In praise of The Economist

I read The Economist. I would like to share why this magazine continues to inspire me (excerpt from Wikipedia):

The Economist claims that it "is not a chronicle of economics." Rather, it aims "to take part in a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress."

And it has done so since 1843.

Longe-range forecasting: "Exercise in irrelevance"

"Very long-range forecasts from the OECD, a think-tank, may seem an exercise in irrelevance."

Read the rest here.

Core competency driven reinvention

"Why, when so many widget-makers have gone to the wall or been bought up by foreigners, is GKN alive and kicking and British-owned after 253 years?"

The Economist documents the creation of a new business by GKN enabling it to at times preempt and at times work through the downturns like 2009.

"The trick it has mastered is finding new businesses and markets to move into before its established ones run out of steam. “We have been very good at recognising that things don't last forever,” says Nigel Stein, GKN's chief executive since January."

GKN, whose core business is drivelines for automotive industry, is now one of three or four manufacturers in the world who can build a carbon-fibre composite wing spar for passenger jets.

"The aerospace venture might seem to sit awkwardly in a company whose mainstay is selling car parts but Mr Stein says there are “soft synergies” between the two divisions. Both make high-precision kit for a few global firms: it takes the same set of skills to serve and sustain the trust of such demanding customers."

It is a delight to see large corporations comprehending that the same trick does not last for ever.  For me the article highlights three key attributes of companies that last hundreds of years successfully:

• They know their core competency, continuously challenge it, and grow it into "new" businesses.
• They do not hesitate from trial and error when they push their core competency into the "new" or even the unknown.
• They are not risk averse; that is, they are intelligent about where they take risk, they do not jump into business models that everyone is running after, and differentiation, and at time uniqueness remains a driver for the measurement of success.

The best part of such company's as GKN is; they manage Schumpeter's Creative Destruction with finesse!  And deeply understanding their core competency is at the heart to it.

Read the complete article here.

Innovation to solve the "CEO disease"

Prakash Dubey forwards the Economist Intelligence Unit report "Cultivating business-led innovation" with the purpose to "explores how senior executives can promote a culture of innovation by empowering different business units", and a blog "The Hunt for Innovation: 10 Strategic Insights" from one of his colleagues at Oracle, Bob Evans, referencing it. The blog begins:


"Ever hear of the dreaded “CEO Disease?”

It was initially diagnosed by Stanford psychologist Carol Dweck, who discovered that the broad power and authority held by CEOs often leads to risk-averse and even truth-averse culture in which employees offer up nothing but “the good news of their perfection and the company’s success, no matter what the warning signs may be.”"

The report is a valuable read, and well done. The complete survey is provided in the appendix.  The report's executive summary lists four key outcomes from the survey:

1. Effectively capitalising on multiple resources to pursue innovation remains elusive for many companies. The bigger the company, the more likely innovation is to be siloed.


2. Companies furthest along the innovation path utilise customer data and customer participation in their product and service improvements. Fifty-four percent of respondents in this group actively collect customer feedback and analyse customer data for clues to innovate effectively, but in different ways.


3. Leading companies make use of disruptive technology trends to either foster innovation or improve business processes. Big data and social media were identified in the survey as offering the most opportunities for companies seeking to innovate effectively.


4. Many companies have no plan for learning from failed ideas. Nearly half (49%) of respondents said their company had no system to deal positively with failure.

See the complete Economist Intelligence Unit's report here and the blog at Forbes here.

Consumers and privacy

A key method of information access for consumers is via a web browser.  The browsers have enabled plethora of data to be connected in forms that can be utilized for analysis.  Interestingly, it is still the wild west on the net when it comes to collecting consumer information.  Though things are changing:

"In December 2010 America's Federal Trade Commission proposed adding a “do not track” (DNT) option to internet browsers, so that users could tell advertisers that they did not want to be followed. Mozilla's Firefox, Microsoft's Internet Explorer and Apple's Safari all offer DNT; Google's Chrome is due to do so this year. In February the FTC and the Digital Advertising Alliance (DAA), a consortium of trade bodies, agreed that the industry would get cracking on responding to DNT requests. In the European Union a new rule requires websites to ask before using “cookies” to gather data about users' behaviour."

Interestingly, Microsoft is starting to take the lead:

"On May 31st Microsoft set off the row. It said that Internet Explorer 10, the version due to appear with Windows 8, a new incarnation of the software firm's operating system, would have DNT as a default."

"Brendon Lynch, Microsoft's chief privacy officer, blogged: “We believe consumers should have more control.” Could it really be that simple?"

Read the complete article on The Economist here.

Infrastructure: State Capitalism

China has been developing infrastructures around the world and engaged in long term contracts for the past fifteen years at least, ones that I am aware of.  Though, it may not be common knowledge that:

"China State Construction & Engineering Corporation (CSCEC), reckoned by International Construction to be the world’s biggest builder, is renovating the Alexander Hamilton Bridge in New York, helping erect a huge tower block in Moscow and creating a massive tourist resort in the Bahamas. China Railway Construction Corporation (CRCC), the second-biggest, is building Mecca’s new metro system."

China is now the player in the global architecture engineering and construction sector.  In some cases, it is also taking on the management of the infrastructure it develops, all the more reason to build it well.

"In July, in one of the first such deals involving a Chinese firm, China Communications Construction (CCC) signed a deal to build a highway in Jamaica and run it for 50 years."

Read the complete article at The Economist here.

Mexico's engineering talent's economic impact?

The Washington Post reports:

"Mexico is producing graduates in engineering and technology at rates that challenge its international rivals, including its No. 1 trade partner, the United States.  President Felipe Calderon last month boasted that Mexico graduates 130,000 engineers and technicians a year from universities and specialized high schools, more than Canada, Germany or even Brazil, which has nearly twice the population of Mexico."

