Innovation Blog - UCI Paul Merage School of Business : Future

Energy Innovation: From Chocolate to Diapers

Lynda Lawrence — Wed, 16 Jun 2010 16:57:00 GMT

In this week’s Bloomberg Business Week, Esme Deprez highlights a few of the more innovative sources now being explored for fuel. In the wake of the gulf oil spill and the coal mining tragedy, it makes sense to look at more of these options: 1) Chocolate: a Formula 3 racecar that runs on biodiesel from chocolate waste in Britain. 2) Turkeys: diesel from bones, beaks and feathers 3) Coffee: from the 20% of grounds that are oil—comes complete with that scent of fresh-brewed java 4) Beef: Amtrak is using biodiesel from beef by-products in Texas 5) Human fat: a plastic surgeon is converting liposuction waste to power his car 6) Urine: especially from pigs, converts to hydrogen, helps with disposal 7) Manure: Every day a cow produces enough energy to power two light bulbs 8) Dirty diapers: the products and their contents yield methane and diesel oil. In fact, most of these solutions offer twin benefits: providing energy while reducing waste and emissions. Perhaps if these solutions got just a fraction of the subsidies we spend on oil and coal, they might add to the mix we need for a better future.

The 2010 Innovation Awards: Danger Ahead?

Lynda Lawrence — Fri, 16 Apr 2010 22:24:00 GMT

This is the sixth year of Business Week’s Innovation Awards, and there are some disturbing signs in the data they’ve gathered. They highlighted the fact that 15 of the top 50 are now Asian companies—a statistic that was fairly predictable. Much more significant, however, is that one third of the American companies on the chart just five years ago are no longer on the list—including 3M, Starbucks and eBay. And even more disturbing, while 95% of CEOs in China rank innovation as key to economic growth, only 72% of CEOs in the U.S. agree. That figure could even be inflated, since when they tracked intent to increase innovation budgets, 88% of Chinese innovators were investing, compared to a measly 48% in the U.S. Now granted it’s been a tough couple of years in the economy, and most companies were busy cutting payrolls in the face of declining sales. But experts across the board agree that innovation is the only way U.S. companies can begin to compete and to put people back to work. It seems to me that if U.S. companies don’t start looking ahead, they are very soon going to be left behind.

Deadlines and Daydreams

Lynda Lawrence — Tue, 27 Oct 2009 22:37:00 GMT

Reading Malcolm Gladwell’s new book, What the Dog Saw, I was struck by his descriptions of infomercial king Ron Popeil and the famous copywriter, Shirley Polykoff, who made hair coloring acceptable, and changed women’s looks for half a century. These were not middle-of-the-night inspiration people—they were hard workers who kept looking for new ideas and perfecting them for years. Or, as legendary dancer Paul Taylor says, in a profile in the New York Times, ”People think some muse comes down and strikes. Well, making a dance is just plain work like anything else. The inspiration is the deadline.” So which is it, deadlines or daydreams? Research is mixed. Real deadlines are important incentives, but too little time can stifle creative solutions. This weekend I scratched my cornea and couldn’t read. Without my daily fix of five newspapers, internet sites, weekly newsmagazines, professional journals and business books, I found myself full of ideas that had been rumbling around the back of my brain but hadn’t fully formed. Suddenly I knew how to tackle that weird transition in class, that emotional hitch in a consulting assignment, that tricky patch in a report. And then this morning in the Wall Street Journal, business book writer Pat Lencioni addressed the same issue. According to him, you need to block out creative time in every day. Even with deadlines, you’ll have better solutions if you let your mind drift, enjoying that walk or a long shower or staring out the window, instead of staring at your computer forcing yourself to THINK, DAMMIT. The truth, of course, like all things in life, is not simple. You need deadlines and daydreams, perspiration and inspiration, and the trick is finding the right balance.

