

At present, “one in eight people do not have access to safe drinking water and two in five people do not have adequate sanitation”—there’s still a long way to go.

But WaterAid have a plan. In their 2009-2015 Global Strategy, they explain their ambition as follows:

…by 2015 a further 25 million people will have access to safe water, improved hygiene and sanitation as a direct result of our work; and…by influencing the policies and practices of governments and service providers we will have reached a further 100 million people.

Match this against figures from their annual reports and we discover that, although there is still some way to go to fulfil this ambition, WaterAid is in fact well on their way.

In 2009/2010, Wateraid reached 940,000 people with safe water and 1.24 million people with sanitation. In 2010/11, these figures grew to 1.5 million and 1.6 million people respectively. And in 2011/12, they reached 1.6 million people with safe water and 1.9 million people with sanitation. That’s a total of 8.78 million people over three years.

Assuming the same performance again over the next three years, WaterAid will reach 17.56 million people by 2015. Admittedly that’s somewhat shy of their goal of 25 million people but given growth in their figures of somewhere between 7% and 60% each year, it’s seems safe to assume that such growth will continue. Reaching 25 million people therefore no longer looks that unachievable.

What can we learn?

Such figures continue to support Collins and Porras’ original assertion that organisations who set themselves big, hairy, audacious goals go on to achieve them on a surprisingly consistent basis.

It can be daunting to set such ambitious goals, especially publicly. What if we don’t achieve them? What if we embarrass ourselves? What will everyone say? As organisations, we fear our failure and fear the repercussions of falling short of our self-imposed mark. And yet, we need to dare to fail in order to succeed.

Unlike commercial organisations who often intentionally withhold their vision due to its commercially sensitive nature, charities frequently declare their intentions publicly for an effective charity is “accountable to the public and others with an interest in the charity in a way that is transparent and understandable.” Typically, this means that charities publish both their vision and their strategy in the public domain.

For non-profit organisations, such public declarations are, in many ways, imperative. Charities cannot succeed without funding and funding cannot be obtained without demonstration of impact and ambition. Vision supports both. Necessarily, charities must be ambitious in both the work they do and the funds they raise. WaterAid epitomises this behaviour and demonstrates that it works.

In the same way as WaterAid’s impact has grown over the last three years, so also has their income. Total income has steadily increased from £45.6 million in 2009/10 to £55.8 million in 2011/12. That’s an increase of almost £10 million annually in the midst of an economic downturn. And it isn’t all due to increased grants—donations and gifts have also increased from £32 million to £35.9 million annually over the last three years.

WaterAid shows us that vision provides motivation, structure and the drive to achieve. They may not achieve their goal of getting every household in the country to donate £2 a month but how much more will they accomplish than if they never asked?

Similarly, it is hard today to conceive of a world in which absolutely everyone has access to safe water and sanitation but shouldn’t this be something toward which we all strive nonetheless?

As one of our clients once said, “Vision enables you to aim for the stars and clear the fence.” I wholeheartedly agree with this perspective. And, as I’ve said before, by aiming for the stars, I believe that whether you reach them or not, you will certainly clear a fence or three along the way—fences that you may not otherwise have cleared had you not created a vision in the first place.

Vision also cascades to create strategic alignment. As we see from WaterAid’s 2009-2015 Global Strategy, their vision has clearly informed their four aims for 2015. Rather than continually having to ask, “What are we trying to achieve?” the presence of a long-term vision has ensured the only question that remained was, “How are we going to achieve it?” And with their six year strategy, WaterAid have ensured that even this question has been answered. Every single person in the organisation is therefore able to go about their work knowing that, with each and every action, they are taking one step closer to the stars.

I’m confident that WaterAid’s overall vision is unlikely to change but I also hope that, having publicly declared the objective, they continue to pursue their fundraising ambitions too. £52 million a month is not a small figure and it is no small task to encourage every household to donate. But WaterAid boldly declared that, “We’re going to keep asking until every household does it,” and I hope that they do.

I worry the campaign may be a marketing slogan—yet another way to spin regular giving—but I hope it is not. WaterAid have already proven that they’re both ambitious and capable of achieving their goals. This is a culture to be proud of and one to nurture. With the drive and ongoing determination to actively pursue goals such as these, WaterAid will continue to make a difference every single day.

WaterAid and its partners use practical solutions to provide safe water, effective sanitation and hygiene education to the world’s poorest people. They also seek to influence policy at national and international levels. To find out more about the charity, visit www.wateraid.org

In February 1991, when British Rail claimed “the wrong kind of snow” was to blame for disruption to their services, the UK media had a field day! Surely snow was just snow? From an engineering perspective however, British Rail had a point—not all snow is created equal.

This snow was light, fluffy, and apparently entirely unsuitable for our rail system. It wasn’t deep enough for snow ploughs and it got in places that it shouldn’t, resulting in jammed mechanisms and shorted circuits. Emergency timetables were put in place and long delays on the rail network were the order of the day.

All time is not created equal

When it comes to strategic development and building tomorrow’s success, not all time is created equal either. Too much of the wrong kind of time is likely to stop an organisation in its strategic development tracks, resulting in long delays and a failure to create tomorrow’s business.

Many organisations run primarily on maintenance time, responding to what is required right now. Their focus is on today: what needs doing, who needs responding to, and where the next sale is coming from. Head down, just get on with it. Although such time is necessary for day-to-day operations, when it comes to strategic development, maintenance time is the wrong kind of time.

With maintenance time, strategic development just will not happen. Something more important, more urgent, more now will always appear. And the more your organisation only runs on maintenance time, the more urgent everything will become! Maintenance time will, at best, result in small, incremental improvements; more often than not, it just maintains the status quo. Longer term, operating only on this kind of time will certainly result in strategic neglect.

