Monday, December 20, 2010

Billion-dollar Ideas: Finding Tomorrow’s Growth Engines Today

To create growth in uncertain times, use this disciplined and market-focused methodology. It can help you discover and distill attractive new ideas and build a business case for implementing the best of them.

by Greg Lavery and Chris Manning

Fabulous insight!!!!!!

"After several years of survival mode for many companies, growth is back on the agenda. But the requirements for success have changed. In today’s conditions — uncertain recovery, limited capital, and many new competitors — companies must find new ways to grow.
There’s no going back to the growth ideas that were bouncing around the organization before the global financial crisis. Executives need a robust framework to help them rapidly develop a long list of opportunities and then choose the very best ideas from it. The process must be comprehensive, efficient, rigorous, collaborative, and focused on “market-back” opportunities designed to meet customers’ needs. And it must be bold — the company must resist the temptation to do what has been done in the past.
Booz & Company has created a methodology for this, based on five lenses used for evaluating growth strategies. The five lenses — share of wallet, new regulations, technology and applications, distinctive capabilities, and business models — represent discrete and complementary ways to find and judge unconventional and unseen ideas. This approach has already been used successfully by companies in many industries and geographies."

Monday, December 13, 2010

Deep Change: How Operational Innovation Can Transform Your Company

by Michael Hammer

Breakthrough innovations in operations—not just steady improvement—can destroy competitors and shake up industries. Such advances don’t have to be as rare as they are. > April 2004

We spend a lot of time in our work on driving organic growth on innovation. What does that mean? The formal definition of innovation is “the act or process of inventing or introducing something new” which is normally applied to new products or services. This article offers tremendous insight into how operational innovation can lead to substantial growth. The key is creating competitive separation, i.e., creating separation between you and your competitors in the eyes of your customers. Anecdotally, one could argue that is may be more difficult for your customers to match gains from operational innovation since it usually involves a whole system than innovating in products or services.

"In 1991, Progressive Insurance, an automobile insurer based in Mayfield Village, Ohio, had approximately $1.3 billion in sales. By 2002, that figure had grown to $9.5 billion. What fashionable strategies did Progressive employ to achieve sevenfold growth in just over a decade? Was it positioned in a high-growth industry? Hardly. Auto insurance is a mature, 100-year-old industry that grows with GDP. Did it diversify into new businesses? No, Progressive’s business was and is overwhelmingly concentrated in consumer auto insurance. Did it go global? Again, no. Progressive operates only in the United States.....

....The secret of Progressive’s success is maddeningly simple: It outoperated its competitors. By offering lower prices and better service than its rivals, it simply took their customers away. And what enabled Progressive to have better prices and service was operational innovation, the invention and deployment of new ways of doing work.

Operational innovation should not be confused with operational improvement or operational excellence. Those terms refer to achieving high performance via existing modes of operation: ensuring that work is done as it ought to be to reduce errors, costs, and delays but without fundamentally changing how that work gets accomplished. Operational innovation means coming up with entirely new ways of filling orders, developing products, providing customer service, or doing any other activity that an enterprise performs."

Thursday, December 09, 2010

How Learning Leads to Results
Matthew E. May, author of The Shibumi Strategy: A Powerful Way to Create Meaningful Change, introduces a passage on the critical role of a learning focus in innovation from The Other Side of Innovation: Solving the Execution Challenge, by Vijay Govindarajan and Chris Trimble.

This article is fabulous and underscores our work that the innovation process is one of constant learning and adapting.

"Learning and innovation cannot be separated. That’s why low-resolution prototyping is a critical part of the innovation process, because every savvy designer knows that before anyone can improve or innovate anything, learning must take place. In fact, there isn’t a successful design firm in the world that doesn’t elevate to gospel the “fail fast and learn” principle.
Although learning and innovation are closely linked, learning comes first. The great innovators understand that it is learnership that results in leadership....

...Learnership is all about the beta. It is an acquired capability, a teachable discipline. It requires developing a strong skill and a sound process. In this passage, Govindarajan and Trimble provide a precise and valuable definition of learning — and a reason that innovators should pay attention to it.
— Matthew E. May....

..When we speak with executives about the overriding importance of learning from experiments, we sometimes sense a degree of impatience. The overwhelming goal, in the minds of some, is not learning; it is results. Learning is a soft and squishy objective; results, on the other hand, are what business is all about.

We sympathize with that point of view. Learning, as an outcome, can sound like a consolation prize. “Sorry that the project failed, boss, but let me tell you, we learned a ton.” We get it. With innovation, however, placing primary focus on learning rather than results actually leads to better results.

We are not talking about learning in a general, feel-good sense. We are talking about a very specific type of learning. For our purposes, learning is the process of turning speculative predictions into reliable predictions"

Monday, November 29, 2010

Trend watching—the growing power of emerging markets

Very interesting!!!!

"Now that virtually the entire world has joined the consumer arena, prepare for an avalanche of new brands, entrepreneurs and innovations from ‘emerging’ markets that will have global potential and appeal. From aggressive Chinese brands to Turkish creatives to Brazilian apparel, we're seeing a sharp increase in world-class companies that can and will compete for consumers’ Dollars, Reais, Euros, Pounds, Rupees, Rands, or Liras.

Sure, the expansion of global markets creates new opportunities for existing well-known brands, but the real story of the rise of these new powerhouses is the new brands that are making waves, both within their domestic markets, but increasingly outside these, competing and even beating the established, entrenched incumbents at their own game. One thing's for certain – the range of brands that consumers covet will be even more diverse in twenty, ten or even five years.

