Creative Destruction - Its bin fun

Creative Destruction is about big, life changing ideas that need a special sort of entrepreneur to drive something new through. The classic entrepreneur is an opportunity spotter - very different.

For instance was Ruben Rausing of Tetra Pak spotting an opportunity or did the company really make a difference to our lives? He and the company have certainly been very successful.

If you went back 50 or so years and met Ruben for the first time would you have thought that the packaging concept was "another idea" or someting that was going to change the industry? Spotting the new ideas is sometimes very difficult.

One of the ideas we have been researching is called "Carbin", and it does what it says - a handy bin for the car. There has been a fantastic response from the few that have seen it, and there seem to be 2 key markets. The promotional market - it is easy to print on, very visible in the car, and the Car accessory market. (We think its much better than fluffy dice!)

If you are interested in more details, do let us know.

Creative Destruction: Endorsements

It is always nice when you get an endorsement from someone who is well known and just happens to understand music.

Hello Hubert,

Thanks again for taking the time to demo your Airsound system the other day.

I'm e-mailing you to tell you that I couldn't be more pleased with it. I think you've pulled off something quite remarkable with it -- you might even be a genius! I've been playing a lot of my old favourite CDs and music DVDs and have been pleasantly surprised every time. The sound is warm, well balanced and beautifully detailed. If you stuck it a cherry or walnut cabinet and sold it for £1000 pounds no one would argue.

I look forward to hearing the next generation which is currently at the prototype stage and will certainly be looking to buy one of those too.

The next time I'm in the area I'll drop off a Suzanne Vega CD for you.

In the meantime, congratulations and keep up the good work. And feel free to use any of this e-mail that you wish as an endorsement for your product on you website or wherever.

Very best wishes

Bruce

Bruce Thomas - fabulous bass player - with the Attractions, and has also played with many other s - including Al Stewart, Paul Rodgers, Steve Howe, Wings, Paul McCartney, Nic Lowe, Pretenders, Madness, Billy Bragg, and Suzanne Vega
http://www.geocities.com/SunsetStrip/Diner/2674/thomas_bruce_a.htm

For further information about the Airsound system - the Sonic Soundscape - please see Dias Music

If you are interested - contact me for a special offer!

Creative Destruction: Due Diligence – how much do you do?

The creative production process relies on an entrepreneur taking something new or innovative to the market place and making a real difference to our lives.

Previous articles have been written about different markets where there will be a number of alternative “new” options, where there will eventually emerge one or two serious contenders. For instance in the heating market and wood pellets, the question has not been answered yet.

Part of the process of market making involves making relationships, and in commerce this involves the transfer of goods and services and fees via an agreement.

The question of due diligence often arises, or the slightly murkier cousin “trust me!”. Undertaking research on someone or a company can be uncomfortable, could be costly, time consuming and ultimately unnecessary. Not undertaking any research can be very costly in some situations.

Step 1 The basic research

Make sure the company or the individual is traceable, and do look for some history. For instance even solicitors or former solicitors can have a past.

Tip: http://www.lawgazette.co.uk/archive/view=query.law

gives you an online archive in the UK for news on Solicitors. This one is free, and there are others for other proffessions and trades.

Why?

Individuals often repeat their behaviour, although we have serial entrepreneurs, you can have serial offenders.

Step 2 The basic trust

You can also network, and network in someone else's network. Find out who they mix with, what other people say about them. Even better, you may find someone in your network that can speak for them. If you cannot, then think about whether you want to proceed to step 3.

Step 3 The more advanced trust

Should you experience each others product or service at a level where you can afford to loose, before you decide to scale.

All the above sounds good – but time consuming. The venture capitalists seem to do it quicker through making sure that the team stands up to scrutiny and that you deal at the right level. Unfortunately how you get from being on your own to being amongst a team of recognisable and highly talented people is not so obvious. Take some comfort from the fact that many VC investments don't work out. Many Hi-Tech teams split up. It does seem to be an iterative process, and you have to keep learning along the way.

Creative Destruction: Wood Pellet burners – the micro view

I like metaphors! Particularly relevant for me is Sun Tzu, The Art of war, which is filled with metaphors for the small business. When studying I came across the idea that a green and verdant valley would be hotly contested. Rocky slopes would not, and local knowledge could be used for survival. If successful you can move down the hill side as you grow in strength. Wonderful!

Last week I was thinking about this, pellet burners, and keeping one eye on the traffic. I was stuck at 6:30 am along with numerous cars, behind a very slow moving vehicle. (Nothing unusual in Wiltshire). Perhaps this in itself is an extension of the above metaphor.

In the last article about wood pellet stoves the complaint was that there was no real impetus in the market. Whilst the conditions could be met for successful market development. There was not an obvious company pursuing a successful route to the consumer. Perhaps they have the wrong vehicle.