A different kind of time

Strategic development needs a different kind of time. It can’t run on urgent, ‘now’ time. It needs a calmer, ‘development’ kind of time. It needs the kind of time that enables you to calmly look ahead and to see beyond what exists at this instant. To look towards what might exist or what could be created in the future, without worrying about that urgent email or phonecall. It steps away from today to look at how best to build your organisation and its capabilities for tomorrow.

Development time won’t happen by accident and it won’t just magically appear some day. You need to create it. Shut the door on everything else and focus. You need to extricate yourself from the urgent and look around. As a business, you need to take time out to reconsider and examine where you are headed, your broader environment, your competitors, your processes, your business model.

Become self-aware and mindful. Where do you want to be and how would you like to get there? What needs creating that doesn’t currently exist? What could be done better? What needs to go? What needs to be developed? You need to encourage your staff to ask the same questions. To ask, “Is this the best way of doing this?” To take time out. To step away for a moment to spend time on tomorrow.

In doing this, you will develop an organisation that takes responsibility for actively creating tomorrow and that is not just maintaining today. An organisation that has a strategic capability. A conqueror instead of a zombie.

How and when you decide to take this time is up to you but it does need to happen. Dare to escape the office. To turn off your phone. To leave your emails for another day. And please don’t leave this time until it’s urgent, because by then you may find that it’s just too late!

I’m constantly amazed by the lack of focus that many organisations and managers have on the future. ‘Now’ seems to be such a pressing priority that it is often the only thing thing that really seems to matter. To survive and thrive in the long term however, organisations need to be ambidextrous: able to exploit the now while simultaneously exploring and adapting to the future.

From a human perspective, the Oxford Dictionary defines ambidextrous as being “able to use the right and left hands equally well.” Natural ambidexterity is rare: one study of just under 8,000 children found that only 1.1% were reported as being mixed-handed. However, ambidexterity can confer certain advantages and to be highly skilled in some activities—such as touch typing and playing the piano—it is vital.

Within organisations the situation is not dissimilar. The term organisational ambidexterity was first coined by Professor Robert Duncan in 1976. Typically, organisational ambidexterity refers to the ability of an organisation to balance exploration and exploitation equally well. Again, this is not an easy skill to master—tension exists between these two “fundamentally different learning activities” and each places different demands upon an organisation.

Exploitation

Maximising returns by aligning and utilising existing resources and competences

An organisation’s ability to exploit its existing resources and competences hinges upon its ability to align itself around a clear strategy and to implement this strategy effectively. Competitive advantage is created by effectively and successfully exploiting the organisation’s existing competences and resources. Within the organisation, a laserlike focus on maximising returns results in a fearsome ability to implement and execute plans. Operational excellence is driven throughout—if improvements and refinements can be made, they will be made. The organisation functions like a well-oiled machine.

Exploration

Seeking out new opportunities and adapting to changing environments

An organisation’s ability to seek out new opportunities and adapt to changing environments is determined both by its openness to the broader environment and its willingness to take risks. Competitive advantage is created by uncovering new opportunities through exploration and innovation—particularly innovation that is discontinuous and potentially disruptive. The organisation creates room for diversity and discovery, both internally and externally. Staff are encouraged to experiment and play. Risks are taken that increase the potential for game changing outcomes.

Understandably, just as it is difficult to write equally well with both hands, organisations frequently find it difficult to achieve balance between exploration and exploitation. Based upon my own experience and academic organisational ambidexterity research, I’ve devised a matrix that categorises organisations in one of four different ways. Do you recognise your organisation below?

	Miner Exploiting but not exploring Miner organisations are concerned with maximising returns from their existing resources and the capabilities they have now. Efficiency and gradual improvement is their focus as they seek to hit their monthly or quarterly revenue targets. Although there is some discussion about the future, the company will tend to keep their heads down and focus on the work at hand. They assume that all is stable and little is likely to disrupt their status quo; long-term revenue planning is based upon past performance and assumptions of security. The organisation tends to shy away from disruptive innovation and activities that impact their short-term revenue for fear of the impact they will have upon their existing business model and world view. Typically, all is well while the sun shines and short-term performance can be high; however, this “one-sided focus on exploitation…can result in a competency trap because firms may not be able to respond adequately to environmental changes.”
	Adventurer Exploring but not exploiting Adventurer organisations are primarily focused on exploring what they could do or where they could go. A great deal of discussion, research and, at times, investment goes into ‘tomorrow’s business’. The organisation is very responsive and open to the changing environment. New ideas are aplenty and innovation is strong. But, although the organisation theoretically knows how to respond to changing demand, in practice they struggle to deliver: “returns from exploration are systematically less certain, more remote in time, and organisationally more distant from the locus of action and adaptation.” Similarly, low levels of exploitation mean that ideas are not fully capitalised upon. Due to continuous change, it is difficult to drive strategic alignment and continuous improvement throughout the organisation, resulting in much strategic intent but little effective action. Overall, “too much exploration may enhance a firm’s ability to renew its knowledge base but can trap organisations in an endless cycle of search and unrewarding change.”
	Zombie Neither exploring nor exploiting Also known as ‘the walking dead’, zombie organisations fail at both exploration and exploitation. By not effectively exploiting the resources they have at their disposal and neglecting to maintain their current capabilities, they become less and less effective over time. In addition to this, they fail to explore and adapt to their changing environment, resulting in their already weak proposition becoming even less in demand as markets shift. To begin with, the organisation continues to exist thanks to their historical success and latent demand. However, these organisations are living on borrowed time and without significant action will, at some point, cease to be viable concern.
	Conqueror Exploring and exploiting Conquerors are truly ambidextrous organisations: they maximise their returns from their existing resources and competences, while simultaneously ensuring they explore and adapt to the changing environment. By placing high value on both organisational effectiveness and organisational responsiveness, these organisations have the ability to both explore new opportunities and exploit the opportunities they find. The organisation places themselves in the best possible position to survive and thrive, maximising current gains whilst ensuring that the organisation remains flexible and well able to cope with expected and unexpected changes.

