Product Life Marketing Blog

Interview with John Warrillow - author of Built to Sell

2010-06-16T11:49:00.000-07:00

Just 1% of small business owners successfully sell their businesses each year, though most of the vast majority of small business owners would like to think their business is sellable. This stark reality is one that John Warrillow ran up against early in his career and now spends his time sharing ways to avoid that reality with other entrepreneurs.

Recognized by B to B Magazine's "Who's Who" list as one of America's most influential business-to-business marketers, John is a frequent speaker on a variety of issues that impact small business owners. This month he spoke with us.

John's books, Drilling For Gold and Built to Sell: Turn your Business Into One you can Sell have caught on in the small business community. His focus, unlike most books marketed to entrepreneurs is not about running a business but rather about building a business that is sellable.

As an entrepreneur in the service industry, John's words, during his interview resonated with me. One of his key points is that if you ARE the key asset of the business, then it isn’t worth much if you sell it. If the service you offer is not easily replicable by others within your organization, then you have less a business than a "job" in a company that only employs... you.

Wow - strong, but true words!

It's just this type of expert advice and easily understandable concepts that makes John's book so readable and on target for entrepreneurs hoping to cash out and profit from years of hard work building a sustainable business. John’s easy-to-read book outlines 14 steps to building a business that potentially is lucrative to prospective buyers.

Since I've heard much about John and his book it was a pleasure to find out who he admires (Bo Burlingham is the editor-at-large of Inc. Magazine) and what companies he thinks have a great model for developing a business that can be sold profitably. (A company that takes a service generally sold by local businesses and replicates the service on a national level – fascinating reading.)

John's experience as a small business owner, he has started and exited 4 different companies, gives him the depth of knowledge to write frankly about the challenges small business owners make. He shared some of his insights with us in his very approachable style.

Enjoy!

Q: Who were your early role models and what were the main things you learned from them?

A: Bo Burlingham is the editor-at-large of Inc. Magazine and the best selling author of The Great Game of Business, Small Giants among others. Bo agreed to write the foreword for my book so we collaborated. He's an incredible storyteller and a wonderful human being. He has the ability to distill a, complex business concept into a language anyone can digest.

I hope 5% of Bo's ability as a storyteller rubbed off on me.
My three favorite books for entrepreneurs are:

1. Small Giants by Bo Burlingham (key lesson: you don't have to be big to have a great business)
2. The E-Myth by Michael Gerber (key lesson: work on not in the business)
3. The Four Hour Work Week by Tim Ferriss (key lesson: get a life!)

Q: What inspired you to write "Built to Sell"?

A: I have started and exited 4 businesses in my career. In 1997, I started Warrillow & Co. as a boutique consultancy. Over time, I built the company but eventually hit a plateau: I was doing most of the selling and clients expected me to be personally involved in their project's execution. This of course constrained our ability to grow. I earned a good living but the cash flow was inconsistent and I continually struggled to balance client service and business development.

By 2004, I had decided to sell the business. I met with a few M&A advisors who explained to me that my business was not worth very much: I was told the best price I could hope for was 50% of revenue or 3 or 4 x EBITDA and even a deal at these low multiples would only be possible if I agreed to stay on for 3-5 years. I did not receive this news well.

At the beginning of 2005, I committed to changing our model so I could sell the business for a higher multiple. Over the next year, I transformed our offering from a billable hour consultancy to a subscription business where we charged an annual, up-front fee for a series of market research reports. We discontinued custom consulting and transitioned 100% of our revenue to recurring subscriptions. We went from 5 or 6 clients to 100 subscribers. Personally, I went from hand-holding each client to not knowing most of our subscribers.

In 2008, I sold the business to an American-based Fortune 1000 company.

I took some time off and realized I wasn't ready to "retire" so I wrote Built To Sell to share my experiences of transforming a business into something sellable with other business owners who would like to own a business they could sell one day.

Q: What did you learn in the process of putting together this book?

A: The statistics around selling a business are stark:

• 97% of all businesses in America are small businesses – virtually all would like to think their business is one they could (they may not want to yet) sell one day
• 50% of small business owners want to exit in the next 10 years
• Just 1% successfully sell their business each year

Q: What is an example of a great company that people have never heard of?

A: The School Photography Company is a U.K.-based company that has approached the business of photography in an entirely different way that makes their company a valuable, sellable asset. The School Photography Company specializes in taking classroom photos. They have a special formula for getting kids to come into a room, sit down quickly, and smile broadly at just the right time. They teach their secret formula for herding munchkins to a group of young photographers eager for the work experience. Each year school principals repurchase their services to take the obligatory classroom shot and document the progress of their flock. Customers - both parents and principals - value The School Photography Company's work because they get kids out and back into their classrooms quickly and efficiently.

The typical photo studio that takes a hodgepodge of assignments is nothing more than a glorified job for their owner. And therefore, when the owner decides s/he has had enough, there is nothing to sell. The School Photography Company in contrast is a business that is not dependent on any one photographer while offering a repeatable and valuable service. They have a scalable formula and a sellable company.

Bio:
John Warrillow is the author of Built to Sell: Turn Your Business into One You Can Sell. He has started and exited four companies. Most recently John transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which was acquired by The Corporate Executive Board (NASDAQ: EXBD). In 2008 he was recognized by BtoB Magazine's "Who's Who" list as one of America’s most influential business-to-business marketers.

Billion Dollar Bidding

2010-05-07T14:44:00.000-07:00

Move over E-bay! When auctions come up in conversation, a number of companies come to mind. E-bay of course, Sotheby’s maybe, but maybe not Burnaby-based, Ritchie Bros. They are, however the largest auctioneer of industrial products on the planet operating in over 110 locations, in 25 countries around the world.

Our guest this month is Ritchie Bros. COO, Bob Armstrong. Bob joined Ritchie Bros. in 1997 and has seen the company’s gross auction sales exceed $3.5 billion dollars. His role, as he describes it is less sales and more operational efficiency, but he had some interesting things to say about innovation and transparency, two words that we have been hearing a lot about these days.

Ritchie Bros. is somewhat unique in the auction world as they take pride in their “no reserve, no minimum bid” philosophy. In other words, the customer sets the price. While this might seem to the company vulnerable to low bids and money losing auctions, this philosophy of strategic transparency ensures that each auction is eagerly awaited and attracts bidders from around the world, on-site and over the internet at rbauction.com.

As the company has grown larger, Bob’s role has expanded and he and most of the company’s employees have gotten busier and busier. While this is obviously the path to business success, Bob shared with us his concerns about the ability to innovate in a fast paced environment where employees are focused on day-to-day operations.

I have to agree and think that this is a concern of many companies. In this current recessionary climate, where risk taking is already at a low, are larger companies in danger of losing their capacity to innovate? As a company gets bigger and more structured, of course both risk-taking and the time to innovate start to erode. Can we as managers reverse that trend and encourage innovation at every level of the organization?

Another key topic that I discussed with Bob was the issue of transparency. In the 21st century, transparency has become a byword of excellence in business management. Bob is fortunate to work for a company that has embraced transparency since its inception. We can learn a lot from their experience. Transparency breeds trust from vendors, customers and other company stakeholders, obviously an advantage in business operations.

At this intersection of trust and innovation lies acceptance and more importantly good feedback. Innovative companies must of course come up with bad ideas as well as good. When the trust bred by a corporate culture of transparency leads a company to introduce less than successful concepts, feedback from stakeholders tends to be both honest and helpful, reducing the amount of time spent on bad ideas. On the other hand, successful innovative concepts are embraced and rapidly spread by the company stakeholders. The role of transparency in innovation may be undervalued but is very real.

What is your role at Ritchie Bros.?

As the Chief Operating Officer for Ritchie Bros. Auctioneers, I oversee our auction operations, IT, property development and appraisal teams. Essentially my mandate is to improve the operating efficiency of our business. I’m focused less on how we can generate more sales and more on how we execute our auctions.

What key trends are affecting your industry?

A big trend over the past ten years regarding the buying and selling of commercial and industrial assets has been the increase in transparency. Everyone is more informed than ever before because of the quantity and quality of information available. No longer are there certain players who have an information advantage over others. This makes it more difficult for intermediaries to buy low and sell high.

Ritchie Bros. has always stressed the importance of transparency. We conduct unreserved public auctions, meaning there are no minimum bids or reserve prices—our customers set the prices, not us and not the equipment owners. In order for this type of auction to be successful our customers must be equipped with detailed equipment information. This is why we encourage our customers to inspect the equipment before the auction, and why we provide equipment details and make auction results available on our web site.

We believe our dedication to transparency has helped us become the world’s largest industrial auctioneer selling more equipment to on-site and online bidders than any other company in the world. We have been conducting auctions for the past 50+ years and during that time we have established 110 locations in more than 25 countries, including 41 auction sites worldwide. Last year we achieved US$3.5 billion in gross auction proceeds.

How do you measure innovation success?

With Ritchie Bros., success is based on our ability to provide exceptional customer service while increasing operating efficiency. We are always looking for ways to improve in these areas—we want innovative ideas that will improve the customer experience or help us sell more equipment items in less time or with less staff.

For us, one of our most precious assets is the time our Territory Managers (sales people) are available to work with their customers and potential customers. We are always searching for innovations that allow them to spend more time with customers.

Also, as we continue to expand and purchase land around the world, which can be very expensive, we must find ways to maximize the utilization of that land. We are always looking for innovations to help us achieve this.

What is the biggest pitfall that impedes successful innovation?

All of our best innovations have come from someone in our organization having a creative idea and the guts to follow it through to its fruition. However, as we continue to expand and get busier, there is a continuing pressure on our people to complete the day-to-day business. This allows them less time to devise new and better ways to accomplish the tasks at hand.

Also, as we continue to expand, we increasingly institute rules, policies and procedures that might stifle innovation. We continue to struggle to find ways to encourage our employees to think outside of the box as we grow and become more structured every year.
What is an example of an innovative company that people have never heard of?

VendAsta, which is a small software development company based in Saskatoon, Saskatchewan. They helped us develop our Field Asset Information Management (FAIM) system, which allows us to capture higher quality equipment information and to do it much more efficiently. It saves our sales people time and enables us to service our customers better.

The folks at VendAsta went beyond our requirements and ended up delivering a product that exceeded our expectations. They took the time to get to know what we really needed and built a far better system than we had originally specified.

Bob Armstrong Biography:

Bob Armstrong joined Ritchie Bros. Auctioneers in 1997. Bob has worked in several roles within the organization, starting as the Company's Manager of Corporate Relations. In 2000 he was promoted to Vice President, Investor Relations and Corporate Secretary. Subsequent roles included Vice President, Internet Services and Vice President, Finance. In November 2004, Bob was appointed Chief Financial Officer and Corporate Secretary. In 2008 he became the Company's Chief Operating Officer. Bob is a Chartered Accountant with a Bachelor of Commerce degree from Queen’s University. Prior to joining Ritchie Bros. he worked for several years with KPMG and held financial management positions in the shipping and television production industries.

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An Interview with Aquaman

2010-03-31T15:56:00.000-07:00

Coming to us this month is an environmental entrepreneur from the water industry. With over 70% of the world's surface covered by water and recognition growing of the role that it can play in addressing many of the issues facing modern society, water treatment, preservation and management, is an area that is getting a lot of attention these days. And Edward Quilty is on the leading edge with his company, Aquatic Informatics.

Aquatic Informatics develops and markets software for the water and climate information industry, an industry that may seem rather daunting at first glance. Their customers include, municipalities, engineering firms, universities and state and provincial government who use their easy to run software for a variety of tasks related to maximizing use of this natural resource in safe and conservation friendly ways.

A trained biologist, just shy of his Ph.D. and BC native, Ed started working in the environmental data monitoring industry straight out of university. He has seen massive changes in the industry as weather and climate changes have impacted a variety of aspects of daily life around the globe. The thriving clean tech industry in our part of Canada keeps Ed busy, but he took some time out to talk to us a bit about running a small company, his inspirations and guiding principles.

I found Ed's comments on hiring and managing people to be particularly inspiring. He is not a fan of micromanagement and believes in hiring the right people. All of us who manage people aspire to the same thing, but often are able to achieve it. Ed believes it comes down to hiring people who can believe in the company's core values. A great comment really resonated with me was, "It's amazing how much time and energy can be wasted wrestling the wrong people in the right direction."

I'd never really thought of it that way, but it strikes me as true. As increasingly we look for people both with expertise in a narrow body of knowledge and with the right personality and work style to fit into the corporate culture, it comes down to espousing the same core values. While it seems the pool of talent is great, finding the right fit for any organization takes time and effort.

One of the benefits of conducting these interviews each month comes from learning more and more about running my own small business. My interview with Ed turned out to be a treasure trove. He digs deep down to his philosophical core when discussing core values and how to imbibe that in a corporate culture. He believes in taking opportunities, even if they don't always seem to have a specific goal in mind - the mark of a true entrepreneur.

Who were your early role models and what were the main things you learned from them?

Nearly straight out of University I worked as a contractor for BC Environment. My boss during those few years had an amazing ability to motivate our team, somewhat passively. While other units were micromanaged and stereotypically disengaged, our unit had a real collegial spirit - we were very tight, worked exceptionally hard, and had tons of fun. It was us against the world. My boss's strategy was to hire great people and remove roadblocks for them. I've adopted this approach in my own companies and I think it's been a cornerstone for the success we are now seeing at Aquatic Informatics.

In your opinion what are the key trends affecting your industry?

The environmental data monitoring industry is undergoing radical change. The combination of climate change, growing water scarcity and rapid technological advances is prompting governments and private entities to rapidly modernize and enhance the collection, processing and timely publication of environmental data. Extended droughts in California, Australia, and China, and recent floods in Europe are all good examples of how big the problems can be and the scale and timeliness of the response needed. The industry used to move at a glacial pace whereas now it requires real-time collection of data, and fast interpretation and decision-making.

What is the greatest business advice you've ever received?

Ralph Turfus, a well known local tech entrepreneur, told me to take the time to really understand my own core values and then build a company around them. As a small company, you need to be really efficient and responsive, and therefore you need great team alignment. It's amazing how much time and energy can be wasted wrestling the wrong people in the right direction - I like to save my battles for the competition. So we have made a real push to ensure our core values are living and breathing within the company - they aren't just lip service. They are part of our hiring process and drive our team's 360 degree performance reviews within the company.

If you could redo something in your past, what would it be?

Two things. First, in university I had an opportunity to take an international co-op work term. Instead I chose to stay in BC and continue to build my local contacts and experience - it seemed more practical whereas the alternative would be more fun. In hindsight I should have gone for more fun. Also, I now look at the globe as one market and I think I would have gotten to this mindset more quickly if I had worked abroad earlier. Second, I wish I had finished my PhD before throwing myself completely into building Aquatic Informatics. I thought I could do both but really I needed every second and more for Aquatics. I do intend to complete my PhD down the road, but likely with a new focus.

What is an example of an innovative company that people have never heard of?

There is a really inventive Austrian company called S::CAN (www.s-can.at) that are making waves in sensing technology in the water industry. They have built spectrometer technology into portable and robust devices that can be deployed in situ to measure a large and growing list of water quality parameters, such as dissolved organics, nutrients, and contaminants. In the same way that we are transforming the way our industry can handle massive amounts of environmental data in real-time, S::CAN is transforming what our industry can actually measure in real-time - they are opening big doors and it's really exciting for us.

List a few of your favourite business sites.

www.bctia.org
www.acetech.org
www.gazelles.com

-------------------

Edward Quilty - Founder, President & CEO

Edward Quilty is the founder of Aquatic Informatics. Ed has worked in the water industry since 1992 and has specialized in automated monitoring, data management and assessment, and environmental impact assessments. Prior to founding Aquatics in 2003, Ed was principal of QA Environmental Consulting, a regional firm focused on designing and managing hydrometric networks. Mr. Quilty is a registered professional biologist with the British Columbia College of Applied Biology, is a Director of the Canadian Water Resource Association, is a member of the Canadian Meteorological and Oceanographic Society and the American Water and Wastewater Association. Ed is also an active member of ACETECH and BCTIA, technology associations focused on rapidly growing British Columbia companies.

The Soul of the Entrepreneur

2009-12-07T13:09:00.000-08:00

Despite the plethora of degrees, honors and accolades, this month's guest is a down-to-earth guy. Andrew Csinger, Entrepreneur in Residence at the University of British Columbia, is an engineer at heart and a man with a wide variety of interests, some of which he shared with us in this month's interview.

His keen ability to look into the impact of technology on society marks him as not your typical computer science Ph.D. As such, he has a wide-range of projects in the works as diverse as his new book, Talent and Treasure, a look at the soul of an entrepreneur and expounding on the cross currents of miniaturization and mobilization.

It was this last that caught my eye. As cell phones become ubiquitous, nearing 100% in most developed and many developing nations, the opportunities for business as well as, personal use lag behind. We've only just begun to explore the mobile platform. As our guest notes:"... the impressive technology-based business advances of the last two decades (will) seem like antique slow motion."

Much of what will drive this trend is "miniaturization". This is, of course a trend that we should realize will drive growth in cell phone capability, as it has driven technological advances in everything form early radios to computers. Every new technology in this and the previous century has morphed from a room-sized apparatus to fit into your hand, each ever more rapidly.

Where does this take us with cell phone technology? It has taken 10 years or so to get from suitcase-sized "bag phones" to credit card sized "cell phones". Much of the focus has been on developing applications and... training users how to take advantage of all this new technology. Will it take a Mac type breakthrough to get us over that barrier in mobile technology, as the easy to use Apple interface revolutionized the PC in 1984? Only then, perhaps, miniaturization can take over and drive further growth.

We need only look back into Dr. Csinger's list of role models to see that he expects an big thinker to lead the way in this quest. His list is an eclectic group of inventors, businessmen and philosophers. He references Albert Camus (I’m not the weirdest person on the planet) as well as, Buckminster Fuller (If it can be imagined, it can be designed; if it can be designed, it can be built)

It is in this last statement that we find the kernel of an idea, one that is yet to manifest itself, except in laboratories and universities across the globe, as well as, in garages and increasingly in the new home of the entrepreneur - Starbucks.

This soul of the entrepreneur, which Andrew Csinger certainly has, makes his comments an interesting read. I'm sure you'll enjoy them as much as I did.

Q: Who were your early role models and what were the main things you learned from them?

A: Buckminster Fuller: if it can be imagined, it can be designed; if it can be designed, it can be built. Bertrand Russell: there must be a logical explanation. Albert Einstein: things are not what they seem. Bill Gates: it helps to be in the right place at the right time. Steve Jobs: It's not JUST about the money. Albert Camus: I'm not the weirdest person on the planet. Warren Buffet: Quality Counts. Zen and the Art of Motorcycle Maintenance: Quality Counts All The Time. A mentor at IBM Labs during my early University days: "Winning isn't everything. It's Everything." One of my academic supervisors on the occasion of a conference trip: "Don't drink the water and bring plenty of toilet paper." Often repeated by great men over the centuries in all walks of life: "Stand on the shoulders of giants." This is how you learn. This is how you build great buildings, great people, great companies.

Q: What key trends do we need to be aware of?

A: Miniaturization has found its match in mobilization. The intersection of these trends will make the impressive technology-based business advances of the last two decades seem like antique slow motion. Huge personal empowerment is coming to a mobile platform near you, if we don’t screw it all up with trade embargoes and war, and that sort of thing.

Q: What inspired you to create Talent and Treasure?

A: The public is mystified by the entrepreneur. I'm an entrepreneur, working with entrepreneurs every day. Although I'm also still mystified, I'm in a good position to shed some informal but credible light on what makes them tick. There's lots you can read about the Entrepreneur, lots of academic theories and biographies, but nothing in the middle, nothing that speaks to the soul of the entrepreneur. This book tries to capture, mostly through portrait photography and short interviews, that which defines the entrepreneur. We all want to know. And in this tumultuous global economical roller coaster, we all need to know...

