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NY Times: The Yin and the Yang of Corporate

 

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January 26, 2012

The Yin and the Yang of Corporate Innovation

By STEVE LOHR

IN the hunt for innovation, that elusive path to economic growth and corporate prosperity, try a little jazz as an inspirational metaphor.

That’s the message that John Kao, an innovation adviser to corporations and governments — who is also a jazz pianist — was to deliver in a performance and talk on Saturday at the World Economic Forum in Davos, Switzerland. Jazz, Mr. Kao says, demonstrates some of the tensions in innovation, between training and discipline on one side and improvised creativity on the other.

In business, as in jazz, the interaction of those two sides, the yin and the yang of innovation, fuels new ideas and products. The mixture varies by company.

Mr. Kao points to the very different models of innovation represented by Google and Apple, two powerhouses of Silicon Valley, the world’s epicenter of corporate creativity.

The Google model relies on rapid experimentation and data. The company constantly refines its search, advertising marketplace, e-mail and other services, depending on how people use its online offerings. It takes a bottom-up approach: customers are participants, essentially becoming partners in product design.

The Apple model is more edited, intuitive and top-down. When asked what market research went into the company’s elegant product designs, Steve Jobs had a standard answer: none. “It’s not the consumers’ job to know what they want,” he would add.

The Google-Apple comparison, Mr. Kao says, highlights the “archetypical tension in the creative process.”

Google speaks to the power of data-driven decision-making, and of online experimentation and networked communication. The same Internet-era tools enable crowd-sourced collaboration as well as the rapid testing of product ideas — the essence of the lean start-up method so popular in Silicon Valley and elsewhere.

“These are business and management innovations lubricated by technology,” says Thomas R. Eisenmann, a professor at the Harvard Business School.

The benefits, experts say, are most apparent in markets like Internet software, online commerce and mobile applications for smartphones and tablets. “The cost of creation, distribution and failure is low, so it takes relatively little time, money and effort to float trial balloons,” says Randy Komisar, a partner in Kleiner Perkins Caufield & Byers, the venture capital firm, and a lecturer on entrepreneurship at Stanford.

That style of innovation is being applied well beyond Google’s products and Internet start-ups. The National Science Foundation, for example, is embracing the formula to try to increase commercialization of the university research it finances. Last fall, the foundation announced the first of a series of grants for what it calls the N.S.F. Innovation Corps. The 21 three-member teams received a crash course at Stanford in lean start-up techniques, and have been given $50,000 each and six months to test whether their inventions are marketable.

The lean formula, with its emphasis on constantly testing ideas and products with customers, amounts to applying “the scientific method to market-opportunity identification,” says Errol B. Arkilic, program director at the foundation.

Yet while networked communications and marketplace experiments add useful information, breakthrough ideas still come from individuals, not committees. “There is nothing democratic about innovation,” says Paul Saffo, a veteran technology forecaster in Silicon Valley. “It is always an elite activity, whether by a recognized or unrecognized elite.”

Successful innovation, Mr. Saffo observes, requires “an odd blend of certainty and openness to new information.” In other words, it is a blend of top-down and bottom-up discovery.

OPEN innovation isn’t a new idea. It flourished, in its way, even in the late 19th and early 20th centuries, notes Tom Nicholas, a historian at the Harvard Business School. In fields like electricity, pharmaceuticals and communications, big corporations including General Electric and Dow Chemical routinely monitored the research beyond their walls, and bought or licensed promising work, especially the inventions of university scientists. The result, Mr. Nicholas says, was a thriving “ecosystem of private and corporate innovation.”

A century later, the corporate labs at G.E. are trying to quicken the pace of innovation — but this is long-cycle innovation, since G.E.’s power generators, jet engines and medical-imaging equipment last for decades. The company is opening a software center in Northern California to make its machines more intelligent with data-gathering sensors, wireless communications and predictive algorithms. The goal is to develop machines, such as jet engines or power turbines, that can alert their human minders when they need repairs, before equipment failures occur. Such smarter machines, the company says, are early arrivals in what it calls the Industrial Internet.

To tap outsider ideas, G.E.’s research arm has made investments with venture capital funds in clean-energy technology and health care, and it works with corporations, government labs and universities on hundreds of collaborative projects. “We’re much more externally focused and connected to the outside world than we were several years ago,” says Michael Idelchik, G.E.’s vice president of advanced technologies.

Apple’s smartphones, tablets and computers typically have life spans measured in a few years instead of decades, with new models introduced regularly. But like G.E., Apple is in the hardware business, where innovation cycles are beholden to the limits of materials science and manufacturing.

Apple’s physical world is far different from Google’s realm of Internet software, where writing a few lines of new code can change a product instantly. The careful melding of hardware with software in Apple’s popular products is a challenge in multidisciplinary systems design that must be orchestrated by a guiding hand — though it will no longer be the hand of Mr. Jobs, who died last October.

Yet Apple has also repeatedly displayed its openness to new ideas and influences, as exemplified by the visit that Mr. Jobs made to the Palo Alto research center of Xerox in 1979. He saw an experimental computer with a point-and-click mouse and graphical on-screen icons, which he adopted at Apple. It later became the standard for the personal computer industry.

In 2010, Apple bought Siri, a personal assistant application for smartphones. At the time, it was a small start-up in Silicon Valley that originated as a program funded by theDefense Advanced Research Projects Agency of the Pentagon. Last year, Siri became the talking question-answering application on iPhones.

Apple product designs may not be determined by traditional market research, focus groups or online experiments. But its top leaders, recruited by Mr. Jobs, are tireless seekers in an information-gathering network on subjects ranging from microchip technology to popular culture. “It’s a lot of data crunched in a nonlinear way in the right brain,” says Erik Brynjolfsson, director of the M.I.T. Center for Digital Business.

Apple and Google pursue very different paths to innovation, but the gap between their two models may be closing a bit. In the months after Larry Page, the Google co-founder, took over as chief executive last April, the company eliminated a diverse collection of more than two dozen projects, a nudge toward top-down leadership. And Timothy D. Cook, Apple’s C.E.O., will almost surely be a more bottom-up leader than Mr. Jobs.

“What we’re likely to see,” Mr. Kao says, “is Google and Apple each borrowing from the playbook of the other.”

Economist: Applying the world's business brains to housing the poor

Schumpeter

A $300 idea that is priceless

Applying the world’s business brains to housing the poor

Apr 28th 2011 | from the print edition

FRIEDRICH ENGELS said in “The Condition of the Working Class in England”, in 1844, that the onward march of Manchester’s slums meant that the city’s Angel Meadow district might better be described as “Hell upon Earth”. Today, similar earthly infernos can be found all over the emerging world: from Brazil’s favelas to Africa’s shanties. In 2010 the United Nations calculated that there were about 827m people living in slums—almost as many people as were living on the planet in Engels’s time—and predicted that the number might double by 2030.

Last year Vijay Govindarajan, of Dartmouth College’s Tuck School of Business, along with Christian Sarkar, a marketing expert, issued a challenge in a Harvard Business Review blog: why not apply the world’s best business thinking to housing the poor? Why not replace the shacks that blight the lives of so many poor people, thrown together out of cardboard and mud, and prone to collapsing or catching fire, with more durable structures? They laid down a few simple guidelines. The houses should be built of mass-produced materials tough enough to protect their inhabitants from a hostile world. They should be equipped with the basics of civilised life, including water filters and solar panels. They should be “improvable”, so that families can adapt them to their needs. And they should cost no more than $300.

Mr Govindarajan admits that the $300 figure was partly an attention-grabbing device. But he also argues that it has a certain logic. Muhammad Yunus, the founder of Grameen Bank, has calculated that the average value of the houses of people who have just escaped from poverty is $370. Tata Motors has also demonstrated the value of having a fixed figure to aim at: the company would have found it more difficult to produce the Tata Nano if it had simply been trying to produce a “cheap” car rather than a “one lakh” car (about $2,200).

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The attention-grabbing certainly worked. The blog was so inundated with positive responses that a dedicated website, 300house.com, was set up, which has attracted more than 900 enthusiasts and advisers from all over the world. On April 20th Mr Govindarajan launched a competition inviting people to submit designs for a prototype of the house.

Why has a simple blog post led to such an explosion of creativity? The obvious reason is that “frugal innovation”—the art of radically reducing the cost of products while also delivering first-class value—is all the rage at the moment. General Electric has reduced the cost of an electrocardiogram machine from $2,000 to $400. Tata Chemicals has produced a $24 purifier that can provide a family with pure water for a year. Girish Bharadwaj, an engineer, has perfected a technique for producing cheap footbridges that are transforming life in rural India.

Another reason is that houses can be such effective anti-poverty tools. Poorly constructed ones contribute to a nexus of problems: the spread of disease (because they have no proper sanitation or ventilation), the perpetuation of poverty (because children have no proper lights to study by) and the general sense of insecurity (because they are so flimsy and flammable). Mr Govindarajan’s idea is so powerful because he treats houses as ecosystems that provide light, ventilation and sanitation.

Numerous innovators are also worrying away at this nexus of problems. Habitat for Humanity, an NGO, is building durable houses of bamboo in Nepal. Idealab, a consultancy, is on the verge of unveiling a $2,500 house that will be mass-produced in factories, sold in kits and feature breakthroughs in ventilation, lighting and sanitation. Philips has produced a cheap cooking stove, the Chulha, that cuts out the soot that kills 1.6m people a year worldwide. The Solar Electric Light Fund is demonstrating that you can provide poor families with solar power for roughly the same cost as old standbys such as kerosene and candles.

Profits and other problems

These thinkers, like the advocates of the $300 house, must solve three huge problems to succeed. They must persuade big companies that they can make money out of cheap homes, because only they can achieve the economies of scale needed to hit the target price. They need to ensure sufficient access to microloans: $300 is a huge investment for a family of squatters living on a couple of dollars a day. And they need to overcome the obstacle that most slum-dwellers have weak or non-existent property rights. There is no point in offering people the chance to buy a cleverly designed house if they have no title to the land they occupy. Solving these problems will in turn demand a high degree of co-operation between people who do not always get on: companies and NGOs, designers and emerging-world governments.

However, the exciting thing about the emerging world at the moment is a prevailing belief that even the toughest problems can be solved. And a similar can-do moment, in the late 1940s, offers a striking historical precedent for the application of mass-production techniques to housing: as American servicemen flooded home after the second world war to start families, Levitt & Sons built Levittowns at the rate of 30 houses a day by mass-producing the components in factories, delivering them on lorries and using teams of specialists to assemble them.

Some emerging-world governments are beginning to realise that providing security of tenure is the only way to deal with the problem of ever-proliferating slums. And big companies that face stagnant markets in the West are increasingly fascinated by the “fortune at the bottom of the pyramid”. Bill Gross of Idealab reckons the market for cheap houses could be worth at least $424 billion. But in reality it is worth far more than that: preventing the Earth from becoming what Mike Davis, a particularly gloomy follower of Marx and Engels, has termed a “planet of slums”.

Fast Code Design: Wanna Solve Impossible Problems? Find Ways to Fail Quicker

Source: http://www.fastcodesign.com/1663488/you-are-solving-the-wrong-problem

Wanna Solve Impossible Problems? Find Ways to Fail Quicker

A case study in how an intractable problem -- creating a human-powered airplane -- was solved by reframing the problem.

1959 was a time of change. Disney released their seminal film Sleeping Beauty, Fidel Castro became the prime minister of Cuba, and President Dwight D. Eisenhower made Hawaii an official state. That same year, a British industry magnate by the name of Henry Kremer wondered: Could an airplane fly powered only by the pilot's body?

Like Da Vinci, Kremer believed it was possible and decided to try to turn his dream into reality. He offered the staggering sum of £50,000 for the first person to build a human-powered plane that could fly a figure eight around two markers set a half-mile apart. Also, he offered £100,000 for the first person to fly across the English Channel. In modern U.S. dollars, that’s the equivalent of $1.3 million and $2.5 million. The Kremer Prize was the X-Prize of its day.

[Paul MacCready holding a “Speed Ring,” a device he invented for competitive glider flying.]

The problem was the process itself.

A decade went by. Dozens of teams tried and failed to build an airplane that could meet the requirements. It looked impossible. Another decade threatened to go by before our hero, Paul MacCready, decided to get involved. He looked at the problem, how the existing solutions had failed, and how people were making their airplanes. He came to the startling realization that people were solving the wrong problem. “The problem is,” he said, “that we don’t understand the problem.”

MacCready’s insight was that everyone who was working on solving human-powered flight would spend upwards of a year building an airplane on conjecture and theory without a base of knowledge based on empirical tests. Triumphantly, they would complete their plane and wheel it out for a test flight. Minutes later, a year's worth of work would smash into the ground.

Even in successful flights, the flight would end with the pilot physically exhausted just a couple hundred meters later. With that single new data point, the team would work for another year to rebuild, re-test, and re-learn. Progress was slow for obvious reasons, but that was to be expected in pursuit of such a difficult vision. That’s just how it was, went the common thinking.

The problem was the problem. MacCready realized that what needed to be solved was not, in fact, human-powered flight. That was a red herring. The problem was the process itself. And a negative side effect was the blind pursuit of a goal without a deeper understanding of how to tackle deeply difficult challenges. He came up with a new problem that he set out to solve: How can you build a plane that could be rebuilt in hours, not months? And he did. He built a plane with Mylar, aluminum tubing, and wire.

The first airplane didn’t work. It was too flimsy. But, because the problem he set out to solve was creating a plane he could fix in hours, he was able to quickly iterate. Sometimes he would fly three or four different planes in a single day. The rebuild, re-test, and re-learn cycle went from months and years to hours and days.

Find a faster way to fail, recover, and try again.

Eighteen years had passed since Henry Kremer opened his wallet for his challenge. Nobody could turn that vision into an airplane. Paul MacCready got involved and changed the understanding of the problem to be solved. Half a year later later, MacCready’s Gossamer Condor flew 2,172 meters to win the prize. A little more than a year after that, the Gossamer Albatross flew across the English Channel. So what's the lesson? When you are solving a difficult problem, re-frame the problem so that your solution helps you learn faster. Find a faster way to fail, recover, and try again. If the problem you are trying to solve involves creating a magnum opus, you are solving the wrong problem.

[Thanks to Alan Kay for turning me on to this story.]

Aza Raskin

Aza is the founder of Massive Health, and was until recently Creative Lead for Firefox. Previously, he was Head of User Experience for Mozilla Labs. He's been responsible for... Read more

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Fast Company: How Carrots Became the New Junk Food

Article location:http://www.fastcompany.com/magazine/154/the-new-junk-food.html

April 1, 2011

Tags: Leadership, Innovation, Ethonomics, carrots

How Carrots Became the New Junk Food

By Douglas McGray

LATE LAST SPRING, Omid Farhang, vice president and creative director at the advertising agency Crispin Porter + Bogusky, started hearing a word around the office: "carrots." He didn't think much of it at first. Crispin specializes in lavish, zeitgeisty campaigns for brands such as Burger King and Old Navy. New clients are often assigned code names, to keep them a secret as long as possible. Carrots probably meant a new campaign for Nike or Frito-Lay. Then Farhang heard the brief. "I was like, Wait, carrots is carrots?" he says, laughing.

Bolthouse Farms sells nearly a billion pounds of carrots a year -- the carrots Farhang kept hearing about -- under a number of different brand names and supermarket labels. Only Grimmway Farms, a few minutes down the road in Bakersfield, California, sells more, just barely. Together, the two companies control more than 80% of the carrot market in the United States. As produce growers go, they are huge businesses -- in Bolthouse's case, between $600 million and $800 million a year in revenue, including premium beverages (carrot juice, of course, as well as açai, fruit smoothies, and vanilla chai) and salad dressings.

The company has been around for nearly a century now, but it boomed in the 1990s, with a breakthrough product. A local grower named Mike Yurosek had become frustrated with all the waste in the carrot business. Supermarkets expected carrots to be a particular size, shape, and color. Anything else had to be sold for juice or processing or animal feed, or just thrown away. Yurosek wondered what would happen if he peeled the skin off the gnarly carrots, cut them into pieces, and sold them in bags. He made up a few test batches to show his buyers. One batch, cut into 1-inch bites and peeled round, he called "bunny balls." Another batch, peeled and cut 2 inches long, looked like little baby carrots.

Bunny balls never made it. But baby carrots were a hit. They transformed the whole industry. Soon, the big growers in Bakersfield were planting fields with baby carrots in mind, sowing three times more seeds per acre, so the carrots, packed densely together, would grow long and skinny, for the maximum number of 2-inch cuts. Yields and profits climbed. The really big deal, the thing nobody expected, was that baby carrots seemed to make Americans eat more carrots. In the decade after they were introduced, carrot consumption in the United States doubled.

Then a couple of years ago, after a decade of steady growth, Bolthouse's carrot sales went flat. Sales of baby carrots, the company's cash carrot, actually fell, sharply, and stayed down. Nobody knew why. This was a big problem.

FOR JEFF DUNN, Coca-Cola was the family business. Dunn's father spent most of his career at the company negotiating huge sponsorship deals around events like the Super Bowl and the Olympics. Just a few years out of college, Dunn followed him. Dunn eventually took over his father's job and became one of the company's top executives, overseeing all of Coca-Cola's businesses in North and South America. Like his father, Dunn considered himself a marketing guy, which made sense for a top executive at a soft-drink company. "We were selling sugar water and fairy dust," Dunn says. "And don't forget the fairy dust."

Three years ago, he became CEO of Bolthouse. His office is across the street from an agricultural machine yard filled with tractors, seeding trucks, and 65,000-pound harvesters. It has been something of a change. Then again, there are similarities. "Carrots are basically a duopoly," he says. "It's Coke and Pepsi." And when he looked at his flagging sales, he wondered if some fairy dust might help.

Dunn put together a series of focus groups and surveys and discovered something interesting. People said they were eating as many carrots as they always had. But the numbers clearly showed they were buying fewer. What people meant, it turned out, was they were as likely as ever to keep carrots in the fridge. When the recession hit, though, they became more likely to buy regular carrots, instead of baby carrots, to save money. But people used to eating baby carrots weren't taking the time to wash and cut the regular ones. And unlike baby carrots, which dry out pretty quickly once a bag is opened, regular carrots keep a long time. So people were buying regular carrots and then not eating them, and not buying more until the carrots they had were finally gone or spoiled.

Bolthouse had never marketed its baby carrots. It just sent truckloads to supermarkets, where they got piled up in the produce aisle. Dunn assembled a small team and studied advertising campaigns for other agricultural commodities, such as almonds, avocados, eggs, and milk. They were shocked at what they found. "Every campaign paid back," Dunn says. "Every single one. Between 2 and 10 times."

