Social innovation- Catalytic Philanthropy

Before taking this class, my definition of innovation was only limited to technical innovation, such as ipods and laptops. I never thought an innovation could be a process, idea, or public policy which changes our routine or beliefs to reach a social need or a shared vision ( Westly and Antadze, 2009). Numerous nonprofit or for-profit organizations and governments have put forth some innovative policies or measures, which are called social innovations, in order to tackle current social problems. Nonprofits face some problems, including the lack of funding, and the ineffective policy implementation. Mark R. Kramer, thinks that donors should actively engage in solving the problem, not just write down a check to support nonprofits as in conventional philanthropy. He proposes a new approach “Catalytic Philanthropy.” If philanthropists really care about a problem and are able to analyze it in detail, they would have more knowledge to know how to make the society better. Kramer’s article “Catalytic Philanthropy” in Stanford Social Innovation Review mentioned an example of Tom Siebel, founder of a software company and a philanthropist. He tackles mesh abuse among teenagers in Montana by mobilizing experts and advertising agencies to film ads to inform teenagers how terrible meth abuse is and how it is related to the crime. The result turned out well. The rate of mesh abuse decreased 45 % among teens and 72 among adults from 2005 to 2007. Below are links to the websites about the article “Catalytic Philanthropy” and also about social innovation.

The article “Catalytic Philanthropy”
http://www.ssireview.org/articles/entry/catalytic_philanthropy/#
Social innovation
http://sigeneration.ca/

I like this idea of Catalytic philanthropy and also agree with his point that donors should make sure their money is used effectively. However, I think that people donate their money to organizations, because they expect the organizations to have experts who can put the donated money to use effectively, very similar to people hiring an investment manager to manage their wealth, because they believe he/she can earn a better return on the invested money.

Google Wave: The New Form of Communication?

According to an article on CNN, Google Wave will go out to 100,000 Beta testers on Wednesday. Google Wave consists of e-mail, chat, Wiki documents, blogs and photo-sharing sites to create a form of Internet communication called a "hosted conversation," or a "wave." These 100,000 Beta testers will help to get the kinks out before the product is released to the general public for common use.

The creators of Google Wave, Lars and Jens Rasmussen, believe that Google Wave will eventually replace email as the main way people interact on the internet. New features in Google Wave include, e-mail-like communications being edited by several people at the same time. Also, users of Google wave can talk about sections of Wave documents in real time, where people see what a person is typing as it is typed. If a person comes to the conversation late, they can replay everything they've missed.

In the article, Jens Rasmussen said, “e-mail is a computer version of snail mail. Wave will be something new, a real-time communication system designed specifically for today's faster-paced, multitasking Internet.” Many people in the Tech industry have found this to be a great new application. However, there is some concern that is may be too complex for mainstream use.

This product hopes to change the way we communicate online. If people in the Tech industry are worried about it being too complex, how will the general public react when it is finally unveiled? Is this something is can take the place of email in everyday life?

Everything is bigger & better in Texas (and that includes patent litigation)

According to the LegalMetric research firm, 45% of the patent cases that went before a jury in East Texas were won by the plaintiff- that’s nearly double the national rate of 25%.
These rates may seem coincidental, until you learn that a company doesn't need to have any significant operations in Texas at all. Many small companies and corporate giants are learning that if you want to win a patent suit- take it to Texas.

This is happening to companies with more defined patent boundaries, like pharmaceutical companies, so what can we expect from software companies who have vague patent language and boundaries? Even corporate giants like Microsoft are not immune to excessive verdict rewards doled out in Texas. The company has to pay a small Toronto software firm, i4i, $249 million dollars because of patent infringement with the use of XML language. (You should consider that by 2009 hundreds of XML languages had been designed for software and is used as the default file format for countless companies including Apple.)

Some blame the litigation environment on the jury pool in but I disagree entirely. As we discussed last week, our patent system is in need of reform. Plaintiffs should not be allowed to choose jurisdictions without any rational basis. Such freedom led to an environment where organizations are able to take advantage of poor patent notice to shut out competitors and make a quick buck in the process. Unless something changes the patent environment can only get worse. What are some specific ways to limit jurisdiction eligibility to decrease the abuse of patent litigation?

http://www.forbes.com/forbes/2009/0907/outfront-patent-law-texas-plaintiff-paradise.html

Necessity is Apparently NOT the Mother of Invention: More about “Orphan Drugs”

In last week’s discussion of the controversy surrounding patents and their tendency to sometimes inhibit innovation, we came across the example of “orphan drugs”. Our conversation sparked my interest and I did some research to learn more about this concept of market and profit-driven innovation, specifically related to one of the world’s greatest health problems: malaria.

I found that the US passed an Orphan Drug Act in 1983, meant to encourage pharmaceutical companies to develop drugs for diseases that have a small or unprofitable market by providing them enhanced patent protection, marketing rights and tax incentives. However, this act has not gone far in promoting the development of drugs for harmful diseases that are having catastrophic effects in our world and on its economy.


