Saturday, September 29, 2012

Pain-Gain Map for Smart Parking Grid

The "Pain-Gain Map" appears to have come from the website Gamestorming.

To be successful, your product or service must appeal to the customer and it must outweigh the cons of not investing in it.  By mapping out the pros and cons from the customers' perspective you may discover something that is of great value to the customer but has not been considered in your business model.  You may also discover that something you thought was valuable to this customer segment, is insignificant.  It is crucial that the entrepreneur choose a niche market to start out, with the best customer segment(s) targeted.  By doing this exercise, it is possible to figure out which segment(s) will find the most value in your proposition.

Smart Parking Grid

For residents of Boston, who park downtown, have trouble finding metered parking spots, and frequently find themselves without change, the Smart Parking Grid is an infrastructure change to the city of Boston along with a mobile application that alerts residents where open parking spots are and allows them to pay meters with credit cards or bank accounts through their mobile phones instead of change. Unlike residents who live in cities with traditional, change-only parking meters, residents of Boston will experience an improved quality of life in that they will be able to easier find parking spots in the city and enjoy the convenience of paying with their mobile phones.

Tuesday, September 25, 2012

Innovation Opportunity to Fix Our Broken Medical Structure

There was a great article in the Wall Street Journal (I think it was Saturday, September 23) about a private health insurance company and the reason for its success. The leader of the organization believes that lack of continuity it one of the prime issues with healthcare today. He is fairly convincing that the reason we have lost so much continuity is because market has changed, but the healthcare industry hasn't responded appropriately.

He points out that there are specialized doctors, and there are specialist in the specialty, and so on.  There are so many different specialty doctors, but no good communication system set up for collaboration between the doctors. This insurance company puts a team of healthcare professions together to ensure the patient gets the appropriate and most expeditious treatment. 50 years ago, there weren't near as many specialized doctors as there are today.

The leader of the company also said that years ago, a person worked for one company all their life. This may have afforded the employee the opportunity to keep the same healthcare professionals to care for them, building extensive history with the caregiver. Nowadays, a person may work for more than 3 or 4 employers and when they switch they may have to find new doctors and start over.

I wish I hadn't thrown the paper away....I meant to keep it for reference. I hope that you get the gist of it and agree that this may be a situation where the market changed and the industry has not responded, leaving terrific opportunity for innovation.

Saturday, September 22, 2012

The Masters of Innovation

I enjoyed reading about the innovators in this reading and I particularly enjoyed reading the footnotes. I actually laughed out loud when I read some.  Table 2-1 is the essence of the article in reference format; one that I am sure I will refer to again later in my career.  The two themes for innovation that stand out most to me right now are 1) customer-focus and 2) recognition of patterns.   
Being customer focused is necessary because that is how you know you "are" or "are not" bringing value.  It can also give you clues as to when to pivot and how.  Understanding the customer is critical for success and sustainability. 
Recognition of patterns for innovation is key for being able to connect the dots and invent.  This is why learning different skills can help a person become better at innovation, because as patterns are recognized in one skill as being similar to another, ideas can be shared or transferred.  Patterns can also be sources of information to indicate where the consumer finds value or what works and what doesn’t.  Bill James says, reviewing old data in new ways might highlight a pattern, this can lead to innovation.  Combine this method with Clayton Christensen’s disruptive innovation concept for industry transformation and you will likely find a story like the one of Netflix.  Netflix saw that Blockbuster was making most of its revenues from late fees.  Recognizing the pattern that there are many people turning movies in late, they made this a strength for their business.  In fact, the longer you keep the movie, the better off Netflix is.  Netflix has transformed the movie rental business by combining the pattern they saw of late rentals with simplicity (rent one anywhere) with affordability (a dollar, really?).

