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The elixir of youth

Charlie Baecker — Thu, 15 Mar 2012 21:48:00 GMT

Start-ups are widely acknowledged to have a role in economic development and yet, little
research has been done on their innovative activities as compared to those of more
established companies. In “The elixir (or burden) of youth? Exploring differences in
innovation between start-ups and established firms,” authors Paola Criscuoloa, Nicos
Nicolaoub and Ammon Salter explore innovation in new firms by using a sample of
12,209 United Kingdom companies.

They organize their data by first differentiating between services and manufacturing
industries. Using what they refer to as a “matching estimator approach,” the authors
“demonstrate that start-ups differ significantly from established firms in their innovation
activities.”

Their results show that start-ups in services have an increased likelihood of product
innovations. On the other hand, however, they find that there is no significant difference
in the likelihood of product innovation between start-ups and established firms in
manufacturing. Furthermore, they examine the returns to innovation, discovering that
“start-ups in both manufacturing and services have a higher proportion of sales from
innovative products than established firms.”

This paper has several implications in regards to theory and policy. First, their analysis of
service firms “breaks new ground in understanding the ways industrial conditions can
shape the advantages and disadvantages of start-ups versus established firms in terms of
innovation… Bringing together the literature on service innovation with the discussion of
age and innovation, this paper has helped to invoke a set of factors – intangibility, co-
terminality and low capital intensity – that might help to explain the relative advantages
of start-ups versus established firms.” In terms of policies, this research indicates that it is
important to consider industry conditions under which start-ups operate. The authors
suggest that such an approach would “put in place programs to help new firms lower the
liabilities associated with newness in manufacturing and help develop policies to sup-
port established service SMEs to upgrade their skills to meet the competition posed by
new firms.”

Paper: http://www2.druid.dk/conferences/viewpaper.php?id=1325&cf=9

Small firm innovation performance

Charlie Baecker — Thu, 15 Mar 2012 21:47:00 GMT

Small firms typically rely on the CEO’s individual knowledge for developing
innovations, but recent work suggests that this is inefficient because it underutilizes other
employees’ knowledge. In their paper “Small firm innovation performance and employee
involvement,” Petra Andries and Dirk Czarnitzki study “to which extent using CEOs,
managers and non-managerial employees’ ideas enhances small firms’ innovation
performance.” The analysis relies on a dataset of 305 small manufacturing and service
firms, collected through a large-scale survey.

Previous work studies the impact of employee involvement on the large firms’ innovative
performance, but Andries and Czarnitzki are among the first to apply this to small firms.
They find that “also in small firms, using ideas of managers but even of non-managerial
employees significantly impacts a firm’s innovative performance. More specifically,
[they] show that for process innovation performance, small firms benefit greatly from
suggestions by non-managerial production employees.” For product innovation
performance, their results show that there is a positive effect of using non-managerial
employees’ ideas, suggesting that the “historical focus on the entrepreneur/CEO which
was broadened more recently to the study of entrepreneurial teams does not yet fully
capture small firms’ innovative potential.”

They write that, “although CEOs generally do not provide relevant input for process
innovation, their ideas are actually very relevant for product innovation.” In addition,
they show that “R&D managers’ knowledge is highly relevant knowledge for product
innovation, while production managers’ suggestions contribute heavily to process
innovation. At the same time, however, we show that ideas from R&D managers do not
contribute to process innovation, ideas from production managers do not contribute to
product innovation and using ideas from managers in marketing/distribution or
administration does not contribute to process nor product innovation. This implies that,
depending on their functional expertise and the desired type of innovation, CEOs and
managers actually do contribute their knowledge and skills directly to innovation.”
Finally their results show that “non-managerial employees’ contributions depend on their
functional area of expertise as well as on the desired type of innovation.”

One important managerial implication of this paper is that “small firms’ CEOs should
refrain from relying solely on their own actions and ideas in the innovation process.” A
second is that “both functional differences as well as differences between product and
process innovation need to be taken into account when a firm intends to use ideas from
employees in its innovation process. If a firm wants to excel in product innovation, it
should focus mainly on using ideas from its CEO and R&D managers. If it wants to excel
in process innovation, attention should go to ideas from employees in the production
department, including both production managers and non-managerial production
employees.” At the end of the day, Andries and Czarnitzki’s research “clearly indicates
that separate – and perhaps simultaneous – initiatives to engage a select group of
employees in either process or product innovation are far more efficient.”

