Thursday, January 13, 2011

Business: Anyone Can Be Innovative Through Mindfulness

Sir Isacc Newton had an open mind the day an apple fell on his head; rather than writing the falling fruit as an annoyance, he contemplated why it had fallen, and proceeded to test his theories until he developed one of his 3 laws of motion
"Millions saw the apple fall, but Newton asked why." Bernard Baruch (via Just Be Spendid)

Many believe that Steve Jobs is an innovative genius and has an inherent trait that cannot be learned. This may or may not be true. But one way that we can become innovative as individuals, organizations, and as a nation is to become mindful

As you read the following blog article, please keep in mind that the purpose of this blog post is to make you aware that everyone, every company, every country can be innovative. We must just be (as my good friend says to me often) open to the universe; We must be mindful of what is occuring around us, in order to allow connections  between seemingly unrelated events, trends, needs/wants, problems /solutions, lifestyle/behavior changes to blossom into new concepts-- which can then grow into designs and applications. Eventually these seeming 'out of the ether' ideas will be labeled as overnight 'innovations'. (Kinda like how George Clooney spend decades in Hollywood, however after appearing on ER he was labeled an "overnight success")

3 Innovation Takeaways from Asia
December 29, 2010 from Harvard Business Review

Singapore-based blogger Scott Anthony shares the most important things he's learned from his work with Asian businesses

"....There are three important things I will take away from this year: The West is overly discounting Asia's growth potential.  I argued  [see wonderful article The Asian Innovation Century?] a few months ago that the innovation axis was shifting from the West to the East. Silicon Valley remains the global hot spot of innovation, and America continues to churn out innovative companies like Groupon and Bloom Energy. But Eastern companies and entrepreneurs are gaining traction. Chinese companies like BYD are well positioned to lead the electrical vehicle market. Indonesia features a vibrant Internet ecosystem, with emerging startups providing unique services to the local context. Singapore is positioning itself as the global exchange, where West meets East and where India and China are both reachable via relatively short direct flights. And India's nation of entrepreneurs is driving change in market after market. The period of growth that Asia is enjoying still involves a heavy dose of replication and leveraging raw resources, but Western companies that discount the region's innovation potential do so at their own peril. 

Innovation has never been more accessible. 

In October,I described [related blog post "Are Entrepreneurs Being Commoditized?"] how two entrepreneurs told us about the business they had built—featuring a fully functional website and lead customers—for less than $10,000. I argued in that post that the increasing ease of innovation meant that entrepreneurs were destined to become commodities. That point led to spirited discussion with my VC friends. All things being equal, of course, you'd rather have a skilled entrepreneur than an unskilled one. But just like Autotune and other technologies that allow passable music talents to turn into global powerhouses, lower costs and increased understanding of the process of innovation can allow anyone to be a competent entrepreneur. Companies in industries with fraying barriers to entry need to think about shifting their focus from fighting upstarts to working with them. Companies in industries with strong barriers to entry should think about taking advantage of the increased understanding of innovation to create businesses that only they can. 

We're on the verge of a golden age of innovation.

The 20th century innovator who had the most impact was probably Henry Ford. By showing the power of scale economics, he ushered in an era where behemoths created processes to spread their businesses around the globe. This quest for efficiency naturally crowded out more exploratory innovation efforts. Entrepreneurs and venture capitalists filled the void in some sectors of the world economy. Academic researchers began to focus more deeply on what historically seemed like the black art of innovation. Big companies began to attempt to manage innovation in a systematic way. As this knowledge continues to build and propagate, I believe there could be a wave of powerful innovation that addresses global challenges like poverty and resource scarcity. In particular, watch for markets that historically were inhospitable to entrepreneurs. There are some businesses that really could only be launched by large, established companies. As these companies figure out how to realize their full innovation potential, we could see some amazing things.

There are two areas in particular that I think need greater attention from the innovation community: 

1. The human side of innovation must be addressed. 
Innovation is, of course, an intensely human behavior. Increasingly, I've heard people at large companies ask how to create human resource systems that support innovation. The first thing I tell them is to make sure they aren't following policies that penalize innovation, particularly policies that punish prudent risk taking. But that's obviously not enough. We need to figure out how to create more systematic ways to track, measure, and reward people following behaviors consistent with successful innovation. We need to make sure we have systems that balance short and long term performance. 
The Inventor's DNA

Finally, we need to develop training programs that give leaders the necessary skills to master the paradoxes that increasingly appear on management's agenda. One book that I'm looking forward to reading next year on this topic is Jeff Dyer, Hal Gregersen and Clayton Christensen's work on The Innovator's DNA. 

2. More focus must go to solving the first mile problem. 
    I've been increasingly telling people that the key to successful innovation is to become a Latter-Day Edison. 

    I particularly point to two great Edison quotes

    "Genius is one percent inspiration
    and ninety-nine percent perspiration

    "Opportunity is missed by most
    people because it is dressed
    in overalls and looks like work.

    Most big companies are built to scale businesses, not start them. In my experience, the biggest challenge is the first mile—when a company takes that critical first step from a plan that looks great on paper to a revenue- and profit-producing business. 