In the attached article, renowned economist Jeffrey Sachs discusses how diseases like malaria are leading poverty-stricken Africa more and more towards economic disaster. Sachs stated that while big pharmaceutical companies have the scientific ability to develop a malaria vaccine, they lack motivation because of the low potential for profit, danger of competition, and the royalty stack. To help create a larger, more profitable market for the malaria vaccine, Sachs proposed that ‘rich countries’ such as the US, along with agencies like the World Bank, should commit to buying vast quantities of the vaccine on an annual basis at a guaranteed price.


Such an approach, Sachs states, has the potential to significantly change the world we live in today in many ways: most importantly, low-income countries would benefit profoundly and could more easily climb the economic development ladder. The ‘rich counties’ today have enormous scientific ability and financial capability to make a huge impact on the rest of the world, and as Sachs puts it: “In a world in which science is a rich-country prerogative while the poor continue to die, the niceties of intellectual property rights are likely to prove less compelling than social realities.”

The Role of Innovation in "The New Normal"

Yesterday, the Wall Street Journal published a letter written to customers by Microsoft CEO Steve Ballmer prior to the release of the new Windows 7 operating system. This letter was primarily written to justify switching to the newest version of Windows, stating that there would be a cost savings associated with the switch because of decreased support costs. He even went so far to say that companies could expect to see increased worker productivity. More interesting to our class, Steve Ballmer spent a great deal of this letter speaking about “the new normal,” and the important role of innovation in the economic recovery of the United States.

In his closing, he stated that the future economic growth of our country would be attributed to technological innovations. This seemed quite contrary to the trends in innovation we discussed at the beginning of our class, such as public policy and business model innovations. However, like my last post demonstrated, it is technological innovation that is recognized and rewarded in the United States. Patent laws seem to me to be a formalized way the United States encourages these technological innovations. Our readings and discussion described how difficult it was to enforce patents on innovations that did not have clear bounds. In light of this, is the innovation trend away from technology real or a dream of researchers and professors alike?

The Curb Center at Vanderbilt

From Brown’s Design Thinking, we learned that Edison used the team-based approach to innovation and made it [innovation] a “profession that blended art, craft, science, business savvy, and an astute understanding of customers and markets.” Brown showed us how organizations (Kaiser Permanente, Shimano, etc.) used group collaboration as the soil in which new ideas can conceptualize and grow.

The Curb Center for Art, Enterprise and Public Policy at Vanderbilt is the nation’s leading research and policy center focused on the American system of creative enterprise, expressive life and the public interest. (http://www.curbcentervanderbilt.org/)

It is Vanderbilt’s very own creative “lab” where faculty, staff, and students can collaborate and focus on making creative expression central to the college experience. The Curb Center is built around 3 core principles. Their first principle is to identify and strengthen the public interest related to creative enterprise and expressive life. The second is to broadly define the system of creative enterprise and expressive life. The third is to recognize the importance of bringing different voices and perspectives together.

The Curb Center leads two programs that serve as collaborative forums for the advancement of creative thought and expression on college campuses: the Arts Industries Policy Forum (http://www.curbcentervanderbilt.org/arts-industries-policy-forum) and Vanderbilt’s Creative Campus Initiative (http://www.vanderbiltcreativecampus.org/).

Steven Tepper, who serves as the Associate Director of the Curb Center, included the following conditions that are necessary for creativity:

-an atmosphere where collaboration thrives

-diverse environments where there are adequate opportunities for cross-cultural exchange

-interdisciplinary exchange

(http://www.creativity.emory.edu/what-is-creativity.shtml)

Assuming Brown, Tepper, and Edison are right about the relationship between collaboration and creativity, why are individuals often credited with creative ideas?

Design Thinking: If I’m Missing Something, at Least I’m Not Alone

After re-reading Brown’s “Design Thinking” (DT) article, I had the feeling I was missing something. Is the idea that creativity in approaching consumer needs is a key to innovation really new? Does the concept warrant a distinct theory?

After some research, I’m relieved to learn there is heated debate about the model’s relevancy.

Brown states that DT uses design techniques to “match people’s needs with what is technologically feasible.” According to Business Week’s “Innovation Guru” Bruce Nussbaum (see link), naysayers of DT contend the process isn’t practical and forgoes doing what design entails for abstract talking about design ideas. Proponents say it’s about doing large-scale systems design with intangible but valuable results.

Brown and Nussbaum, both proponents, cite “hard” examples of DT success. Nussbaum discusses BofA’s “Keep the Change” program, where debit card purchases round up, the change deposited into savings; and an initiative to develop school curriculum around pop culture gaming. In these examples and Brown’s, the DT endorsement focuses on inclusion of designers in thorough market research.

Yea-sayers seem to simply be insisting designers have a seat at the table from minute one. Great idea. Design is central but is dependant on other aspects of sustainable innovation we’ve discussed. Without a careful plan considering competition, external forces, etc., what is there to design? In a DT vacuum, there’s danger of falling into the Beta trap. Your product might be perfectly suited for market needs but never reach the shelves.

http://feedroom.businessweek.com/index.jsp?fr_story=0fbd3d5f681da3f7bf6f22b64a340857f061028b

Electric 18-wheelers and the road to Diffusion

On September 25th, the New York Times covered an article about the commitment of FPL, a major utilties group, to roll out electric Vehicles to it's fleet(click blog title to view article).

