The Business Innovation Insider

« January 1, 2006 - January 7, 2006 | Main | January 15, 2006 - January 21, 2006 »

January 13, 2006

Lego and the next generation of customer-driven innovation

Core 77 points to an interesting article in the February issue of Wired Magazine ("Geeks in Toyland") discussing the development of Lego's Mindstorm NXT product and how it illustrates the principles of customer-centered innovation:

"There's been plenty of talk in marketing circles about tapping into online social networks (like Myspace) to connect with consumers and gather market data; even some increased discussion recently about software companies enlisting netizens to assist in their own product development - most geeks know that there isn't a much faster way to fame and (possible) fortune then adding "hooks" into the software API (application programming interface) to allow users to code their own piggy-back applications (just look at Google Map hacks). Everyone wants to be like Google. So reading how a humble little product like Lego is showing everyone - and I mean everyone - how it's really done is a treat. Maybe we'll start seeing manufacturers wanting to be more like Lego and read more stories of consumers becoming product developers."

What's interesting is that Lego has apparently whole-heartedly embraced consumer-generated innovation, despite the obvious intellectual property risks:

"Lego's Danish brain trust soon realized that their proprietary code was loose on the Internet and debated how best to handle the hackers... Some Lego executives worried that the hackers might cannibalize the market for future Mindstorms accessories or confuse potential customers looking for authorized Lego products.

After a few months of wait-and-see, Lego concluded that limiting creativity was contrary to its mission of encouraging exploration and ingenuity. Besides, the hackers were providing a valuable service. "We came to understand that this is a great way to make the product more exciting. It's a totally different business paradigm -- although they don't get paid for it, they enhance the experience you can have with the basic Mindstorms set."

Rather than send out cease and desist letters, Lego decided to let the modders flourish; it even wrote a "right to hack" into the Mindstorms software license, giving hobbyists explicit permission to let their imaginations run wild. Soon, dozens of Web sites were hosting third-party programs that helped Mindstorms users build robots that Lego had never dreamed of: soda machines, blackjack dealers, even toilet scrubbers. Hardware mavens designed sensors that were far more sophisticated than the touch and light sensors included in the factory kit. More than 40 Mindstorms guidebooks provided step-by-step strategies for tweaking performance out of the kit's 727 parts."

For BMW's Chris Bangle, imitation is the sincerest form of flattery

Thursday's Wall Street Journal (print edition only) featured a glowing piece on BMW's head designer Chris Bangle (one of the panel speakers at last month's FORTUNE Innovation Forum), who has finally been vindicated for his cutting-edge designs:

"Trashed by critics just a few years ago, BMW chief designer Chris Bangle is experiencing a pleasant reversal of fortune at this week's Detroit Auto Show. Mr. Bangle, a 49-year-old American, was pummelled by BMW fans and auto journalists after the German car maker restyled its flagship 7 Series sedan in 2001 with sculpted curves and contours. The car's bulbous trunk was ridiculed as the "Bangle butt," and thousands signed an Internet petition imploring BMW to "Stop Chris Bangle.

But at this year's North American International Auto Show, designs resembling Bangle's work are cropping up in cars from several BMW rivals, including Toyota Motor Corp.'s new Camry and the Mercedes-Benz S-Class from DaimlerChrysler AG's Mercedes division, both of which sport raised trunks. Suddenly, everyone is trying to do the kind of styling for which the auto journalists criticized the BMW group so badly..."

A few days earlier, the auto enthusiast blog Jalopnik also wrote about the changing perceptions of BMW's Bangle. Apparently, his innovative thinking about automobile design was just a few years too early for popular acceptance:

"Propellerhead design guy Chris Bangle’s earned his fair share of grief over BMW’s most recent aesthetic direction. And even he admits that he could’ve picked a better name than “flame surfacing” for the look of the latest Bimmers. We also think the 6-Series is ugly. But having said that, we think that Bangle’s one of the most fascinating, divisive and influential figures on the automotive scene today, so the morning speech that Bangle was scheduled to give was probably our #1 must-attend of the whole two-day press hoopla fête thing...

Bangle, on the other hand, seems to be an exploratory mind; pointing out that automobiles were in their baroque period a half-century into their existence; using architecture as the yardstick that drives car design. He then equates the flame-surfaced Bimmers with the Bilbao Guggenheim. He goes on explain that surface is a cardinal tenet of designing automobiles; that “Surface is really structure revealed.” Which, given high-end rod shops’ penchant for metalfinishing and repetitive block-sanding of coats of paint, makes sense, because in that realm, the surface dictates to the viewer what the structure underneath is, even if that’s an illusion."

