Mark Federman -- How to Determine the Business You're Really in: Applying McLuhan's Thinking Tools to Business Design

Mark Federman, McLuhan Program in Culture and Technology, June 4, 2004, 11:15 a.m.

These participant's notes were created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. These should not be viewed as official transcripts of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. These notes have been contributed by David Ing (daviding@systemicbusiness.org) at the IBM Advanced Business Institute ( http://www.ibm.com/abi).

Introduction by Roger Martin

• How personality impacts design article in
• Chief strategist, and head of the McLuhan Centre
• 25 years experience
• Most recently, CEO of Persona -- voice on Internet
• Teaches applied McLuhan

[Mark Federman]

What sort of business are you in?

• Wide variety of different businesses

How many people are measured or evaluated by a financial measure?

• Almost everybody.
• Much is driven by financial results.
• Thus, everyone is really in the same business:  you all manufacture money.
• • Not in the same business as you.
  • I don't manufacturer money.
• I manufacture ideas; I build awareness
• • I am measured by the number of ideas I create any minute.
  • Can be fired by walking out of my session.
• I know what business I'm in; do you know how to perceive the realities of your world?

Answers were normal answers

First step:  what haven't you notice recently?

• A man who would come up to the border with a wheelbarrow of dirt.
• • Thought smuggling something in the dirt.
  • At the end of the war, the guard sees the man, asks him what he was smuggling?
  • Wheelbarrows!
• Guard didn't see this, because it didn't fit his conception
• In our jobs, we don't see these conceptions:  mental models
• We're not effective in overall effects
• Conception limits perception.
• How can you notice what you haven't yet noticed?

Hard to notice, when we're in a comfortable situation:  like a fish in water.

• McLuhan:  fish don't know about water, because they have no anti-environment.
• • Only when a fish is pulled out of the water does it know.
• Need to create an appropriate anti-environment.
• Everyone is vying for your attention.
• If attention is the most valued asset, the most valuable personal skills is ignorance:  the ability to significantly ignore that which is irrelevant or merely distracting.
• Must create an anti-environment to ignore what we notice, and notice what we ignore.

One way to create anti-environment is to wait.

• March backwards into the future.
• More useful:  reveal those effects that we can see now.
• Raise issues that haven't yet occured.
• Anticipate effects of that which we can't do.
• Predict the future by foretelling the present.

Reveal one of the secrets of McLuhan of predicting the future by foretelling the present.

• 1955, foretold television recorders.
• 1960s:  IBMers didn't believe in the computer in every home, with home shoppig

The laws of media:

• Medium is not limited to television, but anything in which a change emerges:  environment, changes in policies are all McLuhan media.
• Apply where tangible or intangible, abstract or concrete.
• Questions more revealing than answers, thus four questions.

1.  What does the media extend, enhance, accelerate or enable?

• Can ask this about any product, word.
• e.g. e-mail:  extends and enhances communications
• Terseness enhancements meaning.

2.  When pressed, the media will reverse.  What will the media reverse?

• A new thing or innovation, but what are the circumstances in which it emerges?
• e.g. e-mail, enhances ability to communiticate, but with spam or unimportant FYIs, no information with overflowing inbox.

3.  Something else will be displaced.  What is obsolesced by the new medium?

• Ubiquity.
• Just before the dot-com burst:  you know end of the market is near, when you get advice from your garbage collector.
• Star glows brightest before nova.
• E-mail obsolesces packages, but also visual cues.

4.  What does the new medium bring from the past?

• There's nothing new under the sun.
• E-mail retrieves from the past:  Hermes, the scribe from the past.
• Hermes was also the god of commerce, cunning and theft.
• E-mail is thus the source of those messages from Nigeria

When McLuhan said medium is the message, we know the medium by the effects (the message).

• Creates a cognitive anti-environment.
• But, what's coming next?  How do we predict the future?  What haven't we noticed recently?

How do successful companies become successful?

• Bookstores with walls of books on leadership.
• Common fascination with IBM.
• Nominal business focus with company was hardware devices, computed tabulated and recorded.
• The business that the company was really in, from Thomas Watson Sr.
• • From NCR, sales, but a people person.
  • Company song:  IBM ever onward
  • IBM corporate uniform.
  • Unwavering focus on the customer.
  • Watson then led with hired disabled workers, lifetime employment practice.
• IBM's business practices enhanced and enabled people's relationships.
• • Pioneered relationship selling.
• IBM was the first major open source software company
• • In the 1960s, were given source code on microfiche.
  • Society to Reduce Redunant Effort (SHARE)
  • CICS began as a field-developed program.
• Primary people orientation created an environmental conditions to enhance old growth.
• Able to handle the reversal in its hardware business
• Saw customers were buying hardware for software, to get support.
• But then 10 years, IBM was surpassed by Amdahl and Hitachi.
• Lou Gerstner:  realized the real strength of IBM wasn't in hardware or software, but when IBM was intimately involved with customers in their business
• • People, not products
  • Movement towards IBM Global Services:  key, but not central
  • Customers could get IBM services, without their hardware and software.
• Services revenue is now more than hardware and software.

