Strategy, Innovation, Futures BusinessBlog

Innovate Like Edison

2007-10-18T11:37:00.000-06:00

Edison is probably one of the most referenced inventors ever. Not to undermine his great achievements in the act of creation (1% imagination and 99% perspiration as the saying goes), he also did a remarkable job in developing and marketing products for which were innovative That legacy has manifested itself into one of the greatest companies of the world, GE.

A new book by Michael J. Gelb and Sarah Miller Caldicott, Innovate Like Edison, boils down Edison's process to five key steps. Below is an excerpt from the book where the authors " give you a taste of his approach, using the example of Edison's first product, the stock ticker. His system is culled from historical documents and written as Edison might have noted them.

1. Identify trends in the marketplace, observing where and how needs are shifting. In 1868, I read in the newspapers that the rebuilding of the American South after the Civil War has sent commodities prices rising, since demand for lumber, brick, stone, and other building materials has increased and supplies are strained. The reporting of these prices - as well as the price of gold and precious metals - is eagerly sought by American businesses at an increasing rate.

2. Determine if there are any gaps created by these changing needs. I've noted that few efficient machines and few services exist to rapidly - and reliably - report commodities prices, precious-metals prices, and stock prices to businesses around the country.

3. Identify the core insight (the "aha!") or need at the heart of each gap. I think I can apply the principles of -telegraphy to make a machine that reports prices.

4. Link your insights to your capabilities as a company and your strengths and weaknesses in relation to your competitors. I can combine my talents for telegraph equipment assembly and design to develop price--reporting machines that operate rapidly and efficiently.

5. The hypothesis is an "if-then" proposal for a practical experiment about the goal you'd like to fulfill based on the linkage you've created. If I can build an efficient, reliable telegraph-like machine that can help businesses report commodities and metals prices all over the country, then I will make a significant profit.

The result? Edison's stock-reporting machine launched his career as a successful inventor and innovator. "

Quoted section is copyright Michael J. Gelb and Sarah Miller Caldicott

Are You Wired For Leadership?

2007-09-20T09:33:00.000-06:00

Interesting article in the Wall Street Journal today on the brain activity of visionary leaders vs. non-visionary leaders. An Arizona State University management professor, Pierre Balthazzard, is strapping electrodes to people's brains, asking them to think about the future and monitoring their brain activity. According to the article 'the first 50 scans of local luminaries suggest that visionary leaders use their brains differently than others'. This program is amongst 'the most ambitious because it seeks both to identify brain patterns, and then train managers to replicate the patterns within their own brains.'

Picture above is copyright Wall Street Journal.

The question is though, do all leaders need to be visionaries? Every organization needs to have a balance of those that worry about the future and those that worry about the present...

Catching Up... few tidbits....

2007-03-21T11:15:00.000-06:00

Apologies I haven't posted for a while, we've been pumping out a release of Epiture, and working hard on a variety of client projects, all of which have contributed to my distinct lack of posting...

Anyway, quick round up of interesting snippets...

--> Something near and dear to my heart - the messy desk syndrome... At home, I'm an absolute neat freak, but if you look at my desk at work, you'd be surprised at the paper and book stacks as well as the weird and wonderful that inhabits my space... This story was carried by Reuters, to announce a new book 'A Perfect Mess: The Hidden Benefits of Disorder', which I have not read yet, but one of the authors Eric Abrahamson is the author of 'Change Without Pain', which was a good read. I do know that my messy desk was a problem when I worked at a Fortune 10 company, that had a 'clean desk' policy, and while I was extremely careful to never leave anything confidential out, I had many policy violations... oh well... what can I say... the hierarchical approach of something is either in one category or another has never and will never worked for me. I'm not a black or white kinda person when it comes to information (though I am with ethics), and knowledge is all shades of gray, and that's how I like it. Of course, that may have something to do with why we've developed the first adaptive knowledge networking software that works on fuzzy networks not hierarchies... (sic)

--> Getting Unstuck: How Dead Ends Become New Paths is a book recently sent to us from Harvard Business School Publishing. I thought it was something to do with business innovation from the cover but it turns out to be more of a self-help type of book. Wow. I think this could be a real pioneer. More like therapy for your business-career-soul-n' more-in-a-book. From the blurb, because I'm not good at explaining these kind of things: 'We all experience psychological impasse. This feeling of uncertainty about your next moves in life might come at predictable moments: the loss of a job, the end of a romance etc etc. But pyschological impasse might also come at unpredictable moments: when the career of a lifetime somehow loses its juice, when you find yourself longing o renew a sense of life's adventure. Though uncomfortable, impasse is necessary; it's the only place from which you can define a new vision for your professional or personal life. In Getting Unstuck, business psychologist Timothy Butler leverages more than 20 years of research to offers strategies for finding your way again...'

This book is not for the faint hearted, I looked through some of the chapters, and it asks some tough questions to help you get to the bottom of the reasons for the impasse. It's not a quick fix and feel good coffee-and-a-self-hug pseudo soliloquy. So if you are ready to really resolve your impasse and renew, this may be the book for you...

--> March 15th was ManyWorlds.com's 7th Birthday - SEVEN! Wow! I'm still in shock, it seems like just a few moons again we were creating the site... If you have any comments on how we can improve, please, please email me at n.moneypenny(at)manyworlds.com. I'm all ears to new ideas. The site really is incredibly successful and has a life of its own, much more than we ever intended.... So thank you to you all, for being a part of it...

Tech in the US still relies on immigrants....

2007-02-12T11:00:00.000-06:00

Interesting snippet from R&D magazine this month.

