Monday, October 30, 2006


"Auerbach was an innovator in almost everything he did," said Jerry West, who played for the rival Los Angeles Lakers and now runs the Memphis Grizzlies. "He not only brought the black athlete to Boston; more importantly, he recognized the greatness of the athletes that he had.”

The world knows Red Auerbach as the “greatest coach that ever lived.” NBA.com describes Auerbach as the Patriarch, the boss, an American Original... the man. In his storied career as the coach and the GM of the Boston Celtics, he won a record 16 NBA Championships. Auerbach passed away last weekend at the age of 89.

How did Auerbach become the greatest coach of all times?

Auerbach created many innovations that practically changed the game of basketball, the NBA and the business of coaching. Auerbach was a creative coach who even created a five-step process for hiring the best athletes on his team.

Here are a few Auerbach original innovations that shaped and changed the game of basketball in his time. Innovations that have since become integral to the way the game is played today:
  1. In 1954, the NBA initiated the 24-second clock, in order to eliminate the tactic and speed up the game in general. The "Celtic fast break" engineered by Bob Cousy, and invented by Auerbach was born, and it went on to became one of the NBA legends of the era.
  2. Bill Russell, a basketball legend recruited by Auerbach, was such a shot-blocking genius that he would often block them to a teammate in order to trigger a Celtic fast break that would culminate in two easy points at the other end of the court. The modern concept of Transition Basketball, meaning offense predicated by opportunities provided by effective defense, was a Celtic invention.
  3. Auerbach also invented the concept of the "6th Man." Players like Frank Ramsey, followed by Sam Jones and John Havlicek, were as important as any of the starting five, and all went on to become Hall of Famers. Auerbach was the first coach to recognize the importance of the bench, and recruited solid players who would play well when the starters rest.
  4. Auerbach drafted the NBA's first black player, hired its first black coach and fielded its first all-black starting five. "Red did all that, but he wasn't doing that because he was trying to break ground," Doc Rivers, Boston Celtics head coach said. "His response was always: 'I'm trying to win a game and that's who I think gives us the best chance.' I think his example spread throughout the league."
  5. Auerbach did not rest his players during the off-season. His teams would barnstorm throughout the six New England states and play as many pre-season games as they could each year in preparation for the new season. Off-season rigor and preparation. Another Auerbach original.

Auerbach appointed Bill Russell as the player-coach, making him the first African American to head a major professional sports team in the history of the United States. Russell led the Celtics to two NBA titles in his three years of coaching, becoming the first African American to lead a major league team to a championship.

The distinction of being the only coach to get thrown out of an All-Star Game and an Old Timers Game showed Auerbach's intense competitive spirit to win any game, every game. That’s Red Auerbach.

"The Celtics aren't a team," Red Auerbach once said. "They're a way of life."

In honor of Red Auerbach who passed away last weekend leaving behind a legacy of coaching, leadership, and innovations in the game of basketball.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

References:

Haaretz
Boston Herald
Monsters and Critics
Mercury News
NBA

Thursday, October 26, 2006

"It's hard to build an identity for your brand around a team," says Charles Denson, Nike brand president in the Wall Street Journal story. Denson asserts: "We built our brand around the athlete and his or her personality, creativity and innovation. I think that's what gives the Nike brand the edge it has today."

Do you agree?

If you are running a business, you would be quick to say: "No Way! Teams make Business happen!" We have come to accept that teamwork, team collaboration, team building, teaming, team spirit -- are essential to business success. We have been told to never use the term "I" in business.


The david Adidas - "We over Me" (or "We over I")

According to Wall Street Journal, Adidas is about to launch a new innovative campaign praising the Team Spirit in sports. In a new 11-year partnership with NBA, Adidas is launching a brand new campaign with the slogan: "It takes 5IVE" - celebrating the concept of team over individual or "we over me". The campaign is the brainchild of Simon Atkins, Adidas' director of marketing in the U.S.

Adidas will showcase five NBA stars together: Tim Duncan of the San Antonio Spurs, Kevin Garnett of the Minnesota Timberwolves, Tracy McGrady of the Houston Rockets, Chauncey Billups of the Detroit Pistons, and Gilbert Arenas of the Washington Wizards.

It's interesting to note that Adidas has picked the sort of blue-collared, hard working, good citizenship team players, and role models of the community as part of its 5IVE Team.

A TV commercial will began airing this week where the players look into the camera and say: "It's not about them, but rather the team." Besides the commercials, there will be print ads, online web ads, and even a new video game in collaboration with EA Sports.

Adidas will launch signature basketball shoes for all five players in the range of $80 to $130. And to take this one step further, Adidas is also launching 30 different basketball shoes - each shoe representing special design and logo of an NBA team - for about $100 each.

The goliath Nike - "I want to be like Mike"

Nike has always been big on marketing the individual as the passport to selling basketball shoes. From the world famous Michael Jordan who made an empire for Nike in basketball with the Air Jordan shoes and apparel, to the new king of basketball LeBron James riding high on the success of Nike Zoom Lebron, it has always been about the Individual spirit, the Individual drive, the Individual personality, the I in the Individual. Shaquille O'Neal has also championed the growing line of Shaq by Nike.

Nike owns over 80% of the U.S.'s $2.6 Billion basketball market and its share is also growing year over year; while Adidas' share of the market is only about 14%. Adidas is growing market share. But it remains to be seen whether it will grow at the cost of Nike, or other lesser brands.

Who will win?

If this was running a business, We always wins. I always loses. But this is not just running a plain ole business.

For now, Adidas wins with the new partnership with NBA and EA Sports, creating the "team spirit" in the NBA where everything is literally about "I" and players lack camaraderie, great community message that could jive with the NBA fans, and a cool line of new shoes touting Teams and showcasing each NBA team. Even NBA wins in the process.

Adidas is definitely innovating and challenging the widely held "I" culture of NBA. And Adidas is doing this creatively. NBA has a lot to gain from this program as well.

However, when I go shopping for basketball shoes, do I really care about the "team" or "5IVE" or "We". I am out there buying a great pair of sneakers. And I am definitely thinking Jordan, Shaq, LeBron - "I want to be like Mike" when I put them shoes on and go for that layup. I am not thinking Duncan, Garnett, Arenas, McGrady, Billups - whose collective popularity is probably less than any of the Nike stars. Perhaps I am not an average shopper. Perhaps Adidas could have picked the NBA stars who are the most popular, and created a team with them. Then again, that wouldn't have been a team, would it? It would have been an "I Team".

Tuesday, October 17, 2006

How does an organization implement one million new creative ideas each year? And become a perennial top ten profitable companies of the world. And achieve market leadership while relentlessly pursuing perfection and delivering some of the best new innovations the world has ever seen.

Welcome to Toyota’s Innovation Factory. The world knows Toyota as the car maker that produces such great brands as Camry, Lexus, Prius, Scion, Rav4 and more. For example, the introduction of the Hybrid car back in 1997 when other car makers had not even put together a design for a hybrid car, much less a concept car.