Bumper stickers?

• Our practices may show we're not as people oriented.
• e.g. Microsoft (as a descendant of IBM)
• • Microsoft stepped in when Digital didn't.
  • IBM was ubiquitous:  a sign of a medium in its obsolescence.
  • Microsoft saw IBM's practices.
  • Microsoft embraced and extended, not only marketing, but included innovation by other.
  • Microsoft retrieved strategy from IBM in the 1970s.
  • Now beginning to see reversal with Microsoft in open source.
• IBM realized that they're really a people business, and retrieved open source roots.
• Microsoft sees challenges to industry dominance.
• Microsoft's brand was operating system, now includes everything in computing
• McLuhan would ask them to be artists:  what effect would you like to see in your market?
• • Effects first, causes later.
  • Must obsolesce first.
  • e.g. dot documents, from only Microsoft-approved platforms.
  • Would obsolesce open source.
• Richard Stallman:  "The Right to Read", Communications of ACM
• • The right to read for free is impinged upon.
  • Will cause new government accountability

What haven't you noticed recently?

• Microsoft's trusted computing environment:  contracts, law, anti-piracy
• Through McLuhan lens, there's much more.

Look at Amazon.com

• Concept was emblematic of the dot-com era:  reduce friction, make customers sticky, disintermediation.
• Business' use of information technology, and proprietary use of technology.
• Amazon.com as "information as commodity" business, but Amazon lost money.
• Try instead:  accelerates and enhances putting books in the hand of customers.
• • Reverses:  books held up.
  • From the past:  shipping.
  • After nearly losing $1B, they built warehouses and hired people for distribution.
  • Then realized that distribution and fulfillment is more than warehouse.
  • Shifted some of inventory cost to suppliers.
  • Made free shipping pay, by putting in a slight delay.
• Were able to redirect themselves by knowing what business they were in.

Grocery Gateway .com

• Thought that they were in the grocery business
• Tried to create warehouse-sized Longo stores.
• Al Celery took over, retrieved from the past not the grocery or grocery boy, but the delivery.
• To properly implement this, had to team up with a real grocer:  Sobey's.
• As a delivery company, could deliver for others as well:  LCBO, Staples, Home Depot.
• Who are their competitors?
• • UPS, Fedex, Purolator
• McLuhan says another dynamic:  ignore your competition.
• • Ignore obvious competitors, i.e. same industry.
• When you figure out which business you're really in, you can make some observations you haven't noticed before.

Reversing conventional thinking, tied to language.

• One of first ways to change is the way we speak.
• Ups/downs, with us or against us
• Even win/win seems to suggest someone loses.
• An obstacle to awareness.
• • For me to be right, you have to be wrong.
• Using laws of media, no one has to defend a point of view.
• • Value judgements aren't useful:  they create a smog in our culture, that draw our attention from processes.
  • McLuhan was primarily interested in retrieval.
• Finds most interesting is reversal:  related to innovation.
• • Innovation now as a management cliche.

Define innovation, and how to create an innovative culture

• Innovation is non-linear and non-deterministic (not predictable from what has come before).
• Creates substantial changes in the ground.
• • 1. Can't plan innovation.
  • 2. Can't manage innovation.
  • Once you begin planning and managing, you create determinism that works against innovation.
  • Requires autonomous agents, feeding back and forward.
• Have been taught to not notice innovation when it occur.

What haven't you noticed recently about innovation?

• Who have been taught to ignore you competitors?
• • Ignore the distraction of competitive annoyances.
• Don't listen to your customers?
• • The secret of Adobe Systems
• Sell neither products nor services
• • Second Cup or Starbucks.
• Give away your intellectual property as a competitive advantage
• • Intel

Answers:

• John Warnock brought Adobe code from Xerox, based on Postscript.
• • Decided to license font libraries.
  • If had listened to Postscript companies, wouldn't have listened to them.
  • Licensing font libraries was clever, but not innovative.
  • Had an idea about creating a virtual printer.
  • Marketing experts asked:  why want to create on screen?
  • Technical asked:  why platform independent?
  • None of customers asked for it.
• Expertise:  the tease of a little bit of information, so that you want to come back to the expert.
• • The expert has all of the right answers, but rarely the right question.
  • Reversal:  None of customers wanted to be able to throw documents from platform to platform like an Acrobat.
  • Gave away Acrobat reader for free, and still does.

