Nokia Giving Away Software for Free

June 25, 2008

innovation by donationYesterday I mentioned that GlaxoSmithKline is giving away a small fortune’s worth of cancer research.  The idea is to speed up the process.

Yesterday, Nokia announced that it will spend nearly a half billion dollars to buy a software consortium – so that it can give away the software for free.  Symbian, one of the leading software developers for high-end mobile phones, is the platform for Nokia phones.  By offering the software at no cost, Nokia hopes to increase Symbian’s market share, to increase the pace of software development by third parties, and to decrease its own software licensing fees.

According to the article, “While more than 90 percent of PCs run Windows, the market for cell-phone software is much more fragmented, with a dozen competing platforms. That means software developers have a much harder time creating applications, and raises costs for handset manufacturers and carriers that have to deal with many different systems.”

Symbian will continue to be run as a multi-company foundation, addressing the concerns that it might eventually become a monopoly like Microsoft.

What can you give away to others – suppliers, researchers, competitors – that will enable you to increase innovation at a lower cost?

Open Source Innovation vs Open Innovation

June 24, 2008

Open Source InnovationI discussed Open Innovation many times in this blog.  The other day, GlaxoSmithKline announced that they are collaborating with the National Cancer Institute to make a “large body of cancer cell genomic data available to all cancer researchers.” This feels more like “Open Source” Innovation.

Much like Open Source Software, GSK has turned over a small fortune’s worth of information to the research community – for free.

Assuming that that the findings of the community are made public (the open source philosophy), this would almost certainly accelerate cancer research exponentially.  Each researcher could build on the ideas of others.

Most research groups are small organizations who do not have the capacity (or desire) to develop drugs.  Therefore, when breakthroughs are discovered, GSK can step back in and capitalize on the finding of the research community.  This will surely decrease their drug development times and costs.

I do wonder how they are handling intellectual property ownership issues that might emerge.  Stay tuned!

7 Ways Innovation Can Help Recession-Proof Your Business

March 13, 2008

As the economy continues to tumble, it is tempting to cut back on your investments in innovation. But now is the perfect time to increase your innovation efforts. Here are seven creative ways that innovation can help you recession-proof your business.

1. Make Your Products/Services More Accessible

Successful companies are now shifting their emphasis away from increased performance and sophistication to increased accessibility and affordability. This helps you tap into an under-served market. Low cost and ultra-portable netbook computers are outselling more expensive models. The Nintendo Wii has sold more boxes than PlayStation and Xbox combined. To learn more about specific innovation strategies, read our articles on The Innovation Bell Curve.

2. Use Open Innovation to Reduce R&D Costs

Sometimes it can be less expensive to have others do your innovating for you. Organizations like InnoCentive enable you to define the “value” of a new idea and then post your request to a large community of expert solvers. This moves innovation from an unpredictable cost (infrastructure, the cost of researchers, and other hidden costs) to a predictable cost (the posting fee and reward).  Other Open Innovation option include asking your customers what they want.  Check out MyStarbucksIdea.com.  Open Innovation is a perfect way to reduce costs while growing the business.  Learn about my own Open Innovation experiences…and dilemmas.

3. Use Process Innovation to Reduce Operating Costs

Innovation is not just about new products or new business models. It can also be focused on ways of reducing operating costs. Use my 7Rs of process innovation to help make your processes more efficient and more effective. I have seen companies reduce costs by 60% while improving responsiveness to customers by as much as 90%. If you can increase service while increasing margins, you are sure to recession-proof your business.  Download my 7Rs worksheet and improve your processes

4. Use Innovation to Match Supply and Demand

Sometimes you only want temporary measures to help you ride out tough times. I worked at Accenture, the large international management consulting firm, for 15 years. During my time there we went through three recessions. Each time the pattern was the same: the economy tanks, customers reduce spending on consulting, Accenture lays off employees, the economy picks up, Accenture scrambles to hire talent. During the 2001 dot-com bubble burst, they used a different approach. Instead of handing out pink slips, they offered a leave of absence for a period of time. The employee on sabbatical would get 20% of their salary (plus benefits) and would be assured a job upon their return. This helped match supply with demand, while keeping morale relatively high. Sometimes a creative solution can help you smooth the ups and downs of the economy.

