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427 posts categorized "Innovation"

November 05, 2013

Reminding Ourselves of the Importance of Basic Scientific Research

In a post entitled Fostering Genius, I discussed a number of research and academic organizations in and around the Princeton, NJ, area. The organization to which I devoted most of the post was The Institute for Advanced Study, a research center most famous for once having counted Albert Einstein among its members. He isn't the only genius that has called the Institute home. Over the years some 33 Nobel laureates have worked there and, since 1936, its members have claimed the majority of math's top prize — the Fields Medal. One of the things that distinguishes the Institute is that its focus is basic research rather than applied research. Its members are trying to understand the fundamental principles that make the universe tick. The Institute's current Director, Dutch mathematical physicist Robbert Dijkgraaf, told reporter Eliza told Gray that seeking to expand the boundaries of science "may be a luxury that America can no longer afford — or at least appreciate the importance of." ["The Original Genius Bar," Time, 22 July 2013]

As evidence that scientific research no longer holds a cherished place in contemporary America, Gray notes that the Institute's "influence in Washington has fallen, as has Washington's interest in science." She goes on to report:

Basic Science"Over the past 25 years, the U.S. government's spending on physical-science research has dropped by half. Sequestration — the $1.2 trillion in spending cuts in the discretionary and defense budgets over the next decade — has accelerated that, slicing budgets for agencies that support science research, like the National Science Foundation and the National Institutes of Health."

Even without sequestration, Congress' interest in science was waning. Gideon Rachman traces the growing lack of interest in science back to Ronald Reagan. He explains:

"Traditional conservatives disdain populism and respect knowledge. They believe in balancing the government's books. And they are pragmatists who are suspicious of ideology. Reagan debased all these ideas – and modern American conservatism is still suffering the consequences. The most damaging idea propagated by the Reagan myth is the cult of the idiot-savant (the wise fool)." ["How Reagan ruined conservatism," Financial Times, 1 March 2010]

To continue reading this post, click on the link to the new Enterra Insights site.

October 25, 2013

Fostering Genius

Eliza Gray tells the fascinating story of The Institute for Advanced Study in an article published in Time. ["The Original Genius Bar," 22 July 2013] She describes the Institute as "a place to work unhindered by the pesky objectives required by traditional research centers or obligations to pimply students at universities. If research were measured on a spectrum from the practical (like making a laptop slimmer) to the theoretical (like studying the way matter moves in space), the institute is as 'close to the frontier as possible,' says its new director, Dutch mathematical physicist Robbert Dijkgraaf." Since opening its doors in 1930, Gray reports that "33 Nobel laureates have stopped through along with more than two-thirds of the winners of the Fields Medal, math's top honor since 1936."

Institute for Advanced StudiesAccording to the article, the Institute was founded "by Abraham Flexner, an educational theorist, and siblings Louis Bamberger and Caroline Bamberger Fuld, department-store moguls who provided the initial endowment of $5 million." Gray indicates that their motivation for founding the Institute was "to counteract a trend in the U.S. toward applied science." There is certainly nothing wrong with applied science; but, seeking to expand basic scientific knowledge (i.e., "pursuing questions for which the value of the answers isn't obvious") taps something deep in soul of scientific and mathematical geniuses.

Gray concludes her article on the Institute by describing some of the work currently ongoing there, including work on machine learning, cancer, human migration patterns, and star explosions. No one is sure where all of the research will lead, but as one researcher told Gray, "Use your imagination." To put an exclamation point on the fact that the Institute remains relevant and important, it was recently announced that theoretical physicists from the Institute "a jewel-like geometric object that dramatically simplifies calculations of particle interactions and challenges the notion that space and time are fundamental components of reality." ["A Jewel at the Heart of Quantum Physics," by Natalie Wolchover, Quanta Magazine, 17 September 2013] To learn more about that, read my post entitled Are Space and Time Real?

As you read Gray's article, you can sense the excitement she felt as she interviewed those involved with the Institute. It is that sense of excitement and inquisitiveness that a new non-profit organization, called The Project for STEM Competitiveness – which I helped found and currently serve as chairman of – wants to instill in young students. The first project being sponsored by The Project for STEM Competitiveness is a pilot program in Newtown, PA, at the Newtown Friends School called "Liftoff to Mars." To read more about this program, read my post entitled Teaching STEM Subjects Using a Mission to Mars and the following articles: "Newtown Friends to pilot STEM education program," by Crissa Shoemaker DeBree,, 24 September 2013; "STEM pilot program lifts off at Newtown Friends School," by Regina Young, Bucks County Herald, 3 October 2013; and "Newtown Friends School, Lockheed Martin, US Dept. of Energy thinking about life on Mars," by Cary Beavers, The Advance, 3 October 2013.

You might be asking: What does the Institute for Advanced Study have to do with a science, technology, engineering, and mathematics (STEM) education initiative at a Newtown, PA, middle school? The primary connection is geographic. The Institute, along with several other world-class academic and research organizations, lies within a ten-mile radius of Newtown – which also happens to be the headquarters of my company Enterra Solutions, LLC. It is our intention to sponsor field trips to these world-class organizations so that students can feel for themselves the excitement that research can engender.


Fuld Hall of the Institute of Advanced Studies
Fuld Hall of the Institute of Advanced Studies
It is our belief that by exposing students to current projects and researchers, as well as exposing them to the work of the intellectual giants upon which current researchers build, students will become more interested in STEM subjects. The Institute has hosted over 6000 members through the years. It is perhaps best known as the academic home of Albert Einstein. Other intellectual giants who have worked there include: John von Neumann, Oskar Morgenstern, Kurt Gödel, Alan Turing, Paul Dirac, Edward Witten, J. Robert Oppenheimer, Freeman J. Dyson, Julian Bigelow, Erwin Panofsky, Homer A. Thompson, George F. Kennan, Hermann Weyl, Stephen Smale, Atle Selberg, Noam Chomsky, Clifford Geertz, Paul Erdős, Michael Atiyah, Erich Auerbach, Nima Arkani-Hamed, John N. Bahcall, Michael Walzer, T. D. Lee, C. N. Yang, Hassler Whitney, Andrew Wiles, André Weil, Stephen Wolfram, Eric Maskin, Harish-Chandra, Joan W. Scott, Frank Wilczek, Edward Witten, Albert O. Hirschman, Nima Arkani-Hamed, and Yve-Alain Bois.


The National Compact Stellarator Experiment (NCSX) machine at PPPL
As I mentioned above, The Institute for Advanced Studies is just one of the many world-class organizations that lie within about a ten-mile radius of Enterra Solutions' headquarters. One such organization is the Princeton Plasma Physics Laboratory. It was during a visit with Dr. Andrew Zwicker, Head of Science Education at PPPL, that I first discussed establishing The Project for STEM Competitiveness. As explained by its website, "The U.S. Department of Energy's Princeton Plasma Physics Laboratory (PPPL) is a collaborative national center for fusion energy research. The Laboratory advances the coupled fields of fusion energy and plasma physics research, and, with collaborators, is developing the scientific understanding and key innovations needed to realize fusion as an energy source for the world. An associated mission is providing the highest quality of scientific education."



The original SRI Mouse
The SRI Mouse

Another such organization is the SRI International, which began life as the David Sarnoff Research Center, a research and development organization specializing in vision, video and semiconductor technology. Named for David Sarnoff, the former visionary leader of RCA and NBC, the organization has been involved in several historic developments that will grab students' attention, notably color television, CMOS integrated circuit technology, liquid crystal displays, and electron microscopy. The organization invented the now ubiquitous computer mouse, was one of the first four sites of ARPANET, the predecessor to the Internet, developed the SIRI personal assistant that iPhone users are familiar with, and it even helped Walt Disney select a location for his first theme park.

Bell Labs Original Transistor 1947
Replica of Bell Labs' 1947 transistor


Another nearby organization is Bell Laboratories (also known as Bell Labs and formerly known as AT&T Bell Laboratories and Bell Telephone Laboratories). It is currently the research and development subsidiary of the French-owned company Alcatel-Lucent. According to Wikipedia, "researchers working at Bell Labs are credited with the development of radio astronomy, the transistor, the laser, the charge-coupled device (CCD), information theory, the UNIX operating system, the C programming language, S programming language and the C++ programming language. Seven Nobel Prizes have been awarded for work completed at Bell Laboratories."


