The Open Secret of Success

Very true, except one thing. Toyota’s innovation is not limited to process and execution. Toyota’s long term vision results in very dramatic innovation (that granted is not getting the press today - check back in 20 years, I think you will be reading about it then). For some examples see: Toyota’s Partner Robot, Toyota as Homebuilder, Toyota Engineers a New Plant: the Living Kind and The Birth of Prius.

A company truly driven by a focus on continual improvement, respect for all employees and reasonable executive compensation might be a company serious about adopting Deming and Toyota management principles. It is hard for me to imagine such a situation that doesn’t truly seek, as the primary aim of the organization, to benefit many stakeholders (workers, owners, suppliers, customers…) not just executives (or just executives, board and owners…).

Related: Toyota Management Develops the New Camry - Better and Different - Deming and Toyota - Toyota Keeps Improving - More Positive Press for Toyota Management - Good Execution is Important

David Heinemeier Hansson Talk at Startup School 2008 (Paul Graham’s Y-combinator school). It is helpful to appreciate the importance of some simple ideas. Working on web focused businesses people often get carried away with the huge potential and sometimes lose touch with reality. While the ideas are more obvious when looking at web related business their is plenty here for many companies (the second half might be more helpful for many).

In this talk David does a great job of explaining how 37 signals has chosen to work. They are not concerned with becoming large. They focus on doing what they want to do - creating great software solutions (see: Systemic Workplace Experiments). And on making money to allow them to stay in business.

Some tidbits of advice: create great applications, charge people money, make a profit. Yes to those outside the web world this might seem obvious… He discusses a very similar idea to the idea of 1,000 true fans. He mentions to bring in a $1 million, all you need is 2,000 customers paying $40/month. 37 Signals has done well focusing on small business. Don’t be in such a hurry.

Related: Why is 37signals so arrogant? - Complicating Simplicity - Joy in Software Development - Great Marissa Mayer Webcast on Google Innovation

The webcast shows Jeff Bezos, Amazon.com founder and CEO, speaking at TED on the internet boom. He compares the boom to the gold rush highlighting the similarities. But then he compares the internet to the development of industry around electricity. I think he is exactly right on the internet: “there’s more innovation ahead of us than behind us.”

Related: Bezos on Lean Thinking - Amazon Innovation - Amazon’s Amazing Achievement - Innovation Thinking with Christensen - management webcasts

Inside Honda’s brain by Alex Taylor III

Related: Toyota as Homebuilder - S&P 500 CEOs - More Engineering Graduates - More on Non-Auto Toyota - Asimo Robot, Running and Climbing Stairs - Applied Research - Google Engineering Energy

Jules Verne predicted cars would run on air. The Air Car is making that a reality. The car would be powered by compressed air. Certainly seem like an interesting idea. Air car ready for production:

The car is said to have a driving range of 125 miles so by my calculation it would cost about 1.6 cents per mile. A car that gets 31 mpg would use 4 gallons to go 124 miles. At $3 a gallon for gas, the cost is $12 for fuel or about 9.7 cents per mile. I didn’t notice anything about maintenance costs. I don’t see any reason why the Air Car would cost more to maintain than a normal car. Five-seat concept car runs on air

Now does that sound like the Toyota Production System to you? It should. If I were an executive at Toyota I would sure examine this to see if it really is as promising as it looks. And if it is Toyota sure has plenty of cash and the management practice to make a very compelling case for allowing Toyota to produce this globally. The engineers desires closely match what Toyota has learned. Both seek to eliminate the waste of transportation (friction).

Related: Click Fraud = Friction for Google - Manufacturing Takes off in India - Electric Automobiles

Six Principles for Making New Things by Paul Graham

Great advice. Similar to the evidence Clayton Christensen documents in the Innovators Solution on how to innovate successfully. New products and services often start out simple and limited and often are dismissed as unacceptable in various ways. But they solve a real problem and over time are improved and grow market share.

Experimenting quickly and often (iteration) is extremely important and given far to little focus. The PDSA improvement cycle provides a tool to encourage such thinking but still few organizations practice rapid iteration.

Related: Deming on Innovation - What Job Does Your Product Do? - Innovation at Google - Experiment and Learn - more posts related to Paul Graham
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Comment on New or Different? by Matthew May:

I wrote a similar post on my blog awhile back: Better and Different:

I agree with Matthew May that it is often easy to see “new things”, when you look from a different perspective, as really just an enhancement of existing things or combining existing things in a somewhat novel way. Especially since so many things are packaged as amazing new breakthroughs when really they are nice enhancements.

Even management ideas are sold this way. And, for management ideas, I think they are most often actually degradations of what Deming, Ohno, Shewhart, Ishikawa, Ackoff… said - not enhancements. See: failures of management consulting advice.