Paper: https://lirias.kuleuven.be/bitstream/123456789/338133/1/MSI_1203.pdf

Abundance: The Future is Better Than You Think

Charlie Baecker — Thu, 15 Mar 2012 21:47:00 GMT

Keeping in mind with constant innovation and new ideas, we decided to dedicate this post to a
book, rather than academic articles. The following is the summary for Peter Diamandis and
Steven Kotler’s Abundance: The Future Is Better Than You Think.

“Since the dawn of humanity, a privileged few have lived in stark contrast to the hardscrabble
majority. Conventional wisdom says this gap cannot be closed. But it is closing—fast. In
Abundance, space entrepreneur turned innovation pioneer Peter H. Diamandis and award-
winning science writer Steven Kotler document how progress in artificial intelligence, robotics,
infinite computing, ubiquitous broadband networks, digital manufacturing, nanomaterials,
synthetic biology, and many other exponentially growing technologies will enable us to make
greater gains in the next two decades than we have in the previous two hundred years. We will
soon have the ability to meet and exceed the basic needs of every man, woman, and child on the
planet. Abundance for all is within our grasp.

Breaking down human needs by category – water, food, energy, healthcare, education, freedom –
Diamandis and Kotler introduce us to dozens (and dozens) of innovators and industry captains
making tremendous strides in each area: Dean Kamen’s “Slingshot,” a technology which can
transform polluted water, salt water or even raw sewage into incredibly high-quality drinking
water for less than one cent a liter; the Qualcomm Tricorder X PRIZE which promises a low-
cost, handheld medical device that allows anyone to diagnose themselves better than a board
certified doctor; Dickson Despommier’s “vertical farms,” which replaces traditional agriculture
with a system that uses 80 percent less land, 90 percent less water, 100 percent fewer pesticides
and zero transportation costs.

As a bonus, the authors provide a detailed reference section filled with ninety graphs, charts and
graphics offering much of the source data underpinning their conclusions. In this thrilling
antidote to today’s dark pessimism, the authors rely on exhaustive research and extensive
interviews with top scientists, innovators, and captains of industry to explore how four emerging
forces – exponential technologies, the DIY innovator, the Technophilanthropist, and the Rising
Billion – are conspiring to solve our biggest problems. Diamandis and Kotler examine the
stunning impact these forces are having on categories of critical importance while establishing
hard targets for change, laying out a strategic road map for governments, industry, and
entrepreneurs, and giving us plenty of reason for optimism.

Providing abundance is humanity’s grandest challenge – this is a book about how we rise to
meet it.”

For more information, see: http://www.abundancethebook.com/about-the-book/
For an interesting interview with the authors, see:
http://www.innovationexcellence.com/blog/2012/02/17/abundance-the-future-is-better-than-you-
think/
For a review by the Chicago Tribune, see: http://www.chicagotribune.com/news/columnists/sns-
201202221900--tms--ahuffcoltq--m-a20120222feb22,0,5836832.column

Creating Value Through Business Model Innovation

Charlie Baecker — Thu, 15 Mar 2012 21:41:00 GMT

Raphael Amit and Christoph Zott highlight “business model innovation as a way for
general managers and entrepreneurs to create and appropriate value” in their paper
“Creating Value Through Business Model Innovation.” According to the authors,
business model innovation focuses on “how to do business,” as opposed to questions such
as “what product to bring to the market”, “when and where to enter the market” or “what
differentiates the firm and its product in the market?” We offer managers and
entrepreneurs a conceptual primer on business model innovation emphasizing the
importance of activity system thinking.

They believe that innovation should not be simply about new product lines or improved
processes, but also relate to “the firm’s activity system, specifically, its content, structure
and governance.” Their findings show that in a highly interconnected world, particularly
one where financial resources are scarce, “entrepreneurs and managers must look beyond
the product and process and focus on ways to innovate their business model.” This type
of “fresh” business model can “create and exploit opportunities for new revenue and
profit streams,” which can work to counteract an aging model that has historically tied
the firm down with declining revenues and pressures on profit margins.

