« October 9, 2005 - October 15, 2005 | Main | October 23, 2005 - October 29, 2005 »

October 21, 2005

Friday afternoon innovation linkage

The new "Driving American Innovation" ad campaign [Ford Motor Company]
The importance of innovation to the oil & gas industry [Oil & Gas Journal]
Microsoft's innovation timetable [Information Week]
"The Ten Faces of Innovation" radio interview [KQED]
Don Tapscott: The Open, Networked Enterprise [CIO Insight]
Digital media innovation from the BBC [International Herald Tribune]
Korea's Innovation Support System [Korean Herald]
Stifling Spanish innovation [Financial Times]
If I Were Rupert Murdoch (I'd buy Craigslist) [Mark Pincus blog]
Wherever You Are, Be There Totally [Evelyn Rodriguez]

[graphic: Schumpeter's Waves]

Posted by dominic at 4:43 PM | Recommend this! (1) | +dlc | +dig | TrackBack

Eric von Hippel on Democratizing Innovation

Eric von Hippel, the head of the Innovation and Entrepreneurship Group at MIT Sloan School of Management and the author of Democratizing Innovation (also available as a free download from the MIT Web site), will be a guest speaker at the Fortune Innovation Forum in New York on November 30 - December 1. He will be speaking on the topic of "Democratizing Innovation," explaining how manufacturers can work with "lead users" to develop breakthrough new products and services.

With about six weeks to go before the event, Eric was able to share a few of his thoughts about democratizing innovation.

For those readers who haven't read your book, what do you mean by "democratizing innovation"?
Eric: When I say that innovation is being democratized, I mean that users — both user firms and individual consumers — are increasingly able to develop and modify high-quality products for themselves.

Why are more and more users innovating?
Eric: It has been shown that users may develop products for themselves when they have “custom” needs and cannot find what they want on the market. Rapid advances in computing and communication technologies are enabling more and more users with custom needs to design and build what they want for themselves at steadily lower prices. Indeed, levels of user innovation appear to be remarkably high. Studies in several industrial and consumer fields shows that from 10% to nearly 40% of sampled users – both user firms and individual “consumers,” do develop or modify some products.

Why does innovation by users matter?
Eric: Innovation by users matters for two major reasons... First, user firms and individual consumers that innovate are usually lead users. That is, relative to other users in their populations: (1) they are at the leading edge of an important marketplace trend and; (2) they expect to gain relatively high benefits from a solution to their leading-edge needs. Innovations that lead users develop for themselves are often of interest to many users – and so can be the basis for profitable new products for manufacturers... Second, it has been found that users that innovate often freely reveal what they have developed. This means that other users – and manufacturers – are free to imitate or commercialize what lead users have developed without charge.

How will manufacturers adapt to user innovation?
Eric: Studies show that manufacturers often do base profitable new products on innovations developed by lead users. Indeed, freely-revealed innovations by users are forming the basis for a user-centric innovation system that is so robust that it is actually driving manufacturers out of product design in some fields.
The ongoing shift of product development activities from manufacturers to users can be painful and difficult. Many manufacturers must make fundamental changes to long-held business models. However, there are ways for manufacturers to do very well in a user-centered innovation world. They can, for example, learn to systematically identify lead user innovations that offer the basis for successful new products, rather than finding these innovations “by accident” – or by waiting for a competitor to discover them first.

Finally, what are the implications for government policy?
Eric: Social welfare is increased by freely-revealed innovations by users. This finding implies that policymaking should support user innovation, or at least should insure that legislation and regulations do not favor manufacturer-innovators at the expense of user-innovators. Despite the difficulty of the transition now underway, the goal of a democratized, user-centered innovation system appears to be well worth striving for.

Posted by dominic at 11:07 AM | Recommend this! | +dlc | +dig | TrackBack

The march of the penguin companies

This summer's movie smash hit wasn't a blockbuster from a Hollywood film studio - it was a small, independent film about Emperor penguins. The March of the Penguins film was so moving (and so successful at the box office) since it highlighted in human terms just exactly how the adorable little penguins survive the bitter, desolate Antarctic environment. At the same time, these penguins display an unfathomable amount of love and devotion to their unborn young. As a result of remarkable adaptations and perseverance over time, these penguins are able to survive and even prosper under deeply hostile conditions.

