Resistance to Innovative Entrepreneurship: Schumpeter

During the last decade or so, the theories of Joseph Schumpeter have gone through a revival, and much attention has been devoted to his work. By now many economists and commentators value his work highly, especially what he says about entrepreneurship and creative destruction.

While this work on Schumpeter is very valuable, one might also adopt a different attitude towards him. Instead of trying to explicate and apply his ideas, one may more freely use Schumpeter’s intuitions to construct new theories and approaches to economic topics.

Two Key Intuitions: The Notions of Combination and Resistance to Entrepreneurship

Two of Schumpeter’s core ideas, present already in the first edition of his great classic, The Theory of Economic Development (1911), are the notions of combination and resistance to entrepreneurship. Individually, these are potent ideas. Together, they are even more so and can produce a new (Schumpeterian) theory of entrepreneurship.

Two of Schumpeter’s core ideas are combination and of resistance to entrepreneurship.

The notion of combination stands at the center of Schumpeter’s theory of entrepreneurship. Indeed, he famously defines entrepreneurship as a new combination:

To produce means to combine materials and forces within our reach. To produce other things, or the same things by a different method, means to combine these materials and forces differently… Development [or entrepreneurship] in our sense is then defined by the carrying out of new combinations. (Theory of Economic Development, 65–66; emphasis added)

This quote also shows that Schumpeter sees the whole economic process as a combination. The existing economic situation is a combination; when this is recast into a new combination, you produce an innovation.

Schumpeter also provides the reader of Theory with his famous list of the five main types of innovations: “a new good,” “a new method of production,” “a new market,” “a new source of supply of raw materials,” and “the carrying out of a new organization of any industry” (Theory, 66; emphasis added).

We also realize why entrepreneurship is so hard and complex. Maybe the person who conceives of the iPod does not know how to produce it—or market it, or profit from it.

At this point we may stop for a moment and ponder a peculiar fact. If we take these five innovations and lay them next to each other, so to speak, we notice that they compose a whole economic process. First, the raw material is needed, then the process of production, then the new product, and finally its marketing.

Did Schumpeter do this consciously? It matters little, but does point to an interesting ambivalence in how Schumpeter speaks about innovations. We already know he argued that separate parts of the economic process can be seen as innovations (a good, a method of production, and so on). But it is clear that he also felt that the whole economic process itself could be seen as a combination—and this implies a much broader approach to innovations, namely as a process starting with a conception, continuing over production, and ending with a sale. The figure below spells out the difference between the two approaches.

The conventional way of looking at an innovation sees it as a distinct and novel item; say, a new good or new technology. This is how most of us look at innovations, and it makes sense. But there is also a second view that Schumpeter seems to have sensed but never fully spelled out. This views the whole process as the innovation: conceiving the good, producing it, marketing it and, importantly, making a profit.

According to the conventional view of innovations, you conceive of, say, an iPod, and you have an innovation. According to the second and amended Schumpeterian view, to innovate you not only have to come up with the idea of the iPod, but also to produce it, market it, and make a profit. Once spelled out, it is clear that this second version is more realistic. We also realize why innovation is so hard and complex: maybe the person who conceives of the iPod does not know how to produce it—or market it, or profit from it.

A New (Schumpeterian) Theory of Entrepreneurship

The notion of combination is Schumpeter’s master concept, and we are not yet through with it. It cannot only be used to produce a novel concept of innovation, but also a novel theory of entrepreneurship.

We have already suggested that an innovation may be viewed as a combination in the sense that it constitutes a full mini-economy of its own (you must have raw material, produce the good, market it, and make a profit). The reader may also know that Schumpeter pays much attention, in Theory, to the notion of resistance to entrepreneurship. What makes innovation and entrepreneurship so hard, he says, is the strong resistance to it. This resistance can be manifested in three ways: The entrepreneur, like many of us, mentally resists doing something new; it is always hard to carry out a new task; and society is hostile to novelties.

What makes it so hard to be innovative and entrepreneurial, Schumpeter says, is the strong resistance to entrepreneurship.

But what about Schumpeter’s argument regarding combinations? Remember that every economy, according to Schumpeter, can be seen as a combination. Also, what Schumpeter calls resistance can also be described as habits, norms, common ways of doing things, and the like. This means that what causes resistance is the existing combination. How we habitually combine things, to phrase it differently, has become so entrenched in people’s minds that it cannot change without a huge effort: it offers resistance.

Schumpeter’s two concepts of combination and resistance, which are independent of one another in his work, can link to each other organically. Under certain conditions, an (existing) combination creates resistance to a new way of doing things. To innovate, in other words, means to break up an existing combination—to break through the resistance it creates, and to replace it with a new combination.

Earlier, when discussing the concept of innovation in Schumpeter’s work, we mentioned that an innovation was not “finished” once produced and marketed; it also must produce a profit. While Schumpeter does not discuss profit in connection with his five types of innovations, the concept plays a central role in his theories. He had his own concept of “entrepreneurial profit,” which was especially important to his work on the business cycle.

One may summarize Schumpeter’s notion of entrepreneurial profit as follows: The entrepreneur innovates and is rewarded with profit. This sets off a process that will ultimately create a wavelike movement in economic life. Since the innovation is so profitable, others will imitate it; first only a few other entrepreneurs, who are all amply rewarded for their effort. But others will also want to get into the game, until the profit is gone and the new way has become the standard.

It is clear that Schumpeter felt that the whole economic process itself could be seen as a combination—and this implies a much broader approach to innovations, namely as a process starting with a conception, continuing over production, and ending with a sale.