In a new market firms choose which path (or road) to follow. As a market maker you make the path. If you are a follower you have to follow – perhaps behind a very slow moving vehicle. Any customer that comes along may see the market maker first. If they do, and they don't like it they will move on. (I am a potential customer)

Any company stuck behind may lack the resources to overtake, or if they do they have to take a risk. I did notice one or two cars put everyone in danger as they tried to overtake when it was not possible. Shortly before Newbury I changed route.

What factors are there about the “vehicles” in the pellet stove or boiler market that means that the market is struggling at the moment?

Factor 1 Price

From a self interested perspective I would like an alternative to oil. This means that the installation and cost of the boiler should be similar to oil. I would like the fuel to be available and at a similar level or cheaper than oil.

Some of the small firms in the market are selling boilers that perhaps start at £5000, but rising to £12,000 once installation has been taken into consideration. This clearly targets a very small niche of wealthy and green consumers. It also seems to look to substitute green fuel units for its prices e.g. Geodesic, solar, wind, and has a long payback for the consumer. The fuel recommended is also expensive, with prices nearer to £300 per tonne than the £150 per tonne needed. Whilst this fuel is top quality it is also very expensive.

If you meet a market maker with the above prices, you may feel that this market is not for you, yet there are cheaper stoves available, and there is cheaper fuel.

Factor 2 Credibility

When you buy a pellet stove you want to feel confident about the company. You are investing a large amount of cash, this is a risk.

On closer inspection of the market, there are companies which when you do a bit of research, you find a dubious history. From legal disputes to financial irregularities.

Whilst not all companies fall into this category, it is very much a “buyer beware”.

Factor 3 Service

How quickly can I get a stove or boiler? Many companies don't hold stock. It therefore will take time to get your stove. Many of the companies represent small boiler producers. The stock may have to be made to order.

In relation to factor 2, who will service the boiler? If it is going to last 10 years or more, I want the stove or boiler supported.

Factor 4 Agents

There is much mystique on being an agent. Is it because it is a protected trade area? You will see the words “exclusive” banded around quite a lot. The inference is that the company has been chosen, or that they have purchased the license, or indeed that they are the best company with the best stove.

If you are researching do tap in the name of the stove you want, and then find out how many companies in the UK have an “exclusive agreement” for the same stove.

Alternatively you can check with the manufacturer to find out if there is an agreement (I have and was offered a direct offer bypassing the “agent”).

I have been “driving” as a consumer in looking for a wood pellet stove. I am yet to find a company driving the right path using the right vehicle. Ie that can offer the right price, is credible, has the right service, and has a proper agreement that is prepared to sell, install, and maintain a boiler in Wiltshire. In addition is the creative destruction bit. Can they get to me (and other consumers)?

Creative Destruction: No Special Listening chair needed

The Sonic Soundscape is the first commercially available system using Airsound technology. Creative Destruction principles suggest that the difficulty of getting a new way of reproducing stereo accepted will be information.

If Airsound is indeed an “improvement” on the reproduction of stereo then this is indeed true. I have done numerous presentations over the last 10 months for the Sonic Soundscape, and indeed the inventor Ted Fletcher, has also shown off Airsound systems, including the Sonic Soundscape.

The main difficulty is getting people to listen. It is sound, and difficult to articulate the exact listening effect.

“No special listening chair needed”

The Sonic Soundscape provides better quality sound than similar priced speakers as it has:

1 Really clear sound
2 A “surround sound” or spatial element giving depth and space

additional advantages also mean that you need little regard to:

3 the positioning of the speakers
4 where you or your friends and family sit or stand in relation to the speakers
5 how to conceal lots of wires
6 lower volumes needed to get desired sound

It could be ideal for music, home cinema, pc games or television

The Sonic Soundscape contains Airsound which resolves the performance constraints of conventional stereo.

Conventional stereo probably means you have 2 speakers. Unless you locate your speakers properly in your house and sit in the right position you will not hear true stereo sound. You may recognise this as distortion. This may get worse as you increase amplification. (Think about listening to music at a party with lots of people).

The Sonic Soundscape is the first commercially available Airsound system. It maintains an accurately balanced stereo sound-field in all listening positions in front of the speaker. This gives the REALLY CLEAR SOUND.

Conventional stereo is mixed, often 80/20 to give a balanced sound at the single listening point. This does not give a sense of depth. Surround Sound 5.1 or even 7.1 systems use 5 or 7 speakers to split the sound signals, and again, if you are in the middle of the speakers it is possible to get a sense of depth. Virtual Surround Sound (VSS) simulates true, multispeaker surround sound by processing 5.1 audio into two channels (left and right). The spatial algorithms in VSS systems are sometimes used to bounce signals off walls to approximate the effects of speakers to the sides and rear. They are more compact, easier to install and usually less expensive than 5.1 systems, with far less speaker-wire clutter. The absence of rear speakers and a subwoofer means less rumble in movie explosions (and less bottom on your CDs) and a smaller sweet spot where audio effects are most dramatic.

