Category: Management

The Economist has a profile of the “queen of the online flea market” and looks ahead to the challenges she faces:

Mrs Whitman is concentrating on making the existing business bigger and better. For her, this has to be the way forward, not least because it is also the way that the eBay community is directing the firm. Mrs Whitman sees her job not just as a chief executive, but also partly as something like a mayor running a town-hall meeting. Her constituents want her to provide the best infrastructure for them to get on with doing their own business with one another. And they would like her to make sure everyone keeps to the rules. Many individuals and companies now depend on eBay to reach their customers. Several million part-time businesses are run on eBay, and it is reckoned that tens of thousands of people have given up their jobs to make a full-time living selling on the site. They often see eBay as a way of profiting from a hobby or other interest.

Looking out for the interests of millions of online entrepreneurs as they click through auctions of mostly second-hand and clearance stock might not appear as glamorous as cutting deals with big retailers. But it is as necessary. The biggest advantage of eBay is its size and the networking effect which that creates. If you are a seller, it is the place with the most buyers; if you are a buyer, it is the place with the most price information.

The advantage of size can only grow as eBay expands overseas, which is why Mrs Whitman is so keen on venturing abroad. She is finding it easy to build a multinational that is able to think globally, but act locally. The firm’s foreign sites rapidly become local, as the traders use their own language and establish their terms of trade.

This will probably gladden Baazee: “As the company spreads across Europe and Asia, it usually does so by buying what Mrs Whitman calls `baby eBays’, local imitators who help pioneer the concept. She is currently eyeing such a firm in India, which could be a potentially huge new market to enter.”

[via Yuvaraj] A profile of Dean Kamen, as part of a Gartner interview:

Most recently renowned for the Segway Human Transporter, Dean Kamen holds more than 150 patents on such other revolutionary inventions as a shoebox-sized dialysis machine, a stair climbing wheelchair called the IBOT Mobility System and his “Project Slingshot,” a water purification system that was named a runner-up for “coolest invention of 2003″ by Time magazine.

The founder and president of DEKA Research & Development Corporation, Kamen is a tireless advocate for science and the need to bring first-world technology to the third world.”

Quotes from the Gartner interview:

A patent, or invention, is any assemblage of technologies or ideas that you can put together that nobody put together that way before. That’s how the patent office defines it. That’s an invention.

An innovation is one of those things that society looks at and says, “If we adopt this and make it part of the way we live and work, it will change the way we live and work.” And the number of inventions that ever become innovations – I don’t know if it’s one in a million – but it’s pretty damned small.

I consider the high-speed data transmission an invention that became a major innovation. It changed the way we all communicate. However, due to Moore’s Law in recent years, all the inventions related to data transmission have fallen far short of what their impact could be as innovations if they were properly applied.

Suppose instead of multiplying the bandwidth by a hundred in the past five years, you left the bandwidth alone, and you figured out how to get the Internet to a hundred times as many people so the four billion people living in Africa and Asia and places where they have no access to information and knowledge, got access. That would be an innovation.

I think in some cases inventions prohibit innovation because we’re so caught up in playing with the technology, we forget about the fact that it was supposed to be important.

I look at the fact that two-thirds of the human population of this planet does not have reliable access to water or electricity. And it’s that same two-thirds, it’s that same 4 billion out of 6 billion people that have very little money. At least I can say, here these are productivity tools – generators and water makers. But we must find a way to deliver them. When we fail to get there quickly, at least I can say to myself, that’s because it’s a really big problem, and nobody else got there yet. So we’ll keep trying. If you’re going to fail, you might as well fail at the big ones. That’s what keeps us going.

Fast Company attempts to answer the question we all have about Apple: “The battle over digital music is just another verse in Apple’s sad song: This astonishingly imaginative company keeps getting muscled out of markets it creates. So what does Apple have to tell us about innovation?”

Almost everyone agrees that Apple’s products are not only trailblazers but also easier to use, often more powerful, and always more elegant than those of its rivals. Yet those rivals have followed its creative leads and snatched for themselves the profits and scale that continually elude Apple’s grasp.

