Perspective # 29 – Customer centric Innovation story

Customer centric Innovation story : Recently I heard a great story from an old friend who is a research scientist in Unilever Bangalore research center and was in the team which created one of India’s best known customer centric innovation – The Vim plastic coated bar which prevented the bar from becoming soggy and hence the brand became more economical. A bit of background on Vim bar.. Vim invented this category and is the market leader in the Rs 400 crore branded dish wash category. To sustain its lion market share they had a stream of innovations in the past – ‘lemon freshness’, ‘stain cutter’ etc. but the brand badly needed a boost as customers were shifting to liquid cleaners where the market leader Pril from Henkel was wooing the purchase influencers by their ‘free 25000 Rs. Insurance for maids’ plan (a classic ‘marketing innovation’) with actress Shobana as the brand ambassador. The much awaited breakthrough for HLL came in the form of Vim poly bar which fixed the ‘bar getting soggy and messy’ problem.

Coming back to the Vim poly bar story.. It took 3 years to develop the product which was gut wrenching as the soap had to jump three safety roadblocks – It should be safe to use, should not cause any adverse environmental impact when discarded by users and should be safe to manufacture in the soap factory. The researchers zeroed in on a polymer called monomer which can possibly do the wonder. The biggest challenge was to ensure that the polymer embeds uniformly on the dissolving soap, that too only on 3 sides with the top side uncoated! The entire chain starting from sales, packaging, raw material procurement, quality, transport, shelf life etc. needs to be tackled which was handled by taskforces,which means R&D personnel should know the complete value chain. As the end result or ‘what it takes’ is not known one could not tightly project manage this also.

The time pressure was very high as market feedback indicated that ‘liquid soaps’ are winning over bars and the 'which horse should I bet' classic innovator nemesis dilemma emerged (As a parallel activity another team started working on liquid soaps. They introduced the ‘innovative bottle cap’ that only allowed drop by drop usage. This helped HLL to support their ad liner - 'one drop is sufficient to clean a good number of utensils' and overcome the mental block among consumers that liquid cleaner is not ‘strong’ enough)

By this time ad agency Lowe had created the slick ads – a man soaks the bar in a bucket for 8 hours and then drinks the water! Imagine the pressure on the poor researchers! To add to this the soap needs to priced below the psychological Rs 10 for a 200 gm bar. The team also had to ward off the headhunters poaching the researchers for ITC and P&G research centers and also manage the Unilever's changing priorities for India :)

Absolute teamwork and motivation helped and at last they had a winner at hand! The monomer polymer was coated on soaps, precision UV treated for stability,the factory was regigged and was able to price the product right for rural market. As usual last minute surprises came during pilot tests – some users had a habit a cutting the bar into 3-4 chunks to ensure full paisa vasool :) and obviously the inventers had not designed the product for such demanding customers – fortunately it turned out that only few customers indulge in this practice! Sigh! Yes from the management perspective it was a leap of faith for three long years ..But so what ..Unilever who ‘invented’ this ‘soap category’ ensured that the category survives by reinventing themselves. A great story with valuable lessons.

Perspective # 28 – Competence-enhancing & Competence-destroying Innovations:

Competence-enhancing & Competence-destroying Innovations: So far in this blog we have explored many categories of Innovations – let us explore few more ☺ Tushman and Anderson introduced the terms - ‘Competence-enhancing’ and ‘Competence-destroying’ innovations. Competence-enhancing innovations leverage the current organizational knowledge to the next level. These innovations builds upon and reinforces existing competencies, skills and know-how. Turbofans in jet engines, series of breakthroughs in mechanical watches etc. are often quoted examples – all these innovations leveraged past tacit knowledge of existing processes and technologies which helped leap frog to the next frontier. Indian IT firms are classic examples – recall how they progressed from rote Y2K coding to advanced analytics now.

The next in the list is Competence destroying innovation, which obsolesces and overturns existing competencies, skills and know-how – a la phoenix legend. Think about how transistors destroyed vacuum tubes – or quartz watches killed (almost) mechanical watches. There are very few Indian examples – a close one is how Toyota Kirloskar killed the popular Quails Jeep with Innova – It was baffling, how on earth can someone think of discontinuing Qualis which had a loyal following with ‘classic’ SUV looks and replace with a odd looking Innova branded as multipurpose vehicle? End of the day the courageous step paid off. As per Tushman and Anderson "Competence-destroying innovations are negatively associated with incumbent performance, while competence- enhancing innovations are positively associated with incumbent performance—even as both are associated with system-wide organizational change."