Princeton University clearAnd, of course, there is Princeton University. As its website explains, "Chartered in 1746, Princeton is the fourth-oldest college in the United States. Princeton is an independent, coeducational, nondenominational institution that provides undergraduate and graduate instruction in the humanities, social sciences, natural sciences and engineering. As a world-renowned research university, Princeton seeks to achieve the highest levels of distinction in the discovery and transmission of knowledge and understanding. At the same time, Princeton is distinctive among research universities in its commitment to undergraduate teaching."

With all of these wonderful organizations with such rich histories residing in our own backyard, it seemed natural to me to reach out to them for assistance in helping make STEM subjects for interesting for young students. If researchers at these institutions can get young students excited about STEM subjects, I'm not sure what will. However, I'm optimistic that field trips and visits by guest lecturers from these organizations will help stimulate students and, with luck, foster a genius or two among them.

September 06, 2013

Packaging and Sustainability

Manufacturers and retailers know that packaging serves a number of functions. Good packaging protects the products they contain, attracts the eye of potential buyers, and optimizes retail shelf space. More and more, however, you read about the importance of so-called "green" packaging. The challenge for designers and engineers is to develop packaging that provides all of packaging's traditional functions while being environmentally friendly. Each type of packaging material (e.g., metal, glass, plastic, and paper) comes with its own set of unique challenges. Most consumers don't really give much thought to packaging. Fortunately, professionals involved with packaging do. That's because billions of dollars are spent packaging consumer goods each year. Nevertheless, Dennis Salazar, President & Co-founder of Salazar Packaging, believes there is plenty of room for innovation in the packaging sector. After attending a couple of recent packaging conventions, he concluded that, "not a whole lot" was taking place "in terms of innovation." On the other hand, he asserts that there is a lot of activity "in terms of approach." ["What’s New in Green Packaging?," Environmental Leader, 16 May 2013] I'll discuss those approaches later.

Sustainable packagingRory Christian, a Consultant with Cambashi, points out that the "perfect package," if there is such a thing, isn't the work of a lone genius sitting at a design table. He asserts that it requires "input from an array of geographically-dispersed stakeholders, including: multi-disciplinary design teams, packaging manufacturers, logistics operators, retailers and, of course, the consumers themselves." ["The Promise of Great Packaging at Retail," Consumer Goods Technology, 7 May 2013] Each of those stakeholders views packaging from a different perspective and, therefore, each stakeholder provides valuable insight about its development. Christian believes, however, that too often valuable inputs from stakeholders are received sequentially and the result is less than optimum packaging. He explains:

"Companies have tended to operate a sequential process for packaging design, with each team impressing their input onto the product one stage after another. The issues that arise when, for example, space needed for labeling is cannibalized by the brand logo during a preceding process, often lead to conflict, unexpected re-work, extra cost and wasted opportunity."

When sustainability factors are added in, the complexity of the packaging challenge increases. Paul Tasner, Chief Operating Officer and Co-Founder of PulpWorks, Inc., believes that sustainable packaging refers to "packaging that does more good than harm. It is packaging that will not be a burden on our planet or for future generations, as opposed to the packaging that continues to be such a burden on the environment." ["Sustainable Packaging," Dustin Mattison's Blog, 14 August 2012] Tasner adds that one of the challenges associated with sustainable packages is cost. He explains:

"In many cases the sustainable packaging choice is not the economical choice. There may be a cost difference. It is obviously pennies, but pennies are important to many companies. They don't consider sustainable packaging to be an important factor in their supply chains. In fact, many companies see the cost barriers as an issue."

Salazar notes that there have been some attempts to adopt innovative materials ( such as, "seaweed, mushrooms or concepts that make new packaging out of waste such as marine plastic:); but, he laments, these products have not proven to be "game changers" that are "capable of being produced, economically for large volume, commercial use." Ron Romanik, Contributing Editor at Packaging World, believes that even during economically challenging times that manufacturers should pursue innovative packaging solutions. ["How packaging innovators tear down walls while planning ahead," 26 April 2013] He provides ten "tips to help jump-start—or rejuvenate—your leadership in managing a new package innovation."

  1. "Break down walls. You don’t need X-ray spectacles to see that information shouldn't be hidden behind departmental barriers or organizational 'walls.' ...
  2. "Work hard to work together. ... Engineers and technical R&D professionals may suspect that marketing doesn't understand what is or isn't possible, while marketing pros may feel that tech teams are stuck in the proverbial mud.
  3. "Define the common goal. ... Packaging innovation design doesn't happen in a vacuum.
  4. "Empower engineers. ... Don't be afraid to empower engineers and make available to them packaging-specific data to drive to the right solution. ... Consumer behaviors, wants, and needs influence the solution. But engineers need the data to justify the solutions they offer.
  5. "Plan for the good and the bad. ... Companies must remain flexible—from the business processes to packaging line designs and layouts.
  6. "Anticipate the future, systematically. ... Continually research new package ideas to meet present and future needs. ...
  7. "Be a true believer. Leading packaging professionals believe that innovative packaging is good for the company as well as society at large. ...
  8. "Retain educated leaders. The best packaging R&D groups include leaders who are experienced and educated specifically in packaging. ...
  9. "Roll up your sleeves. Even managers should have the experience and capability to execute in order to lead a packaging project from concept to market, to work with engineering, manufacturing, and external material and machinery suppliers.
  10. "Measure to improve. Measure brand performance with consumers. ..."

Deciding what metrics to use is important. As noted earlier, if cost is the most important metric for a company, then some innovative sustainable solutions may never be considered. Additionally, a focus on cost may result in corporate myopia that prohibits a company from looking at the broader picture. That brings us back to the point that Salazar made earlier about new approaches to green packaging. He writes:

"What I find most encouraging is the change of attitude that is more back to basics; packaging design that is green by default. Don't misunderstand, I am not at all critical of this approach, in fact I am convinced it is the only way we can drive positive, long term change. It will be successful because it is based in economics, not guilt and because in most cases the savings they produce are immediate with minimal upfront investment. Even though this economically driven change may not have the green banner on it, the results happen to be basic in regards to sustainability. Many of the products I now see being promoted can easily and accurately be categorized in the three basics R's of sustainability."

The three R's to which Salazar refers are: Reduce, Reuse, and Recycle. None of these R's requires the use of new innovative materials — and that's Salazar's point. Concerning reducing packaging material, he writes:

"The new focus is on thinner, stronger materials able to do the same job with less material. This is consistent not only in paper products but especially in plastics after another turbulent year of resin prices, negatively impacting all forms of transparent, flexible packaging, and non-film products like plastic strapping, and carton sealing tapes. We are most definitely using less, not necessarily for the sake of the planet but for the sake of the bottom line."

Anyone who drinks a lot of bottled water has noticed how caps have gotten smaller and bottles have become thinner over the past few years. Thinner material is good for some purposes (like holding water), but thinner material also offers less protection for more vulnerable products. Concerning the reuse of packaging material, Salazar writes:

"I see a lot more products that permit or encourage their reuse. Paper products such as boxes with specialty coatings designed to extend life and the increased popularity of returnable, reusable packaging such as totes, mailers, and other containers designed for multiple reuse. Companies love the economics of packaging that is not designed to be used and tossed, and they are taking full advantage of closed loop or internal return/reuse capabilities."

Somewhere between the topics of Reuse and recycle is the topic of repurposing. Repurposing involves finding a new use for an old product without having to modify it significantly. Unfortunately, for most manufacturers, repurposing really isn't an option. Finally, on the topic of recycling, Salazar writes:

"If there is a long term positive impact to what appears to be for many companies a short term interest in sustainability, it is in this most important area. More products than ever before are being made with a large percentage of recycled content and even more are able to be easily recycled and are labeled as such. I would also say that most of the manufacturers I know use recycled materials because it saves them money and allows them to minimize the impact of multiple price increases on new or virgin materials."

