Category Archives: Book Review

Beyond the Beaker, A Book Review

Paul Patterson’s Beyond the Beaker, a book on How to Achieve Successful Market Adoption for Emerging Technologies, is a book that belongs on every innovator’s bookshelf. Whereas there are a lots of books on how to innovate, and even a fair number on how to take your product to market, there are very few that overview all of the relevant issues that need to be addressed and managed, fewer still that address both the innovator and corporate perspectives, even fewer still that illuminate the roadmap with real case studies, and next to none that uses successes and failures to help you understand the criticality of getting even the seemingly mundane choices right.

As Paul Patterson notes in the preface, the true, Real Life, events, which frequently go undocumented, are more often the critical events of success. For example, its 4 am and your phone rings. The person on the line is upset, screaming vulgarities because someone in the collaboration violated international trade laws. It’s your job to repair the situation.

For example, sometimes the most important aspect of the product is the seemingly mundane service guarantee. Here in North America, we expect our products to work and manufacturers to replace them if they don’t. We also reward companies who have faith in their products and provide satisfaction guarantees in addition to basic “works as advertised” guarantees. These companies do so knowing that, since we want to do the right thing, we won’t abuse the guarantee. However, do the right thing is culturally defined. Whereas some cultures will pride themselves on only using a guarantee if they are truly unsatisfied or the product doesn’t work, others will pride themselves on finding innovative ways to use the guarantee because their culture prizes cunning in business more than personal restraint. As Paul Patterson notes with this quote from Gan Chee Eng, Vice President of Amway China Company Limited, the Amway Guarantee almost put them out of business in China on the first day:

“I tried to explain to corporate that their guarantee will not work in China, but they insisted. People would have a wagon in the parking lot with a small barrel in it, come into the shop and purchase a 1 litter container of L.O.C.TM, walk out to their wagon, dump the container into the small barrel, walk back inside, and say, ‘I’m not satisfied, you replace’. Honouring the guarantee almost put us out of business on the first day. We closed for two weeks and re-opened with a new guarantee, which limited customer satisfaction to providing one replacement, which meant we effectively sold two for the price of one.”
– Gan Chee Eng

Sometimes the most important aspect of the product is the education around the importance of the product. For example, the success of Hindustan Lever Limited (HLL), the largest soap and detergent manufacturer in India, and its Lifebuoy soap (reformulation) came down to educating the populace on the importance of using soap. A market analysis by HLL found that many consumers were not using soap when washing because they believed that soap did not provide any additional value. So HLL developed an educational program that “visual clean is NOT safe clean” which included a germ-glow demonstration targeted at school children ages 5 to 13 and their parents. This program which did not advocate HLL or Lifebuoy but simply soap usage, ultimately led to a sales increase of 30%. The branding around the educational content was enough.

And sometimes the most important aspect of the product is the insight into potential usage. For example, consider the classic Post-It Note. In 1968, Spence Silver at 3M developed a super-weak glue that could stick to objects, and be easily peeled off, while searching for a new super-strong glue formula. For five years, he hyped the product internally, showing samples in spray-can and tack-less bulletin boards, but it never took off. Then he noticed Art Fry using pieces of the tack-less bulletin board tiles to mark pages in his hymnals and he came up with the idea for a better bookmark. Then he realized that the product wasn’t really a better bookmark at all, but a better note. And while there were technical challenges in perfecting the formula so the glue stayed on the note and not the object the note was stuck to when the note was removed and in developing appropriate coating equipment for paper (which was an imprecise substrate), the biggest hurdle was coming up with the right application for the technology. The second biggest was the right marketing campaign as the product, which was the company’s Outstanding New Product in 1981, did not take off with the first launch attempt in 1977, but the second in 1980.

The second thing I really like about the book is that it’s not your usual pop-culture business book that uses 200 pages to expound upon a simple (although usually very important) idea that could be summarized in 20 pages but is instead a jam-packed tome of information which would make a good textbook. As a result, this is a book that will end up on your bookshelf when you are done reading it and not the goodwill donation pile because you will want to read some parts of it more than once and keep it for reference.