No More Plain Vanilla

Lynda Lawrence — Thu, 22 Oct 2009 20:27:00 GMT

Yesterday in the New York Times, Thomas Friedman’s column defined the new untouchables—the people who are in such demand that employers sacrifice to keep them, or who readily find new jobs in the worst economy. They are the top half of the class, he says, not the ones who can do routine engineering, but the innovative thinkers who create the new products. And today on MSNBC, Intel’s Paul Otellini showed off a vial of teeny, tiny chips, each with the computing power of the best laptops three years ago. Like Friedman, he said that entrepreneurial power comes from education—but the kind that equips people to invent instead of just learning the basics. Finally, Newsweek’s cover story is on changing education, from the idea that there is a set curriculum to the idea that school is to give you the tools to succeed in an everchanging world. I couldn’t agree more. In our Design and Innovation Management class (shameless plug here), we’ve opened it to continuous input from our FEMBA students. Last week, a Tweet from a student alerted us to a YouTube video about changing behavior by making a staircase into a live piano, which in turn we incorporated into our class as part of a workshop exercise that uses toys to inspire new ideas. Because we can’t possibly predict the future, the best education can prepare people by giving them the tools to be flexible, to build on the ideas of others, and to stay constantly alive to opportunities. I’d argue with Friedman that these skills are not just the whipped cream and the cherry on top, that thinking like an innovator is the only way to create the whole sundae.

Which one will change more lives?

Lynda Lawrence — Wed, 21 Oct 2009 18:41:00 GMT

On the same day the world is mourning the Nobel Prize-winning scientist who started the green revolution that transformed Asia and saved billions of lives, the Wall Street Journal is also honoring the 2009 Technology Innovation winners. The Gold goes to a sensor that can instantly identify pathogens, even ones it hasn’t encountered before, potentially spotting and staving off the next pandemic. And there’s software that enables remote health workers to track health statistics via cell phone, potentially catching AIDS or Ebola early enough to stop it. There are solar stations for cell service, borrowing Ikea’s easy packaging and assembly techniques to make cell service a reality in villages reached by donkeys. There’s an artificial hand that actually works like a hand, and drywall with a small environmental footprint. There are speakers as thin as a credit card and a patch that uses electromagnetic energy for drug-free pain relief. There’s even a once-theoretical memory resistor that could make electronic devices so small and powerful we can’t even imagine them. The fascinating thing about all the winners, launched during a worldwide recession, is that any of them could be—or could lead to—a world as different from ours as the world pre-auto, pre-tv, pre-airplane, pre-internet, pre-cell world was from the place we live today. And we have absolutely no way of predicting which of these, or something else lurking behind the sparkling eyes of the inventor on the laptop next to you at the coffee shop, will be the one.

Innovation as Ecosystem

Lynda Lawrence — Thu, 10 Sep 2009 16:35:00 GMT

In the latest McKinsey digital newsletter, Mark Marino muses that innovation is like a coral reef: nobody quite understands what causes reefs to form, but human actions can nurture or harm the process. Silicon Valley, he says, is an innovation reef, started by Dave Packard and Bill Hewitt in their Palo Alto garage during the depression — an organic, bottom-up, self-sustaining ecosystem.

And while that model has built hubs of entrepreneurial growth around Boston, Seattle, and Raleigh-Durham, it may not be sufficient to jumpstart innovation today. He argues that bottom-up strategies need an umbrella approach at the top — something like a national "innovation czar" to focus on the big picture. This czar could drive investments in renewable energy, better health care and improved education by selecting areas that are near the tipping point and funding them. Perhaps the czar could also eliminate needless regulations or address immigration policies that send our highly educated immigrants away when they'd prefer to stay here and start breakthrough companies.

Good ideas all, but likely to fall off the radar screens of a county that's struggling with recession, war, unemployment, and health care reform. Of course, it's precisely during difficult times that people try to do things better, for less. Maybe today's Dave and Bill are tinkering in a garage someplace (or on their laptops at Starbucks), and this recession will see the birth of innovation we'll need for the next growth spurt in the world economy. Perhaps tomorrow's billionaires are working on their own ideas since they can't find work elsewhere. Let's collectively hope so.