In past posts concerning sustainability, I have stressed that the only sustainability initiatives that will have legs are those for which a business case can be made. Salazar agrees. He concludes:

"The other really positive, long lasting change I see is an increased interest in sustainable design incorporating the three techniques above. The end result of an application audit is almost always an immediate savings because so often companies are basically using the wrong product, or in some cases the product design they are using is simply outdated. Imagine being able to use less packaging, that is 50% recycled content and is 100% recyclable after many repeated uses? Those types of goals are being met every day and that is good for the bottom line and for the environment. The best eco friendly packaging solutions are those that are appealing to the company or consumer using them and also make economic sense."

The topic of sustainable packaging is only going to gain more attention in the years ahead. It will be interesting to see what kinds of innovative solutions companies come up with to meet the myriad functions that packaging involves.

August 28, 2013

Some Thoughts About Disruptive Innovations

Helge Tennø, a Digital Director at Dinamo AS in Oslo, Norway, recently penned an interesting blog in which he connected Kevin Kelly's thinking about technology with Clayton Christensen's thinking about disruptive innovation. He writes, "By downplaying technology's role in shaping businesses and industries, companies make themselves vulnerable to emerging threats." ["Disruption and imagination," 180.360.720, 7 August 2013] Tennø notes that we need to think broadly about the term "technology." It refers to things "as big as the alphabet, science, communication and as small as shoes, chairs or Bluetooth." Most importantly, disruptive technologies have two overarching effects. They change "peoples' habits and behaviors" and they disrupt "business ideas and business models."

Tennø believes that disruption occurs "when a firm uses technology in a new way and manages to offer customers relevant value outside the current comfort zone and abilities of the established players." He points, for example, to Henry Ford's application of the production line to produce cars that his employees could afford. He writes that "more current examples are booksellers, airlines and travel, banks and finance, media, hotels, education, insurance and electrical providers." He writes:

"Disruption is a very hot topic today because we are at a time when technology is infiltrating industries core infrastructure and value propositions. The cloud / connected internet, mobile, participation, etc. proposes in a lot of cases such a radically different way of offering or thinking about an offering that disruption is often more than ripe – just waiting to get plucked by small companies, sometimes even unconsciously, digging at an industry from the bottom (which is the trademark of disruption – 'it's not the one you see that kills you').

    'The innovators who create products at "hackathons"aren’t even trying to disrupt your business. You're just collateral damage.' – Larry Downes and Paul F. Nunes, Big Bang Disruption, HBR March 2013

"Unfortunately, even if most companies today use the Internet, I suggest they are mostly doing it to replicate existing infrastructure (many company websites are digital copies of existing content or services already rendered by Customer Service) – companies are not imaginative enough to see how the technology enables them to think differently about their offering, relationship, market, business model etc.:

    'The only thing keeping most big companies from creating new categories is their lack of imagination – their inability to see beyond what they're selling today.' – Eddie Yoon and Linda Deeken, Why It Pays To Be A Category Creator, HBR, March 2013"

Management guru Gay Hamel sees things the same way that Tennø does. He claims they get in that conundrum by boxing themselves in with the wrong question. He told Steve Denning:

"Both Amazon and Apple are classic examples of what I wrote about in the article with C.K. Prahalad in 1990 entitled, The Core Competence of the Corporation. That article argued that the building block for growth is not so much strategy as these deep capabilities that you build and that are very hard to replicate. ... A few years ago, nobody I knew in the idea industry was predicting that Amazon would be the most successful player in Cloud computing, or that Apple would move from computers to music devices to mobile phones to tablets. Yet it is completely logical if you have a competence view of the firm and you see how they continue to leverage that core competence in new ways. Apple and Amazon never made the mistake of getting stuck on the famous question, 'What business are we in?' Once you ask that question, you start asking: 'What assets do we have? And where do we leverage them next?' Once you frame the question that way, the game is almost over." ["Gary Hamel On Innovating Innovation," Forbes, 4 December 2012]

One of things I liked most about Tennø's article was the discussion of something he calls "the Opportunities Matrix." He notes that the Matrix "offers some ideas [about] where new opportunities arise as technology enables new human behavior or habits."


Too often people fail to see opportunities because they continue to view life from the same perspective. Creativity coaches teach techniques that force people to see challenges from different perspectives so that they can consider different approaches for solving it. The Opportunities Matrix does a similar thing. Each red hexagon in the matrix offers a new window (or perspective) through which businesses can consider how they can leverage their core competencies in new ways. It provides them the opportunity to be the disruptor rather than the disrupted. The Matrix helps you overcome the Innovator's Dilemma described by Christensen (that is — how to serve your core business while finding new markets and watching out for new entrants that could be lurking in your blind spot).

Tennø rhetorically asks, "Why is disruptive innovation important?" The simple answer is that disruptive innovation is going to prove fatal for one business or another; and that death is going to be sudden not lingering. Tennø concludes:

"Most companies thrive by incrementally upgrading their existing offering and keeping all competition at bay. This is true, generally speaking an estimate 70% of current return on shareholder value will most likely be the result of incremental innovation (efficiency or sustaining), but if we look at companies future income, and if we look at where they will most likely be disrupted, it is through the innovative use of technology – seeing new needs and new customer demands and working hard at accommodating it. This (a company’s future income) is why disruption – and imagination – might be the most important investments companies look into in these times of great technological opportunity. Now what they need are better, and faster tools for seeing, and acting, on those opportunities."

Sissel Waage bolsters Tennø's arguments. She writes, "Disruptive innovation is in vogue – for good reason. Businesses need to stay ahead in an environment of continual evolution and change." ["Disruptive innovation is key for a sustainable economy," The Guardian, 22 July 2013] She continues:

"We need to allow our brains to think the unthinkable – that is, suspending the pressures of what can be done today and shifting to the question of 'what if?'. ... Suspending judgment and innovating has occurred in countless home offices, garages and living rooms as it has in corporate meeting and board rooms. Yet, given the need for more (and more rapid, large-scale) innovation as we face climate change and other ecological issues, it seems apt to ask how we go about supporting innovation. ... What if there were a centre focused on disruptive innovation, and transforming major societal systems sustainably (with robustness and resilience in mind) particularly where IT, energy, food, agriculture and finance meet? What if prospective innovators came out of their day-to-day urban lives – into a forested or grassland landscape, with blended human and ecological health and resilience that is (mindfully) at the core? And what if the process that prospective innovators went through in such a new centre would submerge them within a space of systems analysis of intended and unintended consequences associated with their emerging new inventions and business ideas? ... What if we really took seriously the innovation needs that our societies face – such as, climate change, ecosystem impacts, biodiversity loss, inequitable access to education, information and capital, and many other issues – and crafted more unusual settings to foster, pressure test and launch those innovations? What if Einstein was right and the thinking (in this case, about innovation) that got us into this situation is not the same thinking that will get us out of it? What if a new way of thinking about built systems could help us innovate to a new climate-adaptive, resilient world? Why not innovate that new centre into being?"

I'm a big fan of "what if" thinking because it is another tool that forces us to change perspective and think differently, and ask good questions. I agree with Waage that disruptive innovations are essential if the global economy is going to grow and new jobs are going to be created.

August 20, 2013

Additive Manufacturing and the Future of the Supply Chain

Sweeping statements are rarely true. That's why a headline that declared "Today’s complex global supply chains are poised to be dismantled" caught my eye. The summary of the article, which was written by Paul Brody, states, "Thanks to the growth of 3D printing, intelligent robots, and open-source hardware, tomorrow's supply chains will be faster, smaller, cheaper, and local." [Gigaom, 21 July 2013] There is certainly a kernel of truth in that statement, but I'm certain that not all global supply chains are going to be dismantled. The question really is: How disruptive is additive manufacturing going to be to supply chains? Noted MIT professor Yossi Sheffi, writes, "The additive manufacturing revolution is underway, and product supply chains lie directly in its path of creative destruction. Which ones, if any, will survive?" ["Does 3D Printing Doom the Supply Chain?" Supply Chain @ MIT, 18 July 2013] Brody continues:

3d Supply chain"Supply chains today are big, complex and global. Keeping them humming is an enormous challenge. But does it have to be that way? We think the world is entering the era of small, simple and local supply chains, powered by a new generation of manufacturing technologies such as 3D printing, intelligent assembly robotics and open-source hardware – also known as the Software Defined Supply Chain."