So they drafted a brief to circulate to ad agencies. "Carrots have an appealing personality. Fun, fun-loving, friendly. High-energy. Visually appealing," they explained. "Baby carrots are the best form factor of carrots." Dunn was clear: He didn't want a health campaign, one that talked about beta carotene or cutting calories. He wanted something more emotional, maybe something funny, something that appealed to impulse rather than responsibility -- the kind of thing a soft-drink or snack-food company might do.

Dunn's team talked to more than 20 agencies. One firm pitched a commercial with a vegetable army, baby carrots in the lead, storming a beach defended by junk food. Another proposed pairing two unlikely celebrities together, or maybe rival politicians, with the punch line "Look who's having a baby!" Dunn kept a memento from the proposal he liked best, a large model of a carrot ripping through a jelly doughnut, red jelly oozing from the exit wound. Nothing, though, seemed quite right. Even the outrageous ideas tended to come back to avoiding junk food and eating healthier.

Then something unusual happened. One of the agencies recommended a rival firm, Crispin Porter + Bogusky. They thought the sensibility Dunn was fishing for sounded like Crispin's work. Dunn figured there was no way Bolthouse had the profile or the resources to hire a firm like Crispin. But he called them anyway. "You guys are kind of late to the game," he said, "but do you want to take a crack at this?"

A MONTH LATER, Dunn flew to Boulder, Colorado. Crispin had decorated its modern, glass conference room like a barn, with bales of hay stacked all around and a wooden bolthouse farms sign over the door. Farhang, the creative director, wasn't sure about the barn. It's possible these guys may find this offensive, he thought. They aren't a bunch of bumpkins.

The presentation began with some ethnography. Crispin had done its own behavioral research, lurking in kitchens around the Boulder area. Staffers had watched suburban moms unpack their groceries and studied where kids looked for snacks when they got home from school. Kids seldom went to the refrigerator; instead, they went straight for the cupboards or the pantry. If they did go to the fridge, baby carrots were at least visible, out on a shelf. Full-size carrots, though, always went in the vegetable drawer. "The drawer of death," one kid called it. Adults weren't particularly fond of the vegetable drawer either. They tended to associate it with all the vegetables they buy and forget, and then discover weeks later, limp and leaking. A strategy began to emerge. Let regular carrots be the vegetable.

"Everyone else pitched baby carrots as an antidote to junk food," Dunn says. "Where Crispin came out was almost the exact opposite. We want to be junk food."

Farhang and his colleagues unveiled storyboards with concepts for a series of winking, self-aware junk-food ads. One ad featured a baby-carrot-branded spray tan, endorsed by Snooki, the star of MTV's Jersey Shore. ("Doritos could potentially do something like that, with the cheese-dusted color of their product," Farhang explains.) In another, a sultry model, surrounded by billowing black silk, runs a carrot slowly across her lips as a voice-over purrs about indulgence -- think Dove chocolates. The best one seemed inspired by a Mountain Dew commercial. A skater dude rides a jet-powered shopping cart through a desert pass, dodging baby-carrot gunfire. Things blow up. There's a pterodactyl. "Extreme pterodactyl!" the voice-over yells.

"To have a great advertising idea, you have to get at the truth of the product," Farhang explains. "The truth about baby carrots is they possess many of the defining characteristics of our favorite junk food. They're neon orange, they're crunchy, they're dippable, they're kind of addictive."

Bolthouse didn't have much to gain from a house-branded campaign since it sells under many labels, and a generic campaign like "Got Milk?" might convince its rival, Grimmway, to share the cost, so Crispin made baby carrots the star. "It's not about making baby carrots cool," Crispin CEO Andrew Keller stresses. "It's about getting baby carrots into a different category."

Crispin imagined individual snack packs made of opaque, crinkly plastic, like a potato-chip bag, with bold, junk-food-style graphics (the new packaging would cost about 25% more than traditional veggie bags, but Dunn could justify it as a marketing expense). "People are now grabbing a bag of these, you know, eating them in the car," Dunn's marketing chief, Bryan Reese, says. They'd look right at home by a convenience-store checkout. Farhang and his colleagues showed ideas for a baby-carrot vending machine, too, and a chilled carrot jar, like a cookie jar, that might stay out on the counter. Bolthouse's traditional packaging worked only for the produce aisle and the kitchen fridge, and it asked more of people. "You know, unzip the 2-pound bag of baby carrots ..." Reese says, in a weary voice. "Grab a few baby carrots ... rezip it ..." We might remember this as an unfortunate cultural milestone, the moment when eating baby carrots became too much work, but Bolthouse wanted people eating more vegetables, and it was looking for whatever would sell.

Just to be safe, Crispin presented a few ideas that brought up healthfulness. But Dunn didn't seem to care. Farhang thought that was smart. "What a silly use of advertising dollars to tell people that vegetables are healthy," he says.

A few weeks later, Farhang was in the California desert, with a film crew. "There's a guy in a shopping cart with a rocket strapped to it, and there's pyrotechnics lining the base of a cliff, and there's a really hot model standing next to a machine gun," he recalls, and laughs. "It's hard not to be nervous. We've got this client that has a genuine desire to change its business, to change the way that people look at carrots forever." And it was planning to spend a huge sum of money for a produce company, in the neighborhood of $25 million. "This isn't Coca-Cola," he says. "We have one shot to get this right."

AT COCA-COLA, Dunn was obsessed with per capita consumption. "Per capita was my mantra," he says. But as he neared the end of his time there, he began to feel conflicted. It was still his job to sell more Coke. But people were drinking a lot of Coke. He talked to his father about it. "If you've got a per capita of three, four, five" -- 500 Cokes a year -- "that's fine. But there are places in the United States where you have per capitas of 1,000. I can't get my head around somebody drinking 1,000 Cokes a year," Dunn says. "This was before obesity had become as prevalent. But it was pretty clear that's where the world was going. And certainly sugar soft drinks had a direct role in that."

Dunn talks as if he carries some karmic debt, still. (He never doubted Coke enough to quit; he actually angled for CEO, only to be forced out when a rival got the job instead.) But his experience comes with a unique perspective. "If all we do is tell people fruits and vegetables need to be part of their diet or they're not going to be healthy -- the rational approach -- we have zero chance," he says. "The last 10 years has proven it. There's been so much written and so much government stuff. And per capita consumption isn't up. I believe there's a different approach.

"People will say, 'You open the bag, it's just baby carrots.' Well, it's just Lay's potato chips, it's just Doritos, there's nothing special about them," he says. "They're just cool and part of your life. If Doritos can sell cheeseburger-flavored Doritos, we can sell baby carrots."

Crispin's campaign, "Eat 'Em Like Junk Food," debuted last September in two test markets: Syracuse, New York, and Cincinnati. (There are plans to expand the campaign to other markets by this fall.) Three television spots aired, as well as a web series, Munchies, starring two slacker grocery clerks. @babycarrots began tweeting salvos at snack-food rivals: "Yo, @skittles. Taste our rainbow. Of orange." "Elves making cookies with their grubby little elf hands ... that can't be sanitary." Display ads, printed up for supermarkets, presented baby carrots as "the original orange doodle," and billboards suggested never fear carrots and beer. Maybe most provocatively, Bolthouse installed baby-carrot vending machines, wrapped in eat 'em like junk food graphics, at a pair of high schools.

By November, sales in Bolthouse's test markets were up 10% to 12% over the year before, compared to minimal improvement or slight decline in a control group. The vending machines were selling 80 to 90 snack packs per week; a number of schools have approached the company about installing their own machines, and Bolthouse is investigating what it would take to scale vending into a real business. In April, it will test its first movie tie-in, with snack packs promoting a new animated comedy, Hop.

"The biggest thing that hasn't worked yet is I haven't gotten my buddy down the street to do it with us," Dunn says. He and Grimmway's CEO have been talking regularly, but just talking, nothing more. (Grimmway's chief, Jeff Meger, declined to comment for this article.)

Meanwhile, nearby, in a room that looks like a cross between a sterile lab and a cluttered kitchen, a white-coated staff has been experimenting with a future phase of the campaign: flavors. Dunn won't say which ones baby carrots might come in, or how Bolthouse will do it -- both coatings and infusions have upsides and downsides -- only that anything it does will be healthy and natural.

So probably not cheeseburger. Cool Ranch, though, might want to watch its back.

A version of this article appears in the April 2011 issue of Fast Company.

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Fast Company: How a Breakthrough in Hysterectomies COuld Lead to Better Family Photos

Article location:http://www.fastcompany.com/1716289/how-a-breakthrough-in-women-s-health-makes-for-better-photographers

January 12, 2011

Tags: Leadership, Innovation, Technology, Ethonomics

How a Breakthrough in Hysterectomies Could Lead to Better Family Photos

By Damian Joseph

There's a common link among photographers, scientists and surgeons: a lens. Whether it be inside a camera, a microscope, or an endoscope, success depends on the tiny glass pieces.

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Olympus deals in lens mastery. The $9.8 billion-a-year Japanese company is built on improving them. A better lens means the company can sell better endoscopes, better microscopes, and better consumer cameras. Improve one, improve them all. In a move that exemplifies the company's knack for using medical innovation to drive business other fields, Olympus has come up with a tool for a new, minimally invasive hysterectomy procedure and parlayed the technology involved into its next-generation digital cameras.

Olympus might be best known for its cameras, but its real success is actually in health care. Health care tools account for some 40% of the company's revenue. Not only is health care more lucrative, it makes for loftier goals--such as taking a crack at modernizing the hysterectomy. The company spent more than $2 billion and two years on perfecting a new laparoscopic method. The hope is that doctors will adopt the new technique, and in doing so, buy an Olympus endoscope.

"We're selling the procedure not the product," CEO of Olympus America, Mark Gumz, tells Fast Company. "And that's completely new to us." Whereas before most women needed two months to recover from a hysterectomy, Olympus' new method has them back to work in a week, with barely a scar. Laproscopic surgery has been around for years, but doctors say newer, HD endoscopes make the revolution in hysterectomies possible. The cams are, in effect, surgeons' eyes. Rather than split a patient open, doctors operate through tiny cuts in the skin. The endoscope, a snake-like tool with a camera at the tip, beams back HD video from inside the patient's body.

Now here's where your photos with the in-laws come in.

The same lens technology also powers Olympus's next-generation PEN series consumer cameras, the company's first micro four thirds system. The PEN E-PL1 made waves in May 2010 when the company aired a commercial shot entirely with its video function. The camera's retro casing had design heads drooling, too. In March 2010, it won a Red Dot design award.

The revenue from cameras and microscopes helps buttress Olympus' medical business, which faces more challenges in the marketplace. To sell more endoscopes to use in laparoscopic hysterectomies, Olympus must overcome "surgeons' appetite for change," which is historically weak, says Matthew Garabrant, senior consultant of strategic research at The Advisory Board, a Washington, D.C.-based consultancy. Endoscopes don't lend themselves to the same retail cycles as consumer electronics, either. A hospital might use one thousands of times over many years before it's replaced. Meanwhile, photographers jump at the chance to update equipment.

Still, the market for hysterectomies is huge. About 600,000 women in the U.S. will need a hysterectomy in 2011--one in three will need one by the time she turns 60. Most don't know the new option exists yet. In 2008 Olympus plunked down $1.9 billion to buy U.K.-based company Gyrus to get its hands on a unique tissue-cutting laser that slices and cauterizes at the same time. That way, surgeons could safely cut a uterus into small pieces to be taken out more easily. Michelle Porter, 47, a researcher at ASU-Tempe, was 42 when she began having excruciating menstrual cycles. Admittedly a "vain fitness buff," she was ready to suffer for another decade or more, waiting for menopause to start. She didn't want to scar the body she'd exercised and kept out of the sun her entire life. A 21-day period changed her mind.

Her gynecologist, Dr. Deborah Wilson, 58, suggested Porter have the new hysterectomy. "Ninety-five percent of the time there are no complications," Wilson says.

Porter went home from the hospital only one day after the surgery. Three days later, she'd ditched the painkillers and was driving. A week later, she was ready to work again. "Now I feel like I'm in my late 30s again, before I started having issues," she says.

Olympus' bet on hysterectomies has been successful enough that the company is looking to revamp other surgeries. Surely, the breakthroughs of its health care division will make their way to the company's other segments, Gumz explains. Medical innovation might be Olympus' focal point, but using those advancements to build better consumer products is the big picture.

Boing Boing: The creation of breatheable chocolate, an excerpt from The Lab - Creativitiy and Culture, by David Edwards

 

The creation of breathable chocolate, an excerpt from The Lab: Creativity and Culture, by David Edwards

Mark Frauenfelder at 10:18 AM Monday, Jan 3, 2011 

 

David Edwards teaches at Harvard University in the School of Engineering and Applied Sciences. In this excerpt from his book, The Lab: Creativity and Culture he writes about creating a "food inhaler" that dispenses breathable chocolate.

Thierry Marx was helping transform how we enjoy the purely aesthetic realm of eating. Each year, in the town of Pauillac, north of Bordeaux, within the chateau of Cordeillan-Bages, he created hundreds of new ways to prepare, visualize, and consume familiar foods. By 2007 the reputation of his restaurant drew comparisons with the two top experimental restaurants in the world, Ferran Adrià's El Bulli outside Barcelona and Heston Blumenthal's The Fat Duck north of London.

That same year we had a chance to involve Thierry in an experiment at Le Laboratoire with the colloid physicist Jérôme Bibette. To explore how a chef became an exhibiting artist, we traveled down to his restaurant in July. The conversation swirled that day around wrapping flavor in particularly thin membranes. Having looked into the idea of inhaled aerosols for delivering drugs and vaccines, I brought up the idea of breathing these colloids into your mouth. Later in the fall I shared that notion with students at Harvard University. They would need to make the food particles small enough to get into the air, and large enough to avoid entry into the lungs under all conditions of breathing. We knew this much. But what did inhaling food mean? Would there be pleasure in it? After a semester of reflection, brainstorming, and quite a bit of coughing (even after designing the particles with a size to avoid the lungs, we discovered that, no matter how we breathed through straw-like inhalers, the particles flew to the back of the throat) I put a piece of tape over the paper cylinder my students had prepared to inhale things like carrot powder. The coughing stopped. And here we had the first prototype of the food inhaler we called Le Whif.

The LaboGroup was just then being formed, and José Sanchez decided we could manufacture Le Whif in the Chinese factory where we planned to make the plant filter. Six months after the idea had come up in Thierry's restaurant, we manufactured the first Whifs in China. They arrived in Paris a few days before Thierry and Jérôme's culinary art exhibition at Le Laboratoire, in March 2008. We exhibited our fledgling product over a Whif Bar imagined by Caroline Naphegyi and cosponsored by the Nestlé division Nespresso. Nespresso offered each visitor a free coffee, and we included a little brown object that looked like a tube of lipstick, by which you whiffed chocolate into your mouth.

To be perfectly frank, Le Whif didn't work well. Chocolate powder fell out if you inclined one end above the other, and you almost invariably coughed when you inhaled for the first time. But this was a lab, and we were testing a new idea--a new way of experiencing food! Two Harvard students, Trevor Martin and Larissa Zhou, had flown to Paris for the event. Jonathan Kamler, who had graduated the year before, having led the previous semester's student whiffing project, was also in Paris to work full-time for the LaboGroup. These three kept the chocolate inhalers full of chocolate powder as several hundred opening night guests tried it out.

It turned out to be fortuitous that, just weeks before the exhibition, the French government had outlawed cigarettes in cafés. This had outraged many French café-goers. Le Whif seemed a kind of inventive response. The traditional sip of coffee, bit of chocolate, and smoke that properly ended a French meal became, in this new anti-cigarette era, sipped coffee and smoked chocolate. Our guests had a ball with it. They invariably held Le Whif between their fingers as if it were a cigarette, and kept it long after the tube was empty, chatting, appreciating a novel social experience (which became, in the hands of my three little boys, something of a slightly illicit thrill).

No, this wasn't a commercial product, and nobody pretended it was. Nobody, that is, but the LaboGroup team. Why? Because the team was having fun. The hoped-for outcome of this first experiment had been observed in the public reaction to the exhibition, and now there were more experiments to be done. And, besides, if Le Whif did manage to become a product one day, magical revenues would appear. The team needed to hope for this income stream. The risk of running out of money was too palpable.

True, whiffing was even more far-fetched than filtering the air with plants. However, being far-fetched made the idea plausible as the preoccupation of an art lab, and commended the idea as a valid creative process even as it cast doubt on the eventual outcome of a valuable commercial product.

Clearly there were things to improve. The design needed to prevent all the chocolate from spilling out as you moved Le Whif around after filling it and before inhaling. But the product needed to remain simple; especially, it needed to avoid the unattractive trappings of pharmaceutical products. Le Whif needed to reliably deliver enough chocolate to satisfy taste but not so much as to fill your mouth with dry powder or provoke a spasm of coughing. The LaboGroup launched a second version of Le Whif in the fall of 2008 with the opening of the new LaboShop. The public could come inside and enjoy a whiff of chocolate with a cup of espresso. Whiffed chocolate came in mint chocolate, raspberry chocolate, and pure chocolate flavors. We invited the public to opine on the result and help us design a fully commercial chocolate inhaler that we would launch within the year.

We said that whiffing was a new way of eating, and proposed Le Whif as a kind of inhaled fork or spoon--and we believed it. Until now, nobody had reliably put food in the mouth through breathing. First there were the hands, then chopsticks, then forks and spoons, and now Le Whif. Yes, we were starting with chocolate, but you could inhale many other things, too, as we did during private evenings of experimentation in the FoodLab--with cheese, mushroom, exotic teas.

From the fall of 2008 into the winter of 2009, our local LaboShop clientele included young professionals, kids, and an occasional celebrity, like the French actress Isabelle Adjani, who would sneak in and out, sunglasses donned, enjoying a private pleasure. This eclectic group, probably fewer than a hundred people, returned regularly to the LaboShop, defining for us the commercial potential of Le Whif and rarely leaving before posing the same impatient question: When could they actually buy Le Whif and take it home? The LaboShop team would, when asked this question, point to the upcoming product launch, whose date we kept moving out further into the future as we tried to improve the design of Le Whif, now a third time, and work out a business model in the absence of a huge demand.

The team geared up for the commercial launch over regular late-evening drinks at the neighborhood café. Production costs needed to be lowered, simplicity improved, and more chocolate added, among other things.

With so much happening then at Le Laboratoire--the global financial crisis having fully settled down on us--our product development was spotty and informal. We did the best we could with limited time and resources. After many delays, the date of the launch was set for April 29, 2009. There would be a world tour to bring Le Whif to major cities and accustom people to the notion of breathing chocolate. We put together communication materials and planned a launch that resembled the opening of an art exhibition, which was the only kind of opening we knew. Our message was philosophical. Breathe chocolate and experience food as an artistic act. If chocolate failed, we had other ideas--inhaled spices, inhaled steak, inhaled coffee. Thierry Marx began to think about it all.