Q: What did you learn in the process of putting together this book?

A: That executing on a concept like this is an entrepreneurial undertaking. That I'm still an entrepreneur :-)

Q: List a few of your business sites.

www.mobioidentity.com
www.minesense.com
www.sparkintegration.com
www.crowdfanatic.com
www.plantiga.com

Andrew Csinger has held a variety of executive management roles and advises senior management on technology transfer, market and corporate development, and mergers and acquisitions in the high technology arena. He holds several patents.

Dr. Csinger is Entrepreneur in Residence at the University of British Columbia, and Adjunct Professor in the Cognitive Systems Group, where he divides his attention between fostering a culture of entrepreneurialism and lecturing on the subject of Digital Trust. He is advisor or director to a number of local startups including Cryptolex Trust Systems (www.cryptolex.com), Scalable Analytics (http://www.scalableanalytics.com), CrowdFanatic (www.crowdfanatic.com) and Spark Integration Technologies (www.sparkintegration.com). Andrew was recently EVP of Product Strategy and Development at Dategrity Corp., a spin-out from the Votehere Corporation, where strong privacy technology is being developed to meet rapidly emerging compliance needs and enablement opportunities.

Andrew was Senior VP and CIO of Group Telecom from 1998 to 2002. GT's successful initial public offering took place in March 1999. During this period, GT became Canada's most successful Competitive Local Exchange Carrier, with 400,000 kilometers of fibre, 1500 employees in offices from coast to coast, a quarter billion revenue run rate and over a billion dollars in financing.

In 1998, he developed and operated the first PKI Certification Authority and Repository to be licensed under Washington State Digital Signature legislation. This seminal work influenced the later adoption of federal U.S. law (the Electronic Signatures in Global and National Commerce Act of 2000, or "E-Sign Act"), and was an early model for the adoption by other states of the Uniform Electronic Transactions Act (UETA).

In 1996, he founded Xcert Software Inc., a technology leader in the emerging business of Public Key Infrastructure (PKI). Xcert was acquired by RSA Technologies Inc.

Andrew received his Ph.D. and M.Sc. in Computer Science from UBC and a Bachelor's degree in Electrical Engineering from McGill University. A Natural Sciences and Engineering Research Council (NSERC) Post-Doctoral Fellow at Simon Fraser University, and a visiting scholar at the German Center for Artificial Intelligence in Saarbrucken, his work on artificial intelligence techniques has appeared in journals and conferences around the world. His research focused on user-modeling by computer in intelligent multimedia interfaces.

Dr. Csinger is regularly invited to speak at conferences and events, about technology and its effects on society and business.

Moving at the speed of molasses - Interview with Mike St. John

2009-11-03T10:42:00.000-08:00

By Peter Roosen

Freight trains and toilet paper have a lot in common when looking from a marketing perspective. They are examples of products that have been around long before we were born that will still be around long after we are gone. They are among the 95% of the things we see and use that are considered established products and services from traditional industries. You won't see them featured in media because they are simply part of the landscape.

Marketers can easily lose sight of everyday products and the marketing opportunities related to them. This is especially the case for stove-pipe industries that produce the many industrial goods and services that form the backbone of our modern industrial economy. The highly popularized electronic gadgets that entertain and keep us in contact do not exist in a vacuum. Most of them are brought to market on the backs of those freight trains that trudge back and forth across the landscape virtually unnoticed. And let's face it, the only time anybody notices toilet paper is when there isn't any.

This month's newsletter takes a look at a great marketing and innovation example from the very traditional lumber industry. Marketers be warned. Making a big splash in a traditional industry isn't an easy thing to do. Last week, we traveled to Boise, Idaho to interview someone who has done just that - in spades - and who continues to do so. Former navy seal Mike St. John was the marketing man behind the shift to engineered structural residential building products from the basic sawn timber that has been used for centuries to hold our floors and roofs together.

Mike has over 32 years selling and producing these structural building products that involve efficiently using the whole tree rather than just the pieces sawn out from the middle to make our buildings. Introducing Trus Joist products was the highlight of his career. These products now have approximately 50% market share and are still growing. At the start, 1976 sales were less than $1 million, and today sales of over $2 billion are made annually. Mike is currently a board member for the APA (American Plywood Association) and he is chair of the EWS (Engineered Wood Systems) committee. He is also a director for Pacific Woodtech Corp. www.pacificwoodtech.com where he also serves as vice president of sales and marketing. Mike teaches courses on marketing and innovation to engineers while remaining keenly interested in these areas.

The road to successfully transforming an industry is not an easy one but Mike is someone who has traveled this road and is happy to share his insights for those of us who are undertaking a similar journey. You'll gather from our interview that there are some key ingredients that can be used to help transform any industry where a good idea's time has come.

Interview with Mike St. John.

Q. Who would you hold out as an inspirational leader?

A. Harold Thomas and Dick Hansen are two who spring to mind immediately. Harold is still alive while both were highly influential from our beginnings in the 1970s. I'll focus on Harold who is a salesman who started a company. He always believed and still believes that if you give salesmen an opportunity to make money, they will perform. The good ones will sort themselves from the rest. When I was vice president of sales, there were more than 300 salesmen of which 250 made more money than executives and managers. We celebrated that. We truly had an organization that the head of was a salesman's champion.

Trus Joist would not be alive today had it not been for the sales guys. The products were very expensive compared to traditional methods.

Q. How were you able to get such expensive products into the market?

A. I had an important accomplishment back in the early days. It was in Colorado at a time when there were fancy ski resorts being built that needed very large roof trusses that if made using conventional materials and methods were too big and difficult to truck through the highway tunnels. At the time, we were just making floor joists. I figured that since we could make these engineered pieces in any length, they could make great trusses while being relatively easy to transport. It worked.

Q. What drove you and your team?

A. We were and still are on a mission to build better homes.

Q. What do you see as the success drivers for successful innovation in a traditional industry such as yours?

A. You need to be truly committed to the idea. Beyond that, execution is important. In my experience, the long term follow up gets bound up in financial performance numbers. So many underestimate the time and cost of doing the execution - even in a traditional lumber business which is like watching molasses flow. It took 30 years to get 50% market share. Sometimes great ideas take that long. A $2 billion market is all it is in our case. Initially we were 5 people going after this market.

In some industries some great ideas, no matter how great, have very slow traditional speed. This is unlike ipods, cell phones and other tech products that move at the speed of light. The backbone of all commerce in the world are still ugly traditional products like sheet rock, timber, steel, petroleum and rubber. These are traditional businesses or products that just don't move as fast.

I've always been envious of the computer and software guys who build extinction into their model. If you buy a computer today, it will be gone in a couple years. If you buy an I-joist today, it will still be around and you'll be able to buy one 25 years later just like the one 25 years before. I've had three Blackberries in two years because they keep advancing. Take the two by fours in my house. I could have bought the same ones in the mid 1800s.

The big lessons are having great patience, deep pockets and making sure the traditional products and industries evolve so that we don't lose our planet. Today we plant 23% more trees worldwide than we take. But not all countries are on side. Hardwood from southeast jungles are an exception as they are stripped for cash - as our northern lands not so long ago. The lumber business can outgrow demand but we have to do it right. Switzerland, Finland and New Zealand have been doing a good job and are able to grow more than they demand. The lumber business takes a huge amount of carbon out of the atmosphere.

The innovation gets down to using every bit of the wood fiber from the tree. Today, in North America, we don't waste a single ounce of wood fiber. The forest products group as a whole has really figured out how to preserve itself through sustainable practices.

The Network Insider: Dialogue with a Dragon - W. Brett Wilson

2009-07-29T17:00:00.000-07:00

Our newsletter this month focuses on an industry that more often than not, gives investors a wild ride. W. Brett Wilson, one of the founding partners of Calgary's FirstEnergy Capital Corp takes us on that journey (while he journeys in Africa) and shares some insights with us.

Brett has been a leader in the energy investing and well known in Calgary circles as both an astute businessman and a philanthropist and has holdings well beyond energy in fields as diverse as entertainment, sports and agriculture.

Brett is perhaps best known for his role on the popular venture capital raising show, Dragons Den.

A successful entrepreneur by anyone's standards, Brett has another side, that of philanthropist. Brett talks to us a bit about how he changed his priorities after becoming wildly successful. This has included his jumping wholeheartedly into a number of charitable concerns, including kids with cancer and organ donation.

The drive that propelled him to the top in investment banking shows in his dedication to the causes he supports.

While some of our other guests, when asked about business mistakes have focused on financial and marketing mistakes, Brett takes us to the world of people. This is a particularly timely topic as people issues are on the forefront of many managers' minds as we weather the worst recession in several generations.

Recruiting and retaining good people looms large as a task in good times. In tough times managers have two tasks. One is to handle potential layoffs, furloughs and other bad news well. The second is to set the stage for an economic upturn, where a reputation for heartlessness could make hiring good people difficult.

Innovative companies, especially those just starting out, must be innovative with their people as well as their products. We talk a lot in our book about managing innovation across functions and that means managing the people who staff these areas effectively. While it's tempting to be product focused, people make up the core of the company and the heart of the company culture.

Driving the company culture across disciplines means also recognizing the personalities which tend to dominate each department; handling conflict appropriately and motivating individuals in the various ways that different personality types require. Like product innovation, people management takes creativity and compromise.
Good people management means recognizing what drives both potential customers and current employees. We'll see in our interview that Brett Wilson finds both of these important.

Q & A with W. Brett Wilson

Q. What are the key trends effecting your industry?

A. Oil and gas Industry. Investing in growth oriented start-ups (Dragons Den related)

Key trends impacting Oil and Gas is the down turn in the economy

There is a challenge in creating opportunities where none existed before.

The downturn has created an abundance of labour, materials and office space. The challenge is always cash flow - cash is king - and in this economy this is the biggest challenge.

Q. What is a biggest pitfall that impedes successful commercialization?

A. Misunderstanding your target market both as the product your delivering and the desirability in that market but that all ties to the bottom line of understanding your market.

Q. What is your biggest business mistake and what did you learn from it?

Not dealing with people issues when they are apparent and should be dealt with. Conflict avoider. People issues should be dealt with through open communication and immediate action.

Q. What do you consider your biggest personal or business achievement?

A. Reprioritizing my life after years as a workaholic to the success of FirstEnergy. The result was I was able to connect with my own children and open the door to other experiences and opportunities. My biggest most successful business is FirstEnergy - in the creation, building development of that business.

Q. What is an example of an innovative company that people have never heard of?

A. The Bolt Supply House... A company I invested in 10 yrs. Ago. They stayed thru lean times, are innovative and have done well. They are a dominant provider of fasteners in Western Canada. (www.boltsupply.com)

W. Brett Wilson

W. Brett Wilson is one of Canada's most successful businessmen and respected philanthropists. A high profile Calgarian who proudly wears the label "maverick", Brett is one of the founding partners of Calgary's FirstEnergy Capital Corp. He helped turn an intrepid start-up into the energy industry's leading investment bank, which has brokered thousands of financings and M&A deals worth over $150 billion. Brett's instincts for investing in the right people have also translated into major holdings in the energy, agriculture, real estate, sports, and entertainment industries, financed through his private investment bank, Prairie Merchant.

His personal charisma and small-town charm have gained him a national audience, a platform he uses to inspire his brand of "prairie ethics" - focused on personal integrity, a commitment to community, and work/life balance. Brett uses his own larger-than-life story to illustrate what he has learned about the real meaning of success.

A self-described "capitalist with a heart", Brett spends almost as much time giving money away as he does earning it. With an innovative approach to philanthropy, he has given - and engaged others to give - tens of millions to non-profit initiatives.

According to Alberta Venture Magazine, who named Brett Business Person of the Year in 2009, "he is single-handedly redefining the meaning of success in work-and wealth-obsessed Calgary." His commitment to excellence and innovation has not only revolutionized the business sector in which he operates, but the community in which he lives, inspiring others to see how they can leave an equally unique mark on the world.

Fight or Flight: Battling it out in the travel industry

2009-06-23T18:10:00.000-07:00

Summer is travel season, so it makes sense for us to explore innovation in the travel industry. Hard hit by a variety of technological inventions that have transformed the way people book travel and whether they travel at all; an economy that discourages any type of expenditure and the miscellaneous impact of oil prices, terrorism and accidents, this is an industry that needs to innovate to survive.

Our guest this month, Ryan Phillips of Flight Centre Business Travel, brings not only his insights about the travel industry, but also some interesting observations about how marketing and sales have changed... and stayed the same.

Even in this low touch era where deals are as likely to close over the web as they are in person, effective sales people understand that personal contact can make all the difference in whether the deal gets signed or not. The rise of social media sites have been a boon to those companies that recognize the consumer need for personal contact and travel industry companies have been some of the first to understand their value.

JetBlue and Southwest Airlines have both harnessed the power of social networking on Twitter, Facebook and other social networking sites and brought a new level of transparency to the industry. They have been some of the leaders in using social media and find new ways of using these technological innovations to increase customer satisfaction every day.

As the hassle factor and the economy together strive to make leaving home an unpleasant experience, those who truly understand the nature of innovation stay one step ahead. Our guest Ryan Phillips, when asked to name an innovative company, chose Nine Inch Nails and their strategic use of free distribution and selected copyrights.

Of course, my immediate thought was, "wow what a leap from travel to music!" But in reality, it's often innovations in a field far removed from the one in which an individual works that drives creativity. The Post-it Note, famously it is said was inspired when the inventor was singing in the choir. Maybe it's something about music.

Whether or not music has anything to do with it, we all know that we live in an era when consumers' access to information is unparalleled, so the old rules of first mover advantage are falling by the wayside. In a matter of moments any concept, promotion, advertisement or idea can be copied and disseminated to the target audience. Which make the ongoing relationship that much more important.

Relationship is key in the low touch century. Ryan understands that and shares his ideas on how his company strives to develop strong ones with their customers.

What is your role at Flight Centre?

Business Development Manager with Flight Centre Business Travel (FCBT) which specializes in corporate executive and employee travel. Essentially I work with companies to identify ways that FCBT Travel Consultants can help streamline processes while offering a personalized service, 24 hours a day.

I frequently talk to my clients and the most common feedback regarding their experience with FCBT is how our travel consultants are very responsive, friendly and knowledgeable. I would love to take all the credit for that, but I really do owe it to the team I work with.

In your opinion what are the key trends affecting the travel industry?

The current economic climate is definitely affecting the travel industry both in terms of personal and business travel. On the leisure side, people are trying to get the most value for their travel dollar in terms of inclusions and options. In terms of corporate travel, a large majority of companies have much stricter travel policies, which is another reason we are seeing an increase in business. We have an excellent process in place which allows for simple, yet effective, ways of tracking company travel policies.

What is the greatest marketing or sales advice you've ever received?

As an extremely ambitious new young sales representative very early in my career, I can remember meeting with a client to do a sales pitch. After the pitch the client looked at me and told that he was interested and that I should call him back in two weeks. Feeling pretty proud of myself I sat back and waited and after two weeks made the call and asked him if he would like to go ahead. His response was "sorry we went with the competition." My manager asked me why they decided that way and I couldn't answer him so he asked me to call the client back and ask why. With a damaged ego I picked up the telephone and called the client and explained to him that I was new to sales and I wanted to learn what I could have done differently. The client explained to me that the competition had come in to talk to him on several occasions during the 2 week period and every time he met that person it made more sense to work with him. Approximately one year later that same client was looking to replace another piece of office equipment and I was given the opportunity to present a proposal. Recalling the conversation we had one year earlier, I followed all his rules and ended up winning him as a long standing client who still currently works with my previous employer and stays in touch with me.

If you could go back in time and change something, what would it be?

I have always been a true believer that all that has happened in my past has been a big contributing factor to my success today. Although we never want to forget our past, we never want to live in it. Live in the present with an eye on the future. The short answer to your question is nothing.

What is an example of an innovative company that people have never heard of?

This may seem like a strange answer, but Nine Inch Nails (NIN), yes the music group! Many people know of them but not many know them as an innovative company. Their marketing tactics have been a true inspiration for me in thinking outside the box. They are almost single handedly changing the music industry. Trent Reznor the mastermind and front man of NIN is paving the way for new and old bands to connect with fans. Taking tactics like this and applying it to a corporate business environment would allow us to connect with clients on a whole new level.

Who in their right mind would think that by giving away an album for free would end up leading to it being the bestselling album on Amazon in 2008 and generate $750,000usd in three days? http://arstechnica.com/media/news/2009/01/free-nine-inch-nails-albums-top-2008-amazon-mp3-sales-charts.ars

List a few of your favourite business sites.

Stockhouse Is a great took for looking at market trends and learning about new and upcoming business.

http://www.stockhouse.com/index.aspx

CNW Group is a good resource to find out what is happening in the Canadian business market.

http://www.newswire.ca/en/

The Flight Centre blog always provides up to date travel information and advice.

http://www.flightcentre.ca/blog/

iGoogle is an amazing tool which allows you to create your very own customized page with 100's of different widget options. It's the first place I start every morning!

http://www.igoogle.com

Linked in has always been a great place to keep a database of contacts I have connected with along the way.

http://www.linkedin.com/in/ryphillips

BIO:

Ryan Phillips joined Flight Centre Business Travel as a Business Development Manager after more than 10 years of working in Business Development with a range of companies from those in its infant stages to Fortune 500. His extensive experience in all ranges of companies allows him to appreciate the importance of creating long lasting relationships while developing effective strategies for increasing profitability.

Ryan attributes his success as a Business Development Manager with Flight Centre to his passion for understanding that each of his client's travel needs are different. As a frequent business and vacation traveler himself, Ryan strives to ensure that his clients are provided with the unbeatable service of Flight Centre's Corporate Travel Consultants.

Ryan is an avid supporter of the community and the people around him. Outside of work he enjoys volunteering for a local children's charity, as well as being involved in regional and community projects.

Ryan Phillips

610 Robson St.

Vancouver BC

604-374-2200

Real Estate 2.0? Understanding the basics with Ben Smith

2009-05-28T09:01:00.000-07:00

It's great this month to get some perspective on innovation from a leader in the real estate, an industry that's been hit so hard in recent year, they are ripe for innovation. Beyond the obvious financial hit, real estate, like travel has been dramatically impacted by the web.

New sites to short cut the house hunting process have replaced part of the traditional role of an agent. An astounding 80% of home buyers use the web as part of their home shopping process and real estate agents are scrambling to adapt to the newest tools available on Web 2.0.

If ever it was time to consider revamping the industry, the time is now.

Fortunately our guest this month, Ben Smith is a web savvy social media pioneer in the industry. Ben, as VP Marketing of Polygon homes has a catbird seat for theses changes, yet unlike many who embrace social media, Ben brings a solid marketing perspective to the adoption of social media.

He still measures success the old fashioned way, in terms of sales and referrals. But he understand the power of Web 2.0 as a marketing tool to drive those key metrics forward. Ben tweets at @bensmithinc and @polygonhomes. He manages Polygon Homes Facebook Page and he has an eagle eye on the trends impacting his industry.

Though many of us might say, "Who would want to be in the real estate industry in these times", these are exactly the times when great innovation takes place. We know that from history. Every recession has been followed by a boom in innovation and entrepreneurship, those on the leading edge of the new innovations arising from a recession lead the way out of it.

Ben understands Web 2.0 and what it brings to the real estate industry. I was impressed with his insight into how the social networking tools now available rather than replace word of mouth marketing simply move it online. The power of these new sites enables home shoppers to move beyond relying on friends and neighbors for recommendations and opens them up to opinions from around the world.

And though real estate is a local business, new tools arise every day that increasingly make it a powerful tool for local business as well. Now home shoppers can connect with more than just their immediate network of contacts in their community to more or less everyone in their community - at least those that are on the web.

Ben's is a story of adapting to the innovation in one field and using it to drive innovation in another. HOW the real estate uses these Web 2.0 innovations to bring about change in their own industry will be the interesting story as we come out of this recession.