Clearly, all of those advances are going to affect supply chains as well as manufacturing. Professor Sheffi provides a glimpse of how some of the changes could play out. He writes:

"Some supply chains will become obsolete as a result of this flexibility. For example, 3D printers in auto repair shops and retail outlets could make certain auto components on site, eliminating the need for these items to be delivered by suppliers. Many expedited shipments will not be necessary as the technology matures. When a production line goes down, for instance, the part needed to fix the problem might have to be shipped from a faraway supplier using expensive same-day delivery services. Simply printing the part in situ avoids this costly transportation option. Scenarios like these do not auger well for express delivery companies. But the news is not all bad because alternative business opportunities will open up. Delivering the raw materials that feed 3D printers is such a possibility."

Unlike many forecasts about what the future holds, Brody claims that his predictions are going to become reality in the near-term "The 3D printing revolution is not a decade or more away," he explains, "it's going to start showing up in mass production within the next five years. Despite skepticism, research demonstrates 3D manufacturing improvements combined with the expiration of key patents will lead to a 79 percent reduction in average cost to print objects in five years, and a total of nearly 90 percent over the next 10 years." Brody's mention of patents raises the real fly in the ointment when it comes to additive manufacturing. Michael Weinberg, Senior Staff Attorney and Innovation Evangelist at Public Knowledge, explains:

"3D Printing has all the makings of a great disruptive technology. ... It also raises some interesting legal issues. As we have seen from the rise of the internet, the ability to easily create and share goes hand-in-hand with the ability to copy and distribute. ... Copyright is historically used to protect creatively conceived works that serve no functional purpose. That means that while many objects that come out of a 3D Printer — the sculptures and decorative baubles — will be protected by copyright, many more will not. As a result, copying those useful objects will not infringe on anyone's copyright. ... That does not mean that there is no way to protect these useful objects. Patent gives protection to many of the useful articles that are beyond the scope of copyright. ... While copyright protects creative expression the moment that it is fixed, someone with a patentable idea needs to make an affirmative decision to apply for a patent. That takes both time and money, and requires a showing of novelty and usefulness. ... If 3D Printing does gain wide adoption, the real secret will be to consider intellectual property concerns with an open mind and to ask a few simple questions. Is this really a new problem? Can the existing intellectual property regime cope with this problem? If not, what is the specific shortcoming? What are the wider effects of addressing that shortcoming? These questions should help us focus on what is truly new about 3D Printing, and what is just the status quo wrapped up in a fancy new technology."

The editors at Bloomberg report, "3-D printing is already having a demonstrable effect on the economy." ["How 3-D Printing Could Disrupt the Economy of the Future," 14 May 2013] They point out that additive manufacturing has historically been used to produce prototypes; but, last year, "28.3 percent of the $2.2 billion global 3-D printing market was tied to the production of parts for final products rather than prototypes." They agree with most other pundits that additive manufacturing represents a disruptive technology. They conclude, "Disruption can be dangerous and scary. It can also lead to wondrous new businesses and ways of life. Perhaps more importantly, it's inevitable -- so get in front of it while you can." That's really the same message that Brody and Sheffi are trying to get across. Perhaps the biggest change that additive manufacturing will introduce is mass customization. While that may sound a bit oxymoronic, what it really means is that the average consumer will have access to affordable customized products. Sheffi explains:

"Customization offers another example of how the technology will close some doors and open others in the supply chain domain. 3D printing makes it much easier to tailor products to customer needs, even down to the individual level. By tweaking the computerized blueprint and maybe altering the mix of materials, manufacturers can produce a limitless number of design variations. This newfound versatility is likely to trigger a dramatic increase in the number of product SKUs, which adds complexity and hence cost to supply chains. The proliferation of SKUs will pose a major challenge for companies. On the other hand, 3D printers are smaller and more compact than traditional manufacturing installations, and require fewer and less skilled operators. As a result, they can be located closer to consumer locations. This close proximity to markets, coupled with the short lead times made possible by 3D technology, shortens supply chains and reduces the need for large inventories. Service levels can be improved since additive manufacturing is ideally suited to just-in-time operations. These are only the possibilities that we can imagine in this early stage of the technology’s evolution."

Ken Cottrill, a Global Communications Consultant at MIT's Center for Transportation & Logistics, believes that hype over additive manufacturing could be creating a false dawn. "3D printing is being hailed as a breakthrough technology that will revolutionize manufacturing and supply chain management," he writes. "This may be the case, but we should avoid repeating the mistake of relying on hype to judge its value." ["3D Printing: Let’s Not Manufacture False Dawns," Supply Chain @ MIT, 23 May 2013] He notes there are still a lot of questions that need to be answered about additive manufacturing. In addition to intellectual property rights concerns mentioned earlier, he indicates that questions remain about subjects such as quality, life cycles, and trust. He concludes, "Posing questions like these does not discredit a potentially paradigm-shifting technology; it helps us to take a step back and evaluate its evolutionary track dispassionately." Professor Sheffi probably agrees with his colleague; but, he still believes that it is important to envision what could be possible. He concludes:

"Imagine global networks of additive manufacturing machines that are attuned to local markets and can be reconfigured in real time as demand patterns change. Such a network would take supply chain agility to new levels. Or distribution centers that store and supply product blueprints rather than physical products, located 'in the cloud' or in server farms. Of course the world can be altered further if home-based 3D printing becomes the norm. In this world, every home is equipped with a printer capable of making most of the products it needs. Supply chains that support the flow of products and parts to consumers will vanish, to be replaced by supply chains of raw material. It's a compelling vision, but a long way off. Even assuming that consumers want to become micro manufacturing centers, the technology is many years away from such mass market applications. Meantime, 3D printing is a disruptive technology that will destroy many traditional manufacturing models. But reports that the concept of a supply chain will die at the hands of additive manufacturing are exaggerated."

We may well be at the dawn of new age of manufacturing. Nevertheless, it is too soon to draw sweeping conclusions about how this new age will affect supply chains.

August 07, 2013

The Real, Fake Food You've Been Waiting For

You might have missed the announcement, but "after three months, $330,000 and a high-profile media blitz, the world's first hamburger grown in a lab made its worldwide debut" on Monday. ["Long Awaited Lab-Grown Burger Is Unveiled In London," by Eliza Barclay, Bay Area Bites, 5 August 2013] After reading Barclay's headline, you might be asking yourself: Who exactly has been waiting for this hamburger? Animal rights activists, scientists, environmentalists, and emerging market consumers may be among those who qualify for that group.

Cultured meatThis isn't the first time that lab-grown meat has been attempted. Earlier attempts have not been met with much enthusiasm because the resulting product has not had much flavor. The $330,000 burger may be different. NBC journalists Alastair Jamieson and Alan Boyle report, "Taste testers ... finally bit into a burger created from stem cells in a culture dish rather than meat from a farm or a store. The burger was cooked in front of reporters and taste-tested by Chicago-based author and food writer Josh Schonwald and Austrian food researcher Hanni Rutzler." ["'Intense flavor': The $330,000 burger that was built in a lab hits the spot," NBC News, 5 August 2013] The claim that the lab-grown burger "hit the spot" might be a bit of hyperbole. Jamieson and Boyle note, "Although [Schonwald and Rutzler] struggled to decide whether they liked the taste, both were pleasantly surprised at the texture and juicyness given the absence of natural fats." Schonwald's high praise was, "It wasn't unpleasant." And Rutzler added, "There is quite some intense flavor." Jamieson and Boyle report, however that Rutzler added that the burger "needed seasoning." To be fair, the seasoning was left off deliberately so that the tasters could judge the quality of the "cultured meat" on its own. The burger was cooked by Chef Richard McGeown, of London’s Couch’s Great House Restaurant, who "browned it in sunflower oil and butter." As any food lover knows, even the best cut of steak requires some seasoning.

The cultured beef that was being tasted was created by University of Maastricht physiologist Mark Post. Jamieson and Boyle report that Post conducted his research using a "€250,000 ($330,000) donation from Google co-founder and entrepreneur Sergey Brin." They continue:

"Post has been working since 2008 to produce a palatable food product from lab-grown muscle cells. He and other scientists involved in similar projects aren't doing it just for the novelty. They see test-tube meat as a means to head off what could become a global food crisis."

As I've noted in previous posts, the world's population is expected to surpass 9 billion people by the middle of this century. Finding a way to feed this increased number of people is going to be a challenge -- especially since emerging global middle class consumers quickly acquire a taste for meat. The following video provides a good overview of why cultured meat may prove to be part of the solution to the global food crisis.

