Pixar Embraces Collaboration to Power Innovation

Who amongst us does not love the work of Pixar? Very few I am sure. Pixar has succeeded as well as anyone in mastering the art of creativity. The company has produced one animated hit after another—including “Finding Nemo”, “Cars” and “The Incredibles”. Rather than being crushed by Disney, as many feared, Pixar has reinvigorated its parent company.

What is most interesting is how Pixar has embraced collaboration within the organisation, with a view, strongly supported by myself, that collaboration powers innovation. In his article in The Economist (June 17th, 2010), Schumpeter says the company devotes a lot of effort to getting people to work together. In most companies, people collaborate on specific projects, but pay little attention to what’s going on elsewhere in the business. Pixar, however, tries to foster a sense of collective responsibility among its 1,200 staff. Employees show unfinished work to one another in daily meetings, so get used to giving and receiving constructive criticism. And a small “brain trust” of top executives reviews films in the works.

Schumpeter continues that Pixar got the inspiration for this system from a surprising place—Toyota and its method of “lean production”. For decades Toyota has solicited constant feedback from workers on its production lines to prevent flaws. Pixar wants to do the same with producing cartoon characters. This system of constant feedback is designed to bring problems to the surface before they mutate into crises, and to provide creative teams with a source of inspiration. Directors are not obliged to act on the feedback they receive from others, but when they do the results can be impressive. Peer review certainly lifted “Up”, a magical Pixar movie that became the studio’s highest-grossing picture at the box office after “Finding Nemo”. It helped produce the quirky storyline of an old man and a boy who fly to South America in a house supported by a bunch of balloons.

Breaking down the barriers is key to successful innovation in any organisation. Pixar certainly sets an excellent example for others to follow.

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Does Collaboration Really Add Value?

Collaboration. Everyone now collaborates. Really. Or so the PowerPoint slides tell us. Did you not know that every organisation is now a collaborative organisation? Show me a CEO who does not have a slide in their deck talking about collaboration.

But what is the true value of collaboration?

Frost & Sullivan, supported by Verizon and Cisco, have published a paper Meetings Around the World II: Charting the Course of Advanced Collaboration. Frost & Sullivan surveyed almost 3,700 professionals in 10 countries on four continents, to determine a model for measuring a Return on Collaboration and the impact of IP-enabled advanced collaboration on business performance.

The study found that there is a continuum of performance and return at the intersection of communications technology and business processes. Performance increases as organizations employ progressively more advanced IP-enabled UC&C tools. Not only do these organizations perform better, but they also have a higher return on their collaboration investment.

The adoption of collaboration tools tools can help organizations achieve performance gains and returns because they can enhance the value that an increasing number of individuals, collaborating across a network, bring to business-critical processes. In those that involve many-to-many interactions, such as innovation and new product development, sales, and customer acquisition, the return on collaboration is highest, as the greatest numbers of people are working toward a common goal (e.g., creating a new product). In processes involving few- to- many interactions, such as corporate reputation and shareholder value maintenance, advanced collaboration tools tend to have a more muted impact, due to a correspondingly lower number of connected individuals involved in these areas. At a basic, functional level, line-of-business managers believe that advanced collaboration tools help them to do critical tasks faster, more effectively, and at a lower cost than when these tools are not used.

Of most interest is the finding that an organization’s Culture and Structure for collaboration is a strong determinant of collaboration quality, leading to high performance. The presence and use of collaboration technology is still important, but it clearly needs to be deployed in an organization that is open, with a decentralized decision making structure. All of this means that today collaboration-enabled performance is heavily based on the organizational structure and environment in which advanced collaboration tools are deployed.

It’s not just about the technology – if the structures for collaboration are not in place, no amount of technology will make the organisation able to be truly collaborative.

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Siemens and Open Innovation

P&G have long been held up as a flagship corporation when it comes to Open Innovation. After reading the Pictures of the Future document from Siemens, I really feel I can put Siemens up there with P&G. The message from Siemens is clearly that Open Innovation is vitally important to their future. The document highlights many of the projects that Siemens is undertaking around the globe that have Open Innovation at their core. It is exceptionally impressive. Siemens have taken the concept of Open Innovation and are truly making it a reality.

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CPG Companies need to innovate to grow

CPG companies, especially those in the food sector, have been long-term investors in Innovation. The consumer is constantly looking for the next flavor, the next tasty biscuit, or the next interesting soft-drink. A new report by PriceWaterhouseCoopers and the Grocery Manufacturers Association has just been released, and highlights that, under a scenario of long-term lower net sales growth, CPG companies will need to rethink the largely defensive actions they took in 2008 and 2009 to preserve shareholder value: divesting non-core brands, conserving cash, cutting costs. To grow revenues, companies either have to raise prices or drive volume—and that’s where innovation comes in.

Innovation goes beyond technical advances. Many CPG companies are looking to innovate by reaching customers in more places—for example, by expanding their product presence in the workplace or targeting demographic groups like Generation Y through smart social media campaigns. Others are looking to tailor their products for local customer tastes in emerging markets.
Understanding customer priorities is central to innovation. Consumers in the United States are buying more carefully, buying different pack sizes, taking advantage of volume discounts, and trading down to brands with a different value proposition. Diamond Foods CFO Steve Neil explains that one key to innovation is a willingness to approach an old problem with a new perspective: “We have been successful at bringing product innovation to categories that historically have not been very innovative, and that has differentiated us,” he says. For example, “We work with our retailers to help them position their private label. We want them to be able to offer the bulk big-value proposition, since we are not going to price at parity with them.” Helping retailers help themselves is just one way that CPG companies can bring a different mindset to their business.

Suppliers are also racing to gain a foothold in emerging markets like China, Russia, Brazil, India and Southeast Asia, according to the report.

It was compiled from interviews with senior leadership of GMA members, publicly reported company financial data, government statistics, analyst reports and other published material on 152 companies in the food, beverage and consumer products sector.

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You must watch Hans Rosling!

If you have fifteen minutes, please watch this video. Even if you don’t, you need to watch it anyway. Make the time!

Not only is it an eye opener about the rise and rise of India and China as economies, Hans’ presentation is unbelievably stimulating. Forget the tie and suit PowerPoint presentation – I wish every talk I went to (and gave) was just like this one.

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Ideas on Smartgrid, anyone?

Certainly interesting to see GE joining the crowdsourcing challenge community.

GE announced  a $200 million open innovation challenge that seeks breakthrough ideas to create a smarter, cleaner, more efficient electric grid, and accelerate the adoption of more efficient grid technologies. GE Chairman and CEO Jeff Immelt unveiled the challenge, the “GE ecomagination Challenge: Powering the Grid.”.

The global challenge invites technologists, entrepreneurs and start-ups to share their best ideas and come together to take on one of the world’s toughest challenges – building the next-generation power grid to meet the needs of the 21st century. The challenge is one of the largest ever and is open at www.ecomagination.com/challenge.

What is significantly interesting is that GE did this in partnership with a bunch of venture capital companies. Not sure if I have seen this before. The Challenge was launched in collaboration with venture capital firms Emerald Technology Ventures, Foundation Capital, Kleiner Perkins Caufield & Byer and RockPort Capital, and Chris Anderson, Editor-in-Chief, Wired magazine. So if the ideas are relevant, there is significant funding there from the VC community to power (no pun intended) them ahead.

An interesting twist! I wonder who owns the IP?

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Excellent series of podcasts on Open Innovation

There are an excellent series of podcasts produced on EnterpriseLeadership.org. I am bringing links to these here.

Dr. Joel West, Academician and Author, Talks about the Open Innovation Paradigm for Technology Development In this podcast, Dr. West explores what powers the concept of open innovation and how it differs from traditional innovation efforts, such as research and development.

Tom DeGarmo, a principal at PricewaterhouseCoopers, Makes a Case for Open Innovation in Economic Downturn DeGarmo provides insight from his research experience with open innovation, gives examples of open innovation communities, and gives CIOs and CTOs several takeways for using technology to carry out open innovation initiatives.

Steve Shapiro, InnoCentive’s vice president of Strategic Consulting, Talks about Using Open Innovation to Solve Tough Problems Shapiro explains the reasons for using open innovation to solve tough problems, InnoCentive’s business model for generating revenue, some of InnoCentive’s most successful challenges, the benefits of using InnoCentive, and the challenges the company faces in this economy.