Does this statistic have a direct correlation with economic growth?  Read the complete article here.

Economic Straddling

"The scale of border-straddling is colossal.  One Mexican in ten lives in the United States - some 12m people."

I wrote about the productivity gains in the US in the past four years, here.  Though the owner of a manufacturing business concluded, "a factory that Sealed Air opened in Mexico was expected to be far less productive than one in America, but within four years had caught up".

Specifically, looking at Mexico, business rethinking is not occurring rather it is taking place as we speak.  The numbers simply are in favor of Mexico for the US:

"In 2001 Mexican manufacturing wages were four times those in China; now the difference is trivial.  Add in the price of fuel, and it is often as cheap to make things in Monterrey and drive them across the Rio Grande as to make them in Guangdong and ship them across the Pacific.  It is also faster: a Mexican lorry can be in Michigan in a couple of days.  Small wonder that Nissan, Honda, GM, Coca-Cola, DuPont and Eurocopter are rushing to invest South of the border."

Now the question is, is straddling one of the world's largest consumer markets is going to be enough for Mexico, or talent, and its growth within the country will be the differentiation among it's peers in the race to create and deliver goods?

Read the complete article at The Economist here.

Advertisement: Stirring emotions to drive behavior

"It is often profitable to stir controversy. An ad that upsets people and thereby generates headlines is an excellent source of free publicity. But if it alienates potential customers, it has gone too far. Benetton, a fashion brand, reels in young shoppers by annoying their parents, for example with a recent ad showing the pope kissing Ahmed al-Tayeb, an Egyptian imam. An edgy image helps sell clothes, but it works less well with cars, as Toyota found with an ad in Australia that mocked both Range Rover and the British queen: “Don't worry, Your Majesty. You're not the only British export that's had its day.” Monarchists howled. Toyota apologised."

Read further how "insult" is leveraged to stir emotions in consumers to drive behaviors in The Economist "Ad Hominem" here.

System Autonomy: Start with automobiles

I believe autonomous systems will probably be the greatest achievement of the 21st century.  A system of systems, based on network of networks, mesh, grid, etc. will power this world by the end of this century.  And I am confident that Quantum Mechanics will have a significant hand in it.

To begin with, Volvo's foray into autonomy of automobiles - from the Wired Autopia blog:

"By 2014, Volvo plans to introduce a new system dubbed Traffic Jam Assistance that will allow the vehicle to be piloted autonomously at speeds up to 30 MPH. At the flick of a switch, the vehicle will be able to steer, brake and accelerate in slow-moving traffic, using a combination of cameras that detect the lines on the road and the vehicle ahead, along with a brace of sensors to keep a safe distance from other road users."

"This latest breed of technology has been born out of Volvo's SARTRE road-train testing program, which allows a densely packed group of vehicles to follow a manned tractor trailer at highway speeds. But that implementation is still several years away, and Volvo is trying to get the technology into vehicles as quickly as possible."

Demonstration of the system below:

Extreme acceleration of innovation: Hackathon

While the entrepreneurs live for speed as at times it is the only weapon they have to be successful, yes, even more so than funding, large corporations due to their various layers find it difficult to comprehend such speed.

It is in the corners of desperation and necessity that gives rise to thinking without boundaries and making the improbable, possible.

Here is an example from the non-profit world.  Non-profit organizations collect data, and at times share data as well.  Yet, they lack the ability to analyze and drive insights from this data as such talent is expensive.  Enter DataKind, a New York based charity:

"A typical DataKind two-day “hackathon” last month in London attracted 50 people who worked in three teams. One pored over the records of Place2Be, which offers counselling to troubled schoolchildren. Crunching the data showed that boys tend to respond better than girls, though girls who lived with only their fathers showed the biggest improvements of all. The charity did not know that."

What is more exciting is:

"The small-talk among the volunteers was of dizzyingly complex statistical and artificial-intelligence techniques. Volunteers included an analyst at Teradata, a data-analytics firm. Around 20 employees attended from Aimia, a firm that mines data from consumer-loyalty programs."

See the article here.

Digital: Protecting the consumer

"Users howled when Microsoft tried to lock down Windows. Now Apple is upping its own security — and everyone loves it."

Thus begins an article in the Wired.  It discusses the topic of control, digital control, that a consumer would like to have on their computational devices.  Microsoft attempted to develop strong security measures for its operating system about ten years ago, that spanned both the software and hardware.  The reaction to locking down of computers resulted in Microsoft pulling back on the initiative it had code named Palladium.

In the same vein, Apple introduced Gatekeeper in its operating system Lion version 10.8.  The loyal Apple consumers approved.

Are you willing to relinquish secure management of your devices?  Read the article here.

"Users will surrender control to avoid malware, spyware, adware, or just plain annoyware."

Economic contribution of women in this decade

The impact on the economy of a nation when women join the work force is evident in the United States. Proof of this can be seen in some of the statistics on women in the work force and women owned businesses at the U.S. Department of State's "Quick Stats on Women Workers" here, and "Women in Business: A Demographic Review of Women's Business Ownership" here.

I am taking the liberty to publish the following short section from The Economist, "Economic contribution of women". It shows what is possible for certain countries around the world if women were to join the work force:

"In the next decade nearly 1 billion women are likely to enter the global labour force. But their economic potential is largely unrealised. According to a report by Booz & Company, a consultancy, if female employment rates matched those of men, GDP would increase by 5% in America and 9% in Japan by 2020. The impact would be even larger for developing countries, home to most of the world’s women who lack adequate education and support (social and political). Increasing female employment would increase GDP significantly in countries like India and Egypt, where female labour-participation rates are below 30%. These countries rank low in Booz’s index of women’s economic empowerment."

Branson, redefining capitalism

"Have fun, do good and the money will follow," is Sir Richard Branson's new equity. The Economist's Schumpeter discusses Sir Richard's various activities which it considers to be perhaps redefining captialism. Some of his significant efforts include the Carbon War Room here and The Elders here.