Ideally, we all want to be conquerors but ambidexterity is not an easy skill to master nor is it necessarily a fixed state.

Start-ups are likely to begin as adventurers, looking for opportunities to exploit. As their ideas begin to develop and stabilise, they may move into being a miner, exploiting the competences and resources they cultivated to maximise gains from the opportunity they have discovered.

Similarly, organisations with a long-standing heritage that have been comfortable as miners for years may find themselves rudely awoken by the competition. This may then lead to a mad dash to adventure in a bid to stay alive.

In either circumstance, the abilities to both explore and exploit need to be mastered—even if not simultaneously. If a start-up never develops an ability to implement and exploit, no matter how brilliant their idea, business failure is likely to result at this early stage. In the same way, no matter how good an organisation is at exploitation, one day change will be required to stay in the game.

The real skill of the conqueror therefore is balancing the two skills as required. Knowing when to send your people out and when to solidify your current position. And when you have the capacity to do both at the same time.

Creating an ambidextrous organisation requires organisational awareness and commitment. Becoming a conqueror won’t just happen by accident! Just as becoming a concert pianist doesn’t happen overnight but requires hours of practice to strengthen and hone the skill of the less dominant hand, ambidexterity requires intentional design and development. Creating a truly ambidextrous organisation requires self-awareness and management awareness, a dedication to excellence and a willingness to take risks, all in the pursuit of building something great.

And for those of you who like the research…

Birkinshaw, J. & Gibson, C. (2004). Building ambidexterity into an organization. MIT Sloan Management Review, 45(4): 47-55.

Boumgarden, P., Nickerson, J. & Zenger, T.R. (2012). Sailing into the wind: exploring the relationships among ambidexterity, vacillation, and organizational performance. Strategic Management Journal, 33: 587-610.

March, J.G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71-87.

Raisch, S. & Birkinshaw, J. (2008). Organizational ambidexterity: antecedents, outcomes, and moderators. Journal of Management, 34(3): 375-409.

Earlier this month, I was contacted by Yisi Lu, a Masters student in MSc Marketing & Strategy at Warwick Business School. For her dissertation, Yisi is considering design thinking and, in particular, its role in education. She asked me some very interesting questions and I would love to share my answers with you today.

To explain a little of my own interest in design thinking…

I tend to live with one foot firmly in both business and design. For those of you who know me, you’ll know that my graduate studies first began at Coventry University where I completed the first year of an M/Des BSc in Industrial Product Design. While I love design, I gradually realised that what really interested me was the strategic management and business of design.  In 2001, I therefore transferred to Warwick Business School to study their BSc Hons in Management Sciences (now known as Management).

Both business and design remain my passions. Much of my spare time is spent reading technical and design blogs. An A3 pad is a firm fixture in my note-taking armoury and something with which clients will be familiar. I was privileged to attend the 2012 Design Summit earlier this year. I’m a strong advocate of the collaboration between the Design Council and WBS. And, on a lighter note, Debbie will happily recount times that she has lost me in a store only to find me looking at the construction of their shelves!

All in all, Debbie and I work hard to integrate design and business throughout our approach to consultancy. We believe that, particularly in this day and age, the two are firmly intertwined and an integrated approach offers much greater value than one or other alone.

Question One

What do you think is the essence of “design thinking” and how does it lead to better education?

For me, there is not one single thing that defines or is design thinking. Certainly, design thinking is about creation and it always involves a symbiotic relationship between problem and solution. However, part of the essence of design thinking is its synthesis of a multitude of elements; you could say that design thinking is many or all of the following things…

A solutions-based process. Creative. Iterative. Agile. Responsive. Holistic. Needs focused. User focused. Visual. It employs feedback loops, prototyping and testing. It involves creative synthesis. Design thinking holds all elements and ideas in creative tension before a solution emerges. It is about broadening out and narrowing down; zooming in and zooming out. Design thinking ‘stores’ work and solutions visually whilst they are in process to ensure that previous iterations can be referred back to, learned from, revised and improved. People who employ design thinking are not afraid of failure or mistakes—they will often do something deliberately ‘wrong’ to find what could be right; they accept that solutions rarely emerge ‘right first time’. Design thinking explores the whole system and encourages people to step outside of the ‘problem’ in order to discover whether the broader environment is the real source of the issue. It encourages people to look at the bigger picture. It handles complexity without drowning; synthesizes knowledge and understanding; and looks for patterns and links between non-related elements. It frequently employs ideas from other sources, cultures and disciplines. Design thinking is playful and curious. It actively involves people and stakeholders; it is a collaborative process that looks both out and in. Design thinking always demands a clear brief.

With regard to education, design thinking moves people away from a narrow view that is based on their existing knowledge and personal opinions, toward a more expansive, curious, multidisciplinary perspective. It allows people to create and form ideas and solutions in a more creative and flexible way. Design thinking encourages students to look at the world differently. It helps them to understand that, with a defined brief, it is almost always possible to discover an effective solution, even if that solution takes time and numerous ‘failed’ attempts. It moves students away from a linear, analytical, detail-oriented approach toward a more creative, open perspective—away from believing “We first need to know everything about this problem to find an answer” to asking “How do we create a solution, even in the midst of ambiguity?” For me, this is more representative of situations within real-life organisations: often problems and solutions emerge together; the implementation of interventions informs both a further understanding of the problem and its solution; more often than not problems and solutions are continually being worked on in parallel. Design thinking enables students to better listen and engage with those around them. It teaches them to be creative in thought: by learning how to visually represent thoughts and ideas, students add another dimension to their problem solving approach. Many problems, models and ideas are not linear and do not lend themselves to being defined with the lined notepaper approach. Similarly, complex situations often involve many interdependent problems that cannot be solved individually. Use of visual tools enables a shared understanding to be created; it draws people together to debate and create solutions or outcomes that otherwise would remain opaque and poorly understood.