How CIOs Can Reshape Their Company’s Business Model: C.K. Prahalad, Best-selling Author and Academic Prahalad provides specific examples of how senior IT executives can address new business opportunities for their companies, how new technology initiatives can drive business opportunities at the bottom of the pyramid, why companies should embrace the concept of open innovation, and what the CIO role will be like 10 years from now.

Dr. David Tennenhouse, partner at New Venture Partners, Talks about Different Approaches to Open Innovation In this podcast, Tennenhouse talks about the need for companies to turn to open innovation, the way open collaboration enhanced open innovation at Intel and other organizations, the emergence of innovation that venture capital firms are seeing, and the takeaways CIOs need to be aware of if they want to promote innovation and open innovation.

Former Air Products Research Executive Talks about Establishing Successful Corporate Innovation Programs Why are some major companies good at driving corporate innovation in technology? For some answers, Enterpriseleadership.org turned to Dr. Ron Pierantozzi, who built his entire career on driving corporate innovation in a technology-related company and doing research in this area.

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Innovation 2010 – from BCG – now available

The Boston Consulting Group has recently released their seventh annual global survey of senior executives on their innovation practices. It covers the full suite of activities in turning ideas into financial returns, including such issues as portfolio and life-cycle management, organisational alignment, and demands on leaders. It discussed what works and what doesn’t and the actions companies are taking to make innovation happen. Further, the report offers pragmatic advice for individuals who want to make a difference in their organisation.

Key findings include:

  • Companies have recommitted to pursuing innovation in 2010, pushing it to the top of their priority list, planning to boost their innovation spending. Seventy-two percent of respondents said their company considers it a top-three priority, versus 64 percent in 2009. Sixty one percent of respondents (versus 58 percent in 2008) said their company plans to boost spending
  • A new world order in innovation is taking hold, one in which rapidly developing economies, led by China, India and Brazil, will increasingly assume more prominent positions
  • Companies’ satisfaction with their return on innovation spending continues to edge higher – but remains relatively low. Fifty-five percent of respondents said their company is satisfied, versus 43 percent in 2008 and 52 percent in 2009
  • Reflecting lingering caution about the economy, companies continue to ramp up their emphasis on innovation geared toward minor improvements to existing products and services, as opposed to, for example, innovation targeting the launch of new products
  • Executives identify a risk-averse corporate culture and lengthy product development times as the two biggest factors holding down the return on their innovation spending
  • The majority of companies are dissatisfied with their innovation measurement practices. Only 41 percent of respondents said their company is measuring effectively
  • For the fourth straight year, respondents ranked Apple and Google the two most innovative companies, with Apple the hands-down winner
  • Less than half of survey respondents believe that the US companies will remain the most innovative over the next five years

A full copy of the report can be obtained here.

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The Benefits of Incorporating Ideation in an Open Innovation Strategy

Ideation has recently become very popular. Many companies are looking to ideation as a tangible starting point for implementing an open innovation strategy. I continue to be involved in ideation projects. Indeed, I have now become very familiar with the WebStorm product from BrightIdea Inc, and like it a lot.

But is ideation worthwhile? Does it deliver value? It certainly appears to on the surface. However, in my experience, it all comes down to a robust strategy – not just for idea collection – but a strategy that determines how ideas will be handled, evaluated and funded in the back-end.

The road to success must include:

  • CEO sponsorship of the ideation process – the launch email should come from the CEO (or someone very high up in the organisation)
  • Strong governance – Innovation Board ideally
  • Well defined back end structure – not just a few ppt slides, but every aspect thought through
  • Dedicated funding put aside in the budget for those ideas that look to show promise
  • A structure to enable business-case development for promising ideas – this is an excellent HR opportunity for high-potential team members
  • Constant reporting back to idea generators as to progress
  • The definition of categories for the ideas as they are posted
  • Ensuring that the evaluation of the ideas is not centrally focused, but spread around to people who have no baggage in properly evaluating the idea
  • The ability to distinguish between disruptive and incremental ideas, and deciding on how each type will be managed – end to end

You might like to read an interesting paper by Cesar Castro who worked at Innocentive as VP of Business Development. It sheds some light on this interesting Innovation practice.

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IDEO and Steelcase innovate on classroom chair for the future

I am a huge fan of Ideo. I like their thinking, their philosophy, and their drive for execution.

The case that is often cited when talking of IDEO is the work they did with Shimano in developing the coasting bike. Now they have done it again. Steelcase Design Studio worked with IDEO to design a classroom chair that would provide quick and seamless transitions from one teaching mode to the next. The swivel seat allows students to easily rotate and view information being shared throughout the classroom. The open seat design enables them to change postures and positions, offering comfort in multiple settings. Its mobile base offers the ability to move back and forth from lecture mode to teambased learning, without interruption.

Steelcase research shows a variety of teaching modes occur in today’s classroom, such as group discussions, team collaboration, and lecture — all of which contribute to more effective learning and instruction. Educators are turning to multiple teaching modes to support multiple learning styles. However, while teaching methods have evolved, the classrooms themselves are not designed to support multiple activities or the transitions required to employ them efficiently.

Many traditional classrooms actually inhibit current teaching methods by creating physical and social barriers between students and teachers. They have been designed for one-way learning with tight rows of desks and chairs that inhibit movement and interaction, keeping instructors confined to the front of the room, where there are few opportunities to connect with students. Students are confined to chairs that are secured to the floor or are difficult to move, forcing them to struggle to adjust to see the instructor, fellow students or content displays.

“Students today expect a more active learning environment that supports co-learning and group discussion, similar to their everyday interactions; but the classroom has remained largely unchanged for decades,” said Sean Corcorran, director of product development and marketing for Steelcase Education Solutions. “

The node classroom chair provides key features like its swivel seat to maintain open sightlines, casters for mobility and quick mode change, backpack storage and a large adjustable worksurface that supports laptops, textbooks and notebooks.”

My only question is: if this is a chair for the classroom of the future, in the future, do we need classrooms at all?

Classroom for the future

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New Survey on Innovation from National Science Foundation

Companies located in the United States reported worldwide sales of $11 trillion in calendar year 2008 and spent $330 billion on research and development (R&D). Nearly $234 billion of the R&D expense was for R&D conducted in company facilities located in the United States. This is according to new figures from the National Science Foundation’s first ever Business R&D and Innovation Survey (BRDIS) developed jointly with the U.S. Census Bureau.

The new survey results from a 2004 recommendation to redesign NSF’s previous industry R&D audit instrument called the Survey of Industrial Research and Development. The National Academies’ Committee on National Statistics made the recommendation to cope with dramatic, fast-moving changes in the way R&D has been conducted during the last 50 years.

Conducted as a full-scale pilot, the BRDIS replaces the previous survey, which had been carried out every year since 1953. “Our world has changed a lot since 1953 and so has the way R&D is conducted,” said Arden Bement, director of the National Science Foundation. “This new survey addresses those changes.”

According to initial BRDIS survey results, companies with R&D activity reported that 68 percent of their worldwide sales came from domestic business operations. The pharmaceuticals and medicines industry reported that 67 percent of their worldwide sales came from domestic operations.

Other industries reported similarly high domestic-to-worldwide sales ratios. Data from scientific R&D services industries revealed that 85 percent of their sales came from domestic operations; computer system design and related services reported 79 percent; aerospace products and parts reported 74 percent; motor vehicles, trailers, and parts reported 62 percent; software publishers reported 58 percent and semiconductor and electronic components reported 53 percent.

In other statistics on sales, BRDIS survey results found that worldwide R&D expense and worldwide R&D costs funded by companies with 5-499 employees accounted for $1 trillion of the total worldwide sales. These companies had worldwide R&D expenses of $64 billion, or 19 percent, of the total expenses for R&D worldwide. Small businesses also performed $63 billion worth of business R&D in the United States and $5 billion abroad. They paid others $11 billion to perform R&D.

The data was taken from a representative sample of about 40,000 U.S.-owned businesses and U.S. affiliates of majority-owning companies located outside the United States that are carrying out research and development activities. Surveys were mailed to companies in January 2009.

Data from the survey can be found on NSF’s website. These data are preliminary; final statistics from the pilot will be available in early 2011. Two additional reports scheduled for release in 2010 will present preliminary 2008 statistics on worldwide and domestic employment, including R&D employment and innovation, respectively.