Four weeks before the scheduled launch in Paris, something very surprising happened. In his first months working for us, when he was still living in Cambridge, Tom Hadfield helped us put the business plan of LaboGroup in shape. In the midst of this he sent a note in early April saying that he was about to start a buzz campaign by Internet. Distracted by the challenges of the launch, we didn't take special notice. Tom's note probably arrived on a Thursday. The campaign was to begin the next day, he wrote.

On Saturday morning Tom reported that some blogging had started and the traffic on the Internet site had doubled. We received another note from Tom on Sunday. Internet traffic had doubled again. Similar messages came on Monday and Tuesday. By then Internet orders for Le Whif were flooding in. Several major blog sites picked up the story midweek, and on Wednesday the New York Post, the Chicago Tribune, and the Boston Globe wanted to do interviews. "The world has been waiting for breathable chocolate!" Tom wrote ecstatically in one of the many emails now zipping across the ocean. By the end of the week the Today Show, Good Morning America, and CBS Morning News had asked for the product to test. We had waves of orders and media requests from England, Germany, Italy, Spain, South Africa, India, Thailand, Japan, Poland, and other countries.

The world had awakened to the idea that we had a new, surprising commercial product. But we actually didn't. We were unprepared. The day before the April 29 launch I was in Washington, D.C., to give a talk at the National Institutes of Health on work I was doing related to infectious diseases. On my way from the airport I received an email from Jonathan Kamler explaining that Le Whif had arrived, filled with chocolate and properly packaged. But, when he took it out of its packaging to test it, Jonathan discovered it didn't function properly. He couldn't even open it. Out of a hundred Whifs, perhaps thirty worked. In a lightning decision, we decided to hand pick the new product, throw out the defective ones, and launch the next day. Thankfully, the surprise of the product, the suddenness of international public reaction, and the bizarre atmosphere of the FoodLab, with Thierry Marx presiding over lunch, helped everyone ignore that day how unreliable this first product actually was.

The team was invited a few weeks later to the Cannes Film Festival to help animate the beachfront terrace café of the Majestic Hotel. For two weeks young women walked between café tables from noon through mid-afternoon. Shoulder straps held serving trays from which they offered free Whifs, like vendors selling hotdogs at a baseball game. Later that month the team traveled to Chicago for the All Candy Show. This went relatively smoothly, and by the end of the month we ran out of the first faulty stock--15,000 Whifs.

A new shipment arrived in July, and until October 2009 it performed mostly as we wished it to, particularly in the hands of those educated to use it or patient enough to learn how to use it even when it dusted your knees with chocolate, or when the chocolate flew into your mouth in one quick burst, or when the inhaler arrived empty, because of some glitch in the filling, packaging, and transporting process. While we received many disappointed notes from customers who received Le Whif and either did not understand it or experienced a malfunction in one of these ways, we also received notes from at least as many customers delighted by the product, who understood Le Whif even with all its youthful blemishes, and who remained hopeful about ordering more, particularly once we'd figured out the issues of manufacture and supply.

The experiment continued. In October we produced an even more reliable chocolate inhaler that began to sell in Lafayette Gourmet within the flagship Galeries Lafayette store. Helped by a brilliant chocolate expert, we completely changed the packaging and marketing of the product to better signal our commercial intentions while preparing the launch of a fully commercial Whif at the end of January 2010. This final product was launched at Davos, Switzerland, during the World Economic Forum, and later that spring in Dylan's Candy Bar in New York City and other locations around the United States, such as the gourmet shop Cardullo's in Harvard Square. That same spring the product launched in England within the House of Fraser in London and in many other cities and towns around the United Kingdom.

Le Whif's commercial appearance mobilized the entire network of artscience labs. LaboGroup ran the business, Le Laboratoire curated the idea through exhibitions, The Laboratory at Harvard introduced the product during its opening in 2009, and the Idea Translation Lab at Cloud Place organized a few high school whiffing parties. Through sales, Le Whif would benefit all the artscience labs eventually; but this was not the reason why Le Whif went on exhibit in Paris or animated parties in the United States. The labs participated in this experiment mostly because Le Whif was a surprising idea, conceived with students at the intersection of aerosol science and culinary art, and, while fun, it also expressed something essential about what each lab did, or wished to do, with students, creators, and the public.

More than a commercial product, Le Whif carried the creative process outside lab borders. We wished the product to be understood in its original art-as-process context. This was signaled by the launch parties in Paris and, later, at the Cannes Film Festival, in Chicago, in Cambridge, and elsewhere. It was signaled by the early silver balloon packaging we used, and by the "airline tickets" we handed out to explain what we had in mind with the "world tour" promotion. Our sales approach reflected a lab sensibility; it did not reflect a reasoned analysis of the market.

Le Whif traversed the entire idea funnel. It started as a catalyst of education, soon became a catalyst of cultural exploration, and went on to be a catalyst of commercial sales revenue that helped keep our labs running. It also inspired new culinary art and science experiments, from whiffed coffee, which launched in the spring of 2010, to whiffed vitamins, scheduled to launch later within the year. And on the horizon was yet another design, Le Whaf, which I conceived with the French designer Marc Bretillot as a new way to "drink by breathing." This was a new form of food--a standing cloud of flavor that falls between a liquid and a gas, just as whiffed food fell somewhere between a solid and a gas.

From The Lab: Creativity and Culture by David Edwards. Copyright © 2010 by David Edwards. Used by permission. All rights reserved.

NY Times: For Sushi Chain, Conveyor Belts Carry Profit

December 30, 2010

For Sushi Chain, Conveyor Belts Carry Profit

By HIROKO TABUCHI

SAYAMA, Japan — The Kura “revolving sushi” restaurant chain has no Michelin stars, but it has succeeded where many of Japan’s more celebrated eateries fall short: turning a profit in a punishing economy.

Efficiency is paramount at Kura: absent are the traditional sushi chefs and their painstaking attention to detail. In their place are sushi-making robots and an emphasis on efficiency.

Absent, too, are flocks of waiters. They have been largely replaced by conveyors belts that carry sushi to diners and remote managers who monitor Kura’s 262 restaurants from three control centers across Japan. (“We see gaps of over a meter between your sushi plates — please fix,” a manager said recently by telephone to a Kura restaurant 10 miles away.)

Absent, too, are the exorbitant prices of conventional sushi restaurants. At a Kura, a sushi plate goes for 100 yen, or about $1.22.

Such measures are helping Kura stay afloat even though the country’s once-profligate diners have tightened their belts in response to two decades of little economic growth and stagnant wages.

Many other restaurants and dining businesses in Japan have not fared so well. After peaking at 29.7 trillion yen in 1997, the country’s restaurant sector has shrunk almost every year as a weak economy has driven businesses into price wars — or worse, sent them belly-up. In 2009, restaurant revenue, including from fast-food stores, fell 2.3 percent, to 23.9 trillion yen —20 percent below the peak, according to the Foodservice Industry Research Institute, a research firm in Tokyo.

Bankruptcies have been rampant: in 2009, 674 dining businesses with liabilities of over 10 million yen went under, the highest number in the last five years, according to Teikoku Data Bank, a credit research company.

In November 2009, Soho’s Hospitality, the company behind celebrity restaurants like Nobu and Roy’s, filed for bankruptcy. Roy’s is now run by another company, while Nobu’s chef, Nobu Matsuhisa, has opened a new restaurant elsewhere in Tokyo with Robert De Niro.

Along with other low-cost restaurant chains, Kura has bucked the dining-out slump with low prices and a dogged pursuit of efficiency. In the company’s most recent fiscal year, which ended on Oct. 31, net profit jumped 20 percent from the same period a year earlier, to 2.8 billion yen.

In the last two months alone, Kura has added seven stores.

“If you look at the restaurant business, consumers are still holding back because of employment fears and falling incomes, and there’s no signs that will change,” said Kunihiko Tanaka, Kura’s chief executive, who opened Kura’s first sushi restaurant in 1995. “Amid these worsening conditions, our company feels that consumer sentiment matches, or is even a tail wind” to the Kura business, he told shareholders earlier this year.

The travails of Japan’s restaurant industry, and the changes in Japanese dining habits, may be among most visible manifestations of how Japan’s “bubble economy” excesses in the 1980s have given way to frugal times since the bubble burst in 1990.

With wages weak — average annual private sector pay has fallen 12 percent in the last decade, to 4.05 million yen, or about $49,300, in 2009 — the Japanese now spend less on eating out. An average single-person household spent 163,000 yen on dining in 2009, 27 percent less than in 2000, according to detailed budget surveys compiled by the Ministry of Internal Affairs.

In a survey by Citizen Holdings, the watchmaker, of 400 men in their 20s to 50s, the average time spent at cafes and restaurants plunged from 7 hours and 52 minutes a week in 1990 to 2 hours and 25 minutes in 2010.

An aging population is also depressing restaurant sales. More than one-fifth of Japan’s population is already over 65, and surveys indicate that older people tend to eat out less. The population is also shrinking, reducing the restaurants’ potential customer base.

Meanwhile, Japanese companies have cut back sharply on their entertainment expenses, further hurting restaurant sales. Total corporate spending on dining and entertainment has halved from a peak of 9.5 trillion yen in 1991 to 4.8 trillion yen in 2008, according to data from the National Tax Agency.

“The restaurant industry here is so linked to the state of the economy, and that’s why we’re seeing this decline,” said Munenori Hotta, a food service industry expert at Miyagi University in Japan. “In this climate, even top restaurants are having to moderate their prices to keep attracting customers,” he said.

Japan’s dining-out boom had its roots in the 1970s and 1980s, as incomes grew and rural populations flocked to big cities. So-called family restaurants brought cheap, Western-style food to the masses flourished in that era. So did American fast-food chains, which were considered novel at the time. Kentucky Fried Chicken opened its first restaurant here in 1970, followed by McDonald’s in 1971.

At the other end of the price range, a new generation of wealthy Japanese savored imported French wines at lavish restaurants. By 1986, there were 503,088 restaurants across Japan, according to records from the Internal Affairs Ministry. That was nearly double the number from 15 years earlier — and was more restaurants than now operate in the United States, which has more than twice the population of Japan.

After the bubble burst in 1990, new low-cost restaurant chains that offered pizzas for as little as 400 yen, or $4.86, started to spread across Japan, and restaurateurs spoke with alarm of ready-made, convenience-store meals that were siphoning off sales.

In the depths of the slump, in 1995, Mr. Tanaka started a company based on serving quality sushi on the cheap.

His idea of using conveyor belts to offer diners a steady stream of sushi on small plates was not a new one; an Osaka-based entrepreneur invented such a system in the late 1950s. But Mr. Tanaka set out to undercut his rivals with deft automation, an investment in information technology, some creativity and an almost extreme devotion to cost-efficiency. In Japan, where labor costs are high, that meant running his restaurants with as few workers as possible.

Instead of placing supervisors at each restaurant, Kura set up central control centers with video links to the stores. At these centers, a small group of managers watch for everything from wayward tuna slices to outdated posters on restaurant walls.

Each Kura store is also highly automated. Diners use a touch panel to order soup and other side dishes, which are delivered to tables on special express conveyor belts. In the kitchen, a robot busily makes the rice morsels for a server to top with cuts of fish that have been shipped from a central processing plant, where workers are trained to slice tuna and mackerel accurately down to the gram.

Diners are asked to slide finished plates into a tableside bay, where they are automatically counted to calculate the bill, doused in cleaning fluid and flushed back to the kitchen on a stream of water. Matrix codes on the backs of plates keep track of how long a sushi portion has been circulating on conveyor belts; a small robotic arm disposes of any that have been out too long.

Kura spends 10 million yen to fit each new restaurant with the latest automation systems, an investment it says pays off in labor cost savings. In all, just six servers and a minimal kitchen staff can service a restaurant seating 196 people, said a company spokesman, Takeshi Hattori.

“Its not just about efficiency,” Mr. Hattori said. “Diners love it too. For example, women say they like clearing finished plates right away, so others can’t see how much they’ve eaten.”

Traditional sushi chefs have not fared so well, however. While the overall market for belt-conveyor sushi restaurants jumped 42 percent, to 428 billion yen, in 2009 compared with 2003, higher-end sushi restaurants are on the decline, according to Fuji-Keizai, a market research firm.

“It’s such a bargain at 100 yen,” said Toshiyuki Arai, a delivery company worker dining at a Kura restaurant with his sister and her 3-year-old son. “A real sushi restaurant?” he said. “I hardly go anymore.”

FT: Open innovation powers growth

Open innovation powers growth

By Jonathan Birchall in New York

Published: December 27 2010 19:33 | Last updated: December 27 2010 19:33

Procter & Gamble, the world’s largest consumer goods company, is an acknowledged global industry leader in new consumer product innovation. According to data from IRI, the market research firm, it produced five of the top 10 US non-food product launches in 2009. But as it pursues its drive to add another 1bn customers to the estimated 2.5bn it already reaches, Bob McDonald, its chief executive, says that the road to more innovation should increasingly embrace other people’s good ideas.

“We need bigger innovations that create more value,” Mr McDonald told this year’s annual gathering and awards event for companies and research institutions that work with P&G. “We want you to come to us with your big ideas first.”

It is now commonplace for consumer goods companies to work with outside partners and to pursue “open innovation” (see panel). But P&G may be the one that has made the largest deliberate effort to expand its reach since the launch of its Connect & Develop programme in 2001 by A.G. Lafley, its then chief executive.

In an attempt to open up the company and to end its resistance to innovations “not invented here”, Mr Lafley said he wanted at least 50 per cent of its new products to involve an outside partner. The company met that goal four years later and the share is now about 60 per cent.

External co-operation has delivered a stream of successful “big idea” products. Last year’s IRI list included Tide Total Care, a premium version of its Tide detergent, which was number two by sales on IRI’s 2009 top 10 non-food products launch list. It was developed with external research from Sweden’s University of Lund and from two small chemical companies. P&G’s Always Infinity feminine care brand was at number eight – it uses a patented absorbent foam material from a manufacturing process developed with an external partner.

P&G’s list of partners includes other large corporations, such as food groups ConAgra and General Mills, and rivals, including its Glad brand plastic bag joint venture with Clorox, set up in 2003. Its most unexpected government research partner may be the Los Alamos National Lab, the US defence technology research centre. Los Alamos initially helped P&G to regulate the production of the absorbent gel used in nappies, using theoretical data analysis systems developed for weapons technology.

But part of P&G’s challenge is now learning how to work better with small and medium-sized companies, and entrepreneurs. “That to me is the largest barrier,” says Bruce Brown, P&G’s chief technology officer who also oversees about $2bn of spending on its internal R&D. “How do we really learn to work better with some of the small and medium-sized entrepreneurs?”

Bill Weedman, head of the Connect & Develop programme, says: “It’s normal for new partners to have a concern that they will be overwhelmed” and that “some small entrepreneurs don’t have the patience to work through” P&G’s exhaustive procedures.

Even when the company begins to explore potential co-operation, it may still decide a proposed partnership does not work. “We most often say no thank you, even in proactive searches,” says Mr Weedman. “Fairly routinely . . . we’ll refer them on to other companies, up to and including competitors. We never want them to have an excuse to not call us first.”

Other innovative partnerships

● Nike+.Nike worked with Apple to develop a sensor that can transmit data from the heel of one of its running shoes to the runner’s iPod or iPhone. Launched in 2006.

● Little Swimmers Sun Care.Kimberly-Clark created adhesive plasters for children that use ultraviolet sensitive material to warn parents of the risk of sunburn. The product was developed and marketed in partnership with SunHealth Solutions, a Florida-based company. Launched in 2007.

● Aquafresh White Trays.GlaxoSmithKline Consumer Healthcare’s entry into the tooth whitening strip market in 2007 came through a partnership with Oratech, a private manufacturer supplying dental products.

● S’mores marketing.Kraft, maker of Graham Cracker biscuits and marshmallows, worked with Hershey, the US chocolate maker, on a joint summer marketing campaign to promote traditional “s’mores” – a combination of all three consumed over July 4 bonfires.

Mr McDonald has now called for the value of the Connect & Develop programme’s contribution to annual sales growth to triple by 2015, so that products launched with outsiders account for $3bn of annual sales growth, up from $1bn now. At current growth rates, the target would raise the share of new annual sales growth from the initiative from about 25 per cent to more than 60 per cent.

Mr Brown says the target marks a second stage in the programme’s development, after a first stage that managed to create the cultural change sought, but risked becoming a “tick the box issue”.

“Instead of just focusing on the number [of external partnerships], let’s focus on the value we can create,” he says.

“When we get those really, really big ideas, we want to scale them more quickly across the company and use them in more places across the company.”

Shekhar Mitra, head of research and development for P&G’s global beauty and grooming business, recalls that a decade ago P&G was not even regularly scanning related research work.

“When we started to change our culture, we found out ‘Holy cow! There’s a world of minds out there that can bring innovation to us’,” he says.

He was involved in one of the programme’s early success stories, the creation of its Olay Regenerist anti-ageing creams, which was built around molecular peptides developed by Sederma, a French company, part of the Croda group.

“As a small company, we had little chance of getting in there until P&G switched its policy,” says Karl Lintner, who headed Sederma at the time.

Sederma has worked with many of P&G’s global rivals too, and says that potential partners with large corporations need to realise that “sometimes – like with most bigger companies – things take longer than you think, so it’s a bit frustrating”.

The Olay brand is also involved in one of the company’s latest product launches, in partnership with Syneron, an Israeli technology company, that has developed a patented anti-wrinkle beauty salon treatment called ReFirme. After four years of joint development with Syneron, P&G’s business in Canada has started selling its Olay Professional ReFirme treatment for C$250 (US$248).

P&G is also seeking approval for the product in both the US and the UK, a demonstration of what Mr Weedman says is its ability to deliver the kind of rapid growth and scale that would have taken a smaller company years or decades to attain on its own.

“When we decide we are going to take something global, we have the wherewithal,” he says. “If you get through working with P&G and it makes sense, when we go global, you will go global. And it will be very quick.”

Copyright The Financial Times Limited 2010.

NY Times: Disney Tackles Major Theme Park Problem - Lines

 

December 27, 2010

Disney Tackles Major Theme Park Problem: Lines

By BROOKS BARNES

ORLANDO, Fla. — Deep in the bowels of Walt Disney World, inside an underground bunker called the Disney Operational Command Center, technicians know that you are standing in line and that you are most likely annoyed about it. Their clandestine mission: to get you to the fun faster.

To handle over 30 million annual visitors — many of them during this busiest time of year for the megaresort — Disney World long ago turned the art of crowd control into a science. But the putative Happiest Place on Earth has decided it must figure out how to quicken the pace even more. A cultural shift toward impatience — fed by video games and smartphones — is demanding it, park managers say. To stay relevant to the entertain-me-right-this-second generation, Disney must evolve.