Not only does it tackle strategic marketing, business development, financial concerns, legal considerations, organizational management, and corporate perspectives as well as the identification and evaluation of emerging technologies and technology development, but it addresses each from multiple viewpoints. For example, with respect to strategic marketing, it addresses SWOT (Strengths, Weaknesses, Opportunities, & Threats), macro and micro approaches, Porter’s Five Forces (Rivalry, Threat of Substitutes, Buyer Power, Supplier Power, and Barriers to Entry), Boston Consulting Group Market Evolution (Fragmented, Specialization, Volume, Stalemante), market and sector attractiveness, competitive advantage, value proposition, application and value chain analysis, other market drivers, and risk management. It addresses business development from a multitude of perspectives that include strategy, cultural, pitch, promotion, and communication. And it covers the five phase evaluation of emerging technologies (feasibility, value research, quick test market, action plan creation, and implementation) because the easiest thing about innovation is, well, innovation itself. The real challenges often lie in getting the innovation to market.

Finally, I really like the inclusion of a chapter on the corporate perspective. If you identify an emerging technology that you want to bring to market, you have to understand how your potential financiers think if you are going to be successful. Financiers typically invest in a portfolio of opportunities to mitigate their risks and increase the odds that they will see a return on their investment. As defined by Copper et. al in Portfolio Management for New Products:

Portfolio management for new products is a dynamic decision process wherein the list of active new products and R&D projects is constantly revised. In this process, new projects are evaluated, selected and prioritized. Existing projects may be accelerated, killed, or deprioritized and resources allocated and reallocated to the active projects. The portfolio decision process is characterized by uncertain and changing information, dynamic opportunities, multiple goals and strategic considerations, interdependence among projects, and multiple decision makers and locations.

This indicates that decisions about whether or not to invest in your product will not be made in a vacuum and will be made with respect to the rest of the portfolio. That means that you will need to insure that you continually address each of the critical success factors of portfolio management (strategic alignment, competitive advantage, market attractiveness, leverage of core competencies, technical feasibility, and financial rewards) if you wish to get funding and maintain it.

All in all, a great book and a great reference.

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Change By Design, A Book Review

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Although he was the engineer’s engineer, Brunel [who designed the Great Western Railway] was not solely interested in the technology behind his creations. While considering the design of the system, he insisted upon the flattest possible gradient because he wanted passengers to have the sense of “floating across the countryside”. He constructed bridges, viaducts, cuttings, and tunnels all in the cause of creating not just efficient transportation but the best possible experience … Brunnel was one of the earliest examples of a design thinker.

A purely technocentric view of innovation is less sustainable now than ever, and a management philosophy based only on selecting from existing strategies is likely to be overwhelmed by new developments at home or abroad. What we need are new choices — new products that balance the needs of individuals and of society as a whole; new ideas that tackle the global challenges of health, poverty, and education; new strategies that result in differences that matter and a sense of purpose that engages everyone affected by them.

Only gradually did I come to see the power of design not as a link in a chain but as the hub of a wheel. … I also noticed that the people who inspired me were not necessarily members of the design profession; engineers such as Isambard Kingdom Brunel, Thomas Edison, and Ferdinand Porsche, all of whom seemed to have a human-centered rather than technology-centered worldview.

The natural revolution from design doing to design thinking reflects the growing recognition on the part of today’s business leaders that design has become too important to be left to designers.

So begins Tim Brown’s new book Change By Design (available September 29) that tackles the myth of innovation that brilliant ideas leap fully formed from the mids of geniuses while exposing the reality that most innovations stem from rigor and discipline … the kind that comes from the application of proper design thinking. Design thinking, a process for practical, creative resolution of problems or issues, attempts to match necessity to utility, constraint to possibility, and need to demand to meet end-user need and drive business success. The ultimate challenge for a design thinker is to help people articulate the latent needs they don’t even know they have. Fortunately, the search for insight — in contrast to the search for hard data — is that it’s everywhere and it’s free. You just have to open your eyes and look at what people are doing.