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The Next Generation is unprepared for Globalization

Today’s university students are extremely concerned with issues of globalization and sustainability, but only four out of 10 believe their education has prepared them to address these issues, according to a new IBM study designed to gauge the attitudes and opinions of the next-generation global workforce and business leaders.

This survey — which asked university students the same questions posed to global business leaders in IBM’s 2010 Global CEO Study — finds that both students and CEOs believe creativity is the most important emerging competency of future leaders; and reveals clear confidence about the ability of information technologies to address looming issues in business or society.

Conducted through IBM’s Institute for Business Value, the Study, “Inheriting a Complex World: Future Leaders Envision Sharing the Planet,” reflects the consolidated view of more than 3,600 students in more than 40 countries.

The study reveals a discerning and decidedly optimistic new ethos — based on an integrated view of globalization, sustainability and belief in technology as a path to solutions to emerging and existing problems. Almost 50 percent of students said that organizations should optimize their operations by globalizing, rather than localizing, to meet their strategic objectives.

At the same time, these students describe a gap in this generation’s training to cope with issues that will arise in an increasingly interconnected and complex world, but a strong belief that information technologies can bridge the gap.

Within four years, this “Millennial generation” will make up half of the global workforce. Despite the economic environment and the challenges students may face entering the current job market, the findings from this study were characterized by an unmistakably optimistic outlook about what’s ahead – and their capacity to affect change in the world they will inherit.

Students surveyed indicated that they will lean more heavily on data analysis — over gut instinct or existing “best practices” — to reach their strategic and operational goals as business leaders in their own right. And as fact-based decisions begin to prevail, they may need to pioneer an entirely new management style — one that continually enriches personal experience and education with new sources of insight based on a new ability deal with the explosion of real-time information.

The study revealed broad-based confidence that increased access to information, analysis, and the resulting insight can reduce uncertainty about the future.

Clearly, the students’ experience regarding globalization is different.  Growing up more connected globally, students see the shocks and threats, but are more prone to view globalization as an opportunity to solve increasingly global problems. They are strongly committed to a global view of shared responsibility for both environmental issues and societal prosperity.

Given students’ concerns about globalization and sustainability, the Study found a gap in educational experiences, as well as business expectations. Asked how well their education has prepared them in a number of areas, only four out of 10 students believe their education has prepared them well to address these issues.

In China, 76 percent of students value global thinking as a top leadership quality, more than students anywhere else. Yet, only 38 percent of students in China believe their education has prepared them for global citizenship, which is lower than students in any other region.

Only 17 percent of students in Japan, less than any other region, believe their education has prepared them well to benefit from the growth of emerging markets.

Understanding these and other sharp differences emerging by geography is increasingly important as economies and societies become more closely linked. Students will confront these differences as they increasingly become the future leaders of business and organizations.

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Collaborative Innovation in the packaging industry

Open Innovation can be be found everywhere.

DuPont has announced the winners in the 22nd DuPont Awards for Packaging Innovation, including the first fully compostable snack bag from Frito Lay and new PET bottles from Coca Cola that incorporate plant-based renewable polymer.

“These winners demonstrate that collaborative innovation has no boundaries. It crosses disciplines, markets and geographies,” said William J. Harvey, president — DuPont Packaging & Industrial Polymers. “The collective ingenuity of these business partnerships has yielded innovative new solutions that address pressing consumer needs.”

DuPont sponsors this long-running awards program to recognize innovation, provide learnings to the industry and highlight the importance of collaboration among value chain participants.

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Open Innovation and TSMC

Do you know who TSMC is? I had the great pleasure about two years ago of visiting TSMC and speaking to some of their management. TSMC is the world’s largest dedicated semiconductor foundry. Its corporate headquarters are in Hsinchu, Taiwan.

Today, TSMC announced that it is extending its already hugely successful Open Innovation platform. TSMC originally launched the Open Innovation Platform in 2008 as an industry-wide design enablement initiative. To date, the Open Innovation platform has accelerated time-to-market, improved return on design investment and reduced design infrastructure duplication. It includes a set of interoperable ecosystem interfaces, collaborative components and design flows that efficiently empower innovation throughout the supply chain thereby enabling creation and sharing of newly-created revenue and profitability.

The Open Innovation Platform’s Alliance programs collaborate with EDA, IP, software IP, systems software and design services partners. The objectives are to deliver accelerated system-level design, reduced system design cost, a faster system-to-IC implementation design cycle, and faster time-to-market.

“The design ecosystem must move beyond its current bounds and embrace the systems- level challenges that are at the heart of every design consideration. The Open Innovation Platform began setting the standard for ecosystem collaboration two years ago. TSMC continues to answer the market’s call and will build that same collaborative spirit on a system-level basis,” explained S.T. Juang, senior director, Design Infrastructure Marketing at TSMC.

The Open Innovation Platform’s global Ecosystem Alliance programs have grown to include 30 EDA partners, 38 IP partners, 23 Design Center Alliance (DCA) partners, and 9 Value Chain Aggregator (VCA) partners. All partners participate in one or more of the Open Innovation Platform collaboration programs. TSMC also begins to work collaboratively with industry organizations, such as IPL Alliance and Si2, to promote the interoperability standards based on TSMC interoperable EDA formats.

“TSMC’s Open Innovation Platform delivers comprehensive and innovative design technology services that remove advanced technology adoption barriers. It helps lower design costs and improves time-to-market,” said Dr Fu-Chieh Hsu, Vice President of Design Technology Platform and Deputy Head of Research & Development. “The Open Innovation Platform will now begin addressing system-level design’s cost and complexity and enable packaging of entire electronic systems onto multi-chip packages.”

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Internet Trends from Morgan Stanley

There is a great set of statistics from Morgan Stanley on Internet trends. It was presented at a summit in New York on June 7, 2010 by Mary Meeker.

Covers stats on the mobile Internet, innovation, online advertising, online commerce, communications, cloud computing, technology and what we could expect next from technology.

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OECD 2010 Innovation Policy Released

The OECD has recently released their 2010 Innovation Policy, together with a number of related documents on Innovation – all of them are really worth reading.

I am providing you the following:

  1. OECD key findings and Policy Message – excellent ppt deck
  2. OECD key findings – document
  3. OECD publication – Measuring Innovation – well worth reading
  4. OECD 2010 Innovation Executive Summary

All of these are a “must read”.

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Insights – IBM 2010 Global CEO Study

IBM Has recently released its 2010 Global CEO Study. An excellent document that should be read by all, as it summarizes what is on the minds of CEOs around the globe, and, for those organizations that are looking to be more customer-centric (and that has to be every organization) understanding what the customer is thinking about is paramount.

Highlights of the executive summary are below, but I have also developed a PowerPoint summary of the document that I prepared as bedtime reading for all of us.

Today’s complexity is only expected to rise, and more than half of CEOs doubt their ability to manage it. Seventy-nine percent of CEOs anticipate even greater complexity ahead. However, one set of organizations — we call them “Standouts” — has turned increased complexity into financial advantage over the past five years.

Creativity is the most important leadership quality, according to CEOs. Standouts practice and encourage experimentation and innovation throughout their organizations. Creative leaders expect to make deeper business model changes to realize their strategies. To succeed, they take more calculated risks, find new ideas, and keep innovating in how they lead and communicate.

The most successful organizations co-create products and services with customers, and integrate customers into core processes. They are adopting new channels to engage and stay in tune with customers. By drawing more insight from the available data, successful CEOs make customer intimacy their number-one priority.

Better performers manage complexity on behalf of their organizations, customers and partners. They do so by simplifying operations and products, and increasing dexterity to change the way they work, access resources and enter markets around the world. Compared to other CEOs, dexterous leaders expect 20 percent more future revenue to come from new sources.

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Can we mix Rivalry and Innovation? McKinsey says we can.

In a world full of talk about collaboration, why would we consider rivalry? Interesting thought. McKinsey have just released a document around innovation and rivalry that is worth reading.

The notion is that we can learn from the past – in this instance, the use of rivalry. Indeed, McKinsey argues that rivalry does not preclude collaboration, but we should try and integrate rivalry and collaboration. Three principles are discussed:

  1. Forming Teams: competing teams are set up from different divisions, including a diverse array of experts, taking different approaches ot the same problem.
  2. Appreciating differences: The various solutions should be held up next to one another, with the opportunity for ideas from one to be integrated into the other.
  3. Conducting “market tests”: this involves bringing the solutions to an internal jury or group of customers to let them weigh and contrast the different solutions.