All of which raises some interesting questions. If Apple is really the brains of the industry–if its products are so much better than Microsoft’s or Dell’s or IBM’s or Hewlett-Packard’s–then why is the company so damned small?

That Apple has been frozen out time and again suggests that its problems go far beyond individual strategic missteps. Jobs may have unwittingly put his finger on what’s wrong during his keynote speech earlier that day in Paris. “Innovate,” he bellowed from the stage. “That’s what we do.” He’s right–and that’s the trouble. For most of its existence, Apple has devoted itself single-mindedly, religiously, to innovation.

With such examples as Apple in mind, a number of skeptics are beginning to ask whether our heedless reverence for innovation is blinding us to its limits, misuse, and risks. It’s possible, they say, to innovate pointlessly, to choose the wrong model for innovation, and to pursue innovation at the expense of other virtues that are at least as important to lasting business success, such as consistency and follow-through. When it comes to economic value, Schumpeter’s creative destruction may have an evil twin: destructive creation.

James Andrews, of the Boston Consulting Group, for example, argues that too many companies presume that they can boost profits merely by fostering creativity. “To be a truly innovative company is not just coming up with great new ideas, or products and services,” he says. “It is coming up with ones than generate enough cash to cover your costs and reward your shareholders.”

Andrews says companies can boost the odds of their success by choosing the most appropriate of three innovation models. The first and most traditional is the integrator model, in which a company assumes res-ponsibility for the entire innovation process from start to finish, including the design, manufacture, and sale of a new technology. In general, large, well-heeled companies–Intel, for example–do best with this model. Second is the orchestrator approach, in which functions such as design are kept in-house, while others, including manufacturing or marketing, are handed off to a strategic partner. This model works best when speed is of the essence, or if a company wants to limit its investment. When Porsche couldn’t meet demand for its popular Boxster sports coupe in 1997, for example, it turned to Finnish manufacturer Valmet rather than open another costly plant. Finally, Andrews says, there’s the licensor approach, in which, for example, a software company licenses a new operating system to a series of PC manufacturers to ensure that its product gets the widest distribution at the lowest possible investment cost. That’s you, Microsoft.

From the beginning, Apple appears to have employed the integrator approach–the model with both the highest costs and highest risks.

At the heart of Apple’s innovation conundrum also lies a powerful cultural bias: the lionization of purely technical innovation. Ours is a material society. So it’s natural that when we think of innovation, we are more inclined to think of objects, things that we can see, touch, and feel, and of inventors such as the Wright brothers and Thomas Edison. It turns out, though, that the most economically valuable forms of innovation often aren’t the tangible kind. Instead, they are forms of innovation that we might belittle as less heroic, less glamorous: the innovation of business models.

In virtually any industry, business-model innovators rather than technical innovators have reaped the greatest rewards in recent decades, argues Gary Hamel, the chairman of Strategos, an international consulting company that focuses on helping businesses innovate successfully. Hamel points to Amazon, eBay, and JetBlue. Each company either delivered goods and services differently (by bringing distribution of books or secondhand goods to the Web) or more cheaply (by becoming a sort of Wal-Mart of the skies). Dell has done both.

There’s one last essential element to successful innovation that has often been missing at Apple: follow-through. As Howard Anderson, founder of both the consulting firm Yankee Group and the Boston-based venture capital firm Battery Ventures, puts it, “Innovation isn’t the key to economic growth. Management is the key to economic growth.” In practice, that means supporting product innovation with such things as a solid sales force, a strategy for collaborating with developers and makers of complementary products, and a strategy for customer ser-vice. “Companies that rely too heavily on creativity flame out,” Anderson says. “In many ways, execution is more important. Apple is innovative, but Dell executes.”