What is your role at Polygon Homes?

VP Marketing.

In your opinion what are the key trends affecting your industry?

As it relates to the Real Estate Industry: the obvious trend or "state of being" is the current economic situation. Currently prices have fallen, interest rates are at historic lows and we are seeing a lot of activity in the market right now. The suggestion is that we are at the bottom... only time will tell. Let's hope that this increased traffic and sales are the "trend" ; ) The other trend is the end of presale and a launch style of marketing and a movement to selling from finished product and a steady tempo approach to sales and marketing.

As it relates to the Marketing Industry in general: let me say first that the fundamentals have not changed despite what all the self-proclaimed "experts" will tell you. Marketing remains about developing one-to-one relationships that grow in to one-to-many referrals, which become huge successes when they transcend to many-to-many conversations. The trend is that the tools we now have to foster this are getting better with Social Media etc. and the trend of "transparency", social responsibility, info sharing, are all just results of customers using these tools and gaining power and a level voice with the companies they support. Don't be fooled, people have always wanted transparency, have been assembling into tribes that multiply since before Jesus and the 12 tribes of Israel, and have always cared about social issues, there has just been a shift in power and share of voice that has elevated these concepts more recently and made marketers pay attention to them. This is grossly oversimplified but you get the general direction.

How do you measure innovation or marketing success?

1. With money. Did it make and / or save any?

2. By leads / traffic. Did we draw anymore to our website and / or to our sales offices.

3. By education. Did we learn anything?

4. Anecdotally. Was anyone talking about it?

5. Emotionally. Did it encourage / motivate / empower the team to move forward, be better, keep going.

6. By speed / simplicity. Did it do any of the above faster or make it any easier?

If you could go back in time and change something, what would it be?

I would be a lot more humble about all the things I didn't know anything about and a lot less opinionated about all the things I thought I knew a lot about. Having said that, youthful arrogance breeds passion and passion allows you to risk.. and I likely would not have pushed myself and my career had I not been passionate and willing to risk, so maybe these were all great experiences and lessons. I suppose it's not about "good" or "bad" experiences, but what you make of them ; ) But now I am getting too philosophical, next question...

What is an example of an innovative company that people have never heard of?

Great question. I saw a company at LPV6 called Mobify.me... they allow you to take your existing website and "mobify" it for your mobile phone - thought that was pretty innovative. www.mobify.me

Also, my friend has a company in San Francisco called Brain Park that is doing some pretty exciting things to connect people, knowledge, and resource in organizations by building an enterprise solution that incorporates many social media type tools. www.brainpark.com

List a few of your favourite sites on marketing or innovation.

Don't really have any "favourites" in particular. Been caught up in twitter lately and follow a bunch of people who tend to pass around good stuff on these topics from a plethora of sources. I do read Seth Godin's blog fairly frequently, and watch TED for ideas, I also get fired up to watch and learn from Apple keynotes.

For a complete list of my bookmarks check out my del.icio.us account www.delicious.com/bensmithinc

www.twitter.com/bensmithinc

www.linkedin.com/in/bensmithinc

www.delicious.com/bensmithinc

About Ben Smith

Born in Hamilton, Ontario, Ben faces the world with the work ethic of a steel worker, creativity of his interior designer mom, and rational science of his dad... he is the guy in the MAC ads standing between MAC and PC facilitating the conversation.

By age 30, he had been the Managing Director of a leading boutique creative agency, the VP Marketing for a leading Vancouver Real Estate Developer (current), got married and had four kids. He's worked for brands both large and small and everyone in between. Credentials aside, it is an insatiable curiosity that fuels him to innovate and pursue excellence in marketing.

Incremental vs Radical Innovation - Do Consumers Care

2009-05-20T15:08:00.000-07:00

I was reading yet another article on innovation on the web when a short sentence caught my eye:

Do consumers sincerely differentiate between incremental and radical innovation?

The author went on to describe the difference between the two

As I see it, incremental innovation... is most times, short-term and more profit-oriented. Furthermore, incremental innovation is used by larger corporations who might not have the right tools, creativity or knowledge to create new original cutting-edge products/services yet have the financial capabilities to execute and implement them!

It's true that most radical innovations are actually discrete accumulations of much smaller improvements yet they have the ability to be life changing, and those seem to have seized to exist these days!

In a nutshell, it seems in his view, radical innovation is what happens when you do a lot of incremental innovation. Sooner or later you reach a Tipping Point, where the next iteration is a radically new idea. (For further discussion of Tipping Points read Malcolm Gladwell's fascinating book of the same name.)

In some sense I would have to agree. Often radically new ideas are iterations of ideas already being explored, but aren't seen by the general public. And this is where I would diverge form the author's opinion.

I actually DO believe that big corporations have the " .. right tools, creativity or knowledge to create new original cutting-edge products/services... ". They also have the financial wherewithal to launch them. What they don't have is the ability to take a huge risk.

Large companies are risk adverse by nature (unless you are a financial institution apparently given how we've been watching them implode over the last year.) Large companies often come up with radical new innovative products but for one reason or another choose not to launch.

Sometimes this is due to how destabilizing the innovation would be to current products. Sometimes it is because of entrenched political positions against this type of innovation. Sometimes it's just that the champion is not well connected. (He or she has been known to leave said big company and go out on his or her own for just that reason and successfully launch the radical new idea.

But back to the question: Do consumers care if a new idea is radical or just an incremental innovation? No, I don't think so. Consumers are motivated by products and services that meet their needs. If that need can be met by making a small change - great. If it requires a radical change- that's fine too.

True consumers get a lot more excited about a radical innovation, but there's a place for both in any well run business. Why, because radical innovation is much riskier. For every success there are hordes of failures.

A well run company pursues both strategies. Incremental innovation builds the infrastructure for radical innovation and provides the fall back when things don't turn out quite like planned.

Which happens rather more often that one would wish.

Tackling Telecom: Innovation at Telus

2009-04-30T13:37:00.000-07:00

This month we're featuring an interview with Bob Petrovic, Director of Services Planning at Telus. In his role at one of Canada's leading telecommunication companies, Bob has been closely involved with managing innovation and sheparding new communication products through the new product process.

As Bob is at the forefront of one the fastest growing segments in virtual communication, mobile services, I was interested in his take on managing innovation. Huge capital expenditures are common in the telecommunications industry, so Bob has a common challenge on a bigger scale, in these economic times - trying to manage long-term investment with short term risk.

In times of financial crisis where companies of all sizes are challenged with funding projects, innovation tends to come from those smaller, more nimble and less capital intensive companies. However, on the telecommunications front, where building the infrastructure takes massive amounts of money, larger companies with legacy systems have the advantage.

In my interview with Bob I was particularly struck by his comments regarding the disconnect that often occurs between Marketing and R&D. In a technology company, in particular where new product development tends to reside with those involved in technology development, this

communication gap can mean the difference between being first to market with an innovative and successful product and time spent developing products that don't meet consumers' needs.

I've talked before about how crucial I believe it is to develop strong working relationships between Marketing and Product Development. Cross-training and working groups comprised of members of both departments tend to improve communication and prevent "orphan" products. I've seen this time and time again, where a great technology product lacks a champion in marketing and so languishes in development stage or the reverse, when marketing research uncovers a consumer need but, without R&D support never moves beyond the idea stage.

In the fast moving and competitive telecommunications marketplace, this type of disconnect can mean the difference between being first to market, and obtaining critically important patents and scrambling to play catch-up as the industry moves forward. Marketing is tasked with correcting identifying the drivers that rule the market is critical and communicating that to those responsible for developing products to meet those needs. When this type of communication breaks down, the result is lost time and lost opportunities.

Bob points out in our interview how critical it is for those of us on the forefront of innovation to reach out beyond out own industries for new ideas and expand beyond our computer screens for ideas on managing innovation. I know you'll enjoy reading his thoughts on managing innovation in this critically important time.

What is your role at Telus?

My primary responsibility at TELUS is for consumer services planning. The scope of the role is broad, ranging from development of product strategies through to incubation of new mobile and broadband services. The goal for these activities is to align activities across the organization & assess emerging opportunities.

In your opinion what are the key trends affecting your industry?

Economic conditions are obviously a key consideration for network operators, impacting a range of decisions from market planning to capital spending. This will be an ongoing consideration for mobile and wireline service providers for the foreseeable future.

In terms of technology trends, it's fair to say that the rise of 3G adoption, driven by smartphones and mobile applications, is a key mobile trend. Video continues to be a key theme in the home with an increasing number of options for time & placeshifted viewing. As with any trend, there are opportunities and risks that need to be understood and acted upon.

How do you measure innovation success?

Commercial endeavors are ultimately measured by profitability and I don't think innovation can be treated differently. Successful innovations will be those that drive usage and adoption in a sustainable way - they have to fulfill a need and be convenient so that people will want to use them. While forecasting commercial success for new initiatives can be tricky, convenience, as measured across economic (price, cost) and esthetic (ease of use) dimensions, is usually a pretty good indicator of future performance.

What is a biggest pitfall that impedes successful innovation?

In any industry, a disconnect between technology and marketing organizations is probably the greatest hindrance to innovation. Opportunities that arise in one area may not be fully appreciated in the other. Maintaining an on-going conversation across these groups goes a long way to realizing opportunities appropriately by managing priorities & expectations.

What is an example of an innovative company that people have never heard of?

In my industry (and hometown), Teradici stands out as a company that's using technology to solve some real problems today with a great vision for the future. They develop thin client solutions that push computing power into the cloud efficiently and transparently.

Outside my industry, I really like what folks like HippoRoller and Kyoto Energy are doing by creating low-cost, simple solutions to real-world problems for emerging nations. Both are applying innovation in a way that increases convenience for the basic needs of life.

List a few of your favourite sites on innovation.

I find myself gravitating to books more than websites for understanding the art & science of developing ideas - I really liked Blue Ocean Strategy and find myself going back to it often.

Lightreading.com is a great site for telecom developments and they do a great job of covering startups which helps me keep a pulse across a wide range of my industry's topics.

-------------------

Bob Petrovic is the Director of Services Planning for TELUS Consumer Solutions. In his decade with TELUS he product managed the mobile computing services portfolio from early telemetry to mobile broadband. Prior to joining TELUS, he launched a number of industry-first solutions for Internet developers. Bob has a Bachelor of Mathematics (Computer Science) from the University of Waterloo. He lives in Vancouver with his wife, 2 kids, and some fish.

Telling stories through numbers - An interview with Stewart Marshall

2009-03-30T15:07:00.000-07:00

Stewart Marshall photo courtesy of Kris Krug

This month we are featuring an interview with Stewart Marshall, self-styled, "financial storyteller". I was intrigued by his description of himself as so often we are presented with numbers that, recently frankly are quite appalling. As we struggle to understand the meaning behind these numbers, we look to financial storytellers to interpret them for us.

The good ones put striking numbers in context and, beyond just helping us to interpret them, get us excited about what they mean for the future. Understanding the past is the first step, understanding what this means for the future and the opportunities it opens up for us personally and for our businesses is the next, key step.

As we are constantly bombarded with numbers and headlines about those numbers that can be misleading, the role of the financial storyteller becomes even more important.

The storyteller these days need not only be an expert at his or her craft but also at intersecting with technology in such a way that the word gets spread efficiently to the key people who need and can use it.

I’ll give you an example of a quote in an article I saw just the other day. "Contrary to popular belief, sales of green products are not tanking in a down economy". While this opening line makes me feel good about the opportunities in the green economy, a few paragraphs later (after many readers would have lost interest) I found the following paragraph:

...sales of green products are up 4.1 percent, driven mostly by price increases, as unit sales in this category dropped 6.6 percent in 2008.

This information, of course, leads one to the exact opposite conclusion, hence the need for not only storytellers, but trusted ones. And as we are all increasingly wired, we look to storytellers who can not only tell our story, but also have the social media savvy to disperse that information across the web using the most effective social media tools to reach our target audience.

As business owners, we all struggle to get our message across in a way that is effective and interesting. Creating interest leads to increased understanding and demand, whether for our product or to invest in our companies.

Using the multitude of new tools available on the web from Flickr and YouTube to Slideshare and Twitter we look to financial storytellers to help us get the message across to our stakeholders in an away that is interesting, creative and above all trustworthy.

Who were your early role models and what were the main things you learned from them?

Sir John Harvey Jones, MBE. He rose through the ranks to be Chairman of ICI and turned it around - proving you can run a successful company and have time and respect for everyone. In fact this is a key ingredient to his success. I remember he talked about riding in a company truck for a week just to learn about the problems his drivers experienced. Later, his Troubleshooter TV series showed me the challenges of being a change agent; what an outsider can bring and what they have to face.

Another person who inspired me early in my career was Sir James Dyson. His story about inventing the bagless vacuum cleaner demonstrated how hard it can be to convince people of your ideas and how important perseverance is in achieving your dreams. In a similar vein I was impressed by inventor Sir Trevor Baylis, who found his inspiration for the wind-up radio in the tragedy that is AIDS.

In more recent times, I've been following the fortunes of Starbucks CEO Howard Schultz and to a lesser degree, Michelin Award winning chef Gordon Ramsay. Both demonstrate a sense of values which I aspire to and show that the age-old idea of honest hard work can pay off.

Links:

Sir John Harvey Jones: http://news.bbc.co.uk/1/hi/business/6285160.stm

James Dyson: http://www.ideafinder.com/history/inventors/dyson.htm

Trevor Baylis: http://windupradio.com/trevor.htm

Howard Schultz: http://www.myprimetime.com/work/ge/schultzbio/

Gordan Ramsay: http://www.gordonramsay.com/corporate/theman/biography/

Why do you call yourself a financial storyteller?

The succinct answer is that I help organizations tell their story with numbers. The aim of a successful story is to increase understanding. Numbers on themselves tell you little. It is only when you label, reference and put them in context with words and pictures that they make mean something: witness the rise of the pie chart in the late 1980s and 1990s. If you put the numbers together with the narrative and mix in some imagery, then you have a story which will resonate.

In my experience, many people struggle to make the connection between what they want or see is happening and the numbers they have available to them. Whether it's making a pitch to investors as a start-up, evaluating an investment appraisal, understanding business performance or even understanding your customer; there is a financial story to tell. Too often we can get wound up in the detailed financials and miss the bigger picture.

As a financial storyteller I can help you connect what you need in terms of facts and numbers with the meaning and underlying story to increase your understanding.

What is an example of an innovative company that people have never heard of?

BatchBlue Software out of Rhode Island - makers of BatchBook, an online CRM tools designed for small business. I've been impressed by their use of social media to connect with a growing customer base and the speed this gives them when responding. What's more I love the product!

More locally, Anthony Nicalo of Farmstead Wines is doing interesting things around wine making and farming. Anthony enables you to connect with artisan farmers who make rare, handcrafted fine wine. I had the pleasure of meeting Anthony recently when he described his goal to make farming sexy! How innovative is that?

Links:

Batchblue: http://www.batchblue.com/

Farmstead Wines: http://www.farmsteadwines.com/

What key trends do we need to be aware of?

The online world is in many ways a paradox. Through technology we can connect and reach more people. On the flipside, this can make us more insular and locked to our keyboards instead of getting out in the world and meeting people in person. I see a trend for connecting these two pieces so that one feeds the other. Social gatherings of Twitter users demonstrate this, I don't remember groups of MSN Messenger users or AOL Messaging having such impromptu and informal events.

This leads to an increasing trend of people returning to fundamentals. Technology is exciting and can in itself be exciting. What is more exciting and holds more promise is what use this technology can be put to. The world is in a state of transition and people are either through choice or necessity returning to things which don't necessarily require a constant internet connection. This could be spending time with friends, taking more exercise, growing their own food etc. Where it does involve technology, there has to be more of a specific purpose. Whether it's for business or pleasure, technology is now starting to target specific markets instead of a general populous of early adopters.

List a few of your favourite sites on innovation and business.

It feels like a simple answer but I have to mention TED. A wealth of ideas both inspiring and practical delivered in bite-sized chunks. Apartment Therapy is always throwing up new ideas in terms of design. For business related sites, I've been following Robert X Cringely for almost 20 years and I still find his columns, blogs these days; enjoyable.

Links:

www.ted.com

http://www.apartmenttherapy.com/

http://www.cringely.com/

Stewart Marshall's bio is available http://www.linkedin.com/in/stewartmarshall

Greening IT with Faronics

2009-01-30T10:15:00.000-08:00

The media spin this past week has been extremely positive in the midst of the world's problems. Barrack Obama's inauguration combined with the Hudson River plane landing has made this the biggest positive news week since Neil Armstrong set foot on the moon and declared it a "great leap for mankind." Meanwhile, Microsoft has sacked 5000 people today and there is no bottom in sight for the current economic meltdown. So where is the bright spot in the economic picture? It is green-tech and everyone is flocking toward it.

Obama is announcing his Manhattan Project for clean energy. Poker champion Doyle Brunson is seeing the new 11^th Hour movie he financed narrated by Leonardo DiCaprio doing well. The movie picks up where Al Gore's Inconvenient Truth left off. Everyone is talking about the environment and clean and green technologies as the solution to the world's problems. I'm more of a leader than a follower but if it is my turn to act as a sheep, I might as well be a green one. I don't mind as long as someone doesn't come along and steal my green wool.

This month's Network Insider has been a little slow in coming. This is because we have been intimately involved in financing an industrial project in these chaotic days. Yes, it is clean and green - veggie plastic products with zero emissions in the manufacturing processes. Then the holidays hit. But we're back. And I'm opening with a great example of a Vancouver company we have been working with that has taken a lead on greening Information Technology.

Dmitry Shesterin is Vice President of Marketing at Faronics. This privately held software company with offices in Vancouver and San Ramon (California) develops computer software for multi-user IT environments. The company employs approximately 100 people and the products are predominantly used in educational institutions, libraries, healthcare facilities, government agencies. Dmitry has taken the lead in producing this month's resource titled Insiders Guide to Greening I.T. This represents the first collaborative resource of this type for the industry. I was pleased to be able to interview Dmitry for this month's Network Insider and to share this resource with you.

Click image to download

Q: Why did you create this resource?

A: Over the last year I have taken a strong interest in green business practices. After seeing how much of an effect our daily practices have on the environment, I've made it my mission to help make Faronics as green an organization as possible. Working with organizations such as Climate Savers Computing Initiative and Offsetters is going to help Faronics get there.

Even with all the information that is available today regarding green computing, I still come across people who are unaware of (or misinformed about) the benefits of reducing the impact of computers on the environment. Through various Internet forums and discussions, I found there were others who shared my views and thoughts. That's when the idea for an Insiders Guide to Greening I.T. was born. I wanted to bring together a collection of stories, blog posts, and practical advice for employees- whether they are high-level or grassroots-that could be used to start green initiatives within their companies.

Q: What do you hope to accomplish?

A: My hope is that by reading this free ebook, others will be inspired with the messages of the individual authors and will take action in their respective workplaces and homes to reduce their carbon footprints.

Q: What do you want people to do?

A: Look for ways to incorporate environmental sustainability into one's daily routines, both at home and in the office. Yes, there is a lot of greenwashing out there with products that have green claims that are dubious at best. But among these products there are the real gems that do deliver the environmental, and often financial, savings as promised. I ask that people do their part in reducing their carbon footprint by taking advantage of green solutions and practices that have a proven ability to work.

Q: Give me an example of an innovative company creating change in this area.

A: Faronics is a good example. We are actively working with Offsetters to improve our internal operations and achieve carbon neutral status in 2009. Our flagship product Deep Freeze has built in capabilities that can help reduce unnecessary energy waste and we have developed a dedicated software solution that delivers desktop computer energy management that doesn't interfere with user or IT needs. Faronics Power Save keeps computers running when users need them, accurately determines when computers are inactive so they can be powered down, and can prove its rapid return-on-investment through network-wide power consumption and savings reports.