The article continues with a case study on GE, and how competition and collaboration has been used successfully to stimulate innovation in GE without disrupting a culture of collaboration.

In an era where collaboration is the catch cry, it is interesting to read and contemplate a hybrid model, especially one that has been pout in practice successfully.

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Obama offers $1m in prize money for Innovation

The Obama administration is offering up to $1 million in prize money to entrepreneurs that can come up with innovative ways to commercialize new technology.

The U.S. Department of Commerce Office of Innovation & Entrepreneurship’s i6 Challenge is offering the prize money to six winners who invent what judges think are the most innovative ideas to drive technology commercialization in their respective regions, according to a White House blog post attributed to Secretary of Commerce Gary Locke.

The challenge is part of Obama’s Strategy for American Innovation, which calls on government agencies to use prizes, challenges, and awards to help create new technologies that will make American industry more competitive globally.

“How well America moves ideas out of the research lab and into the marketplace will help determine whether we remain the most competitive and vibrant economy in the world,” Locke said in the post. “And we want to hear the best ideas from entrepreneurs, investors, universities, foundations, and non-profits across America.”

Entrepreneurs have up to July 15 to submit an application, and there will be a conference call on May 17 to provide more information about the challenge. The EDA Web site also has information about the award program.

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Steve Jobs – taking customer centricity to a new level

Lots of companies talk about customer centricity. And many companies use multiple mechanisms to attempt to tap into the customer’s brain and way of thinking. One of the best examples is Procter and Gamble. They use a range of processes to understand the customer by watching, listening and observing their customers’ behavior.

Steve Jobs does it differently. Steve Jobs has, I believe, the unique gift of being able to see into the future – to predict what the customer will want 2-3 years out. And of course, what is uncanny about his ability is that, if he asked the customer today what they wanted, the customer would not be able to articulate it. Would anyone have asked Apple to create a device that would revolutionize the music industry? No way. Would a customer have been able to describe the iPhone interface for Apple to build? No way.

I am a firm believer that a very very deep understanding of customer behavior is a necessary condition for the success of any business. We are fortunate to live in the same era as Steve Jobs, who can, I believe, project the customer’s expectations into the future in a way no one else can do. And that is significantly amazing.

There is a great article on Steve in the magazine Seeds of Success. It’s worth a read.

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Five forces reshaping the global economy – from McKinsey

The core drivers of globalization are alive and well, but executives are still grappling with how to seize the opportunities of an interlinked world economy.

In this sixth annual survey asking executives about the forces shaping the world economy, there is little change in how respondents view the importance of global trends compared with previous years—either for business in general or for their own companies’ profits. Clearly, the financial crisis and economic downturn have not shaken these key trends. Continued faith in the positive effects of globalization combined with a move away from short-term planning likely reflects rebounding optimism about global economic prospects and is consistent with the findings of other McKinsey surveys on the economy.

Read the complete report.

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Models of Innovation

I really like the work of Professor Mohan Sawhney. He is the author of the book The Global Brain. It is one of the few books that provides concrete models of innovation, powered by collaboration.

It is interesting to see this work quoted in this article. Worth reading.

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Great new book – Seizing the White Space: Business Model Innovation for Growth and Renewal

Kodak invents digital photography in 1975 but doesn’t successfully capitalize on its invention for decades. Xerox famously devises the mouse, the laser printer, and the graphical user interface but fails to commercialize any of them. The $2 billion Digital Equipment Corp. spends developing a personal computer turns out to be too little, too late.

What makes opportunities like these so difficult to grasp is that, so often, they require companies to move far beyond their core into uncharted territory — into their white space. That’s a scary place, one where many companies’ experience is (as one CEO put it) “unblemished by success.” But if the danger is all too obvious, its causes are not. The white space is hard to navigate not because it’s uncharted but because so many companies try to go there with the wrong map, the one they’re currently using — their existing business model.

And who can blame them? Every successful company is already fulfilling a real customer job with an effective business model. The problem is that few organizations can explicitly articulate what that model is. Day to day, they go along guided by implicit rules of thumb, metrics, incentives, and the odd success story. But without an explicit understanding of their business model — the premise behind its development, the way its various parts work together, its strengths and weaknesses when in pursuit of new growth — they don’t know whether they can use it to deliver on a new customer opportunity or if that opportunity is a move into their white space requiring a new model.

Seizing the White Space offers the path to that explicit understanding, starting with an eminently practical business model framework. It identifies the four fundamental building blocks that make your business model work: the customer value proposition that fulfills an important job a real customer needs to do in a better way than current alternatives do; the profit formula that lays out how your company makes money delivering the value proposition; the key resources that value proposition requires; and the key processes needed to deliver it.

A series of in-depth case studies then explores the circumstances when a new business model might be needed — to fulfill unmet customer jobs in your current market, to serve entirely new customers in new markets, or to respond to tectonic shifts in market demand, government policy, and technological capabilities that transform entire industries. A detailed discussion follows that lays out a structured process for designing a new business model and developing it into profitable and thriving enterprise, while investigating the vexing and sometimes paradoxical managerial challenges that have commonly thwarted unguided forays into the unknown for so many companies like Kodak, Xerox, and DEC.

With this book, you can turn business model innovation into a managed process and a more predictable discipline. To play a new game, on a new field, you need a new game plan. Seizing the White Space gives you a language and framework for understanding both the core space of your existing enterprise and the white space you hope to seize. Think of this as your playbook for conquering the unknown.

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Accelerating Innovation through Effective Supplier Collaboration

Exceptionally interesting document on the value of collaboration between an organization and its suppliers, resulting in co-creation. This surely has to be the way of the future. Nothing gets me more stressed than when I hear the word “vendor”. Its is a word that should be banned from our vocabulary. It certainly puts up the barriers, which is totally counter to Open Innovation thinking.

This document finds that accelerating innovation through effective supplier collaboration requires both an overall company wide innovation strategy and an integrated supply innovation strategy. An open innovation strategy requires executive leadership and culture change. This innovation strategy needs to be communicated internally/externally. Management must commit resources and processes (e.g. innovation portal and third party providers) to support the
strategy. Further, the innovation strategy must be linked to overall firm performance and assessed by objective metrics. Definition of innovation and establishment of innovation metrics requires a cross-functional consensus and alignment from top to bottom of the organization.

The innovation metrics with weightings based on innovation needs should be linked to company and supplier performance evaluation. Both hard and soft metrics need to be developed. Risk management strategies enhance the speed and likelihood of successful commercialization of new products. Risk must be defined as a combination of uncertain events and outcomes for both buyer and supplier during any new product development stage gate process. The companies should establish alternative plans if required innovation does not pass the stage gate risk/reward evaluation.

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The Value of Business Model Innovation – BCG Report

Interesting report on Business Model Innovation from BCG.

Read the report here.

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Apple Tops Bloomberg BusinessWeek’s Sixth Annual Ranking of The 50 Most Innovative Companies

NEW YORK, Apr 15, 2010 (BUSINESS WIRE) — For the sixth consecutive year, Apple has topped the list of Bloomberg BusinessWeek’s annual special report, “The 50 Most Innovative Companies,” produced in collaboration with partner Boston Consulting Group. Google, Microsoft, IBM, and Toyota Motor round out the top five.

For the first time since the rankings began in 2005, the majority of corporations in the Top 25 are based outside the U.S. and 15 of the Top 50 companies are Asian–up from just five in 2006. China’s rise is biggest. A year ago its only representative was PC maker Lenovo Group, at No. 56. This year Greater China is tied with Asia’s postwar powerhouse, Japan, thanks to showings by BYD (8), Haier Electronics (27), Lenovo (29), China Mobile (44), and Taiwan-based HTC (47). Just ahead of General Electric in seventh and eighth places are newcomers LG Electronics of South Korea and BYD, with Korea’s Hyundai Motor claiming a spot at No. 22.