If I had to sum it up more succinctly, design thinking in education is about equipping students with an array of tools that enable them to deal much more effectively with complex situations; teaching them to embrace curiosity and failure; and opening their minds to new ways of thinking and doing.

Question Two

What do you think is the nature of a design thinking process?

There are many potential processes and theories that could be used to define the nature of the design thinking process; however, to get to hung up on defining the process itself is to miss the point.

A design thinking process is about creation. Making and doing. Testing and breaking. Seeing and responding.

Designers have done it for centuries. It starts with an idea, a brief, a desired outcome. The designer then starts to create and, in order to do so, they must pull together ideas and get a better understanding of the challenges that stand in their way. They must implement ideas to see if they work and, also, to discover if they and others like them.

The designer is happy with uncertainty because the process of creation is often messy, unpredictable and, at times, frustrating. However, they drive through towards their goal. They like an idea but then find it doesn’t work. They do more research; they look at other options; they push boundaries. The designer turns around and examines those problems that stand in their way—they look at them from a different perspective; they need to find out if the problems vanish or change when viewed from a different standpoint.

During the process, the designer will sometimes work on their own; at other times, they will open up the process to others—to users, to staff, to colleagues, to the people around them.

Sometimes gradually, sometimes suddenly, the designer will arrive at a solution, the end outcome. The solution may be an amalgamation of a number of ideas. Sometimes, a single moment of insight may finally bring the answer.

And yet, however good the outcome, however great, it could be better. The designer may need materials or technology to catch up with what is in their mind’s eye—their ideas are not yet possible with today’s tools. Or, they may learn everything they should do or should have done differently once their completed piece ends up in the marketplace.

All in all, the design thinking process is about a journey from start to finish; from problem to solution; from idea to implementation. But this journey is not linear. It is iterative, recursive and looping. It could take hours or it could take years. But it is always a journey toward a desired objective, travelled with grit, determination and an open mind.

Question Three

What do you think is the best way for universities to teach design? (Should design schools create more business-focused creatives, or should business schools foster creative thinking in their MBAs?)

Ultimately, design thinking is about creation—of ideas, of products, of solutions, of outcomes. And yet, much of the university or business school approach is about the opposite—breaking things down, taking them apart, analysing, critiquing. Always the critic, never the creator.

I am a strong advocate of critical thinking and would never negate its value. However, while theoretical and case-based learning are a vital part of the business school education, I have noticed that students are often not very good at creating. There is a disconnect between their role and that of others—creating is left to ‘the creatives’. Students have rarely experienced the design process for themselves. Few students have ever created a brand; designed a website; designed or created a product, service or a building; created something out of nothing. And yet, in business, the only way that an organisation exists and survives is if it actually creates value; creates a product or a service; creates a market; creates demand. We teach students how to get the most out of what they have but never really to create something new. We leave that to chance, hoping that their innate creativity and drive will enable them to do this on their own. In this sense, we let both our students and their future employers down.

Design schools themselves are however often no better. They teach their students how to create but not how to truly exploit their creations. Creatives and designers can often be left floundering in a business world they do not really understand. They lack the management skills to bring their creations to life and to capitalise upon the value they know their creations contain. They do not know how to build a business structure around their creative process.

The obvious solution would be to bring business people and creatives together. However, with both failing to understand the other, tension begins to emerge. Designers and creatives are reluctant to relinquish business control for fear of what will happen to their creative direction; business people are unable to truly support a creative process they do not fully understand.

This is compounded by the fact that neither business nor design schools teach their students how to manage others in the creation/design process and how to get the best out of those who may ultimately work for them. Gerry McGovern (Design Director of Land Rover) has strong views on this and believes that nobody teaches either business people or designers how to manage other designers and creatives to get the best out of the creative process. Similarly, creatives are rarely taught how to manage their commercial employees to best capitalise upon their creative ideas.

So, in the middle exists this divide. With business people having little or no design, creative and visual literacy, and designers having little or no business literacy, there is a missed opportunity to create real value.

Thinking about organisational ambidexterity, it seems that we find ourselves in a situation in which design schools are teaching their students to explore, whilst business schools are teaching their students to exploit. In reality, as is the case in organisations, students must have the ability to do both—to explore and exploit—for real, long-term value to be released.

Ultimately, I believe it is the responsibility of both design schools and business schools to bridge this divide. Business schools should be embracing design thinking across their programmes, not only at MBA level, but also within their Undergraduate and Masters courses. Design schools should similarly be teaching their students (at all levels) about the commercialisation process and how to exploit the value within their creations.

Question Four

What do you think is the future of design thinking?

I believe there is a strong future for design thinking. With the recent and continuing economic environment, along with the diminished reputations of those who helped create it, the analytical approach has been shown to have significant weaknesses when it comes to solving global issues and discovering appropriate answers. As a result, we are seeing a move toward different approaches, both in how to create real value and also in solving problems. The Singularity University is one such example of how to embrace a multidisciplinary, creative approach. Although design thinking is certainly not the only alternative approach, I believe it is gaining increasing awareness, in part through those higher educational establishments that teach it.

Interestingly, within consultancy, clients also seem to be realising the limitations of the analytical approach and are increasingly resistant to, and jaded by, consultancies that charge high fees, do a lot of analysis, but, at the end of the day, fail to deliver effective solutions and outcomes that create real, practical value where it matters, on the ground. As a result, clients seem to be particularly open to value-based pricing, where the outcomes are clear and the costs are fixed. We ourselves have found that such an approach is hugely effective in facilitating design thinking and a solutions-led approach. As the objectives are clearly defined (the brief), along with measures of success and the value that the outcomes will bring, there is a clarity that rarely exists otherwise. There is also significant flexibility to embrace the complexity and creativity needed to solve the trickiest problems, without worrying about day rates or utilisation. The end outcome: fair compensation for the consultant and a great outcome for the client.