The next challenge that needs to be overcome is creating cultured beef at scale. Today that's not possible. Barclay reports, "It took three months to culture the 20,000 individual muscle fibers that make up one single patty." She continues:

"To create his alternative, Post first removed tissue from a cow with a syringe. Then he separated out the stem cells that specifically make new muscle when the cow is injured. He put those stem cells in a growth medium with antibiotics (to prevent contamination from bacteria). Over time, the cells divide, and with the help of some scaffolding provided by the researchers, 'the cells will self-organize into muscle fibers,' Post explains in the promo video. This was no small feat. As synthetic biologist Christina Agapakis pointed out in a blog post for Discover in 2012, 'Cell culture is one of the most expensive and resource-intensive techniques in modern biology. Keeping the cells warm, healthy, well-fed, and free of contamination takes incredible labor and energy, even when scaled to the 10,000-liter vats that biotech companies use.' Hence this burger's hefty pricetag. And while the technique for growing cow cells avoids animal slaughter, it still requires animal inputs that raise ethical concerns. As Agapakis notes, the burger cells are grown in a medium 'supplemented with fetal bovine serum—literally the blood of unborn cows.' Post says he is working on a non-animal based growth medium."

As a result of the challenges that lay ahead, Barclay concludes, "It will be a longtime yet before the average consumer gets to sample an in vitro burger. First, Post says he has to bring down the pricetag — currently about $154 a pound – as well as the time it takes to grow one burger." Post's best estimate for when consumers will be able to pick up cultured meat in their supermarket aisles is in 10 to 20 years. In the video above, Sergey Brin notes that the future of cultured meat sounds like science fiction; but, he goes on to note that wild ideas are required if a technology is going to be transformative. Matt Novak points out that one of the first visionaries to see the potential of cultured meat was Frederick Edwin Smith Birkenhead, the Earl of Birkenhead. ["Synthetic Hamburgers Are the Future--And Have Been for Decades," Paleofuture, 5 August 2013] In his book entitled, The world in 2030 A.D., the Earl "predicted that artificial meat grown in a lab was the wave of the future." Both his prediction and his timeline may prove to be true. Novak goes on to report "that Jacob Rosin and Max Eastman laid out their case for synthetic production of everything" in their 1953 book The Road to Abundance.

Although it was a hamburger that was cooked up during the London press conference, the website Next Nature wondered how else cultured meat could be used. "Although cultured meat is typically presented as a technology to solve problems like animal suffering, food scarcity and climate issues," the site states, "the technology could also be framed positively: Eating in-vitro could bring us entirely new food experiences and eating habits that may enrich our lives." ["Seven Future Visions on In-Vitro Meat," 5 August 2013] The site's seven potential uses include:

  1. Magic Meatballs that "are designed to playfully familiarize children with lab-grown meat. Young people are more prone to overconsumption of proteins and fats, and are more sensitive to the hormones and antibiotics used in conventional meat production. Luckily, lab-grown Magic Meatballs can be tailored precisely to a child's individual needs."

  2. Knitted Meat that uses "thin threads of protein. Supermarkets sell balls of meat fiber seasoned with various spices and vegetable flavors. New kitchen appliances enable consumers to weave meat according to preset preferences. Texture, taste and tenderness can be controlled to create a personal, multisensory eating experience. Groups of diners can even knit their own sections of a protein scarf, enabling multiple people to share a unique moment."

  3. The Kitchen Meat Incubator that "does for home cooking what the electronic synthesizer did for the home musician. It provides its users with a set of pre-programmed samples that can be remixed and combined to their liking. Besides the preparation of traditional styles like steak, sausage or meatballs, consumers can bring their own imagination to the meat preparation process. The handy sliders on the device control size, shape and texture."

  4. Meat Fruit that "aims to seduce and inspire diners with an entirely new eating experience that balances eating meat and fruit. In vitro technology is used to grow meat structures that precisely mimic those of various existing fruits such as berries, oranges, and mangoes. The result is used to create La Pâte, a sweet-savory amuse-bouche ideal for Michelin-starred restaurants."

  5. Meat paint that allows children "to prepare their own meat dish in a very creative, fun and safe way: by painting! The meat paint lets children put some extra effort into their meal, which makes the dinner more valuable and meaningful again. By painting their own meal children get more affinity with their food and are therefore more willing to eat it."

  6. Meat Powder that "is a straightforward form of in vitro meat that provides the proteins you need – no more, no less. Meat Powder can be used in soups, pies and salads, but is best used in a creamy meat fondue."

  7. Rustic In Vitro incubator that is "designed to simulate rabbit, boar or cattle. The more time it has to ripen, the more structure and character the replicating meat cells will develop."

Humans have been eating all kinds of foods depending on where they live and what is available. Once cultured meat is available in large quantities, it won't seem as strange or offputting as it may seem today. In fact, the meat will probably be flavored to taste and people will wonder how their ancestors were ever willing risk buying a cut a meat they weren't sure would taste great!

August 02, 2013

China's Middle Class Consumers

Most manufacturers and retailers continue to see enormous potential for growth in China. To become the pot of gold that manufacturers and retail hope for, Douglas Alexander, Principal Consultant at Component Engineering Consultants, believes "China needs to make greater efforts to lower its savings rate, extricate itself from the investment and export-driven growth model, and develop into a consumption-led economy." ["Where Are the Chinese Buyers?" EBN, 6 December 2012] He goes on to note that China's "middle class is growing with the promise and expectation that goods will be available for this enhanced level of lifestyle." The new lifestyle that confronts most Chinese middle class consumers is one associated with cities. Urbanization is taking place in China at an incredibly rapid pace. Ian Johnson reports, "China is pushing ahead with a sweeping plan to move 250 million rural residents into newly constructed towns and cities over the next dozen years — a transformative event that could set off a new wave of growth or saddle the country with problems for generations to come." ["China’s Great Uprooting: Moving 250 Million Into Cities," New York Times, 15 June 2013] He continues:

Chinese consumers clear"The broad trend began decades ago. In the early 1980s, about 80 percent of Chinese lived in the countryside versus 47 percent today, plus an additional 17 percent that works in cities but is classified as rural. The idea is to speed up this process and achieve an urbanized China much faster than would occur organically. The primary motivation for the urbanization push is to change China’s economic structure, with growth based on domestic demand for products instead of relying so much on export. In theory, new urbanites mean vast new opportunities for construction companies, public transportation, utilities and appliance makers, and a break from the cycle of farmers consuming only what they produce. 'If half of China’s population starts consuming, growth is inevitable,” said Li Xiangyang, vice director of the Institute of World Economics and Politics, part of a government research institute. “Right now they are living in rural areas where they do not consume.'”

With wages in China on the rise, most analysts expect that the Chinese (especially younger generations) will become bigger consumers of goods and services. The consulting firm McKinsey & Company has put a lot effort into understanding Chinese consumers. That understanding begins by studying the impact of urbanization. A year ago, the McKinsey Global Institute released a report entitled Urban World: Cities and the Rise of the Consuming Class. It concluded that the 600 cities making the largest contribution to a higher global GDP will generate nearly 65 percent of world economic growth by 2025. Many of those cities will be located in China. McKinsey analysts note, "Since the mid-1980s, the pace of that shift — from the United States and Europe toward Asia — has been increasing dramatically. We expect this trend to continue, so executives and policy makers must be prepared to respond. ... To capture the opportunities that arise from urbanization, businesses will need extensive market intelligence."

In past posts, I've emphasized the fact that cities are not homogeneous entities; rather, they are patchwork quilt of neighborhoods, ethnicities, tastes, and lifestyles. That is why market intelligence is so important if businesses want to reach individual consumers. McKinsey partner Yougang Chen believes that "rising middle-class wealth and a new generation of sophisticated young consumers are changing the rules for China's consumer market and the companies that serve it." ["China’s next chapter: The rise of the Generation-2 consumer," McKinsey & Company, June 2013] He explains:

"The image of China as a place to sell only low-cost, unsophisticated mass-market products is changing as dramatically as its demographics. Lifted by a wave of growing middle-class wealth, the country's economy is undergoing significant shifts in consumption dynamics as a new generation of young, prosperous, and individualistic shoppers moves to the fore. Our latest research suggests that within the burgeoning middle class, the upper middle class is poised to become the principal engine of consumer spending over the next decade. As that happens, a new, more globally minded generation, born after the mid-1980s, will exercise disproportionate influence in the market."