Boston Consulting Group’s annual survey of top executives, which provides the raw data for Bloomberg BusinessWeek’s list, suggests that the crucial factor of the drive of innovation is a mindset–a belief that innovation matters. In China, 95% of executives said innovation was the key to economic growth, while 90% and 89% of respondents in South America and India, respectively, agreed. In the U.S., only 72% said innovation was important. Similarly, 88% of executives in China said they were raising their innovation budgets this year, followed by 82% in South America and 73% in India. The rate fell to 48% in the U.S., ahead of only Japan, where just 34% of executives said their companies planned to increase innovation spending. All of which suggests the U.S. may not be dominating the list again soon.

Bloomberg BusinessWeek’s “The 50 Most Innovative Companies” special report is based on data from Boston Consulting Group (BCG). Last December, the consultancy e-mailed a 21-question poll to senior executives around the globe. The 1,590 respondents, who answered anonymously, were asked to name the most innovative companies from outside their own industry in 2009. BCG then factored in the financial performance of the top vote-getters. The final lists weights the survey results 80%, stock returns 10%, and three year revenue and margin growth 5% each.

Bloomberg BusinessWeek’s special report, “The 50 Most Innovative Companies,” is featured in the April 26th issue, on newsstands April 16th. BusinessWeek.com will also feature expanded content, including an interactive table of the full ranking and methodology, at http://www.businessweek.com/go/innovativecompanies.

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INSEAD Global Innovation Index released

INSEAD, the leading international business school, has announced the findings of its 2009-2010 Global Innovation Index (GII), a study which the school has jointly published with the Confederation of Indian Industry (CII) for the past three years. The GII evaluates the progress of innovation readiness in countries, highlighting the obstacles that prevent governments, businesses, and individuals from fully capturing the benefits of innovation.

“This year’s Report underlines the importance of innovation in country competitiveness and growth particularly at a time when the global economy is recovering from one of the worst financial crises it has ever seen,” said Soumitra Dutta, Roland Berger Professor of Business and Technology at INSEAD and primary author of the study. “The results confirm the crucial need for countries to focus on directed pro-innovation policies to jumpstart growth in the medium term and lead to development in the long term.”

‘The Global Innovation Index’, featured in the Report, examines how countries benefit from innovation through the use of enablers that stimulate innovation and their ensuing outputs. There are five enabling parameters which include: ‘Institutions’, ‘‘Human Capacity’, ‘General and ICT Infrastructure’, ‘Market Sophistication’ and ‘Business Sophistication’. The two output parameters – ‘Scientific Outputs’ and ‘Creative Outputs and Well-Being’ – provide evidence of the results of innovation within the economy.

Iceland topped this year’s GII ranking despite the difficult economic situation it has faced over the last two years. Sweden and Hong Kong follow in the second and third positions, respectively. Several of the most innovative countries from last year’s Report, including the U.S. (eleven), U.K. (fourteen) and Germany (sixteen) have fallen in the ranks.

The top ten countries in the overall 2009-2010 GII ranking include:

1. Iceland
2. Sweden
3. Hong Kong, China
4. Switzerland
5. Denmark
6. Finland
7. Singapore
8. Netherlands
9. New Zealand
10. Norway

Similar to the 2008-2009 Report, European economies performed particularly well, including the Nordic ones – Sweden, Denmark, Finland and Norway – which all ranked in the top 10 with Iceland. Some of the Eastern European countries such as Slovenia (26), Czech Republic (27) and Estonia (29) also performed well in this year’s rankings. Israel and the United Arab Emirates placed within the top 25 countries, followed closely by Kuwait (33) and Qatar (35).

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The Daimler Smart Car – an Open Innovation Success Story

Daimler’s “Style Your Smart” open innovation contest yielded 50,000 ideas in a six week period as 8,000 participants from more than 100 countries used their creativity to help the car manufacturer innovate.

“Style Your Smart” was open for around six weeks and participants were invited to use the company’s online toolkit to create, or they could submit their own designs. The take up was phenomenal. Within 10 days of launch 10,000 unique ideas had been submitted.

During the competition contestants exchanged opinions and evaluated each other’s ideas which resulted in more than 600,000 online ratings.

Cash Prizes

The submissions were adjudicated by an expert panel of judges who based their verdict on these ratings. The overall winner with the most creative design was Tamir Shefer from Jaffa, Israel who received prize money totaling €1,500 (approx USD $2,000). Some participants were also awarded cash prizes for being the most active on the website and three other designs picked up prize money.

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Xerox establishes Open Innovation R&D Hub in India

It is interesting to see the real spread of Open Innovation across the globe. The notion of co-creation has to be the way forward, especially as organizations such as Xerox address new markets with new solutions. The old models just will not work in these environments.

Xerox has announced it will open an R&D hub in India with a very Open Innovation flavour.

Here is a quote from an article in the Economic Times:

….We are not looking to hire lots of researchers but will collaborate with local universities, start-up companies, governments and businesses. It will be based on open innovation rather than closed innovation (or, entirely in-house). In an open innovation model you co-create and co-innovate with partners in industry, universities and government.

…..The Chennai innovation hub will be a centre of connectors. For every person we hire, we will partner at least 50 or more people.

Every person will be working on at least five projects and with each project, there will be at least 10 people and hence, it has a big magnifying effect. There will be a large number of innovators working. It will eventually be larger than the European center of Xerox.

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The 10 Top Reasons Why The 10 Top Reasons Don’t Really Matter

You have to love this……… from The Heart of Innovation blog.

10. Analysis paralysis.
9. Reason is highly over-rated.
8. If you need more data to prove your point, you’ll never have enough data to prove your point.
7. You already know what to do.
6. You’re going to follow your gut, anyway.
5. “Not everything that counts can be counted; and not everything that can be counted counts.” (Einstein)
4. By the time you put your business case together, the market has passed you by.
3. “Conclusions arrived at through reasoning have very little or no influence in altering the course of our lives.” (Carlos Casteneda)
2. The scientific method came to Rene Descartes in a dream!
1. “Time flies like an arrow. Fruit flies like a banana.” (Groucho)

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Breaking down the Silos – Open Innovation

There have recently been two excellent, short articles in BusinessWeek about how we need to “break down the barriers” internally and externally within, and between, organisations. The first is from Saul Kaplan, and he gives some excellent examples from both the private and public sector. Read here.. The second article is entitled “Smashing Silos” by Evan Rosen. Read it here.

It all comes back to the paradigm that connectedness and sharing, in itself, will accelerate innovation. I have been a proponent of this for a long time, but it takes articles such as these to reinforce the concept. Why is it that is it necessary for something to be repeated 100 times before it sinks in?

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Is Mush actually mush – or is he right?

Have you seen Jaron Lanier’s article in the Wall Street Journal on January 8th? What do you think of his viewpoint? Do you agree? I have underlined the most controversial bit…….

Here’s one problem with digital collectivism: We shouldn’t want the whole world to take on the quality of having been designed by a committee. When you have everyone collaborate on everything, you generate a dull, average outcome in all things. You don’t get innovation.

If you want to foster creativity and excellence, you have to introduce some boundaries. Teams need some privacy from one another to develop unique approaches to any kind of competition. Scientists need some time in private before publication to get their results in order. Making everything open all the time creates what I call a global mush.

There’s a dominant dogma in the online culture of the moment that collectives make the best stuff, but it hasn’t proven to be true. The most sophisticated, influential and lucrative examples of computer code—like the page-rank algorithms in the top search engines or Adobe’s Flash— always turn out to be the results of proprietary development. Indeed, the adored iPhone came out of what many regard as the most closed, tyrannically managed software-development shop on Earth.

Actually, Silicon Valley is remarkably good at not making collectivization mistakes when our own fortunes are at stake. If you suggested that, say, Google, Apple and Microsoft should be merged so that all their engineers would be aggregated into a giant wiki-like project—well you’d be laughed out of Silicon Valley so fast you wouldn’t have time to tweet about it. Same would happen if you suggested to one of the big venture-capital firms that all the start-ups they are funding should be merged into a single collective operation.

But this is exactly the kind of mistake that’s happening with some of the most influential projects in our culture, and ultimately in our economy.

Digital collectivism might seem participatory and democratic, but it’s painting us into a corner from which we will have to concoct an awkward escape. It is strange to me that this isn’t more obvious to many of my Silicon Valley colleagues.