About Dmitry Shesterin

Dmitry Shesterin is Vice President of Marketing at Faronics. After completing his Bachelor of Arts degree from Tver State University in Russia and Osnabruck University in Germany in 1998, Dmitry has chosen a marketing career path that lead him through various sales and marketing management positions in Russia, Germany and Canada with such organizations as Seiko EPSON and Siemens before joining Faronics in October 2004.

Time to Get Innovative

2008-11-24T10:38:00.000-08:00

There's a lot of buzz out there about the impact that this most recent economic downturn will have on innovation. Historically, great innovative ideas have traditionally gained traction as an economy comes out of a recessionary period. That means, of course that the brainstorming, development and initial launch happened during the downturn itself.

A New York Times article, cautions now, It's No Time to Forget About Innovation and like many in the field, we agree. Yet, frequently, those groups with little to show for themselves, i.e. no sales associated with the group and no direct P&L responsibility seem often to be the first areas cut. Rather than look forward when cost cutting is required, most companies look to dissolve those business units that would cause the least harm to the present operations to the company.

In a short sited way, this makes sense. Often companies that create business units focused on innovation that operate in their own silo. As we said before, this does not take advantage of the inherent creativity that abounds within the various operating units themselves and... is tempting to cut during downturns.

The fact is, innovation is inefficient. Hours and days of brainstorming often result in few if any workable ideas. Thousands of engineering dollars spent doesn't guarantee a real success. Innovation is, in some ways, a model of inefficiency. And there's the rub.

Wild market gyrations, frozen credit markets and an overall sour economy herald a new round of corporate belt-tightening. Foremost on the target list is anything inefficient. That's bad news for corporate innovation, and it could spell trouble for years to come, even after the economy turns around.

As creative pack up boxes and head out the door to home based sites and coffee shops, they take their innovative ideas with them. This is, perhaps one of the reasons innovative ideas often come from entrepreneurial ventures. And in bad times, the ranks of entrepreneurs swell and those lone operators often have time on their hands for the inefficient task of innovating.

David Thompson, chief executive and co-founder of Genius.com Inc., based in San Mateo, Calif., says that innovation "has a bad name in down times" but that "bad times focus the mind and the best-focused minds in the down times are looking for the opportunities."

All of this speaks to the issue of managing innovation in a downturn, especially for large corporations invested in producing short term profits, or at least limiting losses, for their shareholders. How to keep the innovative minds in a company from going out the door is an issue faced by most companies in this economy.

What Does It Take To Lead In Open Innovation

2008-10-14T13:43:00.000-07:00

We've mentioned the benefits of open innovation on this blog before. We're fans of it if used correctly, which isn't all that easy sometimes. When established organizations attempt to innovate, they usually go down the tried and true path of structured, bureaucratic, top down innovation, from brainstorming to launch.

This is, as we know, not always effective in producing truly innovative results. Pure innovation is often the purview of entrepreneurial firms with no structure of which to speak and a rough and tumble environment. Out of this very model has come though, a prototype for effective leadership in an open innovation system

...open innovation communities provide an opportunity to develop theories of human and social capital in a novel context that lacks pecuniary incentives, hierarchical authority, and formal structure.

A post, Leadership in Open Innovation Communities, builds upon that opportunity and discusses several types of leaders that are present in open innovation communities and takes a stab at which is more effective.

Leadership in such communities depends more on the trust and mobilization of peers than on approval of superiors. To wit, members cannot be fired or forced to participate in any activity, nor can they be compelled to pay attention to any other member. Ascendancy in such relationships relies purely, to borrow a phrase from politics, on "the power to persuade"

The post goes on to discuss "brokers", calculating and politically-savvy operators those most likely to have made it to the top of traditional organizations. And "boundary-spanners" defined as well respected guardians who redirect crucial information both within and outside the firm. Each of these leadership styles has its merits, but boundary-spanners tend to be more respected in an open innovation environment.

This is, of course, obvious. In an open innovation situation, where leadership is determined by the group rather than by upper level management, participants will be most likely to look to the one who garners the most respect AND has the ability to lead.

Unfortunately, far too often, those with a repository of knowledge are not in leadership positions in a corporation, which means for open innovation to truly work, the management structure needs to be broken down. Participants need to disregard title and seek knowledge and innovative thinking, which may be why creative product development groups in corporations tend to be people with young employees not yet as aware of the hidden power structure within the corporation.

Is it possible to change this paradigm? Can we create open innovation working groups in large corporations by assigning group members from various functions and expect them to ignore position and title?

Well. Yes. Maybe. The make-up of the team, in terms of personality and ability to lead or follow plays perhaps a bigger role than in traditional work terms where expertise is valued. In some ways a Machiavellian approach to putting together a team of personalities seems to be in order. Careful consideration of how team members will interact and who might emerge as a leader seems appropriate.

Does this follow true to the spirit of open innovation? I don't know, but it's one avenue for large, established corporations to follow.

Interview: Rodney Gainer

2008-10-10T11:21:00.000-07:00

I have been very fortunate to be in touch with Rodney Gainer over the last couple of years. He has worked as the Director of Business Enhancement for the Innovation Resource Centre for more than four years. During his time there, he assisted new inventors and established entrepreneurs on their commercialization efforts.

Rodney holds a business administration diploma from the college of New Caledonia and currently works as web developer for Noratek Solutions, one of the largest technology companies in North-Central BC.

I had the opportunity to interview Rodney about the Innovation Resource Centre and innovation in general. Here are his responses to these questions.

What is the Innovation Resource Centre?

Innovation Resource Centre enables economic growth and diversification based on the commercialization of innovative technology in the Central Interior of BC. We provide support to new and established entrepreneurs through both one to one advising as well as workshops and seminars. We organize networking and idea exchange opportunities and pursue an active communications and research program that creates a broader, better understanding of the role of technology in our economy.

Who were your early role models and what were the main things you learned from them?

Ray Savidan the owner of a forest company. I learned not only to work hard but to work smart. Physical strength only get you so far. Ray taught me to work smarter not harder and to trying new things, not to be afraid to think outside the box.

Dawn Miller, former Executive Director at Innovation Resource Centre, taught me to know my limits and how to work within them. By knowing your limits you learn when to ask for help before you actually need it. Also the ability to be a good listener and how to look at he big picture.

In your opinion what are the key trends affecting the innovation landscape?

Available talent and connectivity are keys to innovation.

The current labor shortages changing how people do business. They are embracing more automated systems that are able to do the jobs that used to be done by a person. The simplest example is the voice mail I got left the other day about the latest Canadian Blood Services blood drive campaign.

Connectivity is more than just a connection to the Internet. It is also to your personal and business networks. It is not only what you know it is who you know who has access to the resources that you will help you achieve success.

What is an example of an innovative company that people have never heard of?

Alterna Energy Inc. believes the world should strive to maximize the value from precious natural resources. Hence the question most often heard around Alterna, 'Why combust when you can carbonize?' Most biomass energy conversion systems take biomass such as wood waste and process it to produce heat energy and ash through combustion or gasification processes. Alterna's 'enviro carbonization' process will produce high quality carbon and heat energy which can be converted into electricity. Carbon is found in all biomass and is used in hundreds of valuable carbon products used by people around the world. Carbon for medicinal use. Carbon for filtering our water. Carbon for use as a reductant in the metal smelting industry. Carbon is a key element in our complex world and can also provide a renewable source of green energy.

What is a biggest pitfall that impedes successful innovation?

People. Many inventors and entrepreneurs are very short sighted when it comes to the success of their inventions and businesses. They believe they can do everything to make their product or service successful which makes them their own worst enemy. To achieve success people need to work with people who can get their innovation to the next level. Is it better to have 100% of nothing or 10% of a million dollars?

List a few of your favorite sites on Innovation.

www.changethis.com - Change This ' uses pdf's, blogs and the web to spread important ideas and change minds.

www.sethgodin.typepad.com - Seth Godin's blog - the agent of change.

www.innovationtools.com - Innovation Tools - a collection of resources on business, innovations, creativity and brainstorming.

www.thecis.ca - The Centre for Innovation Studies - a non-profit in Calgary, Alberta that focuses on research, networking and education.

Thanks Again Rodney!

Protect Your Cleantech - IP May Play A Role In Determining Who Leads The Pack

2008-10-09T12:20:00.000-07:00

With Vancouver named one of the top 10, "New Silicon Valleys" of the clean tech industry, worldwide that is, the role of innovation and the associated pitfalls is on my mind these days. Burnaby based, Ballard Power Systems may be said to have pioneered the fuel cell industry and ex employees are busily creating new companies and uses for the technology.

In the midst of all of this activity certain essential tasks associated with successful innovation can be overlooked. In any rapidly evolving industry, inevitably innovation will overlap and application of existing technologies will tend to be "discovered" by several, if not many different companies. So, it is in cleantech.

That activity that will play such an important role in the ultimate success of a clean technology product turns out to be protection of intellectual capital.

I've written before about the importance of intellectual property protection. A post Mass High Tech.com, Energy, Clean Tech and IP: Protecting Innovation, speaks specifically to the challenges firms in the cleantech industry face.

While an important component to any technology-based company's success, intellectual property is especially important for "clean tech" ventures encompassing energy or environmentally related technologies.

For clean tech companies, it's important to note that investors consider strong IP essential for both first to market companies and those that follow (to protect a key technology for later market entry or licensing/acquisition.)

Cleantech is, of course, an umbrella term that encompasses a wide variety of technologies and spans a variety of different industries. The rationale for application of intellectual property protection therefore varies by industry. Does it promote investor confidence? Is it important as a defensive strategy? Can it be used to encourage licensing down the road?

Clearly, whether or not the reason is immediately obvious, innovators in the space need to take steps early on to protect technological innovation and continue to revisit the applicability of those technologies as the company grows and the discovers new uses for existing patented processes.

Similarly, don't dismiss patent protection for clean tech ventures with a long time-frame to market or long technology lifespan. Strategic patent filing approaches may be available in some jurisdictions, increasing patent enforcement life, for example, until the effort reaches a certain state of commercial viability. It's also possible to file initial applications relating to core aspects of the technology, then stagger subsequent filings for incremental changes.

Like the early days of the dotcom boom, intellectual property protection will play a big role in who turns out to be the winners and the losers in cleantech. Those companies which use forethought and innovative thinking, in every aspect of their business, including legal protection, will be much better positioned to be on the winning end. As new uses for the current technology, as well as, new applications for technologies currently in development arise, appropriate intellectual property protection will be key.

I know I sound like an advertisement for the legal profession, but in an industry highly dependent on break through innovation, the appropriate IP may be the deciding point between leadership and second place.

You Just Don't Understand - The Conflict Between Corporate And Business Unit Innovators

2008-10-06T18:34:00.000-07:00

One of the challenges that every large business seems to face is developing an actionable innovation strategy. In smaller companies innovation often happens naturally. Company employees and founders gather in a room to discuss day-to-day operations. The conversation veers off into a brainstorming session; everyone gets excited. Tasks to make the innovative new idea happen are assigned and off everyone goes to implement the latest great idea, often dropping other initiatives along the way. But, that's OK.

In larger organizations with more developed job descriptions; bonus structures tied to quarterly or annual performance and clear lines of communication drawn, taking an innovative idea to fruition can be frustrating and hampered by conflicting priorities.

So, it was interesting when I ran across this article The difference between corporate and business unit innovation at Innovate On Purpose I don't think you can be any clearer than

... the corporate team and business unit teams are a lot like a pushmi-pullyu - both want to innovate, for different reasons and purposes and have different motivations and concerns.

Corporate strategist are often the champions of innovation. They may be innovators at heart or they may just realize that the key to growth goes beyond continual improvement. Stellar growth requires a constant parade of new products and new ideas, as well as, improvements on existing ones.

However, corporate strategists, while great at cheerleading are rarely in a position to implement innovative strategies. Sometimes they are in advisory or ancillary roles and not in a line position with the authority to allocate resources. If they are responsible for a business unit, they may be so far or so long away from actual tactical responsibility that they may not be aware of the enormous resources needed to actually create and launch an innovative product or service. More importantly, they may not have the authority, which often comes directly from the top, to change priority so that time and resources can be given over for innovation.

Bottom up innovation is stymied because clear lines between business units and the corporate power brokers may be limited or, more often, corporate executives feel powerless or do not understand that a priority shift is needed to accomplish the goal of innovation. Worse, those with the power to allocate resources to innovation may they themselves have conflicting priorities. But there are options to break this gridlock.

- a corporate team focused on longer term disruptions that are suggested by the business units that simply don't have the time or bandwidth to focus on what's next, and a corporate team that provides trends and strategy insights to business unit teams to extend their visibility. A corporate team can provide resources and funding to assist the business units with their mid and longer term innovation needs and take on the creation of new markets or "blue oceans".

In my opinion, this outline has possibilities. It does however veer away from the traditional path toward innovation - setting up separate innovation teams. Managers pulled from various business units and assigned to a group tasked with developing innovative new products. While I agree that corporate innovators have their place. Engaging them in the process and more importantly, getting them to back the project and free up resources I think is a better role for them to play.

Real innovation travels up the corporate ladder, not down. Just give a cross functional innovation team the resources they need and the power to make things happen and get out of the way.

Finalists anncounced for the 2008 Burnaby Business Excellence Awards

2008-10-06T13:05:00.000-07:00

The Burnaby Board of Trade announced their finalists for the 2008 Burnaby Business Excellence Awards. Congratulations to the nominees!

The finalists in the 8 award categories include:

Burnaby Community Spirit Award Finalists:
- Best Buy Canada Ltd.
- Brentwood Town Centre
- Scotiabank
- Vancity South Slope Community Branch
- Westminster Savings Credit Union, Metrotown Community Branch

Business Innovation Award Finalists:
- Day4 Energy
- Icron Technologies Corp.
- M&R Environmental
- Snap Technologies Marketing
- Web Tech Wireless

Entrepreneurial Spirit Award Finalists:
- Icron Technologies Corp.
- Image Path Printing Solutions
- Imagine Redesign
- MetroLeap Media Inc.
- Rock.Paper.Scissors Inc.

Environmental Sustainability Award Finalists:
- Day4 Energy
- Encorp Pacific (Canada)
- Jacques Whitford AXYS Ltd.
- M&R Environmental
- SFU Facilities Services

Non-for-Profit Organization of the Year Award Finalists:
- Basketball BC
- Bonsor Seniors Society
- The Neil Squire Society
- L'Arche Greater Vancouver
- Progressive Housing Society

Business Person of the Year Award Finalists:
- Keith Beedie, The Beedie Group
- Richard Davies, G&F Financial
- Don Hardman, 2007 FIFA U-20 World Cup
- Randy Hnatko, Trainwest Management & Consulting
- Coro Strandberg, Strandberg Consulting

Small Business of the Year Award Finalists:
- Binary Stream Software, Inc.
- Jubilee Cycle
- Petal Pushers
- Simba's Grill
- Snap Technologies Marketing

Business of the Year Award Finalists:
- ABC Recycling
- The Beedie Group
- Best Buy Canada Ltd.
- Kin's Farm Market
- Stormtech

Management by Not Having Any - A Key to Innovation?

2008-09-25T11:33:00.000-07:00

I just attended a workshop co-hosted by Ralph Kerle of the Creative Leadership Forum and was struck by his discussion of Arup.

Who?

Well, if you spent a significant amount of time watching the Beijing Olympics this year you may have seen their work: The Water Cube- The National Aquatics Center where the swimming events were held. Other projects to their credit include The Sydney Opera House and the Millennium Bridge in London.

Arup is an engineering firm... of sorts. Actually it is an organization held in trust for its 9000 staff members including engineers, architects, designers and consultants in over 37 countries. There are no shareholders and no discernable management structure. Yet, they manage to work on over 10,000 at any one time and build some of the most memorable and innovative structures in the world today.

One might call them innovators.

As Ralph Kerle wrote in his article Creative Leadership and the Water Cube at the Beijing Olympics,

... innovation in the building industry is very difficult... Every building is a prototype that mustn't fail. In structural engineering, you just cannot fail or the building will fall down.

This might lead to the conclusion that engineering firms must remain risk adverse at all costs, but risk adverse doesn't mean and mustn't mean forgoing innovation, for one important reason.

The production of the basic building materials on which our civilization exists is depleting our natural resources. As the global population rushes towards 9 billion, our consumption is exceeding our resources. The destruction of the rainforests, the depletion of oil supplies, the failure to find reliable energy alternatives and food shortages offer compelling evidence of this occurring.

The lead in changing the risk-adverse paradigm in the building industry therefore falls to innovative firms like Arup. Founded by Ove Arup, a philosophy and mathematics major from Copenhagen, Arup is unique in its management approach and its business philosophy which might just be little different than what I claimed here was one of my favorite quotes:

"Opportunity is missed by most people because it is dressed in overalls and looks like work." Thomas Edison.

At Arup, new employees are introduced to the firm philosophy and encouraged to go and seek out projects that hold his or her interest. The new employee is expected to be innovative and creative and a full fledged partner in the project, as all team members are.

Ove Arup's philosophy is the guiding principle that enables the company to create such beautiful, innovative and practical structures.

Arup recognised individuals as being innately creative. He reasoned if you provided employees with the simple humanitarian conditions of self organisation and creative freedom, an employer gained loyalty, respect and integrity from the employee, these values became recognised and respected by stakeholders and as a consequence the organisation was seen as reasonable, reliable and ethical.

Is this philosophy transferable to other types of companies? Of course and it must be because we are all faced with a global crisis in the making, as our natural resources are depleted.

Is this philosophy and management structure the only way to create innovative products. Of course not, but providing employees with an environment where they are valued for their creativity; their input is solicited and where they work on projects they like is certainly one way that's worth trying.

Insights from Honeywell's IP Expert in India

2008-09-24T10:48:00.000-07:00

We were delighted to recently become engaged in a dialogue with an engineer and intellectual property expert, Suddha Basu, from the Honeywell Technology Solution Labs in India. He is nothing short of an IP junkie, having responsibilities at HTSL that include: intellectual property research analytics, patent mapping, IP mining, technology clustering, IP licensing analysis, IP led business growth, planning and strategic innovation counseling.

Honeywell is a large and diverse manufacturing company that is primarily the 1999 merger product of US defense giant AlliedSignal and the well branded consumer products manufacturer that made products like home heating thermostats. Wikipedia describes the company as "a major American multinational conglomerate company that produces a variety of consumer products, engineering services, and aerospace systems for a wide variety of customers, from private consumers to major corporations."

Before joining HTSL last year, Suddha worked for Wipro, serving multiple Fortune 500 clients as an IT OEM specialist. He also hosted a radio show at Entertainment Network India which isn't something common to most engineers and IP experts.

Suddha was quite willing to share some things about himself, some trends to be mindful of, current examples of innovation successes in India, how to measure innovation success and avoid a common pitfall. Here are his responses to these questions.

Who were your early role models and what were the main things you learned from them?

When I was younger I thought that conceptualizing a scientific principle or manufacturing novel products with great lot of complex math behind them, are the most critical factors in determining the success or failure of that invention, little did I think about the usefulness of inventions which were never commercialized or inventions which never became an innovation, ( i.e. a new stuff which did not become popular to its end users en masse) In my high school days, my school teachers, various discovery channel science shows and the Indian IT boom of the 1990s, made me realize that consumer needs and /or wants when get satisfied in a product or service, creates an innovation. And that is not always necessarily related to difficult mathematical equations. As we all know great things are always simple in their concept.

What key trends do we need to be aware of?

When a highly experienced researcher or a veteran marketer who is an expert in his / her area or market, working for a big university or a multi billion dollar corporation, suddenly quits his/her job and creates or joins an obscure startup company; is an example when you should expect a trend to emerge in a small and niche technology / market gap. Mere patent numbers, financial or market research data don't give you any real trend. It's the people behind all those numbers who can show you the future of science, society and money!

What is an example of an innovative company in India that people have never heard of?

