In our modern digital environment, all businesses have a great competitive need for creative thinking that far exceeds our industrial forebears. In the quest for an institutional source of creativity, the brainstorming session, where several people meet to have fresh ideas, has emerged as the front runner. Brainstorming can be fun, and some prominent consulting firms have prospered proselytizing this technique, but it has a remarkably thin track record of success.

While people think and behave differently when they are in large groups versus when they are alone, I also believe that people behave still differently when they are in the presence of only one other person. This is often overlooked, yet I believe that creative people can be at their most effective when they work in pairs.

I believe that all people share these three modes of behavior: solo, paired, and group. Generally, these differences are noted only as interesting social quirks, and have not been investigated by academia or exploited by business, but their differences have important implications for the creative manager.

Brainstorming's adherents believe that a group of people can together imagine more and better solutions than any one person can alone. I won't dispute that assertion, but just because one is better than the other doesn't imply that either is anywhere close to being optimal.

A recent article in the New York Times put forth the radical idea that brainstorming might not be such a good idea, and cites recent research indicating that working solo is more productive than working in groups. The author, Susan Cain, points out that many of our greatest innovations came not from large groups of ideating peers, but from solo geniuses working in isolation. Her case in point is Steve Wozniak, the enigmatic inventor of the Apple computer.

As a former inventor who worked almost exclusively by myself, I agree with Cain. The problem is that, at the time, I would only work for myself, and like me, few independent creative people can be motivated to solve the problems of someone else's business. Unless you get remarkably lucky, you need to find a way to reliably innovate with people content to have a steady job.

When I began to consult for others, I too faced the challenge of generating consistent, reliable, and predictable imaginative problem solving. After some struggle, the correct solution finally emerged: pair designing.

This year marks Cooper's twentieth anniversary engaged in intensively creative work performed for hire, on schedule, on budget, for a wildly diverse clientele. Our work is nothing if not creative, and we consistently astonish our clients with the depth of our innovative thinking. What's more, we almost never do group brainstorming, and solo problem solving is, while not forbidden here, institutionally frowned upon as being too slow and expensive. Our ability to innovate reliably and effectively is largely due to our insistence that our creative consultants work in pairs.

I've been watching the new hit TV show "Gold Rush," about amateur gold miners in Alaska and the Yukon. Their struggle to find gold reminds me of the quest for innovation in technology companies. It's interesting to compare the two quests.

Illustration by Scott Cooper

In Gold Rush, a semi-documentary, semi-reality show, big, burly men battle the elements (and sometimes each other) to find gold in the endless miles of wilderness in the 49th state. These days gold is around $1500 an ounce, so a couple of handfuls is all these guys need to have a successful mining season.

Often, all a new technology company needs to become a juggernaut is a couple of handfuls of invention, a few ounces of insight. Google, for example, didn't invent search, they simply added the brilliantly simple idea of ranking search results by the number of references they found. Building their massive search engine and finding a way to monetize their service remained a huge task, but the innovation was just a single nugget. Ironically, the Gold Rush miners almost never work directly with gold. The big problem in gold mining isn't the gold itself, it's dealing with everything that isn't gold. All of their attention and equipment is focused on the not-gold. While they dream of a few handfuls of yellow metal, their day-to-day world is dominated by countless tons of everything else. For the miners to collect a few ounces of gold, these tough, XXL guys have to bulldoze acres of forest, pump rivers of water, dig tons of rock, and move mountains of dirt. They need giant tractors and huge excavators. They need rock and sand sifting machines the size of houses. They also have to contend with trees, wild animals, harsh weather, cash flow, fickle girlfriends, and internecine friction.

Most of what goes on in innovative companies is the simple hard work of designing, coding, and deploying software. It's the quotidian blocking and tackling of everyday business: finding bugs, getting the pixels right, answering the phone. One seed pearl bright idea can occupy a technical team for a year or more, building software and shoveling an endless wilderness of bits. Regardless of the creative brilliance, building a company or a product is mostly just hard work.

The Alaskan gold is just lying there, pure, untarnished, ready to be picked up and sold. They don't have to coerce or cajole it. They don't need to identify or interpret it. Gold is easy to spot, but it rarely comes in a big, fortune-making nugget. It comes in millions of tiny flakes, deposited over the millennia in ancient stream beds.

Innovation is often the same, made up of thousands of tiny shards of creativity. Like gold, creativity rarely comes in giant dollops of obviousness. It tends to arrive in many tiny increments, only the whole of which add up to something revolutionary. So, while the miners have to discard ten-ton boulders, the gold flakes hiding underneath must be handled with exquisite delicacy.