The U.S. made a fateful decision in the late 20th century to routinely cede manufacturing and other physical-world labors to foreign competitors so that we could focus more on lucrative, comfortable intellectual activities like design, entertainment and the creation of other types of intellectual property. That formulation still works for certain products that remain within a system of proprietary control, like Apple’s iPhone.

Unfortunately, we were also making another decision at the same time: that the very idea of intellectual property impedes information flow and sharing. Over the last decade, many of us cheered as a lot of software, music and news became free, but we were shooting ourselves in the collective feet.

On the one hand we want to avoid physical work and instead benefit from intellectual property. On the other hand, we’re undermining intellectual property so that information can roam around for nothing, or more precisely as bait for advertisements. That’s a formula that leaves no way for our nation to earn a living in the long term.

The “open” paradigm rests on the assumption that the way to get ahead is to give away your brain’s work—your music, writing, computer code and so on—and earn kudos instead of money. You are then supposedly compensated because your occasional dollop of online recognition will help you get some kind of less cerebral work that can earn money. For instance, maybe you can sell custom branded T-shirts.

We’re well over a decade into this utopia of demonetized sharing and almost everyone who does the kind of work that has been collectivized online is getting poorer. There are only a tiny handful of writers or musicians who actually make a living in the new utopia, for instance. Almost everyone else is becoming more like a peasant every day.

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Managing IP and Open Innovation

One of the biggest challenges in an Open Innovation environment is the management of intellectual property. Indeed, IP management is a real inhibitor to companies implementing OI – the IP challenges seem somewhat overwhelming. Indeed, I will shortly be teaching IP Management with a specific innovation focus to students at the University of Sydney.

A recently published article address some if these issues. It says that the key is:

  • to understand the benefits of embracing these models of IP development;
  • to have executives and board members agree on and commit to a clear business plan with respect to same; and
  • to have the right people in place to execute the plan.

Different models of collaborative IP development are
used today, including:

  • participation in R&D consortia;
  • collaboration between different companies for a
  • variety of strategic reasons;
  • collaboration with universities and other public
  • research institutions; and
  • the ‘open science’ model, where IP rights become
  • superfluous as access is generalised and data is
  • shared with little or no limitations.

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The Case for Backshoring – Returning to the Fold

For years, the NCR Corporation simply followed the pack. Like many other large U.S. manufacturing companies, in the past couple of decades the maker of automated teller machines (ATMs) relied heavily on offshoring and outsourcing to trim factory costs. By making much of its equipment in cheaper offshore locations in the Asia/Pacific region, and by hiring Singapore’s Flextronics International Ltd. to make other equipment, NCR could slash hundreds of millions of dollars in plant expenses and be reasonably certain that its ATMs met quality standards.

But recently, NCR has rejected this strategy — at least to a degree. In 2009, the company decided to move its most sophisticated lines of ATMs from its plants in China and India, and from a Flextronics facility in South Carolina, and instead manufacture the machines in Columbus, Ga., not far from the NCR innovation center, where its new technology is on display. The reason: The company was concerned that outsourcing distanced its designers, engineers, IT experts, and customers from the manufacturing of the equipment, creating a set of silos that potentially hindered the company’s ability to turn out new models with new features fast enough to satisfy its client banks. “I think you’ll see more of this occurring,” says Peter Dorsman, NCR’s senior vice president in charge of global operations, who says he has been contacted by dozens of U.S. companies studying whether they should make similar moves. “You’ll see a lot more people returning manufacturing to America.” Read entire report.

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New Accenture Study on Globalization released at World Economic Forum

A combination of intensified globalization brought on by recent turbulence in the global economy and the acceleration of new information technologies is driving companies and governments to look for new business models to meet increased demands for efficiency, competitiveness, short-term agility and long-term growth. This is one of the key findings of a study released today by Accenture at the World Economic Forum.

According to the study (download here), based on a survey of more than 400 business leaders globally as well as a year-long field analysis of business and technology developments, such maturing technologies as cloud computing, mobile communications and collaborative computing will offer companies the “hidden wiring” required to compete in a multi-polar world, one in which emerging markets are challenging the traditional strengths of more mature economies.

Throughout the global economic crisis, emerging markets have demonstrated resiliency and weathered the storm as well as — if not better than — more mature markets due to strong local growth, highly competitive cost structures and an ability to serve customers at low price points. This challenge has not been lost on the executives polled by Accenture: 88 percent conceded that their companies have not done enough to develop effective strategic responses to the new disruptive business environment.

When asked which factors will have the most significant impact on their business over the next five years, 41 percent of the executives surveyed said it would be the growth in size and reach of new players in emerging markets, followed by an increase in IT capabilities (35 percent) and slower economic growth in developed markets (27 percent). Respondents also said that the most significant challenges raised by future developments in information technology would be managing complex networks of suppliers, business partners and customers (37 percent), followed by protecting proprietary information and data (28 percent) and competition for technologically and analytically skilled employees (27 percent).

The study, “From Global Connection to Global Orchestration: Future Business Models For High Performance Where Technology and the Multi-polar World Meet,” finds that in the aftermath of recession, new economic value will be created through a combination of the effective use of new technologies and strategies to address the dynamics of globalization. Business leaders surveyed by Accenture highlighted the growth in size and reach of new market players from emerging markets and the increased capabilities that new information technologies provide as the two developments that will have the most significant impact on their business over the next five years.

“Together, these forces are accelerating the need for companies to master five competitive and interdependent dimensions of business: new consumers, talent, innovation, capital, and resources,” said Mark Foster, Accenture’s group chief executive, Global Markets and Management Consulting. “Our research shows that high performers in both developed and emerging markets are looking to leverage information technology with a certainty and pace that will give them the flexibility to adapt their business models and stay ahead of the competition as new economic circumstances arise.”

According to the study, economic power shifts between companies and individuals and between national economies are becoming more common, creating greater business complexity with more people to buy from and sell to, as well as more competitors. At the same time, this complexity is fostering more ways to create economic value. Accenture has identified six market-shaping interactions that have the ability to create new economic value:

— Co-production with customers. Companies are finding more opportunities to engage with customers and suppliers in such areas as co-producing products and sourcing ideas as a part of the innovation process.

— New bridges between producers and consumers. Intermediaries are using technology to build new bridges between producers and consumers, helping companies extend the markets they serve, particularly in emerging-market economies. Nearly sixty percent of business leaders surveyed for the study said that greater consumer connectivity would have a significant or very significant impact on competition in their industries over the next five years, with the proportion even higher among business leaders from emerging markets compared with those from developed markets (68 percent compared with 56 percent)

— New forms of business-to-business (B2B) commerce. New forms of B2B activity are becoming technologically possible, advancing the promise of “e-markets” first discussed a decade ago. Hong Kong-based Li & Fung, for example, has used information technology to transform itself into a global, horizontal provider of services traditionally performed internally by retailers and wholesalers — services such as supply chain management, production and operations. This is an especially powerful trend that is helping make cost structures more variable in a volatile world.

— Consumer-to-consumer content. Technology is enabling like-minded consumers to form clusters of cooperative structures that span multiple countries and regions in order to share information, evaluate products and services and conduct purchases. Accenture’s research reveals that 57 percent of executives believe the growing bargaining power of knowledgeable consumers will significantly affect competition in their industries over the next five years. Business leaders in emerging markets are especially alert to this trend, with 67 percent expressing this view, compared with 52 percent of executives in developed markets.

— Peer-to-peer production. Individuals can form groups that provide products and services to reduce the market power of existing suppliers or to exert greater control over the way a product or service is produced or consumed. International peer-to-peer microfinance platforms are making possible new forms of lending to small entrepreneurs in high-growth economies.

— Cooperative consumption. The growth of social networking and digitization enables consumers to form clusters that boost their bargaining power. Shanghai-based Liba.com, founded in 2003, which sells everything from paint to ceiling lamps, now has 1.6 million members. Liba.com has 300,000 unique visitors a day on its website and produces approximately 30,000 transactions a month during group buying events in Beijing, Shanghai, Guangzhou and elsewhere.

According to Foster, in order to create new forms of economic value and growth, companies can take advantage of any or all of these new combinations of production, collaboration and consumption to reshape their business models ahead of the competition.

“Responding to the newly complex and competitive ecosystem will require businesses to re-evaluate the roles they have played and the sources of value that they have followed traditionally,” Foster said. “However, organizations also have a great opportunity to harness these new market forces to their advantage to optimize, extend and transform their business models.”

