An Olympic Anthem Made To Stick

The New York Times had an article today on successful and failed commercials from the just completed Olympics. I eagerly read it because I wanted to see what they said about the one commercial that I liked so much that I actually rewound it (using Tivo) and watched it many, many times. And I actually stopped my Tivo (an act that should be a metric of marketing success) whenever I spotted this commercial while fast-forwarding through Olympic commercial breaks. Not only that, I searched for the commercial on YouTube and watched it again. Not only that, I found the original source for the commercial and watched that again. Surprisingly, Stuart Elliott, the NYTimes article’s author, didn’t mention the commercial at all in his article on memorable commercials during the Olympics. So I will.

Nike’s United We Rise commercial takes film of Marvin Gaye singing the Star Spangled Banner at a 1983 NBA game and intermixes it with footage of the American Olympic basketball team preparing for the games. The effect, for me, was mesmerizing.

The appeal of the commercial, of course, is Marvin Gaye. To be able to take a national anthem and make it so different, so soulful, and so memorable is stunning even today. I can’t even imagine what the reaction was in 1983, although I know that Jose Feliciano almost ruined his career doing something similar at a baseball game in 1968.

What makes the Nike commercial so memorable? Let’s consider it within the context of Made To Stick, one of the more insightful commentaries on marketing of the past several years. In their book, Chip Heath and Dan Heath (brothers, one of whom is a Stanford Business School professor) outline the qualities of what makes a message (or commercial) sticky—what makes people remember a message and want to tell others about it, or in my case want to watch it over and over again.

The Heaths identify six characteristics that make a message sticky. Let’s examine the Nike commercial with these principles in mind:

  1. SIMPLICITY. The commercial’s message is simple enough: Gaye brought greatness in his own way to  honoring America, and the Redeem Team is going to do the same, in a way that will be memorable for ages. With style, and with a whole lot of coolness.
  2. UNEXPECTEDNESS. Needless to say, associating Marvin Gaye singing the national anthem with the Olympic basketball team was quite unexpected. Check.
  3. CONCRETENESS. Well, I’m not so sure what’s concrete about this commercial. Certainly it’s meant to embody Nike’s Just Do It, but without knowing that slogan already one would have a difficult time pulling that from the images. I’m going to rule that the commercial doesn’t capture this principle.
  4. CREDIBILITY. I believe that part of what Gaye brings to this commercial, believe it or not, is credibility to the USA basketball team. Gaye was a world-famous music icon who had recently had a hit with “Sexual Healing”, yet he chose to open an NBA game with a moving rendition of the national anthem that was as likely to hurt as help his career. Gaye took an American-born music genre and honored his country by applying his incredible talents in that genre to his national anthem. The American team had the ability to take an American-born game and apply their incredible talents in that game to honoring their country. The question pointed towards the USA basketball team as they entered the Beijing Olympics was whether they’d put their NBA stardom on the shelf during the Olympics and focus on representing America against the best of the rest of the world to the best of their ability. In today’s star-driven society, it’s easy to imagine a Kobe saying, “What’s the point? I’ve already achieved greatness in the greatest basketball league in the world.” Well, let’s consider what Marvin Gaye would say to that…
  5. EMOTIONS. Music has a way of touching people’s emotions unlike any other art form. Not only was Gaye’s performance masterful, when have you ever heard a national anthem transformed into a pop-art-form performance that preserved the spirit of the original anthem? There’s a reason that some of the most memorable (sticky) commercials have featured memorable music. Recent JC Penny commercials come to mind. This VW commercial from several years ago is said to have caused the significant posthumous revival of Nick Drake. And, of course, there’s Apple’s iPod commercials.
  6. STORIES. Well, there isn’t a strong narrative here. The message is more implied, as I’ve outlined above. I’m ruling that they didn’t meet this one as well.

So, that’s four out of the six Sticky principles achieved by this commercial. Not surprising that it stuck with me.

Given the nature of this blog, I’m forced to consider: was Marvin Gaye’s performance innovative? Given the requirement of economic value that many of my innovation colleagues require for something to be considered innovative, I suppose not. This Nike commercial, however, undoubtedly is.

Todd Mintz has a wonderful recount of his attendance at the NBA game in which Gaye performed. Below is the 60–second Nike commercial that I watched so many times on my Tivo (there’s 150 second version available on YouTube as well). And below that is film of the original Marvin Gaye performance. Enjoy.

Nike ad:

Original performance:

Disruptive Innovation in Health Care

Most people interested in innovation will have some familiarity with Harvard B-School professor Clayton Christensen and his classic books The Innovator’s Dilemma and The Innovator’s Solution. Christensen recently lectured at MIT on the topic of his upcoming book, The Innovator’s Prescription: A Disruptive Solution to Health Care. Christensen is an excellent lecturer and I recommend that you watch this video, courteously pointed to by Irving Wladawsky-Berger who also provides an excellent summary of the class. Make sure that you allot time for watching—the video is 88 minutes long.

Christensen spends the first half of the lecture reviewing the basic concepts of his first book: the process of disruptive innovation.

Here’s a tip for those who don’t want to watch the video or read his books: if you find yourself in a business that is happily conceding low-margin commodity business to small start-ups and happily retreating to the more lucrative high-margin business, be careful or you may end up as one of Christensen’s case-studies on extinction by disruptive innovation (you will never forget this lesson if you watch Christensen’s video).

I love the way that Christensen phrases his preventive medicine for avoiding extinction by disruptive innovation: create a division that is given an unfettered charter to kill the parent—imagine that mission statement on a conference room wall!

Christensen’s prediction for the future of health care (which begins around the 38–minute mark of the video) is that it will experience disruption due to three emerging technologies:

  • molecular diagnostics,
  • imaging technology,
  • high-bandwidth telecommunication.