Obviously competence-destroying innovations are tough to practice especially if one has to destroy the cash cow. Remember the famous quote of Ken Olson who was the CEO of DEC who spurned PCs and stuck to mainframe cash cows, "There is no reason for any individual to have a computer in their home" ☺ Though this quote has a context we all know that DEC died as they stayed away from competence-destroying innovations.

Perspective # 27 – Social Innovations:

Social Innovations: To start with let us define 'Social Innovation'. It is easy to get entangled in a debate over meaning and nuance of Social Innovation, as there are many definitions! As per Wikipedia Social innovation refers to new strategies, concepts, ideas and organizations that meet social needs of all kinds - from working conditions and education to community development and health - and that extend and strengthen civil society. As per the Centre for Social Innovation it refers to new ideas that resolve existing social, cultural, economic and environmental challenges for the benefit of people and planet. A true social innovation is systems changing – it permanently alters the perceptions, behaviors and structures that previously gave rise to these challenges. Many business schools like Center for Social Innovation of Stanford Graduate School of Business and INSEAD teach Social Innovation. As per INSEAD Social Innovation Centre Social innovation is the introduction of new business models and market-based mechanisms that deliver sustainable economic, environmental and social prosperity.

There are many global examples - "Mr. Condom", Mechai Viravaidya the activist in Thailand who has popularized condoms in that country. Restaurant Lentil as Anything where the customer decides what they want to donate for the food they've eaten, they decide what it's worth and give as they feel… The fashion store Clothing exchange where the currency is clothes where they replace shopping with the joys of swapping! ! Many many interesting examples.

'Hrudaya Post' offered jointly by the Postal Department and Narayana Hrudayalaya hospital is a great example back home - Under the scheme, first of its kind in the history of health care, heart patients in small towns and villages can go to any of the Post office and send their entire medical reports by scanning and uploading to Narayana Hrudayalaya. Checkout Ecomove cycle transportation catering to the crying need for people to adopt a travel solution that is ecological and economical.

Another amazing example is the LifeDream™ lifeskills training program. LifeDream™ addresses the needs of youth (18-25 years) who are constrained by low-income levels, inadequate skills, irregular employment, absence of opportunities for training and development, family indebtedness and little bargaining power at the economic or social level. They expect students to be successfully placed after the 3 month training and in return (Gurudakshina) they will work on environment and sustainability of their society. This novel experiment thus kills two birds with one stone. The pilot project is done at a Bangalore slum where all students got jobs plus there is a visible improvement in the environment.

Perspective # 26 – End of Financial Innovations?

End of Financial Innovations? : You almost get beaten when one talks well about Financial Innovations nowadays ☺ Newspapers are full of economic columnists and gurus – they explore in detail the jargons like statistical arbitraging, vanilla CDO’s, Synthetic CDOs etc. Revelations after revelations follows – they ‘now’ talk about how rating agencies doled out AAA ratings in return of higher fees (S&P charges as much as 12 basis points of the total value of a CDO issue compared with 4.25 basis points for rating a corporate bond) Now the experts are finding the real reason why shares of Moodys, have more than tripled to $68.60 on May 9 from $20.65 at the beginning of 2003! One wonders where these ‘know-alls’ were all these days! Many risk averse lazy fat bankers are also ‘seizing the opportunity’ and proclaim that it was their ‘water tight strategy’, which helped them survive. More disheartening is that they blindly tar Financial Innovations as it is fashionable nowadays, though the fact is that it was a combination of bonus greed plus home loans available zero money down (who realize the gains if the price goes up, and walk away unscathed if the price turns downward as the loans are non-recourse.) which created this mess.

Though there were ‘financial innovations’ like NINJA loans (No Income No Asset) the misuse and lack of regulations led the downfall. Also the 'cool financial innovation’ of slicing bad loans and mixing with good ones and distributing the losses all over the world was theoretically okay, as one even in wildest of dreams will not imagine a global total crisis as we are faced now!