We need to make presentations all the time. This column (from 1998) by Doc Searls is still very relevant today. Key points:

– Begin with the end
– Come from who you are
– Tell your story
– Write from an outline
– Talk from headlines, not headings
– Use graphics
– Use numbers to make lists memorable
– Research thoroughly, source abundantly, give examples
– Make comparisons
– Stand and deliver

The Economic Times has an interview with CK Prahalad. Excerpts:

Take Wipro, TCS and Infosys as potential models of what multinationality means. You will find their cost, given the size of their global operations, measured in terms of people working abroad, is incredibly low compared to traditional MNCs like GE, IBM, Siemens or Philips. The reason is fairly simple. They have no legacies to change, theyre starting from zero. And they were under tremendous cost pressure from day one, so they had to develop new ways of communication, co-ordination and management. Thats quite unique and different from building standalone, country-by-country organisations with their own infrastructure and then changing it to global business management.

The new MNCs like Wipro or TCS are all multi-focal companies where the key manufacturing operations are in one part of the world but the customer-facing operations are in another part of the world. Their revenues may come from a part of the world where they dont necessarily dominate. Its a very different configuration from what the traditional MNCs had to start with. Not only will Indian MNCs emerge as a major force, but they will have the opportunity to rewrite the book on how to manage global operations. They will show us how to create low cost, highly effective, real-time systems. The good news is we are starting with real-time 24/7 as a starting point.

We are inventing so many things we dont take credit for. Take call centre operations. Few people know what it takes to train young Indian men and women who have strong accents, to speak English as if they were born in Ohio. Weve developed accent neutralisation capabilities. And we train not one or two people but a hundred thousand people to take on a persona for eight hours a day which has nothing to do with reality. In other words, we efficiently play-act and thats the innovation.

McKinsey Quarterly writes on how to respond to the challenge from value players:

To compete with value-based rivals, mainstream companies must reconsider the perennial routes to business success: keeping costs in line, finding sources of differentiation, managing prices effectively. Succeeding in value-based markets requires infusing these timeless strategies with greater intensity and focus and then executing them flawlessly. Differentiation, for example, becomes less about the abstract goal of rising above competitive clutter and more about identifying opportunities left open by the value players business models. Effective pricing means waging a transaction-by-transaction perception battle to win over consumers predisposed to believe that value-oriented competitors are always cheaper. Competitive outcomes will be determined, as always, on the groundin product aisles, merchandising displays, process rethinks, and pricing stickers. When it comes to value-based competition, traditional players cant afford to drop a stitch.

As competition becomes increasingly about differentiation and execution, CEOs will have to focus their organizations on rapid experimentation and innovation, the development of superior customer insights, effective pricing and promotions, and frontline efficiencies. The big challenges will be diagnosing where a companys capabilities fall short and then building these skills quickly. While spearheading change-management initiatives with relentless energy, senior managers should be prepared to think creatively about partnerships and alliances to acquire the needed talent.

Differentiation: To counter value-based players, it will be necessary to focus on areas where their business models give other companies room to maneuver. Finding and establishing a differentiated approach isnt easy and often requires trial and error. Competition in value-based markets will therefore be characterized by considerable experimentation in categories and formats to hit on a winning formula.

Execution: Value-based markets also place a premium on execution, particularly in prices and costs. There is no easy answer to this challenge, but its helpful to recognize that value players tend to price frequently purchased, easy-to-compare products and services aggressively and to make up for lost margins by charging more for higher-end offerings.

As quoted in Business 2.0 – part of a “how to succeed in 2004” series:

We first understand how the customer is being served, how can we add something unique, and how can we eliminate cost. We look also for large adjacent markets that are standardizing. These are often characterized by prices that are too high. Our business model is applicable across a broad cross section of the IT industry, where technologies are standardizing, products cost too much, and Dell’s distribution advantages can be brought over. Also there is a complementary nature to these new businesses. The same people who buy desktops buy printers, storage, projectors, services, and network equipment.
We really got serious about the consumer business in 1997. At the time, about 95 percent of our revenue was business and institutions. Now it is 85 percent, and 15 percent is consumer. If you look at what is happening with digital music and broadband, increasingly you have this idea of the digital home, with the PC at the center, connecting things that used to be proprietary. So there are now multipurpose monitors that can be a computer monitor or a TV. And there is the idea of an IP-based wireless network in your home where you have different nodes, whether for audio, video, or printing output, with a PC at the center. Users are asking us for these things.