What has happened if we summarize this cycle but instead use the terms “combination” and “resistance”? We began the whole process with a combination that creates resistance because all the economic actors accept and take it for granted. The entrepreneur now emerges and suggests a different way of doing things. He or she must face all the resistance head-on and, if successful in dealing with all obstacles, is rewarded with full entrepreneurial profit. Then come the first imitators, followed by a whole flock of imitators. The new way of doing things is soon not so new any longer. Eventually, the new and radical combination becomes the common and existing combination. All the entrepreneurial profit is by now gone, and things are back to where they started.

The process we have just presented constitutes a full theory of entrepreneurship, as illustrated in Figure Two (see below). From this perspective, entrepreneurship can be defined as the act of creating a new combination that ends one economic order or way of doing things and clears the way for a new one.

This article has purposed to show the richness of Schumpeter’s work, but not by stating what Schumpeter says or by applying his theories to some empirical case. While these are both valuable ways to deal with Schumpeter’s work, we have instead wanted to focus on Schumpeter’s core ideas and to play with them: break them up, extend them, add to them. A great thinker’s contribution not only appears in his or her finished works and arguments, but also within the rich intuitions or core ideas that underlie the arguments.

Richard Swedberg is a professor at Cornell University and Thorbjørn Knudsen is a professor at the University of Southern Denmark. See their work in the October 2009 issue of Capitalism and Society, an electronic journal published by Columbia University.

FURTHER READING: Robert Fairlie discusses “The Importance of Family for Entrepreneurial Success,” and Jeffrey Friedman’s “Capitalism Without Romance” looks into the financial crisis and its implications for the future of capitalism. Marian Tupy recalls in “The Road From Serfdom” the last time countries tried socialism with gusto. And AEI’s Kevin Hassett describes how “Obama Flunks Schumpeter Creative Destruction 101.”

Image by Darren Wamboldt/Bergman Group.

via american.com

________________________________________________________________________

Hire Jim Woods to Speak or Advise to Your Organization

Innovation, Growth, & Hypercompetition Consultant/Speaker/Business Coach

 Website: InnoThink Group

Request a consultation: Office: +1 719.649.4118 or complete our form.  

 

Innothink Group is a strategic management, innovation and business coaching consultancy. 

Our Guarantee. Where many consulting firms are reluctant to bear risks or tie their rewards to project outcomes, we decided to build a better model. We align our success with yours. We’re outcome obsessed, outcome paid, putting nearly two thirds of our fees at risk subject to hitting predetermined milestones. More than a guarantee we wanted from the outset to create true partnerships with shared responsibility. See a few of our clients.   

We provide broad ranging advice covering innovation, commoditization, competitive advantage, business policy and strategy, as well as global strategy and implementation. 

 

Schumpeter: To Be Innovative is To Be Good At Copying | The Economist

 

 

EVERY year Les Wexner, the owner of Victoria’s Secret, a lingerie retailer, takes a month off to travel the world looking for other companies’ ideas to adopt. Limited Brands, his clothing group, seeks lawful inspiration from firms ranging from airlines to consumer-goods manufacturers. Mr Wexner’s philosophy is that business should celebrate imitation.

That is almost a heresy. Politicians and countless awards ceremonies extol innovation’s role in economic growth. Businesses are told to innovate or die. Imitators are cast as the bad guys: “The corporation that is first…has an opportunity to manufacture with the highest frequency and in the most desirable markets,” proclaims the boss of Burkett & Randle in “Duplicity”, a 2009 corporate thriller starring Julia Roberts. The firm duly triumphs over the evil rival which tries to copy its supposed cure for baldness.

In the real world, companies copy and succeed. The iPod was not the first digital-music player; nor was the iPhone the first smartphone or the iPad the first tablet. Apple imitated others’ products but made them far more appealing. The pharmaceutical industry is split between inventors and imitators. Some innovators, such as Pfizer, have joined the copycats, starting generic-drugs businesses themselves. The multi-billion-dollar category of supermarket own-label products is based on copying well-known brands, sometimes down to details of the packaging. Fast-fashion firms have built empires copying innovations from the catwalk.

The pace and intensity of legal imitation has quickened in recent years, argues Oded Shenkar, a management professor at Ohio State University, in a provocative book, “Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge”. Among social-gaming firms copying, and accusations of copying, are rife. One boss is said to have told his employees: “I don’t fucking want innovation. Just copy what they do and do it until you get their numbers.” Germany’s Samwer brothers, Alexander, Oliver and Marc, have made a fortune replicating American internet models in other markets, sparking outrage in an industry which prides itself on invention. One of their recent efforts is Pinspire, an online pinboard with a similar layout, colour scheme and features to those of Pinterest, the latest craze in social media.

History shows that imitators often end up winners. Who now remembers Chux, the first disposable nappies, whose thunder was stolen by Pampers? Ray Kroc, who built McDonald’s, copied White Castle, inventor of the fast-food burger joint. Even Playboy magazine was just an imitator, noted Ted Levitt, one of the earliest management gurus to acknowledge the role of imitation. Copying is not only far commoner than innovation in business, wrote Levitt in the 1960s, but a surer route to growth and profits. According to “Copycats”, studies show that imitators do at least as well and often better from any new product than innovators do. Followers have lower research-and-development costs, and less risk of failure because the product has already been market-tested. A study by Peter Golder and Gerard Tellis, “Pioneer Advantage: Marketing Logic or Marketing Legend”, found that innovators captured only 7% of the market for their product over time.

Firms seldom admit to being copycats. First, it is bad for bosses’ egos. Second, it can be legally risky. Apple is suing Samsung for “slavishly” imitating its products with its Galaxy smartphones and tablets; and Samsung is suing Apple back. (According to Mr Shenkar, Samsung is also eagerly awaiting a Korean-language version of “Copycats” to distribute to its executives.) This week a jury found that Google had copied Oracle’s intellectual property related to bits of its Java infrastructure.