Till date human civilization has showed us a model with industrial production, human migration for economic prosperity and proprietary knowledge owned by the wealth creators.

However, in the coming years a more socially committed innovative business model (but also with great profits after tax!) might be showcased by India or any country with an emerging economy. I believe where there are more problems with fewer resources but with more creative heads to think about such problems, then innovation flourishes there. Nimbhkar Agricultual Research Institute (NARI) is a non profit research organization developing very low tech but promising bio-fuel technologies of the near future! http://nariphaltan.virtualave.net/

How do you measure innovation success?

This could be measured if we notice, high market share with high profits, growing and varied product line and very less engineering or technology input costs. For Example; Google and Coca Cola, these two companies have the lowest budget for their global intellectual property protection needs. And as I previously mentioned innovations are not always inventions and thus are not necessarily measured by patent strength, patent activity or trade mark portfolio.

What is a biggest pitfall that impedes successful innovation?

For a knowledge intensive business, to impede a successful innovation, a lack of either or both the factors of, Organizational culture and individual mindset of each and every of all the employees, (and not only the VPs and the chairman,) matter the most. In such a situation, everyone stops thinking as being the primary beneficiary from an innovative product or service launched into the market by their company. This employee isolation is not good for innovation. All R&D employees should think of themselves as a scientist and also as a marketer, all at the same time. A less rigid job role / hierarchy help in achieving this impediment.

What advantages does Honeywell gain from having a major global R&D lab now based in India?

Indian engineers, scientists and managers who had previously lived in foreign countries for their jobs or education are usually happy to work from the Indian soil, while still being associated with an R&D giant like Honeywell.

Thank you Suddha for sharing these insights with us.

Why Vancouver - The City's Surprising Rebirth as an Innovation Centre

2008-09-17T20:15:00.000-07:00

Does Silicon Valley in California come to mind when I mention innovation? How about Boston or the Research Triangle in North Carolina?

How about Vancouver?

Traditionally a western outpost far from the major city centers of Toronto and Montreal, In Canada, Vancouver as often played second fiddle. Yes, it's a large metropolis but, compared to the large companies of Eastern Canada, Vancouver was a backwater devoted to mining and timber.

No Longer.

Increasingly fast growing high tech companies are locating major operations in Vancouver. Microsoft recently opened a new development center where software engineers and developers will work on over half of Microsoft's products. And of course, Vancouver is home to a thriving cleantech community.

Sure, Vancouver's proximity to high tech centers in Washington and California plays a part, but that's not the only reason. So, what makes Vancouver so special? The cost of living is high as compared to many Canadian and US cities. It's a long way from San Francisco and New York. It's not all that well known on the international scene, though that is changing.

Probably the better question is what makes any city good for innovation.

Jeffrey Chu, of Fast Company in a podcast discusses some of What Makes a City Fast. Chu cites a confluence of different factors including diversity and in migration. Both of which characterize Vancouver. He goes on, in a specific piece, Fast Cities - 2007 discussing Vancouver, that besides being named one of the world's most livable cities in a Mercer survey...

Its EcoDensity initiative aims to focus that growth by developing more crowded neighborhoods at the city center. The dual goal: to build sustainable neighborhoods with the scale to make green energy technologies affordable and to preserve surrounding forest and mountain ecosystems.

Our take is that Vancouver has much of what is needed to support thriving companies. Our diverse population brings an international flavor. Like many West Coast cities, proximity to the Far East and Far Eastern manufacturing centers has brought a highly educated foreign workforce to our shores. The relatively mild climate has made them stay, bringing diverse perspectives on life and on business, a key for successful innovation as we've mentioned in previous posts.

Vancouver's highly skilled workforce and established technology companies like Electronic Arts has attracted other and often younger workers to the city and created a cultural center with nightlife and activates that attract still more workers.

Vancouver's proximity to major tech centers in the US plays an important role as well as we've mentioned, but there's more. Canadian government support for development of newer, innovative industries and the spotlight that has turned to Vancouver, as host of the 2010 Olympic Games has encouraged companies to take another look at the city.

We believe that cities that are prepared to host innovation in the 21^st need to be diverse, green, creative and influential. Vancouver is certainly one of them.

10 Key Ingredients to Corporate Innovation

2008-09-09T17:30:00.000-07:00

Yesterday in the midst of scanning a variety of articles on innovation, as I do on a regular basis, I came across this post on Now Europe listing the top eight, actually ten, attributes companies that successfully innovate share. I've summarized them below, but you can read the full article here.

1. Top management buy-in

If senior management do not buy into your innovation process, no one else will.

2. Budget

One of the most effective ways for senior management to buy into innovation is for them to allot budget for the initiative.

3. Communication

Once your initiative is ready to launch, it is critical that people know about it, what it is meant to accomplish and how they should participate.

4. Rewards

Complementing communications is a rewards scheme for participating in your innovation activities. Rewards should be relatively small and recognise participation rather than good ideas.

5. Dedicated Innovation People

Assign an individual, individuals or a team the mandate of managing your organisation's innovation strategy.

6. Collaborative Innovation Tools

Enterprises need collaborative tools. Each individual has her own tools and methods for creative thinking, but rather than demand the use of a particular personal creativity tool for all employees, firms should give employees the freedom to use the tools that work best for each person.

7. Effective Evaluation System

It is important that your evaluation process is not a purely critical one. It is easy for evaluators to find all the weak points in an idea. But this can result in very promising ideas being rejected. So, evaluators should be asked not merely to criticise ideas, but also to provide suggestions on overcoming the problems they have identified.

8. Willingness to Invest in Innovative Ideas

Surprisingly, many organisations invest in creativity and innovation tools, but then fail to implement the most innovative ideas they generate.This is usually the result of excessive risk aversion, large approval committees, too much internal bureaucracy or a combination of these. Whatever is the cause, the result is a creativity programme which generates ideas rather than an innovation strategy in which creative ideas are implemented.

9. Enthusiasm

.Enthusiasm encourages participation in the initiative, makes people feel good about their participation and tends to encourage more radical thinking. If employees know that their crazy ideas are enthusiastically welcomed, they are encouraged to push their creative thinking ever further.

10. Diversity

..., if your firm employees a wide range of people with different educational backgrounds, different kinds of experience and of different cultures, your firm will have the advantage of breadth of knowledge, experience and thinking. That results in a wider range of ideas and a higher level of creativity.

What I like about this list is that it covers a wide spectrum of necessary "ingredients" that will result in effective launches of great innovative products... over and over again. Too often companies manage to develop and launch an innovative new product in spite of their corporate culture rather than because of it.

Large companies often embark on an innovation campaign, throw a few creative people at it and railroad an idea through and, if they're lucky, the product is a success. But too often it IS luck that plays the largest role in the achievement, which makes the whole process... unrepeatable.

To create a true innovation machine a company needs to look closely at its culture and determine what changes need to be made to re-energize the business and direct it toward innovation. This isn't an overnight process, which may be why the most innovative companies tend to be those that are smaller, newer and have not yet developed the stagnant corporate culture that typifies large businesses on this side of the Atlantic... or perhaps everywhere.

Not to say that it isn't possible for a large company to become innovative. Many of the steps listed above are easy to implement and should be applied across the corporation. Others require wholesale change which may be a bit difficult in an established company. (Who wants to fire half the workforce and hire on new to meet point number 10, Diversity?)

Other changes may need to be made on a smaller scale in a separate operating unit, dedicated to innovation. Many organizations have found success this way. This strategy too will fail though if only lip service is paid to innovation in the larger corporation.

Every company needs to determine the best way to create an innovation strategy that works best with their particular challenges and within or at least compatible with their own corporate culture. We've helped clients from a variety of different segments to reach these goals by keeping this fact, and the 10 ingredients for innovation success, in mind.

Watching And Waiting For Early Adopters On Web 2.0

2008-09-05T16:27:00.000-07:00

The credit for the explosion in Web 2.O companies goes to early adopters and Web 2.0 companies' ability to reach them. Unlike the Web 1.0 companies of the early part of the century which, diverse though they were, focused on one to one interaction with consumers, Web 2.0 companies focus on multi user platforms.

Web 1.0 companies were selling something; supplying something; providing something for individual users. Web 2.0 companies are providing platforms for users to create their own experience…with other users. Think Myspace, Facebook, Twitter, FriendsFeed, Flickr, blogs and wikis.

Early adopters, that is, the technologically savvy have played a big role in driving the popularity of these new companies. When you're a tech or Internet Company, your early adopters, the ones that eventually drive your business or sometimes are your whole business, are easy to find.

But there are ramifications of Web 2.0 and the companies it spawned for traditional companies, old line manufacturers, service providers and even offline retailers too. Web 2.0 companies have made it much, much easier for many traditional companies to find innovators and early adopters for their products and reach them with marketing messages...maybe.

While frequently early adopters are associated with technological products, the basis for the theory Everett Rogers developed that segments users across a bell curve based on how quickly they adopt innovations, is applicable to just about any category of product.

Two key challenges marketers face is finding and communicating with early adopters and crossing the chasm where momentum picks up and the product gains acceptance by the early majority. Web 2.0 solves both of these problems for many companies.

If you follow Lazarfeld and Katz' Two Step Flow Model, which goes something like this:

... mass media information is channeled to the "masses" through opinion leadership. The people with most access to media, and having a more literate understanding of media content, explain and diffuse the content to others.

You can see why the new way of communicating, creates a funnel which smart marketers can use to direct marketing messages to the wider market. Opinion leaders have always played a key role in the success or failure of new products. In the 21^st word of mouth marketing is becoming one of THE key strategies used to launch a product.

Seth Godin writes this week in The Myth of Launch PR (which by the way, I found when it popped up on Socialbrowse) about companies that passed on the big media spend usually associated with a new product launch: Starbucks, Apple, Nike, Harry Potter, Google, William Morris, The DaVinci Code, Wikipedia, Snapple, Geico, Linux, Firefox and yes, Microsoft. (All got plenty of PR, but after the launch, sometimes a lot later).

Many of those names you'll recognize because... someone told you how wonderful the product was. Today that's even easier and happens at a much faster speed through social networking sites, blogs and other Web2.0 companies.

Finding and exploiting that user or users that can spread the word about a new innovation, cheaply and quickly is the Holy Grail of marketers in the 21^st century. But, the quest is not without its challenges.

Social networks and book marking sites frequently rise and fall before anyone has a good grasp on the audience they serve. Unlike the mainstream media, potential reviewers are fickle. They agree then choose not to review a product. (OK, sometimes the mainstream media does this too, but less often.) They create a big presence and attract a large following ...then disappear because life gets in the way. They get lost in the shuffle overshadowed by tech savvy, early adopters of the Web 2.0 TECHNOLOGY.

Just as marketers scrambled to try to determine how most effectively use Web1.0 technology, we'll struggle with Web 2.0 in its nascent stage. We know that early adopters are much easier to find now…if we could only figure out how to locate them. :P

Burnaby Board of Trade's Know You Neighbours

2008-09-02T13:58:00.000-07:00

1. Full name and position/title: Tatsuya Nakagawa, President and CEO

2. Company/Organization Name: Atomica Creative Group

3. Company website: www.atomicacreative.com

4. Education/Credentials:

University of San Francisco, University of British Columbia

5. Average meetings per month: 20

6. Name a skill or talent you possess that is not in your job description (i.e. marketing background; can speak 3 languages)

Tennis Coach and NCAA Division 1 Tennis Player

Brown Belt - Karate

7. What makes your job fun?

New and innovative products and technologies.

8. Personal Peeves?

Bad cell phone manners

9. Favourite quote?

"Opportunity is missed by most people because it is dressed in overalls and looks like work."

- Thomas Edison

10. Name one person of influence who is in your professional network

Steve Wozniak, co-founder of Apple.

11. Who inspires you? Any mentors or role models?

Thomas Edison. Tiger Woods.

12. Imagine you had a working lunch with three prominent (or fictional) people.

Richard Branson, Virgin Group

Russell Simmons, Rush Communications

A.G. Lafley, P&G

13. Your favourite website is:

LinkedIn.com

14. Name one thing you cannot live without:

Family

15. List committees, organizations, or boards you sit on or have been a part of.

Burnaby Board of Trade, Board of Director

Japan-Canada Chamber of Commerce, Former Director

BC Export Awards, Steering Committee

BC Supply Chain Career Network, Former Director

16. What are you currently reading? Any favourite books?

Tipping Point, Malcolm Gladwell

Innovators Dilemma, Clayton M Christensen

Unleashing the Idea Virus, Seth Godin

17. What would be the professional legacy you'd like to leave behind? (i.e. increase sales by 300%; make corporate social responsibility a natural business practice; introduce technology that changes our lives).

To help change the global corporate innovation success rate from 25% (currently) to over 50%.

Creativity at Work: Linda Naiman on turning ideas into reality

2008-08-28T15:36:00.000-07:00

Our approach to innovation has been somewhat focused on the industrial side. We're always looking for ways to help innovators avoid pitfalls and apply processes to improve their returns from innovation activities. It hasn't been as inclusive of the creative aspects that we recognize are crucial to innovation.

To help bridge the gap, I approached Creativity at Work^TM founder Linda Naiman whose approaches toward innovation come from a different point of view. We've been in regular contact for the last 2 to 3 years, updating each other on our work. Linda was happy to share some insights as she is preparing for a creative leadership forum she is co-hosting in Vancouver from September 16-18 along with Ralph Kerle, CEO of the Creative Leadership Forum, Asia Pacific.

Linda has her own definition of creativity that ties in nicely with our approach that focuses on achieving predictable and measurable results from innovation activities. She defines creativity as "the act of turning new and imaginative ideas into reality. Creativity involves two processes: thinking, then producing. Innovation is the production or implementation of an idea. If you have ideas, but don't act on them, you are imaginative but not creative."

Here are Linda's responses to a few questions I asked her recently.

Who were your early role models and what were the main things you learned from them?

My earliest role models were my parents and art teacher in grade school. My parents both encouraged me to be an artist, my father took me to museums and cultural events, and from early childhood we engaged in lengthy discussions about art, life and politics with an emphasis on analysis and strategy. My mother was always an athlete and a naturalist and she gave me a taste for travel and adventure. My grade 5 art teacher, Fritz Brantner taught us to be Cubists, and through him I learned to think in the abstract, and find the essence of the subject matter at hand - a useful problem-solving skill.

What key trends do we need to be aware of?

Innovation, innovation, innovation. It's not just about R&D and new product development. A recent global study of CEOs conducted by IBM reveals that the scope of innovation spans the entire enterprise, but with a focus on the business model and the customer. 40 percent of CEOs report they are changing their enterprise models to be more collaborative, and the study reports extensive collaborators outperform their competitive peers. "Partnering has shifted from tactical 'Enter a new market' to strategic 'Access to capabilities'," explained one CEO from Hong Kong. Collaboration with external inventors and customers plays a key role in nearly 50 percent of P&G's products.

Social Networking is another trend. Flickr, Second Life, and YouTube, are pioneering a new form of collaborative production that will revolutionize markets and firms.

Innovation requires a change in management styles that must shift from a command-and-control model to one of designer and coach. Organizations world-wide are discovering the merits of artistic and creative training. The arts-based skills transfer directly transfer to management: how to take risks, what motivates people, and how to engage your audience. Companies like P&G and Unilever have brought art and design principles into the practice of management and leadership to increase market share.

What is an example of an innovative company that people have never heard of?

Three companies who provide an innovative service online: Seattle-based TeachStreet, helps Seattle-based teachers and students connect. Students can search for teachers across more than 25,000 courses and filter the results according to location, ratings from other students, teacher availability, promotional pricing and more.

San Francisco-based Carrotmob aims to organize consumers to provide an economic incentive to companies for making positive environmental changes. The group hopes to begin by creating a broad network of consumers and forming partnerships with other larger advocacy groups. Next, it plans to implement campaigns focusing on different industries. Carrotmob will then approach the companies in each industry with suggestions, and invite them to make the changes they have identified.

Toronto-based Parkingspots.com connects those who have parking spots to rent out with those who need them on a monthly basis.

How do you measure innovation or creative success?

Two possibilities are Michael Porter's Innovation Capacity Index, and Richard Florida's Global Creativity Index.

Michael Porter says, "Innovation intensity depends on an interaction between private sector strategies and public sector policies and institutions. Competitiveness advances when the public and private sectors together promote a favourable environment for innovation." United States is number one followed by Finland and Germany. Canada is 10^th on the list.

In the Flight of the Creative Class, Richard Florida outlines what he coins the Global Creativity Index, which captures the ability of a country to harness and mobilize creative talent for innovation, entrepreneurship, industry formation and long-run prosperity. It measures technology, talent and cultural tolerance. Top of the list is Sweden, followed by Japan, Finland, US and Switzerland.

We'd like to thank Linda for helping bridge the gap between creativity and measurable innovation results. This helps us turn great ideas into reality.

Innovation Under The Golden Arches - What is McDonald's Up To?

2008-08-26T17:15:00.000-07:00

Idris Mootee often spots trends in innovation that have somehow have ended up under the radar of the mainstream media. His recent piece, McDonald's innovation in Europe, caught my eye because this latest move by McDonald's is less an iterative change or a nod to cultural differences than a wholesale rethinking of their overseas business and perhaps their worldwide business model.

What McDonald's is doing is (finally) catering specifically to the tastes of the countries in which they operate by offering such staples as porridge for breakfast in the U.K. and soup in France. Denis Hennequin, president of McDonald's Europe, the first non-American to hold the post, is behind all of these new innovative ideas and he has his chefs in Munich cooking up even more to come for the 41 European countries McDonald's Europe serves.

One wonders if this is a reaction to the increasingly skeptical way in which those around the world view all things American. Where once The USA was the golden land and all things American were lapped up with enthusiasm, a confluence of events in recent years has led to a healthier view of America and American companies' role in world affairs - that is as a player, not necessarily THE player.

Or perhaps the alarming rate of obesity with its loose links to consumption of fast food has provided the wake-up call. Either way, we're seeing fast food chains innovate in a variety of ways to combat this change in worldwide eating habits, competitive pressures and a recessionary climate.

While fast food chains in the US struggle with consumers tightening their pocketbooks, overseas McDonalds is taking a more innovative approach and perhaps they are once again leading the pack.

... the whole fast food industry is ripe for a complete makeover, not a botox job. It needs to redefine its customer experiences and take a hard look at what "fast food" means. Fast food doesn't need to be "junk food". I think everyone in the industry better start looking at what is needed to transform this industry.

In other ways, McDonalds is bringing a new customer experience to the fast food customer, though, perhaps lagging a bit behind popular chains like Starbucks. While fast food has long been a staple of budget minded young people. McDonalds is just now testing wireless internet access and linger-friendly environments with comfy seating and larger tables. Could McDonalds replace Starbucks as the "office away from the office" for the budget minded set?

Whether all of McDonalds new innovations take hold remains to be seen. The various scenarios being tested seem to focus on two trends - targeting and addressing the needs of a younger market... one more wired and more health conscious; and integrating McDonalds more into the culture of the countries in which it operates. Both are tried and true strategies, so in that way, the approach is not innovative. But as I have mentioned before, innovation isn't necessarily about "new to the world" inventions, but often is achieved by applying existing knowledge in a new way.

Why not spend money on a Patent?

2008-08-25T13:23:00.000-07:00

Success rates for new products, including patented ones, are shockingly low. For even the world's largest and most sophisticated companies, the numbers are about 25% - certainly below what most managers and owners would like.

There are several references that give the failure rates for new product introductions. The normal range is typically from 70 to 80%. These sources include:

Various studies cited by Advertising Age,[i]
A study[ii] by Linton, Matysiak & Wilkes, Inc. of the top 20 food companies reviewing 1935 new products,
A Booz Allen Hamilton study[iii] on new product management that claims one out of seven product ideas yields a successful product,
Boston Consulting Group vice presidents and directors James Andrew and Kermit King claiming 60 to 85% in an article[iv] titled 'Boosting Innovation Productivity',
Some college textbooks[v] claim 80%.

