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Innovation is not a new idea (though the popular business press often seems to think it is). Deming on innovation.
Recommended posts: Better and Different - Innovation in Organizations - Managing Innovation - Reaction to Jeff Immelt - Ackoff, Idealized Design and Bell Labs - Six Keys to Disruptive Innovation
Articles by: Clayton Christensen and Gary Hamel
Toyota has developed a thought-controlled wheelchair (along with Japanese government research institute, RIKEN, and Genesis Research Institute). Honda has also developed a system that allows a person to control a robot through thoughts. Both companies continue to invest in innovation and science and engineering. The story of a bad economy and bad sales for a year or two is what you read in most newspapers. In my opinion the more important story is why Toyota and Honda will be dominant companies 20 years from now. And that story is based on their superior management and focus on long term success instead of short term quarterly results.
Yes Toyota can improve their performance, based on the last few years. Does management understand what they need to do? I think so. Does management understand that the system needs to be improved rather than the numbers on the spreadsheets of various managers have to be made better? I think so. Do I think most companies today, with bad results, understand the difference between bad numbers on spreadsheets that are used to judge various managers and a system that needs to be improved? No.
I do not believe the bad earnings for the last year for Toyota are indicative of a failed system. The results do show a weakness in the Toyota system that allowed them to perform this poorly during this credit crisis. The risk to Toyota’s future is that they become too focused on short term results, mistakenly thinking the problem to be fixed in the bad quarterly results recently. They need to focus on improving the system for the long term. And the recent experience likely shows some areas that need to be improved. But in no way do the fundamental tenants of the management system need to be changed. For many other companies today, changing fundamental aspects of their management is what is needed.
Related: Toyota as Homebuilder - Honda’s Robolegs Help People Walk - Honda has Never had Layoffs and has been Profitable Every Year - Toyota’s Partner Robot - NUMMI, and GM’s Failure to Manage Effectively - Toyota iUnit - Invest in New Management Methods Not a Failing Company by William Hunter, 1986
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How P&G Finds and Keeps a Prized Workforce by Roger O. Crockett
Career education takes place outside the classroom, too. P&G pushes every general manager to log at least one foreign assignment of three to five years. Even high-ranking employees visit the homes of consumers to watch how they cook, clean, and generally live, in a practice dubbed “live it, work it.” Managers also visit retail stores, occasionally even scanning and bagging items at checkout lanes, to learn more about customers.
Going to visit the gemba, the actual place is incredibly important, and far too often ignored by managers today.
The emphasis on life long learning (in practice, not just words) is also very wise. In my experience far to little emphasis is placed on continual improvement of what many companies will say is their most important asset: their people. If you don’t invest in education of your staff that is going to harm your long term success. The investment P&G makes shows a respect for people.
Related: Jeff Bezos Spends a Week Working in Amazon’s Kentucky Distribution Center - Workplace Management by Taiichi Ohno - Respect for People, Understanding Psychology - Ohno Circle
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Get Rich Slow by Josh Quittner
“At this point, it would be hard for companies to get any cheaper,” Graham said. Since everyone already has an Internet-connected computer, “it’s gotten to the point that you can’t detect the cost of a company when added to a person’s living expenses. A company is no more expensive than a hobby these days.”
I see a great deal of truth to this and it provides interesting opportunities. Including being able to build a business slowly while still working full time. I have written about Y-combinator previously they have helped make this model popular. And the services these companies make seem to me to often be much more refreshing than ideas so watered down they lose much passion (so common from so many companies). Though some large companies provide great web sites.
Related: Some Good IT Business Ideas - Find Joy and Success in Business - Our Policy is to Stick Our Heads in the Sand - Small Business Profit and Cash Flow
W. Edwards Deming
Page 182, Out of the Crisis
More of Deming on Innovation
Related: Innovation Thinking with Clayton Christensen - Engineering Innovation - Managing Innovation - Gary Hamel on Management Innovation
The Innovator’s Prescription: A Disruptive Solution to the Healthcare Crisis
The push for widespread healthcare reform must come from employers, who in spite of their declared intent to cut healthcare costs also know “they profit when their employees are healthy and productive.” Affordable healthcare, he concludes, “doesn’t come by expecting high end, expensive institutions or expensive caregivers to become cheap, but by bringing technology to lower cost providers and venues of care, so they can become more capable.”