According to the article, FPL plans to phase out it's old gas service vehicles, and make all new vehicle purchases of the the electric plug-in variety by 2020. The companys says this commitment will generate $600 million in revenue, and will offset 125,000 metric tons of greenhouse gas.

I find this interesting because the decision is indicative of the growing recognition of the need to find new ways of energy creation and use. The big utility companies, being the good K-strategists that they are, have historically resisted activity that would encourage serious upheaval in their industries. This has been detrmental to the success of and commitment to these kinds of innovations, and has affected public policy towards sustainable energy initiatives.

My thoughts and questions are the following:
What kind of effect do you think this will have on future policy towards sustainable energy initiatives?
Do you think other big players will start to seriously pursue "green" initiatives?
How do you think this will affect the diffusion process among competitors, and ultimately it's diffusion into use by the public?

Innovating in higher education: Is it possible to do it through community engagement?

I have been trying to look for organizational innovations in higher education. And let me confess you that my impression is that we continue doing the same things. So I wonder if there is still the possibility to generate innovations or it is only a myth.

In most of the cases, developing community engagement has been used as a strategy to connect universities with their surrounding communities and make a difference, maybe somehow innovating how higher education institutions can promote social change. Unfortunately, this relationship has been distorted looking for benefiting the academic community rather that the community itself. Most of the times, there is a sense of "we can do everything". Maybe we should look at our actions and outreach in a humble way in order to commit to generate social trust and, then, social change. I would recommend that you read “10 Ways Colleges Can Work With Their Communities” (The Chronicle of Higher Education, September 7, 2009). It reminds us briefly how communities mistrust academy based on their familiarity with unsustainable projects that raise expectations but are discontinued once there are no more funds and, in the case of volunteering students, there is no consideration to the disruption that their presence can cause.

It is not my intention to generate a polemics about how the good intentions of faculty and students is being held but to reflect about hoe we engage in these activities in order to create a real win-win situation.

Reverse Innovation

What exactly is reverse innovation (also called trickle-up innovation) and who is doing this? I found an article about how General Electric (GE) is changing its innovation strategy to adapt to the recession. Because of the slowing growth in rich nations GE has decided to begin developing products for emerging markets, specifically India and China, later distributing them worldwide.

In 2008, GE developed an electrocardiograph (ECG) machine for doctors in India and China and later added a few new features before introducing it in the U.S. for $2,500, 80% less than similar products. In developing the MAC 800 for the U.S. GE cut their development cost from $2 million to $225,000.

The BusinessWeek article also mentions that Nokia, Xerox, Hewlett-Packard, Microsoft, Nestle, and Proctor & Gamble are seeking ways for them to profit by developing products for emerging markets.

Below are a couple of articles on the topic.

http://online.wsj.com/article/SB125372496677034615.html

http://online.wsj.com/article/SB125364544835231531.html

http://www.businessweek.com/magazine/content/09_12/b4124038287365.htm

Chase and Bank of America Revise Policies on Overdraft Fee

A headline in today’s New York Times caught my attention—Chase and Bank of America Revise Overdraft Fee Policies. It reminded me of the only unpleasant experience I had with the Bank of America, when I was charged an overdraft fee of $10 for overdrawing as little as $2, without ever being aware of such a fee until I received my bill. After going through the news article, I realized that I was far from the only person who had this kind of experience—in fact, tens of thousands people did, whose uninformed actions have generated billions of dollars in revenue for their banks. “Consumers who overdraw often do not realize that overdraft coverage is automatic and that the bank will not simply cut them off when their balance hits zero. Many banks then refuse to turn off the coverage, even when a consumer calls to request a change.” As consumer outcry grows, along with looming pressures from lawmakers, Chase and Bank of America opt to change their policies on overdraft fee before any relevant legislation go into effect. Revisions will take place along the following lines:
1) Raise the threshold overdraft eligible for overdraft fees (Chase: $5, BofA: $10).
2) Cap the number of overdraft fees that can be charged in a single day (Chase: 3 times max, BofA: 4 times max)
3) Give customers the choice to sign off overdraft programs. (Once they’re signed off, the bank will cut them off when their debit card purchases or ATM withdrawals go beyond the money in their checking account, and will no longer cover bounced checks.)

I think both the network theory we talked about last week and the literature on competition and innovation in this week's reading are applicable in this case.

Bank of America and Chase are two of the biggest banks in the United States.
In a network consisting of all commercials banks, current customers, potential customers and lawmakers, what role do these two banks play? Since overdraft program works as a substaintial revenue-generating tool for either institution, why do they choose to take the initiative to alter it? Why do they act at the same time? What impact will such move exert on their competitors, rivals and the banking industry as a whole? These are interesting questions to think about.