Airsound systems provide a large sweet spot in all places in front of the speaker. There is also far less speaker-wire clutter. You are in charge of your room, not your stereo. The “SURROUND SOUND” element is not simulated, it is real. It uses a principle called 'sum and difference' or ‘middle and side’ (M/S). By adding and subtracting the 'omni' or 'sum' signal with the 'difference' signal, it is possible to arrive at a conventional 'left' and 'right' audio signal. The M signal represents the majority of the signal content and is heard from the front speaker. While the S contains all the spatial information and comes out of the spatial speakers at the side. This produces a “Sonic hologram”. A picture of sound that does move as the sound changes.

The resultant really clear sound with a surround sound element has the bonus being able to locate the speakers almost anywhere. You can put them where you want. Your room is yours. You can sit where you want. No special listening chair needed.

A bit about Ted: Ted Fletcher is the inventor, one time assistant to Joe Meek whilst he was producing songs such as "Just Like Eddie" by Heinz. He then went on to design ranges of professional audio recording equipment firstly under the Joe Meek brand, and then under tfpro.

Creative Destruction – Carbon Neutral fuel – Wood Pellets

Creative Destruction – Carbon Neutral fuel – Wood Pellets

Everyone uses fuel. Gas, oil, electricity or even wood.

In the UK institutions and organisations such as The Centre for Alternative Technology have been researching alternative fuels that take less resource and cause less harm to the environment for many years.

The uptake of alternatives has been slow despite government incentives such as grants, support in the form of government bodies, legislation, pressure on government organisations to lead the way, and interest from the media.

During 2007 there has been some increased uptake, particularly of solar power. Thoughts have also been that the wood pellet market would take off, but what statistics show is that this has been slow, particularly amongst consumers.

Factors that suggest that wood pellets will increase eventually are based on the fuel supply, prices of alternatives, and quality of solutions available.

There are a number of organisations who now produce consistently good quality wood pellets. There are a number more that are getting ready to enter the market. These tend to be established businesses, or organisations with support.

Gas and oil prices have increased, meaning that it is possible to also consider the wood pellet market to be cost efficient now and in the future as well as providing a sustainable and carbon neutral source of fuel.

As with any new or emerging market the question of creative destruction arises, and with it the “entrepreneur” and their role.

Having spent some time doing research this year I can make some observations.

There are one or two firms that are emerging with good solutions, good service, and now a growing income. This can give the consumer some confidence.

However there are many more that continue to provide either an “expensive” solution, or simply cannot supply the required service. This makes it difficult for the consumer to choose. (Hence if you are interested in a stove or a boiler it really is best to seek advice).

Therefore these early market entrants spoil (as in rugby) the market and its chances for growth.

At some stage there will be a shake out, larger players in the heating market may enter, but at the moment there is not enough “information” from the market – or the entrepreneurs. This could be:

• It has to be simple for the consumer to purchase and install.
• They must feel confident that the company can service the stoves in the future.
• The fuel must be readily available.
• The cost of installation and running should be comparable to at least oil and preferably gas.
• The environmental benefits (and therefore the government induced benefits for installing in an organisation or home) need to be clear.

For some reason government bodies do provide accurate and sometimes good information. They don't however make the option attractive for the consumer. This is the job of the companies concerned.

For wood pellets to emerge as a real alternative one of the key things that is needed is a company (or companies) that are able to present this to the market place effectively. This may then see the creative destruction process in action, and the result would have an impact on society.

As mentioned above there are a couple of projects that I have been involved with in this space over the last year. I will write later this week and give some more “micro” examples.

Action Learning – Creative Destruction

The question I am debating is that does the action learning process (or similar) have a real impact on innovation or those that are taking part in the innovation process?

Action Learning is a process where an individual presents an issue to a small group of people. The issue is explained, clarified, and then questioned. The questions provide challenge, with the aim of helping that individual to decide on some actions they want to take. Other members of the group can then present their issues, be challenged, and then decide on actions.

This process then repeats at regular intervals, with each person reporting back on the actions that they have taken. They are accountable to their peers.

I undertook facilitator training ie training facilitators to deliver action learning, last year. So I do have a commercial incentive as well as interest in the following ideas.