Why Now:
• Both consumers and brands in emerging markets are rapidly getting wealthier, more sophisticated, more mobile, and more educated. Side effect: an abundance of confidence, enthusiasm, creativity, and entrepreneurialism.
• Many emerging markets (minus China) have younger populations, and will not be confronted with ageing populations for a long time to come, meaning an endless source of young entrepreneurs as well.
• Brands from emerging markets are well positioned to cater to other booming emerging markets, while they may be perceived around the world as less arrogant, too. On top of that, they are less hindered by too many legacy systems and thinking.
• Emerging markets will soon boast the biggest markets for everything, from cars and beers, to detergents and mobile internet: not a bad environment for innovation to take root

Some obligatory numbers and stats

• Developing economies "have accounted for nearly 70 percent of world growth over the past five years". (Source: Carnegie, 2010.)
• The GDP of Emerging and Developing Economies accounted for 20% of world GDP in 2000, 34% in 2010, and an estimated 39% by 2015. (Source: IMF, 2010.)
• The global emerging middle class now stands at two billion people who spend USD 6.9 trillion a year, a figure which is expected to rise to USD 20 trillion - twice current US consumption - by 2020. (Source: McKinsey, July 2010.)
• Developing countries will account for two thirds of world trade in 2050. (Source: Carnegie, 2010.)
• The GDP of emerging markets will grow to be about 1.3 times the size of advanced economies in 2050. China will be approximately twice the size of the United States in purchasing power parity (PPP) terms. (Source: Carnegie, 2010.)
• India now has more rich households than poor, with 46.7 million high income households as compared to 41 million in the low income category. 62 per cent of Indian households belong to the middle class (Source: National Council of Applied Economic Research, August 2010.)
• 700 million people will start using the Internet in Asia in the next 5 years (Source: McKinsey; September 2010)"

Monday, November 22, 2010

The Global Innovation 1000: How the Top Innovators Keep Winning
Booz & Company’s annual study of the world’s biggest R&D spenders shows why highly innovative companies are able to consistently outperform. Their secret? They’re good at the right things, not at everything.
by Barry Jaruzelski and Kevin Dehoff

The insights embodied in the complete article is a must read!! The following is intended to wet your appetite to read the full paper
"Why are some companies able to consistently conceive of, create, and bring to market innovative and profitable new products and services while so many others struggle? It isn’t the amount of money they spend on research and development. After all, our annual Global Innovation 1000 study has shown time and again that there is no statistically significant relationship between financial performance and innovation spending, in terms of either total R&D dollars or R&D as a percentage of revenues.

What matters instead is the particular combination of talent, knowledge, team structures, tools, and processes — the capabilities — that successful companies put together to enable their innovation efforts, and thus create products and services they can successfully take to market…..
…… Our goal this year is to examine the capabilities needed to maximize the impact of a company’s innovation efforts in good times and bad, and to highlight the benefits both of focusing on the short list of capabilities that generate differential advantage, and of clearly linking the specific decisions within innovation to the company’s overall capabilities system and strategy.

Strategies and Capabilities
Three years ago, in 2007, we focused our annual innovation study on how companies use distinct innovation strategies to create their products and take them to market. Nearly every company, we found, followed one of three fundamental innovation strategies:

Need Seekers actively and directly engage current and potential customers to shape new products and services based on superior end-user understanding, and strive to be the first to market with those new offerings.

Market Readers watch their customers and competitors carefully, focusing largely on creating value through incremental change and by capitalizing on proven market trends.

Technology Drivers follow the direction suggested by their technological capabilities, leveraging their investment in research and development to drive both breakthrough innovation and incremental change, often seeking to solve the unarticulated needs of their customers via new technology.

It is important to note that we found that none of these three strategies were any better than the others at producing sustained superior financial results, although of course individual companies outperform others within each strategic group. The success of each of the strategies depends on how closely companies, in pursuing innovation, align their innovation strategy with their business strategy and how much effort they devote to directly understanding the needs of end-users.

This year we set out to answer two new questions: Which sets of capabilities are the most critical for the success of each of the three strategies? And do companies that focus on those critical capabilities see improved overall financial results? Our hypothesis: Companies that can craft a tightly focused set of innovation capabilities in line with their particular innovation strategy — and then align them with other enterprise-wide capabilities and their overall business strategy — will get a better return on the resources they invest in innovation".

Wednesday, November 17, 2010

Innovation: It Isn’t a Matter of Left or Right

I found this article to be incredibly thought provoking to the degree that I immediately ordered his book (“Where Good Ideas Come From: The Natural History of Innovation”). The title implies implications for politics but it is much broader than that. How companies drive their ideation can be greatly influenced by the learnings of history. The usual model of companies driving innovation for profit is challenged.

A note. Many of you helped in defining the source for the last posting. It is: The Web Is Dead. Long Live the Internet, Wired September, 2010 By Chris Anderson and Michael Wolff

"In my research, I analyzed 300 of the most influential innovations in science, commerce and technology — from the discovery of vacuums to the vacuum tube to the vacuum cleaner — and put the innovators of each breakthrough into one of four quadrants.
First, there is the classic solo entrepreneur, protecting innovations in order to benefit from them financially; then the amateur individual, exploring and inventing for the love of it. Then there are the private corporations collaborating on ideas while simultaneously competing with one another. And then there is what I call the “fourth quadrant”: the space of collaborative, nonproprietary innovation, exemplified in recent years by the Internet and the Web, two groundbreaking innovations not owned by anyone.

The conventional wisdom, of course, is that market forces drive innovation, with businesses propelled to new ideas by the promise of financial reward. And yet even in the heyday of industrial and consumer capitalism over the last two centuries, the fourth quadrant turns out to have generated more world-changing ideas than the competitive sphere of the marketplace. Batteries, bifocals, neonatal incubators, birth control pills — all originated either in amateur labs or in academic environments.

Now-ubiquitous technology like GPS was created by public-sector agencies for its original military use. And most of the building-block innovations that make GPS possible — satellites themselves, or the atomic clocks that let them coordinate their signals so precisely — were first conceived in nonmarket environments.

The fourth quadrant, however, is not locked in a zero-sum conflict with markets. As in the case of GPS, this fourth space creates new platforms, which then support commercial ventures"

Tuesday, November 16, 2010

Always Pushing Beyond the Envelope
NYT, 8/8/2010

This is a great article about two companies, Blockbuster and Netflix. Both pioneered delivery of movie DVD’s to consumers: Blockbuster via mass selling of DVD’s in ubiquitous stores while Netflix via U.S. Mail. The big difference between the two is that Blockbuster never really planned beyond their original business design while Netflix panned for “creative destruction” of their initially innovative business design breakthrough. One just delisted from the S&P 500 while the other is soaring. Guess which is which.
"For Blockbuster, the advent of DVDs in the mail was a disruptive technology. The chain relied initially on bulky videotapes and late fees to generate a fat revenue stream, and its scale was huge; smaller, independent stores gradually left the market. Netflix opened a new battlefront, mailing thin DVDs and letting customers keep a disc as long as they wanted.