In this regard, the authors suggest that managers ask themselves the following six key
questions about their business models: (1) What perceived needs can be satisfied through
the new model design? (2) What novel activities are needed to satisfy these perceived
needs (business model content innovation)? (3) How could the required activities be
linked to each other in novel ways (business model structure innovation)? (4) Who
should perform each of the activities that are part of the business model (e.g., the focal
firm or a partner), and what novel governance arrangements could enable this structure
(business model governance innovation)? (5) How is value created through the novel
business model for each of the participants? and (6) What revenue model fits with the
firm's business model to appropriate part of the total value it helps create?

The authors believe that addressing the aforementioned six questions can help “managers
see their firms’ identities more clearly, in the context of the networks and ecosystems in
which their firms operate.” Adopting such a clear business model perspective will assist
managers in purposefully structuring the “activity systems of their firm in the context of
other firms and economic agents in their ecosystems.” They conclude that “this
purposeful design and structuring of business models, which encompasses internal as
well as boundary-spanning activities, are key tasks for general managers and
entrepreneurs and can be an important source of innovation, helping the company look
beyond its traditional sets of partners, competitors, and customers. Most importantly,
perhaps, this approach encourages systemic and holistic thinking when considering
innovation instead of concentrating on isolated, individual choices. The message to
managers is clear: when you innovate, look at the forest, not the trees – and get the
overall design of your activity system right before optimizing the details.”

Paper:
http://www.management.wharton.upenn.edu/amitresearch/docs/2012/Amit_Creating_Val
ue_Business_Model_Innovation.pdf

Incentives to innovate and social harm: Laissez-faire, authorization or penalties?

Charlie Baecker — Tue, 17 Jan 2012 19:39:00 GMT

When private actions generate harmful externalities, previous research has shown that public intervention can improve welfare if it appropriately trades off social harm reduction with enforcement costs. On the flip side of this, however, public intervention may thwart the firm’s incentives to undertake research by reducing its expected profitability, depending on the approach used.

Giovanni Immordino, Marco Pagano and Michele Polo consider public policies and approaches that may affect a firm’s effort to discover new technologies and the actual use of that technology once discovered in their paper, “Incentives to innovate and social harm: Laissez-faire, authorization or penalties?” They compare four different regulatory responses: 1) laissez-faire; 2) a lenient authorization regime, where inventions can be used commercially once they are ascertained to be safe during tests; 3) a strict authorization regime, where they can be used commercially only if they are ascertained to be beneficial; and 4) a regime based on penalties, where the commercial use of innovations is sanctioned ex-post if found to be harmful.

There results indicate that the regulatory regime should become more stringent and cogent as the danger of social harm increases. In other words, “if fines are unbounded, laissez-faire is optimal if the social harm from innovation is sufficiently unlikely; otherwise, regulation should impose increasing penalties as innovation becomes more dangerous.” Furthermore, if fines are bounded by limited liability, “it is optimal to adopt (indifferently) penalties or lenient authorization, while strict authorization becomes optimal if social harm is sufficiently likely.”

Paper

Motivating Innovation

Charlie Baecker — Tue, 17 Jan 2012 19:38:00 GMT

Motivating innovation is a critical part of designing incentives. Some previous research has shown that shareholders often must motivate managers to pursue more innovative business strategies. Gustavo Manso examines aspects of an incentive structure in his paper, “Motivating Innovation.”

Manso finds that the optimal incentive scheme motivates innovation by exhibiting substantial tolerance for early failure and reward for long-term success. Additional critical components to encourage innovation and new ideas include commitment to a long-term compensation plan, job security and timely feedback on performance. Furthermore, in regards to managerial compensation, Manso writes that this incentive program can be implemented into an organization via a combination of stock options with long vesting periods, option re-pricing, golden parachutes and managerial entrenchment.

Paper

Non-compete Covenants: Incentives to Innovate or Impediments to Growth

Charlie Baecker — Tue, 17 Jan 2012 19:33:00 GMT

Non-compete covenants are clauses written into contracts that expressly prohibit individuals from competing with former employers. Particularly for technical workers and upper-level management, they have developed to become a common feature of employment contracts. Sampsa Samila and Olav Sorenson research this issue and determine whether they encourage innovation or impede growth in their paper, “Non-compete Covenants: Incentives to Innovate or Impediments to Growth.”