Part of his message is something that I heard biotech guru Steve Burrill talk about a couple of years ago when predicting future trends in biotech: that better diagnostics will allow health care professionals to treat causes rather than symptoms. I’ve talked about how my field of hearing impairment will go through a similar transition, with better diagnostics allowing us to identify the physiology behind different hearing loss etiologies and provide individualized treatments. This falls under the general theme of individualization in health care, a future trend not only in my field by in health care in general.

For the rest of Christensen’s thinking on innovation opportunities in health care, check out the video—it’s worth the time.

Strategic Intuition: an interview with author William Duggan

Much has been written about innovation and the creation of new business and technology ideas. Little has been written about how a person makes that creative leap to come up with something new an valuable, the process that leads to the “Aha” moment.

Columbia Business School professor William Duggan has written about just this topic in his new book Strategic Intuition. I conducted an e-mail interview with Prof. Duggan to talk about the themes of his book, with a focus on the relevance of his ideas to entrepreneurs and startups.  First, though, here’s a brief introduction to his book.

Duggan describes the importance of strategic innovation right at the start:

It’s how innovators get their innovations, how artist get their creative ideas, how visionaries get their visions, how scientists make their discoveries…

Duggan is talking about not just any new idea but ones that are potentially game-changing, ones that seemingly come out of the blue and have a profound impact.

Duggan starts his book off by differentiating strategic intuition from the expert intuition that Malcolm Gladwell detailed in his bestseller Blink. Duggan goes on to describe how strategic intuition is achieved and how it is necessary for developing creative leaps into unexplored territory. He does so by investigating how strategic ideas get created through an examination of such diverse topics a Napoleon’s wartime strategy, Thomas Kuhn’s theory of scientific breakthroughs, and Buddha’s enlightenment. Duggan then discusses how strategic intuition has been applied in some well known and not-so well known business and political situations.

The following is the e-mail conversation that I (BE) had with Prof. Duggan (WD).

BE: Clausewitz, Kuhn, and Buddha are not obviously connected to each other or to business strategy. What was the inspiration to make these connections when preparing your book Strategic Intuition?

WD:  I noticed in reading that all three explain that good ideas come to you in the same way:  as flashes of insight.  Previous elements come together in your mind in new combinations.  They all talked about different subjects:  Clausewitz on military strategy, Kuhn on scientific discovery, Buddha on personal enlightenment.  So the content of the ideas is different in each field.  But the method of the good ideas forming is amazingly similar in all three.   

BE: In war, chess, and other disciplines, strategy and tactics go hand-in-hand. What is the relationship between tactics and strategic intuition, and how do tactics relate to what you call expert intuition?

WD:  The quick retrieval of the right tactic in the right situation is the essence of expert intuition.  An emergency room nurse is just walking by, glances at a child, and swings into action to save the child’s life.  The nurse can act so fast because she has seen that ailment before in some form, and her training or experience told her the right tactic to use.  Strategic intuition is different from this in three key ways.  First, it applies to new situations.  Second, it’s slow.  Third, it brings together many tactics in a new combination. 

BE: So simply put, expert intuition enables tactical action, while strategic intuition enables strategic action. In your book, you state that “Expert intuition works for familiar situations…But strategic intuition works for the unfamiliar” (p.7).  Your thesis here is that the application of intuition built from years of experience, such as that described in Gladwell’s book Blink, will not lead to innovations that can be provided by strategic intuition. People often try to apply their expert knowledge to new situations, thinking that insight from their own field of expertise will provide new and useful guidance to these new fields. Entrepreneurs often do this, and certainly venture capitalists rely on their own expert intuition when assessing new technologies and business plans. How can an entrepreneur tell when they are inappropriately applying their expert intuition and when their “flash” of insight is the result of a breakthrough from strategic intuition?

WD:  It’s entirely possible that some of what worked in field A will work in field B.  But you improve your chances if you also draw from field C, D, E, F, G and so on.  So you cannot set out blindly to apply field A to field B.  But it does often happen that you’re just going about your business in field A and it strikes you how to apply it to field B or C or D.  That’s good.  For example, Henry Ford got the idea to turn a stationary assembly line into a moving assembly line from the overhead rail of a slaughterhouse.  But he did not set out, as a planning exercise, to apply slaughterhouse ideas to carmaking.  That would be crazy.  So the moral is:  keep your mind open to using an idea from any field in any other field.  And notice that Ford was no expert on slaughterhouses.  You can borrow many ideas without any direct expertise at all in that field – which is another big difference from expert intuition, where everything depends on lots of direct practice. 

BE: That makes me think of a lesson I learned from a successful serial-entrepreneur in Silicon Valley: that startups often innovate by taking technology that is mature in one field and introducing it to a field in which that technology currently doesn’t exist, doing so at the moment when the market is ready for that unique technology transplant. You highlight this concept when discussing Thomas Kuhn’s The Structure of Scientific Revolutions. You note that “the common idea of how a leap of progress happens is a leap of imagination. Kuhn gives us an alternative to imagination…a selective combination of elements from the past makes something new. The elements themselves are not new” (p.16). It seems that many inventors and entrepreneurs develop innovations in ways similar to what Kuhn describes. The challenge is being able to identify those cross-disciplinary connections and to see the breakthrough that can arise from combining those previously unlinked technologies. What are your thoughts on whether these approaches by startups and entrepreneurs make them more naturally inclined towards strategic intuition than established market-leading companies?

WD:  I don’t think people in startups and new companies have better ideas than people in big companies.  I do think big companies make it harder to change direction, and most good ideas mark some kind of change of direction.  So it’s easier for a good idea to come true in smaller companies.  This is why I personally try to work mostly with big companies.  They have elaborate methods for generating and implementing ideas that run completely counter to how flashes of insight really happen.  When someone in a big company has a great idea, the company is already lumbering along a different path, and some top executive will have to admit that there is a better idea now and we need to spend a lot of money to change direction.  You can see why that seldom happens.  But it’s within the power of companies to make it happen.  That’s where I try to help.