Blockbuster saw the change coming. It even took action, setting up its own mail service. But seeds of destruction had been sown, and Blockbuster is now financially troubled. Netflix, meanwhile, is already embracing technology shifts that will make those red envelopes a quaint memory
Creative destruction has such a cataclysmic sound. But the term, coined by the Austrian economist Joseph Schumpeter to show how capitalism destroys companies as more innovative ones succeed, describes a process that is more like a slow-motion train wreck.

Established companies’ historical inability to change is what makes Netflix’s maneuvers so fascinating. It foresaw its possible demise at the moment of its own creation.

Netflix was formed in 1997 with the idea of sending movie DVDs, then a new technology, through the mail. But Reed Hastings, the founder and chief executive, and early employees, recognized that delivery of movies over the Internet would replace the mail carrier soon. They named the company Netflix, not Mailflix or DVDs by Mail. ….

……It is happening again, this time to Netflix. It was only last year, more than a decade after its founding, that streaming movies started to take off. But it was Netflix pushing people to do it, even though it meant that the company might rent fewer discs by mail.

Since January 2007, it had been offering a small selection of movies for streaming from the site to a customer’s personal computer. Then it began streaming to TV-connected devices so that the movies could be displayed on a larger screen, the way customers have always watched movies at home.

…. Netflix, meanwhile, keeps cutting deals with movie studios to get more films and television shows online. Now a movie aficionado paying $8.99 a month, for example, gets one DVD in the mail at a time — but can also watch movies online to his heart’s content. At one movie a day, the cost of the habit drops to less than 30 cents a film. Mail-only subscriptions are still available…..

..There is no way that a store with racks of movies can sell its wares for as little. Blockbuster’s same-store sales have declined steadily, even when including sales from its mail service and kiosks. It is closing hundreds of stores. Delisted from the New York Stock Exchange in July, the company’s stock is trading for around 17 cents on the pink sheets, down from $30 in May 2002, which is about when Netflix stock began publicly trading at $7.53."

Monday, November 01, 2010

A Powerful Shift in Digital Business Model

Unfortunately, I lost the quote and site for this posting but the insight is so profound I wanted to share it with you

"You wake up and check your email on your bedside iPad — that’s one app. During breakfast you browse Facebook, Twitter, and The New York Times — three more apps. On the way to the office, you listen to a podcast on your smartphone. Another app. At work, you scroll through RSS feeds in a reader and have Skype and IM conversations. More apps. At the end of the day, you come home, make dinner while listening to Pandora, play some games on Xbox Live, and watch a movie on Netflix’s streaming service.
You’ve spent the day on the Internet — but not on the Web. And you are not alone.
This is not a trivial distinction. Over the past few years, one of the most important shifts in the digital world has been the move from the wide-open Web to semiclosed platforms that use the Internet for transport but not the browser for display. It’s driven primarily by the rise of the iPhone model of mobile computing, and it’s a world Google can’t crawl, one where HTML doesn’t rule. And it’s the world that consumers are increasingly choosing, not because they’re rejecting the idea of the Web but because these dedicated platforms often just work better or fit better into their lives (the screen comes to them, they don’t have to go to the screen). The fact that it’s easier for companies to make money on these platforms only cements the trend. Producers and consumers agree: The Web is not the culmination of the digital revolution.
A decade ago, the ascent of the Web browser as the center of the computing world appeared inevitable. It seemed just a matter of time before the Web replaced PC application software and reduced operating systems to a “poorly debugged set of device drivers,” as Netscape cofounder Marc Andreessen famously said. First Java, then Flash, then Ajax, then HTML5 — increasingly interactive online code — promised to put all apps in the cloud and replace the desktop with the webtop. Open, free, and out of control."

Saturday, October 30, 2010

The Thought Leader Interview: Vineet Nayar
The CEO of HCL Technologies describes how he focused his company on growth by engaging staff in unprecedented ways.
by Art Kleiner and Vikas Sehgal

This is an exceptional article on how leadership focus can define the nature of a company to drive growth. I included a few abstracts to encourage you to go to the original article.

"The idea of putting employees first and customers second might seem counterintuitive, especially when it is advocated by the CEO of a large global high-tech enterprise. But to Vineet Nayar, customers and employees are more directly linked than conventional wisdom would suggest. Nayar is the chief executive of HCL Technologies, a US$2.6 billion business and information technology services company based near New Delhi, India, with operations in 26 countries. (HCL originally stood for Hindustan Computers Ltd.) He argues that the aptitude, ingenuity, and enthusiasm of HCL’s more than 65,000 employees leads directly to greater value for customers, and thus to better performance. This is, of course, common management rhetoric, but Nayar is one of the few chief executives who has built a major company by putting it into practice....
...For example, detailed financial performance data broken out by business unit is delivered regularly to employees’ desktops. This has stimulated employees to ask more questions, volunteer more ideas, and challenge their managers more often. In turn, everyone is making better decisions — the kind of decisions that directly affect the customer’s experience. Nayar calls the customer–employee interface the “value zone.” Similarly, in a bold twist on the 360-degree employee appraisal tool, all appraisals are posted on the company’s intranet, and anyone at any level can give feedback on anybody else, including the CEO. As Nayar says, “Good or bad, we all learn from the results.”...
...The idea of engaging employees resonates with the company’s innovation strategy as well. HCL is a behind-the-scenes technology-services company with a brand that appears on few nameplates, but it profits when its customers’ devices succeed. Thus, much of Nayar’s attention is focused on meeting the challenges of convergence: figuring out what types of innovation will be necessary as content producers, telecom companies, and device manufacturers move into their next phase of interdependent business models. HCL’s revenue-sharing approach, and its ongoing efforts to learn from customers and other outsiders as well as from employees, represents an ingrained awareness that the most important insights can come from anywhere — if you know how to recognize and absorb them....
....We also discovered that technology development needs intellect more than it needs investment in dollars. But marketing needs dollars more than intellect. We are a very engineering-oriented company; our core competence is on the technology side. We have never been good at marketing. We still aren’t today. That’s why being a product company was the wrong positioning for us.
So we developed a different business model, involving revenue sharing: We co-designed products with our customers, then shared the revenue with them. Over time, we used this approach more and more, instead of more conventional fee-based and cost-based contracts. In effect, just as our customers use our technological knowledge for their expansion, we use their marketing talent and branding to help fuel our growth. Everybody shares."

