1. 1 Confidential - for classroom use only Identifying Needs and Finding Opportunities I

2. 2 Confidential - for classroom use only How to Get Startup Ideas (on demand) by Paul Graham (http://www.paulgraham.com/startupideas.html ).

3. 3 Confidential - for classroom use only Building Things that Someone Wants Why do so many founders build things no one wants? Because they begin by trying to think of startup ideas… it doesn't merely yield few good ideas; it yields bad ideas that sound plausible enough to fool you into working on them. When a startup launches, there have to be at least some users who really need what they're making—not just people who could see themselves using it one day, but who want it urgently. Usually this initial group of users is small, for the simple reason that if there were something that large numbers of people urgently needed and that could be built with the amount of effort a startup usually puts into a version one, it would probably already exist. Which means you have to compromise on one dimension: you can either build something a large number of people want a small amount, or something a small number of people want a large amount. Choose the latter. Not all ideas of that type are good startup ideas, but nearly all good startup ideas are of that type. How do you tell whether there's a path out of an idea? How do you tell whether something is the germ of a giant company, or just a niche product? Often you can't.

4. 4 Confidential - for classroom use only Live In The Future, Then Build What's Missing. If you look at the way successful founders have had their ideas, it's generally the result of some external stimulus hitting a prepared mind. Once you're living in the future in some respect, the way to notice startup ideas is to look for things that seem to be missing. But if you're looking for startup ideas you can sacrifice some of the efficiency of taking the status quo for granted and start to question things. Pay particular attention to things that chafe you. The clash of domains is a particularly fruitful source of ideas. If you know a lot about programming and you start learning about some other field, you'll probably see problems that software could solve. You don't need to worry about entering a "crowded market" so long as you have a thesis about what everyone else in it is overlooking. A crowded market is actually a good sign, because it means both that there's demand and that none of the existing solutions are good enough. There are two more filters you'll need to turn off if you want to notice startup ideas: the unsexy filter and the schlep (i.e. tedious) filter.

5. 5 Confidential - for classroom use only Tricks For Coming Up With Startup Ideas On Demand 1.When searching for ideas, look in areas where you have some expertise. 2.The place to start looking for ideas is things you need. There must be things you need. The next best thing to an unmet need of your own is an unmet need of someone else. 3.More generally, try asking yourself whether there's something unusual about you that makes your needs different from most other people's. You're probably not the only one. A particularly promising way to be unusual is to be young. Some of the most valuable new ideas take root first among people in their teens and early twenties. 4.Are there groups of scruffy but sophisticated users like the early microcomputer "hobbyists" that are currently being ignored by the big players? A startup with its sights set on bigger things can often capture a small market easily by expending an effort that wouldn't be justified by that market alone. 5.Similarly, since the most successful startups generally ride some wave bigger than themselves, it could be a good trick to look for waves and ask how one could benefit from them. One way to ensure you do a good job solving other people's problems is to make them your own. When one company or industry replaces another, it usually comes in from the side. So don't look for a replacement for x; look for something that people will later say turned out to be a replacement for x. And be imaginative about the axis along which the replacement occurs When startups consume incumbents, they usually start by serving some small but important market that the big players ignore.

6. 6 Confidential - for classroom use only Exercise The clash of domains is a particularly fruitful source of ideas. What do you know a lot about? In what fields/industries/markets is your knowledge or experience being applied? Where else could it be applied? How? To what good purpose?

7. 7 Confidential - for classroom use only Sources of Innovative Ideas

8. 8 Confidential - for classroom use only Discovering Opportunities Everyone who aspires to be an entrepreneur has ideas. For some, ideas arise on a daily basis. Le real challenge, though, is to find good ideas, ideas that are more than just ideas – they’re opportunities! Where do great opportunities come from? How are they born? History tells us that there are four common sources of opportunities – opportunities that are more than mere ideas – that any would-be entrepreneur can use. 1.Opportunities created by macro trends in society 2.Opportunities found by living and experiencing the customer problem 3.Opportunities created through scientific research 4.Opportunities proven elsewhere that you can pursue here. In management guru Peter Drucker’s words-. “The overwhelming majority of successful innovations exploit change”. According to Drucker, identifying opportunities is about “a systematic examination of the areas of change that typically offer opportunities”. And it’s aspiring entrepreneurs who often spot them. If you want to find a good opportunity, systematically study today’s trends, as Drucker suggests, and ask yourself how those trends will influence the life you and others lead, the markets you serve or the industry where you work. If we think about it, most of us can also recognise opportunities where something can be improved – products, services, processes or whatever – in the lives we lead or the work we do. Thus, fixing what’s inadequate or broken is another rich source of opportunities for watchful entrepreneurs. The key that can unlock the challenge of turning basic scientific research into viable new ventures is linking the promise of scientific discovery with genuine customer needs – sometimes latent ones – so that real customer problems are solved. In a study of the fastest-growing companies in the US, Amar Bhide found that most of the founders simply replicated or modified an idea they encountered through previous employment, or by accident. Looking for opportunities in one place and bringing them home can be a great source of opportunities that are already market tested. John Mullins, “Entrepreneurial Gold Mines” in Business Strategy Review (Spring 2004).

9. 9 Confidential - for classroom use only Example: The Sixth Sense TED Talk Pranav Mistry: The thrilling potential of SixthSense technology: https://www.youtube.com/w atch?v=YrtANPtnhyg

10. 10 Confidential - for classroom use only Example: Municipal Problems 1.Workflow Management & Optimization a.Managing Requests. Database and workflow management system that serves as request intake on the front end and workflow management on the backend. Can track detailed information on request type, individual work order “turnaround” times off of a master service request, crew dispatched. Reporting requirements flexible to say when it got transferred, when it is overdue for a particular agency as well as overdue overall. b.Property Assessments. Optimize data on site property assessments to target biggest positive tax impact. There are over 200,000 parcels in Baltimore City and are supposed to be assessed every 3 years – approximately 70,000 sites a year. Most of these are currently not receiving an on-site visual assessment. 1.Infrastructure a.Water Main Breaks. Predicting the next water main breaks in order to optimize spending capital fund dollars on pipe replacements (and not costly emergency maintenance & repair). Initial data sets that would play a role are: water main break data, sanitary sewer overflow data, costs of pipe replacement, costs of emergency repairs, costs of paving. b.Road Upgrades & Coordination. Related to water main breaks, optimize spending capital dollars based on pavement condition, pipe condition, and other underground conduit conditions to prevent the waste of dollars spent on paving. Can feed in pavement condition index data, water main data, recent paving and pipe replacement locations, and street cut data to develop a model. c.Water Quality. Combine water quality sampling data with sewer and stormwater maintenance data to optimize water quality sampling in way that allows for easy identification of issues with the sewer system leaking into the stormwater system. These issues can then be addressed by maintenance crews and minimize impact on the watershed. d.Bridges. Sensors to predict when repairs are needed. e.Citywide Fleet. Use fleet analytics to determine preventive maintenance needs. 2.Traffic Flow Analysis a.Taking the signal timing data that we have and any traffic data sets that we have and determine better signal timing for optimal traffic flow. 1.Fraud Analysis a.Predicting when water meter reads are being made up based on reads, time between reads, location, meter reader, etc… b.Taking GPS data and devising algorithms to determine if there are vehicles deviating from what their job is supposed to be and creating the proper alerts for their supervisor. 2.Staffing & Deployment Levels a.Police & Fire. Build a model that takes into account calls for service needs, average response times to different call types, volume of calls for service over the day and week, total staffing level, scheduling issues, leave time, training time, court time (police), overtime. Goal is to optimize deployment based on demand while minimizing overall staffing cost. b.Flexible tools for deployment of maintenance crews. Have work orders that have already come in, but also have work orders that come in during the day while crews have already been deployed. Developing algorithms that balance the need to hit turn-around time targets while taking into account total volume and geographic efficiency.