But there is usually plenty of scope to imitate safely. Jean-Paul Gaillard, a former chief of Nespresso, a coffee-making system which has made billions for Nestlé, a Swiss food giant, decided to take on his old firm. His new venture makes coffee capsules which exactly fit Nespresso machines, to compete with Nespresso pods. Nestlé has been unable to stop him. Copying may be safer still when the imitator is not grabbing the innovator’s customers: Southwest Airlines, an American discount carrier, made no objection when Ireland’s Ryanair cloned its business model.

Not invented here

Some businesspeople are willing to talk about the limitations of innovation. Kevin Rollins, a former chief executive of Dell, a computer-maker, asked, “If innovation is such a competitive weapon, why doesn’t it translate into profitability?” But most remain obsessed with their own inventions. Copying is taboo. Praise and promotion do not go to employees who borrow from other firms.

As a result, firms pay insufficient attention to the art of copying. Levitt examined a group of companies whose sales depended on regularly launching new products. None of them, he found, had either a formal or informal policy on how to respond to other firms’ innovations. So they were often far too slow to imitate rivals’ successes, and missed out on profits. Not much has changed since Levitt’s day. Though copying is fairly common, lots of companies fail to do it effectively. American firms in particular are too obsessed with innovation, argues Mr Shenkar. By contrast, Asian companies—such as Panasonic, whose former parent, Matsushita, was nicknamed maneshita denki, “electronics that have been copied”—have excelled at legal imitation.

Excessive copying, of course, could be bad for society as a whole. Joseph Schumpeter worried that if innovators could not get enough reward from new products because imitators were taking so much of the profit, they would spend less on developing them (hence the justification for granting inventors temporary monopolies in the form of patents). But that is not the immediate concern of corporations. Copying is here to stay; businesses may as well get good at it. Economist.com/blogs/schumpeter via economist.com

 

________________________________________________________________________

Hire Jim Woods to Speak or Advise to Your Organization 

Innovation, Growth, & Hypercompetition Consultant/Speaker/Business Coach 

 Website: InnoThink Group 

Request a consultation: Office: +1 719.649.4118 or complete our form.   

 

Innothink Group is a strategic management, innovation and business coaching consultancy. 

Our Guarantee. Where many consulting firms are reluctant to bear risks or tie their rewards to project outcomes, we decided to build a better model. We align our success with yours. We’re outcome obsessed, outcome paid, putting nearly two thirds of our fees at risk subject to hitting predetermined milestones. More than a guarantee we wanted from the outset to create true partnerships with shared responsibility. See a few of our clients.   

We provide broad ranging advice covering innovation, commoditization, competitive advantage, business policy and strategy, as well as global strategy and implementation. 

 

Strategic Design Thinking for Innovations

 

 

Yesterday's seminar by the Finnish Association of Consulting Firms (SKOL) was entitled "Innovation and know-how as success factors of the future". One of the five presenters was Marco Steinberg, Director of Strategic Design of the Finnish innovation fund SITRA. He talked about the evolving role of innovation in design.

Marco Steinberg started by giving three substantial changes in the requirements for innovation:

1. Instead of optimizing one part or entity we need to look at the problem holistically
2. We should have a suggestion-based instead of an analysis-driven innovation process
3. We should not limit ourselves to efficiency improvements – we should create something new

To illustrate his point of view he recited a true story of an Italian town with a problematic swimming pool. People had ceased to use it and the authorities hired an architect because they thought that the reason was the poor condition of the construction. After studying the problem the architect came up with a surprising solution. The construction was certainly in need of repair, but the reason people avoided it was the new bus schedules: they did not coincide well with the opening hours of the pool.

Design is traditionally seen as form giving. Designers are expected to follow a specification and deliver a solution accordingly. In the world of large-scale, complex, and often conflicting systems and interests this is no longer enough.

In an earlier presentation Mr. Steinberg characterized design as a problem-solving discipline for synthesizing disparate issues, integrating through deep understanding, and visualizing complex, multidimensional problems. He sees design as a process that includes iteration, prototyping, and the management of the whole sequence from inception to implementation. According to Steinberg the problem must be examined through multiple scales, perspectives, and contexts.

Steinberg has extended the domain of design into strategic design, which gives form to decision making. In the SKOL presentation he visualized this idea with a funnel diagram. Traditionally designers are involved at the narrow end of the funnel, after the big decisions have already been made. The room for innovation is very narrow, and in the worst case you are answering the wrong question with a brilliant design.

 

 

Strategic design is about "unpacking" the problem, creating several alternative funnels. Strategic design takes place before we are locked into a solution to the defined problem. 

 

 

Steinberg's third diagram visualizes the three new stages of decision-making: 1) Strategic Design, 2) Stewardship, and 3) Implementation.

 

 

Innovation begins by asking the right questions. Strategic design thinking requires multidisciplinary dialog and integrated teams. This does not imply that innovation is a result of a consensus. Steinberg sees it as a major challenge, especially in Finland, that design is driven by a requirement to reach a consensus. This can kill killer innovations.

Images by Aarni Heiskanen, based on original images by Marco Steinberg

via mydesignnotes.com

Jim Woods

CEO & President 

Innovation, Growth, & Hypercompetition Consultant/Speaker/Business Coach

 Website: InnoThink Group

Request a consultation: Office: +1 719.649.4118 or complete our form.  

Innothink Group is a strategic management, innovation and business coaching consultancy. 

Our Guarantee. Where many consulting firms are reluctant to bear risks or tie their rewards to project outcomes, we decided to build a better model. We align our success with yours. We’re outcome obsessed, outcome paid, putting nearly two thirds of our fees at risk subject to hitting predetermined milestones. More than a guarantee we wanted from the outset to create true partnerships with shared responsibility. See a few of our clients.   