And so it has spent the last year outfitting an underground, nerve center to address that most low-tech of problems, the wait. Located under Cinderella Castle, the new center uses video cameras, computer programs, digital park maps and other whiz-bang tools to spot gridlock before it forms and deploy countermeasures in real time.

In one corner, employees watch flat-screen televisions that depict various attractions in green, yellow and red outlines, with the colors representing wait-time gradations.

If Pirates of the Caribbean, the ride that sends people on a spirited voyage through the Spanish Main, suddenly blinks from green to yellow, the center might respond by alerting managers to launch more boats.

Another option involves dispatching Captain Jack Sparrow or Goofy or one of their pals to the queue to entertain people as they wait. “It’s about being nimble and quickly noticing that, ‘Hey, let’s make sure there is some relief out there for those people,’ ” said Phil Holmes, vice president of the Magic Kingdom, the flagship Disney World park.

What if Fantasyland is swamped with people but adjacent Tomorrowland has plenty of elbow room? The operations center can route a miniparade called “Move it! Shake it! Celebrate It!” into the less-populated pocket to siphon guests in that direction. Other technicians in the command center monitor restaurants, perhaps spotting that additional registers need to be opened or dispatching greeters to hand out menus to people waiting to order.

“These moments add up until they collectively help the entire park,” Mr. Holmes said.

In recent years, according to Disney research, the average Magic Kingdom visitor has had time for only nine rides — out of more than 40 — because of lengthy waits and crowded walkways and restaurants. In the last few months, however, the operations center has managed to make enough nips and tucks to lift that average to 10.

“Control is Disney’s middle name, so they have always been on the cutting edge of this kind of thing,” said Bob Sehlinger, co-author of “The Unofficial Guide: Walt Disney World 2011” and a writer on Disney for Frommers.com. Mr. Sehlinger added, “The challenge is that you only have so many options once the bathtub is full.”

Disney, which is periodically criticized for overreaching in the name of cultural dominance (and profits), does not see any of this monitoring as the slightest bit invasive. Rather, the company regards it as just another part of its efforts to pull every possible lever in the name of a better guest experience.

The primary goal of the command center, as stated by Disney, is to make guests happier — because to increase revenue in its $10.7 billion theme park business, which includes resorts in Paris and Hong Kong, Disney needs its current customers to return more often. “Giving our guests faster and better access to the fun,” said Thomas O. Staggs, chairman of Walt Disney Parks and Resorts, “is at the heart of our investment in technology.”

Disney also wants to raise per-capita spending. “If we can also increase the average number of shop or restaurant visits, that’s a huge win for us,” Mr. Holmes said.

Disney has long been a leader in technological innovation, whether that means inventing cameras to make animated films or creating the audio animatronic robots for the attraction It’s a Small World.

Behind-the-scenes systems — typically kept top secret by the company as it strives to create an environment where things happen as if by magic — are also highly computerized. Ride capacity is determined in part by analyzing hotel reservations, flight bookings and historic attendance data. Satellites provide minute-by-minute weather analysis. A system called FastPass allows people to skip lines for popular rides like the Jungle Cruise.

But the command center reflects how Disney is deepening its reliance on technology as it thinks about adapting decades-old parks, which are primarily built around nostalgia for an America gone by, for 21st century expectations. “It’s not about us needing to keep pace with technological change,” Mr. Staggs said. “We need to set the pace for that kind of change.”

For instance, Disney has been experimenting with smartphones to help guide people more efficiently. Mobile Magic, a $1.99 app, allows visitors to type in “Sleeping Beauty” and receive directions to where that princess (or at least a costumed stand-in) is signing autographs. In the future, typing in “hamburger” might reveal the nearest restaurant with the shortest wait.

Disney has also been adding video games to wait areas. At Space Mountain, 87 game stations now line the queue to keep visitors entertained. (Games, about 90 seconds in length, involve simple things like clearing runways of asteroids). Gaming has also been added to the queue for Soarin’, an Epcot ride that simulates a hang glider flight.

Blogs that watch Disney’s parks have speculated that engineers (“imagineers,” in the company’s parlance) are also looking at bigger ideas, like wristbands that contain information like your name, credit card number and favorite Disney characters. While Disney is keeping a tight lid on specifics, these devices would enable simple transactions like the purchase of souvenirs — just pay by swiping your wristband — as well as more complicated attractions that interact with guests.

“Picture a day where there is memory built into these characters — they will know that they’ve seen you four or five times before and that your name is Bobby,” said Bruce E. Vaughn, chief creative executive at Walt Disney Imagineering. “Those are the kinds of limits that are dissolving so quickly that we can see being able to implement them in the meaningfully near future.”

Dreaming about the future was not something on Mr. Holmes’s mind as he gave a reporter a rare peek behind the Disney operations veil. He had a park to run, and the command center had spotted trouble at the tea cups.

After running smoothly all morning, the spinning Mad Tea Party abruptly stopped meeting precalculated ridership goals. A few minutes later, Mr. Holmes had his answer: a new employee had taken over the ride and was leaving tea cups unloaded.

“In the theme park business these days,” he said, “patience is not always a virtue.”

FT: Conference of cool

TED - my favourite! :)

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Conference of cool

By Peter Aspden

Published: July 23 2010 16:36 | Last updated: July 23 2010 16:36

Singer Annie Lennox on stage at the recent TEDGlobal in Oxford earlier this month

The stage of the Oxford Playhouse is littered with the debris of the old information age, as if a director from the outer edge of the counter-culture had been commissioned to make an opera about the death of the mass media. On one side, there is a pile of discarded televisions, on the other a dusty newsagent’s stall. A couple of stuffed carrier pigeons sit at the back of the stage, overshadowed by an old printing press that looks like it last saw action in the days of Martin Luther. It is a bleak vision of pathos and cosmic irrelevance.

And then the lights dim, and we are stirred from our sense of loss by Verdi’s “Triumphal March” from Aida. In the middle of the stage, a giant video screen and a red, neon-lit “TED” sign draw us into the day’s events. This is the opening session of this year’s TEDGlobal conference – the cosy acronym stands for Technology, Entertainment, Design – and we are not being allowed to wallow in gloom or nostalgia. The theme of this year’s conference, held for the second successive year in Oxford, is “And Now the Good News”. The organisation’s imposing, silver-haired European director Bruno Giussani takes the stage. He asks us to put our pessimism to one side and consider the case for “rational optimism”.

Sixty speakers, over four days, will deliver a series of lectures to this end, to an invited audience of 750 figures from the worlds of business, technology and academia who have paid nearly $5,000 each to attend. The format is precise and strictly controlled: each speaker has 18 minutes to put their point across. There are no questions, no pauses. After the briefest of introductions, we are on to the next lecture.

The first speaker is a safe bet: Joseph Nye, the Harvard professor best known for his promotion of “soft power”, the paradigm-breaking concept that eschews the traditional carrot-stick approach to political power, and asks “smart” nations to develop their persuasive abilities to get the world to do what they want.

He gives a polished and fluent performance, lamenting the prevalence of the “fear” factor in contemporary international relations, and giving a compelling account of why the rise of China is an opportunity, rather than a threat, to the west. His presentation lasts 18 minutes, on the button. There is a wave of warm applause, and even a couple of whoops. We are up and running.

TED was founded in 1984, the brainchild of US architect and designer Richard Saul Wurman, who had noticed the convergence of themes in the worlds that would constitute the organisation’s title. At that first conference, held in California, there were demos of the newly released Macintosh computer and Sony compact disc. It was attended by many of the world’s leading IT thinkers, including Nicholas Negroponte, a professor at Massachusetts Institute of Technology, and the cognitive scientist Marvin Minsky.

The conference didn’t pay its way, and was not held again for another six years, by which time the idea behind it – to promulgate “ideas worth spreading” – had found its time. Since then the conference has been held every year in California and attracted a stellar, and sometimes unexpected, line-up of speakers: Bill Gates, Frank Gehry, Al Gore, Billy Graham, Peter Gabriel, Quincy Jones, Bono. In 2001, the conference was acquired by Chris Anderson, a British computer magazine publisher and entrepreneur, via his Sapling Foundation and has cemented its status as a non-profit venture that is gradually spreading its message, most notably through its website, which freely posts TED talks from the conferences online.

Such is the appeal of TED, which is routinely described as a cross between Glastonbury and Davos, that it even attracts improbable celebrities: actresses Cameron Diaz and Meg Ryan and basketball star Kareem Abdul-Jabbar have been spotted in its audiences in recent years, forcing the implementation of one of the conference’s strictest rules, banning the reporting of attendees: “It is not cool to tweet that you are sitting next to a celebrity,” explains Giussani at one point between sessions, to nervous laughter and furtive sidelong glances.

TEDGlobal is the original’s sister conference and has now settled into its Oxford home to nurture its internationalist ambitions. There is a strong streak of idealism behind the conference: a fundamental belief that the free and promiscuous flow of ideas has the potential to make the world a better place. At this particular conference, there is a raft of concrete, uplifting, practicable proposals suggesting that our planet can be saved by the apparently simple process of its most brilliant thinkers connecting with each other. Matt Ridley, a British author and self-styled “rational optimist”, puts it more colourfully in his 18 minutes on the first day: ideas are at their best “when they have sex” and procreate younger, fitter ideas in their place. The audience loves this talk, because it makes ideas sound sexy, and possibly because it has the side-effect of making sex sound profound. Steven Berlin Johnson, author of the bestseller Everything Bad Is Good For You, which argues that popular culture and video games have made us smarter, continues the theme with another memorable slogan later that afternoon, in his talk on how ideas are produced: “Chance favours the connected mind.”

These slick homilies may sound glib but it occurs to me that they may turn out to herald something of an intellectual revolution. As I slope back to my bedroom at my old Oxford college where I have chosen to stay for the week, I am taken back to my undergraduate days, studying philosophy in a room in this very quadrangle, where I am once more bumping my head against intransigent wooden beams.

I recall that we spent an entire term on Descartes’ Meditations, the work that led the French philosopher to his famous declaration: “I think, therefore I am.” It was a slim volume, yet we micro-analysed every last semi-colon of its tortured arguments. To do well, we had to find flaws in the philosopher’s reasoning. Our adolescent critiques spoke to no one outside our precious circle. To be a successful scholar was to regard inwards, and wade into an ever-denser intellectual world that made scant connection with contemporary realities.

Thirty years on, in the very same venue, TED is doing the precise opposite. It regards ideas as a kind of currency that has not been circulating freely enough to achieve its full potential. The most important thing about them is not that they should withstand the obsessive scrutiny of guileless teenage minds, but that they should be original, inspiring, accessible, and that they should do good. They are catering, in Giusanni’s words, for an “incredible thirst” for knowledge and information, and projecting a “new sense of possibility in a world that is becoming submerged by bad news”.

TED talks are a clever mix of the light-hearted, the analytical, and the rawly emotional. There is a high tolerance for the last category that is perhaps difficult for the notoriously sceptical British sensibility to swallow. When Annie Lennox, the singer and humanitarian activist, gives her talk on HIV/Aids in Africa, she chooses to concentrate on a positive story, showing before and after pictures of a little girl who received life-saving treatment for her condition. She is visibly moved as she recounts the transformation: “I don’t know if you can see the hairs on my arms ... ” We can’t, but pretend that we do. Giussani says there is a “lower intensity of cynicism” in a TED audience than in the outside world.

The show-stopper of day one is Naif Al-Mutawa, a bearded, bespectacled clinical psychologist and creator of The 99, a comic book project that showcases enlightened Muslim values in the guise of superheroes. They are shortly about to interact, thanks to some cross-cultural co-operation between publishers, with DC Comics’ Justice League of America in an ultimate act of pop culture détente. Al-Mutawa’s talk is fast-moving, touching and witty (he describes recently manning a food stall advertising “Free Falafel”, only for an earnest would-be protester to ask him: “Who’s Falafel?”) He gets an ovation and his talk is among the first to be made available from this conference on the TED website.

The quality of TED talks is frequently astonishing, word-perfect, immaculately-timed, shuffling potentially dense information in the lightest of ways. The time slot, 18 minutes, shorter than a Pink Floyd tune-up, seems perfectly prescribed for the average attention span, given that you have to listen to five in succession. You can take a break from the intense atmosphere of the Playhouse by watching a simulcast at the nearby Randolph hotel, where there is a more social vibe, and what seems to be the highest incidence of hugs and iPads per square metre in the western world.

Clockwise from top left: singer-songwriter Mor Karbasi; Julian Assange, founder of Wikileaks; applause from the audience; comic book creator and clinical psychologist Naif AlMutawa; poet Iyeoka Ivie Okoawo

Lewis Pugh sets a bracing tone for the second day. He is an extreme swimmer, who recently attempted to swim in a Himalayan lake near Mount Everest at a height of 5,300m. It was so cold, he tells us, that his first effort floundered within minutes. So he was forced to rethink, undergoing a “radical, tactical shift” that made him swim with “humility rather than aggression”. It worked. Here was the perfect TED talk: a little bit of action, some thinking outside the box, humbling words on the need to respect nature, a happy ending. A Hollywood scriptwriter could not have structured it better.

Giussani takes the stage again. Tickets for next year’s TEDGlobal, which cost $5,200, went on offer two weeks ago and are half sold, he tells the audience. “No pressure!” He tells me later that all TED conferences are sold out before the list of speakers is announced. “I really find that amazing,” he says.

One criticism that may be made of TED is that there is a certain uniformity of view – broadly liberal and occasionally self-congratulatory – that makes the proceedings too cosy. Ideas here don’t really rub up against each other in any proper adversarial sense; but maybe that, too, is a flawed legacy of our political and intellectual systems. Perhaps 2,500 years of Socratic inquiry, in which debaters duel dialectically to arrive at a higher form of “truth”, have ill-served us, and we are ripe for a new approach.

One sour note, notable for its rarity, was struck earlier this year when the US comedian Sarah Silverman gave a TED talk. She riffed on a joke about her desire to adopt a “mentally retarded” child that apparently upset some of her audience (the talk has not been released on TED.com). Chris Anderson tweeted his own reaction: “I know I shouldn’t say this about one of my own speakers, but I thought Sarah Silverman was god-awful.” Silverman tweeted back: “Kudos to Chris for making TED an unsafe haven for all! You’re a barnacle of mediocrity on Bill Gates’ asshole.” Anderson drew a gracious veil over the spat: “I gotta say: you’re a way more eloquent insulter than I am ... Sarah, I wish you well.”

It struck me as a welcome note of friction. Ideas have the power to bite, to be misunderstood, to cause inadvertent offence. An awful lot of the world’s problems are down to precisely that, a fact that is easy to forget in the balmy TED world.

I have to miss the third day of the conference to travel to London, and it is disorienting. Listening to the news on the car radio, it seems suddenly full of flimsy, trivial stories. Giussani believes that part of TED’s success can be ascribed to the failures of the media. “They are less and less relevant in most of their daily coverage. The news cycle is dominated by bad news, cynicism and looking backward instead of forward. I am constantly amazed by how much space is taken by what has happened in the past.”

Back in Oxford, the final morning opens with something of a coup: a surprise and rare interview with Julian Assange, founder of Wikileaks, the website responsible for disseminating information that various authorities would rather you did not see. The Australian-born Assange, softly-spoken, ashen-haired, decries the cult of personality and has an ascetic and rigorous approach to the gathering of hard facts, which he describes as the only true form of journalism. This makes him, paradoxically, extremely charismatic. The audience is rapt as we are shown the famous leaked video of an American air strike on Baghdad that is Wikileaks’ most significant triumph.

Assange is asked by Anderson to explain what motivates his hounding of errant governments and corporations, and he gives a haiku-like response: “Capable, generous men do not create victims, they nurture them.” The audience silently processes the reply, a little too absorbed to whoop or cheer.

A few hours later, TED wraps up. Anderson warns the audience of the dangers of “TED-crash”, the feeling of deflation that follows a short, sharp period of intellectual intensity. To help offset it, there is a barbecue and punting expedition. I watch with amusement as a physicist struggles to master his pole, zigzagging from one bank of the river to the other. But we are all, perhaps, too far gone in the realm of ideas to handle such prosaic matters.

The physical occurrence of the TED conference is almost the least important thing about it, because now comes the more serious matter of spreading the word. We have all networked, exchanged e-mail addresses, connected. We have been reminded that some of the world’s most brilliant and dynamic thinkers are busying themselves to find new solutions to the world’s awesome problems.

It is not as if we don’t need their help. New times need new ideas. “I think, therefore I am” didn’t take us as far as we might have hoped after all. Our thoughts should begin to veer away from plunging ever more pointlessly into the human psyche, and spread outwards, via the miracles of technology and communication, to mix, to mingle, to have sex. Call it the techno-Enlightenment, a new Age of Reason that doesn’t draw its boundaries at the steadfast walls of an Oxford college. It is a deeply idealistic, even romantic, ambition. But it might just work. Annie Lennox, giving a familiar encore to a rollicking performance at the Playhouse, captured the TED spirit best of all: sweet dreams are made of this.

TEDGlobal 2011 ran from July 11-15 in Oxford, www.ted.com

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TED’s excellent ventures

TEDx events are big TED’s international mini-me: they follow the TED “ideas worth spreading” ethos but, unlike the main conference, they are rarely for more than 100 attendees, and are coordinated and tailor-made locally, writes Victoria Maw.

Recent TEDx events have included “TEDxYouthInspire” in Accra, Ghana, and, last month, ‘TEDxOilSpill’ in Washington, DC.

Though each TEDx event will be different, there are some fairly strict guidelines to ensure the TED brand retains its integrity. If you are interested in hosting your own TEDx, here’s how to do it:

Get a licence: Nobody can host a TEDx event without a licence (see www.TED.com for details). Licences are awarded on a case-by-case basis. Previous hosts include a strategic planner at Nasa and an African reforestation activist.

Bill Gates

Embrace the spirit of TED : Hosts must show that the event is in the spirit of TED: “focused on the power of ideas to change attitudes, lives and ultimately, the world.”

Follow the correct format: Just as at big TED, TEDx talks need to be succinct (18 minutes) and carefully prepared. They should “foster learning, inspiration and wonder”. You will also have to show two pre-recorded talks from the TEDTalks video series – choices range from mycologist Paul Stamets on six ways mushrooms can save the world to Bill Gates on mosquitos, malaria and education.

Do not profit from TED: TEDx events are not for profit. Admission should usually be free and where there is a charge to cover the cost of the event, it should be minimal and cleared with TED. However, see next point.

Curate your audience: Free does not translate as free-for-all. Each TEDx event can have no more than 100 attendees and TED recommends that hosts “carefully curate their audience, selecting diverse attendees who can contribute to the conversation”.