Posted by dominic at 10:27 AM | Recommend this! | +dlc | +dig

Revolutionary thinking: what scientists can teach you about innovation

MIT World has posted a number of interesting innovation-themed videos that are available on-demand from MIT. There's a lecture from Eric Von Hippel (a guest speaker at the recent FORTUNE Innovation Forum) on the topic of "Democratizing Innovation," for example. And there's a 1 hour, 30 minute video called "The Power of Revolutionary Thinking: What Today's Scientists Can Teach You About Driving Innovation In Your Organization." The video, moderated by Alf Nucifora of the Nucifora Consulting Group, features a number of innovative scientists who explain how they made truly breakthrough discoveries as the result of revolutionary thinking:

"Do you ever wonder how the really BIG ideas happen? From DaVinci and Einstein to Edison and Henry Ford: all made monumental advances through revolutionary thinking. Whether you're a scientist, intrepreneur, entrepreneur or corporate strategist, real success and real impact will come from your organization's ability to deliver quantum leap-style thinking that promotes advances in technological innovation and products that boost bottom line results. But how do you do this? How can you become a REVOLUTIONARY thinker? [...] "The Power of Revolutionary Thinking" will feature a panel of visionary researchers who will explore how organizations, both large and small, can use revolutionary thinking to enhance the innovation process, and show us how advanced concepts go from far-off vision to becoming part of our everyday lives."

Posted by dominic at 10:16 AM | Comments (250) | Recommend this! | +dlc | +dig

Lights, camera, espresso! Starbucks gets into the movie business

After launching an innovative digital music strategy for its coffee customers, it looks like Starbucks is preparing to enter the Hollywood film industry. The company just inked a "sweeping promotional deal" for an upcoming film (Akeelah and the Bee) and it looks like other film deals are on the way. TheStreet.com has more details:

"Starbucks has made another leap into its role as a marketing powerhouse for the entertainment industry. The java giant said Thursday that it is partnering with film studio Lions Gate Entertainment to jointly market and distribute the upcoming film Akeelah and the Bee. This marks Starbucks' first foray into the film business, but the company has already proved its mettle as a marketing force in the music industry by selling exclusive albums from the likes of rock legend Bob Dylan in its chain of 5,000 coffee shops in the U.S."

Yesterday's Wall Street Journal (sorry, print edition only) had the best coverage of the story, highlighting the role that Kenneth Lombard, the head of Starbucks' entertainment division (and a guest speaker at the recent FORTUNE Innovation Forum), played in signing the movie deal. Lombard, of course, was a key figure in Starbucks emerging as a key force in the music industry, helping the company get into the business of producing, promoting and distributing CDs. The Wall Street Journal explains the role of Kenneth Lombard in the new venture:

"To oversee movies, Mr. Lombard hired Nikkole E. Denson, formerly president of Magic Johnson Entertainment and, previously, Magic Hallaway Pictures. As director of business development in Starbucks Music and Entertainment, she is responsible for screening projects, including scripts, and will take a lead role in submitting prospective projects to Messrs. Lombard and Schultz."

So what will Starbucks do for the film (about an 11-year-old African-American girl from South Los Angeles)? There won't be life-sized posters of the film's actors in Starbucks cafes, says Lombard. However, the company will hold advance screenings for some holders of Starbucks cards, as well as some of its baristas. Starbucks will also run trailers of the film over its in-store Wi-Fi network. Finally, stores will begin selling DVDs of "Akeelah" as soon as August - approximately four months after the film opens on 2,000 screens nationwide. It is also likely that Starbucks will promote the film on the coffee cup sleeves used by patrons.

Posted by dominic at 7:26 AM | Recommend this! | +dlc | +dig

The World Economic Forum embraces innovation, creativity and blogging

For the first time ever, this year's World Economic Forum in Davos (January 25-29) will feature a separate track of panels and discussions dedicated to innovation and creativity. Stay tuned for more coverage of the event and the "Creative Imperative" via the ForumBlog - the official blog put together by the organizers of the World Economic Forum. Among those blogging the conference: Loic Le Meur (a French entrepreneur), Bruce Nussbaum, and Thomas Crampton, a Paris-based reporter for the International Herald Tribune.

Posted by dominic at 6:48 AM | Recommend this! | +dlc | +dig

Mexican Coke and the perils of ignoring your customers

Wednesday's Wall Street Journal had a great article ("U.S. Thirst for Mexican Cola Poses Sticky Problems for Coke") illustrating the perils of ignoring customer preferences. (link via The Arizona Republic) As Chad Terhune describes in the WSJ article, Coke has been ignoring the demands of its Hispanic customers in the U.S., who prefer the taste of "Mexican Coke" (Coca-Cola bottled in Mexico and made with cane sugar rather than high-fructose corn syrup) to U.S.-made coke (which tastes worse and comes in cheap-looking cans). In one example cited in the article, a Latino supermarket near Atlanta sells 20 cases of Mexican-made Coke each week, compared to only 5 cases of the cheaper U.S. version. By a 4:1 margin, customers prefer the taste of Mexican-made coke, and also have a deeply-held loyalty to the old-time, curvy glass bottles (rather than the cheaper cans and plastic jugs of U.S.-made Coke). In response, these Hispanic customers have been devising ingenious ways of importing Mexican Coke into the U.S.