Clayton Christensen is the rare management thinker that I feel real provides profound insights into thinking about management. There are many other good management thinkers that offer valuable idea, just most of them (in my opinion) really are presenting material in ways that offer managers a good way to take action on all the long known good management ideas that we fail to adopt successful for decades.
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The newspaper industry is facing challenging times. One success story is the Lawrence Journal-World in Lawrence, Kansas. I first heard about their efforts years ago:
Watchful Eyes on Kansas Media Innovations, NPR, 2005
The Newspaper of the Future, by Timothy O’Brien, New York Times
A related Web site, lawrence.com, is aimed at college readers. It allows visitors to download tunes from the Wakarusa Music Festival, find spirited reviews of local bars and restaurants and plunge into a vast trove of blogs
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The steward of this online smorgasbord is Dolph C. Simons Jr., a politically conservative, 75-year-old who corresponds via a vintage Royal typewriter and red grease pencil while eschewing e-mail and personal computers. “I don’t think of us as being in the newspaper business,” said Mr. Simons, the editor and publisher of The Journal-World and the chairman of the World Company, the newspaper’s parent. “Information is our business and we’re trying to provide information, in one form or another, however the consumer wants it and wherever the consumer wants it, in the most complete and useful way possible.”
The company has continued on an path of customer focus and innovation. There work shows what can be done by understanding what need you fulfill for customers.
They understand what they offer customers (and it isn’t just paper). They understand the technology related to their business (not the technology of their past methods of working but the technology possibilities related to serving their customers). They understand the realities of the marketplace. And they have divined a strategy based on this knowledge (they have innovated). And finally, the Lawrence Journal-World has maintained a constancy of purpose.
Related: Zipcar Innovation - Innovation Strategy - Information Technology and Business Process Support (more…)
I am a big believer in marketing by providing some content for free. It is a great idea for consultants. It is also a great idea for those looking to sell books and audio-visual content.
Can Free Content Boost Your Sales? Yes, It Can
And you know what? Despite the entertainment industry’s constant cries about how bad they’re doing, it works. As we wrote yesterday, Monty Python’s DVDs climbed to No. 2 on Amazon’s Movies & TV bestsellers list, with increased sales of 23,000 percent.
Similar approach worked for Nine Inch Nails and other artists. And yet, lately we hear more about various restrictions to free redistribution of copyrighted content than ever before.
If you are looking to create some business in the rough economy, try thinking creatively and expand your ideas of what is a good strategy for gaining customers. Providing sensible online resources is a far better strategy than hiring a bunch of lawyers to sue college students. I posted a link to Monty Pythons great explanation of what they were doing on one of my other blogs last November. Enjoy.
Related: Giving Away Your Service for Free on Weekends - Innovative Marketing Podcast - Seth Godin on Marketing and the Internet - Marketers Are Embracing Statistical Design of Experiments
Clayton Christensen’s ideas on disruptive innovation are very powerful. I have written about Innovation Thinking with Clayton Christensen previously. Here is an example of such innovation. All you need is a broadband internet connection and you can Kiss your phone bill good-bye:
I ordered mine from Amazon for $203 and have been using it for a month, it has been great. Relatively easy to setup (they had a pretty good customer survey and I recommended they use colored cables - they color cables in the drawings in the users guide but give you 3 white cable to use - they are different types of cables so it isn’t tough to figure out but that would make it a bit easier).
I have been using Vonage for awhile and it is ok, but I don’t see any reason to pay each month when Ooma doesn’t charge a monthly fee (even on the lowest option on Vonage the bill is over $22/month). When I tried to cancel Vonage they refuse to allow it through the web site. Then forced me through voice mail maze only to then say we only answer the phone for you between 9-5 EST on workdays (that is about 75% of the time they are unavailable). I called back a week later, when I got a chance and they forced me through 10 minutes of wasted time but at lest I was able to get it canceled - once they refused to allow cancellation over the web site I was worried the customer disservice would be greater than it was.
Related: Six Keys to Building New Markets by Unleashing Disruptive Innovation - Save Money on Food - The Innovators Solution by Clayton M. Christensen and Michael E. Raynor - Using Google to Eliminate IT Costs
When financial and economic realities reach the point that labor costs must be cut I believe a good option to consider is cutting hours (and pay) instead of people. Some people will have extreme hardship if the cut in hours and pay is significant, but once you get is a bad situation no answers are likely to be without problems. I would try to offer the cuts to those that want them first. I would likely take an unpaid sabbatical, if offered, and the organization was in financial trouble.