11. 11 Confidential - for classroom use only Example: Pearson Publishing 1.Mobile Learning 2.Data Visualization 3.Social Supports 4.Non-Cognitive Skills 5.Digital Content Delivery 6.Assessment 7.Artificial Intelligence/Adaptive Learning 8.Augmented Realities/Holographics 9.Progressive Education

12. 12 Confidential - for classroom use only Example: Healthcare

13. 13 Confidential - for classroom use only Generating Ideas: Macro Trends in Society

14. 14 Confidential - for classroom use only Four Types of Macro Changes In general, four types of changes make opportunities for new businesses: changes in technology, changes in political and regulatory rules, changes in social and demographic factors, and changes in industry structure: 1.…technological change allows people to do things that could not be done before or only could be done in a less efficient manner…. The magnitude of the technological change is important. The larger the technological change, the greater the opportunity for new businesses to be created because larger magnitude changes affect more uses for technology, allowing the use of new technology in more things. 2.Why do political and regulatory changes enhance entrepreneurial opportunity? Deregulation creates opportunity because it allows more variance in ideas to be put forward by entrepreneurs who might have been barred from entry under a regulated regime. 3.Social and demographic changes open up opportunities for new technology businesses by altering people's preferences and creating demand for things where demand had not existed before. 4.Sometimes, industry structure shifts because firms that supply other firms or major customers die or because firms merge or acquire each other. These types of shifts change the competitive dynamics in an industry and open up or close down niches that may provide opportunities for entrepreneurs. Scott A. Shane, Finding Fertile Ground (FT Press: 2004)

15. 15 Confidential - for classroom use only Four Great Disruptive Forces Speed, surprise, and sudden shifts in direction in huge global markets routinely impact the destinies of established companies and provide opportunities for new entrants. In fact, ours is a world of near-constant discontinuity. Competitors can rise in almost complete stealth and burst upon the scene. Businesses that were protected by large and deep moats find that their defenses are easily breached. Vast new markets are conjured seemingly from nothing. Technology and globalization have accelerated and intensified the natural forces of market competition A radically different world is forming. The operating system of the world’s economy is being rewritten as we speak. It doesn’t come out in a splashy new release. It evolves, unfolds, and often explodes. The Four great disruptive forces: 1.The shifting locus of economic activity 2.The impact of technology 3.Demographics 4.Flows and Connectivity Richard Dobbs, et.al., No Ordinary Disruption (Public Affairs: 2015)

16. 16 Confidential - for classroom use only 1. The Shifting Locus of Economic Activity The first is the shifting locus of economic activity and dynamism— to emerging markets like China and to cities within those markets. The emerging markets are going through the simultaneous industrial and urban revolutions that began in the nineteenth century in the developed world. The balance of power of the world economy is shifting east and south at a speed never before witnessed. As recently as 2000, 95 percent of the Fortune Global 500— the world’s largest international companies, including Shell, Coca-Cola, IBM, Nestlé, and Airbus, to name a few— were headquartered in developed economies. By 2025, when China will be home to more large companies than either the United States or Europe, we expect nearly half of the world’s large companies— defined as those with revenues of $ 1 billion or more— will come from emerging markets. Perhaps equally important, the locus of economic activity is shifting within these markets. The global urban population has been rising by an average of sixty-five million people over the last three decades, equivalent to adding seven Chicagos a year, every year. Richard Dobbs, et.al., No Ordinary Disruption (Public Affairs: 2015)

17. 17 Confidential - for classroom use only 2. The Impact of Technology The second disruptive force is the acceleration in the scope, scale, and economic impact of technology. Technology— from the printing press to the steam engine and the Internet— has always been a great force in overturning the status quo. The difference today is the sheer ubiquity of technology in our lives and the speed of change. In their bestseller The Second Machine Age, Erik Brynjolfsson and Andrew McAfee of the Massachusetts Institute of Technology dubbed the current era “second half of the chessboard Processing power and connectivity are only part of the story. Their impact is multiplied by the concomitant data revolution, which places unprecedented amounts of information in the hands of consumers and businesses alike, and the proliferation of technology-enabled business models, from online retail platforms like Alibaba to car-hailing apps like Uber. Thanks to these mutually amplifying forces, more and more people will enjoy a golden age of gadgetry, of instant communication, and of apparently boundless information. Technology offers the promise of economic progress for billions in emerging economies at a speed that would have been unimaginable without the mobile Internet. Barely twenty years ago, less than 3 percent of the world’s population had a mobile phone and less than 1 percent were on the Internet. Today, two- thirds of the world’s population has access to a mobile phone and one-third of all humans are able to communicate on the Internet. Technology allows businesses to start and gain scale with stunning speed while using little capital…. Richard Dobbs, et.al., No Ordinary Disruption (Public Affairs: 2015)

18. 18 Confidential - for classroom use only 3. Demographics The third force changing the world is demographics. Simply put, the human population is getting older. Fertility is falling, and the world’s population is graying dramatically. Aging has been evident in developed economies for some time. Japan and Russia have seen their populations decline over the past few years. The demographic deficit is now spreading to China and will then sweep across Latin America. For the first time in human history, aging could mean that the planet’s population plateaus in most of the world. Thirty years ago, only a small share of the global population lived in the few countries with fertility rates substantially below those needed to replace each generation— 2.1 children per woman. But by 2013, about 60 percent of the world’s population lived in the few countries with fertility rates substantially below those needed to replace each generation— 2.1 children per woman. But by 2013, about 60 percent of the world’s population lived in countries with fertility rates below the replacement rate. 15 This is a sea change. The European Commission expects that by 2060, Germany’s population will shrink by one-fifth, and the number of people of working age will fall from fifty-four million in 2010 to thirty-six million in 2060, a level that is forecast to be less than France’s. China’s labor force peaked in 2012, due to income-driven demographic trends. In Thailand, the fertility rate has fallen from 5 in the 1970s to 1.4 today. A smaller workforce will place a greater onus on productivity for driving growth and may cause us to rethink the economy’s potential. Caring for large numbers of elderly people will put severe pressure on government finances. Richard Dobbs, et.al., No Ordinary Disruption (Public Affairs: 2015)