Some of the innovations are scary !! Death bonds may be the most macabre investment scheme ever devised by Wall Street . As per Businessweek - "Death bond is shorthand for a gentler term the industry prefers: life settlement-backed security. Whatever the name, it's as macabre an investing concept as Wall Street has ever cooked up. Some 90 million Americans own life insurance, but many of them find the premiums too expensive; others would simply prefer to cash in early. "Life settlements" are arrangements that offer people the chance to sell their policies to investors, who keep paying the premiums until the sellers die and then collect the payout. For the investors it's a ghoulish actuarial gamble: The quicker the death, the more profit is reaped." :) :)

Hopefully better sense will prevail and ‘Financial Innovations ‘ will make a comeback soon!! ‘C’mon the show should go on!! Maybe it is also a good time to reread the award winner book - The Origins of Value: The Financial Innovations that Created Modern Capital Markets by William N. Goetzmann and Geert Rouwenhorst in which they beautifully portray Financial Innovations of good old days - Babylonian loan contracts, invention of interest in Mesopotamia, origin of paper money in China and continue with new innovations like mutual funds, inflation-indexed bonds, and global financial securities.

Perspective # 25 – Legal Innovations

Legal Innovations: It is worthwhile to review recent Pharma takeovers with an Innovation lens. Malvinder Singh and family cashed out India’s #1 Pharma player Ranbaxy to Daiichi Sankyo for $4.6 billion. Though Malvinder Singh brands this as a 'transformational strategic redefinition' and not a sell-off ,he is running laughing to the nearest bank ☺ .

There are also patriotic concerns like the Death of Dreams - "someday Ratan Tata may also be pushed to sell Tata Motors to a Toyota; or that the Infosys management may one day reach the conclusion that it is in shareholder interest to sell out to IBM? " Let us keep the patriotic concerns aside and look at this deal from the innovation perspective.Though this is loads of cash , this pales in comparison to possibilities if they persevered and had hit a blockbuster drug. ChrysCapital MD Sanjiv Kaul, summarizes this nicely “Commercially, it is an awesome deal. However, Ranbaxy was the all-conquering Indian hero and should have been the last man standing instead of being the first to capitulate. A huge positive for Ranbaxy but a negative for Indian pharma.”

Pharma giants worldwide are celebrating as they feared the ‘legal innovation’ (innovators working in tandem with legal eagles) weapon of Ranbaxy. Interestingly legal and professional fees of Ranbaxy was Rs 154 crore in 2007, which ate into their net profits of Rs 617 crore. Why global pharma is celebrating? They are hopeful that the Japs will control their ‘legal innovation’ tool ........ Let us rewind few years back on the Ranbaxy and Pfizer Lipitor dispute and read the article Investors biting nails over Lipitor which said “Lipitor, which is designed to lower cholesterol, totaled $10.8 billion in 2004 sales, the first drug ever to surpass $10 billion. Deutsche Bank projects Lipitor sales will grow to $14.2 billion in 2007 if Pfizer successfully holds its patents. But if Pfizer loses, it could face a $8.6 billion plunge in annual sales by 2007" Pfizer CEO saved his job by cutting an out-of-court settlement with Ranbaxy

............Now let us now look at another Pharma innovator Genentech which is in news, as Roche wants to increase its stake and has offered $43.7 billion USD. Genentech stock moved to $95 and some analysts are talking well over $100 !! What is the big deal about Genentech and why the hell is this company so valuable?What has Genentech got which Ranbaxy does not? As we all know India has the best brains and the world is flat! The answer is thought provoking .Checkout how Genentech save lives and their true Innovation history . This company also got sheer guts! Their famous Scientist CEO, Levinson persuaded the board to plow 50 percent of revenues back into research (yes 50% - not a typo) End of the day it pays... as we are seeing now!'Legal innovation’ is not worth it! It makes only small change compared to true innovation.

Perspective # 24 – Web 2.0 Innovations

Web 2.0 Innovations: For enterprises great innovation opportunities await for exploiting the new ‘rich’ Internet, which is branded as Web 2.0 and 3.0. Remember and compare those good old static yahoo pages (web 1.0) and yahoo today (web 2.0) which is much more engaging. Web 2.0 is many things to many people. For many of us it is social networks like Myspace or Facebook or Twitter the microblogging service .. for some it is Wikipedia, the free encyclopedia that anyone can edit or Second Life the 3-D virtual world entirely owned by its residents or Flickr online photo management tool or…. The list goes on! Nevertheless the business impact is profound – watch this youtube video in which the gurus like Bill Gates discuss The Impact of Web 2.0 at the Davos Annual Meeting 2007.