Nurturing the innovation reef.

Innovation At Warp Speed

Lynda Lawrence — Thu, 20 Aug 2009 04:05:00 GMT

This week’s Wall Street Journal special report on innovation has two interesting insights. First: advances in technology in the last decade make innovation both more important and easier. With better computer prototyping, infinitely more data, and instant feedback, companies can test more ideas, more cheaply and more accurately. Walmart can test combinations of displays and prices and know within three days how best to sell products. Instead of limiting new ideas to the few that can be fully tested, companies can encourage lots of ideas.

Of course, if innovation can happen quickly, then more companies will realize that it must happen quickly. This in turn creates a climate where innovation is not an afterthought, but an integral part of the corporate culture.

The second insight is about innovation strategies that work: trying all four at once is seldom successful. The most effective way to improve innovation is Jim Collin’s entreaty to get the right people on the bus.

By hiring both star inventors and star implementers, companies can insure that enough ideas are in the pipeline and that enough of them make it to market. And given that the recession has sent a lot of very good people into the marketplace, smart companies should be looking right now for the talent that will keep them ahead of the competition.

So, if you’re an innovative individual (like many who have been in my classes), keep looking for companies that will appreciate you. And if you want to be an innovative company, keep hiring them.

Smart Moves in Tough Times

Lynda Lawrence — Thu, 30 Jul 2009 23:01:00 GMT

In Business Week’s July 27 issue, there’s a simple chart that tells a big story. Creative Beginnings in a Downturn shows that Hewlett Packard learned to buy game-changing companies in recessions, that Genetech leaned to use strategic partners when they couldn’t afford research labs, and that Google snagged top talent after the tech bust.
In another article in the same issue, General Mills reports increased sales, stemming from bigger marketing budgets, exactly when everyone else is cutting back.

They are just a few examples of some counter-intuitive strategies that smart business people have used successfully in past recessions. When others are cutting back, you can launch new companies, new products, and new approaches when the competitors are not circling around. And years of statistics prove that people who invest in research and marketing in recessions emerge as leaders for years or decades to come.

What’s more, in cost-cutting climates, people are more willing to risk doing business with a new supplier who can accomplish things faster, better or cheaper. That incumbent relationship may not survive belt-tightening, especially if the procurement guy has been laid off.

For those who aren’t frightened, it’s a perfect time to launch your innovative ideas, and watch them take off faster than the recovery.

Little Green Companies Coming to a Planet Near You

Lynda Lawrence — Thu, 30 Jul 2009 22:48:00 GMT

Business Week calls them under-the-radar start-ups in alternative energy, and warns that they may not be the ground floor opportunities that investors are seeking. What’s amazing about this list, however, is the wide range of approaches these companies are taking.

Geothermal energy. Making ice at night. Cylindrical and thin film solar cells. Wind turbines that fit on a house. Ocean and river generators. A truck-top plant to convert industrial waste to biofuel. New ways to conserve, meter, and sell energy. New ways to finance solar panels. Algae for jet fuel, and that elusive clean coal technology.

Maybe none of these will work commercially. Maybe all of them. More likely, some portion of these and others that are not on the radar screen this month will be changing the way we run our homes, offices and vehicles over the next few decades.

If any of these technologies work, we could be on the verge of a new industrial revolution—one that won’t take our depleted natural resources for granted. When everyone is busy looking backwards at how we got ourselves into this financial and environmental mess, it’s exhilarating to see how we just might find out way out.

The Next Energy Innovators, BusinessWeek

The Lost Decade

Lynda Lawrence — Wed, 17 Jun 2009 21:56:00 GMT

Despite our shiny new iPhones and flat screen TV’s, the June 15th cover story in Business Week laments that in the last decade American innovation has failed to live up to its promises. No cure for cancer. Still driving gas guzzlers.