19. 19 Confidential - for classroom use only 4. Flows and Connectivity The final disruptive force is the degree to which the world is much more connected through trade and through movements in capital, people, and information— what we call “flows.” Trade and finance have long been part of the globalization story. In recent decades, there’s been a significant shift. Instead of a series of lines connecting major trading hubs in Europe and North America, the global trading system has expanded into a complex, intricate, sprawling web. Asia is becoming the world’s largest trading region. “South-south” flows between emerging markets have doubled their share of global trade over the past decade. 18 The volume of trade between China and Africa rose from $ 9 billion in 2000 to $ 211 billion in 2012.19 Global capital flows expanded twenty-five times between 1980 and 2007. People crossed borders more than one billion times in 2009, over five times the number in 1980.20 These three types of connections all paused during the global recession of 2008 and have recovered only slowly since. But the links forged by technology have marched on uninterrupted and with increasing speed, ushering in a dynamic new phase of globalization, creating unmatched opportunities, and fomenting unexpected volatility. Richard Dobbs, et.al., No Ordinary Disruption (Public Affairs: 2015)

20. 20 Confidential - for classroom use only The Four Disruptions The four disruptions gathered pace, grew in scale, and started collectively to have a material impact on the world economy around the turn of the twenty-first century. Now they are disrupting long-established patterns in virtually every market and every sector of the world economy— indeed, in every aspect of our lives. Everywhere we look, they are causing trends to break down, to break up, or simply to break. The fact that all four are happening at the same time means that our world will change radically from the one in which many of us grew up, prospered, and formed the intuitions that are so vital to our decision making. the same forces that lifted one billion people out of extreme poverty between 1990 and 2010 will help propel nearly two billion more people into the global consuming class in the next two decades. This improvement in the economic status of so many people would save even more lives than the eradication of smallpox, one of the greatest medical achievements of the twentieth century. The rapid spread of technology will empower individuals and consumers in unprecedented numbers. Increasingly, companies will find that technology drives the marginal cost of delivering a new product, servicing a new customer, or completing a transaction toward zero. And as more people connect to the global communications and commercial systems, the force of network effects will make those systems more valuable— and create more value for those who can tap into them. As a result, the new world will be richer, more urbanized, more skilled, and healthier than the one it replaces. Its population will have access to powerful innovations that could address long-standing challenges, create new products and services for a growing consuming class, and present opportunities for a global entrepreneurial class. Richard Dobbs, et.al., No Ordinary Disruption (Public Affairs: 2015)

21. 21 Confidential - for classroom use only A Warning By 2020, on our current trajectory, businesses could be short of 85 million workers with college degrees or vocational training; at the same time, 95 million lower-skilled workers could be unemployed. The global economy is poised at a set of historical, technological, economic, political, and social inflection points. The transformation we’re living through has sometimes been likened to the Industrial Revolution. In fact, the Industrial Revolution pales in comparison to today’s convulsions, because the shifts today are happening much faster and on a much bigger scale. Because they are so interlinked— urbanization and consumption, technology and competition, aging and labor— and because they amplify one another, the changes are harder to anticipate and more powerful in their impact. And they challenge our imaginations as much as they do our competencies and skills. One of the factors that makes managing today so difficult is the ever-present potential for second- and third-order effects of the changes we’re witnessing. …key to survival is to embed curiosity and learning in an organization. Agility is another vital attribute necessary to thrive in the trend break era. Richard Dobbs, et.al., No Ordinary Disruption (Public Affairs: 2015)

22. 22 Confidential - for classroom use only Opportunity Recognition as Pattern Recognition How do entrepreneurs identify opportunities for new business ventures? One possibility, suggested by research on human cognition, is that they do so by using cognitive frameworks they have acquired through experience to perceive connections between seemingly unrelated events or trends in the external world. In other words, they use cognitive frameworks they possess to “connect the dots” between changes in technology, demographics, markets, government policies, and other factors. The patterns they then perceive in these events or trends suggest ideas for new products or services— ideas that can potentially serve as the basis for new ventures. This pattern recognition perspective on opportunity identification is useful in several respects. 1.First, it helps integrate into one basic framework three factors that have been found to play an important role in opportunity recognition: engaging in an active search for opportunities; alertness to them; and prior knowledge of an industry or market. In addition, it also helps explain interrelations between these factors (e.g., the fact that active search may not be required when alertness is very high). 2.Second, a pattern recognition perspective helps explain why some persons, but not others, identify specific opportunities. 3.Third, a pattern recognition framework suggests specific ways in which current or would-be entrepreneurs can be trained to be better at recognizing opportunities. Robert A. Baron, “Opportunity Recognition as Pattern Recognition” in Academy of Management Perspectives (Feb 2006).

23. 23 Confidential - for classroom use only Between Seemingly Unrelated Events In short, knowledge—especially knowledge concerning specific markets or industries— often provides a solid base for opportunity recognition, and the broader this foundation, the more opportunities present themselves, and the higher the quality of such opportunities entrepreneurs will tend to recognize. Pattern recognition is the process through which specific persons perceive complex and seemingly unrelated events as constituting identifiable patterns. In essence, it involves recognition of links between apparently unrelated trends, changes, and events—links suggestive of patterns connecting them together. The patterns suggested by these links or connections then become figures instead of undifferentiated (and often overlooked) ground. In essence, then, pattern recognition, as applied to opportunity recognition, involves instances in which specific individuals “connect the dots”— perceive links between seemingly unrelated events and changes. The patterns they perceive then become the basis for identifying new business opportunities. Highly experienced entrepreneurs (they had started more than four ventures each), uniformly mentioned engaging in an active search, and also in restricting these searches for opportunities to areas in which they already possessed considerable knowledge. In other words, they reported engaging in a process very similar to that involved in pattern recognition—a process in which they employed their existing cognitive frameworks and knowledge to notice connections between diverse events and trends. Robert A. Baron, “Opportunity Recognition as Pattern Recognition” in Academy of Management Perspectives (Feb 2006).

24. 24 Confidential - for classroom use only Opportunities and Opportunity Recognition: Some Basic Propositions While many definitions of the term opportunity have been proposed, most include references to three central characteristics: potential economic value (i.e., the capacity to generate profit), newness (i.e., some product, service, or technology that did not exist previously), and perceived desirability (e.g., moral and legal acceptability of the new product or service in society). For purposes of this paper, then, opportunity will be defined as a perceived means of generating economic value (i.e., profit) that previously has not been exploited and is not currently being exploited by others. Proposition 1: Opportunities emerge from a complex pattern of changing conditions— changes in technology, economic, political, social, and demographic conditions. They come into existence at a given point in time because of a juxtaposition or confluence of conditions which did not exist previously but is now present. Proposition 2: Recognition of opportunities depends, in part, on cognitive structures possessed by individuals—frameworks developed through their previous life experience. These frameworks, which serve to organize information stored in memory in ways useful for the persons who possess them, serve as “templates” that enable specific individuals to perceive connections between seemingly unrelated changes or events. In other words, they provide the cognitive basis for “connecting the dots” into patterns suggestive of new business opportunities. Robert A. Baron, “Opportunity Recognition as Pattern Recognition” in Academy of Management Perspectives (Feb 2006).