'Of all the engineering and technology companies started in the U.S. from 1995 to 2005, at least one key founder was foreign born in 25.3% of them. And of those immigrant-founded U.S. companies, Indian immigrants (26%) were involved in more of the companies than immigrants from the UK, China, Taiwan, and Japan, combined, according to a recent study, “America’s New Immigrant Entrepreneurs”, by researchers at Duke Univ., Durham, N.C. and the Univ. of California, Berkeley. Nationwide in the U.S., these immigrant-founded companies produced $52 billion in sales and employed 450,000 workers in 2005.'

'California’s Silicon Valley area was found to have the highest concentration of immigrant-founded companies—52.4%.'

Entire report available in PDF here.

With all the politics and debate on immigration and how that affects business and trade, (see also IBM's VP of Technical Strategy and Innovation Irving Wladawsky-Berger's post and discussion on the subject), fresh ideas and fresh perspectives from whatever source, are still a driving force of the capitalism engine in the US.

See also AnnaLee Saxenian's (Dean at the School of Information at UC Berkeley) book 'Regional Advantage' on why Silicon Valley ascended to greatness vs. Route 128 in the Boston area.

Nine-zero Markets, Two-legged Mammals and Singular Technologies

2007-02-02T10:44:00.000-06:00

I subscribe to the Josh Wolfe/Forbes Nanotech Insider newsletter, which is devoted to the nano technology industry. This morning I got an email newsletter from them, that I thought was worth sharing here.

In Josh's role at venture fund Lux Capital he says he's interested in three things

"Nine-zero markets, two-legged mammals and singular technologies."

(Excuse the long quote, but I think this is truly excellent writing, and applicable to anyone in a business development role in a company, large or small.)

"Two-legged mammals: these are you - entrepreneurs out there with genius and talent. To us, talent hits a target no one else can hit, genius hits a target no one else can see. We want to be partners with calculated risk-takers who are commanding "centrifuges" spinning with endless-energy to create a gravitational force that pulls in like-minded geniuses. We want doers: not bluffers.

Nine-zero markets: billions of dollars. Investing is about uncertainty—so we need our risk-reward sufficiently skewed so that when things go wrong (and they always do), being off by an order of magnitude still means breathtaking success. Decimal points show only that you've got a sense of humor, not a sense of accuracy. Thing big, now think even bigger. Time is scarce so don’t waste it on something small.

I've written before that my most inspiring personal moments and greatest clarity comes on airplanes in the moments just after take-off and just before landing. You'e granted the perspective to see entire cities, to visualize the products and technologies filling the homes, cabinets, cars, pockets of millions of people. The billions of dollars of wealth created and the life-improving value given to society. From Nylon fabrics and Velcro fasteners in closets, to new chemical compounds that line refrigerators and medicine cabinets YKK zippers, Brita water filters, LCD screens, Teflon pans, Tyvek insulation, Windows -- both the literal insulating ones and the branded virus-prone ones--all billion dollar markets. And whereas consumer markets see their leaders with 30-40% market shares, the history of technology and the law of increasing returns shows that the best technology companies can command 80-90% market shares. Winners can take all.

Singular technologies: singular means not best in class, but only in class: "one of a kind, unique." Clever breakthrough inventions that will change the world -- the kind of technologies that rely more on the creativity and intellectual power that went into their creation, than the marketing that can promote them. They should have moats in trade secrets and patents around them, so that even if someone else had infinite capital, it wouldn't matter -- replication would be really hard if not nearly-impossible. Initially with really great technologies (just like ideas), you don’t have to worry about them being stolen. If they're any good, you'll have to ram them down people’s throats just to listen. But good corporate and legal hygiene shows good judgment. And good judgment inspires confidence in your future decisions."

As business people, I think these three ingredients are what we are all interested in, and this pithy 9-0, 2, 1 formula is a fantastic condensation of business success.

On a personal level, erudite and inspirational writing like this helps me with the technical development of our singular technology - Epiture.

The Human Cost of Unused Ideas

2007-01-29T18:30:00.000-06:00

Henry Chesbrough @ Berkeley of Open Innovation fame kindly sent me a review copy his new book 'Open Business Models' last week, so we've been fighting over it in the office.... There were some quotes in the accompanying publicity bumpf. But this one quote really struck me... It's the reason I left my high flying job at a supermajor oil company, and took the rollercoaster entrepreneurial route instead.

"...many of the ideas people work on are never deployed in the market. It is reportedly quite common for a pharmaceutical researcher to never see one of her projects ship to market, even over a thirty year career, because the attrition rate of compounds is so high. This is an enormous waste of human talent and must take a toll on any person's initiative."

Can we all say YES to this... in my case it was not new compounds that never made it to market, it was new business ideas, and new ways to use existing assets and capabilities. All those projects, and meetings and MISSED OPPORTUNITIES.

Ok - vent over :)

Thanks Henry for saying it. I needed that.

Seven Habits of Successful Virtual Teams

2007-01-29T17:30:00.000-06:00

I wonder when Steven Covey wrote his Seven Habits, whether he could imagine that it would become such a bestseller, and spawn a plethora of similar Seven lists. Try searching on 'seven' in ManyWorlds.com to see what I mean. You can choose from at least 30 articles, including The Seven Habits of Spectacularly Unsuccessful Executives to the Seven Habits for High Effectiveness and Seven Neurotic Styles of Management.