Related: Process Improvement and Innovation - Toyota, Lean, Consultants… - Google Innovation - Management Improvement History - Doing the Wrong Things Righter - Six Sigma and Innovation - leading management thinkers

I am reading a fascinating book by Jessica Snyder Sachs: Good Germs, Bad Germs. From page 108:

This is a great example of a positive special cause. How would you identify this? First you would have to stratify the data. It also shows that sometimes looking at the who is important (the problem is just that we far too often look at who instead of the system so at times some get the idea that it is not ok to stratify data based on who - it is just be careful because we often do that when it is not the right approach and we can get fooled by random variation into thinking there is a cause - see the red bead experiment for an example); that it is possible to stratify the data by person to good effect.

The following 20 pages in the book are littered with very interesting details many of which tie to thinking systemically and the perils of optimizing part of the system (both when considering the system to be one person and also when viewing it as society).

I have recently taken to reading more and more about viruses, bacteria, cells, microbiology etc.: it is fascinating stuff.

Related: Science Books by topic - Data Can’t Lie - Understanding Data

Yahoo Mail Innovates, Gmail Stagnates

To me Yahoo is really continually improving the service, not innovating. Still an interesting exploration of visible improvement.

Related: Kaizen Online - Kaizen definition -Innovation Examples - Google Innovation webcast -

Once again Seth Godin does a great job of explaining the dynamics of marketing on the web: Seth Godin Video on Web Marketing. In this 6 1/2 minute video he touches on various topics including:

• the ease with which web users ignore ads on the web
• the importance of customers marketing for you (see our previous post: Lego - Innovative Marketing Podcast)
• the need to develop relationships with customers that then allow your to reach them, “permission marketing” (such as with Amazon)

Seth is asked if there is a social network that is good for marketers to help them do their jobs. He says: “Far and away it is having a blog. It’s tempting, if you’re a salesperson to go to Linked In…” I think he is exactly right: Your online brand - Blogging is Good for You. For many a “regular” web site is fine too - post some articles to give a real view of what you offer that is different from everyone else (blogs are fine but they are not the only way).

Related: Better and Different - Why are you afraid of process? - Seth Godin speaking at Google

via - Seth Godin Says: You Should Be Blogging

Peter Pande adds his thoughts on how six sigma and innovation can work together. In his podcast, Innovation vs. Efficiency, he makes the argument that innovation and efficiency can work together. As I have stated many times, while bad six sigma efforts may harm innovation but there is no reason good six sigma efforts would. In fact good six sigma efforts help innovation.

Related: Six Sigma Outdated? No. - Fast Company Interview: Jeff Immelt - Better and Different - New Rules for Management? No! - Six Sigma Success
via: Peter Pande’s Take on Six Sigma and Innovation

Larry Dignan asks “Is Google reinventing corporate management or just living off the fruits of one big breakthrough?” Well, I believe Google offers a great deal for managers to study - see our posts on Google management practices. But that is not the same as reinventing corporate management. Most companies have no way of just replacing their management system with a “Google management system” - they don’t have the managers to make it work, or the staff or the systems or maybe even the business… However there is plenty that can be learned and adopted. In, Google: Reinventing management?, Larry states:

My advice, study Deming and Toyota and Ackoff and Christensen and Google and a whole group of leading management thinkers. And use the knowledge to create a management system that works in your organization. A good way to start: read these management books and read the blogs like: Lean Six Sigma Academy, Evolving Excellence, Lean Blog, Panta Rei, etc.. And apply what you can where you are. Don’t try to copy what one place does or expect some consultant install management into your organization.

Related: Google Management - How Google Works - Google Experiments Quickly and Often - Meeting Like Google

Good article on the topic of company blogs and the new thinking needed to manage given the new communication system created by the internet, blogs etc.: Company bloggers can help put out fires:

As I have mentioned before, Dell really has made some good moves in this area. Sun CEO, Jonathan Schwartz, on using blogs to communicate:

Related: Dell, Reddit and Customer Focus - Your Online Presence - Blogging is Good for You

Marissa Mayer speech at Stanford on innovation at Google (23 minutes, 26 minutes question and answers). She leads the product management efforts on Google’s search products- web search, images, groups, news, Froogle, the Google Toolbar, Google Desktop, Google Labs, and more. She joined Google in 1999 as Google’s first female engineer. Excellent speech. Highly recommended. 9 ideas:

(inside these are Marissa’s comments) [inside these are my comments]

1. Ideas come from anywhere (engineers, customers, managers, executives, external companies - that Google acquires)
2. Share everything you can (very open culture)
3. You’re Brilliant. We’re Hiring [Google Hiring]
4. A license to pursue dreams (Google 20% time)
5. Innovation not instant perfection (iteration - experiment quickly and often)
6. Data is apolitical [Data Based Decision Making - this is true but as an operating principle requires people that really understand data. See: Data can't lie.
7. Creativity loves Constraints [process improvement and innovation]
8. Users not money [the opposite of what business school's teach business case]
9. Don’t kill projects morph them

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I have mentioned I like the way Amazon, and Jeff Bezos, have been managing in several posts. Recently Amazon has added very strong financial results to that portfolio of things they do well. Amazon earnings announcement:

Pretty impressive. It seems Amazon might be able to begin delivering strong current financial performance (they have done so at least twice, and maybe longer depending on how you look at it…) and continue to build and innovate for the future. That is when a company really sets itself apart from the crowd. Previously, from the investing perspective, the argument was largely based on the belief that the steps taken today were building for the future (a fine thing, but risky - without the evidence of success actually making real profit it is often easy to make a good case for why the future will be good). In an investment it is more comforting when current earning provide some evidence the profits predicted in the future have some basis in reality.