Another way of doing something similar is profit sharing (where costs go down when profits go down). You should be careful how such sharing is designed, it can create bad incentives if done incorrectly. Also by paying a portion of wages as bonuses that expense can be reduced when times are bad without layoffs.
The Rise of the Four-Day Work Week
Related: Bad Management Results in Layoffs - Some Firms Cut Costs Without Resorting to Layoffs - Operational Excellence - posts on respect for employees
Brazil’s Camaçari plant is model for the future
Here is an interesting video on the plant. It is sad how poor management at GM, Ford and Chrysler has created such a bad situation for those working at those companies, their suppliers, the communities that support their production… GM and Ford had the advice they needed to succeed from Deming in the 1980’s but they chose to focus on the short term, large executive payments, accounting gimmicks instead of continual improvement…
They each have improved over the years, but the standard is not just improving but doing so effectively and enough and they failed at that. The UAW shares some responsibility for failing to successfully lead their workers to a promising future but management is much more responsible for the failure in my opinion (the video and article try to say Ford wants to be innovative in the USA but the UAW won’t let them). It is management’s jobs to focus the organization on cooperation and success for all stakeholders. When management is more concerned with getting themselves huge payoffs (from the pockets of the other stakeholders) and then try to blame one of those other stakeholders for fighting management is disingenuous. Executive’s contempt for other stakeholders leads to the other stakeholders feeling that they should be just as greedy as management.
Related: Ford’s Wrong Turn - Ford and Managing the Supplier Relationship - Global Manufacturing Data 2007 - Toyota’s New Texas Plant - Womack Podcast on GM - VW Phaeton Manufacturing plant
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Low-Tech, High Impact Innovation
Great post. My father, Dr. William Hunter, did a great deal of work with appropriate technology (he was a chemical engineering, industrial engineering and statistics professor) and in management improvement.
Often the failure to adopt appropriate technology solutions results from a combination of 3 things:
Thinking about why appropriate technology is so effective, but underutilized can help anyone improve the solutions they adopt. Thankfully the adoption of appropriate technology solutions has been increasing over the last few decades.
I would especially encourage people to stop looking for the newest management book and actually read and adopt and then re-read and… the excellent management books from the last 50 years. Stop chasing some new shiny thing and adopt solutions that are effective - even if they seem boring.
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Data from World Wind Energy Association, for installed Mega Watts of global wind power capacity in 2007. 19,696 MW of capacity were added in 2007, bringing the total to 93,849 MW. Europe accounts for 61% of installed capacity, Germany accounts for 24% and the USA 18%.
Post from the Curious Cat Science and Engineering blog (more posts on energy and engineering). The graph shows the top 10 producers (with the exceptions of Denmark and Portugal) and includes Japan (which is 13th).
Related: USA Wind Power Installed Capacity 1981 to 2005 - Wind Power has the Potential to Produce 20% of Electricity by 2030 - Top 12 Manufacturing Countries in 2007
The End of Theory: The Data Deluge Makes the Scientific Method Obsolete by Chris Anderson
So proclaimed statistician George Box 30 years ago, and he was right. But what choice did we have? Only models, from cosmological equations to theories of human behavior, seemed to be able to consistently, if imperfectly, explain the world around us. Until now. Today companies like Google, which have grown up in an era of massively abundant data, don’t have to settle for wrong models. Indeed, they don’t have to settle for models at all.
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Speaking at the O’Reilly Emerging Technology Conference this past March, Peter Norvig, Google’s research director, offered an update to George Box’s maxim: “All models are wrong, and increasingly you can succeed without them.”
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There is now a better way. Petabytes allow us to say: “Correlation is enough.” We can stop looking for models. We can analyze the data without hypotheses about what it might show. We can throw the numbers into the biggest computing clusters the world has ever seen and let statistical algorithms find patterns where science cannot.
see update, below. Norvig was misquoted, he agrees with Box’s maxim
I must say I am not at all convinced that a new method without theory ready to supplant the existing scientific method. Now I can’t find peter Norvig’s exact words online (come on Google - organize all the world’s information for me please). If he said that using massive stores of data to make discoveries in new ways radically changing how we can learn and create useful systems, that I believe. I do enjoy the idea of trying radical new ways of viewing what is possible.