Organizations across the globe are trying to leverage the ‘new Internet’ to better serve their customers and improve productivity. Yes - it is not just the Facebook kids or Secondlife avatars but even nano scientists are using Web 2.0 . nanoHUB, the science gateway for nano-science and nanotechnology housed at Purdue University is an example. The Web site is a required bookmark for people who get excited about stuff like algorithms, carbon nanotubes, nanoelectronics and quantum dots. Michael McLennan, a senior researcher says “ the secret sauce of nanoHUB is a software application that is between the supercomputers at national research facilities that power the site and the Web interface. This "middleware," named Maxwell's Daemon, also finds available computing resources on national science grids and sends job requests to those computers faster than the blink of an eye.”

Innovations also await those who leverage mashups. A mashup (which may get replaced by semantic web later) is a web-based application that combines two or more different applications into a single view. For example do you want to know who speaks better –McCain, Clinton or Obama? Check this Speech Mashup. You don’t need to be a nerd to create mashups – just see how simple and easy it is to create this vacation request application mashup.

And behold. We are seeing just the beginning – ‘Rich Internet Applications’ a.k.a Web 2.0 plus ‘Cloud Computing’ plus ‘Software as a Service’ plus ‘Telepresence’ the high-definition video conferencing system will transform our business landscape. No – This is not a bubble like we had in the past as today there are strong business drivers like co-creation and prosumers who produce and consume – also Web 2.0 is not built on vanilla HTML ..now we have solid tools and technologies like Flash, Flex, AJAX, Folksonomies, Microformats, REST, XML, JSO, XHTML, RSS, Atom, Wikis, WebTop, Ruby on Rails etc.

This year Arcelor Mittal is going to host their annual shareholder meeting in the second life virtual world. The website says, “To access the ArcelorMittal virtual meeting centre, please ensure that Second Life is installed on your computer and that you have an avatar.” ☺ note this is a brick n mortar steel company..Julien Onillon, the head of investor relations gets excited and tells Wall Street Journal, “At a real shareholders event, people come for drinking and not for the event. We want people who are really interested to attend the event. Though anybody can attend the meet, security will be tight. Though there won't be any bouncers if a guy starts to get naked and says bad things to Mr. Mittal, he will be kicked out” and then the profound punch line “We’re going to be touching a population that has never been touched” They also plan to legitimize the virtual Linden Dollars with which you can buy real Arcelor shares! Geddit? The writing on the wall is clear – endless innovation possibilities!!

Perspective # 23 – Look around and leverage!!!

Look around and leverage!!! : It is not necessary to create something ‘new’ when you can ‘leverage’ what we have already. The key is to connect (or visualize) the business need with existing innovations. Steve Jobs once saw a crude demo of worlds first GUI at Xerox PARC Labs and he was able to ‘visualize’ the potential and was the driver for Apple’s famous UI …Which in turn gave ‘inspiration’ to Windows.

Every quarter Apple sells 10 million iPods whereas Sony, Microsoft Zune, Creative etc. languish – interestingly there were many MP3 players in the market before iPod but they never caught fire like iPod.

Sometimes ‘novel’ innovations can be detrimental! In fact the study of Brian Uzzi, professor at the Kellogg proves that truly novel products have a very high failure rate. It is not just products - the same applies to business model innovation also. Overture invented the ‘paid search’ business model innovation but it was Google who made Billions by executing better. Net net ---- Look around and leverage!!!

Perspective # 22 – Strategic Innovation

Strategic Innovation: Vijay Govindarajan and Chris Trimble, professors at Tuck School of Business at Dartmouth College introduce the concept of Strategic Innovation in the book Ten Rules for Strategic Innovators: From Idea to Execution. 'Strategic Innovation' as per these gurus is different from product innovation, process innovation, value innovation, service innovation or business model innovation. Strategic innovation is an experiment usually done by well-established organizations involving a sizable investment in an unfamiliar new business that may take years to produce a profit. The book includes case studies of some of the companies who ventured into this space - New York Times Digital, Corning Microarray Technologies, Hasbro Interactive, Capston-White and Analog Devices.