Sound familiar? Aren't some big companies like penguins - trying to survive in hostile market environments, all the while adapting and innovating in ways that may not make sense to the casual outside observer? Over a period of time measured in decades, if not centuries, these companies emerge as beloved institutions of global capitalism as a result of their unstinting attention to future generations of products and services. Or something like that, I guess. (another pet theory of mine)

Is it a stretch to think of big companies like penguins? Well, in a story about Linux and open source, Mitch Wagner of Wagner's Weblog has an interesting comparison of big companies and penguins:

When it comes to trying out new technology, big companies are like penguins. Here's how a flock of penguins jump into the water: They all stand around on the edge of a pool, shoulder to shoulder (do penguins even HAVE shoulders? Never mind. Stay with me on this), and jostle and bump each other. Eventually, one of the penguins is knocked into the pool. The other penguins watch for a little while to see if the first penguin gets eaten by anything -- if it's safe, the other penguins jump in.

Are there other ways that big companies act like penguins, especially in terms of innovation and adaptation?

Posted by dominic at 10:11 AM | Recommend this! | +dlc | +dig | TrackBack

How to make the competition irrelevant through blue ocean strategies

At the Fortune Innovation Forum in New York on November 30-December 1, Blue Ocean Strategy co-author W. Chan Kim will be sharing insights about his thought-provoking new book, which argues that companies need to stop focusing so much on competing with one another and start finding the "blue oceans" - new territories and new landscapes to exlore. By implementing a Blue Ocean Strategy, it's possible to make the competition irrelevant.

The blue ocean strategy framework has been so successful in getting companies to think about business strategy that Gabor George Burt has even launched a Blue Ocean Strategy blog. There are case studies of companies using blue ocean strategies - like Akzo Nobel - as well as stories and anecdotes that flesh out some of the concepts behind blue ocean strategies. For example, here's a quick example from the 2000 Sydney Olympic Games:

In the 2000 Sydney Olympic Games a swimmer from Equatorial Guinea qualified for competition not by meeting the minimum time standard, but by winning a wild card entry. Such cards are randomly allocated to athletes from small, third world countries who otherwise would have no chance to meet the competitive standards. The intent is to make the Olympics a truly world-encompassing event.

This particular athlete gained instant celebrity status by flailing and splashing his way to an unforgettable last place showing. Being exposed to a full size swimming pool for the first time, and uninitiated in the ways of a diving start, he somehow managed to finish the 100-meter heat to the spectators’ uproarious reception. Such a display of courageous dilettantism made him one of the most talked about athletes of the games, winning him worldwide fame, celebrity invitations and attractive promotional opportunities. Why such raving success for the worst swimmer in Olympic history? Because he unintentionally sidestepped head-on competition with his much more qualified rivals, and instead gave spectators what they really wanted: inspirational entertainment.

Posted by dominic at 9:41 AM | Comments (269) | Recommend this! | +dlc | +dig | TrackBack

Yak shaving and the joys of endless fiddling

Earlier this year, Joi Ito had a great post about yak shaving - "the technical term for when you find yourself eight levels deep - and possibly in an recursive loop - in a stack of jobs." Here's the classic example of yak shaving from an article by Danny O'Brien and Merlin Mann: "You start out deciding to tidy your room and you realize that in order to do that you'll need some more trash bags, so you need to go to the shops, which will involve you getting out the car, but the car needs gas, so you'll need to go to the gas station first, which means you should probably find your gas discount card, which involves finding your keys, which are in the room somewhere..."

In a way, all innovators are yak shavers. Joi Ito explains, using examples from his own personal experience:

I remember the moment when I was working in television, music promotion and motion pictures and decided that IP and the Internet would solve many problems that I had with the control that big companies had on the flow of information. I helped set up the first ISP in Japan, helped set up Infoseek Japan, started one of the first web companies in Japan... but it still didn't solve the "problem." I realized that there were some basic problems in society and the market was broken. I noticed that democracy was broken and tried to work on fixing that in Japan. Then I realized that it was broken all over the place and decided to work on that too.

The takeaway lesson: the most successful innovators are those who can avoid the endless fiddling involved in developing new products or services, and find a way out from the endless recursive loop of tasks.

(photo credit: Jonny Hat)

Posted by dominic at 9:39 AM | Recommend this! | +dlc | +dig | TrackBack

Is there such a thing as too much innovation?