BE: Are you familiar with IDEO’s approach of iterating customer observation and rapid prototyping as a way to gain insight into product use and to develop product innovations? Their approach seems to be a variant of Kuhn’s stages of scientific breakthrough.

WD:  There’s a wonderful book by Andrew Hargadon, How Breakthroughs Happen, that shows how IDEO draws existing elements from very different fields to make a new combination.  That’s exactly strategic intuition, and I think that’s the heart of their success.  Customer observation and rapid prototyping are good, but many companies do that.  I think what Hargadon points out is the most important piece of the puzzle.   

BE: Do patents embody strategic intuition or expert intuition—or do these concepts of intuition not apply to patent development?

WD:  The patent system is in chaos because better information – chiefly the internet – lets everyone trace backwards all the elements that you combine for a new patent.  So the people who did each element claim a piece of the new patent pie.  I think inventions are almost always strategic intuition in action, not expert intuition.  By definition it’s a new combination rather than a repeat of the same tactic in the same situation.

BE: In the traditional scientific method, one develops a hypothesis and then proves or disproves that hypothesis through experimentation. Kuhn points out that scientific breakthroughs do not occur though the scientific method; rather, breakthrough ideas occur after the assimilation and analysis of information, then experiments prove the truth of the breakthrough idea, and finally hypotheses are developed to explain the results. How do these concepts relate to innovation in business? One might view the traditional scientific method as akin to the market-research approach to business strategy: define a product offering based on knowledge of current customer demands, prove those demands with market research, then release the new product. Clayton Christiansen might call this incremental innovation. Kuhn’s scientific breakthroughs could be viewed as disruptive or radical innovations, where ideas are not readily apparent from current customer and market trends. Startup companies can be particularly adept at the equivalent of Kuhn’s approach because they typically have the breakthrough idea, take it to market, and then understanding the market and customer needs after assessing the success of the product.

WD:  The traditional scientific method does not start with a hypothesis.  That’s the experimental method, which is step 2 of the scientific method.  Step 1 of the scientific method is the work you do before you come up with a hypothesis and the experiment to test it.  And scientists know how you start that first step:  look in the laboratories of other scientists.  So whenever someone wins the Nobel Prize, ten other people come forward to say they did this and that piece of the work.  As in the patent system, that’s true.  So yes, starting with market research is a version of the experimental method, not the scientific method.  Market research should come after you have your new idea, because otherwise you have no idea which market to research, and you can spend a fortune researching exactly the wrong market. 

BE: Thanks for the clarification. Speaking of right and wrong markets, one strategy for finding new markets is Blue Ocean Strategy (BOS), described by Kim and Mauborgne in their book of the same name. Where do the concepts of strategic intuition intercept with the strategy of developing a business in an uncontested marketplace? The BOS concept seems at odds with the advice from Clausewitz, in that BOS advises not to compete directly in a fight for market share but to move to a battlefield where the enemy doesn’t even exist.

WD:  BOS makes the correct observation, after the fact, that the best business ideas create new markets rather than compete within existing markets.  But BOS does not tell us how to get an idea that creates a new market.  In fact, it leads you down exactly the wrong path, by telling you first to identify a new market with nobody in it.  That’s actually a recipe for losing a lot of money, because by far the overwhelming majority of markets with nobody in it have nobody in it for a very good reason:  there’s no money to be made there.  Let’s take Microsoft:  after the fact, we can see that they were the world’s first company to specialize in operating software, when there was nobody else in the market.  But did the idea for Microsoft come from first identifying that empty market?  Of course not.  Bill Gates and Paul Allen had no idea that operating software would be a big business until after their first success – BASIC for the Altair – which they put together from existing elements that were within the grasp of millions of computer geeks at the time.  Their flash of insight brought those previous elements together.  Then they realized they were first in a new market.  First the flash.  Then the blue ocean.  Not the other way round.

BE: “First the flash…” This is one of the main points of your book: that the flash is an acknowledged part of innovation, yet no one before has explained fully what is required to spark that flash. That’s where strategic intuition comes into play. You state, “What triggers active problem solving is the ability to recognize when a goal is achievable…There must be an experiential ability to judge the solvability of problems prior to working on them” (p.47). This speaks to the need for experienced management teams on startup companies proposing breakthrough technology, and experienced teams are something that venture capitalists look for in companies that they are considering for investment. It also speaks to the need for researchers to immerse themselves in their field of investigation if they want to develop their own breakthrough ideas. Yet it is often thought that someone with no experience in a specific industry might bring fresh eyes to problems and not be restricted in their thinking by common wisdom and past assumptions, i.e., they do not have expert intuition for that field. Is this thinking naïve or wishful thinking?

WD:  That quote is from Gary Klein, the world’s leading expert on expert intuition.  But as to your question:  I think the confusion comes from the meaning of “experience.”  Napoleon won his first battle against terrific odds without any previous combat experience.  Yet he had studied all the major battles of history, and so had all the experience of previous generals to draw on.  Expert intuition requires direct experience.  Strategic intuition requires knowledge, which you can get from reading or talking to people.  So yes, someone with no experience in an industry can bring fresh eyes to it.  But it’s unlikely that someone with no knowledge of an industry can do the same.  So someone from the slaughterhouse industry could bring a fresh idea to Henry Ford, who was already in the car business.  But someone has to know the car business too, to understand why the moving rail is such a good idea.  So I guess that argues for insider/outsider teams, where one person knows the industry and someone else brings fresh eyes.  The problem there is that their fresh eyes might not be the ones you need.  So imagine that Henry Ford brought in someone from the shipping industry, not the slaughterhouse industry.  There’s no way to predict which fresh eyes you need.  That’s why my favorite formula is someone with deep industry knowledge who consciously opens their mind to drawing from other fields – like Henry Ford himself. 