Their research explains how some firms are able to execute the big idea they had and how to build a new cash cow while sustaining the bread and butter existing business. The authors explain the three challenges (a: The need to 'forget' the parent company success recipe b: 'Borrow' some assets of the parent, such as brand, manufacturing etc. c: 'learning' on how to succeed in a new environment) The Key message is as fol. "The core competencies and routines you have developed to succeed allow you to innovate in an incremental way around the current business But, those same competencies and routines will hamstring entrepreneurial efforts in new businesses. If NewCo cannot forget the old, then it will have trouble learning the new.” and this means rewiring the organizational DNA across four areas: staffing, structure, systems, and culture.

Tough job indeed..Considering the shorter CEO life spans and the danger of missing the quarterly earnings estimates! Reminds of the famous Jonathan Swift quote "He was a bold man that first ate an oyster." Yes, it needs lots of courage and boldness to do a strategic innovation experiment, but it is worth it.

Perspective # 21 – Intellectual Property Dimension Part Two

Intellectual Property Dimension Part Two: In good old days there were not much ‘innovation competition’ - for example we did not have multiple scientists working on the same objective – say curing baldness! Now research is going on on everything under the sun and the catch is that if you are not very careful one can step on another’s toe and get sued big time.

To make the matters worse patent trolls are waiting out there to blackmail you as soon as you invent something!Be paranoid as now the world is flat.Kodak is the most often quoted case study. They unknowingly (?) infringed on Polariod patents and suffered badly – they had to shut down a $1.5 Billion factory and pay $909 Million as damages ..and to top it they paid over $100 Million as litigation fees. What is more interesting was that it was considered a victory for Kodak as they were originally sued by Polaroid for $12.5 Billion!!! (Jeez! that is a helluva lot of money)

Sometimes it is plain stealing (c’mon- though all companies swear by their values and have appointed ‘chief ethics officer’ etc. ,most of them indulge in corporate espionage and have dirty tricks departments) GE was caught infringing MRI patent of Fonar and ended up paying $128,7 million. Microsoft keeps paying! They paid $160 million to Digital and $ 30 Million to IBM for patent infringements. (‘Infringement’ is the right word sir, not ‘stealing’!) These are scary numbers. Who has got time to pore the thousands of patents for possible clashes? Note that 145,300 international patent applications were filed in 2006. Imagine if you are innocent and get sued.

This is what happened with Apple iPod. Steve jobs and team invented the amazing UI where one can easily navigate the menu. They launched it globally and was an all time hit. The loss making rival Creative Electronics also had developed a similar UI and applied for the patent. Apple woke up but bit late – 18 months later they also filed for the patent but clearly Creative had the time advantage and their ‘Zen patent’ won. The Zen Patent is summarized as “automatic hierarchical categorization of music by metadata. The ability for a digital music player to display music using artist, album and track menus” United States patent law is notorious for its ‘first to report invention' system. To make matters worse for Apple their archenemy Microsoft had also applied for similar patent and won and Apple’s patent applications were rejected. Apple lawyers tried the “maa kasam mein chori nahi kiya.Yeh mera hai” (I swear by my mother, I didn’t steal.It is mine) pitch but failed ☺ Just kidding! I dont want to get sued! but jokes apart this is called the classic double whammy or gridlock! Apple angrily sued Creative back claiming that creative had infringed seven of their past patents but it was bit too late. They literally had Apple by their balls! Just imagine the pain - As of September 2007, the iPod had sold more than 150 million units worldwide. Imagine the frustration of Apple designers … anyways the legend Steve Jobs managed it somehow – we don’t know the details but certainly millions have changed hands. Creative also became a licensed ‘made for iPod’ accessories maker. The story ends and they live happily ever after!

During Edison days we never had these issues.. no one came back and said “excuse me Thomas – I invented the bulb before you”!!!!!

Perspective # 20 – Intellectual Property Dimension Part One

Intellectual Property Dimension Part One: IPR actions needs to be carefully planned during the innovation process. The first dimension is that one needs to aggressively pursue IP (trademark, copyright, patents etc.) during the innovation stage.

History is littered with examples where ideator was worshipped but ‘others’ reaped the benefit. Xerox is the ‘market leader’ in this space! They innovated the 1st GUI technology, the 1st copier machine, the 1st desktop fax machine and the 1st computer networking – Ethernet, but did not bother to monetize on the IP and lost. Nowadays the world is full of thieves!