Similarly, in our own experience, design thinking opens up solutions to a multitude of problems that seem intractable with traditional business approaches. Visual problem solving and creative thinking enables simplicity to emerge beyond complexity and solutions to be found.

Moreover, while scientific and theoretical breakthroughs will continue to drive change, many of the most influential breakthroughs of the last century have been design-oriented in nature. Think the automobile, the home computer, mobile phones, the iPod, iPad, and more. Design is literally changing our lives, the way we think and the way we live. Many of the most influential and successful businesses in the world today have, at their heart, design. Their success is not due to either design or business alone but a healthy symbiosis of the two. People are increasingly recognising the power of design and embracing its success. This year alone within Britain, the Design Council hosted the Design Summit 2012; The Founders Forum hosted the Creative Industries reception; the British Business Embassy hosted the Global Business Summit (focused on creative services); various UK Trade & Investment regions hosted Creative Services Summits; the Olympics showcased British creativity and design; and MADE Entrepreneur Festival is focusing on businesses made in Britain, many of which are creative. There seems to be an increasing move toward supporting creative and design-led businesses and design thinking is fundamental to this future.

That said, for design thinking to be truly embraced in academia, I believe there needs to be a change in attitudes. Design thinking by its very nature is often very accessible and can be easily embraced by the populace. It also tends to dislike words. Historically, academia has tended to shun that which appears simplistic, even if at its heart it is rooted in research and grounded in experience. Similarly, design itself has not traditionally had a strong relationship with peer-reviewed journals nor has it taught or encouraged a critical, scientific approach. Gradually both sides of this situation are changing and multidisciplinary approaches are being embraced but such change will need to continue if there is to be a true meeting of minds between business and design.

I don’t know about you but Matt and I have been absolutely glued to the Olympics over the last few weeks. I think the last time that I watched this much sport was back in 1996 when Damon Hill won the Formula 1 World Championship—and that wasn’t compressed into two short weeks when I was also working!

Of course there will always be cynics (we’re British, aren’t we?!) but, for me, London 2012 has been incredible—and we’ve still got the Paralympic Games to go! Sadly Matt and I didn’t manage to get tickets but we’ve loved dipping in and out of the events, watching athletes perform amazing feats of human achievement, and generally soaking up the atmosphere.

And, it would seem that we haven’t been alone. Almost everyone I know on Facebook and Twitter has been posting pictures of how they’ve been supporting the Games and, in an almost unprecedented voice of unity, the media have been unendingly positive.

On Monday, the front page of The Times read:

Our revels now are ended, but the past 17 days have been such stuff as dreams are made of. The London Olympics Games ended last night and the greatest party in the history of the world is now a memory. Or a raft of them.

Looks like we got away with it, then. Looks like London 2012 was—well, we don’t really go in for boasting in this country, but it was, shall we say, not bad. Really quite good, in fact. Quite good for us: rest of the world, was it good for you too?  It was, you know. I think a nation can tell.

So why I am writing about this on a blog dedicated to business musings? Well, it seems like a pretty appropriate time to give a shout out to all things British, including business.

For example, did you know before you watched the Closing Ceremony that the theme tune to CSI: Miami is by The Who (as are all CSI theme tunes) and that The Who are British? This was news to me—at least about the theme tunes for a hit American television series being British in origin.

What about Sir Tim Berners-Lee, British inventor of the World Wide Web? In an Ipsos MORI survey conducted earlier this year, only 13% of adults believed the World Wide Web was made or designed in Britain. Fortunately, the people in the know knew better and Sir Tim was given a star role in the Opening Ceremony.

The stunning and beautiful Olympic Cauldron was designed by Thomas Heatherwick, founder of Heatherwick Studio—one of the most inventive design studios in Britain.  Matt and I spent a fabulous afternoon at the Victoria and Albert Museum browsing the first major solo exhibition of their work (this exhibition is running until 30 September as part of the London 2012 Festival).

In addition to the Olympic Cauldron, Heatherwick Studio have also designed the bestselling zip bag, developed in collaboration with Longchamp; a brand new London bus—”the first bus to be designed specifically for the capital in more than fifty years”; the Rolling Bridge at Paddington Basin; and a huge programme of improvements to a Pacific Place shopping mall in Hong Kong; to name but a few.

We’ve got a lot to shout about in Britain and a lot to be proud of. And yet—at least before the Olympics—only 4% of people felt that business was a reason to be proud to be British. Hopefully this is an attitude that will change following the success of the Olympics but I also wonder whether, to some degree, it’s a matter of education. I don’t think we always realise how rich our heritage is and how much us Brits are truly responsible for. Maybe that’s because we’re too self-effacing. Maybe British businesses aren’t very good at getting the word out. Maybe, in a funny way, it’s just part of the nature of being British: we don’t boast, we don’t shout, and we like to quietly go about our business—even when that business is changing the world.

The Opening and Closing Ceremonies of the Olympics were great at showcasing British achievements. A film by UK Trade & Investment was also produced several years ago to promote the creative cultural heritage of modern Britain in our bid for the 2012 Olympic Games. Part of UKTI’s ‘Love and Money’ campaign, the film showcases “products and services that balance business ambition and commercial success with the invention and experimentation for which Britain’s creative industries are internationally renowned.”

Having travelled the world, the Love and Money exhibition has received an international reaction that has been “unanimously positive”. And maybe that is something else that we should take away from these Games: international opinion on Britain is generally more positive than we give ourselves credit for. Good news if you’re looking to internationalise!

I’m sure there will be people out there who disagree with me—you may even be reading this article! But, for me, I stand with Declan Carty whose letter to The Independent having travelled to the Olympics from Dublin was featured in The Week:

I have come to the sad conclusion that there seem to be more people with glasses half-empty than half-full, and it is these people who bleat on endlessly about how poor everything is and how it could be better. We must despatch these naysayers and not pay them any more attention than we have to. Our experience, and the experience of dozens of people we spoke to, was a very positive one. Congratulations to all concerned.