25. 25 Confidential - for classroom use only Example: The Internet of Things The technology industry is preparing for the Internet of things, a type of computing characterized by small, often dumb, usually unseen computers attached to objects. These devices sense and transmit data about the environment or offer new means of controlling it. Product companies compete by building ever bigger factories to turn out ever cheaper widgets. But a very different sort of economics comes into play when those widgets start to communicate. It’s called the network effect—when each new user of a product makes its value higher. Think of the telephone a century ago. The greater the number of people who used Bell’s invention, the more valuable it became to all of them. The telephone became a platform for countless new businesses its inventor never imagined. Now that more objects are getting wired up into networks—street lights, wind turbines, automobiles—there are opportunities for new platforms to emerge. If you produce the value, then you are a classic product company. But there are new systems where value is being created outside the firm, and that’s a platform business. Apple gets 30 percent of the cut from other people’s innovations in its app store. I define a platform as a published standard that lets others connect to it, together with a governance model, which is the rules of who gets what. Business platforms are often engaged in consummating a match. It’s a match between riders and drivers with Uber. It’s between travelers and spare capacity of guest rooms in Airbnb. There is a strong argument that platforms beat products every time. Think of how the iPhone is absorbing the features of the voice recorder, the calculator, and game consoles. The reason for this is that as a stand-alone product, you’re going to have a certain pace of innovation. But if you have opened your product so that third parties can add value, and you have designed the rules of the ecosystem such that they want to, your innovation curve is going to be faster. The Internet of Things (MIT Technology Business Report: Jul/Aug 2014)

26. 26 Confidential - for classroom use only Example: The Zero Marginal Cost Society Excerpted from a review of Jeremy Rifkin’s The Zero Cost Marginal Society (check out http://www.thethirdindustrialrevolution.com/) Machines are about to change what it means to be human. According to social theorist Jeremy Rifkin, they will undermine our sense of private property, take away our jobs and turn us into free agents in a new global “sharing economy”. For good measure, they will also destroy capitalism before the middle of the 21st century. If you’re already thinking that The Zero Marginal Cost Society belongs to the genre of techno-futurism that resorts to extreme predictions to attract attention, then you’d be right. The value of this book, however, doesn’t lie in the accuracy of its specific forecasts, but rather in the extrapolations of current trends that enable Rifkin to reach them. On that measure, this is a thought-provoking read that pushes some of the most important new technologies to their logical – and sometimes scary – conclusions. Take the machines that underpin the book’s central argument. They will be self-replicating, capable of producing their own spare parts and propagating themselves indefinitely. They will be powered by an alternative energy source like the sun, allowing them to run more or less forever. And they will be connected by the coming “internet of things”, a self-organising network that will allow them to operate as part of a new pervasive intelligent infrastructure. These machines will also be fully automatic and require no human labour to operate. As a result, they will throw off products at virtually no cost, save the minimal one of supplying the basic raw materials. This gets to the heart of Rifkin’s argument. If the marginal cost of producing each additional item falls to essentially nothing, then everything becomes free. In their pursuit of profit, businesses will have irrevocably undermined their own margins: capitalism will have destroyed itself. But don’t despair. Rising in its place, Rifkin argues, will be a civilisation based on a new and more fulfilling communitarianism, free of the hang- ups that have characterised the materialistic individualism of the late capitalist age. http://www.ft.com/intl/cms/s/2/7713c7fc-b07a-11e3-8efc-00144feab7de.html#axzz2wtIp2EqP

27. 27 Confidential - for classroom use only The Five Pillars of the Third Industrial Revolution Rifkin describes how the five pillars of the Third Industrial Revolution will create thousands of businesses and millions of jobs, and usher in a fundamental reordering of human relationships, from hierarchical to lateral power, that will impact the way we conduct business, govern society, educate our children, and engage in civic life. The five pillars of the Third Industrial Revolution are (1) shifting to renewable energy; (2) transforming the building stock of every continent into green micro–power plants to collect renewable energies on-site; (3) deploying hydrogen and other storage technologies in every building and throughout the infrastructure to store intermittent energies; (4) using Internet technology to transform the power grid of every continent into an energy internet that acts just like the Internet (when millions of buildings are generating a small amount of renewable energy locally, on- site, they can sell surplus green electricity back to the grid and share it with their continental neighbors); and (5) transitioning the transport fleet to electric plug-in and fuel cell vehicles that can buy and sell green electricity on a smart, continental, interactive power grid. The creation of a renewable energy regime, loaded by buildings, partially stored in the form of hydrogen, distributed via a green electricity Internet, and connected to plug-in, zero-emission transport, opens the door to a Third Industrial Revolution. The entire system is interactive, integrated, and seamless. When these five pillars come together, they make up an indivisible technological platform—an emergent system whose properties and functions are qualitatively different from the sum of its parts. In other words, the synergies between the pillars create a new economic paradigm that can transform the world. The intelligent TIR infrastructure—the Internet of Things—will connect everyone and everything in a seamless network. People, machines, natural resources, production lines, logistics networks, consumption habits, recycling flows, and virtually every other aspect of economic and social life will be connected via sensors and software to the TIR platform, continually feeding Big Data to every node—businesses, homes, vehicles, etc.—moment to moment in real time. The Big Data, in turn, will be analyzed with advanced analytics, transformed into predictive algorithms, and programmed into automated systems, to improve thermodynamic efficiencies, dramatically increase productivity, and reduce the marginal cost of producing and delivering a full range of goods and services to near zero across the entire economy. http://www.thethirdindustrialrevolution.com/

28. 28 Confidential - for classroom use only Google Trends http://www.google.com/trend s/topcharts?date=2013

29. 29 Confidential - for classroom use only https://www.cbinsights.com/blog/periodic-table-cybersecurity/

30. 30 Confidential - for classroom use only Generating Ideas: Empathic Design

31. 31 Confidential - for classroom use only The Sources of Innovative Ideas Innovative ideas have many sources. Some originate in a flash of inspiration. Others are accidental. But as Peter Drucker told readers of Harvard Business Review almost two decades ago, most result from a conscious, purposeful search for opportunities to solve problems or please customers. His observation supports Thomas Edison’s famous judgment that invention is ninety-nine percent perspiration and one percent inspiration. Many, if not most, radical innovations are the product of new knowledge. Although innovations based on new knowledge are often powerful, there is generally a lengthy time span between development of new knowledge and its transformation into commercially viable products. The computer took over fifty years to surface in the market. Satellite communications took even longer. Despite the time lags involved with new-knowledge-based innovations, the rewards are often enormous. Consider Corning’s development of fiber optics technology, which that company now dominates. Customers are an evergreen source of innovative ideas if salespeople, service people, and R&D workers listen to what they say and probe for more. Customers, for example, are often the best source of information on the weaknesses of current products: “It’s a great device, and I’d use it more often if it would fit in my briefcase.” Customers can also be the best source for identifying unsolved problems. ─ Good businesspeople take the virtue of listening to customers and pleasing them as an article of faith. But sticking too close to current customers can stifle innovation and lock your company into technologies that have no future. This happens when (1) customers fail to understand technical possibilities, and (2) when they are afraid that innovations will render their own systems obsolete. Harvard Business Essentials, Managing Creativity and Innovation, (HBS Press: 2003).