Matthew E. May, a senior University of Toyota advisor, and the author of “The Elegant Solution: Toyota's Formula for Mastering Innovation” puts forth a passionate perspective on how Toyota creates new innovations at the breakneck speed of over 2,500 new ideas implemented every day. How is this possible? Innovation at Toyota has to do with the history, foundation, guiding principles and practice.

Foundation of Elegance and Innovation

Toyota was founded by Sakichi Toyoda as a handloom company. In 1898, Toyoda created Japan’s first steam-powered loom. Toyota Motors began as Toyota Automatic Loom Works, a company whose looms were of the “highest quality, lowest cost, and easiest to use.” Sound familiar. Hence the term “Elegant Solution” which according to May is about “finding the aha solution to a problem with the greatest parsimony of effort and expense.” And May argues that at Toyota, you get elegance from creativity, simplicity, intelligence, subtlety, economy, and quality. Further, May lays the groundwork for the term Innovation, which according to David Neeleman, founder and CEO of JetBlue means: "Innovation is trying to figure out a way to do something better than it's ever been done before." Indeed. This has become one of the guiding principles at Toyota.

Guiding Principles for Driving Innovation

Three guiding principles drive Innovation and create elegant solutions at Toyota, which were originated and finessed by Toyoda:

1. The Art of Ingenuity

May asserts that in order to succeed in an ever complex business world with competing pressures to innovate amidst competitive pressures and yet manage risks and uncertainty, an individual has to be both an artist and a scientist. Ingenuity creates images of cleverness, resourcefulness, initiative, originality, inventiveness, creativity, skill and even cunning – resulting in innovation. Sound contradictory. The key is to continually ask the question: “Is there a better way?”

This is possible if the individual fully leverages their domain knowledge and expertise, continuously pursues every possible way to innovate and perfect, challenges opposition tactfully, does not accept the status quo, and uses organizational efficiencies to drive new ideas and methods. Toyota has made ingenious vehicles such as Camry, RAV4, 4-Runner, RX which have become perpetual favorites in the market place.

2. The (relentless) Pursuit of Perfection

May argues that for a business to succeed at innovation, it has to rigorously search for an optimal solution – one that yields low-cost, low-risk, high-impact breakthrough. Innovation happens at Toyota through systematic pursuit of perfection at every level, every department, in everything Toyota does. Perfection equates to excellence, precision, flawlessness at Toyota. And it is this chase for perfection that creates better processes, products and services for tomorrow, today. It takes many small steps (Collins - Built to Last) to create sustainable innovation. For example, the Lexus cars made by Toyota epitomize perfection in the form of car design, function, performance, service and total satisfaction.

3. The Rhythm of Fit

May propounds that great innovation has to fit – fit the innovator, the times and the larger system. How can a great innovation shape and then change the attitudes and behaviors of people, the way they think, they work, they live? A change that fits in the current time and environment. For example, the Toyota Prius car. A hybrid car that provides plenty of room in the inside, shows solid performance on the highway, provides all the safety features, and gives great gas mileage and range. Toyota envisioned the changing environment of higher gas costs and pollution that wanted a car which is economical to drive, is environmentally friendly (green innovation), and does not sacrifice the inherent need for roominess, safety and performance.

The three principles create both the policy and framework at Toyota for driving innovation and creating elegant solutions. How would you find and drive innovation at your organization? Here are six ways to find innovation. If you are a technology company, read about how Intuit creates innovations and achieves market leadership using similar principles. May asserts that these three principles are non-negotiable and must be adhered to by everyone at Toyota.

Blocking Innovation

May also talks about the obstacles that hinder sustainable business innovation which Toyota has tactfully avoided through out its history. He calls these innovation blockers “temptations”, which are about taking short cuts, trying to hit a home run every time, creating products too complex that are top loaded with extra dressing, and without a real understanding of the innate customer need.

Here are the three Innovation blockers (does your organization block creativity and innovation? Here are some tips to unblock creativity and innovation) that Toyota has avoided over the years:

1. Swinging For Fences

High risk. High reward. NOT. When a company only focuses on trying to go all out for home runs every time at bat, you will strike out more often than not. The key is to build a sustainable batting average -- lasting innovation, and not just go out swinging every time at bat.

2. Getting Too Clever

Every product manager at one time or the other is guilty of adding all those extra "bells and whistles" that the customer does not care about. This happens when you bow in to competitive pressures, or needs of specific customers that are not indicative of the mass market. The company ends up creating products that customers actually run away from.

3. Solving Problems Frivolously

May calls this the "brainstorm" trap, which is creating something that is out of line with the company’s core values, not serving customer’s true needs, and worse yet, something that is created hastily without rigor and analysis.

Ten Practices for Making Innovation

May showcases the following Ten Practices that Toyota has adopted on its core principles towards making Innovation happen:

1. Let Learning Lead
“Learning and innovation go hand in hand, but learning comes first.” Education and Learning can drive substantial innovation.

2. Learn to See
“Elegant solutions often come from customers -- get out more and live in their world.” The key is to unearth the latent needs of the customers, and perceive the emerging needs.

3. Design for Today
“Focus on clear and present needs, or your great ideas remain just that.” Innovation that drives business in today’s market is likely to get funded and succeed.

4. Think in Pictures
“Make your intentions visual -- you'll surprise yourself with the image.” In Six ways to find innovation, we talked about the need for visual imagery.

5. Capture the Intangible
“The most compelling solutions are often perceptual and emotional.” This is where the product manager needs intuition and the ability to read their customers’ minds.

6. Leverage the Limits
“Restraining forces rule -- resource constraints can spur ingenuity.” It is critical to know what you can deliver, how you can deliver and by when.

7. Master the Tension
“Breakthrough thinking demands something to break through.” In Failures and Stumbles driving innovation, we talked about the five takeaways stimulating innovation. Accept that mistakes will be made.

8. Run the Numbers
“Think for yourself -- temper instinct with insight, focus on facts, and do the math.” A sound technical analysis is critical before you begin a new product innovation. This should take into account such factors as risks, probabilities of success, and lessons learned from past projects.

9. Make Kaizen Mandatory
“Pursuing perfection requires great discipline -- create a standard, follow it, and find a better way.” A process is a must have. Think Six Sigma. Think Rigor at Intuit.

10. Keep It Lean
“Complexity kills -- scale it back, make it simple, and let it flow.” Innovation happens when you can simplify the intended application and make it so easy-to-use that it becomes a no-brainer.

Bottomline:

Toyota has become the dominant car maker today based on large part due to the Innovation Factory. A Factory based on a foundation of creating elegant solutions through three guiding principles, avoiding three “temptations” and driving ten production practices.

"Toyota is becoming a double threat: the world's finest manufacturer and a truly great innovator . . . that formula, a combination of production prowess and technical innovation, is an unbeatable recipe for success."

