Q:  I’ve heard a lot of C.E.O.’s saying they want to stay small, culturally, even as they grow. Your thoughts on that?

A:  I think that when people talk about staying small, they’re saying they want to be big but still be nimble and creative and innovative and flexible. They also want to still feel like attackers, not defenders. As companies get larger — and I saw this with AOL even before we merged, but certainly after the merger with Time Warner — we did shift from being an attacker to a defender.

And I realized the world of business really separates into these two groups. The attackers are the entrepreneurs who are disrupting the status quo, trying to change the world, take the hill, anything is possible, and have nothing to lose in most cases. They’re driven by passion and the idea and intensity. Large organizations — and it’s true of Fortune 500s and it’s also true of governments and other large organizations — are defenders. These guys aren’t trying to pursue the art of the possible, how to maximize opportunity. They actually are trying to minimize the downside, and hedge risk. They’re trying to de-risk situations. Entrepreneurs can’t even think this way. It’s not even a concept they understand.

For the traditional executives running these large companies, of course they want to grow, of course they want to innovate, of course they’d rather have revenue grow faster than slower, but they mostly don’t want to lose what they’ve got. But entrepreneurs are deathly afraid that they won’t be able to change the world, and that somebody else will. Again, these generalizations are a little unfair, but corporate executives are all too often deathly afraid that the business they inherit will be less valuable when they leave than when they started.

Read the full interview at the New York Times

Image via the New York Times

“Fisker is a design company, not a manufacturing company. It was destined to fail from the beginning”
- Darrell Issa, R-CA.

Creating the atmosphere that design-driven companies are inherently doomed to fail is not only an inaccurate, but dangerous, precedent for entrepreneurs in the US, particularly those with disruptive innovations.  Related to Fisker’s bankruptcy is the failure of battery maker A123 (a manufacturing company founded out of MIT), also a significant recipient of Federal loans, which was bought for pennies on the dollar by the Chinese company Wanxiang Group, but appears unaffected by this latest round of federal hearings.

Republican representative Issa’s targeting of Fisker hold the potential to create an even more chilling atmosphere for entrepreneurs who happen to come from a design background.  Despite their talents as innovators and market disruptors, it is already a significant challenge for designers to receive venture funding. So much so, that forward thinking VC firms have created designer-only opportunities (ex. NEA’s Design Mentorship Program) in order to capture the opportunities from creative thinkers and innovation experts.  Rep. Issa may be closing the door on for designers to receive federal funds through programs explicitly created to support the types of companies designers tend to start, programs such as SBIR.

Let’s hope that Rep Issa demonstrates a more accurate, and nuanced, understanding for Fisker’s bankruptcy in the hearing to come.  Let’s also hope that other influential individuals, those who support disruptive innovation and innovators (instead of a well-funded establishment and their lobbyists, as Rep Issa appears to) come out in support of designers and their proven contributions to the US innovation economy.

photo credit: Wonkette.com

Unfortunately, we’re seeing far too many companies knowingly incurring Innovation Debt.  The current era of R&D cost management and de-investing are precisely the corporate decisions that lead to the best people leaving, inability to recruit the right people, loss of productivity, and an innovation funnel that is decreasing in value.

We experienced this exact thing during a call just yesterday. A company, which for decades was the innovation leader in their category and reaped the market-share and share price rewards of having an “Innovation Surplus” switched to innovation cost management about 3 years ago.  In the shortest term this company did not experience negative consequences from this decision. But now, a few years on, we’re hearing of their best innovation team leaders leaving the company, of their competitors launching new products to exploit opportunities, and of small upstarts finding traction in the marketplace with customers who have become disappointed in a brand that is failing to keep up with their evolving needs.

The (mis)management of innovation as a cost-center is the number 1 contribution to Innovation Debt. Corporate leadership’s failure to understand that innovation is the lowest cost way to investment in assets that deliver shareholder value. But to achieve that shareholder value requires managing innovation effectively. Companies that actively manage innovation efforts to align with corporate strategy practice dynamic innovation portfolio management.  These companies are able to respond quickly and effectively to the need to manage their costs without incurring Innovation Debt.  They’re also able to refocus on innovation projects that reduce cost of manufacture, further leveraging the power of innovation.

Read the full article at FastCompany

(photo credit: Horia Varlan via photopin cc)

You can buy a Coke pretty much anywhere on Earth. Thanks to a vast network of local suppliers, Coca-Cola has almost completely solved distribution, getting its product into every nook and cranny where commerce reaches. There are places in the world where it’s easier to get a Coke than clean water.