They did not even spare this poor blogger… Last month my blog was copied by an innovation consultant. Yes Imitation is the highest form of flattery, but I was forced to act as the blog was featured in Rediff. I wrote to Rediff and they promptly removed the blog and apologized. Now my blog is protected by copyscape so that I get notified if anyone tries to steal the content.

Dell is a great example on how to leverage ‘business method patenting’. Though we all attribute Dell’s success to their sales skills and direct to order system, many fail to notice why IBM and HP is not to able to simply copy the well documented Dell ‘best practice’ – they cant because Dell has got 30 plus patents protecting their online direct model system.

Dan Bricklin and Bob Frankston created the worlds first spreadsheet VisiCalc but did not bother to patent and we all know what happened next ☺ Those who are nostalgic about spreadsheet history can checkout www.bricklin.com/visicalc.htm where they indirectly lament “We retained a patent attorney who met with executives. The patent attorney explained to us the difficulty of obtaining a patent on software, and estimated a 10% chance of success, even using various techniques for hiding the fact that it was really software (such as proposing it as a machine). Given such advice, and the costs involved, we decided not to pursue a patent.”

Think about this...Last year MS Office clocked sales of $18.3 billion and out of Microsoft’s profit of $20.8 billion, $11.9 billion came from MS office.Though they are nice guys guess what will happen if Dan and Bob bump into their IP lawyer today? Bloodbath possibly ☺

Perspective # 19 – Value Innovation

Value Innovation: ☺ Nowadays you will be almost ridiculed if you have not read the strategy book Blue Ocean Strategy (BOS) by INSEAD professors Kim and Mauborgne!! Don’t get caught surprised if your boss says, “Let us do a BOS session”! Though there are thousands of strategy books, this one is selling like hot cake and is already translated into some 40 languages! The blue ocean/ read ocean metaphor itself is a great ‘innovation’ – though the concept itself is not new the powerful metaphor made it a great success.

Another reason was that the theory turned the traditional trusted Porter strategy framework which portrays that successful business are either low-cost providers or niche-players upside down. Pundits who hail the 'benchmarking' tool hate this book though!

The heart of blue ocean strategy is the value innovation concept. A blue ocean is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company. As per Kim and Mauborge “Value innovation is a strategic move that allows a company to create a blue ocean. Typically, companies in the red ocean pursue incremental improvements for customers through either low cost or differentiation. Value innovation helps companies make giant leaps in the value provided to customers through the simultaneous pursuit of differentiation and low cost. It shouldn’t be a trade off between the two; exceptional value and innovation should be inseparable. Offer buyers a huge leap in value, and that will give rise to new markets. That’s how you make the competition irrelevant.”

Famous examples are Red Bull energy drink, Cirque du Soleil, Swatch and Starbucks. Interestingly many Indian firms are practicing Blue Ocean Strategy for long! Reva electric car who stayed away from the rat race is an example. In the crowded Indian FMCG red ocean, which is dominated by MNCs like P&G, Unilever etc. we have few who ventured into the blue ocean by 'value innovation' – Paras Pharma (Dermicool, Livon, Moov etc.) and Cavincare’s 50-paisa shampoo sachet are examples.

Perspective # 18 – Balancing Innovation and Efficiency

Balancing Innovation and Efficiency : Prof. Rishikesha T. Krishnan of IIM Bangalore recently spoke about Balancing Innovation and Efficiency. Some firms choose the efficiency path (GE of Jack Welch era) and some the Innovation path (Apple, Sony etc.) The need of the hour is to marry these two competencies so that the organization is responsive, innovative and efficient at the same time.

This is a tough challenge as "efficiency requires stable routines – read stable & controlled environment whereas Innovation requires creativity & new ideas – read loose & flexible environment." Though this is challenging there are organizations that got this equation right. Prof Rishikesha gives examples of the Ace project of Tata and the Shell GameChanger project.