* Fortune, February 2006
Selected references:

Creativity And Innovation in Business Definitive Guide is a 185-page collection of my handpicked 48 Creativity and Innovation best practices, case studies, articles, interviews, and insights on the current state of innovation in business. The eBook provides real-world examples on how the Top Innovators including Toyota, Apple, Google, GE, Proctor and Gamble, Yahoo, Netflix, BMW, Deloitte, Timex, Frito Lays, Johnson & Johnson, Starbucks, Southwest Airlines, Microsoft, Intel and more innovate and grow their business successfully time and again, especially during trying times. Use this eBook as a guide to find and create game-changing innovations, unblock creativity, and make innovation successful at your business. The Innovation eBook is used by over 300 organizations all over the world including HP, Pepsi, EDS, major universities and business professionals.


References:

Matthew E. May: “The Elegant Solution: Toyota's Formula for Mastering Innovation”. Free Press. 2006.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

Saturday, October 14, 2006

How do you find Innovation? Can you find innovation blind-folded or using the same lens? Can you even look for Innovation? Or it just happens.

Innovation is coupled in some ways to imagination where every time you see something, you open your eyes to endless possibilities. Literally. According to Chuck Palus and David Horth, authors of The Leader's Edge: Six Creative Competencies for Navigating Complex Challenges, you need to “see with new eyes” in order to find innovation. We had discussed earlier on how leadership can drive innovation inside your business. We naturally fall into a habit of looking at things around us with the same eyes, analyzing it with the same logic and creating the same perceptions. It is easy to get used to this routine. Most managers act the same way. According to the authors, most managers “act on what they expect to see”, take shortcuts, do not spend enough time analyzing information and making a sound judgment. It’s as if the managers are walking around blind-folded since they have already created built-in perceptions of what they see.

Why is this so? We are after all living in the world of action. People get rewarded to get things done fast. And managers are no different. According to the authors, managers spend ninety percent of their time solving the problem, and only ten percent thinking about it. There is too much focus on getting the problem resolved quickly and moving on to the next problem. Perhaps this happens because of the sheer pace of work, multiple competing projects, approaching deadlines, and focus on quarterly results. The result: the problems are half-solved or worse yet, wrongly solved. The authors assert that "Complex problems — even really wicked ones — often begin to crack and shift when you spend more of your time looking at the problem."

What does all this have to do with Innovation?

Palus and Horth believe that Innovation happens when you begin slowing down (what did you say?), and when you put the brakes on the way you normally see and perceive, analyze and understand.

Here are the Six Ways to Find Innovation:

Stand in different places

Switch roles. This is the only way to learn and understand what is out there or in there. If you are the manager, become an employee. If you are in Sales, become a customer. If you are the product manager, become the product or the user. Try to adapt the mindset of who you want to do business with. Change your perspective. This bit of role playing will allow you to find new innovative ways to look at the same problem, and find a solution that you never thought existed before.

Use the lenses of other domains

Are you selling high tech gear? Well what if your buyer was shopping for groceries? How would you sell to that buyer? Are you looking to create that next big innovation in chemistry? What if you were to use this innovation in sports? Learn about something other than your domain knowledge. Try to apply this knowledge to your problem. Say you are trying to market an application to the CEO of a company, and are not able to determine the appropriate message, the punch line. What if a Kid were to buy your product? How would you explain to the Kid? The key is to use a different lens outside your domain and arrive at a solution. If you don’t know how to use a different lens, find someone in the company who can. Or create a group to do this.

Ask powerful questions

Questions are not just for the devil’s advocate and to create doubts. There is no such thing as a silly question. Question everything about what you are trying to accomplish. Start with why, what, how, when, what if, so what, where and so on. Ask broader or narrower Questions. Ask the question of a metaphor. Ask opposite questions and inside-out Questions. Ask precedence and consequence Questions. Ask ridiculous questions, and don’t forget to ask the “Real” question. Ask about object rules and action rules (Shank). Question the merits and even ask how you can make the innovation worse or fail. The more questions you ask and the more answers you try to find, the more innovative ways you would come across in trying to find a way to create a new product or solve a problem.

Foster new knowledge

New knowledge not only comes from your own domain, but when you are out there doing something else. Go attend a trade show of an unrelated business. This will open up your mind to how businesses are creating products for other markets. You may find an application of this in your market. Spend a week with your customer. Understand the problems your customer faces on a day to day basis; not just for your product, but everywhere else. Gain new insights on how your customer does their business with their customers. Check out what your key competitor is doing outside their place of business, what they are doing to promote and market their products. Do Offsites with your creative teams, and focus on learning something totally unrelated to what you are doing. Use the Offsites to create some group thought. The creative team should spend time in new places to gain new viewpoints, and which in turn will generate new ideas.

Create a visual verbal journal

A picture says a thousand words. A journal to put down your thoughts visually will allow you to think about your ideas from various angles, and create clarity of thought. Wherever possible, doodle. Do drawings of processes, tasks, relationships. Connect the dots or let them flow from one to another. Create a habit to write down key ideas, however unrelated, and try to associate these with real world scenarios. Create more pictures (don’t worry about whether they are pieces of art). Imagine the customer you are trying to sell visually. What would be they thinking out loud or saying out loud? Write short catchy phrases describing their actions and thoughts. At times you may be going on different tangents from your visual thoughts, but it is possible that one of the new tangents holds that all important idea to generate new innovation. And at times, the visuals may create even further complexity. Perhaps it is best to let go of that visual, and start a new one. Wherever possible, try to associate visuals with concise thoughts or ideas.

Change the pace of attention

How do you lead groups to find and create innovation? The key is to slow them down and try to get the group to focus on a few key ideas initially. Try to brainstorm on these ideas using creativity techniques such as free association, locksmiths, SCAMPER, or Question Breakdown. Ask the group to bring their own ideas, however silly they may appear on the surface, and evaluate each idea and brainstorm. Give rankings to each idea by having everyone vote. If the group is pressed for time, and is moving fast through the thought process, make it a practice of slowing them down. Ask more questions. Try to change the topic to have the group momentarily think of something else. Bring them back. Try to rephrase what you are trying to do. What you are trying is create is that moment of intuition or magic moment wherein group members can come up with an idea that everyone says “wow, let us explore that.” Use group forums or N-Gates to channel the group creativity into a new idea or innovation.

Are you ready to find innovation inside your business? Remember to slow things down, view the world with a set of new eyes, follow the six steps above, and unblock creativity and innovation within your organization.

If you enjoyed reading this Creativity best practice, I recommend the complete list of Creativity Innovation Best Practices.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

References:

CCL – Center for Creative Leadership. CCL e-Newsletter, October 2006: Needed: A New Way to See.

Leading Creatively: Acting Sensibly and Meaningfully in a Complex World by Charles J. Palus and David M. Horth (CCL & Jossey-Bass, August 2001).