Wednesday, October 27, 2010

A Gandhian Approach to R&D
Scientist and scholar Raghunath Mashelkar explains a new model of innovation from India that benefits the world’s poor.
by Abhishek Malhotra, Art Kleiner, and Laura W. Geller

This article describes an approach for innovation that focuses on the ~4 billion poor in the world.

"When it comes to India’s future, Raghunath Mashelkar admits he’s an optimist. Although millions of Indians are still living below the poverty line and many will continue to do so for decades to come, Mashelkar, an accomplished polymer scientist who has held a wide variety of leadership positions at prominent research and scientific institutions, believes that India has the raw materials — the talent and drive — to overcome its challenges and become a nation of innovators.
These advances, Mashelkar argues, should be developed to help the poor at a price they can afford; not just in India, but in emerging nations around the world. He calls this concept Gandhian engineering, citing examples such as the Tata Nano, the cheapest car in the world at a cost of about US$2,200; a hepatitis B vaccine that is 1/40th the cost of traditional vaccines but meets UNICEF’s quality requirements; and Aravind Eye Care’s cataract surgeries, performed on 300,000 patients annually, which cost 1/100th the fee charged in other countries but meet global quality standards...
...It’s a term (Gandian) I coined for getting more from less for more people, a new way of expressing one of Gandhi’s teachings: “Earth provides enough to satisfy every man’s need, but not every man’s greed.” In other words, Gandhian engineering is inclusive innovation: developing products and services that improve life for everyone, innovation that doesn’t leave out the poor...
...(Another example)For the millions of people along India’s coastline who depend on fishing for their livelihood, a new system of satellite-based potential fishing zone (PFZ) forecasting has raised productivity levels and thus incomes. Before this technology was accessible, fishermen often returned home in the evening without any catch. Today, scientists can see the chlorophyll — the green coloration of water created by the activity of the fish — and can also measure the sea surface temperature, which changes due to the activity of the fish. The PFZ information is disseminated to the fishermen in two ways: first, through electronic message boards, where the information is posted. Second, some service providers are supplied with the information, which they then send by SMS text messages to the fishermen’s mobile phones, which can be purchased very inexpensively in India today. When the fisherman goes to these regions where the fish density is higher, his income level will rise. And, also significant, when he used to come back after catching the fish, the fisherman’s catch might rot because he wouldn’t be able to secure buyers quickly enough. Today, using his mobile phone even before he comes ashore, he has fixed where he’s going to sell.
So all of this technology is being developed and used to enhance prosperity, both for the provider of the low-cost product (in this case, for example, Bharti Airtel, one of Asia’s largest telecom service providers) and also for the user (in this case, the fisherman). Technology is going to be a game changer. If you provide people with high innovation at low cost, they will become more productive and efficient, and their earning potential will increase. We can keep improving lives in India and around the world just by making this technology affordable and accessible."

Monday, October 25, 2010

With Kinect, Microsoft Aims for a Game Changer
NTY, 10/24/2010

Sorry for the lapse in postings—things have been a b it hectic but all good stuff!

This is a fascinating story on many fronts:
• How to try to catch up to competition and then leverage the innovation beyond the current addressable marketspace
• The beaucracy and battles between large established business and new innovations
• How to expansively define a Business design and addressable marketspace to drive growth

"....The company’s blend of game developers, interface whizzes and artificial-intelligence experts has built Kinect, a $150 add-on for the popular Xbox 360 console that hits stores next month.

In fact, Kinect arrives with a healthy dose of sci-fi trappings. Microsoft has one-upped Sony and Nintendo by eliminating game controllers and their often nightmarish bounty of buttons. Kinect peers out into a room, locks onto people and follows their motions. Players activate it with a wave of a hand, navigate menus with an arm swoosh and then run, jump, swing, duck, lunge, lean and dance to direct their on-screen avatars in each game....
....The mass-market introduction of Kinect — with its almost magical gesture and voice-recognition technology — stands as Microsoft’s most ambitious, risky and innovative move in years. Company executives hope that Kinect will carry the Xbox beyond gamers to entire families....
...Where Apple popularized touch-screen technology, Microsoft intends to bombard the consumer market with its gesture and voice offerings. Kinect technology is intended to start in the living room, then creep over time throughout the home, office and garage into devices made by Microsoft and others. People will be able to wave at their computer and tell it to start a videoconference with Grandma or ask for a specific song on the home stereo....
....Critics knock Kinect games as too easy and say the gesture technology still has annoying kinks. They also say Microsoft has had a nasty habit of gumming up its creative engines with bureaucracy.

“They often got lost in fights between all their divisions,” Mr. Johnson says. “Anytime something becomes high-profile, middle management slows it down.”

Monday, September 27, 2010

Why I.B.M. Took a Different Path in Storage

I thought this article offers insight into how to fully deploy your internal R&D organization:

"The high-stakes sumo match between Hewlett-Packard and Dell ended on Thursday, with H.P. paying about $2.3 billion for 3Par.

I.B.M. has said it looked at 3Par and other companies more than two years ago, when it was building up in the field of clustered storage, an important technology in handling data remotely for so-called cloud computing systems. Instead of 3Par, it bought an Israeli clustered-storage specialist, XIV.

I.B.M. did not report the price tag on XIV. But analysts estimate it probably paid less than $200 million for a business that now generates more sales than 3Par’s revenue of $194 million last year.

I.B.M. will not comment on those estimates, but it does point to the XIV deal as an example of how its research labs are used to inform the company’s merger, acquisition and divestiture strategy.
In fact, Big Blue’s storage business has been bolstered by a series of early-stage purchases in the sector over the last couple of years, including Arsenal Digital, Storwize and Diligent. I.B.M. has not gotten in the middle of pricey bidding wars like the one over 3Par or over Data Domain, which EMC bought last year for $2.4 billion, after beating out NetApp.

The labs, explains Robert Morris, a vice president of I.B.M. Research, provide strategic “headlights” for the company as a whole. At the end of each year, the lab researchers prepare a global technology outlook, which presents senior management with an assessment and predictions about key technologies over the coming several years.

As a senior research manager, Mr. Morris also meets with members of I.B.M.’s M.&A. teams four times a year. “
It’s not enough to see in the future, you have to act,” he said. “If you’re ahead of the game, you can go in and get companies at a good price, before others recognize the value.