For example, when IDEO was hired by Zyliss to design a new line of kitchen tools for the home, they started out by studying children and professional chefs. While neither was the intended market, both yielded valuable insights. A seven-year-old struggling with a can opener highlighted issues of physical control adults have learned to disguise and the shortcuts used by a professional chef yielded insights into cleaning requirements. The exaggerated concerns of people at the margins of the market led the team to abandon the idea of a “matched set” and create a line of products with the right handle for each tool. The end result was a product line that flew off of the shelves. [Proving one of my favourite points: just because you’ve been doing it that way for years, it doesn’t mean you’ve been doing it right!]

The Zyliss success story happened because the willing, and even enthusiastic, acceptance of competing constraints by the design team is the foundation of design thinking. The first stage of the design process is often about discovering which constraints are important and establishing a framework for evaluating them. Constraints can best be visualized in terms of three overlapping criteria for successful ideas: feasibility, viability, and desirability. A competent designer will resolve each of these three constraints, but a design thinker will bring them into harmonious balance. The popular Nintendo Wii is a good example of what happens when someone gets it right.

For those trying to wrap their minds around design thinking, the basic innovation rules that Tim outlines in chapter 3, A Mental Matrix, are a great place to start because they’ll put you in the mindset required to grasp the key tenets of design thinking.

  1. The best ideas emerge when the whole organizational ecosystem has room to experiment.
    And room to fail! The greatest successes will often emerge after you get the false starts and failures out of the way (and make an effort to understand why you failed).
  2. Those most exposed to changing externalities are the ones best placed to respond
    and the most motivated to do so.
    Furthermore, if you have someone who thrives in that sort of an environment, make sure she’s on the team!
  3. Ideas should not be favoured based on those who create them.
    The most successful individuals are often those who latch on to, and promote, good ideas.
  4. Ideas that create a buzz should be favoured.
    Nothing’s better than viral marketing!
  5. The “gardening” skills of senior leadership should be used to tend, prune, and harvest ideas.
    Not to create them.
  6. An overarching purpose should be articulated.
    You’re looking for new ideas to solve a problem that people want solved.

And you want to grasp design thinking, because it works. Probably the best example is that of “Cool Biz“, the imaginative program from the award-winning Japanese advertising agency Hakuhodo designed to help the Ministry of the Environment in Japan get people moor involved in meeting Japan’s commitment to the greenhouse gas reduction goals of the Kyoto Protocol. Within a year of the launch of this program, the slogan “Cool Biz” was recognized by a staggering 95.8% of the Japanese market. Can you imagine the boost to your corporate brand if 95.8% of your potential market recognized your corporate offerings?

For more information on design thinking, which is becoming more necessary by the day in a world where constant change is inevitable and everything is a prototype, see the Design Thinking blog, IDEO’s website, the The Harvard Business Review article on Design Thinking, the Innovation 100 Interview with Tim Brown on YouTube, the Design Thinking video (extended version) on YouTube, and the Global X Interview with Tim Brown on YouTube.

And if you’re still not convinced you should buy the book, consider the following quote which literally made my day:

Business school professors are fond of writing learned articles about the value of brainstorming. I encourage them to continue to do so (after all, some of my best friends are business school professors, and it keeps them busy and out of my way).

Business Network Transformation: A Review

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Recently, Jeffrey Word, the Director of the Center for Business Network Transformation and Vice President of Product Strategy at SAP, edited and published Business Network Transformation: Strategies to Reconfigure Your Business Relationship for Competitive Advantaged through Jossey Bass, with all royalties from the book being donated to the World Food Program.

The book, which is about the evolving nature of global business and the ways that a company’s network of relationships (with suppliers, customers, and other partners) is being reconfigured to derive competitive advantage and increased profitability, includes contributions from Geoffrey Moore (TCG Advisors), David Kletter (Booz Allen Hamilton), Randall Russell (Palladium Group), Andrew McAfee (Harvard Business School), Mohanbir Sawhney (Kellogg School of Management), and Jeffrey Dyer (Brigham Young Unversity), among others, and does a great job of not only defining business network transformation (BNT), but also in providing practical advice on how to achieve it and case studies that illustrate the ideas.