BE: I agree completely with what you say. I’ve found that some of the most innovative people I know are those who have a wide variety of intellectual interests and look for inspiration from outside of their field of expertise. How should these people, or any entrepreneur attempting to develop new technology, think about Clauswitz’s decisive point when considering their own business strategy?

WD:  The key to the “decisive point” is the contrast with the “objective point.”  Like everyone else, an entrepreneur must set goals.  But never think they’re set in stone.  An example is Puma, which Jochen Zeitz took over when it was a small, failing shoe company.  He made a tough four-year plan to outsource production and streamline operations.  A year into it, the Beastie Boys wore one of his styles at a concert – the Clyde – and the shoes sold out overnight.  It was a decisive point:  he realized he had a fashion sports apparel company, and threw out his objectives.  The decisive point is where you win.  The objective point is just your current guess on where your latest idea will take you. 

BE: Right, and Zeitz’s strategic intuition enabled him to identify that decisive point and take action. In a completely different field from military strategy, photographer Henri Cartier-Bresson talked about the decisive moment defining creative success in photography: “There is a creative fraction of a second when you are taking a picture. Your eye must see a composition or an expression that life itself offers you, and you must know with intuition when to click the camera.” The decisive point and the decisive moment seem to be similar concepts, both requiring experience from which intuition is drawn, the presence of mind to be looking for the breakthrough, the actual epiphany, and finally the execution.

WD:  My guess is that Cartier-Bresson is talking about expert intuition in that subset of professional fields where there is a lot of waiting and then quick action.  Hitting a baseball is similar.  Martial arts have a whole philosophy and discipline for this.  It shades into strategic intuition if the situation is new enough – perhaps if Cartier-Bresson takes on a new subject, a hitter faces a new pitcher, or a samurai confronts a new enemy.  Napoleon spoke in terms similar to Cartier-Bresson’s about the moment when you make your decisive move in a battle – that is, when the decisive point appears. 

BE: Miss that moment, and you risk failure. One builds up strategic intuition, in a way, to be prepared to take advantage of that decisive moment when it occurs. Do you believe that everyone has the ability to have strategic intuition—to innovate and create that flash of insight that combines elements from the past into something new? How can a company identify individuals who are better at this than others? What steps can be taken to successfully promote the development and application of strategic intuition?

WD:  My own view is that strategic intuition is an ordinary function of the human mind.  Can some people do it better than others?  I have no idea.  We have no way to measure.  Ray Kroc was 52 years old, struggling to sell milkshake machines, when the idea for McDonalds struck him in a classic flash of insight – he called it an “Idaho potato” hitting him on the head.  The day before you would think he had no strategic intuition at all.  The day after, you’d think he had a lot.  Did his capacity for strategic intuition change overnight?  I doubt it.  I do have a survey that shows how close people think to the basic ideas of strategic intuition, so companies could use that, but how you answer a survey and what you do in action are two very different things.  So I’m not sure how to identify people with more strategic intuition.  But I think I know how to promote the development and application of strategic intuition:  that’s what my whole book is about.  First, learn what strategic intuition is.  (That’s in the book.)  Second, apply tools that use it.  (Those are in the book too.)  Third, stop using other tools that inhibit strategic intuition.  This third step is the hardest, and that’s why big companies suppress strategic intuition so much. 

BE: You quote from Napoleon’s memoirs: “I bent my policies to accord with the unforeseen shape of events” (p.76). One common characteristic among many successful startups in Silicon Valley is their flexibility towards their business strategy.  Startups often reach unanticipated roadblocks and their ability to readjust their business plan with decisiveness—to find new applications or customers for their technology and abandon their original business plans–can determine whether they will succeed or fail.  You note that, “He [Napoleon] passed up more battles than he fought, looking for only those he could win” (p.172). This speaks to the need for startups to narrow their focus on what they are trying to achieve. Venture capitalists shudder when they see a business plan with multiple markets being addressed because this indicates a lack of focus for the startups inherent limited resources. Are restricted focus and strategic constraints necessary for the successful application of strategic intuition?

WD:  I think this is actually easier than it looks.  It’s very rare for a business plan to include the most important thing:  what previous elements combined in the entrepreneur’s mind to make up the new idea.  Since that’s not in the business plan, the VC must ask the entrepreneur in person.  If there’s a good answer, the VC will then have as good an idea as the entrepreneur of what markets the idea might or might not fly in, at least to start.  Then as the entrepreneur wants to change strategy, the VC will be up to speed to understand why. 

BE: This being a blog about innovation, I have to ask the obvious question: what is the relationship between strategic intuition and innovation?

WD:  Strategic intuition is how successful innovation happens.  I’ve studied countless cases, and when there was enough information to identify the source of the actual idea for innovation, it was always strategic intuition.  It’s really a simple idea:  for something complex to work, each piece that makes it up has to have worked before, in some way, sometime, somewhere in the world.  Innovators don’t dream – they combine.  How else could it possibly work?

BE: Our discussion has only scratched the surface of the material and insight provided in your book Strategic Intuition. I recommend to those readers of this blog who have found these topics interesting to seek out the more in-depth discussions in your book. Thank you, Bill, for what has been for me a fascinating discussion. Best wishes, and good luck with your book.

Presidential Hopefuls Ponder Innovation

BusinessWeek recently asked several of the presidential hopefuls from both parties questions on the topic of innovation. BW started by asking how each candidate defined the word innovation (the definition of which I’ve posted on several times, as have others), and then moved on to platform issues on innovation.

Probably not surprisingly, I was underwhelmed by the insight provided by the responses.