Innovation in a McDonald's Kitchen

How would you feel if you walked into a McDonald’s restaurant and saw that the menu had changed to $7 zucchini burgers and $11 seaweed-encrusted mahi mahi?  Probably confused and unhappy.  So, when McDonalds chefs need to come up with new and “innovative” recipes, they have to be very careful. 

I found this article interesting because most of what we have studied in class has been centered on more radical innovations.  McDonald’s, on the other hand, has picky consumers, lots of competitors, and an unchanging notion of what fast food “should” be.  People expect their food to be fast, cheap, tasty, and fairly basic. Therefore, their innovation has to stay very basic.

Process innovations for McDonald’s would be problematic.  The chefs at each store are trained in how to cook, prepare, and serve their food in very specific and cost-effective ways.  Paradigm shifts would also be difficult for McDonald’s.  It is such a huge organization that changing its basic business model would be a colossal feat.  So, the McDonald’s chef has to change their product, but only incrementally.

            Given all of these constraints, it seems to me that while he is not creating anything shocking or phenomenal, the McDonald’s chef is a real modern innovator.  Because of how set in its ways McDonald’s is, and the caliber of ingredients and cooking methods they must stick to, it is awe-inspiring that McDonald’s can come up with new recipes at all.  Despite their challenges, they are constantly improving upon their recipes, and that to me represents true, applicable innovation.

More on Innovation Beyond Invention

Work-Life Balance

As someone who has never personally entered the workforce, instead watching friends and family members of the Y Generation from a distance as they battle to make sense of their career journey. One of my particular concerns is the challenge for new "work-forcers" to balance their outside time with their career. Do you really need to check your blackberry as every new e-mail buzzes itself into awareness? Does your boss really expect you to reply immediately to an insanely early Saturday morning update? What if you were out of service, without your Iridium phone, in the mountains for the weekend? Is this really what it takes for this economy's job-beggars to prove that they were worth hiring? I ran across this topic of innovative work-life balance programs and incentives being implemented by some very enticing companies (at least for someone who despises the constant pull of business e-mails and task masters). The following links are some of the more interesting concepts I came across during my personal career research.

Work Better? Work Less.

Working Mothers Look No Further

24-hour E-mail Culture

The 4-Day Week

Enjoy and feel free to let me know if any other articles struck you, or if you found anything about companies in Nashville that look like they might make sense for someone like me!

Gap Outlet goes ROWE

The Gap Outlet the second major retailer to adopt the Results Only Work Environment model for their headquarters employees. The ROWE model, created by two former HR “renegades” at Best Buy, essentially means that it doesn’t matter when or where employees work; output is measured instead of hours. Gap Outlet had a ROWE pilot program in 2008 that yielded results: productivity, quality, engagement, and work/life balance scores soared, and turnover decreased by 13 percent. 

The fear of adopting an innovative HR strategy like ROWE is that people will not be motivated to work, but that has not been the case. Employees who fit into a ROWE culture and excel in it want to protect it, so employees who don’t fit in find their way out quickly. 

This kind of paradigm shift will lead to a more nimble, empowered workforce, and will allow more focus on important initiatives and less on people’s scheduling needs. ROWE also takes the “disciplinarian” pressure off of managers and HR, who can shift from policing to coaching, supportive roles. 

ROWE allows a workforce with more diverse experiences to come together in a way that isn’t always possible, and will better include women who organizations invest in only to leave when they start a family.

I think that a ROWE model will force better linkages and stronger networks, as employees are motivated to form relationships to increase their productivity and results. With the minimal financial investment required to implement, Gap Outlet decided it was worth the risk. 

http://www.businessweek.com/careers/managementiq/archives/2009/09/gap_to_employee.html 

Ebay for Patents?

In light of our upcoming class discussion on intellectual property, I found this article in the New York times pretty interesting.

http://www.nytimes.com/2009/09/21/technology/21patent.html?_r=1&ref=technology

In the article, Steve Lohr shows how, "...the world can be a rough place for independent inventors." He tells the story of Dr. Daniel Schlager, co-founder of Zoltar Satellite Alarm Systems, and inventor a device which beams locator beacons from cell-phones. This device makes individuals in emergency situations easier to find by emergency response personnell.

After securing a patent on the device, Zoltar presented the invention to large cell-phone makers. These companies showed no desire to purchase or use the invention, but in the years to follow, Zoltar's founders started to see the ideas and designs show up in products made by the major companies. Zoltar took the companies to court, and after millions of dollars in court fees, settled in each of their cases.

This story is descriptive of many inventors who, rather than finding the licensing rights they seek, turn to courts to find a return on their investments. This path sometimes yields results for inventors, but rarely does the same for their investors. Also, some critics argue that the time spent in litigation limits innovation activity and slows the speed to market of viable innovations.

Venture capital firms and investment groups are responding by creating a market-based solution to the problem. These firms buy patents from small investors and auction them off to larger corporations. This, the firms argue, is a win-win for inventors and corporations alike.

Some critics argue that the "little guy" still loses out. Patents are hard to price, they say, comparing them more to "works of art" than stocks.