Mexican Coke has been a dirty little secret at Coke, which has been increasingly disturbed by the growth of underground supply chains that bypass Coke's established distribution systems. (Think unmarked trucks pulling up with cases of scuffed glass bottles stamped "Hecho en Mexico" in Hispanic communities all across America). Coke calls this underground supply network the work of "bootleggers" and has even complained to the U.S. Customs and Border Protection Agency, but to no avail (the Mexican Coke isn't fake, it's just not officially sanctioned by Coke). As the Wall Street Journal explains:

"The underground business is especially galling to Coke and its bottlers because Coca-Cola Classic sales in the U.S. are down 10% since 2000, and Coke's market share of the $66 billion-a-year industry is at an eight-year low.

Don Knauss, president of Coke's North American operations, calls the bootleg cola "an irritation." He recently assigned a team of executives to fix the problem. "There are a lot of distributors bringing Coke into the U.S. We don't know how big it is," he says. Last year the company quietly started a limited test program to allow the authorized distribution of a small amount of Mexican Coke through one of its U.S. bottlers.

When U.S. bottlers complain about unauthorized Mexican Coke being sold in their territory, Coke investigates. Mart Martin, a Coke spokesman, says the company has successfully filed lawsuits over Mexican Coke in the past, but he declined to elaborate. "We have found, however, that sending draft complaints and cease-and-desist letters to be relatively effective since they serve as a mechanism to inform the unauthorized distributor of the legal issues," he says. Martin says that the importation of Mexican Coke infringes on Coke's trademark and on local bottlers' authorized territories, but "it's not an illegal product." The company also has fined some of its Mexican bottlers for failing to keep their sodas out of the U.S."

So what do you do if you're Coke? Or, for that matter, what do you do at any company when your customers are using your product in ways that you never intended? Do you embrace the customer-centered innovation and hope for a larger piece of the market pie - or do you call in the lawyers and force-feed your customers what they don't want?

UPDATE: Grant McCracken has written a great (and entertaining) post about the Mexican Coke fiasco on his blog. Skip to the end, where he compares the executives of The Coca-Cola Company to (1) the administrators of the Roman Empire and (2) the heads of the Catholic Church. (Hat tip: Niti Bhan)

Posted by dominic at 6:32 AM | Recommend this! | +dlc | +dig

January 12, 2006

Disney's Michael Eisner to host "creativity and innovation" interview program on CNBC

According to MediaBistro's TVNewser, former Walt Disney CEO Michael Eisner has been selected to host an occasional CNBC interview show focusing on innovation and creativity in the business and entertainment sectors. Right now, it looks like the 60-minute show (tentatively called "Conversations with Michael Eisner") will be bi-monthly and prime-time -- if the ratings are huge (or at least, better than the ratings for James Cramer's "Mad Money"), it's conceivable that the show will receive a more regular schedule:

"The long press release [for the show] promises "60 minutes of freewheeling and probing dialogue conducted by one of the most dynamic and accomplished leaders in business." It will focus on the importance of creativity and innovation in all pursuits, from business to politics to entertainment. The program will be seen on CNBC's three global channels. Its U.S. timeslot and premiere date haven't been announced yet. "I can think of no better place for my first new venture than CNBC, which itself is an innovative leader in the ever-changing media world," Eisner says."

Posted by dominic at 11:21 AM | Recommend this! (1) | +dlc | +dig

The best of Indian design and innovation, part II

On her Perspective blog, Niti Bhan has written widely about the evolving world of design and innovation in India, including the process of brand development in India, the engine of innovation in India, and the specific notions of creativity (such as jugaad) that underpin Indian innovation.

Over the past 12 months, Niti has also provided a wealth of links to other bloggers and intellectuals who are contributing to the conversation about the future of Indian design and innovation, such as Neelakantan and Amit Varma. Below, I've packaged together some of Niti's "must-read" blog postings and links to other innovation thinkers:

"BEST OF" Indian design and innovation:

Brand India and the Blogosphere [Neelakantan's Interim Thoughts blog]
The Myth of Indian Liberalization [Amit Varma's India Uncut blog]
Does Thomas Friedman's Flat World Theory Apply to India? [Jagdish Bhagwati via Yale Global]
Charles Eames on design in India [National Institute of Design]
China: India :: Walmart: Target [Grant McCracken]
The Bottom of the Pyramid framework [C.K. Prahalad]
The comparative strengths of India, China and the USA [Sunil Sudhakaran]
The Argumentative Indian [Amartya Sen]
India 2020: A vision for the new millennium [Dr. A.P.J. Abdul Kalam]
Why the 21st century will be India's [Pavan K Varma]

[graphic: Indian design firm Design Directions]

Posted by dominic at 11:06 AM | Comments (1) | Recommend this! | +dlc | +dig

The Destruction of Kaizen

If you're looking for a band with a cool-sounding name, check out Destruction of Kaizen on MySpace.com (i.e. the company Rupert Murdoch acquired for $580 million last year). There are five tracks to play and download from the band, all of which have the same objective: Destroy Kaizen!!!