We provide broad ranging advice covering innovation, commoditization, competitive advantage, business policy and strategy, as well as global strategy and implementation. 

We help clients to: 

•  Build strategic supremacy through disruption and dominance
• Predict customers’ emerging needs and translate them into a breakthrough value proposition.
• Establish new rules of the game to challenge evolution
• Define a clear role for innovation based on understanding its hypercompetitive contribution.
• Exploit competitor’s weaknesses
• Build rapid short term advantages for long term profitability.
• Tackle the challenges of collaboration, both internal and external, as a driver of innovation.
• Reduce costs by increasing innovation and competitive advantage into the core of your business
• We provide continuous innovation and competitive advantage support

America's Healthy Infatuation With Entrepreneurs - David A. Shaywitz

REUTERS

America has fallen hard for entrepreneurs.

The aesthetic appeal is easy to understand. Compare the Fortune 500 CEOs interviewed on the HBR IdeaCast talking about Campbell's Soup or Coca-Cola (podcast here) with the entrepreneurs at the Stanford Entrepreneurial Thought Leader Seminar Series discussing Pandora and Instagram (podcast here). The big company CEOs sound just like you'd expect. They are competent, factual,  and in control. But while most of them presumably have strong interpersonal skills and a high EQ, they come across as dry, unemotional, and focused on the "core business."

In contrast, the entrepreneurs presenting at Stanford wear their hearts on their sleeves. They are vividly passionate. They exude emotion. They are selling themselves, with a kind of animated desperation. They tell student to "do what you love." It's an appealing message, and you can see why it catches on.

These two personalities generally reside at opposite ends of the business spectrum, presumably reflecting two very different business needs. It's essential to be brash and irrationally exuberant to start a business. But to sustain a large multinational corporation, you've got to be calculating and rational.  It's also a well-described phenomenon that as start-ups evolve into progressively larger companies, their character changes, and their needs evolve, or "mature."  Mature organizations are supposed to act predictably, responsibly, unemotionally. The qualities embraced (or at least tolerated) at the start-up level can become liabilities. Many start-up CEOs hand over the reins at this stage, or at least share them (as Google did for years when Brin and Page hired Eric Schmidt), explicitly acknowledging the need for an "adult in the room." Talk to us about leveraging your capabilities.

While many large organizations might similarly benefit from having a kid in the room -- someone who is energetic, passionate, emotional, excitable - it's hard to envision a corporate phenotype that would be more doomed: the environment just doesn't support it.  Sure, companies trot out bromides about "cultivating entrepreneurship," while HR departments sponsor group training sessions on innovative thinking. But the reality is that the culture of most big companies is geared to performing established activities in increasingly efficient ways. Simply stated: doing the old things better takes precedence over doing new things well enough. Most employees (and certainly the ones who last) figure out extremely quickly how you're supposed to act at work (Sir Joseph wasn't far off). You could say most large organizations have elected to trade the passion of young love for the predictability of adult relationships.

And perhaps this is why we look so wistfully at entrepreneurs. They seem to exude the raw passion that experience has taught us to modulate, the vivid emotion that we've learned to suppress, the intense energy that we learn must be channeled, the unreasonable audacity that has been replaced by sensible objectives.  We cheer for them because they represent our youthful hopes, our idealism, our ambitions and our dreams. And when these entrepreneurs defy the extraordinary odds, and succeed, we rejoice, for at the moment we can sense, if only fleetingly, the exceptional untapped potential within each of us. We rejoice, and wonder: what if?

It would be easy to dismiss our infatuation with entrepreneurs as misty-eyed revisionism, the way we might selectively recall and invoke treasured childhood memories while forgetting the many painful challenges of youth and adolescence. The day-to-day reality of getting a new company off the ground is generally far less glorious than the inspirational experiences trotted out by the small minority of ultra-successful entrepreneurs who are routinely invited to share their stories. There's a significant selection bias here, to say nothing of the urge to write oneself into a heroic cultural narrative.

But I'd argue that if we had to find a group of people to admire and admittedly idealize -- and you know we're going to -- we could do a lot worse than taking our inspiration from impassioned, dedicated individuals seeking against all odds "to make a dent in the world." via theatlantic.com

Consulting, Speaking & Coaching. Driving Growth through Innovation  

Innothink Group is a strategic management and innovation consultancy. Where many consulting firms are reluctant to bear risks or tie their rewards to project outcomes, we decided to build a better model. We align our success with yours. We’re outcome obsessed, outcome paid, putting over a third of our fees at risk subject o hitting predetermined milestones. More than a guarantee we wanted from the outset to create true partnerships. 

For speaking, coaching or consulting inquiries contact: 

CEO Jim Woods

+1 719- 649-4118

 

IDEO’s chairman and founder David Kelley talks about regaining creative confidence: Innovation 101

Innovators aren't exceptional as much as they are confident. So says David Kelley, the founder of the venerable Palo Alto, Calif., design firm IDEO.

Mr. Kelley, whose company is responsible for designing a wide range of products and services, including the modern computer mouse, believes—and research suggests—that virtually everyone has the capacity to innovate. It's just that somewhere around the fourth grade most of us stop thinking of ourselves as creative, he says, so our ability to innovate atrophies.

Mr. Kelley has made it his life's work to help people regain their creative confidence. In his three decades as a designer and as a professor in the design program at Stanford University's engineering school, from which he graduated in 1978, Mr. Kelley has developed a set of techniques for solving all kinds of problems—techniques that he came to believe could be taught as a methodology. His approach is called "design thinking."

Six years ago, with a $35 million gift from German software magnate Hasso Plattner, co-founder of SAP AG and a onetime IDEO client, Mr. Kelley founded the Hasso Plattner Institute of Design at Stanford—dubbed the d.school—a nondegree program that draws students from all seven of Stanford's graduate schools. The program aims to help students unlock their creative potential by teaching them to become, among other things, more open to experimentation, more comfortable with ambiguity and less afraid of failure.