Nicolas Nova of the Pasta and Vinegar blog points to a recent piece in the Financial Times ("When the Cutting Edge Frightens the Customers") about the various factors influencing innovation by Korean cellphone manufacturers (i.e. Samsung, LG Electronics). What's interesting, says Nova, is that innovation is becoming a tough issue for these companies: they want to be on the cutting edge of technology, but they also want to avoid alienating their customers who may not be early-adopters. Here's an extended quote from the FT piece:

Both companies are now at a critical juncture as they face a fundamental contradiction: they are concentrating on high-end products, particularly in mobile phones, but ever-smarter gadgets are becoming more intimidating and difficult to use for the average customer. These markets are also becoming saturated and new growth is to be found at the low end. So how do Samsung and LG, number three and five respectively in the global handset market, avoid a Sony-style post-Walkman product crisis?

“Sometimes it’s difficult to do market research because often consumers don’t know what they want,” says Lee Hee-gook, chief technology officer at LG Electronics.

No product exemplifies this dilemma better than the mobile phone, analysts say. “They are developing these all-seeing, all-doing handsets that can do everything but shine your shoes, but does the phone-using public really want that level of capability?” asks Mr Morris. “And more importantly, will they pay for it?”

“At any point you have to get realistic and check that what you’re doing makes sense.”

Posted by dominic at 8:26 AM | Recommend this! | +dlc | +dig | TrackBack

Innovation is no laughing matter... or is it?

Anil Rathi, the president and founder of Idea Crossing and the founder of the Innovation Challenge, talks with Sushil Bhatia (the inventor of the Glue Stic) about the role of laughter in generating new, innovative ideas on the Innovation Challenge audioblog. Sushil Bhatia's notion that laughter can be a tool for idea generation may sound unconventional, but he's appeared on ABC's "Good Morning America" and has gathered substantial evidence that laughter can actually improve focus (even in a corporate environment).

Posted by dominic at 8:07 AM | Recommend this! | +dlc | +dig | TrackBack

The AHA! factor

Dave Pollard, author of the How to Save the World blog, has refined his thinking on how to encourage wide-scale, mass collaboration to solve problems and hash out important business issues. In a recent blog posting, Pollard lays out his initial framework for AHA! centers and makes a few tweaks to the model. Here's the basic notion of what an AHA! Discovery center would look like:

When I first thought up the idea for AHA! I envisioned a physical centre (or centres) that would attract (by reputation and by some of its physical assets and setting) some of the world's best minds to address some of the world's most intractable problems. Weekdays would be allocated to business problems, with companies and consortia paying a fee for the service. Weekends would be volunteer groups addressing broader social problems, at no charge, and with the experts from the weekday sessions encouraged to stay over and help deal with these broader issues. Focus was to be on complex problems, the ones that don't lend themselves to well-established solutions and analytical thinking. Everything we produced was to be made available Open Source and Creative Commons licensed.

After thinking through and refining the problem, Pollard believes that a virtual - not a physical - AHA! discovery center would be the appropriate venue for problem-solving:

Rather than physical centres with certified AHA! practitioners, what if we reduced AHA! to its absolute essence: a set or 'basket' of capabilities, guiding principles, working models and tools that have been shown to work well in dealing with complex intractable problems.

This virtual workspace, says Pollard, would be "a database, a wiki, or some other simple, common place where everyone could access it and everyone could add to it."

Posted by dominic at 7:54 AM | Comments (6) | Recommend this! | +dlc | +dig | TrackBack

October 20, 2005

Brands as innovation roadblocks

At the upcoming Fortune Innovation Forum in New York (November 30 - December 1), Nancy F. Koehn, the James E. Robison Professor of Business Administration at Harvard Business School and the author of Brand New, will be the moderator of a panel discussion on how brands sometimes block companies from pursuing dynamic, new paths to growth and innovation. Joining her on the panel will be Jonathan Blum, SVP at Yum! Brands and Elizabeth Smith, EVP of Global Marketing at Avon Products.

The roundtable discussion will focus on a single question: "Can brands ever become roadblocks to success?" The answer, surprisingly, is yes. Management textbooks may teach that creating a world-class brand is the end-all and be-all of modern business, but brand managers know that the only thing more difficult than creating a brand is maintaining the brand, especially during a period of change. If a brand typecasts a company or pigeonholes it into being a certain type of company, there may be an inability to capitalize on new growth initiatives or to recognize new market opportunities. Based on her analysis of the history of classic brands like Heinz, Starbucks and Estee Lauder, Koehn has shown that sophisticated brand-building strategies need to be able to respond to constant change within an industry - as well as consumer behavior - in order to retain their relevance to consumers.