32. 32 Confidential - for classroom use only Lead Users Lead users are another valuable source of innovative ideas. Lead users are companies and individuals— customers and noncustomers—whose needs are far ahead of market trends. Lead users are seldom interested in commercializing their innovations. Instead, they innovate for their own purposes because existing products fail to meet their needs. Their innovations can often be adapted, however, to the needs of larger markets, which will be recognized many months or years in the future. ─ An article coauthored by Eric von Hippel, Stefan Thomke, and Mary Sonnack described a four-phase process used by some 3M units to glean innovative ideas from lead users. 1. Lay the foundation. Identify the targeted markets and the and level of innovations desired by the organization’s key stakeholders. These stakeholders must be on board early. 2. Determine the trends. Talk to experts in the field about what they see as the important trends. These experts are people who have a broad view of emerging technologies and leading-edge application in the area being studied. 3. Identify and learn from the lead users. Use networking to identify users at the leading edge of the target market related markets. Develop relationships with these lead users and gather information from them that points to ideas that could contribute to breakthrough products. Use this learning to shape preliminary product ideas and assess their business potential. 4. Develop the breakthroughs. The goal of this phase is to move preliminary concepts toward completion. Host two- to three-day workshops with several lead users, a small group of in-house marketing and technical people, and the lead user investigative team. Work in small groups and then s a whole to design final concepts. Harvard Business Essentials, Managing Creativity and Innovation, (HBS Press: 2003).

33. Confidential – For Classroom Use Only More on Lead Users According to Eric von Hippel: I define lead users of a novel or enhanced product, process, or service as those who display two characteristics 1.Lead users face needs that will be general in a marketplace, but they face them months or years before the bulk of that marketplace encounters them, and 2.Lead users are positioned to benefit significantly by obtaining a solution to those needs. In sum, then, lead users are users whose present strong needs will become general in a marketplace months or years in the future. Since lead users are familiar with conditions that lie in the future for most others, I hypothesize that they can serve as a need-forecasting laboratory for marketing research. Moreover, since lead users often attempt to fill the need they experience, I hypothesize that they can provide valuable new product concept and design data to inquiring manufacturers in addition to need data. Lead users are defined as being in advance of the market with respect to a given important dimension that is changing over time. Therefore, before one can identify lead users in a given product category of interest, one must identify the underlying trend on which these users have a leading position. The needs of today’s lead users are typically not precisely the same as the needs of the users who will make up a major share of tomorrow’s predicted market. Indeed, the literature on diffusion suggests that in general the early adopters of a novel product or practice differ in significant ways from the bulk of the users who follow them. From the point of view of my underlying hypothesis regarding the ability to predict the sources of innovation on the basis of innovators’ related expectations of rent, I think the lead user application has also shown very encouraging results. Users who identified themselves as dissatisfied with existing products were shown more likely to be involved in developing new ones responsive to their need. Eric von Hippel, The Sources of Innovation (Oxford University Press: 1988), pp. 107-115. 33

34. 34 Confidential - for classroom use only Empathic Design One of the problems that innovators face in determining market needs is that target customers cannot always recognize or articulate heir future needs. Because most are unaware of technical possibilities, they tend to identify their needs in terms of current products and services with which they are already familiar. They express their needs in terms of incremental improvements to these products and services: a thinner laptop, an automobile with better fuel economy, a TV screen with better resolution, faster service. To generate innovations that go beyond improvements to the familiar, you must identify needs and solve problems that customers may not yet recognize. Empathetic design is a technique for doing this. Empathetic design is an idea- generating technique whereby innovators observe how people use existing products and services in their own environments. Some companies take this approach very seriously. IDEO, a leading product design company, bases its design process on an anthropologic approach. Procter & Gamble, a prolific new-product producer, does also. It trains all new R&D personnel in what it calls “Product Research,” the P&G approach to observing how customers use products in day-to-day life. The goal is to put people who have knowledge of technical possibilities and design in direct contact with the world experienced by potential customers. As described by Dorothy Leonard and Jeffirey Rayport, empathetic design is a five-step process: 1. Observe. As described previously, company representatives observe people using products in their homes and workplaces. He key questions in this step are: Who should be observed, and who should do the observing? 2. Capture data. Observers should capture data on what people –ire doing, why they are doing it, and the problems they encounter. Because the data are frequently visual and non-quantifiable, use photographs, videos, and drawings to capture tie data. 3. Reflect and analyze. In this step, observers return from the field and share their experiences with colleagues. Reflection and analysis may result in returning people to the field for more observations. 4. Brainstorm. This step is used to transform observations into graphic representations of possible solutions. 5. Develop solution prototypes. Prototypes clarify new concepts, allow others to interact with them, and can be used to stimulate the reactions of potential customers. Are potential customers attracted by the prototypes? What alterations do they suggest? Harvard Business Essentials, Managing Creativity and Innovation, (HBS Press: 2003).

35. 35 Confidential - for classroom use only Babson College – User Group Narrative 1. Inquire by learning and listening to how people do things; conduct interviews; develop user portraits and stories; 2. Identify areas of opportunity 3. Generate values, ideas, scenarios, and possible solutions; place on schematic 4. Involve the users through role playing 5. Expand on the ideas through interaction, designing interfaces, and building models 6. Describe a solution that can be built and adopted

36. 36 Confidential - for classroom use only Stanford Design Process 1.Choose strategic focus area 2.Observe a specific process, procedure, or event 3.Identify the problem inherent in the situation 4.Formulate your understanding of the problem into a need statement a)Incorporate outcome measures into the need statement b)Define the need criteria that the solution must meet c)While all needs should be associated with positive changes in outcome, innovators should recognize that they are also associated with certain risks. The risk inherent to a need is partially related to what change in outcome or practice the need seeks to address. (Recognizing where a need exists relative to the cascade of events that creates it can help an innovator identify sources of risk associated with the target need.) Stefanios Zenios, et. al., eds., Biodesign (Cambridge University Press: 2010).

37. 37 Confidential - for classroom use only Stanford Design Process (contd.) Once a problem statement has been developed and validated, an innovator’s next challenge is to translate that problem into a need statement. Need statements articulate the problem and the change in outcome that is required to satisfy the dilemma. Importantly, a need should not address how the change in outcome will be accomplished – this is specified by the solution later in the innovation process. Rather, the need should be focused solely on defining what change in outcome is required to resolve the stated problem. Once defined, needs can be organized into three general categories: incremental, blue-sky, and mixed. Organizing them in this way can help innovators appreciate the potential impact that their solution might have on medicine, and also give them a gauge for the relative difficulty of addressing them. Categorization may also help innovators eliminate entire clusters of needs, depending on their strategic focus, thus improving their efficiency and likelihood of success. The three primary need categories exist upon a continuum (with incremental needs on one end, blue-sky needs on the other, and mixed need in between) based on the extent to which they operate within existing treatment paradigms. 1.An incremental need is focused on addressing issues with or making modifications to an existing solution. Such as the function of a device or other technology. It is important to understand that incremental needs typically assume that underlying paradigms or technologies will continue to be used and applied. 2.Blue-sky needs, on the other hand, require solutions that represent a major departure from currently available alternatives and address needs that are further upstream in the cascade of needs. As a result, they may be difficult to define. For example, rather than focusing on improvements to existing machinery or procedures, a blue-sky need might be something like a way to prevent the spread of cancer. Blue-sky needs, if solved, will often supersede most other related needs within an area. 3.A mixed need can be thought of as existing somewhere in between an incremental and blue-sky need on the continuum. With a mixed need, most of the problem may be defined, yet the solution requires expansive thinking. Importantly, the scope of the problem or type of need does not necessarily correspond to the size of the business opportunity or potential market. Small, incremental needs can be solved by incremental solutions that can result in sizable business opportunities if undertaken at the right time. Conversely, blue-sky needs may result in solutions that are direction changing in the industry but may not necessarily translate into significant commercial opportunities. Stefanios Zenios, et. al., eds., Biodesign (Cambridge University Press: 2010).