5. Solve Your Customers’ Pain

Although customers have reduced spending on discretionary items, they may be willing to invest in products or services that eliminate their pains.  Problem solvers are always in big demand.  If their pain is the need for cost containment, how can you do it for them – and take a slice of the action?  In my business, I get more requests for speeches on “recession proofing” than I do for those on general innovation.   What pain do you solve?  Or how can you make your customer aware of a pain that they may not have noticed?  Learn more about why solving a pain is more powerful…during any economic condition. You may also be interested to learn why the ATM machine was headed for failure…until it was seen as solving a specific pain.

6. Fail Cheaply

If you are truly innovative, you will fail.  If you don’t fail, you are playing it safe.  Therefore, if you are going to fail, FAIL CHEAPLY.  And no, this is not the same as failing fast.  I am not talking about speed, I am addressing the cost to implement.  To fail cheaply, you must embrace the “build it, try it, fix it” mentality.  Build out your idea as a small experiment.  Implement it.  Learn from the experience. My Innovation Personality Poker was developed using this approach.  I first created a simple spreadsheet to test for personalities.  Next I wrote the words across the face of an ordinary deck of cards.  Then I created home-made cards printed at FedEx Kinkos on card stock.  Finally, when we knew it was perfect, we invested in designers and 500 decks of casino-quality poker cards.  Eventually we “perfected” the words and process and printed 40,000 decks…and the commercially published book.  Learn more about the “build it, try it, fix it” approach.

7. Before You Can Multiply, You Must First Learn to Divide

While in Asia, I heard a great expression, “Before You Can Multiply, You Must First Learn to Divide.”  I now find myself using this saying nearly every day.  The idea is that if you want to grow your business, you must learn to partner with others – and give them a slice (and a vested interest in YOUR success).  This means you take a smaller slice of a bigger pie.  With the economic downturn, this philosophy is even more appropriate.  People are now hungry for new money making opportunities.  When you help others make money, you make money.  Read more about this powerful, yet simple concept.

BONUS: Use Innovation to Improve Your Suppliers’ Business

We often underestimate the value of our various business partners, and in particular the value of our suppliers. I once worked with a potato chip manufacturer. They were dependent on the quality of the potatoes grown by small, financial unstable growers. Instead of squeezing their suppliers, they helped the suppliers grow their business. They helped the growers buy equipment and fertilizer at reduced costs by leveraging the buying power of the large chip manufacturer. They gave them business loans at reduced rates. When the market gets tight, your suppliers may struggle more than you. But if you help them be successful, you might find you are more successful.

The Bottom Line: Use Innovation to Leapfrog the Competition

While others are tightening their belts, truly successful companies use the recession as a chance to leapfrog their competition. My favorite company, Koch Industries, increases their investments during difficult times. They know that if they focus on innovation while others are cutting costs, they will quickly catapult past everyone else. They must be doing something right. They have grown seven times faster than the S&P 500 for the past 40 years. This is a company that has proven it is recession proof.  Innovation is a powerful tool that can help you ride out the tough times and position you for future growth. With the recession here, you need innovation now more than ever.

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Innovative Pricing Models

February 27, 2008

I was having a conversation the other day with the CEO of a small and growing company. We were talking about innovative pricing models that could help attract – and then lock in customers. Although there are many models out there, here are three I find particularly interesting.

The Consumable Model

With this model you give away (or sell at a reduced cost) a product that has a consumable portion to it. Give away the razor and people need to buy the blades. Get a cell phone, and you need to buy minutes. Buy a printer and you need to buy toner. The consumable portion can be sold on an as needed basis (the consumer needs to buy), as a subscription (you get a set amount each month – such as cell minutes), or as an automatic replenishment (use and we resupply). Staples recently introduced “Ink Drop,” a NetFlix style automatic replenishment for printer ink. Send in the empty cartridge and they will automatically send you a new one. I discussed this concept in my entry on analogy driven innovation.