The most interesting answers given were their definitions of innovation. I’ll start with what I thought was the best response:

Barack Obama
Innovation is the creation of something that improves the way we live our lives.

A pretty good layman’s answer to the question. It includes the key elements of creation/creativity and the necessity for that improvement to provide value of some sort.

The rest of the Democrats’ responses were:

Hillary Clinton
Innovation…will be key to creating new jobs and rebuilding class prosperity.

No argument from me on this. It’s reminiscent of thoughts on innovation by Joseph Schumpeter. It’s not a definition, though.

John Edwards
Innovation means taking impossible tasks and turning them into reality.

Not a bad attempt. Luckily for those of us working on innovation generation, innovation does not actually require overcoming impossible tasks.

Bill Richardson
The American Dream is a belief that we can make tomorrow better. Innovation powers that dream.

Hmmm. I’d say the American Dream for most people is powered by hard work, skilled labor, initiative, and ambition. I’m guessing that one can almost substitute any noun for innovation in Richardson’s response when asked about something of value: “lower taxes power that dream,” or “education powers that dream.”

Now for the Republicans:

Rudy Giuliani
America can meet its challenges through innovation…low taxes stimulate growth [and] spark innovation.

Good job staying on Republican-point by bringing the topic of low taxes into this non-definition of innovation.

John McCain
Innovation is fueled by risk capital, skilled workers, incentives for entrepreneurs, a light regulatory framework, and open access to markets.

Not a definition either, but I like his attempt to define what is needed to create innovation. Proper education needs to be added to his list, though. I’ll actually blog on what I mean by this soon.

Mitt Romney
Innovation and transformation have been at the heart of America’s success from the very beginning.

Not sure why he threw “transformation” in there, but not a bad sentiment. Like Richardson’s response, though, this really is a catch-all response that can express support for practically anything that a questioner is asking about.

Fred Thompson
What we need is another spike in American creativity and innovation.

Thompson didn’t actually respond to any of BusinessWeek’s questions, so BW culled his responses from Thompson’s campaign material. I’ll let someone cull my response to Thompson’s quote from my previous blog posts—you can post it in my Comments section.

Overall, most responded to the question without really answering it. A sign of a great politician, I suppose.

BusinessWeek also asked each candidate how they would increase innovation in science and engineering education, green energy, and the military. Answers were consistent and predictable: increase funding for education, invest in non-oil energy resources.

Strangely, the article’s introduction stated that the candidates were further asked how they would stimulate innovation in R&D and how they would develop better ways to measure innovation, yet the only reply printed was Richardson’s response to measuring innovation: “track the extent to which federal R&D dollars spent at universities result in commercial products.” Not a good response: commercialization of university research is not really a good indicator of a society’s innovation creation. Also, Richardson would be sadly, sadly disappointed in the low number measured if his suggestion were attempted.

The article lists who (apparently) are the “Innovation advisors” to each candidate. I found this interesting for some reason—providing a peek behind the curtain, I suppose. Clinton’s is Tom Kalil, the Chancellor for Science&Technology at UC Berkeley. Obama’s has a couple Bay Area internet heavy hitters: Lawrence Lessig, Marc Andreessen—no wonder he had the best definition of innovation. Giuliani’s includes VC titan Kleiner Perkins (Al Gore’s new gig)—the VC connection explaining Giuliani’s focus on financing innovation in his definition. Romney’s includes the dean of the Columbia Business School.

Individual Innovation

Bill Taylor, blogger at the Harvard Business Review website, has an insightful post on two innovative companies. One of them is 37signals, a company whose products I’ve been using for a couple of years (Backpack, Basecamp) and which is admired by users and Web 2.0 companies everywhere.

If you have any experience with a 37signals product, you know that their two defining features are simplicity and intuitiveness (also defining features of the two most successful tech companies of this century, Apple and Google). During the recent Business Innovation Factory Conference, reports Taylor, the co-founder of 37signals explained their philosophy towards product development:

…if you try to make everyone happy with your products, you end up with mediocrity. Our company has opinions, and we build products based on those opinions.

This statement speaks to two sides of the product development process, whether the product is a movie, a restaurant dish, or an electronics device.

One side is consumer-oriented. Individualization is a theme in almost every consumer product and medical field these days. The more that a company can meet the unique needs of individual consumers, the more they differentiate themselves from companies that produce products for everyone that excite no one.

Taylor expands upon the thoughts from the 37signals co-founder:

If you’re going to do something original, something distinctive, something great, then almost by definition you’re not going to be right for everyone.

Disruptive technology, as described in The Innovator’s Dilemma, begins by meeting the niche needs of a select group of customers, technology that is initially deemed unwanted by the majority of traditional customers. The Long Tail is an extreme of this model of meeting the unique needs of individuals rather than a general product for everyone. Mainstream companies, however, are also embracing this approach (consider Nike’s consumer customizable shoes). Tivo, YouTube and independent films are all variations of this theme: either providing unique offerings for unique customers or allowing consumers to create their own customization.

Addressing the unmet needs of a unique group of potential customers is one road to product innovation.

The other side of the 37signals statement that I referred to earlier is the company side. The way that companies choose to develop their ideas and products is critical to the innovation development that will drive their marketplace differentiation.

I’ve always felt that design by committee produces a lowest-common-denominator result. Take several brilliant chefs/authors/directors and ask them to create something together, and the result will be significantly less creative and satisfying than what each could produce individually. Creativity and innovation require risk and the execution of a unique vision, both of which get diluted and ground down through compromise.

I’m not saying that collaboration and interacting with others is detrimental—on the contrary, this is one of the best ways of developing new ideas—but ultimately a singular vision has to be created that the company follows, whether everyone is in agreement or not. Jobs is brilliant at this, and even when his ideas fail, as with NeXT, they still demand the respect of having achieved innovation at the highest level (of course, much of what NeXT developed was ultimately integrated successfully into the remake of Apple).