38. 38 Confidential - for classroom use only Some Useful Websites 1.http://www2.innocentive.com/?gclid=CN7JnJWa6qUCFcTb4Aod7kz60A 2.www. innovationexchange.com (more big picture, consumer based) 3.www.ninesigma.com 4.www.challengepost.com 5.http://www.unilever.com/innovation/collaborating-with- unilever/challenging-and-wants/ 6.http://innovationchallenge.peacecorps.gov/ 7.http://www.boardofinnovation.com/list-open-innovation-crowdsourcing- examples/ 8.http://www.iqt.org/portfolio/alphabetical.html 9.http://challenge.gov/ 10.http://www.engineeringchallenges.org/

39. 39 Confidential - for classroom use only Hackathons 1.City of Houston: http://www.houstonhackathon.com/sample.html 2.City of Baltimore: Chad Kenney 3.Hack for Change, Baltimore: http://gb.tc/events/hack-for-change-baltimore/challenges/ 4.NYC hackathon: http://www.nyc.gov/html/digital/html/opengov/opengov.shtml 5.Domestic violence hackathon: http://vdhackathon.org/en.html 6.Publishing hackathon: http://www.publishinghackathon.com/ 7.Green hackathon: http://www.greenhackathon.com/ 8.Civic hacking: http://www.hackforchange.org/challenges 9.Sanitation hackathon: http://www.sanitationhackathon.org/ 10.Open government hackathon: http://sunlightlabs.com/hackathon09/ 11.Food hackathon: http://foodhackathon.com/ 12.Mobile work hackathon: http://m2workhackathon.org/ 13.NASA hackathon: http://spaceappschallenge.org/challenges/

40. 40 Confidential - for classroom use only Generating Ideas: Scientific Research

41. 41 Confidential - for classroom use only Technological Transitions Successful technological entrepreneurship requires a focus on technological transitions. This focus on technological transitions is important because, most of the time, entrepreneurs target the wrong type of technological change to establish their new businesses. They start their businesses to exploit incremental change. By focusing on incremental change, entrepreneurs often find that they cannot compete with established firms and fail. What successful technology entrepreneurs have come to realize is that, to be successful, new ventures need to target technological transitions, points when an industry is shifting from one basic technology to another, such as when the printing industry shifted from hot lead linotype machines to cold off-set printing generated by computers. Your new venture will be greatly advantaged by focusing on technological transitions because they undermine the advantages of established firms. The reluctance of established firms to embrace these transitions will allow you to enter an industry and use the new technology to develop a business that is based on what may ultimately becomes a better technology than that belonging to the established firm. Scott A. Shane, Finding Fertile Ground (FT Press: 2004)

42. 42 Confidential - for classroom use only Technological Transitions New technology tends to develop in an evolutionary manner…. The incremental advances that occur within a technological framework and the radical shifts between technology frameworks can be presented graphically using a concept called the S-curve. Developed by Richard Foster, a McKinsey consultant, the S-curve shows the performance of a technology as a function of the amount of effort expended to develop it. Ultimately, all technologies reach diminishing returns, making it difficult for managers to achieve very marked performance improvement in their technologies. At these points when technologies are facing these diminishing returns, new firms can often successfully enter industries with new technologies. In general, the conditions that exist before a dominant design emerges are more favorable to new firms than conditions that exist after a dominant design emerges. Before a dominant design emerges, barriers to entry are low, facilitating firm formation at a lower cost, and therefore a lower risk. Markets are also fragmented, with many small competitors. Scott A. Shane, Finding Fertile Ground (FT Press: 2004)

43. 43 Confidential - for classroom use only Example of Scientific Research: The NSF Nifty50 The nifty50 are NSF-funded inventions, innovations and discoveries that have become commonplace in our lives. This interactive section of the Web site allows visitors to click on each innovation and explore it in greater depth. Since its official establishment in 1950, the National Science Foundation has been at the forefront of discovery - more than 100 Nobel Prize Winners and thousands of other distinguished scientists and engineers have conducted their groundbreaking research with funding from the NSF. At the same time, the agency’s growth has mirrored America’s own growing commitment to science as a national priority. One dramatic example of this commitment is the number of grants funded. In 1952, the NSF had the resources to fund only 28 research grants. In contrast, during 2000 the Foundation will fund more than 10,000 new grants. Check out the Nifty50 web site: http://www.nsf.gov/od/lpa/nsf50/nsfoutreach/htm/n50_z2/pages_z3/text_list.htm Then check out the proposals recently funded: http://www.nsf.gov/funding/pgm_list.jsp?org=NSF&ord=rcnt Where are there entrepreneurial opportunities? And these from In-Q-Tel (the CIA): https://www.iqt.org/portfolio/

44. 44 Confidential - for classroom use only Other Websites 1.http://www.technologyreview.com/index.aspx 2.http://www.technologyreview.com/magazine/business reports/ 3.Economist Quarterly Technology Review 4.http://www.economist.com/science-technology 5.http://techcrunch.com/ 6.http://www.wired.com/magazine/ 7.http://www.ted.com

45. 45 Confidential - for classroom use only Sample Ted Talks Pranav Mistry and SixthSense Technology: http://www.youtube.com/watch?v=9qJDoJAH06s Vijay Kumar and Robots that Fly: http://www.ted.com/talks/vijay_kumar_robots_that_fly_and_cooperate.html Sebastian Thrun and Driverless Cars: http://www.ted.com/talks/sebastian_thrun_google_s_driverless_car P.W. Singer and Military Robots: http://www.ted.com/talks/pw_singer_on_robots_of_war Amory Lovins and the Future of Energy: http://www.ted.com/talks/amory_lovins_a_50_year_plan_for_energy

46. 46 Confidential - for classroom use only Exercise Make a list: 1.Opportunities created by macro trends in society 2.Opportunities found by living and experiencing the customer problem 3.Opportunities created through scientific research 4.Opportunities proven elsewhere that you can pursue here. Try to link the four. John Mullins, “Entrepreneurial Gold Mines” in Business Strategy Review (Spring 2004).

47. Confidential – For Classroom Use Only 47 Finding Opportunities: Christensen’s Model

48. Confidential – For Classroom Use Only 48 Introduction to Christensen Model According to the disruptive technological change model, advanced by Professor Clayton Christensen, incumbents fail to exploit disruptive technologies not so much because these firms do not “get it,” as suggested by the architectural innovation model, or because the technologies are competence destroying to them, as suggested by the incremental-radical model. Rather, incumbents fail because they spend too much time listening to and meeting the needs of their existing mainstream customers who, initially, have no use for products from the disruptive technology. Disruptive technologies have the following four characteristics: 1.They create new markets by introducing a new kind of product or service. 2.The new product or service from the new technology costs less than existing products or services from the old technology. 3.Initially, the products perform worse than existing products when judged by the performance metrics that mainstream existing customers value. Eventually, however, the performance catches up and addresses the needs of mainstream customers. 4.The technology should be difficult to protect using patents. Allan Afuah, Innovation Management, (Oxford University Press: 2003).