Teaching the Process

The best way to unleash creativity, Mr. Kelley says, is to give students an "experience," or in d.school speak, a design challenge. Under his teaching model, however, students aren't just handed a problem to solve—they must define the problem themselves through research and direct observation.

David Kelley says most of us stop thinking of ourselves as creative somewhere around the fourth grade

One group of students, for example, was tasked with designing an incubator for the developing world, where infant mortality is high and expensive incubators are scarce. But when the students were dispatched to Nepal to spend time with mothers and doctors, they found that most births take place in rural areas far from hospitals, so flooding hospitals with cheaper incubators would be of no use to most premature and low-birth-weight babies.

Equipped with this knowledge, and, as Mr. Kelley sees it, a newfound empathy for their subjects, the students reframed the problem. "This was about keeping babies warm, not cheaper incubators," explains George Kembel, executive director and co-founder of the d.school.

The second step in the process is "ideation," where students visualize and brainstorm potential solutions with one another. The students decided that what was needed was an inexpensive baby-warming device that could function in rural communities—one that was transportable, simple to use and sanitize, and worked without electricity.

Next comes "prototyping." The students made sketches and three-dimensional models of potential incubators that they could test, modify, and test again, in an iterative process that is at the heart of design thinking. By the end of the class they had a finished prototype—a kind of sleeping bag made of special material that could be wrapped around a premature infant and kept clean and warm with nothing more than boiling water. The students went on to form a nonprofit company in the hopes of bringing their Embrace incubator to market.

Mr. Kembel says the learning experience at the d.school is centered on a few basic beliefs. One is that people learn by doing, so the more projects students tackle the better. The same goes for developing prototypes. Speed and quantity are encouraged in the hope that students will fail early and often. "If you go through lots of little tests, you learn more than if you just do one test," says Mr. Kembel.

Another guiding principle is that people learn best by collaborating with others who have radically different points of view, so classes should be made up of students and teachers from a variety of disciplines—the more the better.

Moreover, "everyone needs to have an equal voice," says Mr. Kembel, "because everyone in a sense is learning, even the faculty." So the old model of teacher at podium lecturing students has been thrown out in favor of classrooms that look more like studios, with tables and chairs scattered about.

Mr. Kembel says a lot of time at the d.school is spent helping students unlearn things they learned in elementary school. Fear of failure is rampant among students who have been drilled in standardized-test taking, he says. "What we want the graduate students to do is work with others and go out and take risks," says Mr. Kembel.

Making Waves

The d.school is reporting progress on several fronts.

It now enrolls 700 students per year, up from 30 six years ago. Applications are running at two to three times the number of available slots, Mr. Kembel says, and increasing numbers of students are choosing to attend Stanford because of the d.school. He also says employers are starting to seek out students with d.school credentials.

The d.school has produced several companies, including d.light design, which makes solar-powered lanterns for the developing world; Alphonso Labs, which markets Pulse, a news-reading application for iPhone, iPad and Android devices; and of course, Embrace, which hatched from the incubator project.

Almost weekly, educators from around the world make the pilgrimage to Palo Alto to take tours and get advice on how to set up d.school-like programs of their own. Dozens of colleges have programs in various stages of development.

More recently, the d.school has been teaching K-12 teachers how to employ design-thinking techniques in their classrooms. Last year alone, more than 500 educators attended workshops at the d.school's K-12 lab. Research is under way, but early indications are that K-12 students exposed to design thinking are more engaged and motivated to learn, say Rich Crandall, director, and Adam Royalty, founding member and lead researcher, of the K-12 lab.

To Mr. Kelley, that is the Holy Grail of design thinking. He says it is behavioral change that enables students to gain innovation confidence, something he believes is as important as gaining literacy skills. "For me this is a mindset," he says. "It's a way of thinking that you can use in every part of your life."

Ms. Geer is a writer in Connecticut. She can be reached at reports@wsj.com. via online.wsj.com

 Speaking 

As the CEO and founder of InnoThink Group, Jim can help your organization enhance the strategic innovation and competitiveness of your business policy and strategy, with an emphasis on increasing top line growth. 

If you’re interested in having Jim speak at your next event, simply use this form to send us your details and speaking requirements, and we’ll be in touch shortly. Or you may call us at 719-649-4118. Thank you!

Educational Innovation, Technology and Entrepreneurship - Fernando Reimers

I have spent the last 25 years studying and working with governments and private groups to improve the education available to marginalized youth, in the United States and around the world. Most of that work was based in the belief that change at scale could result from the decisions made by governments, and that research could enlighten those choices. When I joined the Harvard faculty 13 years ago I set out to educate a next generation of leaders who would go on to advise policy makers or to become policy makers themselves, and designed a masters program largely responsive to that vision. During those years I continued to write for those audiences.

Over time, however, I have become aware that traditional approaches can't improve education at a scale and depth sufficient to ready the next generation of students for the challenges they will face. I have also become more skeptical of the assumed linear relationship between conventional research and educational change. I now believe the needed educational revitalization requires design and invention, as much as linear extrapolation from the study of the status quo — that is, of the past. It also requires systemic interventions — changes in multiple conditions and at multiple levels, inside the school and out. And it requires a departure from the conventional study into how much we can expect a given intervention or additional resource to change one educational outcome measure — typically a skill as measured on a test or access to an education level, or transition to the next.