The researchers, Mr. Morris adds, learn things from the I.B.M. acquisition teams as well. “They’ll say, ‘Have you seen this little company?’ ” he said.
“They’re like sensors in the marketplace. We develop a lot inside I.B.M., but most innovation is going on outside any single company.

Monday, September 20, 2010

Innovation and commercialization, 2010: McKinsey Global Survey results

This is an important article to read to bench mark your company to their findings. Most of the major barriers to growth are internal and under management control. Excerpts are:

"As companies begin to refocus on growth, innovation has once again become a priority: in a recent McKinsey Global Survey,1 84 percent of executives say innovation is extremely or very important to their companies’ growth strategy

Growth and innovation
Almost all companies are actively seeking growth again. For the largest group of respondents, 41 percent, the focus is on their existing core businesses (Exhibit 1). Only respondents in the high-tech industry differ. In addition, more executives say their companies are seeking organic growth through new products or services or new customers in existing markets (68 percent and 63 percent, respectively) than are pursuing growth through new markets or M&A

Managing innovation
Just over half of all respondents, 55 percent, say their companies are better than their peers at innovation, a figure that hasn’t budged since 2008…..Fundamentally, the biggest challenge is organization
(internal issues)

Going to market
Only 39 percent of respondents say their companies are good at commercializing new products or services….A big part of the problem may be the absence of a formal decision-making process"
(internal issues)

Monday, September 13, 2010

Five Reasons You Don’t Have the Time to Delay Innovation

I think this is an interesting article. I prefer you think of “managing” risk at the early innovation stages vs. eliminating it.
Eat your own lunch before someone else does it for you.
The pace of innovation is getting faster in every industry. Product teams that were stretching to meet 7 year delivery cycles are now being asked to compress the cycle to 3 years.
Eliminate (manage) business risks
Much of business success is about managing risks….. Sustainable innovation practice is not about taking on greater risk, it’s about eliminating (managing) risks… pre-validating conceptual designs before moving them into downstream processes (this is a managing concept)
Saving time
If you are not integrating innovation best practices into you value creation and delivery processes, you are wasting time.
Saving money
The net result of making the right choices, eliminating (managing) risks, and saving time through innovation is that you will be driving a more efficient and effective organization
Making money
While there are cost saving benefits that companies derive from innovation, it is in the dimension of revenue, market share, and profits that innovation delivers its greatest benefits.

Tuesday, September 07, 2010

Don't Rule Out Apple Ruling Your Living Room
The new Apple TV fits into Steve Jobs' entertainment vision

By Peter Burrows

What I love about this article is Job’s concept of “owning the living room”. It is so powerful and it forces Apple to think about all the parts that must fit together—technology platform; deals with content providers; pricing; etc. More and more companies have to think about their growth domains in this “above the tree line” way to fully capture the available consumer/customer dollar that is potentially available.

"Apple's (AAPL) decade-long run of iPod-, iPhone-, and iPad-fueled prosperity has featured only one notable dud. Introduced in 2006, Apple TV is a set-top box used to play movies and other digital fare on a TV via iTunes on a Mac or PC. Apple has sold fewer than 3 million of them, estimates Kaufman Bros. analyst Shaw Wu. The company sold that many iPads in three months.

And yet, at a Sept. 1 event in San Francisco, Steve Jobs announced that Apple is bringing out a less-than-revolutionary upgrade.

So why bother? Even Jobs concedes the device (a cheaper Apple TV device) is mainly for tech hobbyists, and most of the Sept. 1 event was dedicated to the revelation of a new line of iPods and a social networking feature that works within iTunes. What Jobs didn't say is that Apple wants to become king of the living room. He tells Bloomberg Businessweek that when the time is right, Apple could open an App Store for the TV that could do for television sets what all those apps have done for the iPhone. Asked if the iPad could evolve into the TV of tomorrow, Jobs shrugs and says, "That's how I do most of my TV watching today."

Saturday, August 21, 2010

Putting a value on training
Training programs generate greater value for organizations when the curricula reflect key business performance metrics.
Testing real-world outcomes is crucial.
McKinsey Quarterly, July 2010 • Jenny Cermak and Monica McGurk
Source: Organization Practice

This is a very important topic and an interesting case study of how to measure the impact of training in your organizations. In essence, you must understand how the training relates to specific business performance goals and then assess the impact.

"All organizations train their people, and most spend significant sums doing so. Yet they generally don’t have any idea whether they’re getting any business value from training. Beyond teaching new employees the specifics of their jobs, most companies train staff in areas such as leadership, communications, performance management, or lean operations. But they typically measure training’s impact by conducting surveys of attendees or counting how many employees complete courses rather than by assessing whether those employees learned anything that improved business performance.
This approach was, perhaps, acceptable when companies had money to spare. Now, most don’t. Yet more and more, organizations need highly capable employees—90 percent of the respondents to a recent McKinsey Quarterly survey1 said that building capabilities was a top-ten priority for their organizations. Only a quarter, though, said that their programs are effective at improving performance measurably, and only 8 percent track the programs’ return on investment.
The story of one social-sector group, the Boys & Girls Clubs of America (BGCA), illustrates how organizations can make the most of their outlays for training programs by doing a better job of understanding which of them create business value, and how. The answers are remarkably straightforward and have lessons for retailers, manufacturers, and a range of other organizations as well".

Saturday, August 14, 2010

Does Globalization Threaten or Nurture Local Markets
By R. Frost

A critical issue for all companies (this article talks about consumers but I think it is relevant to business to business situations because decision makers are impacted by similar dynamics that impact consumers from a local vs. global basis), this article delves into the emotive issues impacting decision making. An example of the type of topics covered is highlighted. This is definitely worth the read.

"What effect does globalization have on consumer behaviors and tastes? As we move easily across regions and cultures are we more adventurous or will we naturally navigate to the known?...

…But Mark Kennedy, chief strategy officer at Landor Associates, views the renewed interest in local traditions more as a complement to globalization than a substitute for it. “In all countries in the world there’s almost a reaction to [globalization] in some of the local products,” he says. “I wouldn’t call it a backlash, but it’s almost like a balancing effect on local products. They start to reassert themselves.” Kennedy notes that this growing interest in local brands is taking place even as the shops in all the world’s airports are becoming increasingly the same, with the same brand names in all of them "

Saturday, August 07, 2010

When formulating your mobile-related business-model strategy, think behavioral, not technological
By G. Michael Maddock and Raphael Louis Vitón
The Innovation Engine Business Week July 27, 2010, 1:31PM EST

I thought this was a thought provoking approach to connecting with your customer base to drive innovation. Even in business-to-business situations, I can envision using digital mobility distributions to replace more traditional approaches. Just some “food for thought”.