Sir Richard's most recent effort, the B Team, "The idea is to form a small group of business leaders who will campaign for reforms to make capitalism more oriented to the long term and socially more responsible."

Who qualifies for such a rehaul of capitalism?

"There were too few candidates from the business world of sufficiently unimpeachable character, it seems, and, more positively, some members of the B Team are likely to be relatively young. Instead, the plan is for the B Team to consist of people who have done business in a way that fits the guiding principles, such as Mr Zeitz, perhaps Ben Cohen (of Ben & Jerry’s ice cream) or Paul Polman, who is trying to double Unilever’s revenues while halving its environmental footprint."

This effort will be worth keeping a close eye on. I believe it may just be the right time for the vision of the B Team. And a successful entrepreneur is one who times it right. Sir Richard is one who understands "timing" of opportunity well.

Read the complete article "Call in the B Team" here.

Entrepreneurial high-tech industry growth declines in the US

My last blog was about the value of skilled immigrant's driven knowledge creation and its impact on economic growth in the US, see here.

This progress has had a decline per a recent report.  From "Why Immigrant Entrepreneurship Is Stalling" in Bloomberg Business Week here:

"In Silicon Valley, it declined from 52.4 percent to 43.9 percent during the same period. Kauffman extrapolates that tech firms with immigrant founders employed about 560,000 workers and generated an estimated $63 billion in sales from 2006 to 2012. Native-born entrepreneurs aren't making up the difference. Their startup rate has remained relatively flat over the last 16 years, and declined in 2011, according to Kauffman's most recent index that tracked new business creation from 1996 to 2011."

See further coverage in media in the following: Washington Post here, and Forbes here.

Entrepreneurs; an essential ingredient to economic growth

"America also used to have one of the most business-friendly immigration policies. Fully 18% of the Fortune 500 list as of 2010 were founded by immigrants (among them AT&T, DuPont, eBay, Google, Kraft, Heinz and Procter & Gamble). Include the children of immigrants and the figure is 40%. Immigrants founded a quarter of successful high-tech and engineering companies between 1995 and 2005. They obtain patents at twice the rate of American-born people with the same educational credentials. But America’s immigration policies have tightened dramatically over the past decade, a period in which some other rich countries, such as Canada, have continued to woo skilled immigrants, while fabulous new opportunities have opened up in emerging markets like China and India. Why endure America’s visa obstacle course when other countries are laying out the red carpet?"

Entrepreneurs and entrepreneurial innovations have remained the key ingredient in United States economic strength.  US stands alone in this race as no other nation even comes close to what has been accomplished here.  The Economist article "Fixing the capitalist machine" here, further highlights the impact of immigrants on the US knowledge economy.

Will this fertile land of knowledge and innovation sustain or has it seen its best days?

Does US remain the productivity leader?

The article "Hard times, lean firms" in The Economist here states:

"Far less attention has been paid to the flip side of the jobless recovery: the remarkable improvement in American productivity. How long can this continue? “I see no limit,” says William Hickey, the boss of Sealed Air, a packaging-maker. Is he right to be so optimistic?"

At a high level labor productivity is defined as the output per hour.  But this productivity during the economically difficult times have come as a result of "First, workers are terrified of losing their jobs. This makes it easier to persuade them to put in extra hours or shoulder new tasks. Even in unionised firms, there have been reports of greater flexibility. Workers have been staying on the job longer rather than “featherbedding” their hours by, for example, queuing up early to clock off as soon as the shift ends."

It is difficult to find a global company today where the stress is not high all the way down to the lowest levels.

Interestingly, the CEO of the corporations may find it lonely at the top, but according to Jennifer Lerner on the research team at Harvard which studied middle to high level officials from government, the military, business and nonprofits, states that the executive levels don't feel stressed or much less so than middle management. Read details here.

The Economist article gives a second reason, "... tough times are forcing firms to strain every brain cell to become more efficient."

Can this be sustained,specifically in light of a global push to compete among the emerging countries for the same opportunity? "But all such advantages are temporary. As Mr Hickey points out, a factory that Sealed Air opened in Mexico was expected to be far less productive than one in America, but within four years had caught up."

World's tiniest capacitor

One of my very first jobs out of college was at Murata, a Japanese electronics company I had never heard of.  And then I discovered that its products were in just about every electronics device.

Murata manufactures "Capacitors, which store electricity, are used in just about every type of gadget -- smartphones, laptops, parts for hybrid cars, medical equipment and digital cameras. Smaller components allow for other innovations and improvements, from thinner devices to longer battery life."

"The latest capacitor, measuring 0.25 millimeter by 0.125 millimeter, is as tiny as the period at the end of this sentence."

Imagine the impact on miniaturization of existing consumer products. Right off I can imagine health and medical applications and monitoring embedding electronics solutions for the life of a patient.

Universities: China growing, Russia shrinking

Interesting news from the world of higher education in Asia:

From The China Daily here:  "Figures from the Ministry of Education show that over 290,000 overseas students studied in China in 2011, a 10.3 percent increase since 2010. Among the students, 118,837 of them are studying for a degree, accounting for 40.6 percent of the overall international student population, which has increased 10.62 percent from 2010."




From The Moscow Times here:  "The bill aims to cut the number of higher educational institutions, leaving a smaller cadre of better-funded universities that pack a more powerful punch in international rankings."

Innovation's purpose; to deliver agility and flexibility

Let's assume I am leading a product development effort of an automobile for the US market and it is 2007. My product assumptions are based on data that is probably 12 to 72 months old, one assumption being that oil prices will remain low within the US market. Finally, let's say I am half-way through the development of the product.

How do I now change course when the oil prices have sky rocketed resulting in the fact that the consumer and large corporate customer base I had planned to sell to have decreased by 75% overnight?  See one of my previous blog's showcasing innovation in automotive manufacturing here.