Yahoo! SWOT Analysis

Saturday, September 15, 2012

7 Sources of Innovation (Peter Drucker, 1985)

The Unexpected
“The Unexpected” source of innovation comes as a result of unexpected success, failure or outside events. 
In Peter Drucker’s book “Innovation and Entrepreneurship” he explains how Macy’s New York missed the opportunity to cash in on appliance sales because they didn’t want growth of appliances, they were focused on growth in fashion goods.  Bloomingdale’s however, recognized the unexpected success of the appliance sales and responded to the opportunity and prospered from it.  One can also find themselves on the other side of unexpected success by seeing a competitor stumble onto unexpected success; the key is to pay close attention (data) to what customers’ value, not what you think they value.
Failure offers the chance to learn, pivot and try again.  There is a great story of unexpected failure in the book “The Checklist” by Atul Gawande where he shares the events of a flight competition (to compete for a contract to build long range bombers) held by the U.S. Army Air Corps October 30, 1935.  Boeing’s model 229, was much more capable than the specifications the Army gave for the plane.  The flight competition was merely a formality, it seemed obvious that the best plane was the Boeing 229.  Shortly after takeoff, the Boeing 229 stalled, turned on one wing and crashed.  Clearly Boeing, nor the Army, expected the failure of the 229.  The response to the tragic failure was the creation of a pilot’s checklist, making simple and succinct.  This illustrates rebounding from a failure nicely.
The unexpected outside event refers to events that take place independent of what the enterprise is working on.  When a new fad kicks in and a company sees the chance to cash in on the opportunity, this is the unexpected outside event. If a natural disaster decreases the number of suppliers, then this unexpected outside event could be a chance for other suppliers to increase their sales volumes or perhaps innovation will lead to a substation as a result.
An incongruity is a disconnect between what is and what should be (or people assume it to be).  There are several examples of economic incongruities that Mr. Drucker references.  One example is of the steel mills and the creation of “mini-mills.”  The demand for steel increased, but the economic performance from traditional large steel mills did not.  The “mini-mill” at one-sixth to one-tenth the size of the integrated steel mill, was more cost effective and better able to meet customer needs.  The paper mill is another industry that is incongruent in economic reality of demand verses the reality of the process.
            Another type of incongruity is between reality and assumptions.  The book gives the example of the shipping industry in the 1950’s and their efforts to reduce the fuel consumption and crew size; they were focused on the costs of the ship (asset) when it was working.  What they should have been working on was the cost of not working (loading time), because the revenue lost when not working is much greater than the incremental gains made by changes to the design when the ship is at sea (working). 
            Incongruity between perceived and actual reality is, according to Peter Drucker, the most common incongruity.  This pertains to the perception of what the customer wants from the supplier in comparison to the actual need of the customer. 
            Lastly, there can be incongruity in the rhythm of a process.  In other words, the process continues at a predictable, normal, steady pace until a certain step or stage occurs.  This offers one the chance to innovate such that the process can remain rhythmic from beginning to end.  Examples offered in the book include an enzyme to bridge the gap in cataract eye surgery and the fertilizer spreader “Scotts”. 
Process Need
The source of innovation for a process need is an imperfect task or step in an existing process.  For example, the process for exiting I-95N at exit 109 in Georgia is to get in the right hand lane to exit, drive up over the hill in the road (about a mile before the exit) and exit when you arrive at the exit.  With the increase in population in Effingham county the traffic using this exit has increase exponentially over the last 10 years.  The line to exit the highway can grow to a couple of miles, which means at some point the cars are slowed or stopped just beyond the hill, where there is no visibility of the traffic to the driver that is driving 65 miles per hour toward the exit.  After several deaths occurred, the DOT increased the number of lanes to exit at exit 109 to accommodate the volume of cars and relieve the congestion that was creating the hazard. 
Industry and Market Structures
            Changes in industry and market are the prime time to innovate.  The rapid growth of the automobile industry in the early 1900’s is an example in the book.  More recent examples of industry and market structure changes include cell phones, tablets and even the shift from product-based business models (buying CD’s) to service-based (on-line streaming for videos  or downloading songs for a fee) represents a change in structure that offered platforms for innovation.  The caveat for innovation in response to industry and market structures, according to Peter Drucker, is that the innovation must be kept simple.
            Innovation can be based on demographics, in particular age distribution.  The datum is already available and there is known lead time, all that is missing is the ability to see the future as a result of the present situation (and future projection) and not a result of the past.  Identifying changes in the center of population gravity (the age group that is the largest and the fastest-growing age group in the population) can be exploited by capitalizing on the anticipated needs/wants of that group. 
Changes in Perception
            Perception-based innovation occurs when one capitalizes on the perception (not reality) of a group (sector, society, etc.).  One example given was the unprecedented advance and improvement in the health of Americans (though I am not sure that is the case today!).  Americans, however, had the perception that we were unhealthy and needed to change and this opened up opportunity in health foods, education, exercise facilities, equipment and attire and so on.  Peter Drucker states that spotting inaccurate perceptions and acting on them can be risky, they may not be sustainable.  For this reason, he recommends that perception-based innovations start small and specific. 
New Knowledge
            Knowledge-based innovation is the sexiest of entrepreneurship; it is what many think of when they think of the term “innovation.”  Peter Drucker suggests that knowledge-based innovations have long lead times (longest of all innovations) and convergence of knowledge.  Once the research and synthesis of knowledge are complete thorough analysis followed by practice of entrepreneurial management must ensue. Analysis is necessary to confirm and validate the innovation and entrepreneurial management is needed to manage the risks. (Google may be a good example of a company that is lacking in entrepreneurial management, one that is market-focused and driven.)
Intellectual property protection and proper timing (window of opportunity) are also important aspects of knowledge-based innovation. This innovation seems akin to an “all in” approach given the long lead times and the creativity needed to converge knowledge that leads to the breakthrough.