49. Confidential – For Classroom Use Only 49 The Signals of Change When can we reasonably expect innovation to lead to the emergence of new companies or business models that could be harbingers of industry change? The answer involves evaluating three customer groups: 1.Customers not consuming any product or consuming only in inconvenient settings (non-consumers) 2.Consuming customers who are undershot 3.Consuming customers who are overshot Identifying the industry circumstance is important because it defines what sorts of innovations will not flourish Clayton Christensen, Seeing What’s Next, (Boston: Harvard Business School Press, 2004).

50. Confidential – For Classroom Use Only 50 Creating a New Market among Non-Consumers For non-consumers, successful new-market disruptive innovations follow two patterns: 1.They introduce a relatively simple, affordable product or service that increases access and ability by making it easier for customers who historically lacked the money of skills to get important jobs done 2.They help customer do more easily and effectively what they were already trying to get done instead of forcing them to change behavior or adopt new priorities New-market disruptive innovations have the greatest potential for long- term industry change Which is why poor people can represent an enormous opportunity for new businesses – they are essentially non-consumers Clayton Christensen, Seeing What’s Next, (Boston: Harvard Business School Press, 2004).

51. Confidential – For Classroom Use Only 51 Evaluating Opportunities among Non-Consumers In order to locate opportunities among customers not consuming any product or consuming only in inconvenient settings (non-consumers), companies seeking to create disruptive growth should first search for ways to compete against non-consumption: 1.Test #1: Does the innovation target customers who in the past have not been able to do it themselves for lack of money or skills? 2.Test #2: Is the innovation aimed at customers who will welcome a simple product? Cramming disruptions into established markets is very expensive and always fails 3.Test #3: Will the innovation help customers do more easily and effectively what they are already trying to do? At a fundamental level, the things that people want to accomplish in their lives don’t change quickly Clayton M. Christensen, Foundations for Growth, MIT Sloan Management Review, Spring 2002.

52. Confidential – For Classroom Use Only 52 Creating a New Market among Undershot Consumers Undershot customers create opportunities for existing firms to profitably introduce up-market sustaining innovations which make good products better 1.Existing consumers for whom existing products are not good enough along whichever dimension of performance customers in a given tier of the market care about the most – this dimension forms the industry's basis of competition 2.These up-market sustaining innovations fall on a continuum between radical and incremental improvements 3.They are the means by which companies exploit their growth potential after they establish their initial foothold Clayton Christensen, Seeing What’s Next, (Boston: Harvard Business School Press, 2004).

53. Confidential – For Classroom Use Only 53 Creating a New Market among Overshot Consumers Overshooting occurs because companies innovate faster than customers’ lives change and therefore products become too good 1.Customers who stop paying for further improvements in performance that historically had merited attractive price premiums 2.Overshooting is the driver behind commoditization, the process that results in companies being unable to profitably differentiate their products or services 3.If overshooting never occurred, products would never mature – customers would always be willing to pay higher prices for better products 4.Price based competition means that companies can no longer earn premium prices for improving a particular dimension 5.All customers in a market do not become overshot at once – the condition starts at the bottom of the market and then creeps upward Clayton Christensen, Seeing What’s Next, (Boston: Harvard Business School Press, 2004).

54. Confidential – For Classroom Use Only 54 Opportunities for Low-End Disruptions when Customers are Overshot Overshooting and the resultant changes in the basis of competition open the door for three different forms of industry change: 1.Low-end disruption taking root among the most overshot customers 2.Specialists entering and displacing integrated players 3.Standards or rules developing that allow different types of providers to create products and services good enough to meet the minimum requirements of customer segments Although they don’t create new-growth markets, innovators in overshot market tiers can create new-growth companies by using low-end disruptive innovations to establish a beachhead among the incumbent’s least demanding customers Clayton Christensen, Seeing What’s Next, (Boston: Harvard Business School Press, 2004).

55. Confidential – For Classroom Use Only 55 Opportunities for Low-End Disruptions when Customers are Overshot (contd.) Specialist providers can introduce a displacing innovation and take part of a market from an incumbent –Unlike up-market sustaining innovations, displacements take place at a point of modularity A new company can emerge and piece together value chain components in new ways and offer new benefits (e.g. Dell) –Unlike low-end disruptions that first target the least demanding customers, displacements first target the mainstream market When customers are overshot, the emergence of rules or standards allow producers closer to the end consumer with less skill to produce good-enough products –Because following the rules allows providers with less skill to produce good-enough products, something that previously would have required deep expertise –Such standards determine how components of a system interface with each other Defining these interfaces enables non-integrated companies to begin producing subsystems, and companies with less technical depth to become assemblers of modular products Clayton Christensen, Seeing What’s Next, (Boston: Harvard Business School Press, 2004).

56. Confidential – For Classroom Use Only 56 Summary: Where are the Opportunities? Customer Group IdentifierWhat Could Happen Signals of Change (How can you tell?) Non- consumers People who lack the ability, wealth, or access to conveniently and easily accomplish an important job for themselves; they typically hire someone to do the job fro them or cobble together a less than adequate solution New market disruptive innovation Product/service that helps people do more conveniently what they are already trying to get done Explosive rate of growth in new market or new context of use Undershot customers Consumers who consume a product, but are frustrated with its limitations; they display willingness to pay more for enhancements along dimensions most important to them Create an opportunity for existing firms to profitably introduce up-market sustaining innovations which make good products better Sustaining up- market innovation (radical and incremental) New, improved products and services introduced to existing customers Integrated companies thrive; specialist companies struggle Overshot customers Customers who stop paying for further improvements in performance that historically had merited attractive price premiums Overshooting is the driver behind commoditization, the process that results in companies being unable to profitably differentiate their products or services Low end disruptive innovations Displacing innovation Downward migration of required skills New business model emerges to serve least demanding customers Emergence of specialist company serving mainstream customers Emergence of rules and standards Migration of provider closer to customer Clayton Christensen, Seeing What’s Next, (Boston: Harvard Business School Press, 2004).

57. Confidential – For Classroom Use Only 57 Exercise Select the company (or industry) for which you work. Identify: 1.Customers not consuming any product or consuming only in inconvenient settings (non-consumers) 2.Consuming customers who are undershot 3.Consuming customers who are overshot What are the opportunities to create a new product/service or market?

58. Confidential – For Classroom Use Only 58 Starting Something that Matters

59. Confidential – For Classroom Use Only 59 What Would You Do… See http://radar.oreilly.com/2009/01/work-on-stuff-that-matters-fir.htmlhttp://radar.oreilly.com/2009/01/work-on-stuff-that-matters-fir.html See Start Something that Matters by Blake Mycoskie: There is something different in the air these days: I feel it when I talk to business leaders, give speeches at high school and college campuses, and engage in conversation with fellow patrons at coffee shops. People are hungry for success – that's nothing new. What's changed is the definition of that success. Increasingly, the quest for success is not the same as the quest for status and money. The definition has broadened to include contributing something to the world and living and working on one's own terms. What you now hold in your hands is a guide to help you and anyone who is interested start something that matters. In this book, I describe some of the counterintuitive principles that have helped TOMS grow from an interesting idea to a company that in five years has given more than a million pairs of shoes to children in need. And I will show how you, too, can create something that will make a difference…. We all come at that goal from different angles, but what all of us have in common is a foundation on at least one, if not all, of six key traits: These six traits form the guidelines I believe everyone should follow to start and sustain something that matters. This book shows you how to apply them. Together, these six elements offer lessons that will challenge you to look at your business and your life from a different perspective: They teach that having a story may be the most important part of your new venture; that fear can be useful; that having vast resources is not as critical as you might think; that simplicity is a core goal in successful enterprises; that trust is the most important quality you bring to your company; and, finally, that giving may be the best investment you'll ever make. 1.If you did not have to worry about money, what would you do with your time? 2.What kind of work would you want to do? 3.What cause would you serve? 4.How could you change the world?