In a video accompanying the article, Gordon Orr, a Director at McKinsey & Company, explains that many of China's new consumers are purchasing goods and services online. This has resulted in many companies wondering exactly what kind of presence they need in Chinese cities (i.e., virtual presence only, virtual presence and a flagship store, or multi-channel presence). In another McKinsey & Company article, Chen, along with his colleagues Dominic Barton and Amy Jin, discuss how "generational change and the rising prosperity of inland cities will power consumption for years to come." ["Mapping China’s middle class," June 2013] They write:

"The explosive growth of China's emerging middle class has brought sweeping economic change and social transformation—and it's not over yet. By 2022, our research suggests, more than 75 percent of China's urban consumers will earn 60,000 to 229,000 renminbi ($9,000 to $34,000) a year. In purchasing-power-parity terms, that range is between the average income of Brazil and Italy. Just 4 percent of urban Chinese households were within it in 2000—but 68 percent were in 2012. In the decade ahead, the middle class's continued expansion will be powered by labor-market and policy initiatives that push wages up, financial reforms that stimulate employment and income growth, and the rising role of private enterprise, which should encourage productivity and help more income accrue to households. Should all this play out as expected, urban-household income will at least double by 2022."

Douglas Alexander asks, "How would you feel if your boss promised you a 13 to 15 percent raise, per year, for the next 7 years? Stimulated?" Probably, but rising wages, are only part of the emerging picture. The McKinsey analysts note, "Beneath the topline figures are significant shifts in consumption dynamics." As noted previously, the biggest shift is that upper middle class Chinese consumers are going to be driving the Chinese economy and those are the consumers that most companies should target first. They believe, "By 2015, barring unforeseen events, more than one-third of the money spent around the world on high-end bags, shoes, watches, jewelry, and ready-to-wear clothing will come from Chinese consumers in the domestic market or outside the mainland." The McKinsey analysts also note that companies need to look beyond China's coastal cities. They explain:

"Middle-class growth will be stronger in smaller, inland cities than in the urban strongholds of the eastern seaboard. And the Internet's consumer impact will continue to expand. Already, 68 percent of the middle class has access to it, compared with 57 percent of the total urban population."

In China, as elsewhere, there are also generational differences when it comes to what consumers buy. McKinsey analysts label the most significant generation of Chinese consumers "Generation 2" or G2. They write:

"China's new middle class also divides into different generations, the most striking of which we call Generation 2 (G2). It comprised nearly 200 million consumers in 2012 and accounted for 15 percent of urban consumption. In ten years' time, their share of urban consumer demand should more than double, to 35 percent. By then, G2 consumers will be almost three times as numerous as the baby-boomer population that has been shaping US consumption for years. These G2 consumers today are typically teenagers and people in their early 20s, born after the mid-1980s and raised in a period of relative abundance. Their parents, who lived through years of shortage, focused primarily on building economic security. But many G2 consumers were born after Deng Xiaoping's visit to the southern region — the beginning of a new era of economic reform and of China's opening up to the world. They are confident, independent minded, and determined to display that independence through their consumption. Most of them are the only children in their families because when they were born, the government was starting to enforce its one-child policy quite strictly."

This generation is not IT-savvy, McKinsey analysts report it "is the most Westernized to date." They describe G2 consumers a bit more:

"Prone to regard expensive products as intrinsically better than less expensive ones, they are happy to try new things, such as personal digital gadgetry. They are also more likely than previous generations to check the Internet for other people's usage experiences or comments. These consumers seek emotional satisfaction through better taste or higher status, are loyal to the brands they trust, and prefer niche over mass brands. Teenage members of this cohort already have a big influence on decisions about family purchases, according to our research."

The article goes on to discuss more about the location and character of growing Chinese cities. The analysts then conclude:

"Armed with better information, companies can begin tailoring their product portfolios to the needs of increasingly sophisticated consumers and revising brand architectures to differentiate offerings and attract younger consumers eager for fresh buying experiences. There will be not only challenges but also plenty of opportunities for companies whose strategies reflect China’s new constellation of rising incomes, shifting urban landscapes, and generational change."

The "better information" with which companies must be armed will come from big data analytics. I agree with analysts who predict that, in order to grow, most companies are going to have to conquer the emerging market landscape. There is no more important emerging market than China.

August 01, 2013

The Benefits of Urbanization on Innovation

People continue to flock to cities. Although some migration is forced (see, for example "China’s Great Uprooting: Moving 250 Million Into Cities," by Ian Johnson, New York Times, 15 June 2013), most of it is voluntary. Many analysts believe there are good reasons that people prefer urban life (like better use of resources and better access to services), but Jim Russell isn't sure. He writes, "Greater population density drives innovation and productivity. Albeit a theory, urbanists rally around the idea. I'm skeptical of the claim. The conclusion supports the preferred geography, raising a red flag." ["The Magic of Cities," Sustainable Cities Collective, 9 June 2013] Russell states, however, that a new study by MIT researcher Wei Pan is tempering his skepticism. He cites an article by Emily Badger in which she interviews Pan. ["The Real Reason Cities Are Centers of Innovation," The Atlantic Cities, y June 2013] She begins her article by writing:

The Magic of Cities"It's obvious from human history that people have long found unique value in living and working in cities, even if for reasons they couldn't quite articulate. Put people together, and opportunities and ideas and wealth seem to grow at a more powerful rate than a simple sum of all our numbers. This has been intuitively true for centuries of city-dwellers."

In the information age, however, intuition is seldom satisfactory. Badger continues:

"There have been plenty of theories. Adam Smith famously figured that people become more productive when we're able to specialize, each of us honing a separate area of expertise. And when lots of us elbow into cities, we're able to specialize in ways that we can't when a rural farmer must also double as his own butcher, accountant and milkmaid. Other economists have suggested that cities become great agglomerators of industry when factories cluster together around economies of scale and communal access to transportation."

Pan and his associates (Gourab Ghoshal, Coco Krumme, Manuel Cebrian, and Alex Pentland), attempt to move beyond theory in a study entitled Urban characteristics attributable to density-driven tie formation. That's a title only an academician (or an academician's mother) could love. The study's abstract is just about as dry:

"Motivated by empirical evidence on the interplay between geography, population density and societal interaction, we propose a generative process for the evolution of social structure in cities. Our analytical and simulation results predict both super-linear scaling of social tie density and information flow as a function of the population. We demonstrate that our model provides a robust and accurate fit for the dependency of city characteristics with city size, ranging from individual-level dyadic interactions (number of acquaintances, volume of communication) to population-level variables (contagious disease rates, patenting activity, economic productivity and crime) without the need to appeal to modularity, specialization, or hierarchy."

In the paper, the authors write, "One of the enduring paradoxes of urban economics concerns why people continue to move to cities, despite elevated levels of crime, pollution, and wage premiums that have steadily lost ground to premiums on rent." Why indeed? Pan told Badger, "We think there's an underlying completely different way of thinking here, which is very different from the economist's way of thinking." The study builds on previous work by researchers at the Santa Fe Institute that proved "the math behind the power of cities: As they grow in population, all kinds of positive outcomes like patents and GDP and innovation (and negative ones like STDs and crime) grow at an exponential factor of 1.1 to 1.3. This means that all the benefits (and downsides) that come from cities don't just grow linearly; they grow super-linearly. Badger writes:

"As for why this happens, ... Pan pushes aside theories about the location of manufacturing or the specialty of trade. 'It's more fundamental than that,' he says. 'Cities are about people. It's just that simple.'"