Christensen's Innovator's Dilemma implies that I will do all in my power to keep the project going, to make sure it ends one way or another, and that it looks like a success. Such is the conundrum of 20th century based product development, which is anchored in detailed analysis of the past, and an inability to comprehend the future. Such product development's focus is efficiency and effectiveness. And there are quite a few examples in the market place in the last ten years to prove this consideration that has led to various companies demise or bankruptcy.

The question is how do I become flexible and agile, where my company can make quick turns ahead of the market, and does not make commitments that cause it to be rigid and unable to respond to the customer need.  Further, how do I become such that I show the customer what they need versus the customer asking me?

The solution to this enigma is the definition of innovation for a Global Fortune 1000.  Where in contrast the perfected approaches of product development deliver continuous improvement embedded in efficiency (cheaper, faster, better) and effectiveness (the customer receives the promise of the product).

So, what is the definition of innovation for a global corporation? To solve the Innovator's Dilemma, perhaps Confucious had the answer:

"When it is obvious that the goals cannot be reached, don't adjust the goals, adjust the action steps."

Thiel Fellows - Attempting Breakthroughs

"[The Thiel Fellowship] rewards smart young people for not going to college and, instead, diving into the real world of science, technology and business."

"Since 2010, he has been bankrolling people under the age of 20 who want to find the next big thing — provided that they don’t look for it in a college classroom. His offer is this: $50,000 a year for two years, few questions asked. Just no college, unless a class is helpful for their Thiel projects."

"A cool hundred grand, no strings attached? You won’t be shocked to learn that it is harder to get a Thiel Fellowship than it is to get into Princeton."

I previously wrote about the Milner Prize here which challenges the ethos of the Nobel prize to some extent. Above is an example of the Thiel Fellowship that asks the creative and young to do what they love, if they qualify.  Read further here at New York Times.

Below is a counter point, do you agree?

"Anthony Carnevale, director of the Center on Education and the Workforce at Georgetown University, says that the fellowships themselves are nice, but that the message is destructive. “These very unusual and talented kids are in a very high-powered learning environment,” Mr. Carnevale says. “They’re enormously privileged people who’ve been allowed to develop all their horsepower with no constraints. I think it makes you an odd duck.”"

Creativity and Misfits

"Speaking of internet firms founded in the past decade, Peter Thiel, an early Facebook investor, told the New Yorker that: “The people who run them are sort of autistic.” Yishan Wong, an ex-Facebooker, wrote that Mark Zuckerberg, the founder, has “a touch of Asperger's”, in that “he does not provide much active feedback or confirmation that he is listening to you.” Craig Newmark, the founder of Craigslist, says he finds the symptoms of Asperger's “uncomfortably familiar” when he hears them listed."

Schumpeter's article "In praise of the misfits" in The Economist discusses how the most creative minds in the technology driven sector have shown signs of Asperger's, or dyslexia, or ADD, or etc.  Read details here.

"Entrepreneurs also display a striking number of mental oddities. Julie Login of Cass Business School surveyed a group of entrepreneurs and found that 35% of them said that they suffered from dyslexia, compared with 10% of the population as a whole and 1% of professional managers. Prominent dyslexics include the founders of Ford, General Electric, IBM and IKEA, not to mention more recent successes such as Charles Schwab (the founder of a stockbroker), Richard Branson (the Virgin Group), John Chambers (Cisco) and Steve Jobs (Apple)."

P&G - Higher Accuracy in Decisions Through Analytics

While reading old colleague Franz Dill's blog here, who served as P&G's Chief Scientist of Business Intelligence, I was prompted to collect few of Franz's blog posts to highlight Procter & Gamble's leadership in leveraging analytics to drive accuracy in decisions.

Here is the link to P&G's Business Sphere, "... a visually immersive data environment that transforms decision-making at P&G by harnessing real-time business information from around the globe."

Franz also points to an interview with P&G's CIO Filippo Passerini in Information Week.  Some insightful snippets from the article are:

"The decision cockpit is focused on forward-looking projections rather than historical reporting, with three-month, six-month and 12-month projected trend lines for market share, cost of goods, and margins. All of the data is drillable, meaning you drop down from the companywide views to study performance by country, region, brand, and product."

"With the success of the decision cockpit, P&G has been able to do away with more than 80% of the company's standardized business intelligence reports, according to Passerini. Most users embraced the new approach as more attractive and usable than spreadsheet-based reports sent by email, but in some cases users had to be "forced over the hump" of reliance on the old reports, he said."

"But there's isn't any one significant component of the decision cockpit or Business Sphere environment that came out of a box. It's a first-class, highly customized, and purpose-built system based on P&G's ambitious vision."

I am confident that if P&G is showcasing the Business Sphere this broadly, then it must be onto the next competitive advantage in analytics already.

Read the rest of the details here.

Sugru - Breakthrough Innovation

I believe that breakthrough innovation is and always has been the domain of the entrepreneur and an incumbent has never delivered Schumpeter's Creative Destruction.

Here is an example of a product and its story to prove the point.

Infographic: Industries with Most Innovative Information Technology

This info-graphic was designed by Central Coast Agency.

Energy: Robots for Drilling

"Robotic Drilling Systems AS, a Norwegian company developing a drilling rig that can think for itself, signed an information-sharing agreement with NASA to discover what it might learn from the rover Curiosity."

Oil and gas industry requires a significant amount of human resources to preform a multitude of tasks. A significant number of them are dangerous in execution or are in hazardous environments. Robotics is slowly making its way into this sector.  Read further details at Bloomberg here.

"Apache, the third-largest U.S. independent oil and natural- gas producer by market value, is writing software that will essentially allow the drill bit to think for itself, communicating directly with equipment at the surface that controls speed and direction. Graham Brander, the company’s director of worldwide drilling, sees it working much like a plane on autopilot, flying on its own with a human on standby, ready to assume the controls if necessary. “That’s what I view very much as the automation model for the oil and gas business,” he says."