Go forth and promulgate: All original content from each TEDx event must be recorded on video and posted on TED’s YouTube site. Content can also be streamed live from the event.

Copyright The Financial Times Limited 2010.

FT: Navigating cultural differences

Navigating cultural differences

By Emma Jacobs

Published: July 19 2010 23:07 | Last updated: July 19 2010 23:07

HSBC is backing a show (above) by Brazil’s Ernest Neto to highlight its local knowledge

EDITOR’S CHOICE

Success on the mommy track - Jul-06

Where organic food is new and ancient - Jun-03

More than just an investor - May-10

Idiosyncratic master of the revels - May-04

A high-speed empire builder - Apr-27

Fresh waters for entrepreneurs - Apr-25

Walking through a labyrinthine tunnel apparently made of purple, lime and yellow-coloured ights may not be an obvious route to boosting a bank’s profits. But HSBC hopes its sponsorship of an exhibition by Brazilian artist Ernesto Neto in London may help to do just that.

The bank, known for its “world’s local bank” slogan, has backed this summer’s Festival Brazil, a programme of cultural activities at London’s South Bank Centre celebrating the country that is predicted to be the world’s fifth-largest economy by 2025. Marah Winn-Moon, HSBC’s global head of cultural sponsorship, says such events are integral to a strategy that posits understanding different cultures as key to developing successful business relations. “Individual consumers might see Brazil from a different perspective and break down stereotypes about Brazil, not just being about carnival. They might work for an SME and HSBC might provide an entry point for operating in Brazil,” she says.

David Kotheimer, deputy chief executive of HSBC Brazil , an American who worked in London before moving to São Paolo last year, believes the festival helps business. “Understanding the creativity in the culture, you get a sense of the country and that helps spot opportunities to expand the bank’s business,” he says.

Colin Tweedy, chief executive of Arts & Business, a UK body that encourages private investment in the arts, sees this as “cultural diplomacy”, which he describes as “extending the company’s brand into a foreign market”. Such marketing strategies are only effective, he says, if the companies are prepared to work at “getting people, including foreign journalists and trade emissaries, to engage with these events”.

HSBC, for example, is also involved in a parallel programme of business seminars and conferences about operating in Brazil, including a research project with The Economist, conferences with the Financial Times and a publication with Time Out magazine.

Celebration of a country’s difference runs counter to the notion that the world is becoming culturally homogenised through the spread of the internet, the internationalisation of business and the development of a cadre of high-flying MBAs that appear to speak the same business language.

Such a belief can fool managers into believing cultural differences do not matter, according to Paul Bennett, chief creative officer and managing partner at Ideo, a global innovation and design consultancy. In fact, he says, global companies must understand different cultures and turn that to business advantage: “It’s the understanding of the subtleties that are important.”

As Maarten Nijhoff Asser, consultant at Trompenaars Hampden-Turner, which advises companies on cross-cultural challenges, says: “If your strategy is just growth without thinking about adapting to local markets, then you are just the Royal Bank of Scotland and you will falter. Too many companies don’t listen. It can be long-winded, but it is ultimately more successful.”

All companies, says Andrew Kakab­adse, professor of international management development at Cranfield School of Management, have done localisation “badly at some point”. The key to making it work is “clarity of strategy”, which is formed “when a company interrogates itself about what it’s really good at”, he says.

One global brand that has adapted to local tastes is fast-food chain McDonald’s. From the beginning of its development in the US, to its spread in Europe and, more recently, India and China, the company has targeted a variety of products at consumers in different markets.

Catering to local taste

Starbucks, the coffeeshop chain born in Seattle that has become one of the world’s most ubiquitous brands, has had to grapple with the challenge of projecting a core identity while also adapting to local markets.

At first, the chain traded on its all-American image. Outlets and food offerings were fundamentally the same, whether in Singapore or San Francisco. Now, however, the company is tweaking this strategy. It has decided that it must subtly tailor its offerings to local tastes.

In the UK, for example, it now sells the “flat white”, a strong espresso-based coffee drink that originated in Australia and New Zealand and only arrived in Britain about a decade ago.

Similarly, some of its cafés are being tailored to their local environment. A branch in Knightsbridge includes one-off art pieces, as befits one of London’s more affluent areas and a royal borough.

The company hopes the strategy will help it reconnect with local communities after a period during which, it now says, it expanded too quickly and suffered reputational damage.

The trick, however, will be to do so while also retaining its strong American image.

Key to its successful localisation have been research and investment in products adapted to local tastes.

Big Macs were never going to succeed in India, where 80 per cent of people do not eat beef. But the company did not treat the country as a single market, and conducted in-depth analysis in several states. So, when McDonald’s opened a restaurant in Gujarat, where most citizens are vegetarian, it offered vegetarian burgers and other Indian dishes, such as samosas. In New Delhi, however, McDonald’s introduced meat burgers for non-beef eaters – such as the Maharaja Mac with lamb or chicken.

The company has also made an effort to recruit local managers, for example establishing joint ventures with two local entrepreneurs in New Delhi who were selected to manage the fast-food restaurant. According to a 2007 article in the Journal of Business Case Studies by Bahaudin Mujtaba and Bina Patel, of Nova Southeastern University, this strategic move helped the company negotiate Indian bureaucracy.

Not all overseas managers need to be local recruits. But Mr Bennett says that when staff are sent overseas they need to become immersed in the local culture. He cites the example of one employee who moved to Shanghai and cycled to work instead of having a driver. “Relocation can be like dropping people from the sky so that they lead from above rather than becoming part of the community you need them to sell to,” he says.

Increasingly, this process is also taking place in reverse, with companies from the growing Bric economies expanding overseas. “It used to be that it was western companies growing in new markets – now it is the likes of Tata, Lenovo and Mahindra that are expanding overseas,” says Mr Nijhoff Asser.

The reasons why many companies expand overseas are changing. He adds that there was a time when “companies went overseas for costs [of production]” or to reach new markets, “but now they are going there to find innovation in the local market”.

Last year, Vijay Govindarajan and Chris Trimble of the Tuck School of Business co-authored an article with Jeffrey Immelt, chief executive of General Electric, in Harvard Business Review on “reverse innovation”, a process whereby goods developed as inexpensive models to meet the needs of emerging markets are repackaged as low-cost products for western consumers.

Prof Kakabadse says this is a reversal of the old strategy of “think global, act local”. Now, it is “think local, then act global”. So, rather than companies customising products to a local market, the focus should be to start with the local products and then try to leverage them globally.

But not all global companies need to adapt to different cultures. Apple sells the same iPad in Tokyo as in Toronto. Rather than localisation, it competes on pace of innovation, says Mr Nijhoff Asser. “HSBC, Ryanair and Apple’s top teams have asked themselves what makes their companies better than anyone else. HSBC looked at its 19th-century origins when it was operating in Hong Kong and Shanghai and serviced the local needs,” he says.

But, he adds, Ryanair does not worry about adapting its product to local markets. Its competitiveness lies in price: “Whether you decide to differentiate your market is entirely dependent on your product.”

Copyright The Financial Times Limited 2010.

FT: How to avoid being a one-hit wonder

Excerpt:

Too often, the problem is that entrepreneurs go into business because they have a great product idea, rather than an idea for a brand, according to Rita Clifton, UK chairman of Interbrand, the branding consultancy.

Not only does this mean they are highly unlikely to create a second great product, they are also open to competitive attack from larger companies operating in the same market, Clifton notes.

“The whole way to create a sustainable business is to have a brand,” she says. “Products tend to be highly replicable, so if a large company sees a start-up come up with a good idea, it will just do something similar, scale it up much more quickly and market the hell out of it.”

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How to avoid being a one-hit wonder

By Jonathan Moules

Published: June 4 2010 16:58 | Last updated: June 4 2010 16:58

It has been said that entrepreneurship is the new rock and roll. This may not be a perfect analogy, but musicians and business founders are alike in that they have to repeat their initial success multiple times in order to be considered great.

The history of start-ups is littered with fantastic business ideas that faltered because they ended up being a one-hit wonder.

Sometimes, it is a failure on the part of the founder to step back and let others take the business to the next level. In other cases, the owners become so obsessed with perfecting their original product that they fail to see where to take the business next.

Successful businesses are those that can overcome these problems. So what can budding entrepreneurs learn from their stories?

Ash Gaming began life in 2002 delivering specific customised online computer games for bookmakers and online betting sites. It has grown fast by regularly supplying new products: it now has a portfolio of more than 100 games, supplying 30 bookmakers and gambling websites in 32 different languages.

The key, according to founder Chris Ash, is to consistently exceed expectations. However, he admits that this is not easy.

“If people are used to being surprised with what you deliver, it’s hard to maintain the bar,” he says. “Everyone is waiting for the next thing, and if it does not live up to the usual highs, even a good product can seem unexciting.”

Too often, the problem is that entrepreneurs go into business because they have a great product idea, rather than an idea for a brand, according to Rita Clifton, UK chairman of Interbrand, the branding consultancy.

Not only does this mean they are highly unlikely to create a second great product, they are also open to competitive attack from larger companies operating in the same market, Clifton notes.

“The whole way to create a sustainable business is to have a brand,” she says. “Products tend to be highly replicable, so if a large company sees a start-up come up with a good idea, it will just do something similar, scale it up much more quickly and market the hell out of it.”

Those that have overcome this kind of competition – such as online grocery delivery business Ocado and ethical drinks and snacks group Innocent – have done so by sticking to a bigger brand strategy, according to Clifton.

“When Ocado started, it was not just that they wanted to do an online grocery service, it was that they had a new way to do online grocery delivery,” she says.

“All of their innovations, such as the massive bags, the text messages before your order is delivered and the iPhone app, have all come from an understanding of the brand.”

One entrepreneur who has followed the brand first, product second principle is Paul Lindley, founder of healthy children’s meal maker Ella’s Kitchen.

Lindley – whose daughter Ella’s reluctance to eat fresh fruit inspired him to set up his company in 2005 – had the advantage that he understood branding, having spent 10 years at Nickelodeon, the children’s television channel.

“I knew we had a problem with kids’ food and with my experience I knew I could create a brand of food that was just for kids and meant something different for them,” he says. “We try to be very uncorporate on our packs and in our language to make us very different to Heinz and Hipp [the market leaders in child and baby food].”

Innovations, such as the soft packaging used in the Ella’s Kitchen baby food ranges, were the result of thinking about how to satisfy the core brand values, Lindley claims.

“I went for the packaging originally because it was so tactile,” he says. “Once we started developing the stuff, I very quickly realised that there is another function of packaging: convenience.”

Ella’s Kitchen started with two lunch box products and now has a range of 46 items, earning the Henley-based company a revenue of £30m this year and putting it among the fastest growing businesses in the country.

New products are developed with the help of what Lindley calls “unscientific groups” made up of his daughter’s and his wife’s friends – many of whom would not normally consider ready meals. This has not only helped the company come up with ideas but has helped to get supermarket buyers to agree to stock new ranges.

“What the supermarkets love is that we managed to persuade a group of mums who would normally cook their own stuff to use our stuff once or twice a week,” Lindley says. “They also love the fact that this has led to a ‘premiumisation’ of baby foods because there wasn’t a category like that before.”

Another business to crack the problem of recreating the buzz of an original good idea is Vitabiotics. The London-based company was started in 1971 by pharmacologist Kartar Lalvani with a concept for multivitamins.

Vitabiotics now sells a range of products across 15 brands, covering different areas of health – such as pregnancy, skin, hair and nails. Last year, this generated sales of $430m in 108 countries, although the UK remains the biggest market.

Tej Lalvani, the founder’s son, who is now chief operating officer, puts the company’s success in generating new products down to owning the research and marketing expertise. The company has also avoided buying other businesses to add to its range of products.

“More care goes into elements like the packaging if we own the process ourselves,” he says.

Perhaps most of all, Vitabiotics has maintained its focus. Even with so many different products under its brand, Lalvani claims that the business is a success because what it does is clear and simple.

Copyright The Financial Times Limited 2010.

WSJ: A Taste for Hotter, Mintier, Fruitier

FOOD & DRINK

MAY 26, 2010

A Taste for Hotter, Mintier, Fruitier

The Increased Craving for Intense Flavors Suggests That the American Palate is Changing

By MIRIAM GOTTFRIED

Jon Protas for The Wall Street Journal

Wrigley developed textured crystals it calls Micro-Bursts to make its Orbit Mist gum flavors more intense. Top, peppermint spray, bottom, from left, watermelon spring and mango surf.

The buttery taste found in packaged foods isn't just butter flavor anymore. Increasingly, it is browned-butter flavor, formulated to taste deeper and more savory than plain butter, says International Flavors and Fragrances, one of the leading laboratories for developing flavors used by food companies.

More Americans want spicier and more intense flavors in their foods. Christopher Lee, executive chef at New York City's Aureole restaurant, shows WSJ's Christina Tsuei how Aureole is using bold flavors creatively.

Snack chips are spicier. Chewing gum is mintier. Energy drinks are fruitier. In short, American cuisine is adrenaline cuisine.

Some food companies are hitting their labs to try to torque up flavorings to appeal to the country's expanding palates, and, of course, boost sales of snacks, drinks and even main courses. Arugula and ancho-chile sauce now appear at restaurants like Chili's where there was once only iceberg lettuce and mayonnaise. PepsiCo Inc.'s Frito-Lay brand recently introduced Doritos chip flavors labeled First-, Second- and Third-Degree Burn. Gum-maker Wm. Wrigley Jr. Co. is using new technologies like textured crystals it calls Micro-Bursts to deliver a more intense flavor as well as new sweeteners to make flavors last longer. At home, seasoning company McCormick & Co. Inc. says Americans now keep an average of 40 different spices, a figure that has grown roughly twice as fast in the past two decades as it did in the previous 30 years.

Jon Protas for The Wall Street Journal

Frito-Lay's new line of Doritos chips labeled First-, Second- and Third-Degree Burn are made with jalapeño, buffalo and habanero flavors, respectively. Hot flavors from Asian food influenced company developers.

Food companies describe some of their efforts as adding "umami," a Japanese word that, roughly translated, means "good flavor." What it describes, however, is the pleasant savory flavor found in protein-heavy foods and increasingly viewed as one of the five basic tastes (in addition to sweet, sour, salty and bitter). It isn't exactly a flavor, food executives say, but an experience—an explosion of flavor.

"You're seeing a lot with umami," says Kevin McDermott, executive chef at International Flavors and Fragrances. Mr. McDermott helps create new flavors and flavor combinations in the kitchen that scientists then recreate with chemicals in the lab.

Food and flavor companies are secretive about the technology used to enhance flavors that they consider proprietary information. They now have the ability to create the full spectrum of any flavor in a lab. A simple strawberry flavor can range from tart, just-picked strawberry to almost candy-like sweetness. When Dr Pepper Snapple developed its new Dr Pepper Cherry soda, for example, it tested 30 different cherry profiles with consumers.

View Full Image

Associated Press

To develop Dr Pepper Cherry soda, consumers judged 30 different cherry flavors on a nine-point scale. The soda also was given a JAR score, which stands for 'just about right.'

As people crave intensity in flavor, some traditionalists are wondering if diners will become desensitized to natural flavors. Regular mangoes may taste bland when eaten next to mango-flavored gum or a mango energy drink, they say.

"The more you taste something, the more you need to taste it," says Mitchell Davis, vice president of the James Beard Foundation, a New York-based non-profit that works to preserve American culinary heritage. "You always need something spicier, something more, a bigger high."

Hot Spices

See the top ten sellers for McCormick in the post-war era and in 2009.

POST-WAR ERA	PRESENT
Black pepper	Black pepper
Vanilla extract	Vanilla extract
Cinnamon	Cinnamon
Nutmeg	Sea-salt grinder
Cloves	Black-pepper grinder
Allspice	Garlic powder
Ginger	Chili powder
Ground mustard	Oregano
Celery seed	Red pepper
Lemon extract	Cumin

Source: McCormick

"I don't think it's inherently bad to become a flavor junkie," says Dr. Davis, who has a doctorate in food studies, noting that the local-seasonal food movement also stems from the demand for more flavorful food. "It's one way to look at food. But there is a sophisticated way of doing it and there is another way of doing it."

The current flavor boom is a big change for a nation known for its mashed potatoes, chicken sticks, macaroni and cheese and other unadventurous fare. It's a reversal that has been in the making since the advent of processed food first began to drown out regional cuisines during World War II, food historians say.

"Bold is replacing boring," says Kevan Vetter, McCormick's executive chef who is part of a team that has met for the past 10 years to develop McCormick's annual "flavor forecast" report. The report includes the top 10 flavor pairings that the spice-maker thinks will be popular in the coming year. Among the flavor couplets in its 2010 forecast are roasted cumin and chick peas, caraway and bitter greens, roasted rhubarb and ginger, and almond and ale.

Evolving Tastes

A snapshot of how the use of spices and seasonings in America has expanded over the years.

1940s-1950s

CREDIT: McCormick

• The kitchen was one of the smallest rooms in the house.
• Shopping takes place at a local market with limited offerings.
• Eating out is a special occasion, done infrequently

1970s-1980s

Everett Collection

• More kitchens make a style statement—like avocado and gold color schemes.
• Food processors and microwave ovens appear, and TV cooks like Julia Child and the Galloping Gourmet inspire home cooks to be creative.
• The average pantry has about 25 seasonings, including lemon-and-pepper seasoning salt and taco seasoning.

1990s-Present

Associated Press

• The kitchen becomes the hub of the home and often a showcase where cooks entertain.
• Ethnic restaurants go beyond Italian and Chinese and embrace just about every global region.
• Supermarkets and specialty stores offer a wide range of foods and fresh produce regardless of season.
• TV chefs like Emeril Lagasse and Paula Deen are celebrities with their own brands and product lines.
• The average pantry has about 40 spices, seasonings and extracts. Mainstream recipes call for ingredients like cardamom, smoked paprika and garam masala

McCormick uses the flavor forecast to guide its product pipeline and to promote usage of its spices.

New flavors used to originate in fine dining kitchens and work their way down, but now they come just as often from the Food Network or from ethnic or international sources. "The timeline that trends take to evolve down to the mass consumer has really shortened," Mr. Vetter says.

McCormick now counts sea-salt, smoked paprika, roasted garlic and dried lemongrass among the flavors in its typical grocery-store offerings. Asian and Caribbean spices, blends and marinades have been the focus of recent roll-outs, and the company is predicting strong Indian spices will be big within the next five years.

At Frito-Lay Inc.'s Plano, Texas, headquarters, executives describe their new flavors of Doritos chips to match what they see as the brand's image. Doritos, the company says, are targeted at a younger audience. The Doritos consumer likes action-packed video games and late-night partying and wants that extreme experience to translate to the chips as well.