What are some benefits/drawbacks to this approach to commercializing innovation? Is this business model itself a form of innovation? How do you think this will effect innovation in this country as a whole?

Stealthy Innovation: Starbucks’ Rebranding Campaign

Rebranding + Global Corporation = Local?

            This past July, Starbucks announced the opening of a new coffeehouse as well as a new rebranding campaign.  Interestingly, however, their new coffeehouse is called 15^th Av. Coffee & Tea rather than simply Starbucks.  As the first step in their rebranding campaign, 15^th Av. Coffee is an attempt to create unique, local neighborhood coffeehouses alongside their ubiquitous Starbucks franchises.  There are several noticeable differences between a Starbucks and 15^th Av. Coffee.  First, coffee served at 15^th Ave is roasted in smaller batches and brewed within days of roasting (as compared to Starbucks’ mass-roasting process).  Secondly, espresso served at 15^th Av. is made from an old-fashioned espresso machine and servers spend extra time adding “latte art” to the drinks.  Unlike Starbucks’ “thaw and serve” pastries, 15^th Ave. offers pastries baked daily by a local bakery.  Customers can also read their poetry and perform songs during open-mic sessions at 15^th Av. as well as bring in their own LPs to play on the sound system.  In “How to Manage Radical Innovation,” Stringer explained how large companies usually avoid innovation due to financial restrictions and bureaucratic structures.  It is particularly interesting to study the 15^th Av. Coffee innovation in light of Stringer’s arguments. 

The company is planning to open several other “neighborhood” coffee shops around the country this year, each with their own name and locally-inspired atmosphere.  In an attempt to gain new customers and stay afloat, it seems Starbucks is determined to appeal to the portion of the market that would otherwise be uninterested by its impersonal corporate chain.

            I think it’s clear that Starbucks’ product is not their coffee; it’s their coffee shop experience.  In turn, the true innovation of 15^th Av. Coffee & Teas is its new coffee shop product and rebranding campaign.  With their rebranding innovation, Starbucks is essentially trying to rebrand and create another product:  the personal and intimate neighborhood coffee shop experience.  Here around Nashville, there seem to be two types of successful coffee shops: the corporate giants, like Starbucks, where masses of customers can order their favorite, predictable coffee drink; and the charming neighborhood coffee shop, like Fido’s, where loyal customers who want their coffees with a side of character and quirkiness, warmly greet the owners and usual faces.  The latter has a sense of place and character that Starbucks simply does not have.

However, I think Starbucks’ strategy could generate a new, promising operating model for global franchises.  Rather than operate a variety of sub-brands themselves, perhaps Starbucks could give local entrepreneurs the chance to operate these local coffee shops using the company’s valuable resources.  In other words, Starbucks (and perhaps other national franchises) could allow local entrepreneurs to take advantage of the franchise’s supply chain and operational skill for a monthly fee.  This could be a new, innovative operating model:  local entrepreneurs benefit from access to Starbucks’ resources & Starbucks increases profits from monthly fees- a win-win situation!

Stringer cited that highly bureaucratic practices and slow commercialization usually prevent large companies from successfully implementing innovative ideas into businesses. This partnership could maximize the advantages that both large (resources, stability, etc.) and small companies (flexibility, closer to the market, etc.) have in the innovation process.  I think this could really help Starbucks successfully implement their 15^th Av. model.  

Questions:

Is Starbuck’s 15^th Av. Coffee innovative or merely deceptive branding? 

For more information, you can visit:

http://schott.blogs.nytimes.com/2009/07/23/stealth-starbucks/

http://www.streetlevelcoffee.com/

What do Apple and the White House have in common?

Apps.

That’s right, the White House seems to be taking its cue from Apple’s App Store in providing applications for government purposes. Seems like a stretch but according to the Wall Street Journal, our chief information officer Vivek Kundra is leading the charge to “…address some of the barriers to improving the way the government leverages new technology.”

Earlier this year, according to Aayush Arya (Macworld.com), Apple’s App Store had more than 25,000 applications and over 800 million downloads. The White House doesn’t have that much variety yet -as of right now they have applications for social media and productivity, with plans to provide options for web hosting and other IT services.

The concept of cloud computing and downloadable applications may not be a breakthrough concept but if the White House is successful in providing government agencies with transparent resources and allowing the public to have more access to government spending information, they may be disrupting the way that the public sector considers managing their information systems. There are already skeptics regarding whether the White House can really follow through with this idea. Oracle’s Larry Ellison seems to believe that the ‘app format’ is just a trend that the government will not be able to keep up with.

I have high hopes for Kundra and the government because there seems to be a need and an opportunity to utilize a more high-tech method of delivering information and services. As long as they can minimize the lag that often exists between the government policies and technology, I think they stand a reasonable chance of succeeding. I would like to highlight one aspect that stuck out to me- the issue of cost. The government must balance acting quickly to stay with the technology trend AND mimizing cost. Think about it: if a government agency is going to buy a time-management app for $85,000 (the current actual cost of the service), I think we have bigger problems to deal with.