Here is a blog providing an extrapolation for the future of oil rigs, including 2,000 meter deep underwater cities.

Satellites with nuclear reactors have been functioning successfully in space for close on 40 years, to today a small multi-terrain vehicle of sorts is moving around on a distant planet, to applications of MEMS that quite honestly amaze me at times.  It is not too far off to see the future Apache is envisioning and creating.

US higher education: A bubble?

Since 2006, I have been engaged in US academia from developing and teaching courses to working on acquisition of government grants and private sector funding to creation and commercialization of university IP to improvements in engineering education.

Given my closeness to the subject, I know for a fact that the US higher education system has been the envy of the world.  Yet, a recent article in The Economist "The college-cost calamity" here, surprised me a bit with the extent of concern it documents regarding the state of the US universities.

"A crisis in higher education has been brewing for years. Universities have been spending like students in a bar who think a Rockefeller will pick up the tab."

"The average cost of college per student has risen by three times the rate of inflation since 1983. The cost of tuition alone has soared from 23% of median annual earnings in 2001 to 38% in 2010. Such increases plainly cannot continue."

There are schools that are approaching and attempting to change "education" for the 21st century, from simple automation to hopefully transformation.

"Some universities are addressing their financial problems. Cornell began in 2009: Kent Fuchs, the provost, offered to cut the costs of administration by $70m, if the faculty would concentrate on excelling at a limited number of important things, rather than trying to do everything. Mr Fuchs says that a university can become too broad; a financial squeeze is an opportunity to become more focused."

Though, when the customers (students) say they won't buy the goods (education and training) offered because the price is too high, then the shops (universities) will be forced into change they may not desire.

"Still, the doomsayers may be onto something. Four-year residential colleges cannot keep on forever raising their fees faster than the public’s capacity to pay them, especially when online degrees are so much cheaper. Universities that fail to prepare for the hurricane ahead are likely to be flattened by it."

China and India may want to prepare for Western students in the coming decades?

Social Networks and Ads

About eight years ago, my team and I at Procter & Gamble had the opportunity to take one of the largest media buy and deploy companies to task - we had been paying them, in seven figures, for bot clicks on online advertisements.  The worse part of it was, they had no clue themselves.

This occurred when we were building and rolling out the women's word-of-mouth marketing brand VocalPoint, see the site here.  Leveraging my personal global network across ISPs and internet based companies, we developed the hypothesis of the bot clicks, and then we proved it through data analysis.

It is fascinating to see that today it remains just as bad.

"On July 30th Limited Run, a New York platform for the online shops of record labels, artists and designers, said it would delete its Facebook page. It estimated that 80% of clicks came from “bots”—computers rather than people, but triggering payments to Facebook all the same."

See The Economist's article "Facebook: Work in Progress" here.

Education in China and India

Here is some interesting data from US News and World Report on education in China and India and a comparison to USA:

"China's investment in high school education rose from $4.1 billion to $13 billion between 2001 and 2006, an increase of 212.6 percent, according to a report released August 21 by the Center for American Progress and the Center for the Next Generation."

"India spent $44 billion on education in 2008, a substantial increase from the country's $11 billion annual investment in the late 1980s. The influx of cash bolstered high school attendance and graduation rates."

Here is something though I was not aware of:

"High school graduates in India and China are going on to college—and unlike nearly 50 percent of U.S. college students, they're finishing. Many of them graduate with degrees in science, technology, engineering, or math."

Read the article here.

Amazon.com: Creatively Destructive

Amazon.com - I will remember the days when Amazon.com started, internet based book seller, hard to find books.

Today, Schumpeter would be smiling to see his concept of Creative Destruction realized in this company.  Amazon has successfully ushered in a new way to deliver on the same need, upending incumbents:

"Within a few years, Amazon.com’s creative destruction of both traditional book publishing and retailing may be footnotes to the company’s larger and more secretive goal: giving anyone on the planet access to an almost unimaginable amount of computing power."

Like water for a human, computing holds the same for the 21st century organization, from a university to a for profit corporation. And the ones who learn how to successfully harness this power for extreme acceleration of time in their businesses, or exponential cost reduction, or etc. will be the leaders in their sectors. See multitude of examples in the article, linked below.

"Action in the Cloud, Amazon Reshapes Computing" in The New York Times here continues with:

"According to an executive with knowledge of Amazon’s operation who was not authorized to speak publicly, just one of the 10 data centers in Amazon’s Eastern United States region has more servers dedicated to cloud computing than does Rackspace, a public cloud company serving 180,000 businesses with more than 80,000 servers."

The question is, who will lead when everything starts to go at the speed of light?

"The efficiency of this hyper-aware environment is already remaking jobs for many and will most likely dislocate more. “You can now test a product against millions of users for just a few thousand dollars, or start a company with just one or two people,” said Graham Spencer, a partner at Google Ventures, which invests in data-heavy start-ups that rely on such cheap computing. “It’s a huge change for Silicon Valley.”"

Digital computing through analog?

Robert McMillan of The Wired "Enterprise" blog writes that the Department of Defense through DARPA is funding a new program that "will investigate a brand-new way of doing computing without the digital processors that have come to define computing as we know it."

"The aim is to build computer chips that are a whole lot more power-efficient than today's processors - even if they make mistakes every now and then."

Daniel Hammerstrom, the DARPA program manager behind the program, "wants the UPSIDE chips to do computing in a whole different way. He's looking for an alternative to straight-up boolean logic, where the voltage in a chip's transistor represents a zero or a one. Hammerstrom wants chipmakers to build analog processors that can do probabilistic math without forcing transistors into an absolute one-or-zero state, a technique that burns energy."