Lest you think the band knows nothing about innovation, there's also a brief summary of Kaizen on the site:

"A Japanese term that means continuous improvement, taken from words 'Kai' means continuous and 'zen' means improvement. Some translate 'Kai' to mean change and 'zen' to mean good, or for the better. The same Japanese words Kaizen that pronounce as 'Gai San' in Chinese mean: Gai= The action to correct. San= This word is more related to the Taoism or Buddhism Philosophy in which give the definition as the action that 'benefit' the society but not to one particular individual. The quality of benefit that involve here should be sustain forever, in other words the 'san' is an act that truely benefit the others."

Posted by dominic at 7:01 AM | Recommend this! | +dlc | +dig

Joyce Wycoff launches the Innovation Book Club

Renee Hopkins Callahan of IdeaFlow points out that Joyce Wycoff of the Innovation Network has launched a Web-based innovation book club:

"Out of a list of 90 best-selling books related to innovation, twelve were chosen by a group of avid readers and innovation practitioners as the must-read list for 2006. It was a difficult choice but these special books were chosen for their ability to stimulate thought and offer practical tools and techniques to help make participants more productive advocates and leaders of innovation."

Via the [innovation book club] blog and emails, book club members will have access to reviews, Q&A sessions with the authors, weekly emails with insights and highlights from the books, and readers' guides that will offer great discussion questions to help you integrate the book content with your specific situation. Also, participants will be able to make comments via the blog.

There are two ways to participate: You can join the book club today and start organizing your own discussion group ... or just participate in the online discussion."

It certainly sounds like a great way to meet other individuals who are passionate about innovation. The reading list includes classics like Malcolm Gladwell's The Tipping Point as well as buzz-worthy books like The Ten Faces of Innovation and Blue Ocean Strategy. Joyce Wycoff was one of the guest bloggers at the FORTUNE Innovation Forum in December and was featured in an exclusive Fortune Business Innovation blog Q&A about innovation on November 18.

Posted by dominic at 6:29 AM | Recommend this! | +dlc | +dig

Robots capable of innovation... almost

We Make Money Not Art (via Robot Gossip and BBC News) has a profile of U.K. robots that can reason about change and then adapt, as it receives more information:

"The robot, named IFOMIND, combines learning and reasoning to decide the best way to interact with objects, a bit like an animal may react to another it has not previously seen.

Initially reacting in a 'fearful' manner when encountering a new object, IFOMIND has also been equipped with inquisitiveness. The robot recognizes it can react in different ways and does not have to be scared of something which may not be harmful to it.

The IFOMIND mobile robot system is equipped to wait and watch in order to see if it can get some new information. It can then retain this information as it carries on and meets more objects.

The techniques can be used in devices such as household equipment or cars, large scale production control systems or complex adaptive software systems."

[photo: BBC]

Posted by dominic at 6:00 AM | Recommend this! | +dlc | +dig

January 11, 2006

IBM's coverage of last month's FORTUNE Innovation Forum

On the home page of IBM's On Demand Business site, there's a link to an exclusive video from the FORTUNE Innovation Forum. The "Is Innovation Still America's birthright?" video is from a panel discussion featuring FORTUNE's David Kirkpatrick as well as Linda Sanford of IBM, Shantanu Narayen of Adobe and strategy guru John Hagel as they discuss whether or not America's innovators are keeping pace with those in India and China.

In response to a question from David Kirkpatrick about the implications of America losing its position as the leading global innovator, IBM's Linda Sanford describes the changing nature of global innovation:

"I think when you think about where the world has moved to, it is all about innovation, in my mind, that matters, and I think that is what will distinguish us, has distinguished us here in the United States and I think we will continue to do that.

What I mean by that is that it is not just technology for its own sake – it is technology that gets applied to solving real business problems. I am a mathematician by background, so my little equation says it is invention, which might be the next great technology, plus insight, business insight is where real innovation is going to come from.

You need to be able to have relationships, not just within your own business, but outside of the four walls of your business, and it is going to be more and more multidisciplinary, not just within any particular, you know, functional area, but literally bringing together an ecosystem of what might seem like unrelated parties that really will come together with a different perspective that will yield the true breakthrough innovations.

