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.