It is this interest in change that has led me to study the work of education entrepreneurs — of innovators who are creating new education designs, in ways that exceed the resources they command. I am especially interested in the entrepreneurs whose goal is to produce significant educational innovation — rather than simply providing access and delivering services to new groups, or rather than improving the efficiency of the educational enterprise as we know them — to teach our old schools a few new tricks, so to speak. I am also particularly interested in entrepreneurs who can achieve sufficient scale and develop the strategy to significantly change the ecosystem, to shift the conversation about education, to eventually transform the sector in the way in which Wilhelm Humboldt transformed the sector of higher education with the creation of the University of Berlin, or in the way in which Joseph Lancaster propelled the universalization of basic education with the development of a method to teach a basic curriculum at low cost.

The conversations in these blogs on Educational Innovation and Technology are an exciting opportunity to explore a promising mix — the synergies that can result from combining innovation, the utilization of technology in education and the role of education entrepreneurs in creating new designs that can transform the ecosystem. It is in the interplay of these three factors that I see the greatest potential. Not all education entrepreneurs using technology generate innovation, and most of their designs have failed to transform the sector and not all innovators using technology have produced designs that can be scaled or with the ambition and potential to change the conversation or the sector. As a result, educational enterprise is a fragmented territory, of modest scale, yet to transform the education ecosystem.

In order for these three elements — innovation, technology and entrepreneurship — to produce the synergies necessary to substantially transform education, we will need to build a collaborative architecture that allows for the fruitful integration of careful study, design and invention, and action at scale. Such collaboration of industry, academy and the public schools is exceptional, not the conventional way of business for universities, governments or businesses.

Universities are uniquely positioned to lead in forging these partnerships. The trust we receive from society in the form of financial resources, financial and legal advantages and institutional autonomy enable us to anticipate new organizational forms to support educational renewal, rather than reproduce the established forms of the past. While we haven't done this consistently in the history of higher education in the US or abroad, there are good historical precedents of universities taking seriously the task of substantially improving the work of elementary and secondary schools, of serving those who are not direct members of the university community.

This is the time for universities to lead the task of fundamentally reinventing public education. But to do it well, we need to seriously commit to design and innovation, and to work with others — with entrepreneurs, industry and governments — so that their ambitions and impatience for results, and the accountability they have with the constituencies they serve, can help align our efforts with the creation of public value in the form of education institutions that prepare the next generation to lead and manage the challenges we have passed on to them. via blogs.hbr.org 

Want to bring new products and services to market faster? Want to be more agile? Contact Innovation and Growth Speaker Jim Woods. Jim works confidentially with start ups, governments as well as profit and for profit enterprises.

Visit our website:www.innothinkgroup.com Executive and Business Coaching: http://ow.ly/anBpK

Jim Woods is president and founder of InnoThink Group. A global management consulting firms specialized solely in helping organizations of all sizes in all industries catalyzing top line growth through strategic innovation and hypercompetition. Jim has over 25 years consulting experience in working with small, mid size and Fortune 1000 companies. He is a former U.S. Navy Seabee and grandfather of five. To arrange for Jim to speak at your next event or devise an effective growth strategy email or call us at 719-649-4118 for availability.james@innothinkgroup.com

Follow us on Twitter: http://ow.ly/anyCg

Follow us on LinkedIn: http://ow.ly/anyJu

Fan us on Facebook: http://ow.ly/anyQ7

How To Keep Up with the Speed of Change

Successful small companies are adept at responding to opportunities and challenges at the drop of a hat. Employees in these companies will step outside of their day-to-day responsibilities to respond to such events. But to be effective, these go-getters need fast access to information they might not normally have at their fingertips. Companies that rely on e-mail as their primary means of knowledge sharing slow down the process of decision-making because e-mail is limited to people on a list and can get buried in in-boxes.

In contrast, by having employees engage and collaborate on a social network platform specifically designed to meet business needs (think Facebook for companies), decisions are made faster, expertise is easy to find, and colleagues stay connected. By using a social network, employees can ask questions and quickly get answers and stay on top of events, updates, and news. Here are some of the benefits of using these tools to collaborate.

1. Boost morale. Social networks help new employees ramp up more quickly, and get the information they need to be successful at their job. Employees are more engaged because they are contributing to a community of knowledge, with real-time feedback and recognition. In an open setting where participation and contributions are encouraged, employees at different levels or across various departments can work together like never before.

2. Open the lines of communication. With social networks it’s possible for any employee regardless of job description to share a business lead with the sales team, report a bug to product development, discuss a potential competitive threat, or debate a strategic decision. The information is there for people who are interested and/or can contribute value. This also eliminates the need to think about who to include on e-mail threads, allowing people to focus on success, not administrative overhead.

3. Asking questions saves time. When asking questions on a social network, employees can see that a similar question has already been asked and find the answer immediately without having to disrupt co-workers. If the question has not been asked, it can be answered by anyone who may know. This eliminates having to know who might know the answer just to be referred to someone else.

By unlocking information exchange from the grip of e-mail and enabling communication through a platform that is open and familiar, employees are better connected and can execute more efficiently to address the daily challenges of a small company. via businessweek.com

Want to increase the sustainability of your nnovation initiatives or need a speaker? Contact us.

Jim Woods is president and founder of InnoThink Group. A leading consulting firm specialized solely in enabling organizations of all sizes in all industries develop top line growth through strategic innovation and hypercompetition. Jim has over 25 years consulting experience in working with small, mid size and Fortune 1000 companies. 

A Fully Biodegradable Foldable Shoe, Inspired By Amazon Natives | Co.Exist: World changing ideas and innovation

In the Amazon, slipping on your shoes is as simple as painting a thin layer of latex on your feet. Rubber, at least in its original form, is derived from tree sap as opposed to today’s synthetic version from petrochemicals. In a way, indigenous people in the Amazon pioneered this ready-to-wear technology as the original tires for human mobility.