Posted by dominic at 3:35 PM | Recommend this! | +dlc | +dig | TrackBack

John Winsor: How to spark innovation

John Winsor, a contributor to the BrandShift group blog and the author of Beyond the Brand: Why Engaging the Right Customers is Essential to Winning in Business, has a new book coming out on November 1, SPARK : Be More Innovative Through Co-Creation.

In a recent blog posting, John provides a brief summary of what the process of co-creation means for companies like Nike, Patagonia and Herman Miller:

While we can all point out innovation in marketing and product development as springing from the brilliance of one mind... the truth is that most innovation happens when co-creation is at the center of the innovation process for a brand. That means involving not only the internal resources of the company and a team charged with innovating, but also the external resources of the culture and the customers.

In my upcoming book, Spark, I had a chance to interview a number of leaders in innovation including, Mark Parker of Nike, Marsha Skidmore of Herman Miller and Rob Bon Durant of Patagonia. These interviews only reinforced my belief that there is no formulaic process, but the need to take a more holistic, co-creative approach to brand innovation with out excluding anyone, including customers.

For a team charged with innovation, try to remember to allow everybody, no matter the level of knowledge, to participate in a positive dialogue. Likewise, develop a policy of more open communication, dialogue, connectivity and equality. Remember to focus on learning and experience versus accomplishments.

Posted by dominic at 12:01 PM | Recommend this! | +dlc | +dig | TrackBack

Steve Jobs, BitTorrent and other tales of business innovation

The Fortune Innovation Forum, which will take place in New York on November 30 - December 1, will feature speakers from some of the most recognizable and well-respected companies in America - FedEx, IBM, Xerox, Starbucks, HBO and HP - in addition to other guest speakers like venture capitalists, design experts and entrepreneurs. Basically, the same types of individuals and companies that appear in each edition of Fortune magazine. A preview of the upcoming edition of Fortune just landed on my desk, and it looks like it has a number of articles of potential interest to anyone who is passionate about innovation:

Rupert Murdoch catches Internet fever and decides to rebuild a media empire

BitTorrent as the "Great Disrupter"

Steve Jobs on "What's Next for Apple?"

How Mercedes re-energized a fading brand

Why AOL is suddenly hot, all over again

Posted by dominic at 10:54 AM | Recommend this! | +dlc | +dig | TrackBack

How do they teach innovation on the West Coast?

As part of the Management of Technology (MOT) program at Cal-Berkeley, the Haas School of Business offers a number of courses to teach aspiring entrepreneurs and CEOs about the process of innovation. Anyway, I thought it might be interesting to peek under the hood of a current MBA class on innovation to see how it's taught. For example, here's the course description of Managing Innovation and Change:

Most innovations fail. Yet companies that don’t innovate die. Managing innovation thus constitutes one of the most difficult and critical tasks facing a manager. Nor is this solely the concern of high tech companies – companies in traditionally “low tech” businesses such as consumer packaged goods (like Procter & Gamble) find that innovation translates directly into lower costs, higher growth and new brands.

The course adopts a capabilities-based view of the firm, drawing from economic, organizational, and engineering perspectives. The goal of the course is to identify the sources of innovative success and failure inside corporations, and how companies can develop and sustain a capability to innovate. There will be considerable attention paid to the management of intellectual property along the way.

It's possible to download the course syllabus for "Managing Innovation and Change" as a 7-page PDF. As might be expected, a few of the classics are required reading: Clayton Christensen on "disruptive change," James Utterback (Mastering the Dynamics of Innovation), and various works by Henry Chesbrough (author of Open Innovation). Oh- and don't forget to check out the rock'n'roll Quicktime video for the new Cal-Berkeley MOT-China program. (I think the music is a track from Lunatic Calm called "Leave You Far Behind")