A cup of coffee:  choose mostly be services

• No longer served by barrista
• Not just coffee, by Ethiopian ...
• Jazz playing
• Reversal from a service-oriented economy to an experience economy

Buying the Ikea experience; Nike experience.

• Sharing experiences by cell phone cameras.

Design speaks directly to creating experience

• This is why "what haven't you noticed recently" is so important

Intel puts much into the public domain:  the power of reversal.

• Intel isn't in the intellectual property business, and could be a liability.
• Thus they encourage others to create circuitry that enhances their products.
• Intel's business:  silicon wafer fabrication.

How overvalued is intellectual property?

• Top 10% of patents generate 92%; which means 90% generates 8 cents.

Internet was created from free intellectual property

We're now 200 years from the beginning of the industrial age

• Management practices from the 19th century focused on the content, not on the medium:  the connections between people.
• Need to change the tools with which we perceive the world.
• We create a culture of innovation.
• We create an environment of noticing.

[Question]

Comparison to Integrated Thinking Program?

• Consistent.
• Integrated thinking is holistic thinking.
• Laws of media (and other tools) is to look at the entirety of effects.

Rule #3 was if one feature is enhanced, another is diminshed?  Is this zero-sum?

• No, these are all simultaneous effects.
• Loss of influence.
• e.g. horses as beasts of burden
• • After automobiles, they turned into dressage.
  • Often, obsolence means that it turns into an art form.
• Retrieval law means that it will come back.
• • e.g. horsepower.
• Changing of form into a new use, or purpose.

Read cases on experience and Starbucks, but personal work?

• "Shopping Manufactory":  had e-commerce software.
• Wanted to offer this product in a library, e.g. so Colgate could have a database on sizes and prices
• In early days of e-commerce, manufacturers would put something into the distribution chain, and had inconsistency.
• Originally placed as a private placement.
• Asked to go to pro bono:  went to 7 venture captalists in 8 weeks, and had 8 stories.
• Confused.
• Really what your company is about is bringing back brand management back to the e-commerce world.
• • People were using cut-and-paste catalog, etc.
• Manufacturers would buy in, and distributors would buy in, consumers would get coupons.
• How did you get that story?
• • For every item you told me about, was slotting into the McLuhan laws of media.
  • Then, it brought back brand management.
• So obvious.
• Unfortunately, paper was signed to go public, but dot-com crash, so buyer had no cash.

Dichotomy:  take laws, distill them into a recipe, but then will not notice something else.

• There are other thinking tools:
• • Media temperature.
  • Transformative nature of metaphor.
• Laws of media can be implemented in other ways.
• Do playshops (as opposed to workshops).
• • As soon as you lose your playfulness, you become deterministic and lose.
• All four attributes exist, as compared to ground.
• • Usually, what happens is focused on three, and then discover haven't found the fourth, e.g. ignored retrieval.
• Not steps, but a fluid thinking environment, so that the questions you haven't thought about jump out at you.
• In Germany, last fall, project to build a new planetarium.
• • Dome also being used as a multimedia theatre.
  • Project stuck.
  • Went through McLuhan-enabled brainstorming (that isn't in the book).
  • • Do brainstorming, and then slot them into the Laws of Media.
    • Then discover lots of thinkings that you haven't thought about.
  • Found two big gaping holes.

Liedtka discussion on working with people in the organization.  Play shops with executives, different people?

• Yes, no and both.
• Before this, was doing business process consulting, that morphed into strategy consulting, that morphed into this.
• Both people who did work, and senior executives.
• • Dynamic of intimidation:  don't want to say things that get me in trouble with the bus.
  • Especially in Canada, and in Toronto, where people come from a culture of deference.
• Need to create a safe environment to bring people up.
• The laws of media are a good way to do this:  everyone is at equal disadvantage.
• • It also points you out of point of view.
  • Looking at processes:  some may be obsolescence, some may be reversal.
  • No one says a wrong thing.
• Would like to create as wide a variety as possible.
• Will often do executive sessions (top secret), then the dynamics are different (seconds-in-command vying), but thinking tools also tend to defuse this.
• e.g. gay and lesbian marriage, asked to come into a religious organization to consider this.
• • Committee formed with all constituents.
  • Using thinking tools, found that many issues that they were debating, weren't issues.
  • • The events would occur for many people.
  • Inclusive congregation, so how inclusive?  Soul-searching.