Today, I am proud to be British and proud of everything we have achieved. If you’re a British business, be proud of your achievements and consider shouting them from the rooftops, even if at first this is only in a whisper.

This post is long overdue! Having been using Float—a fantastic cash flow forecasting tool—since late 2010 (first in beta and now in its full release), I have been meaning to blog about Float’s awesomeness for some time now.

In the interests of full disclosure, I’m proud to be a Founder Member of Float. This means that I believe in what they do and have voted with my feet by supporting them.

Float describe their vision as:

To make forecasting accessible for small business owners. Helping them avoid sleepless nights, painful spreadsheets and ultimately running out of money.

Whether big business or small, we all know how many headaches cash flow forecasting can cause but also how vital it is. Ultimately, cash flow forecasting should facilitate strategic and tactical decision making; it should allow you to accurately plan for the future because you know what the business can and can’t afford. Establishing a clear view on your finances also enables you to rapidly respond to changing scenarios because you’re able to see exactly how these changes cascade throughout your financial situation.

Such a perspective is vital. In start-up and bootstrapping environments, the necessity to manage your cash flow is clear (although, I have to say, I’ve met many businesses who remain remarkably complacent about cash flow management even when their backs are against the wall!). Possibly less evident is the importance of cash flow management even when a business is doing very well.

When profits are good and margins are high, it’s easy to become content about making hay while the sun shines—your finances seem to take care of themselves and managing the detail seems like an unnecessary chore. Inevitably however, overheads begin to creep and your expenditure starts to bloat. Your perspective on the future also becomes increasingly shortsighted. Where you were once planning budgets, investments and new ideas months, or even years, ahead, you begin to leave yourself open to surprises.

Why Float?

Back in the day, cash flow management typically relied upon spreadsheets and more than a little Excel wizardry! For those of us proficient in the world of formulas, functions and charts, this is doable but still incredibly time consuming. For others, it opens up a whole world of hurt!

Float aims to change all of this by making cash flow forecasts ”easy, painless, and maybe even fun!” Seamlessly integrated with FreeAgent—“heavenly online accounting”—Float removes much of the complexity and manual labour involved in the whole process.

There are “no formulas to understand, type in, or break!” and Float’s clean, intuitive, Web 2.0 style interface makes it a breeze to use. Unlike Excel, Float is online, so you can access it anytime, anywhere. It’s also quick to set up and, unlike many other financial planning tools, you don’t need any training or financial qualifications to use Float, so you can literally get started straight away. Colin and Phil (the founders of Float) are always on hand if you’ve got any questions too.

Float particularly comes into its own when you consider the point at which future projections meet current reality. Using a cash flow forecast in Excel, you would need to constantly check that your spreadsheet figures match those of your bank account—does the theory match reality? Float, on the other hand, removes the need for manual checking. All of your transactions, balances and other accounting figures are imported directly from FreeAgent and categorised. This, combined with FreeAgent’s automated bank feeds from Barclays, means that you have streamlined, realtime financial planning at your fingertips!

Float, FreeAgent and Barclays

“But what if I don’t use FreeAgent or bank with Barclays?” I hear you cry.

To answer the first part of that question, part of the beauty of Float is its reliance upon FreeAgent. Much of the frustration inherent in using Excel (aside from the need to understand its functionality) is the amount of time involved in entering data manually and the mistakes that can creep in as a consequence. Float deals with this by pulling its data from FreeAgent and, personally, it’s one of the reasons that I love it most. There’s no way I’d have the time to keep an offline spreadsheet up-to-date and I’m a firm believer in using technology to improve efficiency, so why would I enter data manually when software exists that will do it all for me?

And, if you haven’t ever heard of FreeAgent or don’t yet use it for your accounting, I would highly recommend it! In the words of Ryan Havoc (Boagworld), “FreeAgent is a fully featured online accounting tool wrapped in a sleek, comprehensive and easy to use interface.” Kevin Partner of PC Pro also wrote, “It’s rare that I feel able to recommend a product unreservedly: this is one of those occasions.” Similarly, as I’ve written before, FreeAgent is a pleasure to use, makes life so much easier, and their customer support is second to none.

Float are also working towards integration with other cloud-based accounting packages, so further integration and availability is something that should be on its way.

Similarly, FreeAgent are working hard to support banks other than Barclays and, in the long term, they hope that all FreeAgent users will have automatic feeds no matter whom they bank with. Watch this space!

Planning for tomorrow and keeping an eye on today

Here at Matt Stocker Ltd, we’re passionate about helping organisations to plan for the future and Float’s philosophy very much fits with our own approach. As strategy consultants, we work with clients to build long term success; this includes minimising surprises, reducing risk and helping organisations to allocate their resources effectively.

Back in April of this year, Float asked me to explain why I love Float and how I use it, and I was thrilled for my answers to be featured on their blog.

Float themselves say, “There is still so much more we can do to help business owners see into the future—and we are still hard at work.” As always, I’m excited to see what else is in the pipeline. Float has already come so far and, even since April, they’ve rolled out several new features.

Longer term, I’d like to see Float enable best practice for turnaround situations by providing a week-by-week view on an organisation’s cash flow. In the meantime, I know that they’re currently working on handling credit card transactions more effectively and several other ideas are underway.

Float really does have the potential to transform the world of cash flow forecasting in the same way that FreeAgent and Xero have transformed small business accounting.

RIP Excel! Long Live Float!—the start-up that’s making waves!

Sign up for Float and FreeAgent today

If what I’ve said has piqued your interest, why not sign up for Float and FreeAgent today…

Float offer a 30-day free trial, no credit card required.

And grab yourself 10% off at FreeAgent with our referral code 314yalfc or by clicking the link below:

Cars don’t end up on the scrap heap by accident. The rust that started as a couple of specks over the wheel arches. The chipped windscreen that was never repaired or replaced. The engine that hasn’t been serviced in years.