Since the beginning of April Amazon’s share price has gone from $40 a share to $70. And based on the after hours trades today it is going to be in the $80s tomorrow (though after hours trades can often be misleading - there is some more confidence based on the large volume of hour trades in Amazon, but still…). I must admit this price does seem like it might be getting a bit ahead of itself but Amazon is making an impressive case for strong future performance.

Related: Amazon Innovation - 10 stocks for 10 years (April 2005) - 12 Stocks for 10 Years Update (June 2007) - Very Good Amazon Earnings - Bezos on Lean Thinking - Is Amazon a Bargain?

I have mentioned before that I think Gary Hamel is one of the leading management thinkers on innovation. Here is an interesting interview (via: brisebois blog) with him - Gary Hamel: management innovation

Related: Gary Hamel’s Idea Hatchery - Google Management - Effective Innovation - Managing Innovation - Process Improvement and Innovation - Management Innovation Lab web site

Every so often an article appears discussing the need to change focus from process improvement to innovation (and recently they are followed with quite a bit of blog talk). I disagree on several grounds. First you have needed to focus on both all the time. Second, it is not an either or choice. Third, the process of innovation should be improved.

I do not believe process improvement is bad for innovation. Bad process changes can be bad for innovation. But if we are looking at a research and development organization where the output is new products then process improvement would be focused on improving the processes to make that happen. The type of process improvement would be different than those made to manufacturing a product better.

Some six sigma efforts are little more than cost cutting efforts. And those efforts might claim a “process improvement” that is really just cutting costs in R&D. But we should not confuse bad management with the good practice of process improvement. Yes, cutting costs for the sake of cutting costs often leads to problems. Waste should be eliminated (which can reduces cost). Focus on eliminating waste. Eliminating waste in innovation activities is no worse than eliminating it anywhere. It might be more difficult to determine what is waste (that is where management skill and knowledge come into play) but the idea that process improvement (including eliminating waste is bad for innovation is something that should be rejected). And process improvement in innovation should not be limited to eliminating waste.

A good example of process improvement in innovation activities: Fast Cycle Change in Knowledge-Based Organizations (pdf format) by Ian Hau and Ford Calhoun, published by the Center for Quality and Productivity Improvement, University of Wisconsin - Madison.

Related: Better and Different - New Rules for Management? No! - Quality and Innovation - “New” Management Needs - Management Advice Failures

Google Gadgets are small tools and toys that integrate with iGoogle. Google is funding developers to work on creating gadgets through Google Gadget Ventures. Great idea. They offer:

1. Grants of $5,000 to those who’ve built gadgets we’d like to see developed further. You’re eligible to apply for a grant if you’ve developed a gadget that’s in our Google gadgets directory and gets at least 250,000 weekly page views. To apply, you must submit a one-page proposal detailing how you’d use the grant to improve your gadget.
2. Seed investments of $100,000 to developers who’d like to build a business around the Google gadgets platform. Only Google Gadget Venture grant recipients are eligible for this type of funding. Submitting a business plan detailing how you plan to build a viable business around the gadgets platform is a required part of the seed investment application process.

Google continue to make good moves to manage in a new world. With this program they are not investing in creating an infrastructure to develop software, support software, hire staff… Instead they get to tap the drive and capabilities of those developers working on products which increase the value of iGoogle through small cash incentives. Previously they offered Google Gadget Awards. They also fund Google summer code - to support software developers creating open source software and reducing computer waste (where they didn’t stop with improving the servers they use but to making a broader impact on society). They really do a great job of leveraging their efforts well.

Related: Google Innovation and Entrepreneurship - Google Custom Management Improvement Search Engine - Experiment Quickly and Often - Innovate or Avoid Risk

In my opinion Clayton Christensen offers truly insightful ideas on innovation and management. He presents the rare management advice that is not only good but also new - an incredibly rare combination. The current issue of Business Week includes an interview with him: Clayton Christensen’s Innovation Brain:

While some of Christensen’s ideas are new he also builds on existing ideas. The idea on customer focus being a potential trap was discussed by Deming a great deal. Interesting point on Google, I must agree, though it makes me nervous to think that way: it is easier to mess up success than to fix a mess. I will be interested to read his ideas on the health care system.

Related: Six Keys to Building New Markets by Unleashing Disruptive Innovation - Management Improvement Leaders - articles by Christensen - The Innovators Solution - What Job Does Your Product Do?
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Put Investors In Their Place by Clayton M. Christensen and Scott D. Anthony:

Good idea - as we have discussed previously.

Related: Think Long Term Act Daily - Going lean Brings Long-term Payoffs - Innovation in Organizations - Rethinking the Social Responsibility of Business