But I digress. Anne Zelenka at Web Worker Daily has penned a great little post on habits for vitual teams here. This is a subject close to my heart, since ManyWorlds is the epitome of the spider organization. Everyday I interact with our far flung team, which includes some full time employees who I've never actually met, but I love 'em dearly all the same. Without IM, my medium of choice, it would be impossible to interact with everyone on the team, and to understand what is going on in their lives, as well as work that we need to discuss. It's even got so that we can tell if someone's having a bad day, from the way they type - I kid you not.

And in whatever form of communication you prefer, don't forget Mr Covey's sage advice, and 'best' habit in my opinion - 'Seek First to Understand, and Then to Be Understood.'

Along the same lines, Anne also has 27 tips for teleconferencing to share.

Talent & Compensation

2007-01-17T20:55:00.000-06:00

It's an interesting world this week. The business media has been all over Bob Nardelli's step (mostly push) down from Home Depot's leadership, and he will have to be content with his $210 million+ severance pay for a while. Reported to a lesser extent was Hank McKinnell's earlier departure where he has retirement to (coincidently) mull over the $200 million+ that the former Pfizer CEO walked away with; after losing more than $100 BILLION in market cap.

Executive compensation is always a hot topic - I'm a free market kinda person, so I believe people should be compensated commenserate with their talents and results. I never begrudge an athlete the huge salaries they command, because they are the best at what they do. Likewise with talent in organizations. Employers should absolutely pay what top talent deserves. At the same time we have to be mindful that while money may be a good short term incentive to attract new people (and get rid of CEO's that you don't want anymore!) it will not (and should not) be the primary reason they stay at your organization.

Meanwhile things are heating up in the Valley again. Amy Vernetti, an executive recruiter reports, "We are now seeing the inevitable return of rising cash compensation packages, candidates with multiple offers and yes…the signing bonus is back!!! The bonus was popular during the silly period of the late 1999, but universally hated by employers and investors. It's surprising to see it come back, but the good news is, we haven't seen too many of them - yet." She also has some interesting lessons learnt in high tech companies recent struggles for talent.

Time to roll up our sleeves again; battle for talent 2.0. Will cash, not options, be king this time around?

Fuel for cars vs. fuel for humans

2007-01-15T12:24:00.000-06:00

Matt Marshall over at VentureBeat, reports that "Tortilla prices are going up, causing hardship for the poor in Mexico, apparently because of all the use of ethanol in the U.S. "

When will people get it? Ethanol is NOT the answer. It's a poor fuel; low fuel economy, low performance, hard to transport and I don't think even cellulosic ethanol is the answer. Don't get me wrong, I'm no lover of the infernal combustion engine, indeed I don't even own a car, even though I used to work for an oil company and I live in Texas. And by the way, producing a pure commodity (definition of Ethanol), never did anything great for the economy (Capitalism 101), especially when they can make it much cheaper in Brazil.

But the biofuel of the future is not Ethanol. And even if it was, NREL has proved in the US we have more than a billion tons of cellulosic material available to use as fuel, to be self sufficient. But the future fuels, biohols or whatever you want to call them, should not attempt to emulate gasoline or diesel other than their ability to power a motor. Want to be really good to the environment? And not endanger food supply or hurt trees? Try algae - greatest carbon dioxide sink you've ever seen and doesn't take up huge amounts of monocultured land... And it doesn't have the problems of regular veg oil bio-diesel.

Fire at Chevron Refinery

2007-01-15T09:57:00.000-06:00

When I came into the office this morning, I was distressed to see that a small fire had broken out at the Chevron Refinery in Richmond, CA. As many of you know, Chevron is one of our clients and we've often visited at the Richmond Technology Center which is next door to the refinery. We have a number of clients in the Energy sector, and of all the companies we have visited, and Chevron is probably the best I know of at putting safety first, in the minds of all employees, whether they are managerial, executive or janitorial.

However horrible this is for the company, the only silver lining for the refining industry in general may be that downtime in one location, often results in margin improvement for others... That's life in the 'cost is everything' refining business.

My sympathies to CVX.

Can a Computer Choose Your New Hires?

2007-01-12T13:14:00.000-06:00

Saul Hansell of the NYT reports on the hiring of an organizational psychologist at Google, who has put together a comprehensive survey of questions that are graded to find more well-rounded individuals that are able to deal with the competitive culture at the company.

"Google has always wanted to hire people with straight-A report cards and double 800s on their SATs. Now, like an Ivy League school, it is starting to look for more well-rounded candidates, like those who have published books or started their own clubs.

Desperate to hire more engineers and sales representatives to staff its rapidly growing search and advertising business, Google - in typical eccentric fashion - has created an automated way to search for talent among the more than 100,000 job applications it receives each month. It is starting to ask job applicants to fill out an elaborate online survey that explores their attitudes, behavior, personality and biographical details going back to high school.

The questions range from the age when applicants first got excited about computers to whether they have ever tutored or ever established a nonprofit organization.

The answers are fed into a series of formulas created by Google's mathematicians that calculate a score - from zero to 100 - meant to predict how well a person will fit into its chaotic and competitive culture."

While psychological profiling is nothing new to large organizations, and indeed we at ManyWorlds use a variety of tools for own hiring practices, one has to wonder if this kind of automated profiling will end up with a culture of 'too many Chiefs and not enough Indians' (apologies to any cultures I may offend by saying this).

Google's astounding growth rate, they're hiring 200 people a week, according to Laszlo Bock, Google's vice president for people operations, means the sheer mechanics of attracting, interviewing and even on-boarding must be intense. And yes, most of the enlightened among us realize that people who don't get the best grades at school are often extremely smart in other ways.