    Of course they can outsource the creation of new businesses to entrepreneurs, but they then have to pay hefty acquisition premiums for the successful opportunities, and they lose the ability to leverage all of their capabilities. 

    Earlier this year, my colleagues Matt Eyring and Clark Gilbert wrote a must-read Harvard Business Review article that provides a conceptual way to address this challenge("Beating the Odds When You Launch a New Venture"). The next step is developing the processes, tools, systems and structures to help companies more reliably pave the first mile of growth. Next year, I plan to continue to do my best to make the best innovation thinking accessible to readers, with a particular focus on the ideas in this article. Happy holidays, and thanks for reading. 

    Provided by Harvard Business Review —Copyright © 2010 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School.

    and  . . . My not so little aside/rant to the above point: 

    If we as individuals or collectively bury our head in the sand in order to avoid seeing the possible 'attack' on the horizon, under the misguided believe that if we see no evil, hear no evil, speak no evil, then it does not exist - the we will,collectively, be caught with our pants down (again!). (think i can fit a few more idiomatic phrases there?)

    I have personally witnessed this in the Home Furnishings Industry where the 'good ole' boys' of US furniture manufacturing never believed that anything 'Made In China' (or anywhere in Asia, Brazil, etc) could ever meet, let alone surpass the quality, construction, and design of American Made Furniture. Well, I can say my assessment at the time of my initial visit to the newly built, Taiwanese owned factories in Southern China, as compared to the US factories was that the Chinese factories were years ahead in terms of machinery, equipment, employee training, and product line efficiency optimization. And that the combination of these Capital investments along with the low Labor costs, that China would very very rapidly emerge as a powerhouse in the home furnishings industry with lower prices and superior quality.  

    Meanwhile, 20 years later, there are still those in the US with their head in the sand, denying to themselves that the overseas makers have won the and kept the market through continuous improvements, capital investment, planned growth, and improved efficiencies. Even as labor prices have risen across Asia, including most recently in Vietnam by a factor of 8 in 2 years, and raw material prices (which are imported from Brazil, Europe, USA, Canada, New Zealand, etc) have increased, the Asian manufactures continue to dominate. This is a perfect example of not being mindful of the reality of the emerging events, situation, factors, and opportunities.

    And, rather than trying to emerge from the ashes of the industry, invest in capital equipment, employee training and operating efficiencies, many US wooden Bedroom Furniture companies petitioned the Commerce Department to implement anti-dumping duties on the Chinese manufactures. As a result massive anti-dumping duties were applied to the category of "wood bedroom furniture" from China. These revenue from the tariff are disbursed quarterly to the petitioners in dollar amounts of hundreds of thousands to millions per petitioning company. 
    Meanwhile, all the US Companies who are doing the manufacturing in Asia, many of whom are also the same US Manufacturers which petitioned and receive anti-dumping duties, have moved the "Wooden Bedroom" portions of their product lines out of China to new, even bigger factories in Vietnam which were built by the same (mainly Taiwanese owned) Chinese factories. 

    However, there are no requirements that I can find (if you have info please email me) which stipulate that these funds must be reinvested in the sorely needed modern machinery, efficient manufacturing process systems, employee education, and updated product design. As a result the US Furniture Industry continues to die an accelerated death. 

    (This protectionism this is a Brilliant solution ehh? (see my previous post about protectionism here) Essentially, the furniture company owners get revenue from the tariffs, while shuttering US plants, outsourcing manufacturing, and in the end the employees, and dependent businesses of these US factories are the real losers--take that Middle Class, we'll show you).

    Please note, not ALL US Furniture manufactures fall under the above classification of my rant; I do have an example of a US Wooden Furniture Manufacturer which is now closed, however not because they had their head in the sand, but rather because they suffered from losses due to extreme weather and there were not sufficient resources  available to them to rebuild their business,continue to employ 25% of their town, and continue the 4 generation, sorely needed US manufacturing business. I will write about this great company in a later blog post and link it back to this.

    Rumors of my demise have

    been greatly 
    exaggerated -Mark Twain

    Just because your down, doesn't mean you are out!

    An industry that has been lost can be rebuilt through the same mindful approach that was once missing. Apple [$AAPL] re-emerged from its near demise in the 1990s when the stock price fell to it's all time low (see chart) to the start of it's gravity defying (sorry Newton) rise starting January 9th,2007 when Steve Job introduced the iPhone and AppleTV

    Through the mindful approach of piecing together of past product introductions (the iPod), emerging technology (cell phones), and consumer wants, needs, and lifestyle--Apple was able to develop a product which has, as Jobs boasted "reinvents the phone". (a little different than the ole' Mission accomplished banner, ehh?Since then, Apple has not rested on its laurels, it continues to improve, expand, and diversify it's product line by mindfully combining the available and emerging technologies with the ever evolving consumer lifestyle. 

    From Apple we can take away the concepts that:
    • a mindful approach is required for innovation
    • eyes wide open to emerging consumer lifestyle needs, wants, demands
    • and above all "pick yourself up, dust yourself off, and get back on that damned horse!
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