60. Confidential – For Classroom Use Only 60 Exercise Start something that matters: If you did not have to worry about money, 1.What would you do with your time? 2.What kind of work would you want to do? 3.What cause would you serve? 4.How could you change the world?

61. Confidential – For Classroom Use Only A More Beautiful Question Warren Berger (Bloomsbury: 2014)

62. Confidential – For Classroom Use Only 62 Introduction Artists from Picasso to Chuck Close have spoken of questioning’s inspirational power. (This great quote from Close was featured recently on the site BrainPickings: “Ask yourself an interesting enough question and your attempt to find a tailor-made solution to that question will push you to a place where, pretty soon, you’ll find yourself all by your lonesome— which I think is a more interesting place to be.”) The most creative, successful business leaders have tended to be expert questioners. They’re known to question the conventional wisdom of their industry, the fundamental practices of their company, even the validity of their own assumptions. Questions challenge authority and disrupt established structures, processes, and systems, forcing people to have to at least think about doing something differently. To encourage or even allow questioning is to cede power— not something that is done lightly in hierarchical companies or in government organizations, or even in classrooms, where a teacher must be willing to give up control to allow for more questioning.

63. Confidential – For Classroom Use Only 63 Three Part Model Just asking Why without taking any action may be a source of stimulating thought or conversation, but it is not likely to produce change. Basic formula: Q (questioning) + A (action) = I (innovation). On the other hand, Q – A = P (philosophy). In observing how questioners tackle problems, I noticed a pattern in many of the stories: 1.Person encounters a situation that is less than ideal; asks Why. 2.Person begins to come up with ideas for possible improvements / solutions— with such ideas usually surfacing in the form of What If possibilities. 3.Person takes one of those possibilities and tries to implement it or make it real; this mostly involves figuring out How.

64. Confidential – For Classroom Use Only 64 Asking Powerful Questions If What If is about imagining and How is about doing, the initial Why stage has to do with seeing and understanding. To ask powerful Why questions, we must: 1.Step back. 2.Notice what others miss. 3.Challenge assumptions (including our own). 4.Gain a deeper understanding of the situation or problem at hand, through contextual inquiry. 5.Question the questions we’re asking. 6.Take ownership of a particular question. While a fairly straightforward process, it begins by moving backward.

65. Confidential – For Classroom Use Only 65 Five Learning Skills Five learning skills, or “habits of mind,” were at the core …and each was matched up with a corresponding question: 1.Evidence: How do we know what’s true or false? What evidence counts? 2.Viewpoint: How might this look if we stepped into other shoes, or looked at it from a different direction? 3.Connection: Is there a pattern? Have we seen something like this before? 4.Conjecture: What if it were different? 5.Relevance: Why does this matter?

66. Confidential – For Classroom Use Only 66 Question-Storming Collaborative thinking in problem solving is essential because it brings together multiple viewpoints and diverse backgrounds. While it’s understood that creativity sometimes requires solitude (“ Be alone, that is when ideas are born,” Nikola Tesla said), we also know that it flourishes when diverse ideas and thoughts are exchanged. One solution to this conundrum may be to shift the nature of brainstorming so that it’s about generating questions instead of ideas…. The Right Question Institute— which specializes in teaching students to tackle problems by generating questions, not solutions— has found that groups of students (whether children or adults) seem to think more freely and creatively using the “question-storming” method, in which the focus is on generating questions. The RQI’s Dan Rothstein believes that some of the peer pressure in conventional brainstorming is lessened in this format. Answers tend to be judged more harshly than questions. The RQI approach to question-storming focuses less on volume and moves more quickly to “improving” the questions generated by the group, by opening closed questions and closing open ones. The key is to converge around the best questions, as decided through group discussion. This gets to one of the big problems with brainstorming in general: Many ideas are tossed out, but the groups often don’t know how to winnow down to the best ideas. It can be easier to winnow down questions because the best questions are magnetic— they intrigue people, make them want to work more on those. RQI recommends coming out of a session with three great questions that you want to explore further. Question-storming can be more realistic and achievable than brainstorming. Instead of hoping that you’ll emerge from a meeting with “the answer” (which almost never happens and thus leaves people feeling frustrated), the goal is to come out of it with a few promising and powerful questions— which is likely to provide a sense of direction and momentum.

67. Confidential – For Classroom Use Only 67 Rapid Test and Learn The rapid test-and-learn approach has caught on throughout the entrepreneurial world, fueled in part by Eric Ries’ Lean Startup phenomenon. Ries maintains that entrepreneurs, existing companies—or anyone trying to create something new and innovative—must find ways to constantly experiment and quickly put new ideas out into the world for public consumption, rather than devoting extensive resources and time to trying to perfect ideas behind closed doors. Ries urges businesses to focus on developing what he calls “minimum viable products”—in effect, quick, imperfect test versions of ideas that can be put out into the marketplace in order to learn what works and what doesn’t.

68. Confidential – For Classroom Use Only 68 Examples 1.Why are we doing this particular thing in this particular way?, 2.What is the fresh idea that will help my business stand out? 3.What business are we in now—and is there still a job for me? Now that we know what we now know, what’s possible now? 4.How is my field/industry changing? What trends are having the most impact on my field, and how is that likely to play out over the next few years? Which of my existing skills are most useful and adaptable in this new environment—and what new ones do I need to add? Should I diversify more—or focus on specializing in one area? Should I be thinking more in terms of finding a job—or creating one? 5.What are the underlying assumptions of my question? Is there a different question I should be asking? 6.What if we combine A and B? Or A and Z? Or better yet, A and 26? What if I put this together with that? 7.What if I combine these different ideas to solve this one problem? 8.What if our company didn’t exist? Who would miss us? What should we stop doing? 9.What if money was no object? How might we approach the project differently? What if we could only charge ten bucks for our hundred dollar service? What if we could become a cause and not just a company? 10.Is this a problem I could solve? Will this make people’s lives meaningfully better? How do companies get better at experimenting? What will we learn? 11.Is this opportunity real? Is there a customer who needs it? 12.What if a job interview tested one’s ability to ask questions, as well as answer them? 13.What is important to you? 14.When you’re in a bookstore, what section are you drawn to? 15.What if you made one small change?

69. Confidential – For Classroom Use Only 69 Exercise Just asking Why without taking any action may be a source of stimulating thought or conversation, but it is not likely to produce change. Basic formula: Q (questioning) + A (action) = I (innovation). On the other hand, Q – A = P (philosophy). Take a situation that is less that idea: 1.Ask Why – what makes it less than ideal. Why is this the status quo? What are assumptions are we taking for granted? 2.Come up with ideas for possible improvements / solutions— with such ideas usually surfacing in the form of What If possibilities. 3.Take one of those possibilities: How would you go about making it real?