Thursday, October 12, 2006

What does Google, YouTube, Wikipedia, eBay, Craigslist and more have in common? According to Charles Leadbetter, author of the soon to be released book "We-Think", we are witnessing the new age of creativity and innovation that begins with people asking a simple question: "Are you thinking of what I'm thinking?" A new wave of companies are cropping up wherein people are creating and conducting business together, determining the rules of the business, and their "collective creativity and collaboration are replacing top-down management as a business model."

People are the creators

Leadbetter asserts that "Google’s service is based on extracting insight from our collective intelligence" wherein the query engine is based on how each web page is linked by other pages on the Internet by the people - akin to a vote. YouTube is compared to Google where according to Leadbetter, "its ethos is democratic: people can vote on what they like." It is the collection of people that make these new services grow. Google and YouTube are simply enablers. People are the creators. In a related story on Google's acquisition of YouTube, I talked about how YouTube has created successful innovations similar to Google with regards to Vision, Business Model, Technology and User Experience and Partnerships.

Participation

Leadbetter calls this new world of doing business as the world of "We-Think", where "we (the people) are developing new ways to innovate and be creative en masse” without the need for an organization. Leadbetter provides several examples of the We-Think culture including eBay, multi-player computer games, Neopets, Second Life, Linux, Apache, MP3 revolution and more. The common theme across all of these new businesses: participation. This is a strategic shift in business thought - whereas most businesses think of their customers as consumers, these new businesses think of their customers as active participants and "voices in the conversation", not just passive listeners. In Co-Creation driving Innovation, I talked about mainstream businesses such as Doritos, Starwood Hotels and Timex watches embracing this phenomenon and leveraging their customers to create new products.

People Innovation

Leadbetter makes a poignant observation: "Innovation and creativity which were once elite activities undertaken by special people are now becoming mass activities, dispersed across society. This is innovation by the masses, not just for the masses."

Finally, Leadbetter concludes that We-Think scrambles the logic of managerial capitalism, where consumers turn out to be producers, demand breeds its own supply and leisure becomes a form of work. And this leads to the "irresistible force of collaborative mass innovation."

We think Leadbetter is on the money, and we are certainly in the midst of this "We-Think" phenomenon of People Innovation that is not only revolutionizing the way companies do business, but also the business itself.

Wednesday, October 11, 2006

When was the last time a company innovated from zero to $1.65 Billion in market value in less than two years from founding, and in less than one year from launch of their key product?

Beginnings of a new Broadcast company

YouTube, a consumer media company for people to watch and share original videos worldwide, serves over 70 million videos daily on their website - videos that are created and shared by everyday people. YouTube also draws 34 million unique visitors a month, ranking it in the top 15 sites by traffic volume. YouTube's mission is to convert everyday people into broadcasters of tomorrow. Is YouTube the beginning of a new broadcast company? A company that fundamentally changed the rules where people choose what they want to watch, when they want to watch, and for how much (and free in most cases) without the overload of
advertisements.

Who came first?

Is YouTube a modern-day community of all the people who were using Microsoft's NetMeeting for sharing live video many years ago? There was a huge wave of people who initially embraced the live capability of sharing video in NetMeeting in the late nineties using a simple Webcam and simultaneously conducting conferencing using integrated live chat and audio. A market of live conferencing and video sharing softwares got created overnight based on this initial success. Some of the applications of live video even created a whole new adult industry. However, not a single vendor experienced any type of consumer mass market success. And then TIVO emerged from the Internet boom (or bust), wherein you can buy a simple hardware device (technically a large hard-drive that saved analog TV broadcast into digitial media) and pause, rewind and store live broadcast TV, and watch it on demand anytime. TIVO was innovative and revolutionary, and single-handedly created a huge market following for On demand TV. TIVO even became a verb wherein thousands of TV fans would talk about "Just Tivo it." However, TIVO was a personal device that did not let you share the videos with friends and families. Nor TIVO allowed you to capture your own video and store it (at least not easily) and then send it someone else.

New Innovations

Until Steve Jobs and Apple started the iPod and then iTunes revolution, which morphed into video downloads of hit TV shows onto iPods or desktops to allow people to view the shows on demand. However, even the brilliantly innovative Jobs missed what was to become a people Video revolution. Whereas Jobs was focused on creating partnerships with TV broadcast companies to monetize the market of recorded broadcast videos and grow the business at Apple, YouTube founders Chad Hurley, Steve Chen, and Jawed Karim were focused on the exact opposite - free video service created by the people for the people. They were trying to create the world's best platform and Video network wherein people can upload, tag and share videos for free. The founders almost went broke trying this innovative experiment out after the launch when the number of people uploading videos to share, and the number of people downloading videos to watch grew exponentially. However, the growth of Internet as a network and the fall in price of broadband, bandwidth and storage kept their vision going (and a few million dollar capital investment eventually by Sequoia capital). The YouTube Innovation Revolution was just beginning.

Zero to 70 million Videos served daily

YouTube, founded in February 2005, created many timely innovations that made it successful in such a short time paving its way to an acquisition by Google for $1.65 Billion dollars.

First, the vision of Founders to create a Video download service for FREE (and not getting caught up in monetizing the Video Service from the get go) at the right time when the broad consumer market was evolving into creating and sharing home videos at personal websites or community sites from just sharing pictures and images. Sound familiar? Think Google (that created the Search engine for free and did not monetize it for the longest time).

Second, the intense focus on providing the best and most comprehensive experience for users interested in uploading, watching and sharing videos. This is no easy feat. YouTube made it as easy as 1,2,3 to upload and share a video. And to create a vibrant community, it added such key features as categories, video ratings, most requested videos, most watched videos, and more. This made it extremely easy even for a novice to simply go to YouTube site and browse a video that they want to watch at the click of a mouse. And the ease of uploading and sharing videos meant that there was always fresh content that people want to watch daily. People can also create their own accounts and create their own list of favorite videos, categories, etc. Of course to make all these possible, YouTube created an innovative seamless Video platform that can deliver hundreds of millions of Video to people all over the world.

Finally, YouTube created key partnerships with various Music and Broadcast players in the industry (who soon realized that YouTube was upto something big). This included CBS, Sony, Universal, Warner, NBC and more. This gave YouTube and its people ability to watch snippets of TV shows, news, movies, sports and entertainment shows - short-form video programming or short clips. This became a win-win for both YouTube and its partners. YouTube wins because it brings in fresh content from hundreds of broadcast channels that people around the world want to watch online at their convenience for free, and the credibility from playing with the big boys. Partners win because they use YouTube to market their broadcast programming to the people in the hopes of creating more business on their TV broadcasts.

These timely innovations in business model, technology and user experience, and partnerships made YouTube an overnight success. As Eric Schmidt, CEO of Google pointed out in the Press Release announcing the acquisition: "Our companies share similar values; we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers.”