But I can't help but think this approach will cause many more problems down the road. When rapid growth occurs, organizations are often faced with many choices, associated with well understood practices of organic (i.e. hiring), or non-organic (i.e. acquisitions). Google is doing both. Now even the best companies in the world, have a hard time to make acquisitions really work, and get real value from them. Add to that the complexity of managing an incredible number of competencies and market place offerings. There has to be major duplication of effort occurring and more worryingly, how do new ideas survive at Google? How do major decisions get made? If you keep adding resources (very smart ones at that), social structures such as mentoring, decision making, influence are all affected. And that can't be good news in the long run for shareholders.

Content Management Strategy Teleseminar

2006-09-13T14:13:00.000-06:00

Just thought I'd mention that ManyWorlds.com in conjunction with Earley & Associates, is offering a free web four part teleseminar on during Sept and October on content/knowledge strategies.

Our Managing Director, Steve Flinn, will be talking in the first and fourth parts of the series.

The first telecon, Sept 25th, will focus on the all important business case for content and knowledge management. The last telecon on Oct 16 focuses on advanced techniques such as global deployment, personalization, and intelligent and adaptive recommendations.

Learn more and register for free here.

The Adaptive World

2006-06-13T14:40:00.000-06:00

I just thought I'd share that our CEO, Steve Flinn, was interviewed by Peter Clayton of LandedFM (an online radio station for business career advancement). He discusses the formation and mission of ManyWorlds.com, and also ponders on the Adaptive World that we're living in, and how that influences business and technology.

7 Deadly Sins of Organizational Design

2006-05-22T15:58:00.000-06:00

Part of my job is spent on the design and architecture of our patented knowledge network software, Epiture. I was just reading an industry rag on software, when I came across this little gem on the Seven Deadly Sins of Software Design. It occured to me that as managers, we have exactly the same challenges in organiational design with 'portfolios' of teams and business processes that span internal and external organizations, as we do with the architecture of the software that designed to help enable it all.

So here are the Seven Deadly Sins for Organizational Design:

Rigidity. Making it hard to change. Changes often ripple through organizations, organizations need a certain amount of 'future-proofing' in their design.
Fragility. Making it easy to break. This one is especially relevant for business process design and organizational design tied to it.
Immobility. Making it hard to reuse. I once worked in a Fortune 10 organization where you were reorganized at least once a year, I think we must have spent more on business cards and consulting wiring diagrams than any other company in the city. Employees need a sense of continuity, if you don't make org design reusable, you will at best cause confusion and at worse sheer inefficiency.
Viscosity. Making it hard to do the right thing. There are natural information flows in an organization. If you overengineer a design or make it too rigid, people will be tempted to find their own 'workarounds' and ways of doing things, which means your business processes will suffer.
Needless Complexity. Over-Design. When you over-do it - e.g. the "Swiss-Army knife" antipattern. While you should definitely scenario test your design, designing to the 'nth' degree, will actually cause rigidity.
Needless Repetition. Who hasn't worked in an organization where repetition was rife?
"Not doing any". Design, that is. Or equally deadly, not informing all people of all the changes.

Have I missed some deadly sins? What are your experiences?

Why Sharing Knowledge Makes You More Influential

2006-04-04T10:43:00.000-06:00

We all know the old axiom of knowledge is power. But we've all also experienced in the 'free agent economy', having a specific talent or expertise is critical to being able to add value to a team. So how do you maintain your competitve differentiation, whether you are a business or a individual in a knowledge sharing world? Here's an interesting example of why you are more than your sum of your knowledge. Five years ago today, MIT launched OpenCourseWare (MIT OCW), a project that has had a profound effect on university dissemination of knowledge and academic material to learners around the globe. It was a revolutionary step -- one that reflected the idealism of the MIT faculty and the core educational mission of the Institute. OCW has ultimately led to fundamental changes in the way colleges and universities engage the web as a vehicle for education.

Today, thanks to OCW, MIT has made available, online and free of charge, the course materials from over 1285 undergraduate and graduate courses, and there are OCW projects underway at leading universities around the globe (including Tufts, Johns Hopkins, and universities in China, Spain, Portugal, Japan, France and Vietnam.) Nearly 20 million people have accessed OCW since its inception.

So has the OCW project meant that MIT has lost any of its status or influence, considering anyone around the world can 'virtually study' there? Not in the least, instead I would argue that MIT's influence has increased. Just as on ManyWorlds.com, where we measure influence of authors, by using our Epiture technology to figure out how many pieces of content are connected to authors, our own influence is statistic that we should all track. Influence is not just about connections, its about being able to channel knowledge and ultimately influence decisions in those connections. Connections in this case can be other people, academic institutions or companies. By opening and sharing more, MIT increases the scope of its connections, and can influence those connection points.

Its interesting to ponder how to do this on an individual basis. There are many people whose distinctive talent is based on the scope of their Rolodex, and there are many people whose distinctivness rests on their specific focus or expertise in a subject. But the knowledge economy that we live in now, demands that we both be master of an extensive connections network and have specific knowledge/expertise to share, in order to be truly influential.

Using General Patton's Military Principles to Power Your Business

2005-11-01T12:25:00.000-06:00

Bob Parsons, a highly successful internet entrepreneur, who you may never have across in big corporate circles, shares advice via General Patton on decision making techniques in this insightful blog. For all of those who think that their products are being commoditized, Parson's success should be a good anchor - after all the domain name business is rather cut-throat, but Parson's company 'GoDaddy' continues to grow year on year, without major offshoring so prevalent in the technology industry and high levels of customer satisfaction.