I’ve got a strong feeling that the concept of entropy, which in information theory is a measure of uncertainty in a signal, can be applied to these concepts. High entropy systems are less predictable and embody more originality in its signals than low entropy systems. The most innovative companies/ideas/people would be quantized as having high entropy in an information theoretic applied to innovation. Any mathematicians want to give it a go?

Countdown to Innovation

CalendarJeffrey Pheffer, a professor at Stanford’s Graduate School of Business, recently wrote a short column in Business 2.0 magazine on the usefulness of deadlines. He gives a couple examples of their usefulness demonstrating how they can be effective at forcing decisions, actions, and agreements.

Pheffer notes that when Steve Jobs set a June release date for the iPhone back in January, he gave a useful deadline to the iPhone development team in finishing the product that forced them to finalize the product—but of course, anyone who works in development knows that product launch deadlines have this effect, Pheffer doesn’t need to summon an iExample to make this case.

An interesting question for this blog, of course, is whether deadlines can apply to innovation. Well…yes and no.

A process and therefore a deadline can be applied to innovation, as has been frequently mentioned with respect to design innovation. A practical example to shed light on this is the application of deadlines to research, to the extent that research represents innovation (a topic for a future post).

Deadlines can and should be applied to research projects. People with no experience with research think that researchers must work in a timeless vacuum, a limbo of thinking and investigating until the researchers discover something brilliant. The reality is that professional researchers—in academia and in industry—base their work around the investigation of hypotheses. Researchers usually have considerable expertise in the area that they are investigating and have a very good idea of the process that they are going to conduct to test their hypotheses. In fact, research grants that fund the majority of university research require a timeline for the research project, with anticipated milestones and deliverables explicitly stated. Any responsible company conducting research will require the same.

There is a difference between research project plans/deadlines and ones for product development, however, and that is that research plans are organic. Due to the nature of research, new information is often discovered that leads to further investigation. This unanticipated addition to the project plan is consistent with the stated goals at the outset of the project and is therefore both valid and valuable to execute, but it is a significant change to the plan that is usually not experienced in product development. Predicting task durations and milestone dates with research is more difficult when the outcomes of the tasks are unknown (the nature of research), but experienced researchers can still estimate them with reasonable accuracy because they have confidence that they know how to get answers to their hypotheses.

So, deadlines can be applied to research and, by association, to innovation.

There are aspects of innovation, however, that cannot given deadlines. The act of creativity cannot be given a deadline to those who are not creative. One cannot be told to have an innovative idea by Friday. Finding connections between seemingly incongruous technologies and concepts, one specific embodiment of innovation, is something that creative people live with and think about on a constant basis—they do not schedule flashes of genius.

Innovation has many embodiments: process oriented ones that make up the majority of innovative breakthrough, but also those “aha” moments where an opportunity is simply discovered. The former represents the majority of corporate innovation and should be executed by every company interested in creative product development, with schedules and deadlines in place. The latter represents key innovations that are not scheduled but result from creating of supporting culture thinking and having the type of employees to who are able to produce such creative acts.

Jobs on Design, Everyone Else on the iPod

I’m reading a book called Sketching User Experiences, which is an interesting dialogue on the philosophy of design, filled with many practical real-world examples. The author, Bill Buxton, has been a part of or exposed to many fascinating design projects over the years that he details in his book.

I want to post a quote by Steve Jobs about design from Buxton’s book:

Design is a funny word. Some people think design means how it looks. But, of course, if you dig deeper, it’s really how it works. To design something really well, you have to ‘get it.’ You have to really grok [understand] what it’s all about.

I feel like a broken record saying this on my blog, but it’s worth repeating, particularly for new readers to this blog. Design is the science of elegant functionality, which is why having a process for design development is so important. Just like research or development—design is also a well defined process.

Jobs’ quote reminds me of what was told to me recently by a friend who is a researcher at Apple’s top competitor. He complained that, more and more frequently on projects, executives at his company were instructing him and his colleagues to, “make it like the iPod—you know, simple and cool.” I’ve heard this complaint elsewhere and it’s obvious that the iPod has become the sole definition of design in many people’s eyes—some Platonic design ideal that everyone is striving to reproduce.

Also because of the iPod, simplicity has become the buzzword of the year, but this is also a misplaced ideal. I hesitate to discuss this, because simplicity has been a mantra of mine since the ‘90s given the unique needs of hearing aid users (my field) and my general philosophy that products should be intuitive. The design success of the iPod is a result of more than just simplicity, just like the business success of the iPod is a result of more than just its design. Perhaps a better buzzword for the future is intuitiveness, from which simplicity is one solution.

My friend’s dilemma was that this demand to mimic the iPod restricted his creativity to the design language of the iPod—he couldn’t treat each project on its own terms with its unique challenges. There’s no surer way to squelch innovation than to tell someone tasked with creative thinking to mimic someone else’s creation. Not only that, the requirements that produced the iPod design may have nothing to do with the design requirements of these other products. The relationship between a product, its use and its user may require a design solution completely different to that of an iPod, but that design solution can still be brilliantly elegant and functional.

While the iPod is currently an icon of design and probably the most written about product with respect to design, I suspect that it may soon become anathema to designers if executives continue to force their design teams to mimic the iPod style. Soon there will be a growing league of ipodoclasts looking to tear down the iPod and force their own design language to the forefront of consumer product design.

What’s ironic is that companies should actually be trying to mimic Apple’s/Ives’ approach to design and learning from his process of iteration and innovation rather than mimicking the product of its/his process. Until they do (and maybe even if they do), Apple will maintain its design lead. Perhaps the iPhone, another product of Jonathan Ives design team at Apple, will be the product to demonstrate that design success can result from intuitiveness rather than simplicity, at which point I suppose executives will be clamoring for products to be made like the iPhone—you know, intuitive and cool.