They find that the enforcement of non-compete clauses significantly impedes entrepreneurship, employment growth and innovation. The authors believe that this may be due to the fact that the “value of the recombination of knowledge facilitated by the elevated mobility of individuals across firms might outweigh the greater incentives to innovate afforded by the enforcement of these non-compete covenants.” Furthermore, their results show “relative to states that enforce non-compete covenants, an increase in the local supply of venture capital in states that restrict the scope of these agreements has significantly stronger positive effects on (i) the number of patents, (ii) the number of firm starts, and (iii) employment.” Finally, their findings point to a strong interaction between financial intermediation and the legal regime in promoting entrepreneurship and economic growth.

Paper

The Innovation Dilemma: How to Innovate When the Market Is Mature

Charlie Baecker — Tue, 17 Jan 2012 19:24:00 GMT

Robert G. Cooper recently addressed a common issue in the present market in his article, “Perspective: The Innovation Dilemma: How to Innovate When the Market Is Mature.” If you are trying to grow your business wishes in the midst of mature, commoditized markets, this is a good article to read that discusses examples of bold innovation, which are breakthrough products, services and solutions that create growth engines for the future.

Cooper outlines five different vectors that can act as drivers of innovation. First, have a product innovation strategy that focuses your development efforts on opportunity-rich strategic arenas, much like Corning and Apple do. Second, foster the right climate and culture for innovation, driven by senior executives, as found at Grundfos and 3M. Third, set up a system to generate, capture and handle proactive ideas, similar to what Swarovski has done. Fourth, design a robust idea-to-launch stage-gate process to manage large and complex and development initiatives, which companies like P&G, Emerson Electric and Kennametal have done. And finally, do the necessary up-front due diligence and make the right fact-based investment decisions in riskier projects, such as portfolio management, much like Corning, Green Mountain Coffee Roasters and Grundfos do.

Click here for the paper to read more about these examples

Management Innovation and Leadership: The Moderating Role of Organizational Size

Charlie Baecker — Tue, 17 Jan 2012 19:20:00 GMT

Recent research on new managerial processes, practices and structures that can change the nature of managerial work show that this form of management innovation can be an important source of competitive advantage. Ignacio Vaccaro, Justin Jansen, Frans Van Den Bosch and Henk Volberda hone in on this research at the organization level in their paper, “Management Innovation and Leadership: The Moderating Role of Organizational Size.” Because top management has the ability to influence such management innovation within organizations, the authors investigate the role of leadership behavior.

They define two forms of leadership: transformational and transactional. They see transformational leadership as being “aimed at the followers’ identification with its purpose and common goals. It stimulates employees to attain to organizational goals by appealing to high-level needs for self-actualization.” Through its four dimensions of idealized influence, inspirational motivation, intellectual stimulation and individual consideration, transformational leadership can affect all facets of management innovation. Transactional leadership, on the other hand, involves leaders who are “primarily concerned with gaining compliance from subordinates – which they will do by targeting their self interest – by agreeing upon the conditions and rewards that will follow the fulfillment of certain requirements. With two dimensions of contingent reward and active management by exception, transactional leadership is also positively related to management innovation within an organization.

The authors further find that organizational size moderates the effectiveness of both transformational and transactional leadership on management innovation. Their results indicate that the effectiveness of transformational leadership increases with organizational size. In contrast, smaller, less complex benefit from transactional leadership when realizing management innovation.

Paper

International Business Travel: An Engine of Innovation?

Charlie Baecker — Tue, 17 Jan 2012 19:14:00 GMT

Business surveys and research have often reported that managers prefer face-to-face communication when negotiating deals and selling products. However, Nune Hovhannisyan and Wolfgang Keller go further in their paper "International Business Travel: An Engine of Innovation?" to show that face-to-face meetings are also important for the transfer of technology, reasoning that technology is tacit and usually best described and demonstrated in person. They examine the role of inward business travelers in raising a country’s rate of innovation by looking at business travel from the United States to thirty-six other countries during the years 1993-2003, using patents to measure innovation.

Their results indicate that international business travel has a significant effect on technology transfer through international trade and foreign direct investments. On average, a 10% increase in international business traveler arrivals leads to an increase in patenting by about 0.6%, which is substantial in this scope. Hovhannisyan and Keller also find evidence showing that the quality of the impact on innovation and patents is related to the quality of the technological knowledge carried by each business traveler. Furthermore, they suggest that cross-country income differences can be reduced through international air travel, issues that create the foundation for further research within labor market policies on how strongly short-term cross-border movements affect innovation.