It starts off with a great introductory chapter by Geoffrey Moore and Philip Lay which explains how most networks these days are either collaborative (like the ones used by Cisco, Boeing, and Goldman Sachs) or coordinated (like Nokia, Nike, or Charles Schwab) and that while each of these network types have their advantages (expertise, innovation, and market development in the case of collaborative networks and efficiency, speed, and adaptability in the case of coordinate networks), each of these network types also have their disadvantages (as collaborative networks struggle with commoditization and entrusting partners with non-core mission critical processes while coordinated networks struggle to enter new markets and achieve downstream visibility). As a result, most networks need to transform to compete in today’s economy. This is especially true if your competitors are transforming their networks and their strategies to capitalize on new opportunities. The chapter concludes with a list of seven early warning signs that indicate you will need to transform your network or risk being left behind.

The next chapter, by Marco Iansiti (of Harvard Business School) and Ross Sullivan (of Keystone Strategy) tackles business network transformation in action by diving into the five guiding principles (design for adaptability, plan for scalability, encourage participation, develop a governance framework, and create superior customer value), providing a four-phase implementation framework for you to follow, and presenting case studies on Novartis (which is using BNT to reduce new drug development cycles and cost), Hugo Boss (which is using BNT to manage multiple brand identities through smaller, nimbler sub-organizations), and NVidia (to create and capture niches in the semiconductor industry).

Chapter three, by Mohanbir Sawhney (Kellogg School of Management) and Ranjay Gulati (of Harvard Business School) tackles the all important goal of creating superior customer value in a connected world and addresses digital networks and customer collaboration. In doing so, it discusses collaborative value exchange in depth and provides a guide on how to use today’s networks and network technologies to create more value regardless of what industry you happen to be in.

The next two chapters, by Ranjay Gulati and David Kletter (Booz Allen Hamilton) and N. Venkatraman of (Boston University), respectively, tackle relational capital and product leadership, which are critical to value creation in today’s modern business networks. An organization with a well designed and well managed network has a lot of relationship capital that it can capitalize on between its suppliers, customers, and alliances; relationship capital that can mean the difference between success and failure in today’s economy. Chapter four discusses the dimension of relationship capital and how to move from transactional relationships to ownership relations which take advantage of strategic partnerships to create value that would not otherwise exist. Product leadership is becoming harder and harder, especially when today’s business landscape is shaped by the intersection of Moore’s law (the number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years), Metcalfe’s law (the value of a network grows as the square of the number of users), and the Edholm’s law (bandwidth rises three times faster than computer power, implying that the speed of communication doubles every six months). Chapter five provides case studies from GM (Onstar), Apple (the iPod), and Microsoft (HealthVault) that demonstrate how companies that can create, and take advantage of, opportunities created by the intersection of these laws can change, and dominate, markets.

Then we encounter the chapter on driving collaborative success in global partnership networks by John Hagel III, John Seely Brown, and Gautam Kasthurirangan (of the Deloitte Center for Edge Innovation) which is one of the crown jewels of the book. Truly successful business networks are business process networks (BPNs) which orchestrate many best-of-breed suppliers and partners together in a distributed, collaborative approach that uses the respective strengths of each partner to create new, valuable, products and offerings that no individual organization can create on its own. An organization that moves from a physical network approach to a process network approach can grow from a niche provider to a global multi-billion dollar enterprise, like the Li & Fung group which went from a small exporter of traditional Chinese items made from porcelain and bamboo, clothes, and toys in the 1970’s to a multi-national group of companies with offices in 40 countries and $14 Billion US in annual revenues. Besides presenting a number of impressive case studies, this chapter also discusses the key elements of global process networks (which include product and process modularity, loosely coupled processes, trust in collaboration, and productive friction), common misconceptions (and how to combat them), and a pragmatic path to orchestrating a BPN. This chapter alone is worth the price of the book, but if you stopped reading here, you’d miss the insight on managing innovation by Henry Chesbrough (of the University of California at Berkeley), the discussion on the role of IT in business network transformation by Andrew McAfee (of Harvard Business School), and the full road map to business network transformation presented by

Geoffrey Moore and Philip Lay (of TCG Advisors), which I’m not going to cover because I have to leave you with some surprises so you’ll buy the book and support the World Food Program. It does a very nice job of building on the innovative concepts I’ve been covering since I started this blog (including my posts on the innovation revolution on e-Sourcing Forum) and presenting them all in one nice, neat package. It’s worth your time.