So am I worried (about America's ability to innovate)? I am worried that we won’t get there fast enough and it is a sense of urgency that we need to continue to drive here. But I do believe that we are looking at it in a different way today, in a way where innovation matters, not only for our businesses, but for the world in general."

On the IBM site, it's also possible to download a podcast of the panel discussion and read the full transcript from the panel discussion as a PDF document.

Also, check out the link for Linda Sanford's new book - Let Go to Grow: Escaping the Commodity Trap.

Posted by dominic at 2:15 PM | Recommend this! | +dlc | +dig

Niti Bhan's tour of Indian design and innovation, part I

By now, everyone knows that India is an outsourcing giant with world-class organizations dedicated to business process outsourcing. But did you know that India also has a number of world-class design and innovation institutions? In this special post for the Fortune Business Innovation blog, Niti Bhan, who writes about design and innovation on her Perspective blog as well for Core 77, shares some thoughts on the "must-see" destinations in India for any Western executive curious about the current state of Indian innovation. According to Niti, cities such as Ahmedabad and Pune - usually overlooked by traditional business publications in any discussion of the future development of the Indian economy - have as much (or more) to offer than Delhi or Mumbai:

Ahmedabad is not as well known globally as the major metros of Delhi, Mumbai, Calcutta or the erstwhile Silicon Valley of India, Bangalore. Yet, Ahmedabad, in the western state of Gujurat, should not be missed. Home to outstanding educational institutions, noteworthy historic and contemporary architecture and of course, Mahatma Gandhi's ashram on the banks of the river Sabarmati, Ahmedabad also has the distinction of being under Prohibition for Gujurat is India's only 'dry' state.

The Indian Institute of Management, whose graduates are ranked globally with MBAs from Wharton, Harvard and Stanford, is located in a distinctive red brick campus designed by Louis Kahn. CK Prahalad, a globally-recognized management professor at the University of Michigan, is an alumnus. Recently, Professor Anil K. Gupta made news with his work on grassroots innovation and rural development through the National Innovation Foundation.

The National Institute of Design was begun under the auspices of the Ministry of Industry, when Jawaharlal Nehru, India's first Prime Minister, invited Charles and Ray Eames to write a white paper on the role of design and India's development. Yet another Louis Kahn red brick building, NID is situated on the banks of the Sabarmati, across from the Tagore Hall, which was designed by Le Corbusier. This same design philosophy underpins India's soon-to-be-ratified National Design Policy, formulated to stimulate innovation and competitiveness in Indian industry. NID will be positioned and developed into a "National Center for Excellence" - a model for design and innovation in India. SAP supports Enterprise Software Usability Research.

Pune is a major industrial center, rapidly competing with Bangalore to become India's innovation and design hub. It is home to one of the world's largest two-wheeler manufacturers (Bajaj Auto) and the world's second largest forge - Bharat Forge Ltd. It is also home to Kinetic Engineering, Force Motors (previously known as Bajaj Tempo), India's largest car manufacturer (Tata Motors) as well as DaimlerChrysler's assembly line for Mercedes Benz. Whirlpool, LG, Frito Lay and Coca Cola all have manufacturing plants in Pune. Emerson's global design center is here and both Deere & Co and Dana have moved their engineering and design operations to Pune. A three hour drive from Mumbai, Pune also has the highest per capita income in India.

The Engineering Research Center at Tata Motors is home to 1400 scientists and engineers dedicated to product and process development, technology upgradation and new product introduction. Tata Motors has the unique distinction of giving India its first and only indigenously built passenger car - the Tata Indica - and its premium feature sedan - the Tata Indigo. These milestones among others led to Ratan Tata, the Chairman of Tata Group, being recently awarded the NID/BusinessWorld Lifetime Achievement Award for Design in December 2005.

Tata Technologies is a Tata subsidiary offering automotive engineering and design globally to GM, Ford, DaimlerChrysler, Toyota, Volkswagen and Honda from a dedicated facility in Pune. If you're looking to source innovation and design services from India in automotives, this is the place to start.

The three largest design studios offering award winning industrial and product design as well as branding strategy and visual communications were all founded by NID graduates: Onio Design (Branding, Interaction and Product design), Design Directions (Industrial design with focus on industrial and medical equipment), and Elephant Design (which recently overhauled the brand strategy and corporate identity for Bajaj Auto).

And finally, Bangalore. No introduction is required to the city which has put India on the global map and is home to SAP Labs, Microsoft Research and HP Labs. The city also hosted the Doors of Perception East event in 2003.

The Indian Institute of Science (IISc) in Bangalore can be truly described as India's intellectual powerhouse in science and technology. Founded by JN Tata in 1909, IISc has contributed in a significant way towards the scientific and technological growth of India as also producing outstanding individuals to manage institutions, industries, and business houses.