These cars have owners who, like Penny, decided they’d take what they could get from the car now without thinking about the value it could give them in the future—if they just looked after it a little better.

The decision may not have been a conscious one and the driver was happy as long as the car started each morning and got them to where they needed to be. Until, of course, the occasional cough, splutter and engine complaint turned into a hefty bill from the garage or, at worst, a failure to start every single day! A car that once held value and purpose has suddenly become a car useful only for parts.

The thing is, the organisational equivalent of this is happening up and down the country every single day. These organisations still work. They still start up every morning. But check engine lights are on.

The loss of a long-standing and loyal customer. Failure to win a new contract. High staff turnover or increasing absence.

But the organisation still works, so why should anybody worry?

Companies, management teams, and staff sometimes focus so much on starting the business every morning, they forget the organisation itself needs a little bit of tender loving care.

Gradually, the strength of a business model weakens, the market shifts, the brand becomes outdated, and the proposition gets muddied.

Eventually, a competitor draws alongside your rusty, clunky, unreliable business with their sleek, polished and purring motor, and you realise with horror that you can no longer compete. As they pull away, your organisation is smoked and left for dust.

Although Sheldon is known for his pedanticism, in the case of the check engine light he has a point. Several episodes later, Penny says: “The check engine light is fine. It’s still blinking away. It’s the stupid engine that stopped working! It cost me almost $1,200 to fix it!”

Don’t be Penny within your organisation. Decide to keep up with technology. Ensure your strategy and business model remain effective. Make good use of effective performance measures to spot trouble before it starts. Have a strong vision. Invest in your people. Develop your products, service and brand.

Do this and your organisation will remain competitive for the long haul. The Sheldon’s of this world will never be able to say, “Did you once again ignore your check engine light?” and you will never repeat the immortal words of Penny, “No, Mr. smarty-pants. I ignored the fill gas tank light!”

Last week, I wrote about how nothing breeds success like failure but ended on a crucial question: How? How do we affirm failure correctly and effectively? How do we encourage perseverance and daring? How do we embrace failure and turn it into success?

My reading around failure has uncovered several suggestions and I would love to add a few of my own.

1. Stop the denial

Failure happens—fact! You will fail; if not today, then tomorrow, next month or next year. Your failure may be big or small, catastrophic or common, but the one thing I can guarantee is that you will experience it.

We need to stop hiding from failure, avoiding it and denying it. As individuals and organisations, it’s ok to admit failure and to put it right. Starbucks has even adopted this as part of their customer service ethos: “Your drink should be perfect, every time. If not, let us know and we’ll make it right.”

At a deeper level, we also need to “acknowledge that some people—even ambitious people, smart people, talented people, tenacious people, good people—experience failures that turn out to be more than mere bumps on the road to success.”

Before we can turn around failure of any form, we must “strive for transparency,” both within our organisations and in the interactions we have with one another.

2. Disown failure as an individual identity

Did you know that in 18^th century English, failure as an identity did not exist in our language? Scott Sandage points out that “the usage ‘he is a failure’ or ‘I feel like a failure’ was unknown; people spoke of going into business and ‘making a failure of it’. The striver was still responsible for paying for (and learning from) his own mistakes—but the shop or the counting house was the failure, not the person.”

Such depersonalisation makes failure much easier to face. It also enables objectivity and more effectively facilitates learning. Further, this perspective is a much closer reflection of the truth. We rarely fail entirely alone or entirely through our own fault—usually, circumstance is much more complex than that.

3. Exempt ourselves and others from the obligation to succeed

Closely related to failure as an identity is the pressure to succeed. Real or perceived pressure to ensure that we don’t let others down, disappoint or fail to meet expectations. None of us should be living in fear of the consequences of our failure for, if this is the case, we will never have the courage to try.

Those who experience failure can be ostracised and may experience emotions such as shame and humiliation. High profile failures, such as that of Gerald Ratner, reveal the stigma that can be attached to failure. For some the effect of this stigma is extreme. A study on the relationship between debt and suicide in Japan showed that some consider suicide preferable to their financial failure—in one 52-year old debtor’s words: ”Bankruptcy means you’re a loser for life.”

Although it is inevitable that certain failures will, and should have, consequences, we need to ensure that these consequences are not permanent and nor are they terminal. We need to create a culture in which failure does not engender blame and retribution but that consequences are fair and representative of the action.

Similarly, we need to take down the pedestals upon which we place others and accept that they, like us, will fall. Second, third, fourth, or even one hundredth chances should be available to all.

4. Set realistic expectations

Success is rarely instantaneous but, in a culture that craves instant gratification and “admire[s] instant…effortless brilliance,” this is all too easy to forget.

We need to recognise that success takes time and there will be failures along the way. As organisations and as individuals, we need to set realistic expectations about what is is possible to achieve. In the words of Aza Raskin, former Creative Lead for Firefox, “Your first try will be wrong. Budget and design for it.”

5. Understand the failure spectrum

As I mentioned in my last article, failure is nuanced. At one end of the spectrum is failure that forms “an essential part of a [learning] process” but at the other is failure with “dark” and catastrophic consequences. We need to be able to recognise the different types of failure and employ effective strategies for each.

Within our organisations, we need to create processes, systems, cultures and budgets that allow for and encourage “intelligent” failure.

However, where catastrophic or abject failure is a risk, multiple failsafes should be built in. All too often, “individuals can be quite adept at picking up on hints of failure in the making [but] organisations typically fail to process and act on their warnings.” Such failure is not to be encouraged. At whatever point on the spectrum failure lies, “leaders…must shape cultures that are open both to the possibility of failure and the need to learn when problems do occur.”