Posted by dominic at 10:30 AM | Recommend this! | +dlc | +dig | TrackBack

The IKEA of carmaking

At a time when U.S. automakers like Ford and GM are grappling with a dicey future, it looks like Eastern European automaker Skoda - the world's third-oldest car manufacturer - has everything figured out. Strategy + Business takes a closer look at how "a Communist car monopoly turned Volkswagen subsidiary is now becoming an entrepreneurial global enterprise." It's a pretty impressive tale of being able to tap into new markets and adapt to the realities of global capitalism:

The company is presently negotiating to sell Skoda designs to Chinese carmakers, while pushing deeper into the Indian car market and preparing for entrance into Iranian and Arab markets. Meanwhile, Skoda (pronounced “shkoda”) has carved out significant market share in Britain, Germany, and Scandinavia. It is growing in Italy and France, and continues to be one of the dominant carmakers in the former Communist bloc. Its strategy — to become “the Ikea of carmaking,” as one Skoda executive puts it — builds on its existing post–Cold War reputation as a maker of inexpensive but strikingly functional small cars.

Oh, and in case you're wondering - Skoda automobiles are not sold in either the USA or Canada.

Posted by dominic at 9:59 AM | Recommend this! | +dlc | +dig | TrackBack

London's Management Innovation Lab

Gary Hamel, the strategy guru who literally wrote the book on how to thrive in turbulent times by making innovation a way of life, opened up the world's first Management Innovation Lab at London Business School over the summer. The new innovation lab, created in partnership with the Woodside Institute, will encourage collaboration between academics and business practitioners in exploring new approaches to management and business processes. The creation of the new lab is based on an interesting premise - that "management innovation" and not "product innovation" or "technical innovation" or "business model innovation" is the single greatest driver of competitive advantage in today's global economy.

Speaking at the London Business School Global Leadership Summit, Hamel outlined some of the ideas motivating the creation of the new institution:

Lives, markets and democracies are all resilient – they constantly evolve. As a result, companies need to build innovation management into their systems to ensure that they, too, evolve, that they maintain their resilience. The most innovative companies give employees the space to innovate – such as Google, which encourages its staff to take time to innovate and post their innovations on the web to see how customers react.

Others, however, are not sold on the idea. Imaginatik Research (publishers of the Corporate Innovation Weblog), in fact, sees the creation of the Management Innovation Lab as just a thinly-veiled marketing ploy for executive workshops at London Business School:

Sounds cool doesn't it? Unfortunately the "lab" is a thinly masked way for Gary to get some publicity for his latest consulting offering - a two day workshop which essentially is there to get business leaders from Ground Zero, to the first steps towards creating a cohesive innovation strategy for that firm (Essentially the "Framing" stage of the Innovation Pipeline). Not that I blame him for trying to make "a buck" as they say here in the US...

Posted by dominic at 8:50 AM | Recommend this! | +dlc | +dig | TrackBack

At the ripe old age of 31

Dan Saper of the blog Dan's Drivel points to an interesting observation from SmartEconomist.com: "Over the last 100 years, there has been a clear, large shift in the life-cycle productivity of innovators. If at the beginning of the 20th century great achievements were attained at an average age of 23, by the year 2000 the average age had grown to 31."

(photo credit: Leo L31 on Flickr)

Posted by dominic at 6:54 AM | Recommend this! | +dlc | +dig | TrackBack

October 19, 2005

Silicon Valley legend Randy Komisar on Innovation

Randy Komisar, a partner with Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, is a guest speaker at the Fortune Innovation Forum in New York on November 30 - December 1. He is also a Professor of Entrepreneurship at Stanford University and the co-author of The Monk and the Riddle: The Education of a Silicon Valley Entrepreneur, as well as other articles on leadership and entrepreneurship. At the conference, Randy will be speaking as part of a roundtable discussion on "Innovation, Risk and the Threat of Failure." (Please click here for more information on this speaker, or to register for the conference.)

With almost six weeks to go before the start of the conference, Randy has generously offered his views on business innovation...

Who should be responsible for innovation inside a large corporation? Why?
Randy: The CEO must set the tone and balance. That being said, true innovation works best when it is distributed throughout the organization as part of the culture and objectives for all of the primary initiatives. No matter how routine one’s task, one should be empowered to innovate new approaches to their challenges and deliverables. This underlies the notion of a learning organization. Certainly some individuals and functions will take bolder innovative measures on behalf of the company, but even those workers with fundamental execution tasks should consider innovation a portion of their jobs.