Creative destruction describes a process of economic cycles, where a “special” innovation that makes a difference to everyone's lives is brought to market by an entrepreneur. The Entrepreneur as defined by Schumpeter is different to the “opportunity spotter”:

The Opportunity Spotter

e.g. I noticed whilst in East Anglia that potatoes were being produced very cheaply compared to London. As a merchant I have spotted an opportunity, and if I can bring potatoes from East Anglia to London profitably or better than anyone else I can be an entrepreneur.

Schumpeter describes the entrepreneur as “special” in so far as they have to inform and persuade the market place that their solution is better than the market standard. In so doing they render the previous solution obsolete. This can lead to market regeneration, and with it a boom.

How does the process of creative destruction actually work?

From my perspective I see lots of people with good ideas. Sometimes they are quite “wacky” and sometimes fantastic, but equally sometimes the market may not be responsive to what they have to say. They may not have the right drive, skills or ambition to take the idea forward.

From a macro perspective there is survival of the fittest. Ideas, opportunities and entrepreneurs fail for different reasons, and at the end there may only be one or two winners. Schumpeter does not explain this process – he was an economist after all.

The question I am debating is that does the action learning process (or similar) have a real impact on innovation or those that take part in the innovation process?

Underpinning action learning is the ability of the individual to stay grounded in their decision making.

For those familiar with Transactional Analysis this would be staying in the adult space as a pose to the parent or child space. Once you go into the parental space you cease to listen to reason and tell others what you believe to be right. Decision making may be poor. In the child space you may “fantasise” about unrealistic opportunities or become very defensive when challenged. You may also find listening to feedback really difficult. It may cause you to become angry, to hide in a corner, or just not hear what another person says to you. This would suggest that being in the adult space is the only place to be.

For those familiar with a Johari window may understand that good relationships and taking action are underpinned by personal exposure to others of how you feel and want to take action on issues. Also self awareness is important. Have I got many blind spots, I have refereed to these as “holy Cows” or “Black Holes”.

Holy Cows are methods that we rely on, even in new environments. They may have served us well in the past. We therefore continue to use them in the future without reassessing.

Black Holes are places we are scared to go to, we may have been there before and failed. We may have seen others fail.

So in theory identifying and dealing with these holy cows and black holes can help us be more successful. It could help us become more able to deal with innovation. This requires a flexible person that can deal with change.

So Action Learning provides a supportive framework, challenges thinking, requires you to listen. It should help you identify one of your black holes, or a holy cow, and help you change your behaviour so that you can move on.

Surely this should be essential for any new business owner!!!! You often hear of successful entrepreneurs having failed first and learnt. Perhaps Action Learning can be a cheaper and less painful experience!

There must be some counter arguments.

Most of the arguments against will be around reality. Creative Destruction is a very difficult act. It requires big action, big conviction. Unrealistic? Or would others view it as unrealistic? If so would a group challenge fairly or unfairly the ambitions of a big thinker?

Does a big thinker with a serious project have to have some fantasy (or vision) to keep them going? At times it may be or seem unrealistic, especially to others. Would Action Learning help here?

Does a big thinker at times grit their teeth and tell others how its going to be? Time pressures, lack of understanding, or communication difficulties?

In other words should the person who is creating, informing, persuading always be well grounded? Should they always take feedback from others. Do they need to adapt their behaviour? Does the support of others add or take away?

My personal experience is that when I enter into a couple of hours (I may not admit to days) where I am very resistant to change I get stressed, perhaps angry, perhaps hide in the corner. It can be a negative experience, and when it happens I know I don't take positive action. It will be a holy cow, an ideal, that I don't want to change. It may be a place where I am scared of failure.

I probably waste valuable time dwelling on the issue rather than learning to move on.

For instance if you had £1m and a business opportunity for £1m how quickly would you spend the money? What is a sensible way to proceed (grounded). What is foolhardy? What is “cowardly”?

If you had been through an Action Learning programme would you spend the money more wisely? Or would you still loose it – just in a grounded way!

Sonic Soundscape testimonial

Brilliant Stereo Sound That Follows You Across the Room

I’ve got a new best friend. It’s cool white, very discrete and called Dias. Thanks to Dias for the past week I’ve been listening to some great sounds while I work or unwind.

Brilliant sound is what Dias is about. I like a good stereo sound, over the years I’ve invested a lot in audio equipment and music CD ripping is my business now. But getting a good sound here, while I work, is difficult so I love the sound I get now. Yes, the quality is high – very high – but that’s not the main thing. Thanks to Dias I get a great stereo sound wherever I am in the office.

Incredibly Dias stereo sound follows you round the room.

There is much more! To read on please see Jeff's Blog

http://podserve.blogspot.com/

Jeff has enjoyed the sound so much he has offered to demonstrate the Sonic Soundscape in the SE of London and surrounding area. For more information please see http://www.diasmusic.com