Loosing People, Growing Your Business

2005-10-28T15:01:00.000-06:00

I was listening to an interesting tele-seminar given by Michael Gerber two nights ago (I'll report on that fully in another blog). Gerber is famous for the E-Myth series of books on successful entrepreneurship. He hammered home that one of the most important skills of entrepreneurship is growing people. While I've heard that 'people' message a million times and absolutely believe it, it really hit home recently.

Our company, ManyWorlds, has grown from an idea formed by a couple of people disgruntled by the way that big corporations work (or don't) over a drink in a Dutch Casino one night, into a successful, growing business, with a super-cool technology, extensive patent portfolio and advisory consulting clients that love our advice. While we're not exactly a household name, I think we've done pretty well for 6+ years and surviving dot com crashes and had no VC funding (intentionally).

But recently, I was rather shocked and upset when our lead technical developer who has been with us for 5 years decided to leave. First I was in absolute disbelief, then I cried (yes, I'm embarrassed to admit that, but I did; I wept), then I was angry, and thank goodness finally I felt optimistic. He sent his resignation letter in at 10.30pm by email one night (hint to others: this is really not the best way to communicate this). 10.35pm I called his home, to ask what we had done wrong, and tried to find out what we could do to keep him. I was shocked to learn that he's been sort of looking around (or at least his wife has been for him) for a couple of months... We'd just given him a pay rise literally a month before... Anyway, the next day in the office, the mood was quite tense, I couldn't really face him. I was shocked at myself for this behavior, but I realized I have been though thick and thin with this person (both in work and his personal life), and had positioned myself more as a friend in his life, than a manager. Thank goodness for instant messaging... because without that I wouldn't have been able to communicate with him for a few days while the initial shock wore off. Over time, I realized that this employee's departure is something I couldn't really have prevented. Someone else at our company conducted the exit interview and their findings confirmed this.

Yes, there is a silver lining to this story. And Michael Gerber's words have helped me to define it. A few days after I learnt of this employee's departure, I started to feel optimistic - for no particular reason. I wasn't sure why, because even though we had started to interview other people, I wasn't feeling on solid ground at all. But I'm a person who thrives on change, even if it's bad initially (and boy, did I feel bad...), I realized that loosing a key member of staff is really an opportunity to work 'on' your business, not 'in' your business, as Gerber puts it. Sometimes you grow and develop people to an extent that they realize they're not destined to part of what your company does for the long haul. Often I fall in the trap of working 'in' our business, and not 'on' it, and I realize I've done that throughout my life, even while at part of large Fortune 10 companies. People moving on in your organization or department, however good they may be, offer an opportunity to shake things up, to reorganize, to take advantage of new trends and ways of working. And yes, there's a steep learning curve of course to climb again with new people and new challenges. But you do it so that you can climb to a new height of success, that isn't often possible with your existing talent, which is essential for the long term success of your organization.

Oh, by the way, we're hiring... :)

Pricing Judo

2005-05-16T10:02:00.000-06:00

I'm republishing a blog entry by my colleague Steve Flinn here for your interest and comments.

Pricing Judo

If you've had a chance to take a tour around www.manyworlds.com, you know we help executives apply some of the most sophisticated strategies and approaches around. But invariably we come across executives with a lament that is a variation of the following: "Steve -- all this sophisticated thinking you guys bring is great, but here's our situation -- we're in a war with a new competitor that just brings to market a knock-off of our product and then prices it a little below ours. That's leading to a spiraling commoditization of our industry and our business. So, smart guy, what do we do about that . . .?"

Well, longer-term you need to do something about how easy it is for a competitor to basically just copy your product. But, as the famous economist John Maynard Keynes pointed out, in the long run, we're all dead! So in shorter-term you need to use the few levers you have -- in particular segmentation and pricing levers. The following approach is one Dipak Jain, marketing expert and Dean of the Northwestern's Kellogg School of Management, has related to us. While not foolproof, it can buy you time to address some of the longer-term issues with product and services differentiation.

First, when a competitor brings to market a product that is similar to your product and then underprices you, your natural inclination is to lower your price to meet theirs, with the expectation that your stronger brand will give you the edge. But resist the very strong urge you have to take that approach! Lowering your price will only cheapen your brand, you'll legitimatize your competition's product, you'll signal to your customers that you have been overcharging them in the past, and you'll reinforce the commoditization of your business.

Instead, execute what Dean Jain calls a "sandwich strategy" -- what I'll call "pricing judo". First, add an additional "kicker" to your product to position it as clearly a more premium product than the competition's product, and raise the price! Then introduce a more economical version of your product and price it at or below the competition's product. This effectively sandwiches the competitor's product. The competitor may still gain some share, but the destructiveness to your margins should be blunted.

Every business leader would like competitors that are smart enough to not play the copy and drop-the-price game, as ultimately you both end up losing. But just about every industry has a dumb competitor or two, and so you have to be the smart one and apply the segmentation and pricing judo approach.

Meanwhile, get working on making your products and services impossible for the competition to copy in the first place!

Sorry - its been a while...

2005-05-15T20:36:00.000-06:00

Quick apologies that I haven't posted for a while... Too many clients - is that a good thing or a bad thing? Not enough thinking time certainly is a bad thing... I got quite a lot of interest on the HP new CEO, including pickup from Computerworld. Anyway I'll be back to full force soon, so keep tuned.

HP's New CEO, Same Strategy?

2005-03-29T13:14:00.000-06:00

Mark Hurd ran NCR and came up through the data warehousing division (Terradata). He was at NCR for 23 years. In his CEO tenure there, he has improved the financial results of the company, but maybe not its strategy. What an interesting choice - and how very different from Carly Fiorina. In terms of diversification, some may consider NCR to be a mini-HP for its broad range of product lines and offerings.