A study[vi] by the Product Development and Management Association titled 'The PDMA Foundation's 2004 Comparative Performance Assessment Study (CPAS)' shows 40% rather than the higher 70-80%. The PDMA figure appears to be based just on the post-commercialization or post-launch failure rate. It does not include all products that go into the development pipeline, rather just those that make it to the launch pad. Including all the steps from idea generation, the PDMA study failure rate is over 80%.

Companies stay alfloat because the products they sell, including new products, rarely rely on patented subject matter. Companies derive about a quarter of their sales and profits from new products, only some of which are patented. The other three quarters of a company's sales and profits come from yesterday's breadwinners that still have years left in their product life cycles.

So what happens if a company stops innovating? In most cases, it will slowly die. Companies operating in a competitive marketplace need to continually introduce new products or products that are better, faster, or cheaper in order to stay in business. They don't need to overdo it with innovations, but there is a need to have something in the works. Companies that are leaders in innovation become the pacesetters for the rest of the industry. The other players are forced to keep up or get knocked out of the never-ending race.

Another factor that stimulates the corporate innovation process is the tantalizing prospect of huge profits from world-beater innovations. For the few innovations that become blockbuster commercial hits, the rewards can be great. Companies that come up with such innovations and exploit them well can end up dominating their industry categories and raking in huge profits.

Does this mean small businesses need to come up with ideas and file patents on them? Let's look a little closer at the numbers as they apply to small businesses rather than Fortune 500 companies.

Only about one quarter (1/4) of the products that go into the development process end up being successful. This is a deplorably low figure that applies across a wide range of industries. The data comes mainly from well-established companies, typically the top ones in the various industries. In other words, one in four successes is currently accepted as the best that can be done in terms of converting ideas introduced to the development process into successful products.

What happens in the case of start-up companies? For these companies which are usually quite small, there is a whole other set of failure rate data involved. U.S. and Canadian statistics reveal that only about one third (1/3) to one half (1/2) of new companies remain in business for at least 3 to 5 years.[vii]^,[viii]. About a third of them make a profit during that time, another third break even and the remaining third lose money. Many of the companies that close their doors within the first few years do so because of business failures. Running a profitable business is obviously not easy.

Let's multiply the survival probability for a start-up company with the new product success probability. This makes the overall likelihood of success for a start-up company successfully developing and commercializing an invention or new product small. The math looks like (1/3 to 1/2) x 1/4 = 1/12 to 1/8 overall likelihood of success. Since the probabilities are not entirely mutually exclusive, the more forgiving 1/8 figure will be used. Determining what influence one of these variables might have over the other is beyond the scope of this article. In any event, a 1 in 8 or 12.5% chance of success seems somewhat risky which is why venture capitalists and finance people generally have a hard time dealing with start-up companies based on a new product idea. However, a well managed start-up company with a highly successful product can generate a phenomenal return.

From these numbers, it appears that the vast majority of patents are not worth the paper they are printed on. Here are five reasons a small business should look twice before calling a patent agent:

It usually costs between $5,000 and $20,000 to obtain a patent. These costs include the fees paid to the patent offices in one or more countries and those fees paid to the patent agents, many of whom are attorneys. These do not include the internal costs for having your key people sitting in the patent agent's office or working on the patenting aspects.

It normally takes about two or three years to obtain the patent and can take much longer if there are problems. Some innovations become worthless in three years, much less than the 15 to 20 years covered by a typical patent.

A patent gives a complete disclosure as part of the requirement for obtaining it. In other words, your competitors know exactly what you are doing and how you are doing it. This is especially so with recent changes to the U.S. patent rules that publicly disclose the entire contents of the applications 18 months after application, regardless of how long it takes for the application to get processed.

Most patents don't offer any real protection since they are often narrowly defined and easily circumvented.

The patents become extremely expensive when they become litigated. Usually the patent owner is the one who initiates the litigation. This is because, in practice, a patent is little more than a right for the patent holder to sue an infringing competitor. These costs can run into the hundreds of thousands or millions of dollars. After years of expensive and complex litigation, the infringer often does not end up paying much, if anything, to the patent owner.

Spending the same time, money and effort on your up front marketing would be a much better approach for most small businesses. Up front marketing does not include promotional and sales expenses but does include going out to determine what the real market is for the proposed or actual product. It includes focus group testing, trial selling, surveys, tradeshows, etc.

Look before you leap when you have an idea that might be patentable. At least you should do the math first.

Peter Paul Roosen has an engineering background and is co-founder of Atomica Creative Group , a specialized strategic product marketing firm. He has co-authored Overcoming Inventoritis: The Silent Killer of Innovation now available.

[i] Brock, D. (1997). Getting the most out of your new product introductions. Partners in Excellence. http://www.excellenc.com/articles.htm

[ii] Linton, D.B. (1997, July 1). Market study results released: new product introduction success, failure rates analyzed. Frozen Food Digest 12(5), 76.

[iii] Dean, B. (2005, March 28). Case study: Incorporating focus group research into the product development process. DM News, Article 32310. www.dmnews.com/cms/dm-news/e-commerce/32310.html

[iv] Andrew, J.P. & King, K. (2003, April). Boosting innovation productivity. BCG opportunities for action, April 2003. http://www.bcg.com/publications/publication_view.jsp?pubid=847

[v] Friedman, H.H. (2000). Product policy; new product development. http://academic.brooklyn.cuny.edu/economic/friedman/mmproductpolicy.htm

[vi] Adams, M. & Boike, D. (2004, July). PDMA foundation CPAS study reveals new trends. Visions, XXVIII:3, 26-29; and: The PDMA Foundation’s 2004 comparative performance assessment study (CPAS). PDMA Foundation. www.pdma.org/cpas.php

[vii] Knaup, A.E. (2005, May 1). Survival and longevity in the business employment dynamics data. Monthly Labour Review 128:5, 50-57.

[viii] Baldwin, J., Bian, L., Dupuy, R., Gellatly, G., Statistics Canada (2000, February). Failure rates for new Canadian firms: New perspectives on entry and exit. Minister of Industry / Statistics Canada Catalog no. 61-526-XIE. www.statcan.ca/cgi-bin/downpub/freepub.cgi

Practical reasons for strengthening member to member network ties

2008-08-25T13:03:00.000-07:00

Here is mini article we put together for the Burnaby Board of Trade. Practical reasons for strengthening member to member network ties:

1. Relationship: It's easier to call or email a fellow member and start building a relationship. Having membership in common creates a good starting point. Plan to meet at an event. It is almost always preferable to do business with someone you know and have developed a relationship with than it is to place your trust with a complete stranger.

2. Consistency: Developing a relationship with a group of people that you see on a regular basis has its advantages. You become familiar with their products, quality, needs and also the various shortcuts that can be taken to achieve your desired ends. For example, if you use a local printer for your stationary needs, they will likely keep your artwork on file so that re-orders are relatively easy.

3. Complementary: Member businesses are diverse and may complement your business, becoming good referral partners. This will allow you to be a better resource to all your contacts and clients.

4. Community: Because of the closer ties, people will be more compelled to go the extra mile. It is a natural to put in a little extra effort to help a friend or someone you know.

5. Accountability: Fellow members can usually be more easily held to account than firms that you have no ties with outside of the immediate transaction.

6. Activity: Business and people that are actively involved in an association tend to be more connected to the business community and interested in connecting with people than those who are not involved in such networks.

7. Productivity: Working more closely with fellow members can lead to productivity enhancements in your business. Sharing relevant information and developing informal mentorship relationships are a couple ways to do this.

8. Cost: It often costs less to do business with someone who you know through an association. Check out the current list of members who offer a discount to fellow Burnaby Board of Trade members as one way.

Innovation and The Vancouver Olympics

2008-08-22T13:12:00.000-07:00

Next Up: Vancouver. For many Canadians, watching our athletes perform in China is only half the attraction of the Beijing Games. Sure, it's great to see Canadian athletes pick up medals but with the 2010 Winter Olympics scheduled for Whistler, there's more than just an interest in sports.

Expected to give a big boost to business and spotlight some of the rapidly growing, B.C. based companies, the Winter Olympics and how to capitalize on them is of top concern to many executives in the area. A number of executives from a variety of companies traveled to Beijing this year to assess the opportunities.

While it's the sport and spectacle of the Olympics that will be in the public spotlight for the next 17 days, a cadre of B.C. business leaders is headed to Beijing with more than secondary interest in the behind-the-scenes activities.

Game organizers and those responsible for ensuring the events go smoothly, as well as local tourism departments, will be watching to see how well the games are orchestrated. Number crunchers will attempt to quantify the costs and benefits of bringing the games to British Columbia. Business, large and small are looking at Beijing as a jumping off point for the high profile coverage they can expect to obtain when the Olympics make their way to Canada.

Many 2010 sponsors are also in Beijing, or on their way, to honour their obligations as supporters of the Canadian Olympic team, and to learn about ways they can roll out their own hospitality programs a year-and-a-half hence.

"We're hoping our presence there will help our profile as a company," said Doug Horswill, senior vice-president for environmental and corporate affairs at B.C. mining firm Teck Cominco Ltd.

The bad news for local businesses is that the Beijing Olympics disappointed. The anticipated surge of activity failed to materialize. One Chinese business owner put it succinctly:

"Everybody thought the Olympics would be great for business," he said. "It turned out differently."

A combination of tight security, high prices and the big unknown of China combined to keep tourists away. Will this also be true in 2010? Canada, an established, industrialized, capitalistic country isn't quite as exotic as China and most probably won't elicit the same level of concern from tourists, but the two big unknowns, the world economy and the security situation, i.e. any new terrorism or conflicts could impact how much benefit the Olympics will bring to British Columbia.

Investing in Olympic licenses and developing Olympic related promotions is expensive and risky. Huge sums of money are spent every 4 years to create tie-ins for the few weeks of Olympic season in the hope of lasting benefit.

What can innovators do to maximize the exposure and reduce the risk? Our take is simple. Integrate Olympic based activities into the business plan. Think both inside and outside the box. Create solid, programs that mesh closely with your company's mission statement and overall business strategy. Team up with closely related athletes or activities - think long term relationship.

The 2010 Olympics my only run 17 days but the benefits could last quite a bit longer.

Moving From Marketer To Content Creator Drives Sales In a New Era

2008-08-13T13:37:00.000-07:00

Often lost in the discussions about innovation is the role that enlisting consumer, especially key influencer, support is in determining the success of a new product. Despite hours spent in labs and on exacting market research, many an innovative discoveries fail because of ineffective launch strategies.

Identifying and building relationships with opinion leaders is something we try to do in all of our projects from well before the product launch. This is, of course something that the software industry does on a regular basis, enlisting developers in the early stages and releasing beta versions for testing.

In the consumer products arena however, this is used somewhat less often and frequently results in lower visibility and ultimately less success. In an age when consumers are easily accessible through the internet, it seems almost irresponsible to ignore this opportunity to involve them in the early stages of development and create an active community of supporters prior to launch.

An article, How to sell Vodka, discusses how one company, using limited resources, created a hot new product by using the power of the internet and word-of-mouth marketing to build a winner in the distilled spirits category.

"We can't do things with more money or more people. Our aspiration is to find people - customers - who are discoverers and disseminators."

In an era when budget cuts force companies to look for creative ways to market products, innovators are changing focus from top down marketing to content creation.

"We have gone from being a marketer to being a content provider," Phillips said, and he wasn't referring to the contents of a cocktail glass. "Our job is to create photos and tools and content that others can use to build our brand."

How to implement or even initiate this strategy leaves established marketers scratching their heads and grasping at straws. This is, perhaps why it is often the purview of smaller, quicker, younger companies filled with entrepreneurs not MBAs.

Working the web, filled with social networks, blogs and message boards can be a daunting task for the uninitiated. Navigating the realm of social marketing in search of key influencers requires an understanding, not of strategy, but rather of tactics of the web that may be unfamiliar to mainstream marketers.

But that's where the innovators of the product adoption cycle reside these days - on the internet.

Word-of mouth marketing is rapidly replacing aspirational marketing as the tactic of choice for rapidly growing companies. Yes, celebrity endorsement still has the power to drive sales, but a positive review from a well-known blogger can often add legitimacy to a product claim. Viral marketing campaigns and well-executed online PR campaigns reaching key influencers often perform just as well as a mass media ad buy, particularly in smaller fragmented categories. Original content, particularly amusing YouTube videos can raise awareness faster than broadcast ads (though reposting those on YouTube works well too) as they rapidly spread from user to user.

As companies, large and small, scramble to refocus established marketing departments in the new era of Web 2.0, creative strategies evolve to become personal. Content creation becomes the goal. And it is, of course, not your "father's" content. Hipper, of course, but more honest and interactive as consumers play a greater role in influencing product design.

Innovation Going Green - B.C. Government Helps

2008-08-07T17:14:00.000-07:00

By now, those of us involved in innovation, no wait, everyone, whether involved in innovation or not, knows that green inventions are the hottest new thing. It seems that the Canadian Government knows too... at least in B.C.

As I've written about before:

Canadian companies are very reliant on the Natural Resource Sector - the drill it, mine it, chop it mentality.

So, it's not terribly surprising that this government effort is focused on energy. The B.C. plan offers a 30% tax credit to early-stage investors in companies engaged in the research and development, commercialization and/or manufacture and processing of clean technologies in British Columbia and employing B.C. workers.

"Innovative clean technology reducing GHG emissions will play a key role in helping to grow B.C.'s green economy," said Technology, Trade and Economic Development Minister Ida Chong today. "The tax credits will lever up to as much as $25 million annually in venture capital to support clean tech companies that can offer exciting employment and investment opportunities to British Columbians."

The goal is, obviously to get on the cleantech bandwagon. Moving from old line energy producing industries makes sense as a diversified economy is in the best situation to ward of the impact of the possibility of unemployment driven by the almost certain recession soon to come.

British Columbia is already home to the third largest Cleantech cluster in the world, growing at an annual rate of 11% a year. Naikun Wind Energy Group Inc., which plans a wind farm off the coast of British Columbia, had one of the best ROI in Canada in the cleantech field.

Companies in British Columbia conduct research and development in a variety of fields including: transportation, energy efficiency, wastewater clean air and fuel cell development. More are in early stage development or searching for investment capital.

And, with the increased interest in green, that is sure to continue.

There are now close to 100 cleantech companies listed ion the TSX Venture Exchange, (The TSX Venture Exchange is Canada's public venture capital marketplace for emerging companies). Market value of these companies is more than $13 billion. But hard times could be coming.

The creaky economy and the booming successes in 2007 has led to a slump in 2008 in the TSX Venture Exchange. Entrepreneurs and established companies are struggling to maintain the growth rate enjoyed over the last few years. Investors are leery of banking on new technology in an era when consumers and businesses are hunkering down and payouts may be years in the coming.

Will this tax incentive make a difference?

We think it will. As evidenced by the Abenga Solar case in the U.S. tax credits can make a big difference. Without tax credits, a clear sign of support from the government, funding for risky, new technology projects can easily fail.

In an already tight credit environment, tax credits can make the difference between private funding of a project or not. Investors clearly see the benefits of investing in a field supported by those government entities charged with economic growth.

What Canada Can Learn From Israel About Innovation

2008-07-31T15:18:00.000-07:00

I've written before about our concern that Canada is experiencing an innovation void.

In my opinion, Canadian companies are very reliant on the Natural Resource Sector - the drill it, mine it, chop it mentality. This could be holding them back from innovating. To fully embrace a culture of innovation Canadian companies need to learn from their counterparts to the South and take more chances.

Recently we posted an interview with Mark Krupnik who earned a PhD in applied mathematics from Technion - Israel Institute of Technology. Now, I ran across an article in the Globe and Mail that looks deeper into what makes Israelis so innovation focused and what is holding Canada back.

Interestingly, it's not lack of innovation that seems to keep Canada consistently behind those countries with reputations for not only developing, but also commercializing innovation.

Our national output of discoveries is impressive. University of Toronto professors, as just one example, are third in publication totals world-wide, exceeded only by Harvard and Tokyo. But the commercialization record of Canadian universities is modest. Our best performers generate far less revenue than their U.S. or Israeli counterparts. And, when it comes to turning discoveries into popular products and services, our outputs are underexploited.

Israel by comparison has strong connections between researchers and business and government support and direction - all focused toward the future. Israel, unlike Canada, is a country virtually devoid of natural resources and so, perhaps has a greater incentive to develop an array of innovative industries to support its economic growth.

On the other hand, in less than a generation they have been able to go from exporting primarily agricultural goods to exporting primarily technology. Can Canada, or should Canada take the same route, de-emphasizing our export of natural gas, timber and oil and focusing solely on technological innovation? Probably not, but a future focused innovation strategy has its benefits.

In Israel, as in most countries leading the innovation parade, there are close connections between those involved in pure research and business leaders that can take these products to market. Funding for new research is backed by and encouraged the government and generous grants, both public and private are available for good ideas with good foreseeable, as well as unforeseeable commercial application.

In Canada by contrast, while innovation is heralded as a way in which to fuel our economic engine, the focus, too often has been on incremental changes to our major existing industries. One might consider that giving lip service to true innovation.

To truly take its place in the roster of countries leading innovation in the 21st century, Canada needs to refocus and rethink about the connections between industry and government. It needs far seeing entrepreneurs, as well as, leaders in established industries to advocate a change of course as T. Boone Pickins has in the U.S., rattling an industry entrenched with and supported by the current presidential administration.

Until Canadian companies re-evaluate the roles they play in innovation and our path toward the future, unfortunately Canada will lag behind.

Predicting the Future - Interviewing Retalon's Mark Krupnik

2008-07-24T10:44:00.000-07:00

Retalon develops and markets inventory management and forecasting tools that helps Gillette, InterTAN (Circuit City), Danier Leather and other retailers and distributors accurately predict demand. The net result is improved overall profit margins and performance. This is achieved by optimizing the price, quantity and discount levels over time.

We interviewed Retalon's co-founder and president Mark Krupnik who has earned a PhD in applied mathematics from Technion - Israel Institute of Technology. He has worked as a forecast scientist and project manager at Stirling Douglas Group, and later at NCR (Teradata) after it acquired Stirling. Retalon was founded in 2002. We managed to catch up with Mark in Toronto to find out what he had to say about innovation and how he and his technology-based company approaches the subject.

What are some of the ways you quantify success in innovation at Retalon?

We have three different indicators that would tell us about success in innovation. All three indicators need to work together.

We should like it ourselves. Our people need to feel like they are involved in something big and interesting. We should be excited about it. This is less quantifiable than our second indicator.

We have a proof of value exercise that mathematically gives higher gross margins for a retailer. Our business is in helping retailers optimize their ordering processes to manage price, quantities and discounts to their benefit. We use before and after comparisons to determine success for our customers. We do this by taking a piece of data for the past few months and comparing it to the next period. This is highly quantifiable.

We track the number of converts. When you bring new technology, the more people who buy in, the more people like it, the better. This is not as quantifiable.

What type of internal systems or strategies does Retalon use to foster innovation?

Our company has very strong ties with universities and consultants. We work with Ryerson, University of Toronto and the University of Waterloo. Also consultants from Lakewest, IBM, CGI, etc.

Our approach is that we try to go to a customer and seek to understand what they need. Sometimes they cannot express it clearly enough because they only understand the existing technology. Then we go through the university and consultant group, gather the research and match it with the customer needs.

We have two independent streams: the customers and the university & consultants. By staying on top of the research, we know what technical possibilities there are that can be applied to the customer needs. Likewise, we can use customer needs to give more direction to our research efforts.

Who does Retalon look to as being leaders in successful innovation?

I don't want to offend any particular company, but we divide innovation into two groups:

Strategic - something that is completely new and that others don't see. Examples include Apple, Google and RIM (Blackberry).

Tactical - technological development. They innovate methods and are kind of predictable. Examples include Adobe and Agile.