" retaining customers, winning new business, and communicating with
existing customers and potential ones through their cell phones, PDAs,
smartphones, and such other mobile devices as the iPad (AAPL) and HP (HPQ)
...To understand where mobility fits in, you first need to know
it's the fastest-growing communication platform in history. What accounts for
the rapid growth? We've identified five behavioral (not technical) reasons,
factors that explain why people just adore their cell phones and why you should
make mobility part of your innovation strategy.
1) The world loves instant
gratification. Thanks to mobile phones, we can make connections and decisions at
any time or place.
2) We like filling time vs. killing time. We create
mobile experiences in four- to 10-minute increments....
3) We crave
superhero powers. Our mobile phones allow us to interact in multiple places at
the same time....
4) We modify, adapt, hack, and generally MacGyver
everything we get our hands on. Give people a tool, especially a technology or
digital tool or channel, and they use it to achieve their goals in ways you
never imagined...
5) We think of our mobile device as our "No. 1 recovery
tool," and we never leave home without it. Why? It is a lifeline. Our cell
phones are the first thing we reach for when we're away from home or the office
and a problem comes up."

Monday, August 02, 2010

Herman Miller’s Design for Growth
The office-furniture design leader is betting on innovation as it continues to push the envelope of management practice.

by Bill Birchard

This is a great case study on growth. Among the many learnings, the one I want to highlight here is the importance of using your fundamental strength as a foundation for growth and then incorporate the capabilities of others to drive growth.

"At the start of the 2000s, Michael Volkema, then the chief executive officer of Herman Miller Inc., became convinced that growth in the white-collar workforce was going to slow in the company’s main markets. That was a threat to this office-furniture maker, based in Zeeland, Mich., whose revenues depended on products sold to the white-collar workforce — products such as office desks, chairs, panels, shelves, and cabinets. Volkema’s solution was to create the Creative Office, a capability within Herman Miller for identifying adjacent markets in which the company could build businesses that would provide significant new streams of revenue.....
......In lighting, for example, GE, Philips, and Osram Sylvania were then focusing on light-emitting diodes (LEDs) as substitutes for standard incandescent light fixtures. Miller and his team saw an alternative: using the low-voltage DC power of LEDs for novel kinds of illumination — light tunnels, walls, lighted objects, wearable light. Why restrict lights to conventional overhead fixtures? Why not integrate them into office furniture and fixtures in new ways?
That effort led to a suite of product prototypes dubbed Programmable Environments, and later to a new business named Convia. Among the prototypes were illuminated, movable “visual shields” that changed color and a suspended wall with integrated LEDs. Integral to the new product suite was the notion of programmability. Office workers themselves would be able to use various devices, including their desktop computers, to reconfigure and reprogram the office environment. The new hardware and software allowed Miller and his team to redefine how people would think about personal space, office geometry, privacy, and illumination. In the end, the R&D project spawned 25 patent applications, and Convia was established as a Herman Miller subsidiary in 2006.

Friday, July 30, 2010

A Framework for Generating More Demand While Spending Less

The title is of course quite compelling and so is the slide presentation that can be seen at:

Activate the “view our growth ideas" and then hit the title article. It is worth the effort

Monday, July 26, 2010

A critical metric to assess position vs. competition is market share. This is a very insightful article which highlights different approaches to gaining share without necessarily falling into a margin death spiral.....

"Gaining market share is often top-of-mind for many executives. It is a simple metric to understand and visualize, it is usually tracked on an industry-basis and it usually communicates a sense of achievement when the share numbers are looking good. However exclusive focus on market share can also mask numbers that really count – profitability or long-term brand health.....

Market share is available for the taking today. Customer attitudes and behaviors are shifting and many competitors are vulnerable. The easiest thing seems to be to cut price and gain volume and share. However the more sustainable and profitable way to gain share is to understand the new needs of customers and innovate (product, shopping, engagement, etc.) to meet these new needs better than competitors....

While most companies have had to rapidly develop a strategy to address the low-end of the market as customers down-trade across categories, here are some thoughts on how to implement such a strategy, without hurting the entire portfolio:

- Use segmentation to inform your strategy: Not all customers down-trade to cheaper options for the same reason.
- Take a portfolio approach: Many marketers in today’s environment are investing heavily in their entry-level or low-priced products/brands. While this seems relevant given customer behavior for down-trading, lopsided investments will only accelerate the down-trading. Marketers have to equally invest in other brands in their portfolio and give a strong reason for customers to stay with the premium brands.
- Use bundling to average-out the margin: A low-priced product can be used to attract the customer but it can be bundled with other add-ons,
- Leverage design to maintain differences: Customers should be able to instantly tell the difference between an entry-level, mid-range and higher-end product.
- Have a well-defined role for your entry-level brand: It is important therefore to have a medium to long-term goal for the entry-level product, its role in the portfolio and the contribution that it will make to the overall profitability of the company."

Wednesday, July 21, 2010

It Makes Sense to Adjust
Business transformation is now a continuous process that most companies haven’t mastered. Here’s a formula for managing ongoing change.
by Vinay Couto, Frank Ribeiro, and Andrew Tipping

I believe this is a very strong article defining different approaches for corporate change and definitely worth looking at.

"It used to be that a business transformation was a once-in-a-lifetime event, the sort of fundamental reset prompted by a rare, short-lived disruption such as a new technology, a devastating scandal, or a dramatic shift in costs. But if the recent economic upheaval reveals anything, it is that companies of all sizes, in all industries, are operating in a more volatile, less predictable environment, and that change has become a way of life. To navigate such a rocky landscape, companies must be ready to repeatedly transform themselves — indeed, to institutionalize the capacity to alter strategies again and again — as business conditions require.
Each company’s strategy for approaching transformation falls into one of three categories. These categories in turn determine the level of transformation — the timing and the magnitude — that the company can support.
1. Reactive. This is the default transformation strategy; it is minimal, and has become second nature to most seasoned executives. A change in circumstances provokes a short-term response, generally an abrupt shift that requires little cross-company coordination or follow-up
2. Programmatic. This strategy is more comprehensive and is appropriate when major change is required and a company has sufficient lead time. In such circumstances, the company launches a widespread change initiative across the lines of business that are most affected
3. Sense-and-adjust. This is the most long-term and sustainable strategy, but only a few companies have successfully implemented it. Unlike the first two approaches, sense-and-adjust is dynamic, constantly and consistently smoothing out volatility in areas of business subject to swift and dramatic change, such as research and development or frontline operations like manufacturing and logistics."