Associated with the Institute is the Society for Innovation and Development, which was founded in 1991 to create a channel to help and assist industries compete effectively in the face of global competition, turbulent market conditions, and rapidly evolving technologies. Nokia, Nortel, Microsoft and GM among others support research initiatives.

Srishti College of Art, Design and Technology, established in 1996, is India's only academy offering Fine Art and Design education under the same roof. At Srishti, New Media Arts is a cutting-edge realm that emerges from the convergence of art, design and technology.

A number of Indian design firms also have set up shop in Bangalore: Icarus Design (Branding, Packaging and Industrial Design), Idiom (possibly India's largest design consultancy, with a team of 110 and ambitions to rival IDEO), and Tata Elxsi (a global BPO with 5000 employees serving animation, entertainment, design drafting and prototyping as well as design engineering).

Posted by dominic at 11:25 AM | Comments (77) | Recommend this! | +dlc | +dig

Promoting cross-discipline innovation

Lee Chazen of the Right Brain World blog highlights the importance of cross-discipline thinking when it comes to innovation:

"Creative thinkers are always looking for combinations of new things – which is why it is a disservice to put up lines or barriers to new solutions and ideas. An idea in engineering could answer a question that an educator or entrepreneur has, and a mathematician could provide insight to a psychologist or web designer. By rewarding creativity and innovation across the board, wherever it occurs, the possibilities for new combinations and solutions increases greatly."

In support of this idea, Right Brain World offers the following quote from Buckminster Fuller:

"We are on a spaceship; a beautiful one. It took billions of years to develop. We're not going to get another. Now, how do we make this spaceship work?"

Posted by dominic at 7:40 AM | Recommend this! | +dlc | +dig

Paul Saffo's 7 Rules of Forecasting

At CIO Magazine's CIO|06 The Year Ahead conference in Phoenix, Paul Saffo of the Institute for the Future outlined seven rules for forecasting the future. As James McGee points out on his McGee's Musings blog, "[The 7 rules] are worth having handy if you find yourself in a position to have to make some bets on what might happen next..." I might add that the rules are also handy to keep around in January, when people are expecting oracle-like predictions for 2006. Be sure to check out McGee's Musings for a detailed explanation of these rules as well as some cool graphs highlighting the ideas.

Rule 1. Know when not to make a forecast.

Rule 2. Overnight successes come out of twenty years of failure.

Rule 3. Look back twice as far as forward.

Rule 4. Hunt for prodromes (i.e. early indicators).

Rule 5. Be indifferent.

Rule 6. Tell a story or, better, draw a map.

Rule 7. Prove yourself wrong.

[graphic: McGee's Musings]

Posted by dominic at 7:34 AM | Recommend this! | +dlc | +dig

New Kauffman report on Collaborative Advantage

The Kauffman Foundation has published a 9-page Collaborative Advantage report, which argues that global collaborative initiatives should be part of America's long-range innovation strategy. Instead of seeking "competitive advantage," governments, universities and "other major players in the U.S. innovation system" should be searching out possible sources of "collaborative advantage":

"Responding to signs the U.S. is losing its monopoly in high technology, policymakers are calling for new measures to increase the number science and technology graduates and increase R&D investment. A new report, sponsored in part by the Kauffman Foundation, argues that policymakers are failing to recognize distinctive aspects of the emerging global economy.

The researchers from Case Western Reserve University in Cleveland and the Urban Institute in Washington, D.C., studied engineering in multinational corporation home countries and in emerging economies. Their findings suggest that the U.S. cannot expect to match the numbers of engineers being trained in India and China, and it is not clear how much benefits to U.S. firms will help the U.S. economy. Instead, the report argues that the U.S. should seek "collaborative advantage" by developing a new role in the global technology system by training "global engineers," supporting research where there is true comparative advantage, and developing mutual-gain partnerships."

Posted by dominic at 6:55 AM | Recommend this! | +dlc | +dig

January 10, 2006

Five tips for managing a creative organization

In yesterday's segment of the Wall Street Journal's "Boss Talk" series, Viacom CEO Tom Freston discusses the breakup of the "old" Viacom into CBS and the "new" Viacom and provides the following five tips for managing creative organization:

(1) Put great creative people at the top

(2) Ensure ideas flow from the bottom up with a minimum of hierarchy

(3) Maniacally know your audience

(4) Hire passionate, diverse employees

(5) Have a lot of fun

Tom Freston, of course, is the Viacom executive who oversaw the company's "I Want My MTV" marketing campaign during the early 1980's (you know, back when MTV actually had music videos) and later ran MTV Networks, a family of cable channels that includes Comedy Central and Nickelodeon (home of SpongeBob SquarePants and Dora the Explorer).