Do you think the White House App store stands a chance? Take a look at the article to decide for yourself: http://blogs.wsj.com/digits/2009/09/17/welcome-to-the-white-house-app-store/?mod=rss_WSJBlog?mod=

P&G Innovative Products, Innovative Strategy?

On Monday, Rosabeth Moss Kanter published an article on Procter and Gamble’s new value based strategy. Kanter referred to the strategy as “stunning” and “counterintuitive,” which should say a lot considering she is a Harvard Professor specializing in strategy, innovation and leadership for change. The basis of the strategy that newly appointed P&G CEO Bob McDonald is currently on tour selling, is “purposed inspired growth.” In this strategy growth is based on meeting consumer needs, rather than creating consumer needs. In Brazil, P&G found that there was a need for a low cost laundry detergent, by spending time actually living with impoverished members of that community. They found that people were actually unable to pursue other economic activities, because their current mode of doing laundry was so time consuming. It was to meet this need that P&G developed the basico line (for essential in Portuguese). The basico line includes women's hygiene, diapers, and "greener" laundry detergent products. P&G marketed it using colorful but small in-store displays as opposed to their typical high priced T.V advertising. This new product line has been so successful in Brazil that is will actually be brought to consumers in the United States. Internally, P&G has focused on “evoking the heart” of their employees to “care about human needs.”

It seems clear to me that there is definitely a product innovation in the basico line. P&G did extensive market research, invented new products, and created a disruptive technology changing the way consumers have done laundry for hundreds of years. My question is whether or not P&G’s new strategy based on purpose and values, of evoking the heart and mind of employees to meet human needs is an innovative approach? I think that it is not because smaller companies have employed this strategy for some time now. I think that what is significant is the legitimacy that P&G brings to this strategy that could be perceived as “mushy” or only for certain niche markets. P&G, in this instance, is acting as a K Strategist; formalizing and improving on the “purposed based strategy.” We have typically discussed the benefits a K-strategist gains from being a late entrant, but this is an interesting example of the benefits that a strategy or an idea gains from the support of and implementation by a K-Strategist.

Eco-Innovation

My personal interest on the topic of innovation revolves around many environmentally sustainable concepts. I studied for 3 weeks in Denmark about sustainable technology, so a lot of what I present in this entry will be based on what I learned there, although my inspiration comes from daily independent research.

The topic of global warming, or more specifically the greenhouse effect, has been around since 1906 when Swedish scientist, Svante Arrhenius, estimated that it would take 3,000 years to double the amount of carbon dioxide in the atmosphere. Yet the disruption and creation of the environmental-centric industry did not seem to explode until Al Gore took his ideas to the media (possibly in part because the rate of emissions exponentially increased). Governments, NGOs, corporations, and researchers alike knew about the speeding rate of emissions - but it wasn't until the media exploited the fundamentals for debate that the concept took hold with the masses. Now the principles are spreading to unlikely followers and uniting people under an entirely new innovation umbrella. I hate only thinking of innovation as 'invention'. It encompasses so much more than that and I'n afraid innovators are left thinking that they can only gain recognition through invention of new products. The first point I will make is that the real innovators in this eco-industry are the ones using "one man's trash". The second point I will make is that some of these trash-finders and waste-seekers are thinking up some of the most unbelievably creative products. Fear not, non-inventive innovators, you can use what is already there! These links are just a few of my favorites that I can't wait to see catching up with the green bandwagon.

1.) Harvey Seatbelt Handbags
http://www.seatbeltbags.com/info.html

2.) Freight Container Design etc.
http://weburbanist.com/2008/05/26/cargo-container-homes-and-offices/
http://www.thegreenestdollar.com/2009/02/want-to-live-in-a-shipping-crate/
http://www.containercity.com/home.html

3.) Boxed water and wine (because plastic and glass are too fancy)
http://www.boxedwaterisbetter.com/hello/
http://www.aboutboxedwine.com/

I hope this interests at least one other person, because I simply can't get enough! If you would like to know any more, I would love to share what I know and research what I don't.

Jim Todhunter also has a lot of great insight on his blog Innovating to Win, which is a great place if you're looking for relevant discussions.

Building a Culture of Innovation

In class and through our readings so far we have learned about the different types of innovations and some organizations that have developed innovative products, services, and so forth. Our discussions made me curious about organizations, such as Google and Apple, who are known not only for their innovative products, but as organizations who have built creativity and innovation in to their actual identity. I recently came across an article in BusinessWeek titled “How to Build a Culture of Innovation” about an immensely successful company in India, the Tata Group, who has made a conscious and rigorous effort to ensure that innovation is a high priority in the organization by empowering all of its employees, from top to bottom, to think creatively.

To me, the most interesting thing about Tata Group’s strategy was that they have formed what they call the Tata Group Innovation Forum (TGIF), a group of 12 senior Tata Group executives and some CEOs of the independently run companies whose main focus is on creating a concrete, detailed process for ideas to move through their company both from top to bottom, and from bottom to top. The fact that innovation is clearly a highly ranked goal of Tata Group is evident in many of their organizational practices, such as their performance review process which lists innovation as one of the 9 factors employees are evaluated on. They also offer annual “Innovator Awards” which are linked to significant bonuses, salary raises and promotions.