Monday, June 28, 2010

Bust the Silos
Hastings and Saperstein

One of the major barriers to growth that we have found is internal organizational barriers. Companies are not organized to meet customer needs but around functions, brands, major customers, etc. A great book titled “Bust the Silos” by Hastings and Saperstein offers insight how to break down these barriers for Demand Generation:

"We all now operate in a highly connected, rapidly evolving, customer-centric and
knowledge-driven environment. Yet, most of our current management practices,
organizational models and job functions are not effective in serving our
customers. Value is created through relationships with customers; this drives
loyalty. Companies need to adopt principles and practices that encourage their
diverse groups of employees to have a shared sense of purpose to engage in more
effective ways of working together to build customer intimacy and loyalty….

…Customers value relationships over efficiency, yet service and support
organizations are driven by efficiency. Furthermore, while customer service
and support systems are usually constructed around predictability (think about
FAQ), business problems, particularly with complex business-to-business products
and services, are more akin to chaos with natural patterns than predictable

Monday, June 21, 2010

Using Appeals to Emotions to Sell Paint
WSJ, June 8, 2010

This is an interesting article that highlights efforts to get to the emotive component of a Value Proposition as part of the total Business Design as we define it to create real competitive separation for the Valspar paint company:

From the article it is clear most paint advertising targets the functionality and economics:

"Paint advertising typically emphasizes quality and color selection, and depicts homeowners applying paint to walls.

“What you see in almost every paint commercial is couples in blue jeans and flannel shirts holding rollers and going up and down on the wall and whistling while they work, and Valspar didn’t need to go there,” said Steffan Postaer, chief creative officer at Euro RSCG Chicago…..
…“Everyone’s fighting over the same features and benefits,” Ms. Champ of Valspar said, rattling off typical claims. “ ‘I have 3,500 colors,’ ‘No, I have 4,000 colors,’ ‘Mine’s a paint and primer in one.’ Everyone is working on the same benefits — and showing people rolling paint on the wall.”"

Valspar found a very different scenario when they studied their customers:

"But Ms. Champ said that when Valspar surveyed consumers, “they told us that painting is an emotional journey with lots of highs and lows,” and that applying paint itself was certainly not the high point.

“They enjoy the first roll on the wall, but they don’t want to be reminded of all that work,” Ms. Champ said. “Consumers talk about what they feel when they finish the project, and that’s a sense of pride and accomplishment. They say, ‘I feel like an artist,’ and ‘I feel a sense of freedom and joy.’ They ladder up to a lot of high-level emotional benefits, and that’s what we’re trying to tap into through this campaign.”

They thus created a new form of advertising targeting the emotive component they found:

"Now a new television commercial by the paint company Valspar is taking an unusual approach to selling interior paint: it never shows an interior, or consumers painting. The spot, by Euro RSCG Chicago, opens with a couple walking on white sand toward a white wall, which resembles a drive-in movie screen, as a voice-over begins, “To some, a wall is just a wall — a divider between here and there.” The couple begins to guide the wall through various spectacular landscapes, and the wall assumes the color of the backdrops, from the incandescent green of flora near a waterfall to the warm tan of a hayfield to the reddish brown of a mountain setting.
“To others, a wall is a canvas, an invitation, a blank slate,” the voice-over continues to a lush soundtrack. “The right color can turn any wall into so much more.”

You cannot create sustainable competitive separation if you and your competitors keep chasing the same economic and functional attributes. Start with the Customer Segmentation and create real differences and get to the emotive state whenever you can.

Monday, June 14, 2010

Rethinking Gospel of the Web
April 11, 2010

Under our banner of Ideas, we talked about the power of open platforms and “idea fairs” to stimulate innovation and growth. This article has a different slant and I think touches on important considerations of the classic make/buy, outsource/in source, control/leverage type decisions. I think the key in consumer markets and to a growing degree in B to B situations is that customer experiences are driving factors in influencing these decisions and how to best create and manage these experiences are determinative.

"For about a decade now, ever since it became clear that the jungle of the World Wide Web would triumph over the walled gardens of CompuServe, AOL and MSN, a general consensus has solidified......
....That unifying creed is this: Open platforms promote innovation and diversity more effectively than proprietary ones.

In the words of one of the Web’s brightest theorists, Jonathan Zittrain of Harvard, the Web displays the “generative” power of a platform where you don’t have to ask permission to create and share new ideas. If you want democratic media, where small, innovative start-ups can compete with giant multinationals, open platforms are the way to go.....

....Over the last two years, however, that story has grown far more complicated, thanks to the runaway success of the iPhone (and now iPad ) developers platform — known as the App Store to consumers.

The App Store must rank among the most carefully policed software platforms in history. Every single application has to be approved by Apple before it can be offered to consumers, and all software purchases are routed through Apple’s cash register. Most of the development tools are created inside Apple, in conditions of C.I.A. -level secrecy. Next to the iPhone platform, Microsoft’s Windows platform looks like a Berkeley commune from the late 60s.

And yet, by just about any measure, the iPhone software platform has been, out of the gate, the most innovative in the history of computing.....
.....Perhaps more impressively, the iPhone has been a boon for small developers. As of now, more than half the top-grossing iPad apps were created by small shops.
Those of us who have championed open platforms cannot ignore these facts. It’s conceivable that, had Apple loosened the restrictions surrounding the App Store, the iPhone ecosystem would have been even more innovative, even more democratic. But I suspect that this view is too simplistic. The more complicated reality is that the closed architecture of the iPhone platform has contributed to its generativity in important ways.

The decision to route all purchases through a single payment mechanism makes great sense for Apple, which takes 30 percent of all sales, but it has also helped nurture the ecosystem by making it easier for consumers to buy small apps impulsively with one-click ordering. People don’t want to thumb-type credit card information into their phones each time they download a game to distract the kids during a long drive in the car. One-click purchase also supports lightweight, inexpensive apps, the revenue from which can support small software teams.
Consumers are also willing to experiment with new apps because they know that they have been screened for viruses, malware and other stability problems as part of the App Store’s approval process.