Paper

No Exit: Failure to Exit Under Uncertainty

Charlie Baecker — Tue, 17 Jan 2012 19:10:00 GMT

For any business, delayed exits pose substantial economic problems. Even though many companies tend to hold on to their assets, studies have shown that returns would triple if VCs exited ventures at the right time and shareholder value could increase as much as 13.6% should corporations divest underperforming business units optimally.

Anne Marie Knott recently co-authored a research paper with Dan Elfenbein entitled, “No Exit: Failure to Exit Under Uncertainty.” They examine the private costs of excess entry and study whether social welfare can be improved by expediting the exit of would-be failures. As predicted, their results show that there are substantial economic gains to improving exit decisions. In essence, their research paper provides the mathematical support to prove the value of exiting the market at optimal times.

The general topic of her current paper is in entrepreneurial exit, but the problem they are trying to alleviate is actually much broader, as these types of exits occur frequently. For example, firms exit markets, business units and products, close plants and abandon R&D projects, while venture capitalists exit ventures, employees leave firms and individuals sell stock. Quite simply, exits influence much of the market, as do entrepreneurial entries.

Paper

Presentation

Making Innovation Matter

admin — Thu, 17 Mar 2011 23:42:00 GMT

Abstract: Inventions that aren't commercialized remain inventions, not innovations. Companies such as Apple are organized internally to repeatedly produce innovations in the core business as well as in new businesses. Such companies make sure that their innovations matter and their products are really valued by the customers. This article’s conclusion is that an invention should solve some job that needs to be done. The product developed in the process should matter enough that the customers are willing to pay for the same. Companies should not go too far to battle over the marginal differences but should rather focus more on creating products that are really valued by their customers.

Published: Bloomberg Businessweek, March 2011

Authors: Mark W. Johnson

Link: Making Innovation Matter

Upgrading R&D in a Downturn

admin — Thu, 17 Mar 2011 23:36:00 GMT

Abstract: During global economic downturns, senior executives take many measures to reduce costs especially in their research-and-development budgets. However, such measures delay promising projects as well as adversely affect morale. This article’s main conclusion is that companies should take a more innovative and strategic approach to cutting R&D costs. They should use difficult economic periods as an opportunity to upgrade their R&D organization’s focus, practices, and management. This will not only help them to cut their costs in the long run but will also raise staff productivity and accelerate the process to develop new products for the customers.

Published: McKinsey Quarterly, February 2009

Authors: Christie W. Barrett, Christopher S. Musso, and Asutosh Padhi

Link: Upgrading R&D during Downturn

How to Plan Innovation

admin — Thu, 17 Mar 2011 23:33:00 GMT

Abstract: This article articulates the proposition that innovation is about problem solving, understanding how to ask the right questions, and seeing patterns before facts. All these aspects of innovation help companies develop the right product or service for their customers. This article’s main conclusion is that all the employees in a company have the necessary skills to be innovative. The key challenge faced by most of the companies is not to develop new innovative products for the customers but to create an experience for the customers that also preserves the brand equity those companies had built in the past. It is imperative for companies to preserve their brand equity and simultaneously seek out all the innovative opportunities discovered while developing a new product.

Published: Bloomberg Businessweek, March 2011

Authors: Laura Jakobsen

Link: Innovation

Using Knowledge Brokering to Improve Business Processes

admin — Sat, 12 Mar 2011 00:24:00 GMT

Abstract: This article describes how global companies have adopted a new process called knowledge brokering in which executives are actively seeking out external ideas from people in a variety of industries and disciplines to improve their core business processes and develop better solutions to their organizational problems.

Based on a study reviewing the use of knowledge brokering by more than 50 teams at ten multinational companies, it was found that these teams were able to devise innovative solutions to assigned projects twice as quickly as possible by conventional techniques. It was also found that these teams adopted the following similar path to projects in areas such as strategic planning, sales and marketing, corporate social responsibility and HR.

1. Analyze the problem space

2. Evaluate brokering communities and choose experts

3. Engage knowledge brokers to extract ideas

4. Incorporate the new ideas into an implementation plan for a new process.

The article’s conclusion is that companies can develop breakthrough process innovation and better position themselves for a new networked world by efficiently using their knowledge sources and combining outside insights into their core internal business processes.