In fact, Mandel suggests that our inability to commercialize the breakthroughs of the late nineties has contributed to our trade deficit and our financial mess. From hydrogen fuel cells to biomedical advances, everything proved more difficult to get to market than they anticipated.

What he doesn’t mention, however, is the role of public policy in those delays. Stem cell advances were waylaid by inserting religion into the scientific realm. Lobbyists for the big car companies fought funding for alternative fuels (and how is that working out for us—or them?). Massive off-the-books expenditures on the Iraq war precluded even modest research spending on new science, health care and technology.

If, as most economists agree, we must innovate to climb out of the recession and fuel a new economy that will put our educated work force to work, we must have public policy that supports innovation. There are some promising baby steps in the stimulus bill, but the recession has forced cuts in programs for fuel cells and other scientific advances. And private industry is not in a position to make up for government shortfalls.

While Mandel cites several areas where new products are about to be launched—like the first new drug for gout in 40 years—if government and private industry don’t invest in education and innovation now, we could spend another decade falling behind.

The No-Plan Plan

Lynda Lawrence — Wed, 17 Jun 2009 21:34:00 GMT

Jack Ma, CEO of Alibaba.com, runs one of the most successful business-to-business marketplaces in the world. He’s profiled under "Builders and Titans" in Time magazine’s 100 most influential people. His keys to success? “We had no money. We had no technology. And we had no plan.”

So how did that plan lead to nearly half a billion dollars in sales last year? In a word: Flexibility. If you read the real success stories of leading companies today, you’ll see that often their first ideas weren’t very successful. But because they didn’t have too much invested, they were free to abandon those ideas, or revise them and keep revising them, as they learned more about the market or as conditions changed.

In Joshua Ramo’s new book, The Age of the Unthinkable (see our book review), he suggests that replicating past successes simply won’t work in a fast-paced global market. Only companies which acknowledge that they can’t know the future will survive—because they are prepared to be flexible forever.

How does that work in a business climate that demands quarterly projections and next year’s budgets and five year strategies? One way could be the way Li & Fung does it: as Senior VP Alan Fromkin explained in our class this winter, they create a three-year goal, but they don’t dictate how they are going to reach it. Which gives them the flexibility to keep trying things until they get it right, at that time and in those markets.

It’s not an easy sell, when people around you are desperate for solid answers. But it is perhaps the only strategy that will succeed in the years ahead.

Failure as a Success Strategy

Lynda Lawrence — Wed, 06 May 2009 23:54:00 GMT

The June issue of Psychology Today is what I’d call the Recession Issue. There are articles about getting laid off, working as a free-lancer, relationships to money, relying on friendships, and failure. If there’s a unifying theme, it could be that this recession is actually good for you.

Could the same principles apply to business? Is this recession the best thing that could happen? The answer, I suspect, is a strong perhaps.

Relationships to money, for example, are relative instead of absolute. We compare ourselves to the guy in the next cubicle, not the guy with the private jet. So if your company isn’t likely to make its quarterly earnings projections anyway (and neither is your competitor), it might make that risky endeavor with the upside potential seem like a better idea.

Then there’s the notion of happiness. Study after study indicates that past a certain threshold, money doesn’t increase happiness. Passion, friendship and meaning do. Thus spending time in activities you love, or with colleagues you enjoy could pay big dividends in your personal happiness quotient while creating new professional opportunities for the future.

And finally, there’s failure—or what some people call learning experiences. If you hate what you’ve been doing for years, a layoff or negative earnings can be just the incentive you need to go back to school or move into a venture that you’ve always wanted to try.
It’s times like these, remember, that have given birth to many of the world’s breakthrough inventions.