Practice Makes Perfect: How Billions of Examples Lead to Better Models (summary of his talk on the conference web site):
Related: Will the Data Deluge Makes the Scientific Method Obsolete? - Pragmatism and Management Knowledge - Data Based Decision Making at Google - Seeing Patterns Where None Exists - Manage what you can’t measure - Data Based Blathering - Understanding Data - Webcast on Google Innovation
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The Ergonomics of Innovation by Hayagreeva Rao and Robert Sutton
Related: Saving Lives: US Health Care Improvement - 5 Million Lives Campaign - PBS Documentary: Improving Hospitals - Hospital Reform - IHI on CBS - Articles on Improving Health Care Performance - Drug Prices in the USA - posts on innovation
Learning from a summer intern program:
Unable to just pick a PDF or two, I invited the applicants to join a Facebook group I had set up. Then I let them meet each other and hang out online. It was absolutely fascinating. Within a day, the group had divided into four camps:
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* The leaders. A few started conversations, directed initiatives and got to work.
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If you’re hiring for people to work online, I can’t imagine not screening people in this way. This is the work, and you can watch people do it for real before you hire them.
Excellent post and the advice echoes his advice on hiring: the End of the Job Interview. We have an internship directory, that helps people find opportunities (and those with internships to offer a way to market it) which includes a list of virtual internships.
Related: Seth Godin on Marketing and the Internet - Internships Increasing - Curious Cat Management SubReddit
Agile management (agile software development specifically) is something that makes a big difference in my work life. David Anderson consistently provides great ideas on agile management and he does so again in this 90 minute presentation on the future directions for agile. As I learned about agile software development, what I saw was a great implementation of management improvement practices focused on software development that was very compatible with Deming’s management philosophy and lean thinking practices. The Agile manifesto:
The first line can seem to be at odds, but I think in practice it is not - though I admit it may seem that way based on the importance placed on process by Deming (I think you have to read on agile to understand why this is the case). For my use of agile software develop, a highlight of the most important ideas is:
Important concepts addressed by agile management: highly collaborative, risk tolerance, systems thinking, customer interaction, craftsmanship ethic [joy in work], eliminate waste. Great quote from the webcast:
Related: Kanban In Software Engineering - Management Science for Software Engineering - Improving Communication - webcast of David Anderson talking about applying Agile and Deming’s ideas at Microsoft - What is Agile Software Development?
Toyota has a long term vision. The population of Japan is aging rapidly. Toyota has invested in personal transportation and personal robotic assistance for quite some time. I must admit this new Winglet doesn’t seem like an incredible breakthrough to me (their earlier iUnit seems much better to me - though I am sure much more expensive too). The interest to me is in their continued focus on this market which I think is a smart move. The aging population worldwide (and others) will benefit greatly from improved personal mechanical assistance.
The Winglet is one of Toyota’s people-assisting Toyota Partner Robots. Designed to contribute to society by helping people enjoy a safe and fully mobile life, the Winglet is a compact (you stand just above the wheels and it reaches about the level of your knees) next-generation everyday transport tool that offers advanced ease of use and expands the user’s range of mobility.
The Winglet consists of a body that houses an electric motor, two wheels and internal sensors that constantly monitor the user’s position and make adjustments in power to ensure stability. Meanwhile, a unique parallel link mechanism allows the rider to go forward, backward and turn simply by shifting body weight, making the vehicle safe and useful even in tight spaces or crowded environments.
Toyota plans various technical and consumer trials to gain feedback during the Winglet’s lead-up to practical use. Practical tests of its utility as a mobility tool are planned to begin in Autumn 2008 at Central Japan International Airport (Centrair) near Nagoya, and Laguna Gamagori, a seaside marine resort complex in Aichi Prefecture. Testing of its usefulness in crowded and other conditions, and how non-users react to the device, is to be carried out in 2009 at the Tressa Yokohama shopping complex in Yokohama City.
Toyota is pursuing sustainability in research and development, manufacturing and social contribution as part of its concept to realize “sustainability in three areas” and to help contribute to the health and comfort of future society. Toyota Partner Robot development is being carried out with this in mind and applies Toyota’s approach to monozukuri (”making things”), which includes its mobility, production and other technologies.