Manufacturers and retailers certainly see cities in that fundamental way. As they view the future, they want to know how to reach the billions of people that live (and will live) in urban environments. Only big data analytics can help sort out the diversity, preferences, and locations of future urban consumers. Pan and his colleagues "argue that the underlying force that drives super-linear productivity in cities is the density with which we're able to form social ties. The larger your city, in other words, the more people (using this same super-linear scale) you’re likely to come into contact with." Pan told Badger, "If you think about productivity, it's all about ideas, information flows, how easily you can access ideas and opportunities. We believe that the interaction mechanism is what drives the productivity of the city." Badger continues:

"It's not possible for scientists to measure your social ties in the same way they can measure GPD or crime incidents or STD infections (despite their best wishes, they can't put sensors on all of us). But this study examined a proxy for the same idea: The researchers looked at phone logs between anonymized telephone numbers all over the country, in search of the number of people who we communicate with inside our own metropolitan statistical area. 'If you look at the interaction patterns of cities,' Pan says, 'You will see that they grow super-linearly with population with the same growth rate as productivity, as innovation, as crime, as HIV, as STDs.' All of those facets of urban life have appeared until now to share a somewhat mysterious mathematical relationship. But this research suggests that this particular super-linear growth rate is directly tied to how dense cities enable us to connect to each other. As cities grow, our connections to each other grow by an exponential factor. And those connections are the root of productivity. 'What really happens when you move to a big city is you get to know a lot of different people, although they are not necessarily your "friends,"' Pan says. 'These are the people who bring different ideas, bring different opportunities, and meetings with other great people that may help you.'"

Russell, however, isn't convinced that density is the most important factor when it comes to spurring innovation in urban environments, he believes it is migration. He writes:

"The magic of big cities is migration. A sprawling residential pattern doesn't dampen the effect. Talent can live in the core or super-commute into downtown. Concerning innovation, better to be an immigrant than work in [the] Big City. Migration matters more, much more, than density."

Other recent work, however, seems to support the density theory proposed by Pan and his colleagues. Economists Neil Lee of Lancaster University Management School and Andres Rodriguez-Pose of the London School of Economics conducted a survey "of roughly 1,600 small and medium enterprises across the United Kingdom." Their results indicated, "U.K. firms located in the city were indeed more likely than those in rural areas to report both new products (52 to 46 percent, respectively) and new processes (43 to 34 percent)." ["Cities Are Innovative Because They Contain More Ideas to Steal," by Eric Jaffe, The Atlantic Cities, 12 June 2013] Jaffe concludes:

"The city environment, ripe with chance exchanges and interactions, might only explain a sliver of new product development. Some complex combination of other forces (e.g., creative inspiration or specific demands or more approaches to problem-solving) is also involved. When it came to new business processes, however, the urban advantage seemed to rely almost entirely on ideas learned from neighboring firms (as opposed to original ideas). Here the city itself would appear to play its greatest role in innovation. Greater proximity to other firms, and perhaps also greater employee movement from company to company, no doubt increases the flow of outside information and leads to new ways of working."

In other words, density (i.e., greater proximity to other businesses) plays and important role in urban innovation. That doesn't mean that migration, as proposed by Russell, doesn't also matter. The bottom line is that magic does occur in cities and it is the result of increased opportunities for interactions between people.

July 26, 2013

Institutional Innovation

Each day, dozens of articles are written about the importance of innovation in the business world. Most companies believe that their future survival depends on their ability to be innovative. For example, Danny Baer and Luc Charbonneau, write, "Innovation is the primary force that can catapult a company to market leadership and keep it ahead of its rivals." ["Ernst & Young Insights: The innovation engine: Your company’s success may depend on it," Financial Post, 1 February 2013] Vinnie Mirchandani, however, believes that talking about "innovative companies" is a silly idea. ["Companies do not innovate. People do." Deal Architect, 30 January 2013] He writes:

Corporate Innovation"Apple is Apple because Steve Jobs brought together an amazing team with Tim Cook, an operational genius, Jonathan Ive, a design genius, Ron Johnson, a retail genius, Philip Schiller, a marketing genius and many more. Apple is Apple because it leveraged the innovations created by people at Corning, Foxconn and countless other suppliers. Innovation happens at a cellular level [rather] than a 'company' [level]."

Although it may seem that Baer's and Charbonneau's position is mutually exclusive from the position expressed by Mirchandani, I don't believe it is. During the last U.S. Presidential race, Mitt Romney became infamous for declaring, "Corporations are people." He was ridiculed for the remark, but his point was that people are at the heart of corporate activities, including innovation. If, in fact, you equate a company with its people, then both positions (i.e., that companies and people can be innovative) can be reconciled. That really seems to be what Baer and Charbonneau are saying. They explain:

"As a business grows, you need to keep the spirit of creativity alive — it's too easy to snuff out the creative spark with a stifling layer of process and bureaucracy. Successful companies focus on more than just growth, profit and the bottom line. They build in new capabilities, functions or even departments that centre on creative, disruptive and sustainable ventures."

Obviously, the spirit of creativity and the creative spark can only be kept alive in people. The fact that they discuss new capabilities, functions, or even departments also aligns well with Mirchandani's point that innovation happens at the cellular level. If you buy into the concept that when talking institutionalized innovation you are really talking about how to create the environment, culture, and processes that will help make people more innovative, then you should have no trouble accepting the notion that innovation can involve a structured, repeatable process. Robert Brands, founder and president of Brands & Co. LLC, believes "a structured process must be put into place." ["Can Innovation Be a Structured, Repeatable Process?" IndustryWeek, 23 July 2012] He writes:

"Although it sounds counterintuitive to say 'structure' and 'ideation' in the same sentence, organizations need to conduct at least two ideation sessions each year in order to foster continued growth. A good innovation leader has the foresight to schedule regular ideation sessions year after year, and not just when sales are dwindling. Ideation, or idea management, is part of a long-term innovation effort that, if facilitated intelligently, leads to successful new products or services. Even if a small percentage of concepts make it through the process, the payoff could be significant for the company."

Brands also provides some recommendations about how a company can best structure those ideation sessions. He writes:

"Here are some tips for hosting ideation sessions that will lead to the best possible outcomes.

  • Break up teams into people who know each other but are not 'that friendly' with each other in order to minimize groupthink.
  • Vary the format as well as locations and times of ideation sessions. Predictability can kill ideation. Mix it up to get people out of their comfort zones.
  • Accept ALL ideas and get them written down on the board. You never know when a concept can be recycled for future use.
  • Build a database of ideas from which new combinations and solutions can be derived.

"By holding regular ideation sessions, your organization is adopting a proactive strategy in the new product development process."

I have two concerns with Brands' approach. First, it may lead employees to believe that new ideas are only wanted a couple of times a year and only in formal ideation sessions. Leaders need to ensure that their subordinates understand that there is no bad time to bring up a good idea. Second, his emphasis on ideation (i.e., coming up with ideas) isn't where most companies fail. Tim Kastelle notes that out of hundreds of organizations he has had his students assess, only about 5 percent of those organizations have had any difficulty coming up with new and good ideas. So coming up with ideas is rarely the problem. Kastelle agrees with Brands, however, that "it’s much better to think of innovation as a process than to think of it as an event." ["How to Manage Innovation as a Process," Innovation for Growth, 6 November 2012] Like Brands, he thinks of innovation as idea management. He explains:

"In order to innovate effectively, you not only have to generate great ideas, but you have to select the ones that you want to invest in, then execute them, figure out how to keep people inside the organisation committed as you go through the process, then get the new ideas to spread out in the world. And if one part of that process goes wrong, then your innovation efforts will likely fail. That's kind of scary."

Kastelle indicates that he uses an "innovation value change" to help companies assess where they are in relation to innovation. He also uses an innovation matrix as depicted in the graphic below. ["Tools Don’t Solve Problems, People Do," Innovation for Growth, 16 February 2011] From the title of Kastelle's post, it's easy to see that he agrees with Mirchandani that innovation is all about people. In fact, Kastelle calls it "the last people-centric process" in the corporate world.

Innovation matrix

Kastelle asserts that the innovation matrix "is useful – because tools and skills are two separate things. You can increase one without affecting the other." He offers three lessons learned from using the matrix.

  • "Innovation tools and innovation skills are two separate things: people often think that they can solve their innovation problems simply by finding the right tool. This is rarely true. In general, to improve innovation you have to improve skills and capabilities. Tools can be used to facilitate this process, but they can’t do it on their own.

  • "One of the biggest obstacles to innovation is lack of time: if innovation is important, people need the time and space to work on developing, testing, and spreading new ideas. If you are a manager and you want your people to be more innovative, you have to give them the time needed to do this.