Like mining gold, the quest for innovation is dominated by what isn't innovative. Mostly it's cubicles of conventional work, and it's easy for the delicate innovation to be inadvertently smashed by some hard-rock business process. Just like gold mining, business demands a deft combination of brute force and subtle precision, of massive infrastructure and sensitive awareness.

If you visit a gold mine, you won't see very much gold. If you visit a very innovative company, you won't see crowds of shock-haired Albert Einstein's riding around on Segways reinventing the space-time-continuum. You'll see teams of young men and women working hard at mostly mundane tasks, moving mountains of information, winnowing their way to something of immense value. What lurks there is a respectful awareness of the unique nature of creativity, and how to nurture it. Managers who want innovation don't need to demand it, they merely need to not let the mountain moving of commerce obscure the precious, delicate, dust of invention.

The digital age changes our notions of quality, and in particular, our notions of the limits to quality. Generally, there are two limits to quality: The first limit is your imagination. If you are innovative, you can increase quality in many creative ways. The second limit to quality is what the customer will pay for. If your product is priced too high, even if it is of super high quality, you won't be able to sell many.

These two limits to quality have existed since a caveman traded away a stone knife for the first time. The more it costs to make a product, the higher price you must charge for it. Economists call the tension between cost and price, "Elasticity."

The elasticity concept has been around since that caveman, but in the digital age, its power is draining away. That's because the notion that price is dependent on cost is an assumption based on the character of industrial manufacturing.

Actually, there are two distinct components to cost, "Fixed" and "Variable." Variable costs are those tied to each individual product you make. This includes the raw materials, labor, and transportation of each object. Fixed costs are all the other costs that cannot be tied directly to a unique object. Typically, these include design, engineering, marketing, and administrative costs.

In the industrial age, just as in the days of the caveman, the variable costs were a much larger portion of the total cost than were the fixed costs. That's because design and administration is cheap compared to purchasing, transporting, and transforming steel, aluminum, glass, plastic, and energy. A washing machine, for example, might have taken a dozen engineers six months to design, but it took tons of steel, hundreds of people, railroads, mines, and factories to build those washing machines.

For the washing machine company, elasticity was strong because the variable costs were far, far greater than the fixed costs. The clever business person always paid more attention to driving costs down than to raising quality, simply because cost reduction had such powerful, direct downward leverage on price. Certainly higher quality exerted an upward pressure on sales, but it was offset by the need to raise prices to pay for it. Most customers choose a value compromise, where quality is adequate and price is low. This strong elasticity cemented into business thinking the industrial age idea that quality is expensive. But that relationship has now changed, and quality is no longer so expensive.

The digital age has inverted the relationship between fixed and variable costs. Fixed costs are now usually greater than variable costs, and this dramatically changes the role of price elasticity. When a product is made out of bits, there is no cost to purchase, transport, or transform anything! There are little or no variable costs that can be tied to each individual object for sale. Yes, the cost of transforming bits into coherent software is expensive, but it isn't a variable cost. The expense of design and programming is the same regardless of how many copies you sell.

When price elasticity weakens, the upper boundaries to quality relax and take on a different character than in industrial times. When variable costs drop to insignificance compared to fixed costs, it means that price can drop to insignificance, too. This can be seen clearly in today's market where the most successful companies, such as Google, Facebook, and Twitter, provide their products for free.

When price doesn't dominate the purchase decision, quality does. When every company's offering is free or nearly so, the customer is free to choose based solely on the quality of his or her experience in using the product.

The two limits to quality are still there, but in the industrial age, cost held your imagination in check. In the digital age, your imagination is free to expand without limit. It really doesn't matter how much time, money, effort, or imagination you invest in your digital product, as long as what you make delights your customers. They will certainly be able to afford it, so you just have to make them want it.

In the digital age the upper bounds to quality are only the upper bounds of your imagination. If you and your colleagues can think more creatively and innovate more effectively than your competition, you will succeed. The more desirable your product is, the less each day of invention will have cost you. In other words, your costs shrink to insignificance when you drive your desirability way up. Really clever post-industrial managers don't pay much attention to costs. Instead they exhort their people to better and more desirable creativity. That is the path to post-industrial success.

Microsoft's upcoming OS release, Windows 8, will finally replace a vital component that has remained largely unchanged for the last 30 years. It is the BIOS, and it has faithfully performed a simple but vital function: isolating the operating system from its underlying hardware. It quarantines all hardware-dependent code in one location with a publicly defined interface available to the rest of the operating system. BIOS is an acronym for "Basic Input Output System." It was invented way back in the 1970s by the brilliant computer scientist Gary Kildall, and was one of the more important conceptual breakthroughs that led to the success of the personal computer. Bill Gates copied the BIOS idea in MSDOS and built his company on its strength.