Toyota aims to realize the practical use of Toyota Partner Robots in the early 2010s.
On a personal note, I bought some more Toyota stock two weeks ago. The stock had declined a bit recently. Toyota is one of the companies in my 12 stocks for 10 years portfolio.
Related: Toyota Develops Personal Transport Assistance Robot ‘Winglet’ - No Excessive Senior Executive Pay at Toyota - More on Non-Auto Toyota
Amazon Simple Storage Service (S3) is a service providing web hosting. The cloud computing solution has been used by many organizations successfully. However the solution has experienced some problems including failing for much of the day on July 20th.
During our post-mortem analysis we’ve spent quite a bit of time evaluating what happened, how quickly we were able to respond and recover, and what we could do to prevent other unusual circumstances like this from having system-wide impacts. Here are the actions that we’re taking: (a) we’ve deployed several changes to Amazon S3 that significantly reduce the amount of time required to completely restore system-wide state and restart customer request processing; (b) we’ve deployed a change to how Amazon S3 gossips about failed servers that reduces the amount of gossip and helps prevent the behavior we experienced on Sunday; (c) we’ve added additional monitoring and alarming of gossip rates and failures; and, (d) we’re adding checksums to proactively detect corruption of system state messages so we can log any such messages and then reject them.
Finally, we want you to know that we are passionate about providing the best storage service at the best price so that you can spend more time thinking about your business rather than having to focus on building scalable, reliable infrastructure. Though we’re proud of our operational performance in operating Amazon S3 for almost 2.5 years, we know that any downtime is unacceptable and we won’t be satisfied until performance is statistically indistinguishable from perfect.
The failure was significant but in my view the advantages of Amazon S3 are still very significant. A huge advantage is how quickly you can scale if needed be. If your application is not hosted on Amazon S3 and it grows enormously you have to physically deal with buying servers, installing them, installing software… All this takes time. On Amazon S3 when you need the bandwidth you can get it, when you don’t need it you don’t have it sitting around unused. In that way it is very lean, it seems to me.
And while server infrastructure failures are bad, for most organizations the option is not Amazon S3 or some solution that is 100% reliable. Currently it is difficult to keep IT infrastructures online and operating and coping with shifting demand… For many situations Amazon S3 seems to be a great resource. They need to keep improving; and they seem to be doing so. Being open and honest about the challenges is a good sign. And improving the system, not blaming a person is another good sign.
Related: Bezos on the Internet Boom - Amazon’s Amazing Achievement - Bezos on Lean Thinking - CERN Pressure Test Failure - 12 Stocks for 10 Years Update (June 2008), Amazon is up 116% in the portfolio since 2005, just behind Google and ahead of Petro China
Paul Graham has some excellent ideas. I have written about some of them previously: Innovation Strategy, What Business Can Learn from Open Source and Google and Paul Graham’s Latest Essay. Y Combinator, which he founded, provides seed funding. Here are some ideas they would like to fund:
Related: Our Policy is to Stick Our Heads in the Sand - Find Joy and Success in Business - Innovative Thinking from Clayton Christensen
You can accomplish a great deal by just talking to people. Google Public Relations:
The gBrain extension creates a lot of bookmarks. Several thousands a month. And the Google bookmarks system was never made with this amount in mind. What made things worse (and I didn’t knew that), the bookmarks are connected to the normal web search. Whenever you use the web search, it checks it against your Google bookmarks. You can easily imagine what problems can come up when you have a several 10 or even 100 thousands of bookmarks…
Jeffery also made a few suggestions how the extension could be changed to make use of their Web history service instead of the bookmarks system. This would avoid the scaling problems. I may consider it some day.
But why am I telling this? Because I’m amazed how Google handled this. Instead of just blocking my extension at their side, or sending me a cease and desist letter they contacted me and asked.
Good for Google. I do find it a bit funny they had a lawyer contact the guy but still Google’s reaction was much better than most companies would be. Companies like Google, Amazon, Lego, New York Times are taking advantage of technology to leverage community efforts to improve the value of their service to customers. This is an important innovation management needs to acknowledge and manage. Or you can be like the poorly managed journal publishers or music industry that are destroying their organizations futures.
Related: Funding Google Gadget Development - Innovative Marketing Podcast (Lego) - Innovation at Google
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