Some Surprises on the Innovation Survey

Lynda Lawrence — Tue, 21 Apr 2009 22:40:00 GMT

In Business Week’s annual survey on innovation, it’s not a big surprise that many of even the most innovative companies have taken a hit. (With stock indexes hovering at about half their peak value, it would be amazing if they hadn’t.)

Also it’s no surprise that Apple and Google lead the list of still-innovating companies. It’s in their DNA.

The surprises are hidden in the deeper stories. Tata Motors, for example, has not only upended the car industry by producing the first
$2200 car, they are going to be selling those cars at electronic stores and department stores, plus Tata owned retailers. That’s a whole new business model after a century of dealerships.

One important element of their innovative approach is that they sponsor annual awards for the best innovations. Plus an award for entrepreneurial employees who tried something new that failed. What? Yes, awarding failure—something that a lot of companies give lip service to, but very few actually do.

A less hopeful surprise, however, is the result of a survey by Duke’s Pratt School of Engineering. They found that half of Americans believe that the innovations of this century will not come from this country. Most believe that China will take the lead.

If you’re an entrepreneurial company today, you have a chance to prove them wrong—but only if you keep innovation alive during these financial times.

Killer Cultures

Lynda Lawrence — Thu, 16 Apr 2009 01:50:00 GMT

As an advertising professional, you couldn’t miss the launch of the revolutionary new Saturn some twenty years ago. Never mind that it wasn’t an engineering marvel. It was built by GM, but created in a clean new plant with friendly labor relations, sold by dealers who wouldn’t haggle on price, delivered to customers who were so loyal they would use scarce vacation days to celebrate together at a manufacturing plant.

Today, unless there’s a last-minute Hail Mary from the dealers, Saturn is dead, a toxic brand that’s helping bring down GM. In an article in Newsweek, Paul Ingrassia explains just what went wrong, and it’s a classic lesson in corporate culture.

First there was infighting--sibling brands fought for resources, and won. Then they lost their champions—both the CEO and the labor leader were replaced by people who quickly reverted to the status quo. Then massive debt and falling sales drove GM to start making Saturns at otherwise idle plants, far from their distinctive culture. R&D was cut—they didn’t have a new model for a decade. In short, everything that made this an innovative approach was scuttled, and the entire auto industry has paid the price. Because instead of learning from Saturn, GM used their powerful internal culture to kill it.

GM execs have long lived in a bubble, getting fresh new cars every few months, driving wide mid-western streets to their spacious suburban homes, flying to meet their peers in corporate jets. So while their market share has been falling for 30 years, they kept reinforcing the old way of doing things, fighting the fuel standards that could have made them competitive, and killing their own innovations in electric vehicles.

Looking to the future of your company, if you want to stay ahead, it’s not enough to come up with a new product now and then. You have to make sure your corporate culture isn’t killing innovation faster than you can create it.

Investing in the Recession, Part Two

Lynda Lawrence — Thu, 16 Apr 2009 01:47:00 GMT

The Wall Street Journal is calling it the iPod Lesson—and it’s more proof that investing in innovation during hard times pays off. The amazing 9-minute Kraft macaroni and cheese, launched in 1937. Miracle fiber nylon, 1938. And, of course, iPod in 2001 when the dot com bubble had flattened technology companies.

Somehow people found the money to buy these items that nobody knew they needed, even in the hardest of times. And the advantage lasted for decades. Which is why even though revenues dropped 7.7% last year, R & D spending held flat at the most innovative companies, and some even reported higher spending.

Intel, for example, had a 90% drop in fourth quarter earnings, but only a slight dip in R&D, and new investments of $7 billion slated for the next two years. They’re investing in novel ways, partnering with universities to share their expertise and reap the value of fresh ideas. In our Topics in Strategic Innovaton class last quarter, our MBA students worked closely with Intel to explore new markets and new technologies.

So if you’re trying to predict the winners after this recession, you might want to take a closer look at the folks who are brave enough to keep investing in innovation when all other budgets are slashed.