Now a Spanish company called OneMoment is bringing that ancient, cutting-edge technology to the rest of us. Their completely biodegradable shoe--measuring only 2 millimeters thick on the sole, and just 1 millimeters around the foot (that’s about three millimeters less than traditional shoes)--is created by injecting natural bioplymers, similar to latex, into a mold. The elastic, biodegradable material molds to your foot, and rolls up for easy storage. To clean them, you can just rinse them or wash them in the washing machine. Once they’ve lived out their natural life, you can compost them by shredding and tossing them into the compost bin.

The people who use the shoe vary widely, says Felipe Izquierdo of OneMoment by email: "Long haul travelers, back-packers in New Zealand forest, discotheque fashion lovers in the UK, mothers taking their kids to swimming lessons, hunters, scuba divers. It’s a long list." They’re currently available in 35 countries around the world, and expanding quickly.

"The idea came from the necessity to protect our feet quickly, cheaply, and in an environmentally friendly manner," says Izquierdo. The Amazon natives who inspired the shoes just covered the soles of their feet with Hevea resin, but OneMoment uses internationally certified biopolymers: "Biodegradable does not mean soft or non-rugged materials," he says. "What’s more biodegradable than a tree?"

via fastcoexist.com

Stephen Wunker: The Two Routes Out and RIM's Innovator's Dilemma

(Please take a moment to visit our sponsors.)  


In the late 1990′s, the giants of the wireless industry didn’t give Research in Motion much thought.  Before the company created its soon-to-be-ubiquitous BlackBerry devices, it was building two-way pagers aimed at a corporate market that barely existed.  The behemoths — companies like Nokia and Motorola — focused on the big consumer market where the hardware, software, and sales process looked completely distinct.  Over the next 10 years, up to the introduction of the iPhone, RIM romped from triumph to triumph, dominating the enterprise market and building upon that success to create a strong position with consumers as well.  In hindsight, the industry incumbents were trapped in a classic Innovator’s Dilemma in which they focused on their biggest, most profitable customers (consumers and the wireless carriers who sold to them) while ignoring new sources of growth that demanded new competencies and business models.

It is deeply ironic that RIM is in exactly such a situation now.  On the eve of its developer conference, it is touting a new operating system it hopes will rival iOS and Android, while boasting of its strong position with highly demanding corporate IT customers.  Yet it faces slim odds of earning respectable market share among consumers with iPhone and Android look-a-likes; those competitive systems are very slick, have a huge library of applications, and have already passed muster with many ITgatekeepers.  

RIM’s next-generation devices look to be too late and of interest only to the most demanding corporate clients (ask Digital Equipment about how that strategy worked out for them as they entered the PC business in the 1990′s).  A third player could make a go of the enterprise market by playing asymmetrically — HP might have made room for its ill-fated webOS devices by bundling them with server purchases and optimizing corporate apps for those environments.  But RIM lacks many other assets to leverage, and it does not have deep pockets to finance an acquisition binge.

So, what can RIM do?

One route would be to double-down on the enterprise, expanding beyond the company’s device-centric business model to provide mobile security services (potentially for non-RIM devices as well), bandwidth management systems, and thoroughly-vetted apps.  It could also develop devices suited for particular industry verticals, much as Cisco has done with its Cius tablet or Panasonic has done with its Toughbook line.  Enterprise sales take notoriously long, but for all of the strength iOS and Android have shown in these environments they remain a different world.  RIM could stop thinking of itself as a device-maker and instead focus hard on the overarching jobs that CIOs and business leaders are trying to get done.  Within 3-5 years, it could transform its profile into a solution provider much like IBM has accomplished.  The company’s best shot at executing such a strategy might be through merging with Dell, which offers the datacenter hardware, corporate salesforce, and IT service capabilities that could turbo-charge this offering.

Another path for RIM would be to build on its strength in emerging markets.  The company derives about half its revenue from these markets today, and its market share in many fast-growth countries is substantially higher than in North America and Europe.  RIM’s strengths in encryption and bandwidth management can be real pluses in these markets, and the company has been willing to sell at the relatively low margins necessary to win share in these settings.  Of course, low margins are not a good thing, and price competition may make RIM gun-shy about targeting these markets even more aggressively.  (Again, ask Digital about how its fear of the low-margin PC industry worked out for protecting its strength in fancy mini-computers).  Yet this is where the growth is.  In just the past two months, Brazilian company Positivo Informatica has launched its Ypy tablet tailored for its home market, and DataWind has launched its Aakash tablet that it will wholesale for under $50 to the Indian government.  The BlackBerry doesn’t need to sell for $50, but it needs to be inexpensive.  Conceivably, RIM could also strike deals with carriers to gain a share of data revenues in markets where the device itself is sold inexpensively by the carrier (practices vary around the world about whether devices are sold by carriers or independently).  A low-cost business model garnering revenues partly from services would be a big change for RIM, but change seems imperative regardless of the strategy chosen.

These are tough choices to make.  As with any company facing an Innovator’s Dilemma, the short-term pain may be considerable.  Yet, looking just a bit longer-term, there may be few better alternatives. via forbes.com

Jim Woods is president and founder of InnoThink Group; a global innovation, growth and hypercompetition consultancy. He is an author and speaker on strategic innovation and competitive advantage. To hire Jim to speak or advise your organization - Call 719- 649-4118 or email for availability.  Subscribe to our innovation and hypercompetition newsletter.  

(Please take a moment to visit our sponsors.)  

Follow us on Twitter

Follow us on Linkedin

Follow us on Facebook

Stephen Wunker: Steps to Put Christensen's Jobs-to-be-Done Theory into Practice

(Please take a moment to visit our sponsors.)  

Nine of the ten most valuable companies in America can trace their greatness to reconceiving a market’s boundaries.  From ExxonMobil to Apple to Wal-Mart, these firms expanded markets that others saw as static.  How can companies in today’s economy – seemingly hemmed in on all sides by hyper-competitive markets – break into new ground?