The program is called UPSIDE - Unconventional Processing of Signals for Intelligent Data Exploitation. Read details here.

Entrepreneurs and Innovation

"Anyone who has tried a hand at starting a high-tech business—seeking to turn a clever research idea into something customers will pay good money for—quickly learns that everything taught in business school is next to useless. The mistake is to think of start-ups as just smaller versions of established businesses. They are nothing of the sort."

This quote is apropos to the extreme. And breakthrough innovation that has the capacity to enable Schumpeter's vision of Creative Destruction still remains the domain of the entrepreneur.

The above excerpt is from an article in The Economist discussing Osterwalder's "Business Model Innovation", which has been a contributor to my success as an entrepreneur through the recent down turn.  See the article "Innovation: Difference Engine,Pilgrim's Progress here.  See Osterwalder's website here.

21st Century Global Brands - Made in China

Schumpeter articles in the The Economist are a delight to read. The latest one sums up an interesting generality about manufacturers and their approach to branding products and companies:

"... managing a portfolio of brands is complicated and demanding: people who made their fortunes manufacturing things may not be suited to the airy-fairy world of brand management."

Schumpeter writes:

"Americans can stop worrying about China’s plans to take over their country. The worst has already happened: on July 25th Lenovo, a Chinese computer firm, announced a deal to sponsor the National Football League. America will continue to provide muscle-bound linebackers, but the Chinese will provide the clever laptops and desktops that make their tussles possible."

Thus begins the article "Brand New" in The Economist here. The story of Lenovo is a case study in what else is there to emerge from the world's most populated country. Yet, it seems that the leap from becoming a global brand is not an easy one.

"Only four emerging-market brands make Interbrand’s list of the world’s 100 most valuable: Samsung and Hyundai of South Korea, Mexico’s Corona beer and Taiwan’s HTC."

The article discusses the book "The New Emerging-Market Multinationals" by Amitava Chattopadhyay, of INSEAD, and Rajeev Batra, of the University of Michigan’s Ross School of Business. Beyond the two common best practices for global growth, economies of scale and local knowledge, the article highlights, per the book, three more ingredients required for the emerging-market player to go global.

"The first is focus: they should define a market segment in which they have a chance of becoming world-class. ... Lenovo focused on computers for corporate clients before expanding into the consumer market."

"The second ingredient is innovation: firms need new products and processes that generate buzz. HTC produces 15-20 new mobile-phone handsets a year. Natura releases a new product every three working days."

And finally, I believe, the most important one:

"The third ingredient is old-fashioned brand-building. Emerging-market bosses must grapple with many traditional branding puzzles. Should they slap the company’s name on the product (as Toyota does) or another name (as Procter & Gamble does with its stable of brands, from Gillette razors to Pampers nappies)? How can they market themselves effectively in multiple countries without busting the budget?"

Innovation for the sake of innovation leads nowhere, perhaps a nice collection of artifacts. Marketing the power of the innovation is essential to build the dream that the customer or consumer must aspire to, hence, forming a symbiotic relationship between the growth of the name to becoming a brand name to being a global brand.

Conflict as Thinking

Margaret Heffernan's excellent TED talk, "Dare to disagree". I extrapolate from her talk that for creative thinking to occur constructive conflict whether within oneself or with a thinking partner must occur. Enjoy!

 

Physics: Noble Prize vs. Milner Prize?

It has always been contentious when no more than three people share a Noble prize for invention or discovery.  And the further requirement of the associated validation.  Enter Mr. Yuri Milner, successful entrepreneur.  Mr. Milner has created one or more annual prizes of $3 million for the most influential thinker in fundamental physics.

From The Economist:

"Crucially, recipients earn the prize for inspired contributions that have yet to be experimentally verified, a tactic the Nobel committee eschews. If these later prove beautiful but wrong, so be it. The principle, Mr Milner explains, is to afford the world’s best brains the financial freedom to pursue fundamental ideas wherever these take them. It may have the added benefit of keeping some imaginative physicists away from Wall Street."

Read details here.

Art & Science

While engineers drive towards a reductionist approach to problem solving, that is, let us remove or solve the number of variables down to a manageable point resulting in a mathematical equation that can give quantitative results; artists on the other hand keep expanding to comprehend the environment around their subject matter.

A combination of the two could result in an approach that may provide problem solutions where the original problem can be removed completely by solving an upstream consideration.

The article US News "Grad Engineering Programs Probe Intersection of Science, Art" here highlights this new approach being explored in engineering disciplines.

The question is, can engineers turn art into a process to be repeated?

Innovation: Adjacency, Laterality or Something New - Part II

The convergence of knowledge in the 21st Century is enabling breakthroughs (not the incremental improvements) to come from sources not directly related to the area receiving the value.  This is further proof of one of my innovation principles that we must look in all directions for ideas and innovation for our needs.  Specifically in places that are ancillary or even obscure.

Here are a few examples I have come across:

(1) Mark Bear, a basic scientist, similar to a researcher involved in first principle scientific R&D, has made discovery about a system in the brain that regulates synapses.  The direct results is drug being tested on humans with autism that are producing results with one dose.  Read / listen to details here.

(2) I call this example "Adjacency To Be". This article here and here in The Economist (Sept, 2008) talks about how the Large Hadron Collider will provide insights into areas that were not planned. Yet the Economist also states, "The Large Hadron Collider, ... is a grand project that could yield all sorts of discoveries. Yet the easiest way to sell it to politicians was to frame it as a search for a single particle, the Higgs boson."

From Davos 2007 - Collaboration for innovation

This is interesting and entertaining to watch, five years ago seems exceptionally far.  The topic is Web 2.0 and collaboration, includes Bill Gates and a few other CEOs:

Collaboration - The relative of innovation in continual redefinition and the understanding of it being as expansive or as limited as the knowledge of the descriptor, currently enjoys large number of white papers, Web 2.0 applications, etc. written in its praise and dismissal.