YouTube and Google

Google has announced that YouTube will remain an independent business retaining its distinct brand identity. What is not clear is what Google will do to its own Video service. What Google will provide though is the monetization for YouTube's Video services through its advertiser relationships and global reach. If 1% of the 70 million Videos that are served daily click on a Google served advertisement, this would result in 700,000 daily click-through or 255 million click-through in a year (without accounting for any new growth). And if you take a five year period, it would cost Google $1.29 a click in today's dollar. Or to put it another way, Google can create new revenue of $329 million a year without making any profits (assuming it sells ads at $1.29 a click). A steep price to pay for a Video click? Only time will tell as to how big the new YouTube Video Service becomes under the auspices of Google, and how Google will be able to cash in on its investment and eventually make this a $1 Billion business.

K.D Aubert

K.D Aubert (full name is Karen Denise Aubert) is a model and actress who can be seen in friday after next, Frankenfish, Soulplane and the up coming Luke Cage movie.

KD Aubert was born on December 6, 1978 in Shreveport, Louisiana, but raised in California.







Tuesday, October 10, 2006

Chinese Vice Premier Zeng Peiyan, in a key address at the 14th World Productivity Congress (WPC) held in Shenyang, capital of northeast China's Liaoning Province, emphasized the role of technology and innovation in China towards developing productivity and realizing sustainable development.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

Zeng proposed that in order to "realize sustainable development, China should institute an advanced system of productivity which considers new technology industries as the pioneers, basic and manufacturing industries as supporting players, all of which will help the service sector develop to its fullest". Zeng even called for implementing the strategy of reinvigorating the country through science, education and trained personnel and building a system of innovation. Zeng proclaimed that such innovative systems will "ensure scientific development which help transform the mode of economic growth to achieve harmonious and sustainable development." Zeng also wants to reduce pollution and energy consumption so as to create a safer and cleaner environment for productivity to thrive.

The China drive towards innovation and productivity is consistent with Friedman's assessment in "The World is Flat."

In a separate news story, The Confederation of Indian Industry (CII) is planning to create a National Innovation Grid in India. CII in a partnership with Centre for Entrepreneurial Learning (CFEL) of Cambridge University is proposing to set up a virtual network of information to drive innovation in Indian Small and Medium Enterprises (SMEs). The National Innovation Grid would act as a facilitator and driver for SMEs who can leverage the knowledge gained from CFEL and infrastructure capital from CII to create innovative new businesses. This has the potential to accelerate growth in the Indian SMEs.

"CII`s alliance with East of England International, a hi-tech cluster with Cambridge is focused at developing a model for linking small entrepreneurs and individual innovators with linking academia, research and development institutions, businesses as well as the government to facilitate innovation in the SME sector in India", CII President R Seshasayee said.

CII also launched a new program: "Towards 100 Indian `Billion $' MNCs" in partnership with Infosys. The program has a lofty goal of helping 100 new Indian Multi-National Companies achieve One Billion Dollars in revenue within the next ten years through an "ecosystem" of partners.

Bottomline

China and India are driving Innovation to develop productivity, create sustainable development, and achieve new business growth. Both countries are realizing the strategic importance of Innovation as they seek to create new economic growth in the future. New technology industries, SMEs and even Billion Dollar MNCs are on the horizon.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

References:
Xinhua online
Zee News
Hindu

Sunday, October 8, 2006

What does Doritos chips, Starwood hotels and Timex watches have in common? According to Gerhard Gschwandtner, Editor and Founder of Selling Power, they are all engaging their customers to co-create. In the latest issue of Selling Power, Gschwandtner talks about the role of co-creation driving innovation in mainstream businesses.

What is Co-Creation?

Gschwandtner summarizes: "Information (online) technology has empowered consumers to share ideas, documents, images, and movies across the forever- expanding digital world. The Internet allows businesses to engage customers in a creative workshop experience." This online engagement with the customers that creates new innovative solutions is Co-Creation.


Doritos and The Super Bowl

What is Doritos doing to co-create with the customers? How about a "story about eating your first Doritos chips or what life is like for the spices on the surface of the chip"? Consumers are invited to submit their 30-second homemade videos on stories about Doritos. Talk about whetting consumers' appetite for Doritos with the growing appetite of homemade videos - it appears that Doritos has created the perfect match. And the best part is the grand prize: the top video will be aired as a commercial during next year's Super Bowl (2007). Five finalists will also be awarded $10,000 each. Doritos wins by rallying hundreds of thousands of consumers to create playful videos about its chips, creating the consumer buzz around Doritos at time of the Super Bowl, and finally showcasing the advertisement in front of about a hundred million people watching the Super Bowl. Co-Creation in motion.

Aloft at Starwood

The next time you want to go to a great hotel, how about just logging online and typing in: www.virtualaloft.com. No need to leave home. Welcome to Aloft Hotel, the new futuristic hotel from Starwood. The virtual hotel invites guests to tour the hotel and get a 360 degree view, walk around the lobby, check into a room, swim in the pool, and even watch a sunset on the rooftop terrace. Starwood has taken the concept of co-creation to the next level (literally) by creating the first virtual hotel online, and simultaneously encouraging the customers to provide feedback and engage with the designers and architects who are building the real hotel.

The real hotel will not open until 2008 - plenty of time for Starwood to gather all the customer inputs and creating something that customers really crave for. What a great concept? For instance, at their website, the designers heard one question a few times on "why there wasn't a door in the bathroom." They immediately responded that "there will be a sliding door in the real hotel" and explained why it was missing in the first place. Co-Creation at work.

Timex and The Future of Time




Timex, as part of its 150th Anniversary celebration, and to demonstrate an ongoing commitment to design and innovation, conducted a global design competition: Timex2154: The Future of Time (2004+150 years=2154). Designers from more than 72 countries explored and visualized personal and portable timekeeping 150 years into the future and submitted 640 entries. An assembled world-class design team evaluated the entries in three categories: wrist-based, wearable, and conceptual, and chose the winners. Timex could not have done this alone (if they would have tried to design a futuristic watch). Instead, they were able to obtain 640 creative ideas from some of the world's best designers in a timely manner. Further, Timex created a leadership position as a Watch company by creating such a campaign and getting the inputs from some of the best designers. Co-Creation driving innovation.

Diversity drives Innovation

Gschwandtner compares the past and the present of customer innovations: "In the past, customers have been limited to communicating their wants and needs in surveys and focus groups; today, brands deploy existing technologies to map their customer’s imagination. Brands no longer view consumers as targets with a wallet, but as co-creators of exciting and profitable solutions." This is a tremendous shift. Rather than simply aiming customers for profits with obsolete products, now you are learning from them in real-time and creating better products that will in turn create profitable customers. And today's customer who is digitally engaged and enjoys personal service would not have it any other way. Gschwandtner aptly quotes the term "Diversity drives Innovation" from the book The Medici Effect by Frans Johansson to demonstrate the effect of Co-Creation.