Thirty years is a long time even for brilliant software, and the Windows BIOS has become both a security liability and a performance limiter. It is past time for a replacement, and the upcoming Windows 8 will ship with a UEFI instead of a BIOS.

The Unified Extensible Firmware Interface, or UEFI, is much smarter than the old BIOS and, in particular, it can detect boot-time malware. Of course, one way to define "malware" is "any other vendor's product." Microsoft has said that it will not use the UEFI to block legitimate software from other companies, but fears are rising in the industry that it will do just that.

Because most of the UEFI needs to be implemented by hardware vendors, it will be written and deployed by third-party developers, not Microsoft itself. If these third-parties want to earn Microsoft's compliance certification, they must follow stringent guidelines. If these guidelines are followed, operating systems other than Windows 8 will not be allowed to boot up. In other words, if your computer, pad, or mobile is running the Microsoft OS, it will not run Linux or any other vendor's OS.

This is not a particularly onerous limitation for about 99% of the human race. Very few people want to mess around with their computer at the operating system level. It's complicated, dangerous, and unnecessary to do so unless you are a programmer. Ah, but if you are a programmer, it raises a significant question.

Programmers may not be large in number, but they are certainly large in influence. In the 1990s Microsoft rose to overwhelming dominance of the industry for the simple reason that it catered to the needs of programmers. What programmers believe is true affects what other people in the software industry believe, and they, in turn, influence everyone else. If programmers didn't believe in Microsoft, then Windows would rapidly lose its hegemony as a platform.

In the last few years I've seen a remarkable thing: development shops using Linux hosted on Apple computers instead of Windows machines. I wrote about this almost a year ago on my personal blog. If I were Microsoft, I'd be very worried about losing influence in the developer community. Yet, with UEFI, it seems Microsoft is making it problematic to run Linux on Windows, and this may alienate even those programmers loyal to the Windows platform.

I'm sure that executives within Microsoft look warmly on the UEFI as a powerful mechanism for combatting what they view as competition. Too bad for Microsoft that the programming community doesn't see it that way. This move could be Microsoft self-administering their own coup de grâce, sending their remaining stalwarts into the arms of Apple, and accelerating Microsoft's descent into the irrelevant.

(Thanks to @BobMacNeal for technical editing)

It's easy for business people to forget about the great difference between the inside view and the outside view. That is, the experience customers have with software systems is enormously different from the experience business people have deploying those systems. This means that making an otherwise good business decision about software systems can have terrible, unforeseen consequences.

The Netflix company just learned this lesson the hard way. It doesn't take a rocket scientist to see the progression from VHS tapes to DVDs to streaming video. Netflix built its business by renting DVDs when the competition was still renting clunky VHS tapes. Just a few months ago, the company decided it was time to get a similar head start on the next new technology, but they failed to look at the outside view when they crafted their solution.

They split off the portion of the company that provides streaming video from the older, DVD-supplying part. From the inside of the company, this looked like a really good idea and, from that perspective, it was. It allowed Netflix to offer their streaming video service to customers unencumbered by the older technology. The problem is that this doesn't reflect the point of view of their customers, the outside view.

My wife and I have been happy Netflix customers since they started. We rent DVDs and also stream video from them. As my wife so succinctly said, "I want to go to Netflix to get movies, not to one company for DVDs and another for streaming video." Her sentiments neatly encapsulate the outside view: subscribers think about Netflix as a provider of motion picture entertainment, not as a provider of some particular media.

Netflix learned a hard lesson in the importance of looking at things from the user's perspective, rather than just from their own internal one. This little hiccup has cost them 810,000 subscribers and their market cap has dropped by over a quarter just in the last three months.

In the old days when the variable costs of manufacturing dominated income statements, what was good for the company was usually good for the customer. Today, when the experience of people is far more important than the cost of raw materials, business managers need to focus on their users, their employees, and their stakeholders, and not on their internal business processes. The way to success is by making customers happy, even if it means more work inside the company's walls. The only way to please people is by carefully studying their outside point of view.

As a business person, you may consider your software to be an operational tool, part of the sales or operations of your organization. But to your customers, it is a pipeline to your corporate soul. The behavior of your software indicates what is really valuable, what is truly important to your company, and there is really no way to hide.

Websites let your customers access your products and services, but as a side effect, they also access your corporate values. If your website is clumsy or slick, easy or confusing, it tells them a story.