Other key points from Tata Group’s creative strategy include a training process which focuses on building a culture of “creative dissatisfaction,” from employee orientation to various workshops such as the “Technovator.” Tata also launched a sort of social networking site for its employees to submit and discuss their ideas, called IdeaMax (which is similar to Digg, for those of you who may be familiar with that).

The article highlights the following key lessons from Tata Group for other organizations to incorporate in their innovative strategies:

· Leadership lays the foundation
· Hire the right people, but also focus on building processes.
· Build innovation into the organization
· Use social media to tap ideas and encourage collaboration
· Celebrate innovators

You can read more about Tata Group’s innovative strategy here:
http://www.businessweek.com/innovate/content/aug2009/id20090819_070601.htm?chan=innovation_innovation+%2B+design_innovation+strategy

Wireless Power

I recently found an article on CNN which embodies innovation and thus is perfect for our class blog. The article, entitled “ A Cordless Future for Electricity” focused on the new technology of wireless electricity and how it could make the daily lives of the American consumer easier, much sooner than we might think. WiTricity, is the name of the company that is developing wireless electricity, which they say “has the potential to cute the need for power cords and throw-away batteries." These researchers have found a way to convert the electricity into a magnetic field and send it through the air, all without the use of a a wire. With the onset of wireless electricity, which MIT researchers predict will be available in one year, it will make the need for countless power cords and batteries slim to none.

The proponents of this wireless technology cite that it could be a great help to the environment by saving consumers from using millions of disposable batteries a year Additionally, it would make it easier for electric cars to gain popularity because people wouldn’t have to plug the cars up, but rather drive them on to a wireless power mat. However, as we’ve discussed in class, even though this technology could be revolutionary in terms of innovation, it could also be disruptive by ending the need for traditional batteries. If electronics consumers no longer need batteries to power their items, sales could drop significantly, and the battery industry could cease to exist as we know it. Many other products that used to rely on battery power might have to adapt in order to keep up with the current trends in technology. Something of this magnitude could potentially affect several industries and thousands of consumer products, especially if other companies try to develop their own wireless power. Then, the “era of ferment” that is characterized by "experimentation and competing ideas" will definitely ensue. Although, this wireless power seems so novel, it was interesting to note a quote by the CEO of WiTricity, Eric Giler, who said “Five years from now, this will seem completely normal.”

If you would like to read the article visit this link: http://www.cnn.com/2009/TECH/09/02/wireless.electricity/index.html

After reading the article give some thought to the possible advantages and disadvantages of such technology:

Given that this technology has been known of since 1890 and is still yet not available to the general public, do you think it could pose hazards to our health if not properly tested and hastily implemented like the Iridium phones?

Do you think that electric car sales would actually increase due to the availability of a wireless power source? What subsequent affect would this have on the traditional, gas powered, car sales and/or status of the current car industry?

Interactive Banner Ads on Television

Did you ever imagine you would be able to order a product on television without dialing a 1-800 number? Cablevision, a telecommunication and entertainment company serving NJ, NY, and CT, has just announced that their customers will soon be able to order products and coupons with the click of their TV remote. Interactive banner ads will scroll along the bottom of selected commercials, which will allow you to click on the ad to get more information or place an order. When the product rolls out in October their viewers will only be allowed to order product samples, brochures, and coupons. The purchasing will be available in 2010. An article mentioned that other TV operators such as Comcast and Time Warner are testing or rolling out similar products, but they are not as advance in their efforts.

Since the introduction of DVR and TiVo the TV industry has been scrambling to develop an idea that will bring back the power of commercials. I find the introduction of DVR very interesting because cable companies introduced a disruptive technology, with respect to commercials, to their own industry. Right now the TV industry is in an era of ferment, as everyone is looking for the fix. However do you think this is going to be the solution? I believe it is merely a stepping stone, because if you are not watching the commercials then you are not going to order anything. Below are links to a couple of articles about the topic.

http://www.nytimes.com/external/gigaom/2009/09/16/16gigaom-cablevision-to-launch-clickable-tv-ads-91760.html

http://www.crainsnewyork.com/article/20090915/FREE/909159978

Dragon's Den

For those of you who might not be familiar, I thought I would pass along some info about a TV show that seems pretty relevant to our class. BBCAmerica broadcasts a show called Dragon's Den (which also airs on the BBC in the UK). Dragon's Den originated in Japan (it was originally called Mane no Tora, which translates to Money Tigers), and is a reality show in which inventors face a panel of entrepreneurs who can provide capital for their inventions in exchange for a share of the business. The catch is that the inventor has to say up front how much money they need, and in order to get any of the money, they have to convince the "Dragons" to fund the entire amount. Sometimes its entertaining, sometimes painful, but when it first came on I was kind of addicted to watching it. 