Still, we cannot do everything at once. We have to prioritize which opportunities are best for us and for our customers. But it’s a good day for customers when we enter a new market.

From WSJ:

Gold Winner: Network365 Ltd., Ireland
Silver Winner: Tribeka Ltd., U.K.
Bronze Winner: Civil Registration Modernization Program, Ireland
Honorable Mention: Concept Bois Technologie SA, Switzerland

CATEGORY WINNERS

Business Applications of IT Services Winners (tie): Civil Registration Modernization Program, Ireland, SAP AG, Germany

Consumer Marketing Winner: Lavandoo SA, Switzerland

Energy Winner: Concept Bois Technologie SA, Switzerland

Finance Winner: Network365 Ltd., Ireland
Runner-Up: Celpay Holdings, Netherlands

Transport-Logistics Winner: Tribeka Ltd., U.K.

From the introduction: “Emboldened by rising sales of games, ringtones and other digital content, cellphone operators across the world are rolling out services that allow consumers to electronically purchase physical goods, such as chocolates, concert tickets and books, using their handsets…This year, two innovators in mobile commerce captured top spots in The Wall Street Journal Europe’s European Innovation Awards, which are presented in association with Accenture. Network365 Ltd. of Dublin is the overall Gold Winner in Business and Winner of the Finance category. And Celpay Holdings of the Netherlands is Runner-Up in Finance.”

HBS Working Knowledge (Anil Kambil) writes that by gathering collective wisdom, idea markets can improve your forecasting, knowledge management, and decision making. The three steps that managers need to take to put an idea market into organizational practice are:

Step 1: Tap into strategically important but difficult-to-measure customer behaviors – Take new product development, a process usually fraught with uncertainty. Will customers like the new idea? Will it be better than a competitor’s new product? Now, imagine that a firm could solve these problems using markets, which may be twice as effective at predicting customer preferences as traditional tools like the focus groups, surveys, and conjoint analysis.

Step 2: Unlock knowledge to tackle organization-wide challenges – As a real-time and dynamic polling system, idea markets can play a useful role in eliciting and aggregating the beliefs of individuals within an organization or a broader network. But these markets can also generate valuable signals to decision makers. When idea market prices move dramatically, decision makers should ask, Why is the price moving? What is changing in the beliefs of participants? Market makers can build message and discussion boards into systems to reveal trader beliefs and other key pieces of information.

Step 3: Exploit markets to gain buy-in from customers and managers – Survey methods often require hundreds of participants, but idea markets can work with as few as twenty to thirty participants. Managers who want to implement idea markets can therefore sell them as a cheaper and more nimble way to gauge customer preferences and employee insights than traditional approaches. Finally, markets are dynamic and allow participants to adjust their beliefs based on price and the trading actions of one another revealed in the markets.

Inc has a review of a book “The Wright Way” by Mark Eppler on “the problem-solving principles the Wrights used to invent and demonstrate their flying machine” and which are still relevant today:

Forging: The principle of constructive conflict. This conflict can be used to uncover and validate new ideas and strategies to find a practical solution.

Tackle the tyrant: The principle of worst things first. When “tyrant” problems are put first, costs for the whole are limited to this subset should a solution prove to be unachievable.

Fiddling: The principle of inveterate tinkering. New approaches can be created by tinkering with portions of a problem in an effort to understand it.

Mind-warping: The principle of rigid flexibility. Flexing the mind allows it to consider possibilities outside the plane of thought limited by policy, tradition and experience.

Relentless preparation: The principle of forever learning. Learning as a lifelong passion is essential to generating the information needed to solve problems.

Measure twice: The principle of methodical meticulousness. The fastest and most efficient way to solve a problem is by being meticulous and methodical in your approach.

Force multiplication: The principle of equitable teamwork. The force of a group with a common purpose is multiplied by interdependence powered by trust, effort, profits, power and honor.