What is the most important thing that needs to happen before innovation inside a company can occur?
Randy: A cultural shift. Well articulated priorities around innovation, learning and change. Risk must be confronted and innovators can not be penalized for failure to meet aspirations. Otherwise the culture won’t support risk taking; the heart of innovation.

How much do you rely on research and analysis to guide the development of new innovative services and products?
Randy: Research and analysis are necessary, but not sufficient. Too often the decision is made on those two legs of the stool alone. But judgment is the ultimate guide of innovation. Research and analysis set a foundation and vectors for decision making. However, because innovation by its nature incorporates significant amounts of first impressions, experience and judgment ultimately guide the decisions.

What innovative companies do you most admire?
Randy: Apple, Google, Yahoo, Mozilla, TiVo, Jet Blue, Amazon.

Is there an innovation success story within your business that you are most proud of?
Randy: Our business is designed from the bottoms up to support innovation. But that also requires us to innovate ourselves constantly. We are regularly changing processes to adjust to new opportunities, bringing in new talent and finding new ways to associate with talent where the fields of expertise are changing. For every innovation success story there are many disappointments, which is critical if one is to truly innovate. Frequent failures are guaranteed in the process.

Is there a formal process for tapping into the knowledge of your workforce?
Randy: Being a small partnership, the entire organization attempts to optimize itself around the best interplay of knowledge and judgment amongst the partners. Size and process are tuned to getting the best thinking, experience, and responsiveness from the group. There are shared data bases of information, but real knowledge is shared in the cooperative review of projects and the green lighting of investments.

Can you innovate without having access to large amounts of capital? If so, how?
Randy: Yes, in fact the innovation process lends itself to prototyping which can reduce risk and fine tune direction without undue capital expense. Prototyping does not simply apply to products but also to business models, marketing, organizational design, etc. Ultimately you will have to take a leap of faith, but smart innovation management can narorw the chasm.

How can failure lead to innovative breakthroughs in business?
Randy: One must define failure precisely in an innovation culture. It is not the failure of individuals, or even the failure of judgment or leadership. It is the failure to reach the expected result. If one considers failing to meet the expected result as intolerable, then the organization cannot innovate. Innovation is the process of experimentation; a laboratory for creativity. While some risk can be managed through the process, in the final analysis many disappointments will occur. It is the organization’s ability to learn form those disappointments and put hard earned experience back to work on new insights that determines the effectiveness of the innovation culture.

Does the importance of innovation to your organization vary depending on where you are in the business cycle?
Randy: Our partnership is 100% innovation, 100% of the time. We may move more cautiously at certain parts of the cycle, and we may favor certain risks over others, but we live or die based upon our ability to catalyze innovations that create value and have significant impact – all leading to satisfying returns for our investors.

Posted by dominic at 4:52 PM | Comments (32) | Recommend this! | +dlc | +dig | TrackBack

Collective intelligence - and other thoughts about the future of innovation

TIME Magazine has assembled an all-star cast of big thinkers -- Tim O'Reilly, Esther Dyson, David Brooks, Clay Shirky and Malcolm Gladwell - to find out what the short-term future holds for us. There's a lot of good stuff here, including a riff on why airlines like JetBlue and Southwest have had such a transformative effect on American society and why "change" is not necessarily the same thing as "progress." According to O'Reilly, the single biggest innovation over the next few years will be the notion of collective intelligence:

Think of how Wikipedia works, how Amazon harnesses user annotation on its site, the way photo-sharing sites like Flickr are bleeding out into other applications. I think we're at the first stages of something that will be profoundly different from anything we have seen before, in terms of the ability of connected computers to deliver results. We're entering an era in which software learns from its users and all of the users are connected.

Posted by dominic at 1:03 PM | Recommend this! | +dlc | +dig | TrackBack

Can Ford Motor Company innovate its way out of trouble?

The New York Times peeks inside Ford Motor Company to see what CEO William Clay Ford Jr. might have on tap for the struggling automaker when he announces a new plan to turn around the company later this week. To be sure, Ford is not in the same desperate straits as GM, which has already posted a whopping $4 billion in losses in 2005. However, as the New York Times points out, the writing is already on the wall for Ford:

Both companies are overly dependent on sales of pickups and big sport utility vehicles. Both are suffering steep losses in their crucial domestic automotive operations as fuel prices rise and consumers turn away from gas guzzlers. And both companies are heavily burdened by high labor costs and the obligation to support hundreds of thousands of retirees and their families, the so-called legacy costs that have put much of the domestic auto industry at risk.