But I'm worried that HP is really trying to go to the same 'strategyspace' as IBM. That's a good way to destroy value. Think about HP's collaborative culture (see Regional Advantage book that describes the rise of Silicon Valley vs. Route 128 on the East Coast), HP is not adept at monolothic operations, never has been. Its history is in product innovation. The question is how can you continue to be known for innovation when you operate across many product lines.

My answer is that HP needs to re-evaluate its overall strategy and start moving up the value curve in innovation. See the ManyWorlds whitepaper on Frontiers of Innovation. Products should not be its focus, instead move up the value chain, through services, solutions and go to business model innovation. Perhaps that sounds too conceptual, but I think HP could bring it off. Let me explain, don't try to follow the IBM way of trying to be everything to the customer, instead it should concentrate on tackling big needs of customers with unique value propositions. Surround the customer with multiple tailored solutions for them, delivered by HP units in collaboration with other smaller, innovative companies. Yes, its a challenge managing things in a network, but wouldn't you rather work with a company who could truly say it had in-sourced the best in the world...

Jeeves now works for Barry Diller

2005-03-21T12:40:00.000-06:00

IAC/InterActiveCorp announced their $1.8M acquisition of Ask Jeeves today. It is an interesting addition to their already diverse portfolio that includes Home Shopping Network (HSN), Citysearch, Expedia, Hotels.com, Hotwire.com, LendingTree.com, Match.com and TicketMaster. A couple of weeks ago IAC also acquired a leading catalog retailer, Cornerstone Brands, who's portfolio includes the catalogs and websites of Frontgate, Ballard Designs, Garnet Hill, Smith and Noble, The Territory Ahead and TravelSmith.

There's much speculation today about how much investment IAC will have to put into Ask Jeeves' search technology in order to keep up with investments at Google and MSN Search. But I don't think that's what IAC is up to. We all know how the search game works, remember just a few years ago when Altavista was the bee's knees? And then it was Yahoo, and then Inktomi's engine and so on. Google as the current king pin, has been trying to broaden its scope of offerings in a bid to retard any advantages that a potential algorithm usurper might bring. Yahoo's in the same game, be the point of entry for the user on the web, run their email, run their blog/personal web site, so that you are guaranteed attention a.k.a. eyeballs for advertising revenue. And just last month, Ask Jeeves acquired Bloglines - the most used blog reader on the web today. Part of the reason that Bloglines, run by Mark Fletcher with no venture capital, welcomed the acquisition by Ask Jeeves was that 'One of the things we liked about Ask Jeeves is their multi-brand strategy, and we'll be operating as one of their independent brands.' Sounds similar to the way that IAC operates...

Diller's game (I think) is not to be the 'one portal' but instead to own the brands that people associate with specific needs and value propositions. I don't think they will be pouring tons of money into improving Ask Jeeves' algorithm (and why would they when Ask Jeeves' already owns Teoma's technology that's probably better and will be integrated into Bloglines). I think they will be strengthening the relationships between all the different products and services that IAC's portfolio sells. Diller is into owning the channel, and fulfilling the value proposition. I think he'd buy Amazon if he could. So let Google and Microsoft battle it out for better results from pages 10 million deep. He'll work on selling on you selling you something when you need it. And, oh by the way, check out Gifts.com, IAC's newest launch, for 'to be your one-stop destination to manage all of your gifting needs online!'

Mark Fletcher puts it best; as he well knows the basics of how-to-create-a-company-to-keep -customers-happy- and-thus-make-money method:
1. The company must address a pain point, an existing or soon-to-be problem 2. The company must be run lean
3. The company must not require its customers to change their behavior in any significant way

Of course, we at ManyWorlds are just waiting when people realize the game here is not about making search better, it's about creating and adapting personalized intelligent recommendations that get better over time. And that's when Epiture will show its true strength.

Not a Good Month to be an American CEO

2005-03-17T11:36:00.000-06:00

February 2005 has been quite possibly one of the worst months ever to be a CEO. As Dan Roberts of Financial Times reports '103 US companies announced the departure of their chief executives in February. It was the fourth consecutive increase in monthly turnover and the first time that more than 100 chief executive changes were announced since February 2001.' Ironically he points out; the rapidly spinning exit door at many of the biggest US companies comes during a period of record profitability for corporate America.

Consider last week's victim - Boeing's ethics stalwart and supposed Mr. Fix-it, Harry Stonecipher, was forced off the company's board, just ten days after allegations about an office affair were brought to light. Another public triste was the dramatic ousting of Carly Fiorina, who led the controversial merger with Compaq. Despite being given extra time to make it work, the board felt that Carly's strategy didn't align with theirs.
And now, at 79 years old Maurice (Hank) Greenberg of AIG, who is a management icon in the insurance world, has fallen from grace. After such a long tenure, surely this isn't the way he was planning to go. Greenberg was only AIG's second CEO since the company was founded in Shanghai in 1919.

Next to roll is Michael Eisner - the embattled 20 year veteran CEO at Disney, who will be succeeded by the man he wants to take his job, Robert Iger. Likewise, Martin Sullivan will take over the reigns at AIG. True to AIG's entrepreneurial legacy, Sullivan left school at 16 and has now worked his way up to the top at AIG. But at least Eisner has had the 'luxury' of succession planning, which it seems most of the publicized fallen, have not.