A lot of people bank their entire lives and fortunes on their invention and have pretty strong reactions to questioning, and sometimes their hopes are dashed. It's been interesting to think about in the context of this class- is that an innovation? Is it a disruptive one? How about the show itself? Is it an innovation? It has certainly been duplicated- there are 16 versions of the show worldwide, and ABC is working on a U.S. version, called Shark Tank, which actually premiered this fall. What do you think? Will you watch it?

Here is a clip of the online version of the show: http://www.youtube.com/watch?v=Qo_8B8OQf6g&feature=related

And a parody version, where an inventor pitches the idea for an invention called the "Crapper": http://www.youtube.com/watch?v=C3tjVHQLQ4A

WSJ Technology Innovation Awards Past and Present

This Monday, the Wall Street Journal announced its 2009 Technology Innovation Awards. In light of our innovation projects, I thought that those interested in developing a technological innovation might find a source of inspiration from this Journal Report. The report not only gives an overall gold metal winner, this year to the Ibis T5000 sensor that quickly detects and identifies pathogens in a sample, it also describes winners from a variety of categories: computing systems, consumer electronics, energy, environment, health-care IT, materials and other base technologies, medical devices, medicine-biotech, security-privacy, semiconductors, software, and wireless.

A section of the report gave updates on past winners. One winner, SPOT LLC, struck me as interesting due to our class discussion on Iridium last week. They won the 2008 consumer electronics category award for their satellite-messaging device. SPOT LLC’s Satellite Messenger was originally intended for hikers, skiers and others out of cell-phone range to transmit their current locations and send preprogrammed messages such as “This is an emergency. Please send help.” This device addresses many of the same problems that the creators of Iridium set out to solve but cheaper. It sells for $169 and basic service starts at $99 per year. The company has also continued to innovate both with product and positioning. They introduced a second version that is 30% smaller and in July began offering a roadside assistance services. SPOT LLC currently has 370,000 subscribers and is expanding their distribution nation wide to retailers such as BestBuy. For more information on SPOT see: http://www.findmespot.com/en/index.php

The Fountains of the Future: Coke’s Freestyle Machines

If you’ve ever craved a Caffeine-free Lime Diet Coke but the vending machine only offered the standard Coke and Diet Coke, then look no further because Coca-Cola’s “Freestyle” machines are here!  Coke's introduction of the “Freestyle” vending machine eliminates the limited selection problem by offering more than 100 drink flavor options.  Referred to as the “fountain of the future” by Coca-Cola, the “Freestyle” offers everything from standard sodas and energy drinks to flavored waters and natural water. 

With the recent release (July 2009) of the new machines, I think Coca-Cola is introducing an interesting new business model in the soft drink industry – a process innovation that could disrupt and revolutionize the market.  Physically, the Freestyle is about the same size of a standard vending machine but features several new innovative features, such as a large touch screen interface.  The user navigates through a selection of 100+ drink flavoring options and then the machine uses small doses of flavor from built-in flavor dispensers to mix up the perfect drink.  The Freestyle is more than a simple drink vending machine: it is a market researcher, customer service tool, and an inventory and supply manager – all in one.  The integration of these functions and their information streams offers Coca-Cola a unique opportunity to sustain their current products while simultaneously revolutionize the soft drink market. 

I think the Freestyle innovation will offer several Coca-Cola several advantages over competitors.  On the first hand, the wider array of drink choices will undoubtedly satisfy many consumers who were once disappointed by a limited selection of drinks.  Secondly, the Freestyle will likely expand Coke’s customer base by attracting new consumers who typically select water or no drink offered by their vending machines.  Both of these competitive advantages will allow Coke better capitalize on their drink products.

All in all, the Freestyle is both a product and process innovation.  Moreover, I think the Freestyle’s revolutionary potential lies in its market data, rather than its drinks.  Prior to the Freestyle, product testing was a time-consuming and expensive process.  By having access to a constant stream of consumer behavior, Coca-Cola can more easily test new drinks and respond quicker to current and emerging market trends.  As soon as preferences emerge in the consumption data, Coke can begin designing new drinks that better meet customers’ preferences.  

I also think the Freestyle will allow for better geographical differentiation as well.  Based on the machines’ market data, Coke can better identify geographical differences in consumers’ taste preferences.  For example, suppose the company discovers that energy drinks are much more popular in New York City than elsewhere.  Coke can use this information to advise client restaurants in New York to better stock their inventories with energy drinks.  Likewise, the machines will allow Coke to observe how drink tastes change throughout the day.  For instance, perhaps Freestyle data reveals a post-lunch peak in sales of caffeinated drinks.  Coke can use this valuable information to guide their marketing campaigns and better target their post-lunch consumers.  Ultimately, the Freestyle will shorten or eliminate the time period between preference/ trend identification and capitalization. 

Questions for you:

How do you think the Freestyle will change the soft drink and vending machine industry?

How do you think the purchase decisions will vary between high schools, office buildings, malls, etc.?  How can Coke best respond to these consumer differences?

Do you think the Freestyle innovation could change any other industries as well?  How about the fast-food industry, particularly the drive-thru element?