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.