Archive for August 2010

The Secret to Social Innovation

August 17th, 2010 by Mary-Ann Baldwin

A recent Economist article, “Let’s hear those ideas,” discusses how governments – in countries such as the US and Britain – are looking to “social innovation” as a solution to solving today’s social ills. In the US, for example, the Obama Administration has instituted the Social Innovation Fund (SIF) that will make monetary contributions to non-profit organizations with missions to alleviate social challenges such as Jobs for the Future, Local Initiatives Support Corporation and National AIDS Fund.

That’s a good start. But one of the biggest challenges facing many Americans today is joblessness. Up until this point, government initiatives have seen some success in maintaining or saving jobs, but it has been ineffective in creating new jobs for working America.

When faced with limited resources, such as money, time and people, what can we do to make sure such social innovation efforts are a success? First, it can’t only be about generating ideas. It has to be about meeting the “customers’ needs.”  In my view, a few key areas can’t be ignored:

  1. Partnerships. Collaborate with universities, corporations, non-profits and government agencies to develop sustainable, long-term solutions that solve the problems of economic development, conservation, healthcare and education. In short, get with the right minds to develop true, workable solutions.
  2. Think Differently. Albert Einstein once defined insanity as “doing the same thing over and over again and expecting different results.”  Why then as a society do we do the same things over again and expect for it to yield a different outcome? In order to be successful, we must adopt a different method for social innovation.
  3. Learn from the Experts. Bring together the best and brightest minds in innovation to map out a short- and long-term plan for how we can tackle America’s most pressing social challenges.

How would you approach social innovation?

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The Fast-Follower Excuse

August 16th, 2010 by Scott Burleson

At a major company, I heard an executive make this statement:

“We don’t need to study our customers. We’re a fast-follower. If you read all those Harvard Business Review articles, you know that it doesn’t pay to be first.”

This person was clearly not familiar with the proverb, “If you’re not first, you’re last,” as coined by philosopher Ricky Bobby from the movie Talladega Nights.

All markets have a first mover advantage. Just because other factors also contribute to a product’s success, that does not mean that there is some inherent advantage with being second, third, or later.

Being first to market means that your company has the infrastructure to capitalize before others. However, the risk is that you become complacent after educating the world about the utility of your product. Such sins of negligence include the following:

  • -  You don’t learn satisfaction levels of your particular product and improve it.
  • - You stop studying the market, so you don’t know how to improve your product relative to substitutes and later entrants.
  • - There is a reluctance to create a newer and better product out of fear of cannibalizing the original.
  • - The company develops a harvest mentality and insists on using the same physical assets.

    There are many examples where the first mover did not ultimately win, but rather a later player took advantage of the pioneer’s trailblazing. Nintendo defeated Atari, Amazon defeated Books.com, iTunes defeated cdbaby.com.

    Innovation from a market perspective is an endless series of product adoptions with each having some advantage over the previous generation. Let’s not confuse an “advantage” with a “guarantee.” There is a first mover advantage but not a first mover guarantee.

    If you claim to be a fast-follower and yet do not study your customers, then how can you know which innovations to copy?

    According to Deloitte, over 70 percent of mergers and acquisitions fail to create shareholder value. Granted, some of these deals are about decreasing costs, increasing efficiencies, and other various reasons. But many times, the acquisition is about obtaining a firm that has a product or technology that the purchaser believes will be received well in the market.

    How can a company know what technologies to acquire if it does not know what the needs of the market are?

    The bottom line is simple. Study your markets. Know your customers. Learn their needs, and the associated market opportunities. Your company must study them as if you were Indiana Jones and your customers collectively had the map to the Holy Grail, the Ark of the Covenant, the 10 Commandments, and Vince Lombardi’s secret playbook.

    Take a page from Ricky Bobby. With precise knowledge about your markets, you can innovate, create solutions, and acquire the proper technologies to boldly enact your growth plan.

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    What to Do With All That Cash?

    August 2nd, 2010 by Tony Ulwick

    According to a recent New York Times article, companies are taking in record profits, up 42.2 percent on average. But they are also holding onto their cash like Scrooge. Shareholders are happy because they’re profiting. But without reinvestment, the economy can’t grow, workers remain unemployed, and innovation is stifled.

    That’s not a sustainable strategy, nor a desirable one.  In the article, “Industries Find Surging Profits in Deeper Cuts,” the reporter notes that companies from Harley-Davidson to General Electric to Hasbro to Ford are cutting jobs to improve their profit margins.

    In this same article, Ethan Harris, a chief economist at Bank of America Merrill Lynch, says, “As long as corporations are reinvesting, the economy can grow.” But that’s not happening. And that’s not good news for any of us.

    To be sustainable long-term, companies have to invest in their futures. And this means investing in innovation, research and development, and market selection. If a company discovers the next big market, that drives growth, profitability and hiring.

    Since the economic collapse, Americans have a natural distrust of large corporations.  Now is the time for corporate America to invest in growth and innovation. Long-term, that’s an approach that will reap rewards, create jobs and re-establish America as the world’s innovation center. Businesses need to operate with hope and commitment to the future. Right now, they are sending a message of retrenchment and fear (and some would say, greed). That is not going to instill confidence on Wall Street or among consumers.

    With more than a 40 percent increase in profits, what else is corporate America going to do with all that cash?

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