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Cisco Launches 2nd I-Prize Global Innovation Contest to Find Next Potential Billion-Dollar Idea -> Cisco News

Cisco Launches 2nd I-Prize Global Innovation Contest to Find Next Potential Billion-Dollar Idea -> Cisco News

SAN JOSE, Calif., Jan. 27, 2010 – Cisco today announced the launch of the second I-Prize contest, an open global innovation competition in which entrepreneurs worldwide can collaborate and submit their proposals with the potential to be Cisco’s next billion-dollar business idea. Following last year’s competition, which drew nearly 2,500 entrants, this year innovative thinkers will have access to an expanded portfolio of Cisco® collaboration solutions to build on as they share their ideas with other participants around the world. The winning team will be eligible for $250,000 in prize money.

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Organizations call for greater open innovation to advance sustainability

Announced at a CEO breakfast at the World Economic Forum in Davos, Switzerland, a number of high profile organisations – Best Buy, Creative Commons, IDEO, Mountain Equipment Co-op, Nike, nGenera, Outdoor Industry Association, salesforce.com, 2degrees, and Yahoo! – called on other corporations to join them in committing to opening up their IP to fast-track the development of innovative solutions to sustainability challenges. The 10 founding partners of GX share a commitment to the power of open innovation and collaborative networks to fuel sustainable innovation by making their patented technologies available for research and licensing.

By making private intellectual property visible and usable, the aim is to accelerate the development of green innovation. The launch of GX is the first step in a journey towards more sustainable innovation, and the more companies that post their IP the faster the journey. More information can be found at http://greenxchange.force.com/

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Is Open Innovation Over? What do you think?

Have a read of the excellent discussion going on around whether or not Open Innovation is actually “over”. Read here.

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The Year in Innovation

The Year in Innovation – from Business Week
The innovation industry took a hit this year, as executives dialed back on initiatives—and paid the price. But some encouraging trends also emerged

By Michael Arndt

In 2009 the world was no longer flat; much of it was flat broke. Deflated by slumping sales and income, companies roundly did what innovation consultants say they never should—they cut spending on research and development. The U.S. drug industry, historically one of the most lavish spenders on research and development, announced the elimination of a record 69,000 jobs this year, up 60% from 2008. At many companies, quick hits and line extensions replaced more costly, though potentially more rewarding, investments in game-changing inventions. Read complete story.

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Patent Filings in the US drop

CNN reports that the US patent Office has come out saying tht U.S. innovation slowed this year for the first time in 13 years as the recession cut into budgets, and costs to protect inventions rose.

The number of patent filings in the United States fell 2.3% in 2009 to 485,500 from 496,886 last year, according to a preliminary estimate by the U.S. Patent and Trademark Office. That makes 2009 the first year since 1996 in which businesses and inventors filed fewer patents year over year.

“That’s unfortunate because [patent filings] are a reflection of innovation,” said David Kappos, director of the Patent Office. “Innovation creates so many jobs and so much opportunity for our country. It is absolutely key to our long-term success in the global economy.”

At the same time, U.S. patents issued to inventors and businesses in foreign nations jumped 6.3% for the year. That’s a worry for Silicon Valley, which has been a global leader for decades.

Most blame the recession for the drop in U.S. filings. As a result, many companies are opting to hold off on bringing new ideas to market until the economy improves substantially.

“Our patent filings were down 25% this year, and it was a direct macroeconomic issue,” said Joe FitzGerald, deputy general counsel for tech security firm Symantec. “The overall company reduced spending, and patent filings are a very controllable expense. We might have filed four patents, but we filed three and made sure they were strategically significant.”

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Modeling a Paradigm Shift: From Producer Innovation to User and Open Collaborative Innovation

Excellent paper from Harvard on the paradigm shift from closed to open innovation. Points made include the following. Full text here.

  • When it is technologically feasible, the transition from closed producer innovation or single user innovation to open single user or open collaborative innovation is desirable in terms of social welfare and is worthy of support by policymakers.
  • Free dissemination of innovation designs is associated with the open model. Open innovation generates innovation without exclusivity or monopoly, and so should improve social welfare, other things being equal.
  • Intellectual property rights grants can be used as the basis for licenses that help keep innovation open as well as closed.
  • Policymakers should seek out and eliminate points of conflict between present intellectual property policies designed to support closed innovation that at the same time inadvertently interfere with open innovation.
  • As design costs fall, many more innovations will originate with single users.
  • Open collaborative innovation projects thrive on low communication costs.

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What is Open Innovation? – a starting point

If you are new to open innovation, have a look at the following video. The music becomes a little tedious, but it is a great place to start.

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Bangalore blooming into innovation hothouse

Great article about how Bangalore’s innovation capability is accelerating. Key points as follows:

  • Google’s Map Maker, Intel’s six-core Xeon processor, Microsoft’s search engine Bing and HP’s Dynamic Smart Cooling Technology have all been designed or have key components built in the city. IBM and Microsoft have tens of thousands of employees based in Bangalore. Cisco is developing next-gen intelligent networking technologies in the city.
  • About 60 per cent of the country’s R&D talent is based in Bangalore. Many of the nearly 700 India-based captive multinational R&D centres are located in the city. That is not counting the R&D outsourced to large Indian software companies such as Wipro Ltd and Infosys Technologies, both headquartered in the tech hub.
  • 3M, General Electric and Honeywell see a 15 to 20 per cent revenue growth in the Asia-Pacific geographies in the next three to five years
  • The swing to greater research happened a couple of years ago when Cisco set up its globalisation centre in Bangalore, making the city virtually its second headquarters outside its base in Silicon Valley. In an unprecedented move, the company then relocated its number two executive, the Dutch-born Wim Elfrink to Bangalore. Companies like Cisco and Nokia are not just shifting R&D to India, they are also shifting R&D management to India and that is the game-changer, says Navi Radjou, executive director of the Centre for India & Global Business at the Judge Business School, University of Cambridge.
  • Costs in Bangalore are still comparable to other global R&D centres such as Shanghai in China, the Ukraine and Russia. An analysis of cost per fulltime R&D employee in Bangalore and Shanghai showed Bangalore holding a 15 to 17 per cent cost advantage.

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Globalisation shapes Employees skills

From CNN

Responding to globalization of the workplace, employees worldwide are developing a new suite of cross-cultural and language skills that will equip them to prosper in a more multinational environment, according to recent findings from a global workplace survey.

The survey, by global workforce solutions leader Kelly Services (NASDAQ: KELYA) (NASDAQ: KELYB), finds that individuals across all generations believe the experience they gain in a globally oriented environment will be critical to their careers.

Gen X (aged 30-47) reports the most direct experience within a global business environment, while Gen Y (aged 18-29) is driving the trend toward globalization, making international experience central to their job selection and promotion. Although baby boomers (aged 48-65) receive less formal support and training than their younger colleagues, they still feel they can succeed in a globalized workplace.

The findings are part of the Kelly Global Workforce Index, which obtained the views of approximately 90,000 people in 33 countries across North America, Europe, and Asia Pacific.

Employees around the globe are recognizing how to thrive in a workplace with fewer international barriers, according to Kelly Services Executive Vice President and Chief Operating Officer, George Corona.

“Exposure to the international workplace is becoming the norm as more highly skilled people develop the capacity to export their talents wherever needed around the globe,” Corona says. “In this environment, the ability to work collaboratively with multinational teams is a critical requirement that we expect to become more commonplace.”

Key findings of the survey reveal that:

--  81 percent of Gen Y believe it is important to their career prospects
    that they become more globally oriented, followed by Gen X (78 percent) and
    baby boomers (71 percent).
--  69 percent of Gen X have recently worked closely with colleagues from
    a different country or culture, followed by Gen Y (67 percent) and baby
    boomers (66 percent).
--  84 percent of Gen X feel that they possess the skills to work in a
    more globally oriented workplace, followed by Gen Y (82 percent) and baby
    boomers (81 percent).
--  In deciding where to work, exposure to a global environment is
    considered 'extremely important' by 32 percent of Gen Y, 30 percent of Gen
    X, and 26 percent of baby boomers.
--  Only 35 percent of Gen Y receive formal cross-cultural or language
    training from their employers, followed by Gen X (33 percent) and baby
    boomers (27 percent).     