According to one Wall Street analyst interviewed for the piece, Ford has no choice other than innovate its way out of trouble:

Detroit is at a tipping point... Like steel, textiles, airlines and other American industries that have undergone radical restructurings, we expect an increasingly volatile and difficult environment for the companies involved and for their shareholders.

(photo credit: New York Times/Getty Images)

Posted by dominic at 12:38 PM | Recommend this! (1) | +dlc | +dig | TrackBack

The 21st Century Apprentice

Jim McGee of Future Tense and McGee's Musings has posted an interesting piece about the knowledge workers of the 21st century, arguing that today's knowledge workers bear an uncanny historical resemblance to the craft workers of centuries past:

Whether it is the fundamental nature of knowledge work or the state of our understanding of that work, learning to do knowledge work is more apprenticeship than job training. In the quintessential knowledge work roles, learning still takes place in apprenticeship forms and settings. Think of research scientists, architects, lawyers, management consultants, senior management. Progress and success in these arenas is based on apprenticeship. This can be obscured by the emphasis on credentialling that tends to pick up on easily visible elements, but appenticeship models rule (with both their strengths and weaknesses).

After setting the stage, McGee then looks at the consequences of this apprenticeship model for innovation. First, and most importantly, says McGee, the apprenticeship model may not allow knowledge workers the ability to react as quickly as needed to the rapid pace of technology-fueled globalization:

Apprenticeship models of learning are too slow for the pace of change that characterizes today’s knowledge economy. The clock speed of today’s world was set by the industrial economy and continues to accelerate. Most of the knowledge work fields that are aware and mindful of their apprentice-based learning strategies also take misplaced pride in the pace of those processes. We can’t afford that attitude...

Posted by dominic at 12:21 PM | Recommend this! | +dlc | +dig | TrackBack

Innovation 2.0

On ZDNet's Between the Lines blog, Jeff Clavier builds on the ideas of Web 2.0 that have been floating around the blogosphere recently to outline his vision of Innovation 2.0:

Innovation 2.0 is a context in which large companies take on ideas and develop new products and services using the same tools as fledgling start-ups (LAMP, Ajax and stuff…), and release them within six to twelve months of the first mover. Look no further than Odeo vs Apple vs Yahoo in the podcasting directory space for a good example. Big companies don't always release great implementations of a given concept– at least in the early days (Yahoo Blog Search, Google Reader, the initial revision of MSN Spaces,…). Early adopters (that's us boys and girls) will most likely not switch to these in the short term, but how about the early majority that does not jump on each and every new tool after reading a review on TechCrunch?

Here's how Innovation 2.0 works at a company like Google:

Google, with its 20 percent of free time for personal research, is a poster child of Innovation 2.0. Let's say that they have 3,000 people on staff who can develop "things"– the 20 percent represents the equivalent of an army of 600 people, working in 3/4 person teams on their pet projects– on top of the Google infrastructure. Don't be surprised to see them release cool new things at a breakneck pace.

Actually, as far back as February, I touched on this notion of Innovation 2.0 with an op-ed piece for Tech Central Station called Alpha Companies, Beta Products: Solving the Innovator's Dilemma. It looked at the ways that alpha companies -- the biggest, baddest players within any industry -- are cutting down the time of the product lifecycle and delivering beta products that may not work quite as advertised, but are good enough to maintain a company's competitive position in the marketplace.

Posted by dominic at 8:07 AM | Comments (504) | Recommend this! | +dlc | +dig | TrackBack

It's time to give innovation a "pull," not a "push"

CFO.com has reprinted (in its entirety) a study from the McKinsey Quarterly on the growing trend from "push" to "pull" innovation at world-class organizations. According to John Hagel (one of the speakers at the Fortune Innovation Forum in New York City) and John Seely Brown, "push" systems that focus on efficient allocation of resources and highly precise methods of managing organizations simply no longer work the way they once did:

The highly specified, centralized, and restrictive nature of push systems prevents companies from experimenting, improvising, and learning as quickly as they might, both throughout their own organizations and across others. Push systems not only inhibit product innovation but — even more important — make it much harder to implement incremental process innovations rapidly. In a world where the relative pace and trajectory of capability building are of constantly rising importance, push systems thus hinder companies from participating in the distributed resource networks that are now indispensable to competitive advantage.