So is this trend evidence of the legacy that Sarbanes-Oxley will leave us? A revolving door of chief executives, who retread each others steps by being in a couple years here and then a couple of years there? Will there be more sacrifice to the short-term financial Baal rather than the long term growth god? How can executives be relieved from the temptation of manipulating the results in order to show corporate growth, when they are highly unlikely to be given the kind of tenure that allows them to design and implement new strategies for real growth? It seems that the lessons that Enron, Tyco and Worldcom were supposed to teach have instead become exercises in demonstrating how far you can stretch the boundaries, before the watch dogs will come after you.

The quest for revolving oversight has reached boards too. Just recently Nestle joined a host of other companies in mandating that presidents of the board could only tenure for three years. On the surface this seems a good thing, so that too insular companies must be permitted more external scrutiny. But then I have to wonder, who owns the mandate for the growth of the company in the long-term? Who will be a source for dramatic innovation and risk-taking to change the incumbent model of a company? Where will the next Lou Gerstner's and Jack Welch's come from, if their potential successors see the tumult and troubles associated with the corner office. Don't get me wrong, I'm certainly not advocating that people should conduct business unethically or by fraudulent means, but with given the pressure to produce results with an axe hanging over your head, most people will be tempted to clutch at any means possible.

Perhaps this means that the role of chief strategist in a company becomes much more important than now. Often in large companies, positions that are termed strategy managers are often filled with resources dedicated to operations rather than real growth strategy. Starbucks' executive team may then be good example of how to organize, with Howard Schultz as chief strategist and President and Owen Smith as CEO. Or Dell's similar arrangement, with Michael Dell as founder and strategist and Kevin Rollins as CEO. But these two firms are entrepreneurial in spirit still and 'young' compared to many on the Fortune lists. Time will tell, but for now, I would offer this small advice for those in the corner office. Establish an office of the chairman/CEO, nominate your COOs, and importantly, add a chief strategist.

Three Big Ideas

2005-01-10T15:44:00.000-06:00

I thought I'd share this post that ManyWorlds CEO Steve Flinn shared recently after we had a chat with Michael Schrage - who is always such a pleasure to be around...

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By Steve Flinn

As we ushered in the New Year, we were fortunate to have recently had the opportunity to spend some time with Michael Schrage, perhaps the world's foremost authority on business innovation, and, of course, a ManyWorlds Thought Leader. Our discussions with Michael were very wide-ranging as usual, but we eventually got on the topic of what we thought were the technical areas that will have the most impact on businesses over the next few years, and yet are currently very under-recognized. Here are three big ones that we kicked around:

1. Massive parallelism in information acquisition.

The reduction of scarcity in the computing world has already transformed myriad processes - we no longer worry about conserving scarce memory, storage, bandwidth, etc. We tend to forget that just a decade or two ago those were big bottlenecks. Cycle times are dramatically reduced when the marginal cost of formerly scarce resources plummet. In other words, waste makes haste! Now this same philosophy is being applied to experimentation. Massive parallelism of experiments, or more broadly, information gathering, has already had a profound impact on the biosciences, and now is poised to revolutionize materials science in general. While nano-tech gets all the buzz, 'waste makes haste' is the revolution that will hit first.

2. Inferencing from massive information.

The amount of information that is being generated, whether from 'waste makes haste' above, or from commercial transactions, market data, etc. is growing exponentially. Making inferences from this data remains a challenge. Coming to the rescue is a set of new inferencing techniques, most notably statistical learning models, that have just been mathematically established in the past five years or so. Some of these models are based on the biggest advance in the predictive modelling arena in 500 years! The Greeks gave us deduction, the Renaissance brought us induction, and now statistical learning theory brings us transduction. These new techniques promise insights from data that were previously inaccessible.

3. Adaptive systems and processes.

We all want systems and processes that adapt to our preferences and interests over time with use. By tracking our system and process usage behaviors, along with those of others to whom we have an affinity, systems can learn to become more and more effective. This approach was tried a number of years ago under the umbrella of 'intelligent agents', but the data gathered was too sparse, and the means of behavioral information capture too obtrusive to be effective. Now those barriers are rapidly falling, and application of statistical learning approaches described in 'Big Idea 2' above, will ensure adaptive systems and processes will become the norm.

Each of these areas is significant in its own right, but you can also tell from my brief musings that they will tend to reinforce one another - amplifying their impact. Transformational, yet non-obvious, technologies such as these three big ideas are the ones that end up driving the transformation of industries, and making or breaking businesses. As always, drop me a line if you would like to discuss. (to Steve Flinn :))

62 and Still Raging, But Oh So Cool!

2004-11-15T17:04:00.000-06:00

Ok, so I'm not sure if I was a fan before of Tom Peters or not - some of his books I loved (like Re-Imagine) and there were a couple that left me wanting. But today I think I became a fan of Tom's for sure... Though I have been a closet reader of his blog for a long time, isn't it funny how you can meet someone in person and suddenly they are much more than the sum of their parts (or books)? Blinding obvious thing to say, I know, but that's what happens when you're hit by the blinding obvious.

Tom really has the knack of incising to the core of the issue, through humor and anecdotes, to leave your mind in both agony and ecstasy. Ecstatic from the delightful irony in humor and new knowledge and agonizing because his comments make you itch in your seat, desperate to act and live out your dreams. I'm not sure half the people in the audience today really understood and will process what he said, and I'm not pretending that I can either, but some of it really shook me. I'm sorry that it will be so hard to transmit my feeling (because that's what it is), through this medium, and still be able to give you some value.

Factoids (evidence of the weird world we live in)

1. Every 26 mins a new factory (foreign owned) appears in China
2. February 12 2001 - the human genome is decoded and publicly available
3. Wi=2XI - Wal-mart's 460 terabyte data warehouse contains twice the amount of information on the entire internet
4. 35/70 - The highest level of software system qualification is a level 5 from Carnegie-Mellon, its kind of like the Baldridge Award but for software. There have been 70 Level 5 awards, 35 to India...