This video from Davos 2007 is a good discussion to highlight some of the considerations associated with Web 2.0 based Collaboration.

State owned - The East India Company

State owned companies have been around since commerce began.  Today:

"State-controlled companies account for 80% of the market capitalisation of the Chinese stockmarket, more than 60% of Russia’s, and 35% of Brazil’s. They make up 19 of the world’s 100 biggest multinational companies and 28 of the top 100 among emerging markets. World-class state companies can be found in almost every industry. China Mobile serves 600m customers. Saudi Arabia’s SABIC is one of the world’s most profitable chemical companies. Emirates airlines is growing at 20% a year. Thirteen of the world’s biggest oil companies are state-controlled. So is the world’s biggest natural-gas company, Gazprom."

One to learn from is The East India Company, its opportunistic creation, its transformation, its impact on government and civilian life, and finally its demise.  The article "The Company that ruled the waves" here in The Economist provides valuable insights into what can be learned from the Company, both good and not so good:

"The Company was a model of economy and austerity that modern managers would do well to emulate. For the first 20 years of its life it operated out of the home of its governor, Sir Thomas Smythe. Even when it had become the world’s greatest commercial operation it remained remarkably lean. It ruled millions of people from a tiny headquarters, staffed by 159 in 1785 and 241 in 1813. Its managers reiterated the importance of frugality, economy and simplicity with a metronomic frequency, and imposed periodic bouts of austerity: in 1816, for example, they turned Saturday from a half to a full working day and abolished the staff’s annual turtle feast."

The article highlights the management techniques of the Company:

"It forced its employees to post a large bond in case they went off the rails, and bombarded them with detailed instructions about things like the precise stiffness of packaging. But it also leavened control with freedom. Employees were allowed not only to choose how to fulfil their orders, but also to trade on their own account. This ensured that the Company was not one but two organisations: a hierarchy with its centre of gravity in London and a franchise of independent entrepreneurs with innumerable centres of gravity scattered across the east."

Yet, with growing power the company and associated action, "Adam Smith denounced the Company as a bloodstained monopoly: “burdensome”, “useless” and responsible for grotesque massacres in Bengal."

I will recap The Economist's special report "State Capitalism" on this blog in the future.

What is the reality of "Made in China"?

Is your Apple iPad completely manufactured in China? "The trade gap between America and China is much exaggerated" says The Economist here.

"According to a study by the Personal Computing Industry Centre, each iPad sold in America adds $275, the total production cost, to America’s trade deficit with China, yet the value of the actual work performed in China accounts for only $10. Using these numbers, The Economist estimates that iPads accounted for around $4 billion of America’s reported trade deficit with China in 2011; but if China’s exports were measured on a value-added basis, the deficit was only $150m."

See information on Personal Computing Industry Centre here.

The article concludes, "Pascal Lamy, the head of the World Trade Organisation, has suggested that if trade statistics reflected true domestic content, America’s deficit with China might be more than halved."

Open Fields Driving Innovation

Though the online community has just come through a bit of a resolution on Stop Online Piracy Act, an article in The Economist provides a few interesting insights:

"Critics, who include big companies like Google as well as start-ups and all manner of geeks, argue that the law could put a heavy burden on smaller American sites, stifle innovation and enable censorship, and that DNS filtering could disrupt the internet’s addressing system, causing security problems."

The openness of the internet has allowed exploration and creation of completely new sectors, such as gaming and online gaming, which has for example furthered modeling and simulation in manufacturing by leaps and bounds, in visualization, massive storage systems, physics engines, etc.

Complete article here.

Fostering innovation-led clusters

Excellent research and findings from the Economist Intelligence Unit, "Fostering innovation-led clusters; A review of leading global practices" here.  The research and approach are documented here.  Some of the key findings are:

• Government has a crucial role to play; so does the market.
• Clusters are about collaboration, not just locating firms in the same place.
• Talent is the single most important factor in developing successful clusters.
• Governments need to work to promote a culture of innovation and entrepreneurship.
• Clusters work best when they are focused and can compete.
• Governments can do much to create an attractive business environment—and a good place to live.
• A strong local market will help attract R&D investment, but is not crucial for global success.

(Note: non-subscribers will have to purchase the report)

Venture Capital and It's Poor Future

From the Wall Street Journal, "Facing Up to Venture Capital's Slow Future" here.  Finally, the newspaper has got it right.

Thinking Next to the Box

Wall Street Journal talks about "Embodied Metaphors and Creative 'Acts,'" a forth coming book on Psychological Science by Angela Leung and six other authors.

"Just how potent is the metaphor "thinking outside the box"? Researchers built a 5-by-5-by-5-foot box to find out. 

"People pondering creative puzzles while being allowed to depart whenever they wished from a rectangular path had more creative answers than those hewing to the path or seated."

Test subjects were given a 10-question word-association test often used to measure one kind of creativity (sample item: What one word links "measure," "worm," "video"?). As they answered, participants sat inside or outside the box or sat in a room sans box.

People sitting outside the box answered more questions correctly than either of the other two groups (and the difference couldn't be explained by claustrophobia or confusion, both of which were measured). Creativity seemed to be spurred by acting out a familiar figure of speech, the researchers said.

In a variation, people pondering creative puzzles while being allowed to depart whenever they wished from a rectangular path had more creative answers than those hewing to the path or seated."

Procter & Gamble - Sorry, No Storm Clouds

I have had a great opportunity to work with multiple Global Fortune 100 companies.  A recent article about one of them, Procter & Gamble, in Wall Street Journal "Storm Clouds Loom on P&G's Horizon" here, put a smile on my face.