A great example of the danger of ‘either’ or ‘or’ is 3M where they hired ex GE McNerney as their CEO who almost killed the famed 3M Innovation culture with the ‘efficiency’ mantra. (If all you have is a six sigma hammer everything looks like a DMAIC nail!) Read the insightful article ‘At 3M, A Struggle between Efficiency and Creativity - How CEO George Buckley is managing the yin and yang of discipline and imagination http://www.businessweek.com/magazine/content/07_24/b4038406.htm

Perspective # 17 – Frugality drives Innovation

Frugality drives Innovation: Jeff Bezos of Amazon said in a recent Businessweek Interview “Frugality drives Innovation,just like other constraints do.One of the only ways to get out of a tight box is to invent your way out.When we were first trying to acquire customers, we didn’t have the money to spend on ad budgets.So we created the associates program,which lets any web site link to us, and we give them a revenue share.We invented the one click shopping so we could checkout faster.Those things didn’t require big budgets,They required thoughtfullness and focus on the customer”

Yes - Frugality drives Innovation and we in India are a living testimony! Checkout the Hindustan Times article ‘Espirit de jugaad’ -- India’s 60 most interesting innovations. Read about the barber from UP, Mohammed Idris, who uses a ‘bicycle-powered horse-shaver’ in which the power of the bicycle rotary drive is converted via speed cable to the cutting blade, which cuts the horse hair .Another good one is the Maruta jugaad assembled in the sugarcane fields of UP and Punjab.This bare bones transport is put together using a pump, a wooden plank and old tyres. It has a 20-seater bullock cart trailer attached to its rear. A steering is jacked into the shaft and the 12-horsepower pump engine is hand cranked to give speeds crossing 20km/hour.!!!

Also remember that the best Russian literature came out during those oppresive days. Think about it .. Microsoft spend 6.5 Billion in R&D last year and all we got was Vista!

Perspective # 16 – Diversity is the mother of Innovation

Diversity is the mother of Innovation : Guess who said “We are a nation of communities... a brilliant diversity spread like stars, like a thousand points of light in a broad and peaceful sky.” ? Don’t be surprised ! It is George W. Bush :)

Well! Jokes apart .. Diversity is perhaps the only mandatory prerequisite for Innovation. We have seen that patriotic organizations with isolationist cultures are poor in innovation. There are organisations like IBM and Emirates who got this right though.As Indian companies fared low on this aspect (most of the top brass are in same age group, male and even look alike! ) they are in a race to ‘clock’ diversity by enrolling different nationalities and women.

What many miss is that diversity that can spark innovation is more than gender and race – it includes physical and mental capabilities, demographic differences, differences in religion, cognitive differences, sexual orientation, political and social differences – more diversity the better – the more the merrier!

Diversity also is not just people – it includes products, technology and markets. It is much challenging when it comes to ‘supplier diversity’ which is a global concern for corporates who compete using their global supply chains.The challenge is to invest and develop existing ‘trusted partner’ suppliers,but at the same time encourage supplier diversity which brings in Innovation.

The challenge lies in managing diversity – we all come with our own mental models and it is not easy to value diversity . Though we all love to talk about 'inclusive diversity' , by human nature we love like minded social networks!

We also dont buy the 'diversity is the fountainhead of innovation' argument as we are taught that only smart Einstein types can ideate. But like it or not – If you want to drive innovation embrace diversity. Period. As David Ogilvy said "Diversity turns out to be the mother of invention (not necessity, as the mechanists thought)."

Perspective # 15 - Business Model Innovation

Business Model Innovation : Ever since IBM's Global CEO Study 2006, Business Model Innovation is a sexy topic. The study revealed that most CEOs felt Business Model Innovation is becoming the new strategic differentiator. In the financial analysis for the study, companies that have grown their operating margins faster than their competitors were putting twice as much emphasis on business model innovation as underperformers. Ever since this study innovation in a company's core processes and functions are not fashionable!

But there is nothing new here – Biz model keep changing in various industries. Famous legend is how Dell shocked the market with its Direct selling model. Another great example is Bharti - they discarded the sacred ARPU telco model and focussed on minutes and network utilisation, and outsourced almost everything and focussed on the customer.

Many say Business Model Innovation is going to be the future as ‘Technical Innovations’ are dying ( Remember the quote of - Charles H Duell,Commisioner,US Office of Patents 1899 “Everything that can be invented has been invented”) Not sure though :) But if you combine ‘Business Model Innovation’ and ‘Technical Innovation’ you have a blockbuster! Google is the best example.

VCs love Business Model Innovation ! I am told that in US a dating company is offering a ‘rent a dog’ service for single souls to impress others! If you cant afford (real ones!) a Prada or Louis Vuitton bag it is okay, you can rent from http://www.bagborroworsteal.com/ for a small fee. Endless possibilities in Business Model Innovation, but obviously ‘god is in execution’.