In the 1980s, Simon Berry was an aid worker in Zambia, and when he looked at Coke’s success, he saw an opportunity. Berry realized that using Coca-Cola’s distribution system could bring life-saving medicine to the places that need it most.

“Child mortality was very high and the second-biggest killer was diarrhea, which is simple to prevent,” he says. The standard treatment is oral rehydration solution, or ORS, which is essentially salt, sugar and water. “I had the idea of transporting ORS through the Coca-Cola system.”

Unfortunately, the idea didn’t get off the ground. “We had no telephone, let alone the internet, so it was hard to share the idea,” he says. “Five years ago I thought I’d have another go. It was much easier to do that through Facebook.”

In April 2008, he began a campaign on Facebook. A groundswell of support gave his project, dubbed ColaLife, the attention it needed to get noticed by the BBC and, through the British broadcaster, by Coca-Cola itself. ColaLife began collaborating with one of Coca-Cola’s African bottler/distributors, and the beverage giant shared advice and information about how its distribution network operates.

Eventually, ColaLife registered as an independent U.K. charity in 2011 and began a pilot program in Zambia.

The result of their efforts so far is the AidPod, a wedge-shaped container that fits between the necks of bottles in a Coca-Cola crate. For the pilot program, they are using the AidPods to distribute an anti-diarrhea kit, called “Kit Yamoyo” (“Kit of Life”).

The AidPod’s are a clever packaging solution, born of a very particular design problem. Because the vision was to physically piggyback on Coke’s distribution system, they needed to work with the crates used to move the popular soda to retailers. Initial designs experimented with pouches on the side and tubes that could be slotted in place of a bottle. Neither option would have worked, as both would have meant less space for Coke. Then, genius struck.

“My wife said, ‘Why don’t we make use of the unused space?’” says Berry.

Once the basic wedge shape was settled on, the kit went through nearly a dozen redesigns with packaging partner PI Global. Eventually it evolved into a package that could act as a measuring cup and a storage container for made-up ORS liquid. In future versions, they are exploring modifying the package so it can continue life as a SODIS water disinfectant. Other key design goals were to make the product easy to understand and use properly (both over- and under-concentrated ORS are bad for recovering victims of diarrhea) and to make the package as a whole an appealing product.

“From a design point of view, we were focusing very tightly on the actual packaging, which, when you think about it, is the wrong way ’round,” says Berry. ”Normally you think about what you want to distribute and then what you want to put it in.”

Read the full article at Wired

“We started with single serve, because it is the package you’re seen drinking and holding. The longer-term view is this new design system would eventually hit all touch points beyond packaging, to be honest, but certainly all other package types, as it applies,” commented to Ad Age Angelique Krembs, VP-marketing for the Pepsi trademark. She also added that the swirl element could be tracked in some early glass Pepsi packaging, which in a way served as a source of inspiration for the update.

The new Pepsi bottles got a positive feedback from consumers on testing, so the 20-once packaging is soon to be available in the New York area, followed by Chicago, and some select cities in California and Florida. Ms. Krembs predicts that it may take a year or two before the national market will be converted to the new packaging. At the moment, it’s not clear, if the company plans to introduce the new bottle on the international markets.

The Pepsi bottle redesign follows a number of the last year’s prominent marketing initiatives, such as the cross-platform international campaign “Live for Now,” $50-m advertising partnership with music diva Beyoncé, and the 2013 Super Bowl sponsorship. Despite its efforts, PepsiCo reported a 4 percent decline in beverage volume in North America in 2012.

via PopSop.com

…there is no way to restore the sense of equality that prevailed as late as the 1960s without remedying the ills that caused inequalities to widen: the narrowing of high innovation to a handful of industries and the consequent slowing of economic growth to a snail’s pace.

Prof. Phelps lays part of the blame on the short-term thinking prevalent in the banking sector. A sector that, according to Prof. Phelps, appears to be uninterested in lending, or investing in projects for new products and methods.  Corporate CEOs are also called out for “infighting” and “shortsightedness”.   Corporate boards are admonished to increase their oversight and create incentives that reward innovation.

Prof. Phelps understands that an economy open to new concepts and novel ventures is bound to generate unequal gains. But his argument is less innovation — not more — that has widened inequality in the United States in recent decades.

Edmund S. Phelps, a Nobel laureate in economics, the director of the Center on Capitalism and Society at Columbia University and author of the forthcoming book “Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge and Change.”