Although Gen X and baby boomers have more international experience, Gen Y more readily embraces that experience as a factor in determining future job choice and career progression. Gen Y also receives the bulk of employer-provided training.

“We are seeing a generation emerge that is very confident operating in a global environment. This will lead to many more transferrable skills, and a business dynamic where human capital can be deployed seamlessly to almost any location on short notice.

“Given the significant role this will play in transacting future business and attracting new talent, we expect to see many more firms devoting resources to equip staff with the language, culture, and flexibility they need to be successful in a truly global context,” Corona concludes.

For more information on the survey results, please visit www.kellyservices.com.

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Cool video on the value of ideation through to execution

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Some Really Interesting Facts on Asia and Europe

Some interesting, perhaps little-known facts provide a useful contrast between Asia and Europe and demonstrate both the present-day reality and the scope of the future opportunity:

  • GDP per capita in Asia (approximately US$15,000) is less than half the EU average, and there is a much wider standard distribution. A large population lives in poverty throughout the continent.
  • While India and China are among the fastest-growing economies in the world, the latest figures on GDP per capita are $2,800 for India and $6,000 for China. They should both still be considered developing economies.
  • The top GDP per capita countries (2008) in Asia: Singapore ($52K), Hong Kong, Japan, Taiwan, South Korea ($23K), Malaysia, Kazakhstan and Thailand ($8.5K).
  • India has 22 official languages that are as distinct and different as the 23 EU languages; half a dozen different scripts are used. English is spoken by a mere 7 percent of the people in India. However, it is possible to get deep penetration into the Indian market with five key languages.
  • There is very little content in local Asian languages on the Web, in general. Based on a survey done by Asia Online in 2007, less than 15 percent of the total content on the Web is in Asian languages. Almost 90 percent of the Asian language content is in Chinese and Japanese. There is a huge need for more local language content in Southeast Asia.
  • China now has the fastest-growing patent office in the world. The World Intellectual Property Organization (WIPO) states that China is clearly an emerging scientific and technological power.The share of Asian country-based patent filings is now in excess of 50 percent of all patents filed across the world.
  • India has more gifted and talented students in high school than the total school student population in the U.S. China has more students in science and technology college degree programs than India and the U.S. combined.
  • McKinsey & Company has identified a “Rising Asia” as a stable long-term trend that will fundamentally change consumption patterns.
  • Gartner (NYSE: IT) suggests using IT to reach the market. The research firm suggests that global companies use IT to “lighten” their Asian business model in order to address specific cultural, geographic reach, and supply chain considerations.
  • Wealthy Asians are concentrated in major cities like Shanghai, Beijing, Hong Kong, Singapore, Kuala Lumpur, Mumbai, Delhi, Seoul, Manila and Bangkok.
  • China is now the fastest-growing market for Bentley and BMW.
  • Even countries like Laos, Nepal, Pakistan, Sri Lanka, Myanmar, and Cambodia — which have very low GDP/capita — are interesting markets for cellphones and basic commodities.
  • An understanding of the critical perspectives of Buddhism, Hinduism and Confucianism can dramatically enhance communications strategies targeting most parts of Asia.
  • Google (Nasdaq: GOOG) is not dominant in key Asian markets. In Korea, it has less than 2 percent search market share; in China, about 17 percent; and in Japan, about 20 percent. Local companies dominate because of their better understanding of local content, language and customer Increase Customer Sales with Email Marketing -- Free Trial from VerticalResponse preferences. This suggests that standard U.S. approaches may not work well in many Asian markets.
  • Chinese social networking startups have produced many innovations that have led to their becoming profitable much faster than their U.S. equivalents, like MySpace and Facebook. Asian innovation is gradually making its way to the West.
  • Most of Asia has been relatively unscathed by the global financial and real estate market collapse. (source Commerce Times)

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Hyundai and its Success at Globalization

Great story from the Korea Times. When Hyundai Engineering & Construction CEO Kim Joong-kyum took office early this year, the construction market both at home and abroad was not in good shape.

The financial crisis slowed down many large-scale projects overseas, while the domestic market continued to be bogged down by a record-high number of unsold homes. Orders were shrinking with competition at its highest.

All of this meant that the pressure was on for Kim, who was responsible for steering Hyundai E&C through one of the worst economic slumps in history.

Seven months into serving as the top chief, however, Kim has put most of the uncertainties and concerns behind by posting solid records right through the downturn.

Locally, the builder started ramping up efforts to win orders for housing redevelopment projects throughout the metropolitan area and mega public undertakings scattered nationwide.

Overseas, Hyundai E&C won a $1.3-billion gas exploration contract in Saudi Arabia in March. Then, in June and July, it won orders worth $600 million and $1.7 billion, respectively, in Singapore and the United Arab Emirates. Most recently, the company added a $190-million order to build a fertilizer plant in Qatar earlier this month.

The figures added up to hand over Hyundai E&C the market’s No. 1 position again last month after six years struggling to reclaim the top spot.

And many credit Kim for helping one of the nation’s oldest builders renew its industry supremacy.

The veteran Hyundai executive’s willingness to seek transformation and differentiation is what moved the 62-year-old company forward.

Since the first day of taking office, Hyundai E&C officials say that Kim was all about overhauling decades-old systems and practices. Everything from personnel line-up and global management to internal and external communication, the new CEO wanted changed and improved.

Kim said during his inaugural speech: “Hyundai E&C has endured a countless number of hardships throughout its history, but it continued to maintain its market leadership. At this time, what we need is continuous transformation in order to become a global top leader.”

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Companies add Innovation Programs

It is very interesting to see company after company add innovation programs to their agendas. I don’t mean paying lip service to innovation – I mean really meaningful programs. We all know the success of P&G’s programs, and following them many companies have embraced “programs” around innovation – most of which have been successful.

Pitney Bowes is one such company. It believes that innovation is core to how they build the creative and financial capacity to invest in new market opportunities and new ways to deliver products and services. That’s why they’ve chosen to increase our innovation spending in this economic downturn. In 2008, Pitney Bowes generated just under US$900 million in free cash flow on $6.3 billion in sales. As it be­came clear that a recession was coming, and that it was going to be deep and potentially long, they realized they had the financial capacity to continue to invest in the business. They saw the recession as an opportunity to in­crease our innovation investment as a percentage of revenue so that we could be even better positioned to take advantage of market opportunities.

It will be fascinating to see how the return on investment of many of these programs turns out. Especially those investments made in the midst of a downturn. My guess is that they will be game-changing for most, successful for others, and will fail for a very few. Culture change, which goes hand-in-hand with innovation, is a catalyst for “turning the titanic” at any time.

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Customers by far the best source of Innovation

A new report from Grant Thornton International Ltd reveals that customers and in-house R&D teams are now the leading source of innovation for U.S. businesses, while globally customers are an organization’s best source of innovation. When asked to name the origin of the best innovation ideas, U.S. business owners named customers (37%) and in house R&D teams (37%) as their leading sources of innovations followed by heads of business units (34%) and employees (32%). Globally, 41 percent of businesses say that customers are their leading source for innovation.

“In recent history the tech boom and the creation of internet social networking sites brought innovation and entrepreneurship into every American home,” said Harris Smith, Grant Thornton LLP’s managing partner for Private Equity and the Audit practice leader of the firm’s Southern California offices. “Without entrepreneurs and innovation, America couldn’t thrive.”

Regionally the report reveals that in Asia Pacific customer focus is a particular source of innovative ideas and products with nearly half of businesses (48%) citing customers as the source of the best innovative ideas, compared with 40 percent in Western Europe and 35 percent in North America.

In addition, more than three in four businesses globally (78%) believe that the U.S. is the easiest country to create innovative products, services and business. The U.S. is the clear leader in this, with the next highest countries being China (22%), India (22%) and the U.K. (21%). Regionally, the U.S. is also seen as the leading country with 77 percent of Asian-Pacific businesses, 84 percent of North American businesses and 71 percent of European businesses saying it is the easiest country to create innovative products, services and business in.

“With the history of innovation in the U.S. spanning from the country’s earliest beginnings, it’s not hard to understand why businesses around the globe see America as the land of innovation,” said Smith.

To read the full Grant Thornton International global innovation report, Innovation: the key to future success?, or the North American, European or Asia-Pacific regional innovation reports, please go here.

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New Book on Israel’s Success in Business Innovation

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