Perspective # 14 – Creative Abrasion

Creative Abrasion : One key component required to create the ‘innovation culture’ is to foster a organization climate which promotes healthy conflicts within – the jargon is called ‘Creative Abrasion’.

The challenge is to create a non threatening environment where different ideas and perceptions collide in the melting pot which can raise new ideas or models. Good problem solving managers always allow different approaches which may include silly or disruptive ones.

Though creative abrasion looks like a no brainer, it is very hard to implement..why ? Because one of the unwritten rule of the game in most organizations is not to rock the smooth sailing boat – conflict is often seen as negative.

Sorry but the sad fact remains that your growth in the organization depends not on your functional competence but on your ‘value capability’ – the organization filters out those who are not on the same senior management ‘wavelength’ . The obvious disadvantage of this ‘behavior norm’ is ‘Groupthink’ originally described by Irving L. Janis. "...a quick and easy way to refer to a mode of thinking that people engage when they are deeply involved in a cohesive ingroup, when members' strivings for unanimity override their motivation to realistically appraise alternatives of action." The non obvious disadvantage is that it sublimaly discourages ‘Creative Abrasion’.

Also if you are not careful conflicts becomes disputes and personal, the creative process breaks down.

Sometimes ‘abrasive’ defiant guys are seen as a negative influence on others as they bring conflict and disturb our ‘friendly cohesive climate’! The key is to train personnel to embrace ‘Creative Abrasion’ and to watch out against groupthink. Managers should be trained in this fine art.

Perspective # 13 - God is in ‘structures’ – part two

God is in ‘structures’ – part two : In an earlier post I wrote - god is in structures, which was in the corporate context. From the innovation perspective, the ‘structures’ element is pertinent for cities and nations as well.

Many cities go to great extent to create ‘structurual glues’ that stoke innovation. Silicon valley is a great example. Milan ‘competes’ with other cities to retain the fashion capital of the world tag by investing in events like Milan Fashion Week where creations of Italian designers like Giorgio Armani, Versace, and Dolce & Gabbana inspire budding designers.

Barcelona is another great example. I recently visited Barcelona Activa incubation centre. They work with the society, government and even pubs to create a hotbed to attract global ‘design talent’ . Prof Pedro Parada from ESADE business school,Barcelona calls it the ‘social fabric’. At the incubation centre I met bmat who create algorithms for music, their software can distinguish and play as per your mood - happy, party, furious, sad etc. You can choose 'upbeat' songs that will cheer up your mood! To create hot software like these one needs software engineers who love music and not the rote coders, and the Barcelona ‘social fabric’ is what attracts them. Another company at the incubation centre gigle is close to developing a system-on-chip integrated circuit for multimedia home networking using any of the existing wires in the home – the power lines, coaxial cables or phone lines!! These are software heavy firms who decided to incubate in Barcelona as the ‘social structures’ of the city helps them innovate faster.

Imagine America without Bankruptcy law ! and the impact on the nations innovation..

On a lighter vein ☺ structures are crazy some times. In Amsterdam coffee shops marijuana is allowed (The reported number of deaths linked to the use of drugs in the Netherlands, as a proportion of the entire population, is lower than the EU average), recently they banned tobacco though ☺☺ Some of the feedback reported in Guardian is hilarious “It's absurd. In other countries they look to see whether you have marijuana in your cigarette, here they'll look to see if you've got cigarette in your marijuana. It is like saying you can buy a beer, but you can't drink it there - you'll have to stick to whisky, rum and vodka” Yes – structures are sometimes crazy but don’t discount them w.r.t innovative behavior.

Perspective # 12 - Unreasonable Leaders matter!

Unreasonable Leaders matter! : In the book 'The Power of Unreasonable People - How Social Entrepreneurs Create Markets That Change the World' authors Elkington and Hartigan starts with a quote from George Bernard Shaw: "The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man." History has proved many times that ‘unreasonable leaders’ are ‘unreasonable innovators’.

Being unreasonable is different from mere ‘dreaming’ or ‘demanding’. The latest example is the 1 lakh car project of Ratan Tata the ‘unreasonable leader’.

When Kennedy made his famous 1961 speech "I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth”, many called him a lunatic but he persisted and convinced the congress to sink more than $9 billion in 1960s dollars and won. It would also help if the vision is a compelling one like Grameen bank , One Laptop per Child (www.laptop.org/) or a car for one lakh.