So, its new First-, Second- and Third-Degree Burn chip varieties are made with jalapeno, buffalo and habanero flavors, respectively. They launched this year, as part of the company's efforts to frequently roll out new flavors to keep customers interested.

"Consumers expect more from a flavor. It's kind of like moving from regular TV to high-def TV," says Stephen Kalil, corporate executive research chef at Frito-Lay's Culinary Innovation Center. Mr. Kalil helps brainstorm new flavors and creates a natural version of a flavor in the kitchen that can be replicated in a lab.

"A lot of that flavor goes back to Asian and Szechuan cooking," says Kelly Sepcic, vice president of innovation at Frito-Lay. Sweet and spicy Doritos is another Asian-inspired product with soy, garlic and ginger flavors.

Cuisines like those from China and Thailand include extreme flavors, but, unlike the new burst of flavor in the U.S., they also assign great importance to achieving a balance between spicy and sweet, salty and refreshing, says Dr. Davis of the James Beard Foundation.

Intensely fruity Latin-inspired flavors are also a source. Dr Pepper Snapple recently added fruit punch and mango flavors to its line of Venom energy drinks. Wrigley rolled out its Orbit gum in tropical flavors like Maui melon mint and mango surf.

At Wrigley , the pace of gum flavor creation has accelerated dramatically in recent years. Wrigley introduced Juicy Fruit and Wrigley's Spearmint in 1893 and then waited for 20 years before introducing its next flavor, Doublemint. It wasn't until 1975 and 1976, respectively, that it introduced the next flavors Freedent and Big Red. Today, Wrigley releases about a dozen new flavors a year in the U.S. This fall it will offer Extra gum in fruity dessert flavors, including strawberry shortcake and Key lime pie.

The fruit profiles Wrigley makes for the American market are bolder than the ones it makes for other markets like China, says Rob Peterson, Wrigley's chief innovation officer. The Chinese mint flavor is also less minty than the American one. He adds, "the American fruit flavor or mint flavor would taste very strong or sweet to a Chinese consumer."

Write to Miriam Gottfried at miriam.gottfried@wsj.com

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

Businessweek: How Google Got Its New Look

Technology May 5, 2010, 12:01PM EST text size: TT

How Google Got Its New Look

The process that led to the redesign of Google's all-important search results page

By Helen Walters

Every day 268 million people use Google (GOOG) to search for something. The query goes in, the company's software delivers back the most relevant links. The interaction is so simple—and the hidden calculation behind the results so complex—that it's no wonder people tend not to notice much about the process. Who bothers to ask the ingredients of a magic formula?

For all of its experiments with maps, books, e-mail, and social networking, Google is still an empire built on search. Ninety-seven percent of the company's $23.7 billion haul in 2009 came from advertising. While Google doesn't break out what each of its individual ad products such as AdWords or AdSense generates, multiple people within the company concede that Google is as dependent on the "Sponsored Links" generated by search queries as an oil nation is on its wells.

Since Google's 1998 debut, the search results page—where a home page query is returned with 10 suggested links on the left and multiple advertiser links on the right—has been through seven subtle redesigns. The most recent, in May 2007, saw the addition of images and video in what was dubbed "universal" search. On May 5, Google unveiled its eighth iteration, which Marissa Mayer, vice-president of search products and user experience, calls "particularly large and particularly important."

Google has long had advanced search capabilities, but they were difficult to find. The goal of redesign eight was to surface them and integrate them into the main results page. Users now get results with an extra column of tools to drill deeper into information. That means a query can be quickly refined to show only results from shopping sites, say, or just videos on a topic, or the latest news results. Add in a new logo and a splash of colorful icons on the left side of the page that guide users through the new options, and the look is noticeably different.

Given that the shift of a few pixels can affect Google's profits, why would the company ever mess with the most successful product in the history of the Internet? "The Web is always changing, evolving, and innovating," says Mayer. "It's important even for sites that people use every day and are very familiar with, like Google, to update their look."

It's not just the look that's been updated. Microsoft's Bing and social media sites such as Facebook and Twitter have made a case for the past few years that Google's search, based on ranking the overall relevance of a Web page, is outmoded, and that the future lies in an integration of relevance with real-time search. In December, Google conceded the point and announced it would begin indexing the Web in real time to help users organize the cacophony emanating from social media.

Some in the search industry are skeptical of introducing such complexity to the results pages. "Advanced search almost never works," says Jakob Nielsen, principal of the Norman Nielsen Group and co-author of the book Eyetracking Web Usability. "People don't want to use a search engine. They want to get away from a search engine. That's the reason the advertising works so well—the search engine is one site they want to get away from so they might go to an advertiser." In other words, Google has thrived precisely because it hasn't tried to envelop its users in a full-frills experience.

Still, the competitive landscape is changing. In March, Facebook surpassed Google as the most visited Web site in the U.S. Microsoft has unveiled its own plans for Bing, which currently comes in a distant third in the battle for eyeballs but is making a play in searches along topics such as travel and shopping. Bing recently rolled out a design that adjusts the user interface of search. So if it's clear a user is looking to buy a plane ticket, Bing morphs into a travel engine. "It's a very radical departure from the dominant paradigm of the link-based system on the Web," says Stefan Weitz, director of Bing. "For every query, presenting results back with the same user experience doesn't make sense. You want to book a flight or track a flight, why display a bunch of links? That's illogical."

All the tweaks Google has made complicate its algorithm—and none of them can be allowed to complicate its interface. "They have to try to continue to innovate and evolve the product but stick to keeping things simple," says Andy Miedler, senior technology analyst at St. Louis investment bank Edward Jones. "People have grown to love the simplicity of Google." Every previous redesign has negotiated the demands of simplicity and complexity while improving Google's bottom line.

Google allowed Bloomberg Businessweek access to the core design team of 16 staffers in March, as the company was fixing bugs and gearing up to roll out the redesign—a process marked by collaboration between people who create wild illustrations with dry-erase markers and mathematical types who write in precise code. The atmosphere was loose, though the pressure of the job—engage the new decentralized, socialized Web while still driving users to the advertisers paying the bills—generated its share of stress. "There's a lot of weight associated with the project," says product manager Nundu Janakiram, the point person between engineering, design, and the five other departments involved in the project. "Everyone feels invested in the search engine; it ties together the company. We have to get this right."

Every Google page must work seamlessly on countless different computer makes, connection speeds, browsers, and screen sizes. It also must be optimized to keep people searching and clicking as fast as possible. Just thinking about the technical requirements can drive designers mad. So when the team assigned to Search Results V8 first gathered in the summer of 2009 in a small room at Google's Mountain View, Calif., headquarters, they opted not to think about requirements at all.

Janakiram, a 24-year-old Stanford grad, Web designer Jon Wiley, a 34-year-old ex-improv artist, and two visual designers mocked up hundreds of different results pages that turned everything users know about Google inside out. "Anything we could move around, we moved around," says Janakiram. Navigation tools were switched from the left to the right side of the screen. Colors changed from Google's muted blue to variations with Crayola-like vibrancy. Link styles got tweaked and modules were inverted. One proposal crammed every pixel on the page with information. Another added display advertising.

The wild-ideas phase was a good mind-clearing exercise—and mostly just that. When it came time for the designers and engineers to move into a larger space together and get serious about the new look, the exigencies of reworking one of the world's most profitable Web pages couldn't be held off. "We tend to focus on an evolutionary model where you can bring users along with you vs. dropping them into some completely radical experience," says Wiley, who once ran the Web operation for Texas Governor Rick Perry and who joined Google in November 2006. The engineers try to view themselves as enablers rather than wet blankets. "Sometimes a designer will tell you what they want, and you'll tell them you can give them 90 percent of that with a quarter of the work," says Nate Gaylinn, the technical lead on the project. "If it's really worth it to have the right experience, then you have to put in the extra work. But if it's a minor detail that you can argue either way, we'll take the easier route."

Most of those details are hashed out at a daily "stand-up" meeting of 10 people or so, held at 4:07 p.m. (Google co-founder Sergey Brin once estimated that it took seven minutes to walk across the Google campus; it's now company tradition that meetings end on the hour and new ones start seven minutes later.) Everyone working on the project gathers standing up, to make sure no one gets too comfortable and no time is wasted during the rapid-fire update. Janakiram, balancing a keyboard on the back of his chair, takes notes throughout. "The whole concept of the stand-up is to talk through what everyone's doing," says Gaylinn. "So if someone's working on what you're working on, you can discover and collaborate, not duplicate." Every proposed feature is put through a user interface review conducted by members of the larger search team, who work nearby and police proposed changes to make sure they won't have an unfavorable impact on the search-engine infrastructure. "They're making sure we don't screw up," says Gaylinn.

By October 2009 the team had its first functional prototype ready for "dogfooding"—in which all of the company's 20,000 employees can opt to test a new product. The internal focus group members can log bugs or simply comment on the design. Google won't say how many staffers took part, nor will it release the text of any comments. Janakiram will reveal that at its peak the team received a piece of feedback every 10 seconds and that not all of the responses were helpful. Even Google employees, he says, will send a message to let designers know they think their work is terrible.

One immediate focus of the feedback was the search button: The designers had turned it blue. "We got a lot of people telling us they found the button distracting, or they usually hit enter to search, or their gaze was going to the box, not the results," says Janakiram.

In addition to dogfooding, Google researchers ran 19 test subjects through hour-long eyetracking sessions to monitor responses to various aspects of the new design. Eyetracking has come a long way since the early 20th century, when objects were glued to a test subject's eyeballs. Now multiple cameras are built into computer screens, and the technique provides detailed analysis of where someone browsing a Web page is actually looking. Users often read Web pages as two lines across the top followed by a vertical stripe down the left side of the screen, in what's known as the "F-pattern."

During eyetracking, the engineers and designers sat in an adjoining room and gawked through a two-way mirror while users tried out various incarnations of the new search results page. Each participant was given prescribed tasks to search for so that the Google team could see the page in action. In a test staged during Bloomberg Businessweek's visit, a user was told to imagine his niece was writing a report about Michael Jackson, and he was tasked with helping her find specific information. When users got distracted—as they were by the same blue search button the dogfooders objected to—or failed to grasp how they were supposed to interact with the page, it meant it was time to scrap an idea. In other instances eyetracking data helped designers decide between different colors and type sizes.

While the engineers and designers pored over eyetracking results, Google statisticians conducted months-long experiments with hundreds of thousands of live users. (One advantage of having 268 million users a day is that you can roll out new products to a fraction of them and still have the benefits of a large sample size.) Google wants more searches and more clicks on its Sponsored Links, and anything that slows the process or inhibits clicking can have disastrous effects on profits.

Toward the end of the redesign process the statisticians focused on the slightly expanded gap between the Google search box and the first result. "No human being will notice they spend on average 10 milliseconds longer to click on a search result," says software engineer Patrick Riley. "But if all users take 10 extra milliseconds, we need to be concerned." This analysis was fed back to the designers, who adjusted accordingly. "We take the quantitative and qualitative feedback together with our own intuitions about how the search results pages should be working, and we iterate on the design," says Janakiram.

The focus on metrics is a deeply ingrained part of Google's culture. Brin and co-founder Larry Page are both engineers, and they've been consistent in expressing a belief that form must always follow function. (Page has gone so far as to wonder why the home page needs anything except an empty search box.) That doesn't mean designers have to like it. Douglas Bowman, Google's first visual designer, left the company in March 2009—and lit the Web equivalent of a bonfire on his way out the door. In a post on stopdesign.com, Bowman claimed that at Google, data "becomes a crutch for every decision, paralyzing the company and preventing it from making any daring design decisions." He noted that one project was delayed when a team couldn't decide between two blues—so it tested 41 different shades between them. "I had a recent debate over whether a border should be three, four, or five pixels wide, and was asked to prove my case," wrote Bowman, who is now the creative director at Twitter.

Other ex-Google design stars acknowledge that the emphasis on data can be grating. Jeffrey Veen, who joined Google as design director in 2006, says "the designers I worked with were fantastic but very formally trained in human computer interaction rather than having MFAs. That frames how design happens at Google." Veen, who left the company in 2008, adds: "None of the colleagues I would want to hire would be able to get a job at Google because of the computer-science-based requirements."

Mayer, the vice-president of search products, doesn't buy the criticism. "We're not curtailing instinct at all," she says. "We need that to fuel the innovation engine that yields great designs from Google. What we can do is use the power of the Internet and the measurability of it to figure out in a scientific way if something is a good idea or not." Wiley, V8's chief designer, insists he's comfortable with the mission and understands that search design is not intended to wow users. "It's like lighting design or sound design in a movie," he says. "If you're sitting watching a movie and you say, 'that's really great sound design!' then that's probably not right.…I don't want someone to say 'look at this gorgeous search results page!' I want them to say 'where's my…?' And click, they've gone."

In the period leading up to the rollout, changes continued. Some were major: The launch date slipped five times. A plan to include a widget underneath the search query box so users could tailor results to their location was dropped after engineers decided the technology didn't perform consistently enough. A feature offering users a way to look for similar types of results was renamed from "Not Entirely Unlike" (an oblique homage to sci-fi author Douglas Adams) to the less whimsical, more intuitive "Something Different."

As the redesign was being unveiled to the world via a blog post penned by Mayer, the team continued working. For the engineers, launch is the most critical and nerve-racking time. "We'll definitely be biting our fingernails. You can't just turn this on with a switch," says Gaylinn. Even as the team breaks up and moves onto different projects, changes will continue. "In many ways the project never really completely ends," says Janakiram. "There are always improvements to be made."

Helen Walters is the editor of Innovation and Design at Bloomberg BusinessWeek .

BusinessWeek: Amazon's Smart Innovation Stretegy

Sunday April 18, 2010

 

Strategy & Innovation April 12, 2010, 5:04PM EST text size: TT

Amazon's Smart Innovation Strategy

Amazon shows how it is possible to build a business with the capability to transform itself

By Mark W. Johnson

Building a great business and operating it well no longer guarantees you'll be around in 100 years, or even 20. In 1958, the average length of time a company remained on the S&P 500 was 57 years; by 1983, it had dropped to 30 years; in 2008, it was just 18.

Shorter business life cycles require a new sort of management discipline capable of leading an organization through an ongoing process of transformation and renewal. To thrive in today's marketplace, to be built to last, every business now must be built to transform.

Consider Amazon (AMZN), which emerged from the dot-com bubble one of the few winners and continued to blaze a trail of impressive growth (from about $4 billion in 2002 to nearly $20 billion in 2008). One of the most unexamine facets of Amazon's high-profile success is its unabashed embrace of transformational growth in its white space. Amazon survived the dot-com bust because it had a viable and innovative business model built around a market-changing customer value proposition and a radical profit formula, which upended the staid book industry. Then it quickly expanded beyond books to include all sorts of easily shippable consumer goods, growing from its core into near adjacencies. But Amazon didn't stop there.

A few years later, the company seized its white space when it devised a new value proposition, offering a commission-based brokerage service to buyers and sellers of used books. Then it moved into its white space again by developing a model to serve an entirely different customer: third-party sellers. By opening up its storefront to other retailers that were essentially competitors, Amazon transformed its business from direct sales to a sales-and-service model, aggregating many sellers under one virtual roof and receiving commissions from the other companies' sales.

Then Amazon did it yet again, identifying a new area of potential growth by finding another new customer—the IT community. Serving this new customer's needs required different processes, different resources, and a different profit formula—in short, another new business model. In 2002 Amazon launched a web services platform. Perhaps it was risky for a young company that had only reached profitability in that same year to invest its innovation resources in new business models rather than stick to its core, but within five years the site used by Amazon's web-services platform had grown into the seventh-largest in the world. And Amazon kept going. In late 2007, it set up Lab126, whose first product, the Kindle e-book reader, came to market wrapped in a business model not only foreign to Amazon's DNA but also potentially disruptive to the entire publishing industry.

To launch this high-margin, product-based offering, Amazon had to become an original equipment manufacturer (OEM). It wrapped this technology in a seamlessly integrated iTunes-type digital media platform that combined both transaction- and subscription-based content delivery. It partnered with content producers in innovative ways and created an open back-end that allowed independent publishers to generate new content for the Kindle. In its first year, Amazon sold an estimated 500,000 Kindles. Amazon has greatly expanded the market for e-books and positioned itself for success not only in this market but in newspaper and periodical distribution as well.

Amazon at its roots is built to transform. When it finds opportunities to serve new customers, or existing customers in new ways, it conceives and builds new business models to exploit them. Amazon has the unique ability to launch and run entirely new types of businesses while simultaneously extracting value from existing businesses. Amazon's journey forward will likely be marked by a series of transformations, as it continues to pursue its vision unafraid of white space, business model innovation, or renewal.

To be built to transform requires the courage to focus on delivering value for the customer first. Identifying value begins by thinking of an important unserved or underserved job that customers want done and then coming up with a well-defined value proposition to address that job, however foreign to your current offerings that may be. "If you want to continuously revitalize the service that you offer to your customers, you cannot stop at what you are good at," says CEO Jeff Bezos. "You have to ask what your customers need and want, and then, no matter how hard it is, you better get good at those things." With a well-defined customer value proposition serving a focused, well-articulated job, business leaders and project teams can work together to design the appropriate profit formulas, key resources, and key processes the company needs to thrive.

To do this, business leaders need to become business model thinkers, to understand that both the current model underpinning their existing business and any new models they may devise are complex systems with interdependent elements that must work together to deliver real value. To build these systems, they must think like architects or engineers, to begin with blueprints, build prototypes, and develop working structures that can deliver on new areas of opportunity. Although they can't devise all the answers up front, they can ask the right questions. Then they must pursue those answers like an artist would, exploring with a process of structured creativity that allows everyone involved to freely imagine the possible, not just the easily done.

Business model innovation thrives in cultures of inquiry, environments in which new value propositions, new ways to turn a profit, and ideas for new business models are met with interest and encouragement. In built-to-transform companies, managers recognize that becoming is part of being, and that the road to the next big thing can be traveled only by those with open minds.

This article is excerpted from Seizing the White Space: Business Model Innovation for Growth and Renewal by Mark W. Johnson (Harvard Business Press, February 2010).

Mark W. Johnson is Chairman and Co-Founder of innovation consulting and research firm, Innosight. He is the author of Seizing the White Space: Business Model Innovation for Transformative Growth and Renewal, (Harvard Business Press, February 2010) and a co-author of The Innovator's Guide to Growth (Harvard Business Press, July 2008).

FT: 10 innovations that will reshape business

10 innovations that will reshape business

By FT writers

Published: February 26 2010 16:26 | Last updated: February 26 2010 16:26

1. Blue-sky computing

The hot topic in technology in the past few years has been the emergence of “cloud computing”. But what exactly is this new development and how will it transform our lives?