Do you have an example or two of best practices Retalon has learned from other companies?

For best practices, we like Microsoft and Google. The user interfaces give small numbers of options or features. Exactly the right stuff at the right time. We imagine the same interface as to what will be next. If you are our customer, you will find the next thing in your dynamic needs. The options and features change proactively but they represent what you would need at each stage of your work.

We have good things to say about IBM. There is something from IBM that I have on my wall that describes the five stages of innovation.

Five stages of adopting of an innovation:

1. People deny that the innovation is required.

2. People deny that the innovation is effective.

3. People deny that the innovation is important.

4. People deny that the innovation will justify the effort required to adopt it.

5. People accept and adopt the innovation, enjoy its benefits, attribute it to people other than the innovators, and deny the existence of stages 1 to 4.

(Editor's note: sometime after the interview, Mark emailed the above 5 stages quote to us.)

It is sad but reality.

What areas would Retalon like to improve?

We would like to put more structure into the innovation process. It does not need to be a contradiction. Innovation is creative, yet we need to set boundary conditions. We don't want to kill the creative process but, simultaneously, we want to put some structure into it. It is a delicate balance.

The marketing is one of the important factors to dictate where we should draw the line.

We would like to again thank Mark for taking time to share his views and Retalon's approaches to innovation.

Innovation Stigma

2008-07-22T10:39:00.000-07:00

Reading this post, Innovation Stigma, reminds me of the IBM ads, like this one starring innovation man or this one describing the perfect space for innovation, as if there was one. They play perfectly into the mystique surrounding innovation.

People are conditioned to believe innovation requires "skunk-works" in a specially-designed room to pursue "white space opportunities." Innovation is voodoo.

While creativity and the ability to visualize is key to brainstorming and identifying new ideas, in reality, innovation can be an exacting science, especially when it comes to executing a workable idea. What many, if not most people associate with innovation is but one step in the process.

Like many projects, those dedicated to generating new products for the company, start with one or several people and grow to include a group of people. Like in most projects, the broader the range if ideas, the more likely the right one will be discovered.

And so, what marketers consider the initial stages of innovation - brainstorming and idea generation, too many people consider all of innovation. This is a clearly not the case, to which those of us in the field can attest.

Innovation, in the early stages does require creativity but, successful innovation processes are often not led by managers wearing funny glasses. More likely the process is led by managers well versed in accounting, finance, marketing and often with experience in sales.

Knowing up front the challenges in implementing and selling a new product CAN result in the quashing of good ideas, but those good at innovation know better than to do so. Innovators have the ability to allow a long list of ideas to see the light of day and evaluate each one, over a period of time, outside the room filled with Frisbees and Slinky toys. More often or not, the evaluation process takes place in front of a computer or in a room filled with engineers and finance types.

Unfortunately, the former vision of innovators as "altruistic dreamers" is perpetuated by of all people, the innovators themselves. This is, of course, self defeating and leads more self styled, buttoned up types to be leery of innovators.

One executive described innovation champions as necessary but had low expectations of actual results. Of more concern is the perception executives have about themselves in this role. My sense is business people shy away from championing innovation because they believe the stigma of failing at innovation is more career-damaging than failing at other ventures.

As Drew Boyd concludes in his article, innovators need to drop the mystique and pull aside the curtain. More respect needs to be paid to classic innovators and classic innovation techniques - hard science and solid research.

Corporate leaders need to understand and be involved in the innovation process. Without innovators at the helm of a company, a corporation can easily lose its way and move away from its core competencies and true mission.

Those capable of leading effective innovation programs, the rare mix of analytical and creative skills can be difficult to find, but those who should be involved in the process and champion are and should be legion.

Following Mobile Web Trends Toward Profits

2008-07-15T16:17:00.000-07:00

Word of the world of opportunity in the mobile web has been around since the early part of this century. Though still in it nascent stage, a few applications are starting to stand out as areas ripe for innovators as detailed in this post Five trends driving the mobile web or as the authors, Matthaus Krzykowski and Matt Marshall put it:

...those areas most ripe for pillaging by start-ups

As one who spends a fair amount of time thinking, reading and writing about innovation, the mobile web is an area I keep an eye on. Why? Because it is so early in the growth stage. It's always interesting to watch as a whole new technology takes over. Will it follow the same trajectory of those that came before or will it morph and branch off in another direction?

The authors of this article discuss the various stages of market adoption in the technology arena:

Incubation

Early Traction

Acceptance

Adoption

Mapping the various companies and technologies involved in the mobile web right now they come to a not too surprising conclusion. An opportunity exists for well organized, well funded startups with well thought out and well executed, innovative products

You'll see the action tends to happen in sectors that are somewhere between their "early adoption" and "adoption" phases

Reading their fairly technical discussion of mobile phone trends, I don"t always agree with their assessment of where various technologies lie in the market adoption process, but it's interesting to note which applications they have identified as at a tipping point.

The Five Trends

1. Mobile Advertising

2. Mobile Social Networks

3. Mobile Internet Interface- Search

4. Mobile Mapping And Navigation - Mobile maps

5. Mobile Mapping And Navigation - Location based

As you can see, the 5 trends include some that have had entrepreneurs and large companies salivating since the introduction of the mobile web, while others are newer entries. Mobile advertising, early to be considered but slow to gain traction, may need innovative new delivery systems or more likely ways to get around the "hassle" factor to really take off. Others, like mobile navigation seem a given, as evidenced by the explosive growth in sales of GPS devices.

So, does this mean that innovators in the mobile field should focus on developing applications in those segments deemed to be hottest and most ripe for exploitation? Well no. Perhaps, and it seems likely given the attention given to the study on which this analysis was based, that venture capitalists and angel investors will be looking for companies operating in those spaces.

However, as we've seen as Web 1.0 had morphed into Web 2.0, the biggest opportunities are often not visible until the technology AND the marketplace matures. Who would have guessed that social media would play such a big role with users of the web 10 years ago?

My advice to innovators is to continue investing time into your ideas, whatever they may be. Ensure that your technology works well and smoothly. Make sure it meets current consumer needs and don't be surprised if user input turns your idea in a whole new direction. Just ask the founders of Ebay ( a market for exchanging Pez dispensers) or Youtube (a place to store videos) or even Yahoo, originally just a directory for friends.

Consumers Choose "New" - It's More Than Just a Word

2008-07-07T13:03:00.000-07:00

Last week I wrote about how sometimes it pays to be second to the market with a new idea. Those of us involved in innovation try to look at all angles.

But what is it about developing new products that makes it worthwhile? Why do companies large and small put massive efforts into creating new products? The answer is that new products make money. Sure, the vast majority of new products fail, but those that make it, often make it big, bringing millions of dollars of profit to successful innovators.

A recent post, The Power of New, at Marketing And Strategy Innovation Blog delves a little deeper into the why of new products. Why do consumers like new products? Why do we keep changing the products we buy? Of course, technological advancement drives new product efforts in techie fields, but why do we feel the need to keep changing cereals?

Because it gets us high; that's why! Choosing something new releases dopamine, the same pleasurable sensation associated with a "runners high".

The UK Telegraph, reports that:

Scientists in London have found that we all possess the key brain region which acts on the same pleasure pathways that make drugs addictive. They discovered that people are programmed to try out something new, such as a familiar product in an unfamiliar package or one that boasts a new formula.

Consumers are drawn to the word "new, as well as a change in packaging or product design that convinces the brain that it is looking at an unknown.

"Seeking new and unfamiliar experiences is a fundamental behavioral tendency in humans and animals," says Dr Wittmann. "It makes sense to try new options as they may prove advantageous in the long run. For example, a monkey who chooses to deviate from its diet of bananas, even if this involves moving to an unfamiliar part of the forest and eating a new type of food, may find its diet enriched and more nutritious."

The neuromarketing message, then, seems simple - making a product "new" in some way may give it a boost when compared with competing products.

As professionals involved in innovation, keeping in mind the power of "new" certainly makes sense. However, we do not believe this necessarily should impel companies to step up their new product efforts or slap "new and improved" on existing products that boast incremental changes. Yes, consumers are preprogrammed to seek out the new, but mindless product development and poor execution can still hamstring the most well financed new product effort.

Innovation or Imitation - Sometimes The Answer Might Surprise You

2008-07-03T10:04:00.000-07:00

Much as we laud true innovation, in the real world, the word, "new product" often means "line extension" rather than "new to the world". The reasons are obvious.

"It is estimated that there were over 50,000 new products introduced into the consumer products sector last year, up 77% from 10 years ago. Since the typical store has only 40,000 SKU's, it can be pretty difficult for a consumer products company to succeed today!"

The cost of true innovation can be staggering and the risks inherent in following that path can tip the balance toward business as usual. This is one reason often truly new ideas seem to percolate up from the ranks of entrepreneurs with little to lose and large industries with extensive regulatory protection (i.e. drug companies, etc.)

But, an alternative approach, as discussed in this post, Am I Better Off Being An 'Imitvator' Than An 'Innovaor' ? is to be a speedy second.

"Speed doesn't necessarily mean being first, you can be choose to be a strategic fast follower and there are plenty of advantages to that."

The first mover advantage is often exaggerated or blatantly wrong. In many cases the company that seems to have been first to market actually has followed in the footsteps of innovators with strong product ideas, but inadequate execution.

Since good innovation is often an iterative process, this makes sense. Despite extensive exploration into consumer buying behavior and eliciting of consumer opinions, it is good to remember that... research can be wrong. The history of marketing is littered with research failures, the most famous perhaps being New Coke.

The advantage in being second is in the opportunity to improve. Often the errors made in the product development process are not clear until after the initial launch, when it becomes glaringly obvious that a feature was left out or usability is less than desired.

Similarly errors in marketing execution become obvious only after launch. A great product supported with a lousy marketing plan is doomed to failure. While the first mover struggles to correct those errors a nimble second to the market can move into first place with a sharp and rapid launch.

Peak Products, a local Richmond, British Columbia company that was a fast follower providing low cost, but high quality - product and package design - copies to big box retailers, is a good example. Coming second to the market, but improving upon design and supporting the launch with a strategic sales and marketing plan, Peak Products has now been able to position themselves as an innovator. It has become part of their core business.

A key component of innovation is the ability to think outside of the box. Sometimes that means looking beyond pure innovation and toward improvement. While "me too" products and line extensions abound, finding success by being second requires looking beyond the obvious to what might have been.

In our innovation sessions we pay particular attention to competitive products, possible products and newly launched products. Often a pipeline product has already been introduced by a competitor. That isn't necessarily a deterrent. Rather it could be an opportunity.

Group Blogs, Wikis and FriendFeed- Participation Drives Innovation

2008-06-27T11:18:00.000-07:00

A post, Using FriendFeed Rooms for Work: What's Needed?, by a fellow blogger, Hutch Carpenter, started me thinking about how the web can and often does play a role in the innovation process... and what could make it better. As I've discussed in this blog and with my clients, we at Atomica believe that strategic new product development requires participation by managers from a variety of different department. Often that is neither practical nor possible with far flung divisions and busy schedules.

Early solutions to this problem included conference calls and later, video conferencing. These options is of course subject to the same types of challenges as in house meetings are- schedule conflict, tardiness and inattentiveness. Some issues relate to the off-site nature of these gatherings. The distraction of interruption by phone or physical presence... by those who disregard a closed office door and the temptation to multi-task when one is cozily situated at one's desk staring at a full inbox.

Newer web based solutions have started to surface and, in general have allowed managers to overcome some of the drawbacks of both virtual and actual meetings. The asynchronous nature of most web applications allows users to overcome the drawbacks mentioned earlier of unfocused attendees in teleconferences and video conferences. Multi tasking, contrary to popular opinion, actually results in a loss of productivity, not a gain.

By allowing workers to access the group site in their own time, the propensity of group members to concentrate solely on the activity at hand increases. This leads to more and responsiveness and better communication.

An early web application, group blogs, has turned out to be excellent for brainstorming. The open nature of a group blog allows participants to express their thoughts and comment on others, building upon one or several central ideas and keeping a running record of the conversation. They do, however, tend to favor those participants with the strongest writing skills, often the marketing folks who tend to try to run the show anyway. This can lead to minimal input from those with a more technical bend, often the engineering folks who have the basic information required to make the project a success.

Wikis, popular in many companies for group projects, solve some of the problems related to document exchange and provide a forum for users to post messages and comment on them. Rather than digging through the overcrowded in box for email messages pertaining to the project, group members have one central storage place for everything. There are some drawbacks though.

The land of wikis is well developed, but most of them suffer from only emphasizing multiple user changes to documents and revision tracking. They lack the interactive participation that makes FriendFeed so compelling.

Friendfeed however, shows real possibilities. This application allows sharing of a variety of different types of media including web pages, documents, image files and videos and provides rooms for group meetings. Adding wikis to Friendfeed would offer the best of both worlds and greatly improve the level of participation of various users in group projects. Hutch Carpenter offers some ideas on how to do this effectively.

Rooms already have three key elements for making them into wikis:

- Ability to manage who the room members are

- Room-specific search

- RSS directly into rooms

Here are my four features for wikifying FriendFeed rooms:

1. Better handling of RSS feeds for document changes

2. Sticky setting for entries

3. Timestamp comments

4. New comments and entries notification

Because participation is key to effective innovation and we live in a world where distance increasingly is meaningless, we must come up with better ways to enable managers to effectively interact. As the web continues to evolve, I'm sure we'll continue to see better applications.

On the other hand, there will still always be that one member of the group that never contributes his share.

The Role Of Intellectual Property in Innovation

2008-06-24T17:07:00.000-07:00

A colleague of mine recently had a conversation with Nancy Edwards Cronin of ipCapital Group, a consultancy focused on developing effective intellectual property strategies. Since patents can play such a big role in whether or not many innovations succeed, or just provide a springboard for competitors, Nancy had a lot to say in the area of innovation.

With her background in engineering, Nancy speaks easily to techies and notes that communication is one of the areas in which the innovation process can get bogged down. One trend that she is seeing, particularly in the technical products arena, is this lack of communication between sales and marketing and engineering has led to a greater emphasis on the look, feel and branding of the product rather than what goes in the bottle.

We too are seeing this trend in the marketplace. Product marketing, often left until last, should be conducted at the front end of innovation. A focus on providing customer value in the early stages of product development results in a product that meets consumer needs not just a marketing campaign that tries to do so.

This focus on the marketplace, an unbalanced approach, can cause companies to neglect proper intellectual property protection and, particularly for young companies can be devastating. On the other hand, investing time and effort into IP protection can be useless for smaller companies without the financial wherewithal to defend it. Edwards Cronin advises that often incremental innovation, capitalizing on existing distribution channels and technologies will often yield greater results than "blue sky" technologies, but this too has its drawbacks.

... companies that have historically operated on incremental improvements now find that they struggle to come up with the next "brand new thing. Further, the new ideas they develop may already be claimed in the marketplace or in the patent literature. They may also overlook the need to protect their innovations early and lose valuable ownership of their investment. Worst of all, they may determine that even their best innovations aren't aligned to the direction of the business, thus becoming a wasted expenditure of valuable development time and money.

On the flip side, many entrepreneurs start out with a technical idea and develop products but have little idea of how to sell them or even understand the marketability of these products

With her firm's emphasis on patent protection, Edwards Cronin had a lot to say in this area. She advises making protection of intellectual property a key part of any innovation strategy. Proper patent search and competitive analysis should take a front seat in the process.

As executives lead their organizations to be more innovative and expand their collaboration efforts, they are recognizing the unmistakable connection between innovation and IP. When developed and employed strategically, IP may be used to protect their innovation investment and maximize the success of the collaboration.

ipCapital Group has developed an "invention session" that they use with their clients to ensure that technological innovation is on the right track. These sessions, based on a team approach, bring managers from multiple disciplines into the innovation process from the start and address key issues that are often forgotten in the rush to market. Understanding the marketability of the idea is key before starting any patent process. This is especially important for new companies that have limited resources.

By ensuring that technology in development meets the needs of the marketplace, valuable time is not wasted pursuing unmarketable ideas. By considering the importance of intellectual property rights to the success of the project early on, appropriate patents can be applied for and protected, of considerable importance in highly technical fields.

We at Atomica consider this multi-disciplinary approach indispensable to any innovation process. As the role that technology plays in a wide variety of fields grows and matures, remembering to protect intellectual property and ensure that it is a good fit with the organization and with consumers is critical.

Survey Ranks U.S. Tops In Fostering Innovation - But Rest of The World Gaining

2008-06-13T13:03:00.000-07:00

A recent survey recognized the leadership role that the US has played in innovation over the last century , but notes how other countries are gaining.

"The U.S. maintains the top spot as the global technology leader in innovation," said Mark Jensen, national managing partner of Deloitte's Venture Capital Services. "While the U.S. isn't losing ground, the globalization of innovation is underway. The rest of the world is finding out what they're good at, and venture capitalists recognize where those strengths lie."

In Europe, the focus is on life sciences and clean technologies, two high growth areas that are attracting capital and a growing legion of workers. In Asia, technological innovation has moved to the forefront, though selected life science research centers are becoming common as private and government funding in Asian economies increases.

In Singapore, for example:

A key focus of the economic strategy has been the subsidized attraction of investment by multinational companies, and later in the period the lower employment cost of foreign workers. As the economy grew, labor became limiting, and immigration policy became a key economic growth tool.

Taken as a whole, it is policy, culture and strategic planning that results in effective innovation, for not only countries, but for individual companies. Often ignored by entrepreneurs and more often by large corporations, is understanding how innovation fits into the framework of the existing company.

While out-of-the-box thinking often results in new products and services that change the world, that thinking is usually most effective when it exists with the underpinnings that make an effective launch possible. We see this in failed and successful innovative ventures around the world.

"The Japanese government was one of the first to recognize the value of developing and maintaining a pervasive, high-speed broadband infrastructure throughout the country, fueling significant innovation around the next generation of broadband applications,"

Hence Japan as has attracted venture capital and interest from growing internet firms like Yahoo!. As more firms capitalize on this framework, more innovation results.

In Germany, a country that has a long history of interest in all things green, new eco technology innovation is thriving.

"Germany is the beneficiary of a well conceived, stable public policy that has ensured attractive markets for alternative energy technologies. This combined with a strong general technology base, has fostered substantial innovation in the space," said David Prend, partner, Rockport Capital. "As a result, for example, Germany, a country with marginal sun, is a leader in solar photovoltaic technology that they export to the rest of the world. Venture capital follows quality technology and innovation."

But don't worry about the U.S., venture capitalists still view the US as the leader in innovation. Whether or not that will continue to remain the case, remains to be seen.

Innovation Opportunity In The Beverage Industry - Niche Marketing

2008-06-04T10:15:00.000-07:00

We are fans of niche marketing. Innovating effectively means creating new products and services that will sell to a particular consumer. In today's crowded arena that market is often a small but growing group of consumers. An article in Food Navigator discusses this trend and explains some of the impetus for niche innovation driving the beverage industry.

Fragmentation in consumers' needs and preferences has stimulated the growth of American niche beverages, according to analysts.

The sale of flagships products has stagnated, forcing beverage companies to broaden their portfolios, said Stephen Rannekleiv, vice president for Rabobank's beverage, food and agribusiness research and advisory division.

The niche demand is a significant new trend in the beverage industry, he said, speaking in a company podcast. Another new trend is the desire for products that are better for the environment.

Large beverage companies, with their eye on emerging trends, are aggressively developing niche products. This is making it very hard for small to medium sized beverage companies to complete. Large companies however have the challenge of brand identity, developing an effective niche marketing strategy then sometimes means forgoing the flagship brand as Coke did when launching Dasani Water.

Alternately large brands can stick closer to home and explore niche markets complementary their flagship brand. Gatorade recently signed a deal with Tiger Woods to license his name on a new drink. Will Gatorade be attempting to increase market share among golfers or with the multitude of younger athletes who are Tiger fan? Gatorade isn't saying just yet.