  • "Tools don't solve problems, people do: this is why innovation is still people-centric. It's more important to remove obstacles to innovation than it is to give people tools.

Oana-Maria Pop, an Associate Editor at, also believes that innovation must have a systematic approach. ["Systematic Innovation and the Journey Towards a Unified Innovation Management Standard," 19 November 2012] She indicates that there are four "key insights arguing in favour of a systematic approach to innovation." They are:

1. The Concept of Innovation is Becoming Broader and More Complex

... Innovation is undergoing a major shift. It can now start in emerging markets and not only in mature ones; it has become open, and collaborative allowing more and more areas of the organization to be involved. Paradoxically, broader involvement is not entirely good news. More participants in the innovation process mean more complex decision-making – a genuine burden when there is little guidance available.

2. Innovation Strategy and Culture Matter Enormously

In order to thrive, organizations need to have the relevant cultural component in place and this component involves securing the right attitude towards innovation. ... Companies need to ensure the correct and continuous integration of innovation in the overall company strategy.

3. Innovation does not just 'happen'

... With customer demand and competitive pressures increasing and operation excellence making entities leaner and leaner, the odds of innovation happening by chance have decreased. Evidence points towards a more proactive approach to developing new products, services and business models.

4. Confusion and its lasting reign

The final insight to consider is the puzzlement among entities – especially regarding what innovation is, what it can do and why it should be formally managed. Even companies at the forefront of new product or service development struggle to maintain a robust model that sustains innovation. In addition, organizations agree that they need to innovate more and also acknowledge the existence of a knowledge gap in terms of a systematic approach to their innovation processes.

Even if all the pundits agree that innovation is a people-centric process and that it is required if businesses are to thrive, there are no silver bullet solutions about how to institutionalize innovation. Baer and Charbonneau correctly assert that the innovation process must be tailored to the company (and that may mean you need to tailor it to the people in the company).

July 10, 2013

Trends and Technologies that are Going to Change Your Life and Business: Part 3

In Parts 1 and 2 of this 4-part series, I discussed some of the trends that are predicted to create both disruptions and opportunities for businesses and individuals in the coming years. In the next two posts, I want to discuss some of the technologies that are going to spur those opportunities and disruptions. "One of the main drivers of economic growth through the millennia has been technology," writes Felicity Duncan, Managing Editor at Moneyweb. "Technologies like seed planting and the plough made the turn to agriculture possible, technologies to harness fossil fuels ignited the Industrial Revolution. Technology has also transformed healthcare, our societies and families (think birth control pills), and the transformations just keep coming (my iPhone does more than the communicators on Star Trek!). Looking ahead, it's interesting to imagine what's next." ["Three disruptive technologies that will change your life," mybroadband, 26 May 2013] She continues, "Recently, McKinsey interviewed Google executive chairman Eric Schmidt, asking him to predict what technologies will have the greatest impact on our world in the near future. He came up with three main ones." Those three technologies were: Digital biology; new material and methods in manufacturing (e.g., 3D printing); and smarter computers.

McKinsey technologiesIf you think three seems like an unreasonably small number of technologies that will have a future impact, you're probably right. McKinsey & Company analysts, James Manyika, Michael Chui, Jacques Bughin, Richard Dobbs, Peter Bisson, and Alex Marrs, write, "The relentless parade of new technologies is unfolding on many fronts. Almost every advance is billed as a breakthrough, and the list of 'next big things' grows ever longer. Not every emerging technology will alter the business or social landscape — but some truly do have the potential to disrupt the status quo, alter the way people live and work, and rearrange value pools." ["Disruptive technologies: Advances that will transform life, business, and the global economy," 1 May 2013] In fact, they identified "12 technologies that could drive truly massive economic transformations and disruptions in the coming years." In this post, I'll discuss six of those twelve technologies and will discuss the rest in the next post. Before that discussion, however, I'd like to point out the criteria that McKinsey analysts used to select their 12 candidates. First, the technology had to be "rapidly advancing or experiencing breakthroughs." Second, the technology's "potential scope of impact" had to be broad. Third, the technology had to have "significant economic value." Finally, that economic impact had to be "potentially disruptive." They began their effort with over 100 potential candidates and, using that criteria, whittled their list to the magnificent dozen. The details concerning these technologies were drawn from the executive summary of their report.

1. Mobile Internet

The authors note, "In the United States, an estimated 30 percent of Web browsing and 40 percent of social media use is done on mobile devices; by 2015, wireless Web use is expected to exceed wired use." But it's not in the United States (or the larger developed world) where the mobile Internet is going to have its greatest impact. As the authors state, "In developing economies, the mobile Internet could bring billions of people into the connected world." For the most part, emerging and frontier market countries have leapfrogged into the mobile age and there is no turning back. Some analysts have even begun writing eulogies for the desktop PC.

2. Automation of Knowledge Work

The authors write, "Advances in artificial intelligence, machine learning, and natural user interfaces (e.g., voice recognition) are making it possible to automate many knowledge worker tasks that have long been regarded as impossible or impractical for machines to perform." At Enterra Solutions, for example, we offer automated business analytic solutions that perform tasks that used to require business domain experts, statistical experts, and data programmers. Enterra's approach empowers the business expert by automating the statistical expert's and data programmer's knowledge and function, so that the analytical cycle can be dramatically shortened and more insights can be auto-generated. That doesn't mean that statisticians and programmers are no longer needed. They help create the programs that automate processes that can be used by business people.

3. Internet of Things

The authors write, "The Internet of Things — embedding sensors and actuators in machines and other physical object to bring them into the connected world — is spreading rapidly." In Part 2 of this series, Daniel Burrus identified the Internet of Things as a trend. Here, the McKinsey analysts label it a technology. It's probably both. The Internet of Things is also referred to as the Internet of Everything and the Industrial Internet. The important point is that machines are going to be communicating with each other on networks that humans seldom use and their network will be larger than ours. For more on this topic, read my post entitled Machine-to-Machine Communication.

4. Cloud

Cloud technology is another area that Burrus labels a trend and McKinsey analysts label a technology. The McKinsey researchers write, "With cloud technology, any computer application or service can be delivered over a network or the Internet, with minimal or no local software or processing power required." Cloud technology is one of those areas that is having impact because of its rapid growth. The authors write, "The cloud in enabling the explosive growth of Internet-based services, from search to streaming media to offline storage of personal data (photos, books, music), as well as the background processing capabilities that enable mobile Internet devices to do things like respond to spoken commands to ask for directions." In other words, every computer connected to the cloud can be a supercomputer because the processing power is located in the cloud.

5. Advanced Robotics

Advanced robotics was also a trend identified by Burrus. He predicted that, in the future, "robots will work with humans in new and productive ways." The McKinsey researchers write, "More advanced robots are gaining enhanced senses, dexterity, and intelligence, thanks to accelerating advancements in machine vision, artificial intelligence, machine-to-machine communication, sensors, and actuators." Like Burrus, they believe that robots will work side-by-side with humans. As robots become more sophisticated, they write, it will become more "practical to deploy them safely alongside workers." They warn, however, "These advances could make it practical to substitute robots for human labor in more manufacturing tasks, as well as in a growing number of service jobs, such as cleaning and maintenance." In fact, worker displacement is a far more likely scenario than worker enhancement. Maintaining robots will create some jobs; but, far more are likely to be lost than gained on the factory floor.

6. Next-generation Genomics

The authors write, "Next-generation genomics marries advances in the science of sequencing and modifying genetic material with the latest big data analytics capabilities." As noted above, this was one of the three technologies highlighted by Schmidt. Paraphrasing what he said, Duncan writes, "The vast amounts of data we have collected (and are collecting) on biological processes, such as the data gathered by the Human Genome Project, will be used to run simulations of biological processes that will enable us to predict how diseases will unfold for particular people, how brains will respond to particular drugs, how particular genes will affect the development of children and so on. This will revolutionise the way we approach chronic and genetic diseases, and may even help us build better human beings using gene therapies. As populations live longer, changes to how we use data in biology may have a very dramatic impact on the quality of those now-longer lives."

One thread that runs through the first six technologies identified by McKinsey analysts is connectivity. That connectivity is complemented by artificial intelligence and increased processing power that will generate even more breakthroughs in the future. In the final segment of this series, I'll discuss the remaining six technologies identified in the McKinsey report.