6. Create a learning culture

I love this tip from Richard Watson on Fast Company: “Try to fail as often as possible but never make the same mistake twice.” We need to create organisational cultures that both accept and learn from failure. Prototyping, agile methodologies, even basketball or piano practice, do not involve doing the same thing over and over again. Rather, they require that we “learn from [our] failure and try again differently.”

We also need to ensure that we learn from our failures as quickly as possible. Aza Raskin tells the story of Paul MacCready’s efforts to solve the problem of human-powered flight. Whilst others were spending upwards of a year building planes that were destroyed within a matter of minutes and could not easily be rebuilt, MacCready set out to “build a plane that could be rebuilt in hours not months.” Such an approach enabled him to rapidly iterate and the “relearn cycle went from months and years to hours and days.” Suffice to say, it was MacCready’s planes that claimed Henry Kremer’s rewards for turning his dream of flight into reality.

7. Dare to do things the wrong way

Sometimes, in order to achieve success, we need to dare to do things wrong. Sir James Dyson suggests “initiat[ing] a failure by doing something that’s very silly, unthinkable, naughty, dangerous. Watching why that fails can take you on a completely different path.” In creating the Dyson vacuum cleaner, the conventionally shaped cyclone simply wouldn’t work; it was only when Dyson tried “the wrong shape” that he discovered his key to success. “It was wrong-doing rather than wrong-thinking. That’s not easy, because we’re all taught to do things the right way.”

Alberto Alessi describes this as “danc[ing] on the borderline between success and disaster.” He points out however that “working close to the borderline is very risky, because you cannot see it with your eyes. It is not clearly drawn or marked. You can only feel it by using sensibility and intuition…One step more, and you risk falling into the not-possible area.” Dare to do things the wrong way but do so wisely.

8. Aim for fallure not failure

In Hitting the vertical wall: realizing that vertical limits aren’t, Jim Collins tells the story of attempting to complete an on-sight climb of a route known as the Crystal Ball. A challenging climb, Collins found himself exhausted only three moves away from the crystal. He gave up and let go. In his words, he “failed in [his] mind.”

Learning from his disappointment, Collins went on to discover what he has coined climbing to “fallure, not failure”. When climbing to fallure, you may still fall but you do not choose to do so. Mentally and physically, you give it your all, until either you conquer the rockface or it conquers you.

Collins applies this idea to life and to business. “Going to fallure in life is scary, but not dangerous. Whether it be starting a business or publishing a book or trying an exciting new design, fallure rarely means doom. And most important, [fallure is] the only way to find your true limit.”

9. Know when to quit and when to push on through

Closely related to fallure is the need to know when to quit and when to push on through. Seth Godin talks about the idea of “the dip”—the slog that occurs between learning and mastery. Often such dips need to be beaten and perseverance will lead to success. However, what looks like a dip can also be a “dead end.” We need to be able to recognise the difference.

Similarly, fallure should be used wisely and must be combined with our understanding of the failure spectrum and its risks. Collins later relates the story of the time he convinced another, less experienced climber, to continue climbing a cliff named Cynical Pinnacle even though a storm was approaching. His partner’s rope lodged in a crack and they found themselves trapped “with the temperature in the fifties and dropping, [and] facing a full early-spring front.” Fortunately, both men lived to climb another day but it should be said that continuing to fallure in the midst of a perilous and dangerous situation is sheer folly.

10. Learn the skills to handle failure

Daniel Ostrower, in a comment on Jamer Hunt’s article, pointed out that a “special set of skills (both emotional and intellectual) is required to diagnose and learn from failure.” He argues that, “Not everyone can do it, and even those that can will have more difficulty in certain situations than others.” While I agree that handling failure can be difficult, I wonder whether it is possible to learn skills that would enable us to handle it more effectively. Through studies, such as that of Life after business failure, we can begin to understand the processes that occur and uncover strategies for dealing with failure more effectively.

It should also be said that learning from failure is a process. Business failure involves loss and the psychological effects of such have been likened to those of grief. Just as grieving is a process, so is recovering from failure. Failure can be painful and we need to allow ourselves “time to recover from the hurt”. Only when we have done this, can we engage in “critical reflection,” examining the reasons for the failure and learning to move beyond them.

Michael Jordan—a final word

To return to where we began this journey, Michael Jordan has had astounding success but it has been founded on hard work, dedication, perseverance and failure. In another famous Nike advert, he says:

Maybe it’s my fault. Maybe I led you to believe it was easy when it wasn’t…Maybe it’s my fault that you didn’t see that failure gave me strength—that my pain was my motivation. Maybe I led you to believe that basketball was a God-given gift and not something I worked for—every single day of my life.

Maybe I destroyed the game.

Or maybe, you’re just making excuses.

Michael Jordan was never shooting to lose but that didn’t mean he never missed. We need to dare to fail in order to succeed. As organisations and as individuals, if we allow ourselves to be paralysed by our fear of missing, we will never take the shot that wins or loses us the game.

What can you dare to fail at today?

And for those of you who like the research…

Collins, J. (2003). Hitting the wall: realizing that vertical limits aren’t. Jim Collins

Hunt, J. (2011). Among six types of failure, only a few help you innovate. Fast Co.Design

McGregor, J. (2007). Gospels of failure. Fast Company

Raskin, A. (2012). You are solving the wrong problem. Aza Raskin

Salter, C. (2007). Failure doesn’t suck. Fast Company

Salter, C. (2007). Failure doesn’t suck – part 2. Fast Company

Sandage, S.A. (2012). Get back in the saddle. Times Higher Education

Ucbasaran, D., Shepherd, D., Lockett, A. & Lyon, J. (2012). Life after business failure: the process and consequences of business failure for entrepreneurs. CSME Working Paper.

Watson, R. (2008). Celebrate failure. Fast Company

West, M. (2003). Dying to get out of debt: consumer insolvency law and suicide in Japan. The John M. Olin Center for Law & Economics Working Paper Series, 03-015.

Wylie, I. (2007). Failure is glorious. Fast Company