Smaller and medium size companies, on the other hand are perfectly positioned to explore niche markets too small as of yet for the big players. While larger companies pile on the emerging trend in healthier drinks, smaller companies are free to explore niches within that niche.

Some promising trends that have been identified include beauty food. Already big in Japan the market for natural beauty enhancers is growing. Topical ointments and creams are available to the in the U.S. but beauty and enhancing food and beverages are limited.

Other areas of growth are children's health food, mood enhancing and functional foods and beverages that deliver specific health benefits. These categories are, as of yet too small for major beverage manufacturers to capture but are perfect for smaller and medium sized-companies.

Both large and smaller companies will do well to keep an eye on the growth of functional beverages. As Westerners continue to be exposed to a wide variety of food from all over the world, the health benefits of those foods become better known. An aging population in much of North America and Europe means more health problems and greater interest in ways that lifestyle can impact longevity.

Exotic fruits and regionally popular extracts are making their way into Western culture. Super fruits from South America should soon be joined by emerging exotics from Africa. Flavoe profiles are changing too. Unfamiliar flavors, to the Western palate at least are slowly making their way into the mainstream. Green tea is being followed by varietal flavors of popular fruits such as orange and grape.

All of these trends are becoming popular on the fringes, many will find a solid niche and some will become as popular as the once "hippie food" yogurt, spawning their own niches in time.

The Canadian Innovation Void - Is It Holding back The Economy?

2008-05-27T15:32:00.000-07:00

A Nova Scotia Chronicle-Herald article starts off with a thought that is of concern to many of we Canadians in marketing.

THE BIG QUESTION in Canada is, why are businesses performing so poorly as innovators when compared to their American and many other foreign competitors?

They are? Well yes.

In the early 1990s, output per hour of working in the Canadian business sector was close to 85 per cent of the U.S. level.

It is now down to about 75 per cent of the U.S. level, reflecting differences in innovation, which comes from bringing on new products or services or finding better ways to do things.

The article goes on to say that much of the difference in innovation comes down to management. Canadian companies are less enterprising than their counterparts in the U.S. and in many companies in Europe. While the government is often blamed, it is rather that Canadian companies are more focused on cost cutting to improve profitability than on inventing new products and services to grow their businesses.

While cost cutting, American style tends toward restructuring resulting in a leaner, more agile and risk taking environment, in Canada, lean manufacturing is not on the radar for over 1/3^rd of all companies (as compared to only 18% of companies in the U.S. and Europe.)

So why is this? In my opinion, Canadian companies are very reliant on the Natural Resource Sector - the drill it, mine it, chop it mentality. This could be holding them back from innovating. To fully embrace a culture of innovation Canadian companies need to learn from their counterparts to the South and take more chances.

We need to take greater risks in manufacturing, in exporting, in business development. We need to restructure organizations and cut out the fat. While the United States model of wholesale elimination of levels of management may be too drastic for Canadians to consider, European models, particularly those in Germany and Scandinavia may have ideas that can be implemented effectively.

As we struggle with the concepts of lean manufacturing, risk taking and innovation, we fall behind countries who have adapted these concepts to their own particular culture and political environment. As we fall behind we become not only less competitive but also risk continuing to grow our economy.

Finding the right answer is vital to our future because without more innovation, and the higher productivity it brings, we will have a tough time sustaining a prosperous economy and a high quality of life.

Amen.

Innovation Inspired By Other Industries - When Existing Ideas Are New

2008-05-21T14:39:00.000-07:00

Building an organization focused on innovation often requires realignment of priorities and focus on a new approach to doing business. Unfortunately in the quest to do something new and different, innovators often forgo looking at what's already out there for inspiration.

Innovation doesn't necessarily happen in a darkened room. Often it occurs when an old or existing idea in a different environment takes on new life.

A video that recently appeared in Martin Lindstrom's column in Ad Age online, Where to Find Inspiration for New Marketing Concepts- Watch Industries Other Than Your Own, discusses one way effective innovators find new ideas.

Pointing to an unusual exhibit in the Museum of Modern Art that electronically maps New York City's global telecommunications traffic, he notes that one of the best sources of new marketing ideas is in industries outside of your own.

Lindstrom goes on to discuss how the map of incoming and outgoing calls in NYC gives us a snapshot of where business activity is happening around the globe. This is, of course, of interest to other industries beyond telecommunications - such as the airline industry. An increasing number of calls to a locale means increased business there which requires more flights. By viewing the work of the telecommunications industry, airlines have a head start on developing new routes.

While the example Lindstrom gives borrows the marketing research conducted by one industry and applies it to another, there are countless ways to benefit from the successes and failures of other industries.

As I mentioned in a post Innovation: Old Often Becomes New, that appeared in Fast Company: originality is overrated. As successful marketers and innovators we know that the path from inspiration to effective execution contains many pitfalls, mistakes and miscalculations. That's why, in many cases, the most effective way to innovate is to recast an old idea in a new way.

By looking beyond your own industry, with which you surely are familiar, you bring added brain power to the search for inspiration. The quest for ideas for new products and services happens in all industries. Both success and failures in an industry not your own can provide inspiration for ideas that can work or work better in your industry.

One approach that I like to take is to look at an industry that is more progressive than your own. This may be one that is more consumer focused or more fashion forward or simply more consumer driven or less.

Retailers, often frustrated with inappropriate packaging or displays often guide potential vendors to manufacturers from another industry for ideas. This shortcut saves time and energy that industry-centric companies often waste trying to reinvent the wheel and frequently enables the innovative company to gain entry into new channels smoothly and quickly.

Technology companies, especially in the consumer hardware space, frequently hire designers and marketing folks from other industries to help them understand the needs of their target market. While early adopters are drawn to the technology, later on in the product adoption curve, consumers look more to fashion and "coolness", hence the need to "borrow" ideas from fashion industries.

Manufacturers selling to many small resellers and service providers do well to look at companies with similar channels of distribution both inside and outside the industry served. Often a change in the distribution landscape in one industry is the harbinger of a change in another.

Being truly innovative doesn't mean just coming up with new ideas. It means using all of the tools at one's disposal to come up with new, effective and executable ideas. Sometimes that means just looking at what already exists.

User-Generated Innovation - Nokia does it You Can Too!

2008-05-12T22:26:00.000-07:00

Many people think of innovation as occurring when one genius, alone with his or her thoughts, suddenly leaps into the air with an, "A Ha!" and heads down the path to success. Most of those of us involved with innovation know that this is rarely the case.

In truth, innovation, as we mention in our book, happens in lots of different ways. Though coming up with a unique idea in that "light bulb" moment is the romanticized idea held of innovation, in fact, most good ideas and many of the great ones, result from obtaining input from a variety of different sources, including consumers.

Soliciting and then acting upon user input can not only produce new ideas it can make good ideas great ones. At Nokia, an experiment with opening up a new application, Sports Tracker, for user input turned into a whole new way of streamlining the product development process for the Finnish cell phone maker.

Sports Tracker, designed to benefit runners and cyclist, allowing them to use Nokia phones' GPS capability to capture workout data was downloaded by over one million users when a beta version was posted on Nokia's web site. What surprised Nokia and led to a new way of thinking about the innovation process was the sheer variety of people who downloaded the software - from paragliders to balloonists - and how they used it. Users, it turned out found hundreds of different uses for the software, uses well beyond those the developers had considered.

As a result, Nokia developers are realizing that aiming the application at amateur athletes was too narrow. They are thinking of rebranding the application as a kind of life-tracker.

Since Nokia launched their Beta Labs site, where Sports Tracker was featured as the first application, Tom Vilkarmo, manager of Nokia Beta Labs has a happy problem - managing all of the feedback generated by the over 1 million page views the site garners each month.

But, to Vlkarmo, his managing all of that feedback adds one more step to the process of getting consumer feedback to the software developers. Though he currently blogs about Nokia's new products,

Vilkamo's plan is to turn blogging responsibility over to software developers, so they have direct contact with customers. "Before, there were too many middlemen between developers and users," he says.

This is just one example of a company harnessing the power of the internet to create community, drive innovation and provide direct support to those responsible for innovation. While it's not uncommon for software companies to solicit key users or developers for beta testing, Nokia's strategy of encouraging anyone with an interest in the product, which, incidentally tends to be heavy users, led to more creative thinking, created a community of users and is currently breeding even more new product ideas.

An inventor sitting alone in a room or even discussing new ideas with like-minded colleagues is at a disadvantage when a whole world of ideas is just a mouse click away. Rather than worrying about theft of a good idea, true innovators should worry more about missing the great idea that soliciting user input can reveal.

The Billion Dollar Question: An Interview with Jim Estill

2008-04-24T13:19:00.000-07:00

We found a secret weapon in marketing - an engineer that can sell! Jim Estill was a University of Waterloo engineering techie who got into selling computers and became really good at it. The business he started from the trunk of his car became a substantial acquisition for one of Canada's leading computer distributors, Synnex Corporation. Jim is currently CEO of Synnex Canada which sells about a billion dollars of computer products a year.

Jim also became a highly involved shareholder at an early stage with Research in Motion (RIM), makers of the popular Blackberry device, where he remains on the Board of Directors.

On top of this, he is as curious and interested in new ideas as ever and has become an expert blogger. His CEO-Time Leadership blog at www.jimestill.com is a great place to learn about leadership and making the best possible use of your time.

We interviewed him to bring some of his insights into marketing and leadership to you.

Q: How has your engineering background helped you in your business?

Jim: When I started my business, it gave me credibility (I was young and looked younger). And simply spending the time in school helped my maturity level and gave me confidence.

Q: What made you go into selling from the trunk of your car, rather than staying in the engineering world?

Jim: I was designing a circuit board and needed a computer. I got a better deal if I bought 2 so I did and sold one then someone else wanted one etc.

Q: Who were your early role models and what were the main things you learned from them?

Jim: My father taught me self discipline. I have always loved business biographies so was inspired by many of them like Edison, Ford, Weston etc.

Q: What was the most important thing you had to learn to become able to take your EMJ business from zero to $330 million in 25 years - with 99 consecutive quarters of profitability?

Jim: I had to learn to give things up - to trust that other people were capable of doing parts of the job. This can be a very limiting challenge for an entrepreneur.

Q: What were the keys to R.I.M. Blackberry success?

Jim: Success is usually never just one thing. I think their focus has been good. RIM has always hired good people. RIM thinks big. RIM has good technology backed with great marketing and market understanding.

Q: What have you mainly been bringing to the R.I.M. organization (in the early stages and now)?

Jim: In the early stages, I was the big company, the public company, the company who had grown etc. So I could help with growth issues/rolodex etc. I have always been a techie so I always float my ideas on product (most of which were not done and I do not want you to think I was the brains behind product because I was not).

Right now, continuity helps. I am also a working CEO running a $1B+ tech company so certainly have relevant experience.

Q: If you could redo something in your past, what would it be?

Jim: We are the product of all of our past - including our mistakes. One of the things I often say is "Fail Often, Fail Fast and Fail Cheap" and "Having a failure does not make you a failure" so there is nothing I would want to redo.

Thank you Jim for sharing these insights with us. This should serve as an inspiration to any engineers or techies among us to explore developing our leadership abilities and learn how to become really great at selling. Visit Jim’s blog and connect with him at www.jimestill.com

Do you have a terrible idea?

2008-04-02T08:07:00.000-07:00

I just finished my #2 speech for Toastmasters. Let me know what you think.

Speech title: Do you have a terrible idea?

How many of you have watched Dragons Den or American Inventor? These shows feature entrepreneurs and inventors all pitching their ideas to get financing from these business experts.

Like these experts on these shows, we see a lot of ideas too. It's funny because we actually have talked to many of the same people.

People regularly ask me, "What do you think of our product or idea?"

I tried all sorts of tactful ways to answer this question (and believe me I tried many)

I finally found the perfect answer.... (Click Play if you are interested)

Marketing ROI - Kodak's "Celebrity Apprentice" Experience

2008-03-31T16:38:00.000-07:00

Last month Andy wrote in asking "I'd love to see something on marketing and cost benefit analysis, it's been my experience the two things rarely go hand in hand. I hope I'm an isolated case but guess that I'm not."

I'm making that the focus of this month's newsletter. On Thursday, Peter Roosen and I interviewed Jeff Hayzlett (2nd from the right), Kodak's Chief Business Development Officer and Vice President and David Lanzillo Director, Corporate Communication and Vice President, Communications & Public Affairs.

Tip #1: Try something new if what you are already doing isn't working.

We asked them about their experience in having Kodak featured on Donald Trump and Mark Burnett's "The Celebrity Apprentice" show a few weeks ago.To put this into perspective, Kodak, a 125 year old company, has undergone a major transformation as its traditional photographic films and papers business has been virtually eliminated by the advent of digital photography. The company has gone from having 150,000 employees in 1988 to 51,000 in 2005 and 27,000 today. 60% of the current employees are new to the company within the past 4 years. Yet Kodak remains on the Fortune 500 list in spite of these huge changes to its traditional business.

Jeff said there were two impacts of having Kodak featured on "Celebrity Apprentice" The first one was internal. "It was a morale lifter. Employees see that we are back on the air." He said of the major transition completed at the end of 2007 that employees had experienced considerable "transformation fatigue" resulting from "cost crushing" and "pumping into new businesses."

Tip #2: Don't stack various campaigns if trying something new. Kodak focused on one big one for this time frame - a risky one.

The second impact of being featured on the Trump show was external. Kodak paid about $2.5 million to engage in what Jeff described as "the best product placement deal in history." He said there were "4.6 mentions per minute, about one every 15 seconds, with a total of 89 million viewers. We doubled our sales that week and weren't doing anything else at the time. This was for sales on consumer stuff for what we normally had going out the door."

Tip #3: Create slogan to help communicate your idea or strategy.

Kodak's focus for the show was promoting its new cost model for printer ink consumables. Kodak is launching into the high margin ink market with its "pricey ink stinks" slogan. Jeff said that he would be on live television this week "debating Gene Simmons on getting rid of pricey ink."

David figured the advertising and public relations value equivalency for the Trump show was in the "tens of millions of dollars."

Tip #4: Activation counts more than buzz.

With the improvement of technology and increased competition, there is ever-increasing pressure to make marketing spending more accountable. David and Jeff claimed that activation (marketing efforts that drive sales and not just awareness or buzz) was the thing that counted. Jeff said "if you talk about buzz building in this company, you buzz yourself out the front door."

Tip #5: Have people from different key areas on board with your marketing.

Kodak has a brand and development council with representation from R&D, legal and M&A on it. It also has a marketing operations council tasked with ways to leverage the marketing spend. The company also has its marketing strategy council led by the CEO. Kodak has an EMM (Enterprise Marketing Management) system across the company with dashboards or predictive indicators for campaigns and growth initiatives. This is especially important when one considers that 80% of the company's revenue comes from 19 products, only half of which were in existence 10 years ago.

Tip #6: Make things measurable using whatever tools are needed.

Quantifying marketing ROI (return on investment) is not new. It just hasn't been very doable in the past. Soft measures including brand awareness were more easily determined than strict financial measures such as ROI for marketing investment. Technology and improved ways of measuring customer behavior is making the difference today. Beyond basic software like CRM (customer relationship management) packages, the ability to employ technologies to help track and analyze relevant knowledge helps companies to deepen their understanding of the customer. That is a prerequisite to being able to apply the financial return on investment measurement. Kodak is a large company that has taken this to a high level as an important part of its strategy for transforming itself from a traditional photographic films and papers company into a key competitor in the digital marketplace.

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Product Marketing versus Service Marketing

2008-03-11T14:08:00.000-07:00

Product marketing is more specialized and detailed than most people may realize. If it wasn't, there wouldn't be nearly as much investment lost on products that do not become commercial successes. General marketing companies that don't seem able to clearly differentiate between marketing products and services haven't been able to effectively increase the commercial success rates for companies that specifically market products.

There are several references that give the failure rates for new product introductions. The normal range is typically from 70 to 80%. These sources include:
1. Various studies cited by Advertising Age,
2. A study by Linton, Matysiak & Wilkes, Inc. of the top 20 food companies reviewing 1935 new products,
3. A Booz Allen Hamilton study on new product management claiming that one out of seven product ideas yields a successful product,
4. Boston Consulting Group vice presidents and directors James Andrew and Kermit King claiming 60% to 85% in an article titled ‘Boosting Innovation Productivity',
5. Some college textbooks claim 80%.

Before looking at the different kinds of marketing and a couple key differences that can help companies improve their commercial success rates for launching or products, let's take a brief look at some definitions.

So, what exactly is a "product marketer" and what is the definition of "product marketing"? What about "service marketing"? The answers are not as obvious as they should be. In fact, there are conflicting definitions of "marketing" that can lead to considerable confusion. Let's begin with a crystal clear definition of marketing - the process of anticipating, identifying and satisfying customer requirements profitably. This is the core of what a business is all about and therefore a clear leadership role. That differs greatly from the opinion held by many that marketing is or ought to be primarily a support or management function rather than a key strategic leadership issue.

Okay, now that we have a clear definition of marketing and positioned it so that the tail doesn't try wagging the dog, we can look at the key differences between marketing products versus services.

Here are some differences between product marketing and marketing services:

1. Product marketing requires more sophisticated feedback systems than that required for marketing services. This is a key difference.

2. Product marketing has a lot of front end investment compared to service marketing which normally has much of its investment in the back end. This is another key difference.

3. People and companies become more attached to products than to service offerings. Few talk about this inventoritis aspect that can and often does have enormous impact on a business.

4. Products are often returnable whereas services are not. This is not a key difference although it is one that is often cited by marketing professionals. More service providers are offering guarantees making this difference somewhat moot.

5. Products except for things like insurance are tangible while services are less tangible. Construction workers building a bridge might argue otherwise but most buyers of services are purchasing intangibles. This is also a commonly cited difference that really isn't that important when looking from an investment standpoint.

Looking closer at the key differences.

When a product is sitting on the shelf at Wal-Mart, it isn't as easy to relate relevant customer feedback into the offering itself. In contrast, service providers are often sitting face to face with the consumer of the service and there is not a multi-link distribution chain involved like there is for most products.

Largely due to the complexity of determining products in the context of often modern distribution channels, it takes a lot more investment on the front end to accurately determine the product, its market orientation, packaging, presentation, etc. than it does for service offerings. Services are not normally distributed through complex or multi-player channels, each of which has specific needs to be considered for the process to work.

Another important and often ignored aspect is that it is a lot easier to get attached to a product than to a service. People and their organizations have a natural tendency to become attached to their products. This is generally not the case for service offerings. Look up "inventoritis" and you'll see what we mean.

Knowing the key differences between the different kinds of marketing will allow you to position resources more effectively. It also makes it easier to better plan your product deployments for greater returns on these investments, while avoiding common pitfalls. The bottom line: greater success with your product marketing.

[1] Brock, D. (1997). Getting the most out of your new product introductions. Partners in Excellence. Retrieved April 27, 2007, from the World Wide Web:
http://www.excellenc.com/articles.htm

[2] Linton, D.B. (1997, July 1). Market study results released: new product introduction success, failure rates analyzed. Frozen Food Digest 12(5), 76.

[3] Dean, B. (2005, March 28). Case study: Incorporating focus group research into the product development process. DM News, Article 32310. Retrieved March 31, 2007, from the World Wide Web: www.dmnews.com/cms/dm-news/e-commerce/32310.html

[4] Andrew, J.P. & King, K. (2003, April). Boosting innovation productivity. BCG opportunities for action, April 2003. Retrieved April 27, 2007, from World Wide Web:
http://www.bcg.com/publications/publication_view.jsp?pubid=847

[5] Friedman, H.H. (2000). Product policy; new product development. Retrieved March 31, 2007, from City University of New York, Brooklyn College Economics Department website: http://academic.brooklyn.cuny.edu/economic/friedman/mmproductpolicy.htm