Bottomline

As Co-Creation demonstrates tangible results, more mainstream businesses will experiment and adopt it - not just technology companies. The best side effect of Co-Creation is it brings you that much closer to your customers and creates a positive business environment. The business should not become overzealous about deploying Co-Creation. It has to make observations and decisions based on sampling size and customer type on whether to go all out with customer inputs or experiment.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

If you enjoyed reading this Creativity best practice, I recommend the complete list of Creativity Innovation Best Practices.

Acknowledgements:

Gerhard Gschwandtner - Selling Power - October Issue
Doritos
Starwood – Aloft Hotel
Timex

Friday, October 6, 2006

Marketing executives have limited dollars and resources to invest on marketing programs and create market share growth. How do they pick the optimal go-to-market strategy to achieve market leadership? What markets do they invest into and how much? How do they create Marketing Innovation so that they are maximizing the marketing investments and generating higher revenue today and in the future?

The markets can be divided into five broad categories including Growth market, Emerging market, Existing market, Replacement market and Untapped market to create the appropriate context.

1. Growth market:

a. Growth market is the market where the organization is seeing the most business traction today. The marketing executive needs to first answer the following questions to establish the baseline: What is our current market share in the Growth market? Who are our prime customers? Why are the customers using our products? For how long? Do we provide an effective solution? Are we winning? Why are we winning? Who are we winning against?
b. The marketing executive also needs to determine the Growth market trends. Whether the Growth market is going to grow further. And determine whether the organization is growing at the pace of the Growth market or faster than the pace of the Growth market.
c. At this point an internal analysis of marketing programs that have worked well to get us to this position in the Growth market is needed. The marketing executive needs to determine what has worked and what has not. And why?
d. Now, the key question needs to be addressed on how marketing department can accelerate the business in this Growth market? Whether the department can create an assembly line of marketing programs to accelerate the growth in this market, and rapidly scale. What does the department need to create the assembly line?
e. Finally the department needs to determine the marketing tools, sales collateral and techniques needed to create the demand in the Growth market.
f. Knowing that Growth markets provide maximum revenue dollars today, minimum of 50% to 60% of the marketing investment should be focused on the Growth market. The marketing game is all about execution in the Growth markets.

2. Emerging market:

a. Any market where the organization is seeing an early traction is an Emerging market. The questions that the marketing deparment need to address are: Why are we seeing the early traction? For how long? Do we have an effective solution? Are we winning? Are there competitors prevalent in this market?
b. Now, the marketing department needs to determine whether the Emerging market is a new industry, a new geography, a new vertical, a new user, or a new application of our product.
c. At this point, market sizing and trending is needed. Is there a larger market here beyond the Emerging market? How big is the size of the potential Emerging market? What is the potential growth of this Emerging market? How can we win in this Emerging market? Again, marketing needs to have answers to these questions.
d. The marketing department should invest into one or two emerging markets. Marketing programs for an emerging market will be more creative, innovative and ad-hoc.
e. In an Emerging Market, it is always best to create a Hypothesis. Experiment. Test the hypothesis. Change as often as needed.
f. Knowing that there is a huge upside from investing in an emerging market, minimum of 10% to 20% of marketing investment should be focused here. There is mid-term to long-term revenue potential in the Emerging markets.

3. Existing market:

a. Existing market is the market consisting of the existing, long-standing customers. First, the marketing department needs to know who the existing customers are, why they purchased company's product, how long they have been using company's product, whether they are happy customers and loyal customers, and the company's current relationship with these customers. Another key question to address is how many customers the company loses every quarter and why.
b. It is very important to understand how the existing customers are using company's products. Whether the customers are using the products to the fullest potential. This would lead to key question: Can we market more of the same products to the existing customers? This is tied to extracting the maximum life-time value from the existing customers. Marketing needs to know the maximum life-time value of the existing customers.
c. Another key question that needs to be answered is: Can the company market different products to our existing customers? How do we do this?
d. Ultimately, the marketing department needs to determine the total revenue potential from existing customers. And assess on where the business is today, and the growth potential.
e. When it comes to execution, marketing department should analyze the marketing programs for the existing customers, on what has worked well in the past, and what has not worked well.
f. Another program to consider is whether the existing customers can refer the company to more customers. And what processes need to be in place to achieve this. An estimate of the total potential market of referral customers from the existing customers is essential. Again, establishing the baseline on where the company is with referral business, and analyzing the growth potential is needed.
g. Existing customers not only bring the company maintenance and ongoing service revenue, but provide a tangible upside at a lowered investment.
h. Minimum of 15% to 20% of marketing investment should be focused here. There is short-term revenue potential in the Existing markets (unless it is completely tapped).

4. Replacement market:

There are two replacement markets. Markets that the company takes away from Competitors and Adjacent markets.

a. Competitors:

1. Marketing department needs to have a deep understanding of the direct and indirect competitors and their business. Market share analysis needs to be conducted on Competitors' current market share, and importantly whether their market share is growing, shrinking or remaining flat.
2. Competitive marketing strategy needs to be established.
3. Simply put, competitors' customers need to be identified. A key question to ask is: Are the competitors' customers satisfied? How is our own customer satisfaction?
4. Analysis needs to be conducted on why the organization loses against the competitors, why it wins against them in new business. A list of the competitors' weaknesses needs to be surfaced as part of the SWOT analysis.
5. Further research on how many customers the company has won over from the competition needs to be undertaken (takeaways) and by the same token, existing customers lost to competition (giveaways).
6. Finally, marketing department needs to creatively finds ways to access the competitor's customer base (names, titles, industries, etc.).
7. At this point, marketing department is ready to create marketing programs to win away competitor's customers. At a minimum, the program includes campaign, offer, marketing and sales tools, fulfillment, product and data conversion and integration.
8. Minimum 10% to 20% marketing investment should be aimed at competition. There is mid-term revenue potential in Competitors' markets (programs take time to execute; customers take time to convert).

b. Adjacent market:

1. Adjacent markets are markets that are either sub-sets or super-sets of the solution that the company provides. The company must know on whether it provides a complete solution to the customer's problems or only a subset. For instance, the solution could be deeply embedded within a business process wherein the customer uses other technologies and products. If the company provides a complete solution, what is the strategy against those who provide only a subset? If the company provides a subset, what is the strategy to provide a complete solution? These questions need to be addressed.
2. The marketing department needs to determine the players in the Adjacent market that provide a complete solution or a subset, and whether they are potential competitors or partners.
3. Further, the marketing department needs to answer the following questions: Who are the customers? Are their needs maturing? Are they looking to upgrade and replace the other players? What is the market growth potential?
4. Finally the all-important analysis on resources, costs, profits and risks associated with entering an Adjacent market needs to be conducted. Questions such as entering the Adjacent market head-on, complementing existing players, or focus on a specific niche need to be addressed.
5. The key to execution in Adjacent Market is Experiment. Test a hypothesis. Change the strategy as often as needed.
6. Minimum 5% to 10% marketing investment should be aimed at Adjacent markets. There is mid-term to long-term revenue potential in the Adjacent markets (creating a strategy, executing and attracting customers will take time).
9. Executing marketing programs for adjacent markets require opportunistic measures and entrepreneurship.

