Jun 9, 2010 | Innovation, Management
How do you figure out the productivity of employees paid to think?
In the old days, productivity was measured by a range of quantitative measures, quantity, cost, conformance to standard, cycle times, and so on. Now, when the productivity is ideas, improvements, removal/adjustment of past practices, and the “joining of the dots” it is harder.
When there is a clearly available substitute, the market dictates the price, it costs $60 an hour to get your car serviced, but where there are no obvious substitutes, it is more a matter of what the market will bear. What is it worth to hear a competent musician play a cover? What would it be worth to hear the piece played by the originator?
Competent musicians are relatively common, those who can create something worth covering are rare, and are paid accordingly, and the time it took to create the piece plays no part in the calculation, it is all about the value created, and measuring that is a whole new ballgame.
Jun 7, 2010 | Innovation, Marketing, Social Media, Strategy
Will the iPad and Kindle do to books what has happened to music? You have to believe they will. At the moment, it is the early adopters who are looking for books electronically, but it should not take too long to become mainstream.
It would be silly for publishers to become resisters rather than figuring ways to embrace the change that will happen, drive it, and thereby build a sustainable new business model. The core to that success will be the “ownership of the relationship” with the readers. Currently that is via the publisher who has control of the channel, apart from the few “big name” authors who have their own following, built after a publisher has invested in them.
The new e-readers offer a disintermediation opportunity for authors, one they will grab, so the role of the publisher is about to change, but how many of them see that?
Thinking about the potential for e-marketing of books also puts a gun to the head of the dumb restrictive publishing rules that exist in this country. I cannot buy a book published in the US in Australia unless a local publisher, or off-shoot of a British one, has chosen to publish here, adding another margin that has absolutely no value to me. Until recently, I did not have an option, then Amazon popped up, then the Kindle arrived, and now the iPad. Now there is a new set of rules emerging from the marketplace, and the existing regulations no longer have the control, so have become irrelevant.
Can somebody please tell the publishers and their cronies in the government, and I wouild not be too keen to buy shares in a book retailer wedded to the expensive shop front in Westfield.
May 31, 2010 | Innovation, Strategy
Providers of what eventually become seen as “Legacy” systems have the most to lose from a disruptive innovation, so they usually fight the hardest to maintain the status quo simply because they have so much to loose, and the collective vision in the business obscures the potential of the innovation to disrupt and destroy their existing franchise.
Kodak, invented digital photographic technology, but the margins in photo processing business were too attractive for them to disrupt themselves. Kodak simply failed to take the next step and go beyond film, and as a result is a shadow of its former self, its cash cow of film processing virtually gone.
Similarly, Polaroid “owned” instant photography, they had figured out how to apply emerging digital technology to photography, but the sunk cost of the existing business model was huge, they were a virtual monopoly, they underestimated the market drastically, so they sat on it, believing they had too much to loose by disrupting the ststus quo. Too bad!
Look at the frantic legal rear-guard action that has been a feature of the on-line music war, and the current woes of the newspaper industry, in both cases the losers have been the former incumbents, who had the game sewn up for years, and had the resources to remake their business model.
The only way to ensure longevity, is to be the one disrupting your own market.
May 27, 2010 | Innovation, Management
The formula for innovation success is different in each set of circumstances, but has some consistent themes: time, determination, patience, skill, top level support, collaboration, a combination of analytical and spatial skills, engaged participants, process discipline, and tolerance of failure.
The reasons not to innovate are far more creative, but have the common theme of finding an excuse not to stretch. The link is to a list of the 100 most common excuses, it is a bit of fun, but there would be few excuses lisited that we have not all heard at some time.
May 23, 2010 | Alliance management, Innovation, Leadership, Operations, Strategy
The momentum of innovation in the auto industry has picked up a notch, as a resurgent Toyota allies with Tesla to re-open the NUMMI plant closed earlier this year to produce a mass market electric car.
Toyota got the ball rolling 10 years ago with the Prius, and still leads by a mile in the eco car market, but the competition is emerging. This alliance with Tesla in the plant where Toyota allied with GM for its first plant outside Japan, demonstrating comprehensively that the quality of Japanese cars was not a function of some cultural phenomena peculiar to Japan, but simply a function of good management (a lesson GM never really got) may be just as significant.
It is reassuring to those of us who have watched Toyota transform the manufacturing mentality of the world over the last 30 years with their development and wide sharing of TPS, that after the recent stumble over quality, a stumble some predicted as the Toyota juggernaught seemed to be taking over the auto world, that they have been able to embrace the alliance, and return to the basic values that made them great.
With luck, they will be as open about the engineering and operational evolution of the JV electric car, and the lessons they learn from the alliance with Tesla, as they have been in the past. If so we will all learn a whole lot more.
May 20, 2010 | Change, Innovation, Leadership
Being successful is hard enough, sustaining that success appears even harder, as success breeds a status quo that is focused on more of the same stuff that worked last time, but not necessarily what will work in the future. Safety first, risk elimination, self interest, and hubris appear to become the norm.
This process is pretty well documented with the benefit of hindsight, but it is not always obvious as it is happening.
Microsoft was the success story of the 20th century, it transformed the way we worked and lived, it developed a virtual monopoly in a highly contested market, it remains hugely profitable, but has it dropped the ball whilst still generating those profits on the back of past success?
Microsoft missed the transformation of the music industry, tablet computing, gaming, were wiped out in search, and are losing share in their core server software markets to Linux, and now Google has a free alternative to Office, currently with microscopic share, but perhaps it is a beginning .
The slow erosion of Microsoft a business that just a decade ago was considered sufficiently powerful to attract the attention of the anti-trust laws in the US, potentially forcing a break-up as happened to previous businesses that had developed a virtual monopoly. Now, Microsoft appears to have lost all its edge, and is just trading on past success and the mountains of cash accumulated as a result.
The AT&T telephone monopoly was broken up in 1984, probably a few years before it would have happened by the mergence of new technology, Standard Oil of New Jersey broken up by the Sherman Act in 1911 would have taken a bit longer, but would certainly not have been able to maintain it monopoly after the discovery of oil in the Middle East.
Again, we see the parallels to the natural eco-systems that provide so many lessons for corporations, where sustainable success is dependent on evolution, and change at the margins, not power over the existing environment.