Supreme Rulings on Innovation

The Supreme Court ruled this week on a case that impacts past and future patents while also commenting on the nature of innovation. I’ll get to the innovation part in a second.

Briefly, the Court threw out the previously used test for whether an invention was obvious or not. Most new ideas do not pop out of the air but are combinations of two or more disparate concepts that, when put together, create something new. One of the most critical questions before patent examiners and patent trial judges has been whether this new creation is nonobvious. A patent attorney that I used to work with explained the concept of nonobviousness by holding up a pen and saying that his pen has never been made in the color chartreuse, so such a pen would be new/novel but would also be an obvious modification of currently available pens—there would be nothing nonobvious about it. A chartreuse pen would not elicit a, “Wow, how did you think of that?” response.

In a nutshell, this week’s Supreme Court ruling makes it easier to denote an invention as obvious. One interesting aspect of the ruling for this blog is that the language of the Court ruling speaks to the definition of innovation. Several blogs on innovation, including this one, have attempted to define what innovation is and is not (see the left column of Broken Bulbs, for example). Surprisingly, there is disagreement on the matter, with some people claiming that an invention must be successful in the marketplace in order for it to be innovative. I’ve argued against that definition.

One can look at quotes from the Court’s ruling to infer the judges’ opinion on what defines innovation.

Justice Kennedy wrote,

Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress.

Here he says that innovation is more than just the “ordinary course” of development of something new. Now, how one differentiates an “ordinary course” from an “extraordinary course” is another matter (presumably, one has to rely on the expert opinion of someone knowledgeable within that field of technology).

Interestingly, the court also wrote that ordinary innovation is not entitled to patent protection because it “does no more than yield predictable results.” So, what exactly is ordinary innovation? My best guess is that it is synonymous with the more commonly used term incremental innovation which is differentiated from radical innovation. The former is the common process of improving a product or process through regular R&D development and results in small and predictable improvements. The latter requires creativity and produces unanticipated inventions, resulting in often dramatic changes to product or process performance and often gives the inventing company a significant competitive advantage.

Other sources offered their opinions on innovation in this case. According to the New York Times,

Pharmaceutical and biotechnology industry groups…argued that innovation would suffer if patents became too hard to defend.

This argument was against the Supreme Court’s final decision, which will make it easier to file invalidity claims against issued patents. The biotech industry was worried that if straightforward tests for determining obviousness were eliminated, then innovation programs would be difficult for companies to justify because of the potential for increased uncertainty in issuance and litigation risk. This is counter to many recent arguments that the current state of patents has stifled innovation by creating such a minefield of potential litigation that companies have difficulty doing anything without infringing on weak patents and potentially facing frivolous litigation.

In contradistinction to the biotech group, Microsoft and Cisco filed a brief that was in support of how the Court finally ruled, stating bluntly, “The Federal Circuit’s current test for obviousness hurts innovation” and “has had a stifling effect on true innovation.” Their argument was simple:

Defensive, large scale patenting drains resources away from real innovation: scientists and engineers must spend time working with lawyers and patent agents to file patent applications where their time would be better spent on product development and research.

In their decision on this case that included discussion of obvious innovation, as discussed above, the Supreme Court seems to be aligning the legal assessment of patentability with the concepts of incremental vs radical innovation that have been developed over the past decade. There’s no doubt that the Court accepted the case due to their frustration with the current state of patents (given the unanimous decision, any guesses if the judges are all Blackberry users?), but it’s interesting to see their decision’s collateral contribution to the innovation discussion. I would say that this Supreme Court decision solidifies Innovation as the key business concept of this decade.

I will leave the final words of this post to the following three quotes on innovation from Justice Kennedy in the opinion of the court:

…When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions,
a person of ordinary skill in the art has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense.

This is so because inventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity will be combinations of what, in some sense, is already known.

We build and create by bringing to the tangible and palpable reality around us new works based on instinct, simple logic, ordinary inferences, extraordinary ideas, and sometimes even genius. These advances, once part of our shared knowledge, define a new threshold from which innovation starts once more. And as progress beginning from higher levels of achievement is expected in the normal course, the results of ordinary innovation are not the subject of exclusive rights under the patent laws.


The Physics of Pricing

The Associated Press had a great article that I read today (in the SF Chronicle) on the use of advanced mathematics to help determine product pricing strategies. So-called price-optimization tools from companies such as Khimetrics (acquired by SAP) and Zilliant analyze massive amounts of historical sales data to find clues for better pricing that would be difficult to discern without their sophisticated models. (These software systems cost in the 7–figures—assuming that Khimetrics&Zilliant apply their own analysis to their own pricing in a kind of post-modern self-reflexive business analysis, their customers must be hugely self-conscious about the “optimization” of their bill).

PhysicsThis whole field of analysis in part began, according to the article, when Khimetrics’ founder, Ken Ouimet, was studying complex systems in a university Physics department and he epiphonied (which should be verb) that shoppers have no more sense than a hydrogen atom (or something like that). Next thing you know, mathematical models developed to simulate the motion of atoms in gas are being used to model the purchasing behavior of beer-and-Doritos-buying consumers.

The article and its sidebar have several interesting examples of the successes  of these systems. The systems determine, of course, which products have price elasticity and which don’t. That’s not necessarily difficult for experienced retailers to figure out. What is difficult is to fine-tune pricing on a huge inventory of widely differing categories of products with barely discernible differences within categories.

What’s even more interesting is their analysis of relationships between products and subsequent recommendations to exploit correlational behavior. Beer drinkers, for example, will pay careful attention to price when buying their brew (“10 cents cheaper? Mickey’s Big Mouth for me!”) , but will snatch up snacks to go along with the beer with little concern for cost. So, drop the margins on beer and crank them up on Cheetos—balance this adjustment correctly and you’ve just increased your bottom line.