The Substandard Model

With this model you sell a product or service at a significantly reduced cost, knowing that people will want to (or need to) upgrade at some point. I worked with a large computer manufacturer a number of years ago. Their top of the line product was out of the price range of many companies. So they offered a scaled down and slower version that was quite affordable. Here’s the interesting twist. The slower model was exactly the same computer as the top of the line model. All they did was add a chip to slow it down! They knew that many companies, once the computer was installed, would want the costly upgrade. To do so, they would simply remove the rogue chip.

The Freebie Model

This model is growing in popularity (I suspect it was originally invented by drug dealers looking to hook new addicts). Give a product/service away for nothing. Then, as they want more – or have increased needs – you start charging. This is particularly useful for web-based products where the cost of delivery is inexpensive bandwidth or software. Offer a base product for nothing. Although you may limit the number of users or the number of features, it is a fully functioning product. This is not a trial. Many website offer free versions of their base product, but charge a subscription for their “gold” level features. Adobe did a brilliant job of offering the Acrobat pdf reader for free. This created an industry standard…and helped sell their pdf creation software.

Are you looking to attract – and retain – new customers? If so, try these three models. With some creativity, I am confident that all of these models can be applied to your business.

What other innovative pricing models have you seen?

Traits of a Great Leader

January 30, 2008

Hillary Clinton and Barack ObamaWhen you think of great leaders, what traits come to mind? Honest? Competent? Inspirational? Courageous? Fair? Looks like a leader?

Although that last one is typically not found on lists of leadership characteristics, looks may be related to one’s leadership style.

In an interesting article published in The Economist, researchers found that students could determine a person’s leadership traits just by looking at a photograph of them. Here are some excerpts (please note that British spellings have been retained):

Dr Ambady and Mr Rule showed 100 undergraduates the faces of the chief executives of the top 25 and the bottom 25 companies in the Fortune 1,000 list. Half the students were asked how good they thought the person they were looking at would be at leading a company and half were asked to rate five personality traits on the basis of the photograph. These traits were competence, dominance, likeability, facial maturity (in other words, did the individual have an adult-looking face or a baby-face) and trustworthiness.

The results of their study…show that both the students’ assessments of the leadership potential of the bosses and their ratings for the traits of competence, dominance and facial maturity were significantly related to a company’s profits.

Sadly, the characteristics of likeability and trustworthiness appear to have no link to company profits, suggesting that when it comes to business success, being warm and fuzzy does not matter much (though these traits are not harmful).

Be sure to read the entire Economist article.  The article provides some fascinating insights into our perceptions of leaders and the qualities of good leaders.

How Important is Likability in Leadership?

[Read more]

How to Change an Organization’s Culture

October 1, 2007

Much literature has been written on branding.

But what is a brand? Can you define it in just 6 words?

No, it is not Nike’s “swoop.” It is not McDonald’s “I’m Lovin’ It” jingle. It is not Accenture’s Tiger Woods ads. It is not the design of my website or my “Unconventional Thinking” tag line.

Erik Hansen, Tom Peters’ brand manager (and a good friend of mine), said it quite eloquently. A brand is… “what your customers say it is.”

What is great about this definition is that it gives you direct access to changing your brand. To change your brand you must change your customers’ perceptions and experiences. No logo or advertising campaign has ever done this.

Much less has been written about culture. Can you define it in just 4 words?

This one is a bit trickier. If you Google “definition of culture” you will find a wide range of thoughts on the topic. Webster’s definition of organizational culture is “the set of shared attitudes, values, goals, and practices.” Not bad. But it does not give you direct access to changing your organization’s culture.

Try on this definition.

Culture is… “what your employees say.”

It not what they (or you) say it is, but rather what they say.

It is defined by the conversations. Verbal, written, and unwritten conversations. These might be your mission, vision, rules, and policies. But quite often, your culture is more powerfully defined by the informal conversations that take place.

Conversations between employees. Conversations between bosses and subordinates. Conversations between employees and customers. Conversations between employees and their family and friends. And most importantly, the conversations that take place in the heads of your employees.

Given this, how do you change a culture?

You change the language.

There is a reason I have been dedicating so much blog space to the power of language. Yes, I am fascinated by language. But more importantly, the words we use define our culture. The words we use impact risk taking, perceptions, and motivations.

I would love to hear your thoughts on these definitions.

In future blog entries, I will discuss specific ways in which you can change your organization’s culture by changing its language.

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