Published: McKinsey Quarterly, January 2010

Authors: Corey Billington and Rhoda Davidson

Link: Improve_Business_Processes

The Productivity Imperative

admin — Sat, 12 Mar 2011 00:18:00 GMT

Abstract: The article describes how the wealthy nations of the world with low birthrates and graying workforces are finding it difficult to compete with emerging markets with much larger and younger working populations. This had made it imperative and compelling for the wealthy nations to take up the productivity challenge to produce more and more with fewer workers.

The article conclusion is that developed economies would have to deploy innovative business models to get more from their higher quality knowledge employees. This article suggests that some of the aspects of such a transformative business model can be changing the boundaries around the work–life balance or better adopting approaches such videoconferencing to collaborate and exchange knowledge with far-flung employees.

Published: McKinsey Quarterly, June 2010

Authors: Peter Bisson, Elizabeth Stephenson, and S. Patrick Viguerie

Link: Improving Productivity

The Global Grid

admin — Sat, 12 Mar 2011 00:12:00 GMT

Abstract: Globalization and digital technology have combined to create a vast, complex information network grid which has helped innovative businesses as well as newcomers such as Skype to grow multifold. This had made every company a global company where business transactions are made to customers around the world via sales platforms such as eBay or Alibaba. The article’s conclusion is that this interconnectedness has increased stability for the businesses by diversifying their risk but has also raised the need for the executives to better understand areas where disruption such as global financial crisis could rather have an amplified negative impact.

Published: McKinsey Quarterly, June 2010

Authors: Peter Bisson, Elizabeth Stephenson and S. Patrick Viguerie

Link: Globalization+Technology

Restoring American Competitiveness

admin — Sat, 12 Mar 2011 00:00:00 GMT

Abstract: This article describes that many high tech products such as fabless chips, LCD for monitors, TVs, handheld devices like mobile phones, power semiconductors for solar panels are no longer produced in United States because the industrial commons required for the manufacturing of these products have been lost through outsourcing for short term cost benefits. The article defines industrial commons as the combined capabilities of the high technology firms and the other companies in the industry such as the suppliers of advanced materials, tools, production equipment, and components.

The article’s main conclusion is that the U.S government and industry should work together to revive the country’s industrial commons and thus restore the ability to manufacture a wide array of high technology products. The article also provides a number of suggestions to the policy makers of the U.S businesses about the role that government can play to rebuild the industrial commons and thus realize continued innovation and sustainable economic growth in United States.

Published: Harvard Business Review, July–August 2009

Authors: Gary P. Pisano and Willy C. Shih

Link: Read Full Article

Hotbeds of Innovation

admin — Fri, 11 Mar 2011 23:55:00 GMT

Abstract: Many U.S multinational companies have been forced to revise their R&D budgets because of weak sales and the pressure to stay ahead from their global low-cost competitive rivals in Asia and Latin America. The article concludes that some of these companies have adopted a new approach of “ecosystem investing” in which large companies such as Johnson & Johnson, General Electric, General Motors, and Google are creating strategic partnerships with startups and small companies whose technologies and skills can help them expand their own capabilities. This approach has helped large companies to tap into new sectors such as genomics and biotechnology, advanced robotics, lithium ion batteries, semiconductor manufacturing, and nanotechnology.

Published: Strategy+Business, January 24, 2011

Authors: William J.Holstein

Link: Strategy+Business

Innovative Ways to Grow During the Downturn

admin — Fri, 25 Feb 2011 23:41:00 GMT

Abstract: This article concludes that well-timed innovations in a downturn can still create growth businesses. The article highlights three areas of change which can help companies succeed during the downturn.

• Be open to opportunities that lie outside the core business.

• Explore partnerships options.

• Invest time and money to unearth unmet consumer needs.

Consider for example, it is because of today's cost-conscious consumers that Wal-Mart Stores is moving to reorient their business models and to reinvent its private label brand, “Great Value”. This has been possible because of the increasing number of consumers who are now looking for private labels. This articles conclusion is that companies will need to challenge some of their basic assumptions to succeed during downturns.

Published: Businessweek, April 2009

Author: Jeneanne Rae

Link: Innovative Ways to Grow During Downturn

A Better Way to Anticipate Downturns

admin — Fri, 25 Feb 2011 23:33:00 GMT

Abstract: Executives of the world are evenly split on the question as to whether the global recovery will build or lapse into another recession.The article concludes that the credit markets can provide a concise indicator that a recession is on the horizon.