And guess what? Those consumers care even less about price during big sporting event weekends—turn the pretzel-price up even higher during NCAA Tourney action! Increase the price of mint leaves during Kentucky Derby weekend and you’re golden. Who would have thought that sophisticated mathematics could improve the profitability of such unsophisticated businesses as Safeway’s and Albertson’s.

Personalization/Individualization is a consumer theme that has hit practically all consumer markets, with the extreme perhaps being the ability to completely customize your Nike shoes online so that no other shoe in the world is identical to the pair that you buy. This is normally viewed as empowering for consumers: a good thing.

Consider now the logical continuation of price-optimization. With store cards (e.g., Safeway cards) that people use to take advantage of item discounts, companies are amassing large amounts of personal information that can be correlated with buying habits. Cross-correlate this data with other databases that can be purchased from other sources, and the ability to personalize pricing becomes incredible once price-labeling become easily and quickly changeable (be afraid when grocery store prices are shown with LCD displays).

Herein lies the dark side of too much power from too much information.

Your price-optimization consultant tells you that students coming back from the bar after midnight don’t care too much about the price of frozen pizzas? Nudge those babies up by 15 cents every late-evening and watch your profits climb. Obese people less sensitive to the pricing of chocolate truffles? Put a weight sensor in the gourmet candy aisle. Mercedes drivers less discriminating towards wine prices? Do I really have to spell out for you what to do?

The AP article I mentioned at the beginning of this post predicts that store prices will become more like the mystical pricings of airplane tickets, and I doubt many consumers will relish that thought. Have you ever heard anyone say they wish other businesses priced their products like the airline industry? Where two people sitting beside each other who bought their tickets on the same website pay wildly different prices because their purchases were on different days? Imagine that you are in the register line at Virgin Records with the latest Bond DVD in hand, and the person in front of you buys the same DVD causing the price of your identical DVD to increase by $1. Welcome to the world of airline pricing strategy!

The days of setting prices based on a fixed margin, on prices from competitors, or simply on an incremental increase over last year’s prices is becoming a fading, quaint tradition. Welcome to the Machine.

I sound cynical, yes. But still…

I have to appreciate the evolution of process sophistication. Of modern thinking challenging and overcoming the wisdom of experience (goodbye Willie Loman). This is the essential nature of science, of business, of innovation: new ideas obsoleting the currently accepted lore. I particularly like seeing advanced mathematical theory being applied to such innocuous business processes as the pricing of ketchup. Luddites take note!

Truth be told, I’ve always had a warm spot towards the practical application of esoteric mathematical theory. In fact, since my college days I’ve had a warm spot towards the mathematical discipline of Information Theory (welcome “information theory” googlers!), probably because I tried a long time ago to apply it to neural signals and failed completely (but others eventually succeeded).

Information theory tells us, well, how much information is in something and how much information can be transferred by a transmission channel. How informative is the weatherman in San Diego when all he predicts in every forecast is that the weather the next day will be sunny and in the 80s? Even if is accurate 95% of the time? Information theory would tell you that his information content is low because there’s not much information in declarations of a near sure thing (Listen and be astounded: I am here to tell you that you will take a breath in the next 60 seconds! See?! How amazing is that?).

That being said, my prediction is that the next New Thing in business/marketing will be an information theoretic approach to marketing. Some marketing channels will be proven to have much more information capacity to target consumers than others, and the capacity of each channel will be calculated to the nearest bit, allowing companies to charge millions of dollars for advice on which channel will provide the highest information ROI for your marketing message. Advertising a NASCAR race on American Idol, or promoting hearing aids in Mad Magazine? That’s less than 1 bit of advertising information. Advertising for either product in Golf Magazine, however—that’s called maximizing your channel capacity. is already taken. is not. What’s your guess on how long until all of the latter’s related domains are taken?

Architectural Innovation

GordanaA friend of mine, Gordana Pavlovic, was featured in Saturday’s San Francisco Chronicle for her architectural design work. I’ve always thought that she had a lot to say about innovation, and the Chronicle article articulates why.

Design is often thought of as a purely artistic process, where the designer does all of their work in front of their CAD program or sketchbook in the same way that a painter works in front of their canvas. Modern design, however, emphasizes an interdisciplinary approach that requires engineering, psycho-social research, manufacturing, and artistic vision to all work together in a process of innovation.

Gordana makes it clear that the same holds true for architecture. Her unique creations that include a glass-enclosed bridge tell how her work incorporates an understanding of the needs of her clients. She notes,

…you have to observe how people use space and how they live, and then design around that.

Similar sentiments were made in a short piece by architect Arthur Gensler in the January 2007 issue of the Harvard Business Review. Gensler describes how many architects talk about their clients getting in the way of the architect’s vision. Gensler goes on to say that his vision is based on designing to the client’s needs—there is no conflict between designer and customer. The same holds true in technology: a modern focus of technology innovation is to focus on the user experience and unmet needs: the vision starts with a focus on the client/customer.

In the Chronicle article, Gordana notes that having significant constraints put on her design requirements makes the problem solving process an exciting one. Again, a common modern theory of innovation is that the existence of significant constraints on possible inventions provides a framework from which one can best exercise one’s creativity. Too much freedom to innovate is like providing consumers with too much choice: one is left frozen by so many possibilities that one doesn’t know where or even how to start. By providing constraints, goals are clearly set and strategies can be more easily defined. By requiring an integration of a house’s design with nearby centennial oak trees, for example, Gordana was given a framework from which to begin her own creative process.

The picture at the beginning of this post, by the way, is a photo that I took at one of Gordana’s art exhibits: a glimpse of three of her paintings. Good design, after all, is part artistic.