There are two parts to understanding the platform. The first is to do with processing power and data storage, which have been moving away from individual computers into massive, centralised datacentres. This is bringing industrial scale to number-crunching – and is making it possible to unleash supercomputing power on everyday tasks: analysing a city’s traffic patterns, for example, to predict where jams will crop up.

The second part lies in the billions of intelligent personal devices – think smart phones and netbooks – capable of plugging into this centralised computing resource via the internet. That means individuals (and not just companies or governments) will be able to take advantage of these information “clouds”.

So where does this lead us? Two broad predictions spring to mind. One is that making so much information and processing power available at very low cost will produce new breakthroughs. Science, for instance, could be revolutionised, as researchers gain access to previously unimaginable amounts of data and develop ways to cross-refer between disciplines.

The second prediction is that personal computing devices will become super smart as they are able to draw on the intelligence of the “cloud”. Already, Google is talking about adding instantaneous voice translation to its phones.

The big changes represented by these computing shifts may not be complete by the end of this decade – but they will be well under way.
Richard Waters, San Francisco bureau chief

2. Work longer, work older

This decade will see older people working longer. That’s not surprising. In addition to governments from Britain to Greece raising the retirement age, low interest rates and the death of defined benefit pensions mean many people will not have enough money at age 65 to enjoy their sunset years. They will be forced to work to make ends meet.

What I find interesting – and what could change the face of business – is that they may prefer to do that working for themselves. A recent study from Standard Life suggests that one in six Britons aged 46-65 hopes to embark on a new business venture rather than retire. This is seven times the number of possible start-ups from their parents’ generation – and could amount to a million new businesses in the UK.

Their experience, wisdom and connections will be their secret weapons. But they’re also likely to have more time and money to spare than current entrepreneurs. The typical age today for someone to start his own business is between 30 and 45. Inconveniently, this is also when you’re likely to have young children and a mortgage. “Olderpreneurs”, meanwhile, will often be close to seeing off these responsibilities – as well as eager for ways to stay in touch with people from all generations, as customers, partners, suppliers or perhaps staff.

I predict many great companies will be started in the next few years. The 50-plus generation could well kick-start the recovery.
Luke Johnson writes an FT column about entrepreneurs, and runs Risk Capital Partners, a private equity firm

3. Information does have a value

If there is one orthodoxy of the past decade that the media industry has reason to curse, it was born when Stewart Brand told the 1984 Hackers’ Conference that “information wants to be free”.

People still disagree about what Brand actually meant – and many of those credited with promoting the “free information” idea have since disavowed it – but the phrase has given intellectual cover to everything from music piracy to the notion that not paying for news is an immutable culture of the internet.

Back when people still talked about the “information superhighway”, they scoffed at the idea of it being impeded by toll booths. Online advertising – new and improved – was supposed to cover information owners’ bills. But just as the gleaming freeways of the US’s postwar heyday are now potholed and crumbling, the content free-for-all has eroded media companies’ business models and risks overloading communication networks.

Now content owners from magazine publishers to pay-television broadcasters are wondering why they put all their trust in a single advertising revenue stream.

It is time to revisit Brand’s full quote: “On the one hand, information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.”

Too often in the century’s first digital decade there was no fight at all, but now the information-wants-to-be-expensive mantra is gaining the upper hand. Publishers have pushed Amazon.com to raise prices on eBooks, Apple’s “app economy” is allowing even those with free websites to charge for applications for iPods and iPads, and The New York Times is following specialist titles such as the FT and The Wall Street Journal in charging for news online.

To consumers used to enjoying a free ride, this sounds ominous. On the other hand, we’ve just spent a decade gorging ourselves on too much content of little nutritional value. Expensive content may prove higher-fibre. Indeed, the free-content movement distracted an industry from considering which content is worth paying for. Focus more on the latter, and there is a chance to improve on a dire decade.

To Brand’s maxim, let’s try a new one for the coming decade: content wants to be valuable.
Andrew Edgecliffe-Johnson, US media editor

4. Greed isn’t as good as we thought

Back in the 1980s, the economist Al Rappaport captured the spirit of the times by devising a new goal for the corporation: the maximisation of shareholder value. The measure of a CEO’s achievement was the total return achieved for shareholders during his tenure.

Bill Allen, Boeing’s legendary leader from 1945 to 1968, once described his company’s ethos like this: “To eat, breathe and sleep the world of aeronautics.” By 1998, the CEO there saw it differently: “We are going into a value based environment where unit cost, return on investment, shareholder return are the measures by which you’ll be judged,” said Phil Condit.

This was happening across industries. Britain’s ICI offered a lofty description of its ideals in 1987: “ICI aims to be the world’s leading chemical company … [enhancing] the wealth and well-being of our shareholders, our employees, our customers and the communities which we serve and in which we operate.” But, by 1995, the threat of a hostile bid galvanised the management, and the company declared: “Our objective is to maximise value for our shareholders by focusing on businesses where we have market leadership, a technological edge and a world competitive cost base.”

And it happened across borders, too. When John Reed and Sandy Weill, Citigroup’s joint chief executives in the late 1990s, described the purposes of the newly merged conglomerate’s objectives to a journalist, Reed, the cerebral traditionalist banker, said: ‘The model I have is of a global consumer company that really helps the middle-class with something they haven’t been served well by historically. That’s my vision. That’s my dream.” Weill, more attuned to the spirit of the times, interrupted Reed. “My goal,” he said, “is to increase shareholder value.”

It would all end in tears. Under Allen, Boeing came to dominate the aircraft business; under Condit, the company not only lost its market leadership to Airbus but was mired in scandal. The new value-maximising ICI attempted to rearrange its portfolio of businesses, but failed: its share price went into steady decline and a decade later the company was no longer an independent entity. Weill pushed out Reed, only to become the victim of a series of reputational problems that later hit the company. By 2008, almost all the shareholder value in Citigroup had been destroyed.

Enron, the paradigm of the new corporate model, went spectacularly bust in 2001. In 2008, the collapse of Lehman Bros, a company intensely focused on profit, nearly brought down the global financial system. These failures that bracketed the past decade have a lesson for leaders in the next one: to focus single-mindedly on profit is to risk losing the opportunity to make any profit at all.
John Kay, columnist

5. Energy sources get smarter

We’re already seeing some of the ways energy sources will change in the next decade. Smart meters, for example, which give consumers and utilities alike detailed information about energy usage, are not only being backed by Barack Obama, but are due to replace existing “dumb” meters in the UK and Australia in the next few years.

That means you’ll soon be able to see how much energy is being used in your home, and how much money being spent, via a detailed, appliance-by-appliance break-down – letting you adjust heating and lighting accordingly.

Smart appliances, meanwhile, will communicate with the grid; so a clothes dryer might shut off during peak, high-tariff hours, and on again when energy gets cheaper. Utility companies themselves could chip in by automatically turning down air conditioning a notch during times of peak demand.

We’re also seeing the advantages of light-emitting diodes as replacements for the old Edison-stlye incandescent bulbs (and the newer energy-saving fluorescents). While incandescents generate heat to produce light, LEDs create it from the movements of electrons on silicon chips. The light is more natural, can change colour, can be more precise and is instantly dimmable.

This decade will see cities replace street lighting with LEDs that last longer (by years) and can intelligently dim themselves when there is no traffic, reducing energy use and light pollution. With 20 per cent of the world’s electricity demand coming from lighting, LEDs’ ability to cut energy use by 75 per cent could have a dramatic effect on CO2 emissions.

Energy sources could also change, especially when it comes to small devices. Free energy can be harvested from sources such as body heat or radio waves from mobile-phone towers and wi-fi. Just rolling the trackball on a BlackBerry-type device to scroll through e-mail will be enough to generate power and boost battery life in the future.
Chris Nuttall, technology correspondent

6. Generation Xers come into their own

In the late 1990s and early 2000s, the usual rules of workplace seniority did not seem to apply to workers in their twenties and early thirties. The dotcom boom was empowering this cohort of youngsters – sometimes known as Generation X – to seize status and wealth with astounding precocity. The dotcom bust exposed that trend as an illusion, forcing the upstarts to serve their time in junior roles. An end to the punishment is in sight, however. Now in their thirties and early forties, many Xers should reach the apex of their power between 2010 and 2020, according to conventional wisdom that suggests white-collar workers peak in their late forties and early fifties (the average FTSE 100 chief executive is 52).

What will this mean for corporate life? Often viewed as ironic and detached, Gen X workers are not the most obvious leaders. But according to Tamara Erickson, author of What’s Next, Gen X?, this lack of ideology might be an asset in solving modern challenges (it helps, she says, that they understand gender and racial equality better than their elders). Will their relaxed attitude also help them cope with workplace disappointment? It’s possible, after all, that the baby boomers will hang on to power, keeping Gen X in a Prince Charles-like holding pattern.

And then there are the people nipping at Gen X’s heels. Enviably at ease with digital technologies, members of Gen Y have little love for hierarchy. The downturn has left many of these whippersnappers more whipped than snappy. When – or if – they bounce back, their needs will complicate life for Gen X during its final push up the greasy pole.
Adam Jones, senior companies reporter

7. Gain from the pain of failure

Failure has always been a fundamental part of a market economy. When markets work, they do so because new ideas are constantly being tried out. Most fail. Those that succeed cause older ideas to fail instead. In the US, about 10 per cent of businesses disappears each year. This is an awkward insight – but trial and error could be starting to take its rightful place as a business technique, rather than the dirty little secret of capitalism.

There are some hopeful signs. Stefan Thomke of Harvard Business School has argued that advances in computation have made it possible to experiment on new products as a matter of course, trying many things and expecting many failures. It is now easy, for example, to experiment with changes in the layout of a website, showing different configurations to different visitors and tracking results in real time. Google, meanwhile, routinely launches new products with a “beta” label on them. And academic superstars such as Steven Levitt, co-author of Freakonomics, have been teaching executive courses in business experimentation.

We are also starting to learn more about the psychology of learning from mistakes. Richard Thaler, the behavioural economist behind Nudge, coined the phrase “hedonic editing” to describe our habit of lumping small losses together with larger gains in order to mask the pain of the loss. Sugar-coating is human, but it’s also a recipe for failing to learn from failure. Thaler, with colleagues, even studied the behaviour of contestants on Deal or No Deal. He discovered that people who had made unlucky choices then started to take reckless risks, which often compounded the error.

It’s hard to learn from failure if it briefly robs us of our judgment. As we start to understand why trial and error is so painful a process, we may be able to use it more constructively. The financial crisis has made us aware that a system that cannot tolerate a bit of failure is a dangerous one. The idea that an institution was “too big to fail” used to sound reassuring. Not any more.
Tim Harford, Undercover Economist

8. Do more with less

The inevitable triumph of the Bric countries – Brazil, Russia, India and China – has become almost a commonplace observation in business. Even if a few too many exotic chickens are being counted before they have hatched, the threat represented by these and other emerging countries is changing the way established businesses in mature markets think. There’s a wave of powerful new competitors on the horizon who can price their goods and services at startlingly low levels. Incumbents are going to have to get more efficient and increase their productivity. That’s why you can expect to hear incantations of this management mantra over the coming years: do more with less.

Nor is it just competition from developing countries that has sparked the idea. In the context of the debate over environmental sustainability, companies will have quite literally to produce more while using less of the planet’s finite resources.

And it is not just a private sector story. Deeply indebted governments will also be seeking to squeeze public sector workers. Politically, it is vital that essential public services are maintained and even improved. And yet it is equally clear that budgets are going to be cut. Serious attempts will be made to square that circle.Is doing more with less an impossible task long term? Not necessarily. Usually a better way of doing things can be found. New technology usually makes new approaches possible. And human beings can be very adaptable.

And yet it is clear, too, that an endless demand that we produce more with less could prove damaging. It might lead to a world of “permawork”, where our mobile gadgetry is not only always on, but always being used. The quality of work produced under these circumstances is unlikely to be uniformly high. The drive to achieve more may prove self-defeating.
Stefan Stern, management writer

9. Jump on the hedge

Financial innovation has become a dirty phrase lately because of the role of complex securities – packages of mortgages and other liabilities – in the credit crunch and ensuing financial crisis. But the dirty secret is that if western economies are to recover properly, the funding will have to come from the markets. And such will be the competition for cash that some projects are likely to create fresh innovations to attract lenders.

One of those innovations is the risk transfer. A hot trade before the crisis, it is already returning. Robert Shiller, professor of economics at Yale, published a book in 2003 that proposed new financial instruments for individuals that would enable them to lay off, or “hedge”, the risks they run by trading contracts – a bit like how banks, companies and fund managers traded credit derivatives in the past decade. Worried, for example, that your chosen job track might not yield the sort of mid-career salary you’d like in 10 years? Create a contract in which you’re paid a certain sum if your income falls below a set level.

Investors, Schiller promises, will be interested in making bets on this sort of thing. Indeed, these markets are being created for big organisations today. Take snowfall futures, designed so that cities or companies get a pay-out if winter snowfall turns out to be worse than expected. And just last month, a group of banks, pension funds and insurers announced they were developing a new market for longevity products – the risk that people live longer than expected.

Doesn’t this seem a terrible idea, given where the trading of risk landed banks in recent years? Schiller argues the credit crisis merely shows that “much more work needs to be done to democratise finance. The crisis occurred because the principles of financial risk management were not being applied to the widest possible population.” Come one, come all – companies, governments, citizens: roll up for some risky business.
Jennifer Hughes, senior markets correspondent

10. Deliver us from shopping

Just as the arrival of self-service shelving transformed the physical layout of shops in the past century, online shopping will do so in this one. Already we’ve seen internet shopping become a competitor to bricks-and-mortar stores. Now it will reshape them.

At Wal-Mart, for instance, more than 40 per cent of the online orders on the retailer’s website are sent for pick-up at a local store, as customers seek to avoid the costs and timing uncertainties of home delivery. In response, the retailer is testing drive-through pick-up options and redesigning stores to include pick-up counters at the front. In the UK, Tesco has similar arrangements (though no drive-throughs yet).

Sears Holdings has taken things even further at a pilot store outside Chicago called MyGofer, where four-fifths of the floor space is backroom storage, and one-fifth open to customers who can pick up pre-ordered items, or use computer terminals to order what they want in store. Sound a lot like Argos? Here’s the twist: Kmart is also trying to persuade other retailers to use its stores as a central pick-up location for goods ordered online. Retail industry analysts speculate that even the purely online Amazon might eventually want to set up pick-up locations.

The web will also change what’s on the shelves. A customer standing in a store and armed with a smart phone can call up comparative prices from rivals – unless the item in question is only available at that particular store. So there will be more pressure on retailers to get selective deals with leading brands – or to develop their own-label versions of everything.
Jonathan Birchall, US retail correspondent

What other big ideas did we miss? Please let us have your views and thoughts on the ideas or developments likely to shape the next 10 years by e-mailing: ftweekendmagazine@ft.com

Copyright The Financial Times Limited 2010.

Economist: The book of Jobs

Tablet computing

The book of Jobs

Jan 28th 2010
From The Economist print edition

It has revolutionised one industry after another. Now Apple hopes to transform three at once

Illustration by Jon Berkeley

APPLE is regularly voted the most innovative company in the world, but its inventiveness takes a particular form. Rather than developing entirely new product categories, it excels at taking existing, half-baked ideas and showing the rest of the world how to do them properly. Under its mercurial and visionary boss, Steve Jobs, it has already done this three times. In 1984 Apple launched the Macintosh. It was not the first graphical, mouse-driven computer, but it employed these concepts in a useful product. Then, in 2001, came the iPod. It was not the first digital-music player, but it was simple and elegant, and carried digital music into the mainstream. In 2007 Apple went on to launch the iPhone. It was not the first smart-phone, but Apple succeeded where other handset-makers had failed, making mobile internet access and software downloads a mass-market phenomenon.

As rivals rushed to copy Apple’s approach, the computer, music and telecoms industries were transformed. Now Mr Jobs hopes to pull off the same trick for a fourth time. On January 27th he unveiled his company’s latest product, the iPad—a thin, tablet-shaped device with a ten-inch touch-screen which will go on sale in late March for $499-829 (see article). Years in the making, it has been the subject of hysterical online speculation in recent months, verging at times on religious hysteria: sceptics in the blogosphere jokingly call it the Jesus Tablet.

The enthusiasm of the Apple faithful may be overdone, but Mr Jobs’s record suggests that when he blesses a market, it takes off. And tablet computing promises to transform not just one industry, but three—computing, telecoms and media.

Companies in the first two businesses view the iPad’s arrival with trepidation, for Apple’s history makes it a fearsome competitor. The media industry, by contrast, welcomes it wholeheartedly. Piracy, free content and the dispersal of advertising around the web have made the internet a difficult environment for media companies. They are not much keener on the Kindle, an e-reader made by Amazon, which has driven down book prices and cannot carry advertising. They hope this new device will give them a new lease of life, by encouraging people to read digital versions of books, newspapers and magazines while on the move. True, there are worries that Apple could end up wielding a lot of power in these new markets, as it already does in digital music. But a new market opened up and dominated by Apple is better than a shrinking market, or no market at all.

Keep taking the tablets

Tablet computers aimed at business people have not worked. Microsoft has been pushing them for years, with little success. Apple itself launched a pen-based tablet computer, the Newton, in 1993, but it was a flop. The Kindle has done reasonably well, and has spawned a host of similar devices with equally silly names, including the Nook, the Skiff and the Que. Meanwhile, Apple’s pocket-sized touch-screen devices, the iPhone and iPod Touch, have taken off as music and video players and hand-held games consoles.

The iPad is, in essence, a giant iPhone on steroids. Its large screen will make it an attractive e-reader and video player, but it will also inherit a vast array of games and other software from the iPhone. Apple hopes that many people will also use it instead of a laptop. If the company is right, it could open up a new market for devices that are larger than phones, smaller than laptops, and also double as e-readers, music and video players and games consoles. Different industries are already converging on this market: mobile-phone makers are launching small laptops, known as netbooks, and computer-makers are moving into smart-phones. Newcomers such as Google, which is moving into mobile phones and laptops, and Amazon, with the Kindle, are also entering the fray: Amazon has just announced plans for an iPhone-style “app store” for the Kindle, which will enable it to be more than just an e-reader.

If the past is any guide, Apple’s entry into the field will not just unleash fierce competition among device-makers, but also prompt consumers and publishers who had previously been wary of e-books to take the plunge, accelerating the adoption of this nascent technology. Sales of e-readers are expected to reach 12m this year, up from 5m in 2009 and 1m in 2008, according to iSuppli, a market-research firm.