The article’s conclusion is that economists with the tenacity and the willingness to take time to study the relationship between financial transactions and real economies can easily see the signs of an oncoming downturn and avoid getting caught up in credit market hazard. An example of this was the increasing collateralization of debt obligations during the great credit crisis even when these financial transactions were not creating real economic value. This is believed to have resulted demise of Lehman Brothers two years ago.

Published: McKinsey Quarterly, October 2010

Authors: Tim Koller

Link: Better Way to Anticipate Downturn

Using Rivalry to Spur Innovation

admin — Thu, 17 Feb 2011 03:12:00 GMT

Abstract: Many of the best practices of the Renaissance have already been largely integrated into today’s R&D practices to stimulate business innovation. Some of the practices adopted from that creative period of Renaissance include -

• Promoting “collision” between engineers, scientists, and managers ultimately leads to better collaboration and ultimately produce the best ideas.

• Giving researchers their space to spend time on their own ideas and projects.

• Setting stretch goals to encourage innovators to “shoot for the stars.”

The article concludes that a friendly and healthy degree of rivalry between two or more teams working on a given project can have a strong motivational impact and can lead to new levels of creativity and more valuable, business innovation. The article conclusion is that modern R&D organizations are missing an opportunity to promote pioneering innovation by overlooking this potential of rivalry.

Published: McKinsey Quarterly, May 2010

Authors: Bernard T. Ferrari, and Jessica Goethals

Link: Using Rivalry to Promote Innovation

Innovation Lessons from Pixar: An Interview with Oscar-winning Director Brad Bird

admin — Thu, 17 Feb 2011 02:58:00 GMT

Abstract: Brad Bird, Pixar’s two-time Oscar-winning director hands-on approach to encouraging creativity among animators provides many lessons for any executive hoping to nurture innovation in teams and organizations. Bird joined Pixar in 2000 and won Academy Awards (best animated feature) for two groundbreaking movies, The Incredibles and Ratatouille. Brad Bird was attracted to Pixar because the one thing that was unbelievably different about the company was that the heads of Pixar were worried about directors becoming complacent with their success.

Brad Bird’s first Project, The Incredibles was all about shaking things up and involved everything that computer-generated animation had trouble doing. With artists who were known for doing things differently than told, Brad Bird changed the way a number of things were done at Pixar. This was possible because the heads of Pixar allowed Brad Bird and his team to try crazy ideas. As a result, Brad Bird and his team made the movie that had three times the number of sets for less money per minute than was spent on the previous film - Finding Nemo.

This article concludes that the first step in achieving the impossible is to believe that the impossible can be achieved.

Published: McKinsey Quarterly, April 2008

Authors: Hayagreeva Rao, Robert Sutton, and Allen P. Webb

Link: Innovation Lessons from Pixar

Dispatches from the Front Lines of Management Innovation

admin — Thu, 17 Feb 2011 02:42:00 GMT

Abstract: The articles concludes that Management Innovation eXchange (MIX), a web-based open-innovation project has been designed as a platform for creative thinkers to surface their bold ideas. The article narrates the following top three winning stories from the MIX’s first-ever management-innovation contest, which offers insights for management innovators everywhere -

• Redefining leadership in public housing

• Increasing trust at Microsoft

• Taking the work out of filmmaking

This articles conclusion is that the organizations that foster innovation in their every activity and promote collaborative cultures for individuals inspired by noble goals can spontaneously sustain themselves and easily thrive in the future.

Published: McKinsey Quarterly, November 2010

Authors: Gary Hamel, and Polly LaBarre

Link: Management Innovation

China’s Drive for 'Indigenous Innovation' - A Web of Industrial Policies

admin — Thu, 17 Feb 2011 02:28:00 GMT

Abstract: This report published by U.S Chamber of Commerce concludes that China’s plan for “Indigenous innovation” is a massive plan to turn the Chinese economy into a technology powerhouse by 2020 and a global leader by 2050. Central to the plan is to trade market access in exchange for know-how and technology.

The report conclusion is that the indigenous innovation campaign and its corresponding industrial policies represent the beginning of a new phase in the US-China economic and political friction.

Published: U.S Chamber of Commerce Report

Link: China's Plan for Indigenous Innovation