[image: NYU Stern]

Posted by dominic at 4:11 PM | Recommend this! | +dlc | +dig

Linda Sanford's new book on innovation and commoditization

Linda Sanford of IBM, one of the guest speakers at last month's FORTUNE Innovation Forum, has just published a new book on innovation called Let Go to Grow: Escaping the Commodity Trap.

On his IBM blog, colleague Irving Wladawsky-Berger recently posted a glowing review of the new book:

"The book's basic premise is that the Internet, globalization, and deregulation have given rise to an ultra-competitive marketplace in which many products and services have become commodities. It then presents a sequence of management principles to not just help a company survive the commodity threat, but actually turn it into a growth opportunity by letting go of outdated business models and management systems and bringing innovation into all aspect of the business. I have worked closely with Linda for many years now, and can attest without hesitation that when it comes to business transformation, she knows what she is talking about from first hand experience

[...]

Let Go to Grow is a handbook, based on real experiences, on how to transform a business based on such principles. It acknowledges how difficult it is for a business to change, even when it has no choice, which accounts for the high proportion of companies that do not survive over time. You are asking a business, its management and overall workforce to change its very culture, which in all likelihood is the same culture that has accounted for its success in the past. Leadership is absolutely necessary, both to articulate the vision and need for change, and to operationalize the vision and link it to execution.

Let Go to Grow is a relatively short, easy to read book. It presents its principles and advice in concrete, simple language. It is a book that everyone interested in understanding the business environment in the 21st century and what to do about it should read."

Posted by dominic at 7:08 AM | Comments (1) | Recommend this! | +dlc | +dig

An open innovation model for open source

PhysOrg reports that IBM has joined with three other technology companies, seven universities and the Ewing Marion Kauffman Foundation to adopt guiding principles to speed collaborative research for open source software. According to a statement by the 12 participants involved in the open collaboration effort, "These principles will speed innovation and contribute to open source software research, thus enabling the development of related industry standards and greater interoperability, while managing intellectual property in a more balanced manner." The collaboration effort is an outgrowth of a recent university and industry Innovation Summit co-sponsored by IBM and the Kauffman Foundation.

Orange Yeti has a list of the organizations involved: in addition to IBM and Kauffman, there's Stanford, Carnegie-Mellon, Cal-Berkeley, Cisco, HP and Intel. Oh, and the national champion Texas Longhorns are also part of the mix.

Posted by dominic at 6:52 AM | Recommend this! | +dlc | +dig

Guy Kawasaki's 9 Truths about Innovation

On his Let the Good Times Roll blog, Guy Kawasaki weighs in with the nine (not necessarily self-evident) truths about the art of innovation:

1 - Jump to the next curve
2 - Don't worry, be crappy
3 - Churn, baby, churn
4 - Don't be afraid to polarize people
5 - Break down the barriers
6 - "Let a hundred flowers bloom"
7 - Think digital, act analog
8 - Never ask people to do what you wouldn't do
9 - Don't let the bozos grind you down

Posted by dominic at 6:37 AM | Recommend this! | +dlc | +dig

January 9, 2006

The attack of the creative swarm

Ideas about the wisdom of crowds and emergent intelligence popularized by the likes of James Surowiecki and Steven Johnson continue to gain traction. Over at Information Today, Barbara Brynko catches up with Peter Gloor, author of the recently published Swarm Creativity: Competitive Advantage Through Collaborative Innovation. According to Gloor, a collaborative innovation network is a "cyberteam of self-motivated people with a collective vision, enabled by technology to collaborate in achieving an innovation by sharing ideas, information, and work." By extension, swarm creativity is what results when such a a group works together and exchanges ideas. Interestingly, Gloor points out there may be similarities between creative swarms and phenomena found in nature:

"Swarm creativity is like a beehive or ant colony. It may look chaotic from the outside, but everyone has a job, knows what to do, and does it."

[image: eyeinastoria via flickr]

Posted by dominic at 12:33 PM | Recommend this! | +dlc | +dig

Help Gap come up with an innovative strategy (the Sarah Jessica Parker strategy didn't work)

On Page A1 of Friday's Wall Street Journal (link from Pittsburgh Post-Gazette), Amy Merrick had a great profile of how the Gap retail chain has been trying to come up with an innovative business strategy for at least the last 14 months. Along the way, the company has tried just about every trick in the book (see below) to reverse an earnings slump that has persisted for nearly three years. Yet, despite all these efforts, the company's stock price was still down 16% in 2005.

The current strategy? Gap is placing a big bet on a system-wide store makeover strategy, in the hopes that becoming "more like the neighborhood Starbucks" will make Gap a must-visit retail destination once again. That means dark wood floors in place of beige floors, new lighting arrangements, comfy couches in the store (to encourage shoppers to hang out), and handwritten chalkboards in all Gap stores (to give each store an individualized, personalized touch).