Of all the multinationals, P&G is one that has no "storm clouds" to worry about.  Having led innovation at P&G for five years, I know for a fact that the core of the company (product lines, R&D, and enabling organizations), its bank balance, its employees and values, yet most importantly, its leadership simply have shown again and again over the last 150 years that - it is not a survivor, it is simply a leader among CPG.

Solar Panels From Agriculture Waste

From Popular Science:

"His chemical cocktail extracts the photosynthesizing molecules from plant matter--including chlorophyll--and stabilizes them such that they can be spread on a glass substrate. Said substrate is coated in nanowires and titanium dioxide 'sponges' that help convert photons to electrons and then ferry those electrons away as current."

See the complete article here.

Uniersity of Oklahoma Prepares Students for Developing Countries

The Oklahoman (1/18, Allen) reported, "Beginning in May," the University of Oklahoma "will offer a field methods course designed to help prepare students to work in those developing regions, said" David Sabatini, "the director of OU's Water Technologies for Emerging Regions Center, or WaTER Center, a part of the School of Civil Engineering and Environmental Science." The problem, Sabatini "said, has been that students were leaving the university and signing up with the Peace Corps, the US Agency for International Development and other nongovernmental organizations without being properly trained to work in developing countries." The Oklahoman reports, "Students will learn to build aboveground composting latrines, drill wells by hand and test for contaminants in a stream."

China Update

Via good friend Mr. Tony Tsai, EVP - Chief Marketing & Innovation Officer, The Beijing Hualian Group:

"Xie Guozhong: next year may be most unstable year for world economy in past 20 yearsDec. 22, Xie Guozhong, a director of Rosetta Stone Capital Ltd. and independent economist, said that next year may be the most unstable year for the world economy in the past 20 years. It is impossible for the outflow of hot money to overwhelm China. However, the real estate bubble in mainland China is breaking and the bubble exaggerated economic growth."

"Ministry of Commerce: China's foreign trade situation to be more complicated and serious this yearJan. 9 at the National Trade Promotion Work Conference in Beijing, Vice Minister of Commerce Zhong Shan said that trade friction on products exported from China has intensified since last year. Besides labor intensive industries, such as light chemical, textile and steel, other industries, such as telecommunications and photovoltaic, have also been influenced. China's foreign trade situation will be more complicated and serious this year."

"GDP exceeded RMB1tr last year; GDP to grow by 10% this yearJan. 8 at the Shenzhen NPC Conference, Shenzhen Mayor Xu Qin said the GDP in Shenzhen exceeded RMB1tr in 2011. The GDP in Shenzhen will remain at 10% this year."

"Bank of Communications: China's GDP growth in 2012 to reach 8.5%According to the "Outlook of China's Macroeconomics and Finance in 2012" issued by the Finance Research Center of Bank of Communications of China, China's GDP growth in 2012 will reach 8.5%. GDP growth in the four quarters of 2012 are predicted to be 8%, 8.3%, 8.7% and 9%, respectively."

"Total value of China's imports and exports was US$3.64tr in 2011; trade surplus declined by 14.5%Jan. 10, according to statistics issued by the General Administration of Customs, the total value of China's imports and exports was US$3.64tr in 2011, a 22.5% increase from 2010. This includes exports worth US$1.89tr, a 20.3% increase, and imports worth US$1.74tr, a 24.9% increase from 2010. The trade surplus was US$155.14b, a 14.5% or US$26.37b decrease from 2010."

General Electric Profits

From the Wall Street Journal; complete article here.

Info-Gap Theory

By way of my dear friend Dr. Farrokh Mistree, I have had an introduction to Yakov Ben-Haim, Professor and Yitzhak Moda'i Chair in Technology and Economics, Technion - Israel Institute of Technology and his work on Info-Gap:

"INFO-GAP THEORY is a method for analysis, planning, decision and design under uncertainty. The future may differ from the past, so our models may err in ways we cannot know. Our data may lack evidence about surprises: catastrophes or windfalls. Our scientific and technical understanding may be incomplete. These are info-gaps: incomplete understanding of the system being managed. Info-gap theory provides decision-support tools for modelling and managing severe uncertainty. Three ideas are central in an info-gap analysis: robustness to uncertainty, satisfying critical requirements, and exploiting favorable opportunities."

I plan to speak with Yakov in the near future and will post more on the subject. See Yakov's site here.

Boeing vs. Airbus

BMW - New Global Luxury Car Leader

Mercedes and BMW held out till to release their sales numbers for 2011.

"The auto maker (BMW) sold 247,907 BMW-brand cars and sport-utility vehicles in 2011, 12.6% more than in 2010. Mercedes sold 245,231, up 13.3%."

Here are some interesting approaches to improve sales numbers in the automotive industry:

"Auto makers have long gone to unusual lengths to pump up vehicle sales. For years, General Motors Co., Ford Motor Co. and Chrysler Group LLC leased cars for short periods of time to rental-car agencies for almost nothing. The auto makers ended up boasting of sales totals well above the number of cars consumers were actually buying."

Read the complete article here on Wall Street Journal.

GE Energy Innovation Summit - Multidisciplinary and Accelerated

I had the opportunity to design, convene and execute a two day, first one of its kind, multidisciplinary GE Energy Innovation Summit with an elite team of GE Energy engineers. I have been impressed with the fact that GE Energy chose to lead such a transformational activity, yet more so, I have been working with some of the best engineering minds in the industry here.

The Summit brought together ten external world leaders in areas from government policy and oil and gas to data analytics, top tier academia and successful entrepreneurs. They were joined by ten GE Energy leaders from Marketing, Systems Engineering, and Advanced Technology Operations. Our goal was to create two energy concepts for GE Energy products and services that are 3 to 5 years out and can be taken forward to conduct proof-of-concepts.

Not only did the Summit deliver the concepts, it created two solutions with clear value to the company and its customer for the future as well as business models to take the solutions forward. Most importantly, during the summit senior leadership committed funding for these solutions on the spot.