Key Messages:

Learning is Not Imitation. (Dear Tom, I love you) - god, I don't know how many companies I have given the 'why benchmarking is bad' speech to. Most benchmarking is bad. It engenders those behaviors you really don't want, i.e. striving to mediocrity, being ok with being 'industry average', and measuring yourself against an invisible and presumably finite yardstick. Tom hates the word 'best' because it implies there is a top spot, a king of the hill, that can be attained. Of course it isn't true, best is a relative and subjective word, but most companies don't seem to realize that. Learning means exploring, pioneering, discovering and internalizing your findings, and, guess what, improving and adapting (aka learning). My colleague Steve Flinn has written extensively on why companies mustn't lose the failures, there's more value in those than all the success your organization has ever had. I also learned that Tom disagrees with deductive thinking of Michael Porter, on this ManyWorlds would be completely aligned - except that I know that there are some corporate cultures that can't handle anything more... sadly...

Unthinkable Change Will Happen - Tom shared an anecdote about his childhood, where he grew up in NY in the 1950s. Every night his boyhood room was illuminated by a glow that seemed to never diminish. The glow came from the largest steel making plant in the world (outside the then Soviet Union) owned by Bethlehem Steel. Rolling the clock forward 50 years, and there is no Bethlehem Steel, the steel industry is a shadow of what it was, and people of the 1950s would astonished that it has become such a commodity. Tom was asked to deliver this same message to the executive team at Wal-mart, which gives cause for thought... Who and what will be the icons of our decade, our time, our 'world' as we define it, and how will the unthinkable inevitably happen?

Make A Difference, Personally - It's not all about companies, or competing strategies, its about changing the culture. And culture change starts with the person you look at in the mirror everyday. 'Did we make a dramatic, lasting, game-changing difference' to the world around us? How can you live on the fringe and make a real difference? Sometimes, as I have found, change can be achieved from within corporations and sometimes you can only help it from outside. In reality its probably a combination of both, that really makes change a reality. And that goes for each of us on a personal basis too. Often, as part of large organizations, we're put in this difficult situation where we must be both part of the system and confluent with its ways to keep our jobs and our credibility, and yet disruptive enough to make a difference. It's an incredibly hard balancing act, but by finding like-minds (or fringe dwelling freaks as Tom would probably put it), you can keep your sanity and effect change. Gary Hamel's famous quote about people working for causes not companies is so true, and that's what you're seeking to create - a common cause that many can act on.

Challenge yourself to find a few words to describe yourself and how you are going to make a difference. And, please, act on it.

Here's mine: 'developing an adaptive knowledge network technology that will revolutionize the way that people learn, share and innovate.' Yes, that might be surprising, given my day job of being Executive Editor of a major business strategy and innovation site, and advising top echelons of Fortune 100 companies on their strategic direction, but what really turns me on is learning - and here at ManyWorlds, we are creating software that will help you learn in context without realizing you are learning, while you are helping the software to learn too, without realizing it. And my hope is that it will help you revolutionize what ever you are doing.

Learning for Innovation

2004-11-15T10:58:00.000-06:00

Here are some trends I've heard, from a couple of speeches at the conference this morning, including a keynote from Elliott Masie.

Self Service - A quick poll of the audience, about 1500 people, revealed that most of us used a check-in kiosk at the airline of our choice to get to NYC. A year ago this was unthinkable. This is a great example of why the 'self-service' trend is so hot and will continue to be the preferred way of people to interact with systems. At first you'd think the airline personnel who used to staff the check in desks would be highly threatened by this, but they have now realized that they are freed up to really add value to situations where people really need help, not just the transactional. And now kiosks are moving up the value chain, mooving from the transactional to the 'revenue generating' as they have new functions to buy drink coupons and 'auction' first class seats depending on demand. Imagine this kind of self-service environment in a much broader way inside organizations, its a great way to help them learn and develop, as well as freeing up 'real' people to focus on the most important things.
Credo Based Leadership - Mission statements are not just for decorating the walls of your office anymore. Having a credo and living about it, is the new way to facilitate management and disperse responsibility throughout the organization. Masie gave an example (rather hokey, but true) about a company that has narrowed that credo down to 5 elements. And they chant the 5 elements before every meeting. Sounds a bit stupid, but hey if its works... One element of their credo is 'being open to innovtion and to tolerate new ideas - even when they make us uncomfortable' - how cool is that to open a meeting...
Learning has to Operate at the Speed of Business - ManyWorlds has been saying for a long time that to enable business learning, context is critical (see our adaptive knowledge network technology at www.Epiture.com). But it really is critical. If we are to pursue the vision of what ManyWorlds terms 'real-time learning' (see the Future of Learning whitepaper), we must deliver content, in context, with a forma factor suited to the context. How else can we expect employees to operate, learn and adapt as fast as changing business conditions?
Don't Perfect the Irrelevant - The time: 1997. The place: Smith Corona's last leadership meeting. The century-old typewriter firm's CEO got up on stage , and put on the podium their last most advanced model. Even analysts declared that this was the greatest machine ever. The CEO explained how he wanted his people to feel very proud of their accomplishments in putting this amazing machine together. But poignantly he explained ' what we have done here is to perfect the irrelevant'. Smith Corona lost sight of what their real value proposition was, especially in the age of the PC.

More later, and apologies for the quick writing here, that's the nature of real-time writing.