5. Untapped market:

a. Untapped market is where the company has zero business and no traction. Marketing department needs to determine the Untapped markets, and reasons on why the company has not created any business in these markets.
b. Marketing has to answer the following questions: Can we tap into this market? What is the investment required? What is the available market?
c. Competitive analysis needs to be conducted on whether the competitors have already tapped into this market, and why.
d. As part of execution, marketing needs to think about creating beachheads, and whether the company can leverage their mindshare to build and create this market.
e. Since Untapped market is brand new, a key question on market entry needs to be analyzed: entering with partners or going direct.
f. Marketing department needs to think about creating opportunistic mechanisms to explore the untapped market, and should be willing to change them often.
g. Minimum 1% to 5% marketing investment should be aimed at untapped markets. There is long-term revenue potential in this market.
h. Untapped market is where companies evolve, become great companies and bring in new revenue and market share. Investing into untapped markets is high risk, high reward strategy.

Marketing Innovation requires strategy, disciplined execution, and entrepreneurship (especially outside Growth markets). Marketing Innovation can create significant market leadership for organizations that put all the marketing wheels in motion.

Is your organization Blocking or Stifling Creativity? How do you harness Creativity and produce new Innovation in your organization?

As organizations grow, they setup structures that inherently block creativity.

Systems and Processes

Have your heard of organizational efficiency? Bottomline? Operational excellence? Larger organizations setup systems and processes to become leaner and more efficient, and become focused internally. However, when the systems and processes become an end goal, creativity that drives new innovations and competitive spirit becomes non-existent over a period of time. Hence, organizations must build new processes such as identifying and isolating key creative teams from the rest of the organizations, and stimulating them towards driving innovation.


Reward and Recognition Systems

Who do you reward and recognize at your organization? The operational excellence team, the sales team or the innovation team? Do you even have rewards and recognition systems in place? If you are frequently associated with rewarding behaviors like "going with the flow" and where behaviors like "questioning status quo" are ignored or even reprimanded, creativity will suffer. In order to create the best creative output from employees and teams, organizations must put formal rewards and recognition systems for the innovators and creativity contributors. Recognition and rewards could be in the form of a company-wide announcement of the contributions of your most innovative employees, press releases recognizing and introducing their innovations, providing the innovators paid vacations and combining them with trade shows where they can meet customers, salary bonuses, and more.

Organizational Culture

What stories do you hear in the cafeteria? Are the stories about the next big innovation that someone is working on, a new marketing campaign that is creating great returns or a product that was launched last year and became hugely successful? Or are the stories (or lack thereof) about improving profit margins, increasing productivity and becoming an efficient organization? An organization's culture is built on stories and legends. How many of these stories are known and recognized by the external world? An organization where creativity was not celebrated historically rarely has a vibrant creative environment. However, organizations where most talked about stories revolve around creativity, inspire others to follow suit, building a culture of creativity.

Creative ideas must make business sense. For instance, asking questions on whether you have the means to convert an idea into innovation, the associated costs of doing this, how many customers will use this new innovation, and the revenue potential. Most successful organizations achieve a balance between creativity and operational excellence.

Here are nine processes that you can create at your organization to unblock Creativity and drive Innovation:
  • Open communication within and between departments, and across all management layers.
  • Hiring of people with diverse backgrounds and experience, and avoiding "cloning."
  • Encouraging employees to find new ways to do their daily work, and empowering them to make decisions.
  • Creating an organization that extends out to customers, suppliers, partners, and environment.
  • Stimulating research activities and providing employees some free time to experiment.
  • Allowing employees to take measured risks (with small costs), and seizing opportunities.
  • Creating processes to evaluate any idea on merit, regardless of where it is coming from.
  • Identifying and separating the creative from operational functions in the organization.
  • Using group creativity techniques frequently to promote team building and generate new ideas.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

If you enjoyed reading this Creativity best practice, I recommend the complete list of Creativity Innovation Best Practices.

Acknowledgements:

eCornell. Leading through Creativity Certification Training.

Wednesday, October 4, 2006

In a story on "Connecting the Dots between Innovation and Leadership" published by Knowledge@Wharton, Wharton management professor Michael Useem asked an important question at the roundtable: "How are Innovation and Leadership linked?", "How do we lead in a way that generates Innovation?" The panelists were asked to describe a single factor that is critical to innovation.


Here were the ten answers by the panelists on what drives Innovation at their companies:

1. Marketing

According to C. Robert Henrikson, chairman and CEO of global insurer MetLife, the focus is on marketing. According to Henrikson, Innovation happens because of true marketing, not merely sales support; for example, executives beyond the sales team, such as lawyers and financial officers, need to meet with customers regularly. "All parts of the organization must have a sense of the customers' business to anticipate their needs and reach out with innovative ideas," he said. Henrikson observed that most insurance companies have no marketing and are simply followers of innovation established by competitors. He further emphasized that: "I can't wake up and say, 'It's good to be a fast follower.' You have to get out in front of consumer behavior. That is what will be the differentiator in our industry."

2. Size

Alex Gorsky, head of Pharma North America and CEO of Novartis North America, indicated that "It's really important not to confuse size with true innovation. Research shows big is not necessarily better." Gorsky noted that all the mergers have made drug companies big in size, but not big on innovation. Rather, the smaller biotech companies or divisions are causing real innovations according to Gorsky.

3. Culture

According to Seth Waugh, CEO of Deutsche Bank Americas, culture is a critical factor in promoting innovation. Business leaders stimulate innovation by offering incentives to workers, creating an environment, and setting expectations. Waugh noted: "You must have people with that hunger to always learn, who are always open and who think about things in a different way. You always have to reinvent yourself tomorrow."

4. Technology

Retired partner and managing director at Goldman Sachs, Connie K. Duckworth talked about the important role of technology driving innovation. "The advent of desktop information technology transformed the financial services industry on Wall Street in the 1980s and 1990s," she noted. Duckworth observed that "new computer technology allowed companies to analyze the role of risk and to track risk in financial services, which changed the dynamics of the business."

5. Passion

Patricia Danzon, Wharton professor of health care systems and a consummate researcher on pharmaceutical industry mergers, identified passion as critical to innovation. Although passion is difficult to quantify, Danzon elaborated that passion may be linked to workers who have a stake in the business, either financially or in small firms where there is clear authority and little bureaucracy. Danzon stated, "So much innovation in the pharmaceutical industry is coming from the small firms ... and it seems to come from the passion and the involvement of being master of your own destiny."