The wrong place to start is by asking customers what they want.  Overwhelmingly, customers will answer based on how a market exists today.  As Henry Ford reputedly said of his industry, “If I asked customers what they wanted, they would have said a faster horse.”  Instead, you need to look deeper and examine underlying needs.

Clayton Christensen, the famed Harvard Business School Professor known for coining the term “disruptive innovation,” believes that one of his most enduring legacies will be an idea he first put forward in his 2003 book The Innovator’s Solution: don’t sell products and services to customers, but rather try to help people address their jobs-to-be-done.  This seemingly simple idea has profound implications for re-framing industries.  As I saw in years of consulting with Christensen to companies giant and small, it can revolutionize how firms compete.  But the concept can also be tough to put into practice.  A six-step process provides a rigorous way of defining the jobs you can address.  Once those challenges are tightly defined, it is much easier to generate bold ideas for new solutions.

1.  What are the high-level jobs-to-be-done?

Rather than looking just at what people buy, examine the needs that arise during their lives.  Sometimes the job is much broader than the product or service that is bought.  For instance, why did I take five small children to a movie on Sunday afternoon?  Because on a rainy day I needed to get them out of house for a few hours.  Could movie theaters expand their addressable market by emphasizing how they can occupy kids?  What if the room used for the 20^th screen was adapted instead for inexpensive play like a childrens’ gym?

2.  What are the current approaches and what pain points result?

Jobs-to-be-done can sprawl across dozens of industry categories.  Clearly a company can’t address each job, but by looking broadly it can re-define its true “competition.”  After it understands the full landscape, it can focus narrowly.  Theaters may not want to invest in indoor playgrounds, but they need to see playgrounds as a rival every bit as real as a multiplex a few miles away.  By understanding the pain points associated with competitive offerings, a business can better invest in emphasizing its distinctive strengths.

3.  What benchmarks exist in the full range of competing offerings and analogies?

Companies should always compare themselves to directly comparable firms, but they should not be seduced by the simplicity of that exercise.  Through examining all that the full set of rivals and analogous offerings can do, they can get excellent ideas for their own business.  For instance, a movie theater could learn from Disney World about how to market merchandise to children and how to entertain people in lines.

4.  What performance criteria do customers use?

Much psychological research has shown that even horribly complicated decisions are often reduced to a small handful of criteria that people can keep in mind at any one time.  What are they for your industry?  What adjectives describe a good solution?  Asking customers these questions can open up surprising routes for improving current solutions or marketing existing offerings more effectively.

5.  What prevents new solutions from being adopted?

Managers are often too enamored of their own ideas.  Unfortunately, even compelling ideas can take a long time to catch on.  Indoor plumbing took 4,500 years from its invention to become widely adopted.  Really, is your idea better than indoor plumbing? Think in a disciplined fashion about all the obstacles hindering adoption of new solutions in your industry.  Talk to customers about how they made a decision to adopt a recent innovation – not innovations in general, as that can average out important details, but rather a specific case study.

6.  What value would success create for customers? 

By understanding the value that lies in resolving a pain point, you can see how many degrees of freedom you have to engineer a new solution.  For instance, if resolving an issue on construction sites could avoid 30 minutes of downtime twice a week, and that time is valued at $600 / hour for the crew, then you get a sense of potential price and cost of a new solution.  Keep in mind that value could be defined by money, time, convenience, peace of mind, and other metrics.

Re-framing a market can be an immensely powerful engine of business growth.  These six steps help to translate Christensen’s theory of jobs-to-be-done – an immensely powerful idea – into specific ideas for action. via forbes.com

Jim Woods is president and founder of InnoThink Group; a global innovation, growth and hypercompetition consultancy. He is an author and speaker on strategic innovation and competitive advantage. To hire Jim to speak to your organization - Call 719- 649-4118 or email us for availability.  

Subscribe to our innovation and hypercompetition newsletter.
  

(Please take a moment to visit our sponsors.)  

Follow us on Twitter

Follow us on Linkedin

Follow us on Facebook

Love letters with 7 year delay to tackle divorce rate in China

(Please take a moment to visit our sponsors.)  

Recent ideas to spice up the morning post have included NOT ANOTHER BILL and Postcarden, and it seems variations of the humble greetings card have not yet been exhausted, with China’s post office launching a new love letter service.

Addressing the problem of a growing divorce rate — in Beijing divorce rates have doubled since 2004 to 21,000 last year — newly weds can send each other sealed love letters, which are stored by Beijing Post and delivered seven years later. While the scheme may seem a playful reference to the “seven year itch”, it was in fact launched jointly with Beijing’s Civil Affairs Bureau, hinting to a more serious motive for the initiative. Work-related and money-related stress have been blamed for the rising number of divorces and a post office official to China’s state media commented, “We hope the love letters may save some marriages in the future”. Special stamps, postmarks, postcards, envelopes and even a Love Passport, which can be stamped every anniversary, make up the romantic product range available from China’s post office.
While the success of the idea won’t be known for another seven years, what is clear is that the symbol of the love letter still holds its weight despite new and social media. Are there still more greetings card ideas that will get people posting? via springwise.com

Business today is a chess match without rules. Requiring nimble competitiveness in which conventional thinking is discarded. InnoThink Group is provocative. Dynamic. Imaginative and committed to helping our clients out compete for top line growth. Hire Jim Woods To Speak to Your Organization.


(Please take a moment to visit our sponsors.)  

Jim Woods is president and founder of InnoThink Group; a global innovation, growth and hypercompetition consultancy. He is an author and speaker on strategic innovation, education and competitive advantage. To hire Jim to speak to your organization - Call 719- 649- 4118 or email us for availability. Subscribe to our innovation and hypercompetition newsletter.