Most clients hire Cooper to solve superficial problems. When they first approach us, they ask us to help make their websites “be more friendly” or their software “easier to use.” Sometimes they just want us to “make it pretty.” In every case, we find that hard to use, unfriendly, or even just ugly software is a symptom of deeper problems within the organization.

Franklin Delano Roosevelt, in his inaugural address as the 32th President of the United States, uttered his now famous phrase “The only thing we have to fear is fear itself.” How right he was.

He further identified his target as “nameless, unreasoning, unjustified terror.” He spoke early in 1933, during the darkest days of the American depression, when millions were out of work, no safety nets existed to help them, and there was no recovery in sight. What’s more, the specter of European Nazism, with its saber rattling, and strident, irrational racism, was waxing. In the face of these actual reasons to be afraid, Roosevelt fingered the real danger: irrational fear; fear for its own sake; being afraid simply because it’s easier than not being afraid.

Largely, the nation heeded Roosevelt’s admonition. We refused to succumb to fear, the economy recovered, we vanquished our foes, and emerged as the world leader for the rest of the 20th century.

Unfortunately, in the 21st century, we have quite failed Roosevelt. We have become a terrified nation and live in a culture of fear. We act afraid and we let baseless fear drive our choices. Mutual trust is the basis of civilization, and our nameless, unreasoning, unjustified terror is unraveling the fabric of our society.

The old saying, "History repeats itself" seems to be true in the recent history of book selling.

When the big chain stores of Borders and Barnes & Noble moved into town, the local independent bookstores all quaked in fear or squawked in high dudgeon about how the soulless giant franchises were ruining the business.

Borders failed to compete with Amazon and has since filed for bankruptcy

But the chains taught the independents a valuable lesson: that some books were a commodity. The price and availability of New York Times bestsellers was more important than was the sales clerk's expertise.

The weaker independents closed their doors while the big chains grew fat and happy. The surviving independents continued to disparage the big chains, but the chains delivered a better experience. They added cafes, benches where you could read for hours, and offered a much larger selection of books.

Then the World Wide Web came along, and after some initial jockeying for position, Amazon emerged as the Internet bookseller to beat. Now the shoe was on the other foot. The big chains squawked in righteous rectitude about how they couldn't compete with a company that didn't need to invest in bricks and mortar.

But Amazon taught the chains a valuable lesson: That all books were commodities if you already knew what book you wanted, and it was easier to purchase online, and the online vendors could stock far more titles. What's more, the supporting information on the Web was far more valuable than anything a harried, youthful sales clerk could offer.

Both Borders and Barnes & Noble took huge body blows as the new business model assaulted them, but the Web delivered a better experience. Barnes & Noble created their own online presence and has managed to stay in the game. Borders, however, not only failed to grasp their role in their brick-and-mortar world, but they foolishly gave their online business to Amazon, and so filed for bankruptcy last month.

What's wrong, you might argue, with keeping costs down? Quite a bit, it turns out. If your objective is to design a product people want to use, or to invent something brand new, you must embark on a journey of creativity and innovation. That might seem like normal, every day business, but don't make the mistake of trying to run your creative organization like a conventional one.

Business sage Peter Drucker asserted creative employees "are not labor, they are capital." This has profound implications on the way you should manage and account for your business. As Drucker also asserted, "What is decisive in the performance of capital is not its costs, but its productivity."

In other words, if there is something you can do to enhance the creative abilities of your people, it doesn’t really matter how much it costs, or how long it takes. If it results in a successful invention, or a compelling design, that’s what really counts.

Business people trained in industrial age thinking cut costs from force of habit. After all, expense reduction was an excellent strategy when manufacturing costs were dominant; they are easy to measure and provide instant benefits. In the post industrial age, manufacturing costs are neither dominant nor elastic, so reducing them reduces your quality without improving your desirability. Today, trying to make your product cheaper just makes it frustrating to use and unlovable without making it any cheaper to buy. It’s no longer a valid competitive strategy.

When you work at a design company you are surrounded by designers. They are all intelligent, perceptive, have a great sense of humor, and they often indulge in good-natured ribbing. They also have Photoshop skills.

There's always laughter in the hallways, funny pictures on the walls, and occasionally the funny pictures make it to email. Here's an amusing exchange that took place on an internal email thread a couple of weeks ago.

One of our smart designers, Golden Krishna, was rebuffed by Microsoft Office with a particularly unhelpful error message. Grabbing a screen image, he clipped it, pasted it into an email, and posted it to his colleagues. Several members of the staff immediately pounced.

Here's what Golden first posted:

He was being sardonic, pointing out just how unhelpful error messages can be. Another smart designer, Glen, responded immediately with this doctored error message:

And that opened the floodgates.