The fact that the iPhone platform runs exclusively on Apple hardware helps developers innovate, because it means they have a finite number of hardware configurations to surmount.....
.....But whatever Apple chooses to do with its platform in the coming years, it has made one thing clear: sometimes, if you get the conditions right, a walled garden can turn into a rain forest."

Monday, June 07, 2010

Microsoft Weighs In on Flash Debate
By Jennifer Valentino-DeVries
WSJ, April 30, 2010

In an earlier posting ( we discussed the “battle” between Apple and Adobe on the deployment of Flash, Adobe’s video system. Although Apple claims technical issues are the driving force behind their concerns, one has to believe it is a power play between these two giants. Well now Microsoft is getting into the fray and I am sure we’ll see Google some time soon.

"Not to be left out, Microsoft has weighed in on the latest big tech debate — whether Flash should be the dominant player for video on the Web.
Apple’s CEO Steve Jobs came out with a striking critique of Flash in an essay on Thursday, saying that Flash causes problems with security and battery life and is responsible for crashes on Macs. CEO Shantanu Narayen of Adobe, which makes Flash, responded in an interview with the Journal, calling some of the accusations untrue and blaming other problems on Apple’s policies.......

.......Whatever decisions Microsoft makes in this area are important because the vast majority of Internet surfers use some version of Internet Explorer.

Microsoft backed some of Apple’s argument, saying that “Flash does have some issues, particularly around reliability, security, and performance.” But it isn’t abandoning Flash altogether, the way Apple has done on its mobile devices. “Today, video on the web is predominantly Flash-based,” Mr. Hachamovitch, GM of Micrsosoft’s internet explorer, wrote in the post, adding that “Flash remains an important part of delivering a good consumer experience on today’s web.”

But note the repeated use of the word “today.” It’s clear that the Web is moving in a direction that could spell trouble for Flash. In the post, Microsoft reiterated its support of HTML5 as the standard for the coding that makes up Web pages. Apple also backs HTML5, a standard that supports video within the browser without requiring plug-ins like Flash. (Microsoft’s own video plug-in, Sliverlight, also would likely be hurt by the adoption of HTML5.)"

Thursday, May 20, 2010

Growth through Focus: A Blueprint for Driving Profitable Expansion
Rather than seek increased revenues and profits by expanding products and markets, companies should follow a seven-step strategy for achieving more with less.

by Sanjay Khosla and Mohanbir Sawhney

This is a fabulous article that offers a great approach to growth. It is completely consistent with the processes we have talked about and offers an excellent case study. The following chart highlights their approach but I STRONGLY urge you read the full article. I feel so strongly about it that we will include it as part of our Driving Organic Growth Executive Ed. class at the Kellogg School.

Tuesday, May 11, 2010

Steve Jobs Escalates Fight With Adobe
WSJ, APRIL 30, 2010


As we have come to learn, it is not just the quality of Apple’s products that creates enormous wealth for the company and its stockholders, but control of the system platforms that drives the i-devices. This is a classic fight of protecting this system not just the products. This battle not only impacts the respective parties but the end user –the consumer—and all suppliers.

"Apple Inc. Chief Executive Steve Jobs escalated his fight with Adobe Systems Inc. over the software known as Flash, a battle that could shape the evolution of video and gaming on mobile devices......
....."Flash was created during the PC era—for PCs and mice," Mr. Jobs wrote in an essay totaling more than 1,600 words. "The mobile era is about low power devices, touch interfaces and open Web standards—all areas where Flash falls short." ......
.....Adobe CEO Shantanu Narayen fired back in an interview with The Wall Street Journal, disputing Mr. Jobs's assertions about shortcomings in Flash. That is a "smoke screen," he argued, for Apple's plan to keep its own lock over software development for its mobile devices. "It's clear that it has nothing to do with technology," he said.....
......Media companies and advertisers have privately expressed frustration about Apple's stance toward Flash because their online video and other Web content incorporates Flash. Adobe, meanwhile, has said it will try to work closely with Google Inc. to popularize Flash on phones using Google's Android system.
Another factor is a new version of Adobe's Creative Suite software, which includes tools for using Flash to build iPhone apps. Just before Adobe formally unveiled the software, Apple changed the terms of use for its App Store to forbid apps written with the new software.

Tuesday, May 04, 2010

Starbucks Mounts Major Grocery Push
WSJ APRIL 30, 2010


I think this is a very interesting example of brand extension and all the issues involved.

"Starbucks is rolling out Via instant coffee—so far sold only in its own shops and a couple of retail chains—to tens of thousands of supermarkets, mass merchandisers and other outlets in coming weeks. The product's migration from coffee counter to grocery aisle reflects one of the food industry's hottest trends: putting more restaurant brands like California Pizza Kitchen and P.F. Chang's China Bistro into grocery aisles.....

..."It's an intriguing question how far Starbucks the coffee shop can morph into Starbucks the brand," said Sharon Zackfia, an analyst who follows the company for William Blair & Co. in Chicago. The strategy "bears some risk. And Howard does strike out sometimes. But he also hits home runs," she said. Ms. Zackfia owns some Starbucks stock.
(a relatively highly risk venture that suggests the current Starbucks model has limited growth potential)

,,,But Via will have to prove itself in the grocery aisles. Its debut in Starbucks coffee shops last fall helped reverse a year-long string of same-store sales declines at the company. But that success also reflected an aggressive push from baristas inside Starbucks coffee shops, where the company handed out samples and staged taste tests....
Without that advantage inside supermarkets, Starbucks plans to distribute coupons, purchase in-store displays and hire people to hand out samples. It will also unleash a larger television and print advertising campaign than what it launched amid Via's coffee-shop debut last autumn
.(issues of marketing in the new market segment)....

(What you do yourself vs. forming alliances to handle very new challenges is critical) In selling Via out of supermarkets, Starbucks faces a new challenge. To sell its coffee beans and bottled frappuccinos out of grocery stores, it struck up joint ventures with well-established consumer-goods brands: Kraft Foods Inc. and PepsiCo. But for Via it is acting as its own distributor, a strategy that could backfire if it fails to adequately manage supply and demand.
But Mr. Schultz says Starbucks has built the infrastructure to handle that distribution. And analysts note that the strategy could leave Starbucks with a greater share of profits.
(unproven territory)"