6. Active Participation

Jeffrey Katz, CEO of Sherwood Equities, a New York City developer, and a major investor in Times Square, said business leaders must remain open and receptive to what comes their way in the form of new deals in order to capitalize on opportunities, and then seize these opportunities. He observed that "the marketplace, at least in New York, is extremely [fast-changing]. Unless you are sensitized and able to react right away, you will be reading about a deal next week rather than doing it."

7. Hard Work

Peter Linneman, Wharton finance professor and founding chairman of Wharton's real estate department, had a more real world perspective. He said there is no magic "Aha!" moment in most innovation. According to Linneman, "It's just all hard work -- showing up everyday in the morning, studying plans, walking around seeing what other people are doing. If you wait for 'eureka,' you are never going to have innovation."

8. Internal Development

Seth Waugh observed that it is preferable to create new businesses within the company first, because a homegrown enterprise is likely to fit better in the existing corporate culture. And he noted that this has the advantage of keeping the organization flat. Henrikson also believes in internal development as the passport to innovation. Henrickson emphasized, it’s talented managers -- not necessarily acquisitions -- that drive innovation. Katz is in the build-from-within camp. In order to grow, he encourages contrarian thinking. He noted that "if a developer waits to see what the crowd is doing, it's too late."

9. Targeted Acquisitions

Waugh believes that highly targeted "rifle-shot" acquisition, when an opportunity integrates well with the parent company's overall portfolio, is a strategic approach to stay ahead of the competition. Henrikson believes otherwise. Gorsky observes, "The area where it (acquisition) does make sense is in complementary technology with new technology partners." For example, Novartis' acquisition of Chiron Corp., a biotech firm with a specialty in vaccine development and production, as an example of an acquisition that fits well with Novartis' broader strengths.

10. Agility

Katz emphasizes the importance of agility to reshape development plans. He believes agility can create new ways of efficient and effective development that can span over months and years for completion.

Some of the panelists observed that leaders remain intently fixed on customers to uncover clues to innovation, realize and achieve the need for balance in quantitative skills and people skills, possess emotional intelligence and sensitivity to multi-cultural and multi-generational issues, demonstrate persistence in sticking with a goal although with flexibility, and execute on great ideas.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

If you enjoyed reading this Innovation best practice, I recommend the complete list of Creativity Innovation Best Practices.

Acknowledgements:

"Connecting the Dots between Innovation and Leadership", Knowledge@Wharton. Click here for the complete story.

Tuesday, October 3, 2006

Did you know that the U.S. Government Department of Energy (DOE) has a great program for Small Business Innovation?

Based on the findings of a study that showed that Small Businesses innovated 2.5 times more per employee than a Large Business, while a Large Business is three times more likely to obtain government assistance, the Small Business Innovation Research Program or SBIR was established to provide funding to stimulate technological innovation in Small Businesses.


Small Business Innovation Research (SBIR) is a U.S. Government program under the auspices of DOE (that oversees Science and Technology departments) in which federal agencies with large research and development (R&D) budgets set aside a small fraction of their funding for competitions among small businesses only. The primary program purpose is to improve the competitive capability of small research and development businesses with particular emphasis on emerging and under served small firms. The best part is that small businesses that win awards in these programs keep the rights to any technology developed and are encouraged to commercialize the technology.

Program Participation

Each year (around the beginning of October), DOE issues a solicitation inviting small businesses to apply for SBIR grants. The solicitation contains technical topics in such research areas as Energy Production (Fossil, Nuclear, Renewable, and Fusion Energy), Energy Use (in buildings, vehicles, and industry), Fundamental Energy Sciences (materials, life, environmental, and computational sciences, and nuclear and high energy physics), Environmental Management, and Nuclear Nonproliferation. Small businesses must respond to a specific topic and subtopic during the open solicitation period.

Selection Criteria

DOE uses three evaluation criteria for SBIR grant applications: (1) Strength of the Scientific/ Technical Approach, (2) Ability to Carry Out the Project in a Cost Effective Manner, and (3) Impact.

Grant applications are considered candidates for funding if the DOE technical staff member: (1) has no reservations with respect to any of the criteria and (2) strongly endorses the grant application with respect to at least 2 of the 3 criteria. The technical staff member leverages comments from expert technical reviewers.

Phased Program

SBIR has three distinct phases; each phase has a substantial increase in award amount and assistance from the previous phase. Phase I explores the feasibility of innovative concepts with awards up to $100,000 for about 9 months. Phase I award winners compete for Phase II, the principal R&D effort, with awards up to $750,000 over a two-year period. There is also a Phase III, in which non-Federal capital is used by the small business to pursue commercial applications of the R&D. Also under Phase III, Federal agencies may award non-SBIR funded, follow-on grants or contracts for products or processes that meet the mission needs of those agencies, or for further R&D.

Odds of Winning

According to DOE, the Proposal-to-award ratios are about 5-to-1 for Phase I and 2-to-1 for Phase II; although these ratios can change each year based on the program participation and topic awards.

As of FY 2004, the SBIR program had produced 4,638 Phase I awards and 2,013 Phase II awards for approximately $1.867 billion dollars.

Recent Award Winners

One of the Phase 1 winners for FY 2006 is LightCloud Software out of Pleasanton, California. Their topic area is "Biologically Inspired Approach to High Speed Intrusion Detection." Under the SBIR, the company will design and develop software to protect military and corporate networks from worm and virus attacks, and will significantly reduce the vulnerability of networks, thereby safeguarding classified and proprietary data.

Another Phase 1 winner for FY 2006 is Membrane Technology and Research, Inc. (MTR) in Menlo Park, California. Their topic area is "Energy-Efficient Process to Dilute Methane Emissions." The company will design a process for a diverse group of dilute methane-enriched emission streams, including those generated in landfills and natural gas processing. The process converts methane emissions into a useful fuel in a cost-effective manner.

Commercial Successes

Many successful companies go on to receive a Phase II award. According to DEO, 70 percent of Phase II projects have led to Phase III funding, and two-thirds of these projects contributed to sales of new products or services.

There are many success stories out of the SBIR program. For instance, a company Advanced Fuel Research based in East Hartford, Connecticut, created Fourier Transform Infrared Products under the SBIR grant. The company filed patents and created sales over $12 million. Spin-off of the original company was sold for $22.9 million.

Another company Deep Web Technologies out of Los Alamos, New Mexico received SBIR funding to research and develop a web-based search tool with relevance-ranking of search results from multiple internet databases. Soon after the core development, this technology was embraced by the U.S. government’s interagency Science.gov Alliance and applied to the interagency portal Science.gov.

Bottomline

The U.S. Government and the DOE has a Small Business Innovation program that gives you *free* money, research assistance and potential market to Innovate and make a commercial product. It is definitely worth considering if you are a Small Business that is planning to undertake new innovations in the technical topics and research areas sought by DOE.

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