As a result, companies are already experimenting with "pull" systems and distributed networks as a way of sparking innovation:

Companies are beginning to embrace a more flexible approach to setting in motion (or mobilizing) tangible and intangible assets (or resources), which may reside within or outside the company. This new approach might be called the "pull" system of resource mobilization. Its early elements began to emerge from Toyota Motor's lean-manufacturing system in the 1950s, when the company began pulling resources into the assembly line as needed rather than allowing inventories to pile up during production. But more versatile and far-reaching pull systems — which extend beyond production and, indeed, beyond the enterprise itself — are now beginning to emerge not just in manufacturing and supply chain operations but also in arenas as diverse as pharmaceutical R&D and the media. These early pull models, driven by changing strategic and operational needs and facilitated by the Internet, are visible primarily at the periphery of more mature push models.

Anyway, at the Fortune Innovation Forum, John Hagel will participate in a roundtable discussion with Shantanu Narayen of Adobe and Linda Sanford of IBM on the following topic: "Is the U.S. still a hotbed for IT innovation?"

Posted by dominic at 7:47 AM | Comments (3) | Recommend this! | +dlc | +dig | TrackBack

Baidu and the persistent search for the ideal

Be sure to tune in to Muskblog tomorrow: as part of a Managing Global Innovation class taught by Professor Max von Zedtwitz at the Tsinghua School of Economics and Management in Beijing, MBA student Andrew "Muskie" McKay will interview a key Baidu executive about innovation: "The focus on the interview is on the challenges of managing an R&D facility particularly one that is global or part of a multi-national enterprise... I’m not sure what I’ll be able to reveal to the blogosphere from my little chat as I may have to sign an NDA."

Baidu, of course, is considered the "Google of China": the Chinese language search engine recently had a hugely successful IPO in the U.S. and re-ignited investor interest in the booming Chinese Internet sector. And if you thought Google had a cool name, check out the meaning of "Baidu":

"Baidu" was inspired by a poem written more than 800 years ago during the Song Dynasty. The poem compares the search for a retreating beauty amid chaotic glamour with the search for one's dream while confronted by life's many obstacles. "Hundreds and thousands of times, for her I searched in chaos, suddenly, I turned by chance, to where the lights were waning, and there she stood." Baidu, whose literal meaning is hundreds of times, represents persistent search for the ideal.

Posted by dominic at 7:23 AM | Comments (1) | Recommend this! | +dlc | +dig | TrackBack

October 18, 2005

Out of the red and into the blue

Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, the business strategy book from W. Chan Kim and Renee Mauborgne, came in at #10 in this weekend's Wall Street Journal business bestseller list. That's pretty impressive, considering that the business bestseller list is usually dominated by two kinds of books: books more about pop culture and psychology than business or economics (i.e. The Tipping Point, Freakonomics) or mass-audience books that appeal to a broad cross-section of society (i.e. Rich Dad Poor Dad, Who Moved My Cheese?, Secrets of the Millionaire Mind). In fact, the only other MBA-type book appearing in the Top 10 was Good to Great by Jim Collins (#3). According to the Blue Ocean Strategy site, the book has already been licensed for 29 different languages - so it's a safe bet that it's not only U.S. executives who will be attempting to capitalize on "blue ocean" strategies over the next few years.

Anyway, the basic premise of the book is that companies should spend less time competing head-to-head in hyper-competitive markets -- the so-called "red oceans" of shrinking profitability. Instead, companies should explore "blue oceans" of untapped value and potential:

Based on a study of 150 strategic moves spanning more than a hundred years and thirty industries, Kim and Mauborgne argue that tomorrow’s leading companies will succeed not by battling competitors, but by creating “blue oceans” of uncontested market space ripe for growth . Such strategic moves—termed “value innovation”—create powerful leaps in value for both the firm and its buyers, rendering rivals obsolete and unleashing new demand.

W. Chan Kim will be a speaker at the Fortune Innovation Forum on November 30-December 1, participating on a panel discussion on "Making the Competition Irrelevant." It should be an interesting talk -- one of the panelists will be William J. Bratton, former chief of the NYPD and current head of the LAPD. What a contrast - a French business school professor and a top U.S. crime-fighter.

Posted by dominic at 1:08 PM | Recommend this! | +dlc | +dig | TrackBack