In other words, instead of coming up with a truly innovative strategy, the Gap management team decided that the only option was to mimic Starbucks and hope for the best. What's next, a digital music kiosk in each Gap store, a la Starbucks? Wi-Fi access? Maybe I'm not giving the Gap enough credit, but if a Sarah Jessica Parker ad campaign failed to ignite sales at the Gap by appealing to "Sex and the City" hipsters, I don't think dark wood floors will do much either.

Any ideas out there about an innovative strategy Gap could pursue?

For those without access to the print edition of the Wall Street Journal, the article highlighted seven different steps that Gap has already taken to develop an innovative corporate strategy:

STEP #1: Cut costs, trim debt and tighten up the corporate ship (not so innovative!)

STEP #2: Bring in new management and a new CEO (Paul Pressler)

STEP #3: Change the colors, styles and product mix of the clothing in the stores in the hopes of tapping into a new demographic

STEP #4: Create a new funky position (VP of Brand Store Experience) and hire a young turk (in this case, a 33-year-old former surfer) to make the store experience more customer-friendly

STEP #5: Look outside the corporation for cool new ideas, in places ranging from the Tate Museum in London to the Kennedy Space Center in Florida (this, of course, required a "whirlwind, worldwide tour" and a hefty corporate expense account to understand different kinds of customer experiences)

STEP #6: Form a project team to categorize all the findings from Step #5 and decide which ones would work within the retail industry

STEP #7: Settle on a role model - Starbucks - to guide the roll-out of the creative new ideas

In general, there's nothing wrong with the process followed by the Gap. Each step (#1-7) became progressively bolder over time, as the company started to panic. In the end, though, the company adopted a strategy of mixing and matching from various retailers to come up with the final strategic recommendations. For some reason, it was the dark wood floors that seemed to matter the most. "Honestly, one of the biggest questions was a dark wood floor," reiterated the VP of Brand Store Experience.

[photo credit: "Sarah Jessica Plateglass" on Flickr]

Posted by dominic at 10:50 AM | Comments (1) | Recommend this! | +dlc | +dig

What US innovators can learn from Finland

There's a lot that American innovators can learn from Finland, according to William Brody, the president of Johns Hopkins University. As Brody explains, Finland has leveraged high-level government support of education and scientific research to spur innovation and economic development:

"We seem to be forgetting what made us great, just as other countries are catching on. In 2005, The World Economic Forum at Davos named the world’s most competitive economy: Finland.

Who? It wasn’t until Nokia surpassed Motorola and Japanese competitors to become the leading cell phone maker that the media paid much attention to Finland. But now we have come to discover that Finland is a world-class competitor. Two factors in particular support the Finns’ achievements. First, they have what is largely acknowledged to be the best educational system in Europe. Finnish students, when tested, are the world’s best readers and among the best in science and math. The second factor is that the Finns have an extraordinary commitment to research and development.

Through government and private industry, the Finns devote 3.5 percent of their gross domestic product to R&D, almost a full percentage point more than the total U.S. private and public research investment (which is 2.6 percent of GDP) and nearly double the average for Europe as a whole.

The lesson of Finland is the same lesson the United States taught the rest of the world in the past 50 years: Investment in education combined with investment in research and discovery pays enormous returns. I believe—and studies show— that national investment in education and R&D is probably the single best way we can address some of the most persistent and difficult challenges facing our nation today."

[image: Nokia]

Posted by dominic at 9:01 AM | Recommend this! | +dlc | +dig

Does Google have enough innovative ideas to justify a stratospheric stock price?

On Saturday, the New York Post featured the predictions of a Wall Street stock analyst who came up with a $2,000 stock price target for Google. That, of course, would put Google's stock price in Berkshire Hathaway territory.

Since Google's stock is currently trading around $465/share, what would it take to reach a $2,000 stock price target? Since stocks are valued to a large extent on expected future cash flows, the $2,000 price target assumes an almost limitless profit potential for Google and the ability to create lots of innovative new business lines capable of throwing off cash. The $2,000 number is so high, though, that even bubble-licious Internet analysts are a bit skeptical. Currently, Goldman Sachs has a $500 price target on the stock, while Piper Jaffray analyst Safa Rashtchy recently set a $600 price target.

Anyway, if you're not from New York, you may not be familiar with the editorial style of the New York Post. In addition to outlandish headlines ("Headless Body Found in Topless Bar"), the tabloid specializes in Photoshopped pics of newsmakers. Hence, the Google cheerleaders cheering on Google to ever higher levels of business success!

[graphic: New York Post]

Posted by dominic at 8:24 AM | Recommend this! | +dlc | +dig