Category Archives: Innovation

Knowledge, Imagination, Innovation and Risk

A consumer can seldom say today what new product or new service would be desirable and useful to him three years from now, or a decade from now. New product and new types of service are generated, not by asking the consumer, but by knowledge, imagination, innovation, risk, trial and error on the part of the producer, backed by enough capital to develop the product or service and to stay in business during the lean months of introduction.

W. Edwards Deming
Page 182, Out of the Crisis
More of Deming on Innovation

Applying Disruptive Thinking to the Healthcare Crisis

Update: Sadly MIT delete the video. It is a shame educational institutions lose interest in knowledge just a couple years later. Thankfully we didn’t have to rely on the people deleting web content at universities to keep all the historical content we have in books from hundreds of years ago. I think it is a huge lose to what the mission of these schools should be but that attitude doesn’t seem to be shared by the schools.

The Innovator’s Prescription: A Disruptive Solution to the Healthcare Crisis:

Christensen spies symptoms of such disruptions bubbling up in the healthcare industry, such as molecular diagnostics, imaging technologies and high bandwidth telecom, and business model innovations. Integrated health systems like Kaiser Permanente have a leg up in deploying and optimizing these disruptive technologies.

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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Newspaper Innovation In Kansas

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

Many media companies hoped that convergence — combining television, print and online resources — would help them survive. Instead, many companies have lost money on online journalism. In Lawrence, Kan., Dolph Simons’ Journal-World newspaper has taken ambitious news-gathering approaches to local issues.

The Newspaper of the Future, by Timothy O’Brien, New York Times

Lawrencians buying tickets for University of Kansas football games can visit the same site, LJWorld.com, and find photographs offering sightlines from each of Memorial Stadium’s 50,000 seats. Law aficionados can find transcripts of locally significant court cases posted on the site and participate in live, online chats debating the pros or cons of some cases – sometimes with experts who are involved in the proceedings.

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.

Using Free Content to Boost Your Sales

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

As those crazy Monty Python dudes put it, “We’re letting you see absolutely everything for free. So there! But we want something in return. None of your driveling, mindless comments. Instead, we want you to click on the links, buy our movies & TV shows and soften our pain and disgust at being ripped off all these years.”

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.

Disruptive Innovation Example: Eliminate Your Phone Bill

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:

The Ooma service uses so-called Voice over Internet Protocol (or VOIP) technology to deliver calls to your existing phone using a broadband connection. Consumers need only to buy a $249 Ooma Hub (it was a hefty $399 when the service launched last year); all domestic calls are free. (Ooma charges a few pennies a minute for international calls to landlines and 20 to 30 cents a minute for overseas calls to mobile phones. Calls from Ooma box to Ooma box are free.)
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Replacing your phone service is, of course, just the start for Ooma. In some ways, calling is the Trojan horse to get the box in your house and then figure out other services to sell, like enhanced network security or kid-safe Web surfing.

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

Cutting Hours Instead of People

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

Like many companies, Pella is looking to cut expenses because of the economic downturn. But instead of laying off more workers, the Iowa manufacturer of windows and doors is instituting a four-day workweek for about a third of its 3,900 employees. Chris Simpson, a senior vice-president at the company, acknowledges it’s an unconventional move… it doesn’t want to be caught short of experienced workers.
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According to the U.S. Bureau of Labor Statistics, the number of employees who normally work full-time but now clock fewer than 35 hours a week because of poor business conditions has climbed 72%, to 2.57 million in November 2008, from 1.49 million in November 2007.

Ford’s Camaçari Plant in Brazil

photo of Fords' Camacari plant in Brazil

Brazil’s Camaçari plant is model for the future

This state-of-the-art manufacturing complex in the northeastern Brazilian state of Bahia is not only the centerpiece of Ford’s Brazilian turnaround plan, it is also one of the most advanced automobile plants in the world. It is more automated than many of Ford’s U.S. factories, and leaner and more flexible than any other Ford facility. It can produce five different vehicle platforms at the same time and on the same line.
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At Camaçari, more than two dozen suppliers operate right inside the Ford complex, in many cases producing components alongside Ford’s main production line. Having those supplier operations on-site allows Ford to take the concept of just-in-time manufacturing to a whole new level. Inventories are kept to a bare minimum, or dispensed with entirely. Components such as dashboard assemblies flow directly into the main Ford assembly line at the precise point and time they are needed.
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Unlike many U.S. auto plants, where workers’ responsibilities are strictly limited to specific job classifications, workers like Silva dos Santos are encouraged to learn as many different skills as possible.

Here is an interesting video [the broken link was removed] 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.

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Appropriate Management

Low-Tech, High Impact Innovation

Adopting the perspective of “appropriate technology” is an excellent way to promote and increase innovation. Your solutions don’t have to be high tech, they just have to provide wide benefits – and taking this sometimes counterintuitive approach can be enlightening.

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:

Failing to understand the conditions where the solution will be applied. Failing to “go and see” in lean manufacturing terms.
Short term thinking, the failure to see the challenges in maintenance, is how short term thinking manifests itself with the inappropriate technology solutions often applied by those siting in Washington DC or Paris. The failure to consider maintenance is also very related to the first point. Appropriate technology solutions are often very simple, less sensitive (less moving parts to break, able to deal with dust, rain…) and more easily repairable (with tools, expertise and spare parts available at the location of use).
A desire to use the cool new gadget and ideas.

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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Wind Power Provided Over 1% of Global Electricity in 2007

graph of global installed wind power capacity

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).

Does the Data Deluge Make the Scientific Method Obsolete?

The End of Theory: The Data Deluge Makes the Scientific Method Obsolete by Chris Anderson

“All models are wrong, but some are useful.”

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):

In this talk we will see that a computer might not learn in the same way that a person does, but it can use massive amounts of data to perform selected tasks very well. We will see that a computer can correct spelling mistakes, translate from Arabic to English, and recognize celebrity faces about as well as an average human—and can do it all by learning from examples rather than by relying on programming.