Hold the front pixels

Will the spread of tablets save struggling media companies? Sadly not. Some outfits—metropolitan newspapers, for instance—are probably doomed by their reliance on classified advertising, which is migrating to dedicated websites. Others are too far gone already. Tablets are expensive, and it will be some years before they are widespread enough to fulfil their promise. In theory a newspaper could ask its readers to sign up for a two-year electronic subscription, say, and subsidise the cost of a tablet. But such a subsidy would be hugely pricey, and expensive printing presses will have to be kept running for readers who want to stick with paper.

Still, even though tablets will not save weak media companies, they are likely to give strong ones a boost. Charging for content, which has proved difficult on the web, may get easier. Already, people are prepared to pay to receive newspapers and magazines (including The Economist) on the Kindle. The iPad, with its colour screen and integration with Apple’s online stores, could make downloading books, newspapers and magazines as easy and popular as downloading music. Most important, it will allow for advertising, on which American magazines, in particular, depend. Tablets could eventually lead to a wholesale switch to digital delivery, which would allow newspapers and book publishers to cut costs by closing down printing presses.

If Mr Jobs manages to pull off another amazing trick with another brilliant device, then the benefits of the digital revolution to media companies with genuinely popular products may soon start to outweigh the costs. But some media companies are dying, and a new gadget will not resurrect them. Even the Jesus Tablet cannot perform miracles.

Copyright © 2010 The Economist Newspaper and The Economist Group. All rights reserved.

Forbes: The Future of P&G Under Robert McDonald

Leadership
The Future Of P&G Under Robert McDonald
Hal Gregersen 12.22.09, 4:32 PM ET

When it was announced in June 2009 that Robert McDonald would replace A.G. Lafley as chief executive officer of Procter & Gamble, investors and employees alike found themselves asking, Who is Bob McDonald?

Putting that wonder aside, McDonald has already done well delivering a greater than 20% increase in P&G's stock price since becoming CEO in June. Now that he is slated to become chairman of the board on Jan. 1, 2010, what can his past actions tell us about what he values most and how he will continue to guide the 182-year-old consumer products company into the uncertain economic future?

To answer this question, let's take a moment to look at how his predecessor, A.G. Lafley, responded nine years ago when he became P&G's CEO. The market gave the company's stock an 11% drop during his first week, but despite that unkind reception, Lafley rarely looked back. His everyday actions demonstrated a personal commitment to innovation as the lifeblood of P&G's turnaround. He launched and sustained a long-term commitment to innovation, transforming P&G into one of the world's most innovative companies. He defined innovation as everyone's job and provided all the tools for converting executive rhetoric into concrete business action.

In a recent six-year study of the most innovative companies in the world, written up in the December issue of Harvard Business Review and soon to be a book from Harvard Business School Press, I, together with my colleagues Jeff Dyer of Brigham Young University and Clayton Christensen of Harvard Business School, interviewed many company founders and CEOs to uncover how they had created the original spark of an idea that had evolved into an industry-disrupting company. Our research revealed that the mystery of innovation, a la Steve Jobs at Apple or Jeff Bezos at Amazon.com, is not as mysterious as we might suspect.

Put simply, highly innovative companies are led by innovative leaders, leaders who constantly question the status quo, deeply observe the world like full-time anthropologists, regularly network for new ideas (with more energy than most people network for new jobs in today's difficult economy) and frequently explore the world with an experimental mindset, always trying new things and doing things differently. These four everyday actions produced the fuel behind an innovative leader's ultimate act: connecting the dots across previously unconnected ideas to create a new combination of ideas.

That is precisely how Jeff Bezos, the founder of Amazon, came up with the original idea of selling books over the Internet without maintaining any inventory. For sure, the original idea was not fully hatched; it quickly became obvious that holding inventory was as necessary on the Internet as in a store. Rather, the original idea was a start from which Bezos, constantly driven to discover, could collaborate with others who were also driven to bring the idea to life.

Bezos and his colleagues together shaped that initial idea into something far more successful. Our research found the same pattern at long-established companies like P&G when they were led by discovery- or innovation-focused executives who collaborated with delivery- or execution-focused colleagues.

When A.G. Lafley took over at P&G in 2000, his leadership actions quickly breathed new life into a stagnating company. He placed a premium on putting the customer first. He not only defined two pivotal moments of truth for consumers, the moment of the decision to buy and that of delight in use; he also demonstrated ways to make those moments of truth ever more truthful. Day after day, week after week, year after year, you could find Lafley acting just like an innovative founder entrepreneur. He challenged the status quo with constant questions. He regularly observed consumers in their homes and in the marketplace to see first-hand how well P&G delivered on those two moments of truth. He constantly talked with people inside and outside P&G to gain new views, so he could bring the outside in to P&G and take the inside out. He acted like an innovator as he worked nonstop to establish an organization that thrived on innovation.

Now McDonald not only is the new CEO but soon will be chairman of the board at P&G. The good news is that like Lafley, he has worked with multiple P&G brands and divisions over the years. Like Lafley, he has also worked outside the U.S., his home country, and gained a global perspective. Like Lafley, he served a serious stretch in the military. But unlike Lafley, his everyday actions seem tilted even more toward delivery than discovery. He appears to pay even more careful attention to detail and approaches his own work with even deeper discipline (including doing rigorous early morning workouts). Those are classic characteristics of a delivery-driven, or results-focused, executive. He appears to run a very tight ship, professionally and organizationally.

Equally important, McDonald also shows significant interest in discovery and innovation, and we can hope that that interest--combined with his sharp focus on delivery and execution--will produce enduring positive results for P&G. He is a voracious reader who constantly explores the world of ideas and experiences through books. When taking international assignments (including in the Philippines, Japan, Brussels and Canada) over the course of 14 years, he consistently and deeply immersed himself in understanding the local cultures to better deliver value to customers. Not only did he devour books on each new country, but he was just as likely to learn by experience--for example, taking canoe rides in the Philippines to observe and visit with villagers about soap and detergent use.

For more than a decade McDonald has worked side by side with Lafley to help design and build P&G's innovation engine. His strong delivery skills have helped him lead the charge for creating P&G's low-cost business model, which has lifted sales in developing countries. He has also initiated significant process changes that have driven P&G's cost structure much lower than it otherwise would have been when the financial crisis hit last year.

So what does P&G's future look like with McDonald at the helm? Continue to watch his personal work calendar to find further clues, but if the past is any sign of the future, it's a promising one. Just as Lafley's daily discovery-driven actions--questioning, observing, idea networking--showed up constantly in his calendar during P&G's decade-long innovation transformation (as well as before it), we will continue to glean an even clearer glimpse of P&G's true strategic priorities by watching where McDonald spends his time at work and how he continues to balance the key senior leadership tasks of discovering new direction, delivering effective results and developing others' capabilities in the process.

His predecessor, Lafley, devoted significant personal and top-management team time to doing things like directly observing consumer behavior. Those things declared without ambiguity that innovation really was everyone's job, including the CEO's. As we continue to see those behaviors, as well as others, in McDonald's actions, what we notice on a daily basis will make all the difference in determining where P&G ends up during the next decade. McDonald's demonstrated lifelong curiosity about the world will no doubt provide sufficient fuel for that journey. Like innovative leaders at other companies (for instance, Steve Jobs, who wants to "put a ding in the universe"), McDonald carries a strong commitment to changing the status quo, defining and refining a new strategic path for P&G. One of his favorite quotes comes from Don Quixote in Man of La Mancha: "Who is mad in this world, the people who see the world as it is or the people who see the world the way it should be?" McDonald hopes to create the world as it should be for P&G.

Clearly, the financial crisis is pushing P&G, like most companies worldwide, into new territory. And clearly, P&G needs an even further shift in strategic direction to use its deep innovation capability to deliver lower-cost products and build high-impact business models for a world moving out of a recession.

As the coming days, weeks and months of 2010 pass by, continue to watch the everyday actions of new senior leaders--not only McDonald at P&G but others elsewhere--to see how they shape not only of their own futures but, most important, the futures of their companies.

Hal Gregersen is a professor of leadership at the international business school Insead and is co-author of "The Innovator's DNA," published in the December 2009 issue of Harvard Business Review. This article is an updated version of one that originally ran July 15, 2009.

Forbes: Snack Attack

Entrepreneurs
Snack Attack
Christopher Steiner, 12.14.09

In 1993 Mandeep Arora rode shotgun on a vending delivery route. Even at age 13 he could see it made little sense: tromping up several flights of stairs with boxes of Snickers and Cheez-Its only to find machines still packed. Yet that's exactly what operators of vending networks expected their drivers to do. "It seemed like a huge waste of time," he recalls.

Those days may be over thanks to computer-monitoring hardware devised by Arora, now 29, and college pal Anant Agrawal. Their company, Cantaloupe Systems, launched in Berkeley, California in 2002, makes a 12-square-inch box that sits within a vending machine, captures all the transactions and transmits the data over cellular networks and the Web to Cantaloupe's servers.

The boxes also trigger e-mail and text alarms when machines sell out of an item. Result: less manpower and lower fuel costs. Not only can drivers skip machines that are fully stocked, but they also save time by prepacking their cartons with exactly what each one needs--allowing them to replenish 180 machines a week, versus 100 the old-fashioned way.

Cantaloupe's system costs $300 per machine, plus a monthly $6 service fee. The domestic vending market is huge, with 6 million machines (only 150,000 of which can't get a cell signal). Cantaloupe is in only 35,000 thus far, enough to pull in an expected $8.5 million in revenue this year, up from $2.5 million in 2008; the company has posted positive operating earnings (profit before interest, taxes, depreciation and amortization) since July. While the economy continues to shed jobs, Cantaloupe is looking for software engineers, account managers, field technicians and a technical writer.

Streamlining the vending process is an old idea. Two obstacles: clunky software and expensive, unreliable hardware. Arora and Agrawal started poking around, but the better systems on the market ran to $1,000 a machine. Then came cloud computing--programs managed on servers and distributed cheaply over the Internet. "We got lucky," says Agrawal. "Cloud computing and cellular networks were being stressed when we were in school."

Mark Stein, president of Mark Vend in Chicago, has installed Cantaloupe's hardware in 700 of his 1,700 machines, spread over a 50-mile radius. Over the course of the 12-month rollout Stein's overhead has dropped 15%. He hopes to have the boxes in all of his machines within the next two years. Says Stein: "Knowing exactly what you need is a lot better than guessing, which is what we used to do."

Arora and Agrawal met as undergrads at UCLA. Arora, whose parents ran a vending supply business in San Leandro, California, studied computer science, Agrawal economics and electrical engineering. Both had an entrepreneurial itch. On a vacation tour through India in 2001 the pair batted around a dozen ideas for startups (including a device allowing people to climb up walls without ropes), though vending seemed to have the most potential.

The pair spent the next summer interviewing vending operators in California. In the fall Arora quit working on a graduate degree in computer science to work on Cantaloupe full-time. The partners pooled $100,000 in savings--Arora had bet well on tech stocks, while Agrawal had a stash from assembling computers in high school.

A year later Frito-Lay came knocking. The snackmaker was experimenting with branded machines carrying only its products and wanted to track sales to learn what machines and locations were most effective. As a trial Frito-Lay wanted to install 100 boxes at high schools and on college campuses, but Arora and Agrawal had built only one prototype.

"We had a $30,000 check on our doorstep, and we weren't really ready," recalls Arora, who promptly turned his 900-square-foot Los Angeles apartment into a makeshift factory, thick with RadioShack boxes, wire crimps, laptops, serial cables and soldering irons.

By the next summer Cantaloupe had set up shop at Arora's parents' house in Berkeley. Over the next 18 months the two cranked out 1,000 units by hand in the garage. The following year they landed $1 million in angel funding and in 2006 another $5 million from Global Environment Fund, a venture capital outfit in Chevy Chase, Maryland.

Capital was nice, but snagging orders and filling them still proved tough. "I hung up on them four or five times before I agreed to sit down and talk with them," recalls John Sowell, chief executive of North County Vending in Vista, California, which collects $60 million a year in nickels, dimes, quarters and bills from 17,000 machines in seven states. A big problem: Cantaloupe's early software interface made it hard to mine the sales data. Sowell bought 30 units in 2005 but balked at a larger rollout for another year. "It took about that long for them to really perfect this thing," he says. At last count Sowell had installed 5,000 boxes, eliminating 40% of his truck fleet on Cantaloupe-streamlined routes.

Efficiency isn't the only benefit of computer-controlled vending. Foiling crooks is another. Cantaloupe's hardware sends a message any time a vending machine door opens. When a signal came from one of Sowell's machines that wasn't scheduled for service, a manager in the area swung by and nabbed a former employee pillaging the machine.

Such transparency also helps vending operators land accounts with commercial landlords, schools and municipalities, which typically pocket 5% to 25% of the vending revenue generated on their premises. To secure that valuable real estate, unscrupulous vending operators will offer commissions up to 40%. They get away with it by underreporting sales, effectively lowering the rate. Cantaloupe solves that problem by giving landlords access to the data stream.

Barton Shaw, vice president of Atlanta Vending, knows all about the number fudging. Last year Shaw took over a building with several machines from a competitor who had been reporting sales of $17,000 a quarter; Atlanta tallied $30,000 in its first quarter with the same number of machines. Shaw has since put Cantaloupe's system into 800 of its 2,600 machines, and he hopes to be monitoring nearly the entire network by the end of next year. "It's a big advantage when we pitch people," he says.

Next year Arora and Agrawal plan to integrate credit card readers into their hardware, potentially allowing vendors to charge more for the same candy. "There's a psychological ceiling right now at one dollar," says Agrawal. If snackers don't have to fish for coins, the logic goes, charging more than a buck won't hurt sales much. (The same behavior plays out in New York City cabs, too.)

Meanwhile, competition is brewing. Vending machine manufacturer Crane Merchandising Systems is working on its own monitoring hardware, as is Mars Electronics, maker of dollar-bill changers. Both companies' systems should hit the market within two years. While Cantaloupe doesn't hold any patents on its technology, Arora and Agrawal aren't sweating--yet. "Competition is good. It shows we're on the right track," says Agrawal. "But we're several laps ahead of everyone else."

BusinessWeek: Open Innovation's Champs and Also-Rans

Innovation November 30, 2009, 12:17PM EST text size: TT

Open Innovation's Champs and Also-Rans

Collaboration can pay off, as Procter & Gamble shows, but only if companies jump in with both feet

By Stefan Lindegaard

Open innovation is a hot topic at almost every company that is serious about innovation. Why? Because the idea of combining internal and external resources to increase innovation productivity and prowess is just too good a value proposition to miss out on.

Nevertheless, I believe that only about 10% of all companies are adept enough at open innovation to get significant benefits. Another 30% have seen the light and are scrambling to make open innovation work and provide results that are worth the bother. I call them contenders. The other 60% are pretenders—companies that don't really know what open innovation is and why or how it could be relevant for them. Some might figure out how to follow the leaders one day, but today they're mostly going through the motions.

When it comes to open innovation, Procter & Gamble (PG) is the undisputed champ. Its efforts began in 2000 with what a Web site called Connect & Develop. It's a two-way street, accessing externally developed intellectual property in its own markets while sharing its internally developed assets and knowhow with others.

Pictures on Pringles

Connect & Develop is about much more than just technology transfer. It encompasses everything from trademarks to packaging, marketing models to engineering, and business services to design. This approach has already resulted in more than 1,000 active agreements with external partners.

Here's an example of open innovation at work. P&G had an idea to print words or images on Pringle chips. It then went outside the company for technology to make this happen. P&G found a small bakery in Bologna, Italy, run by a professor who had invented an ink-jet technique to print pictures on pastries. Within a year, these customized Pringles were on the market, a launch that was much faster than usual and that cost a fraction of doing it in-house.

What makes P&G a champ in my view is that management no longer views open innovation as something new, unique, and different. It is just the way the company innovates. Not many others have reached this level of confidence.

Intuit (INTU) and General Mills (GIS) seem to be champs in the making. The reason I like Intuit is its Entrepreneur Day, held for the first time in October for 40 selected startups. Although I have not yet heard of specific outcomes on this initiative, it's a great display of setting clear goals, establishing a filter process, and showing strong commitment to creating new partnerships. All are important aspects for open innovation.

Smooth Linkage

At a first glance, the portal for General Mills Worldwide Innovation Network (G-WIN) might be mistaken for the other open innovation portals that are popping up right now, where hosts seek new business-boosting ideas and technologies. But based on an interview with Jeff Bellairs, who directs G-WIN, I picked up on some sharp thinking behind the scenes.

General Mills is making the linkage between outside and inside resources as smooth as possible. One of its tools for this is an "external speed team," a cross-functional group that meets biweekly to discuss projects, share insights, and make sure the external partners are talking with the right people. In addition, General Mills recently launched an innovation entrepreneur program. These individuals have a number of responsibilities, including ensuring that outside ideas make their way into the company's innovation pipeline.

These efforts by General Mills are highly relevant because they position the company to become a preferred partner, which means getting the first peek at new technologies and ideas and, in turn, a competitive edge.

Then there's Campbell Soup (CPB). The company jumped on open innovation through its Ideas for Innovation portal earlier this year. Unfortunately, this is more like a gimmick than a serious attempt to engage customers and business partners. While I'm singling Campbell out, the truth is that many other companies are just as clueless. Here are my specific problems with Campbell:

• Its intentions are too vague and unfocused. Campbell declares that it wants "ideas for new products, packaging, marketing, and production technologies that will help us meet the needs of our consumers and customers better, faster, and more completely." Gee, that could be almost anything, couldn't it?

• The company should be turning us on, not away. Campbell says it will take three to six months to respond to a suggestion, and if it turns down your idea, you won't receive any explanation. Why not try to make it more inviting?

• The whole thing reads like an ego trip. The Campbell Web site talks only about why open innovation is good for Campbell. If the company wants help, it should at least mention how collaboration can benefit its would-be partners.

In an e-mail, a Campbell spokesman told me that the company considered the site to be only an initial step. He added that management was pleased by receiving nearly 5,000 submissions, but acknowledged that the effort was not perfect and Campbell is working on future enhancements of the site.

To become a champ and not a pretender, here are issues that you need to deal with early in the process.

First of all, you need to ask the why question. Many people believe open innovation is the Holy Grail and race out without asking why it's relevant. Open innovation works only if it aligns with the overall corporate strategy. Many companies mess up here. They simply do not have an innovation strategy.

The next step is defining what open innovation is. Innovation, and even more so open innovation, can be defined in many different ways. Companies need to know what they're after, as Procter & Gamble and General Mills have done.

Before moving on to implementation, you must remember your people. A paradigm shift like this requires that employees change their mindset and obtain new skills. The key things here are the ability to view innovation in more holistic terms and to become better networkers.

Open innovation is by no means easy. But as I said at the start, the value proposition is just too good to miss out on.

Stefan Lindegaard is a Copenhagen-based speaker, network facilitator, and adviser on open innovation and intrapreneurship. His book, The Open Innovation Revolution, will be published in May, 2010.

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