Tag Archives: innovation

In Response to R&D Productivity Metrics

It’s been 2-years since I thought about and responded to the question posed in this blog entry about R&D productivity metrics. The fundamental problem I had with the metrics is that they measured research and development productivity in terms of money in a forward looking manner.  I still maintain this is an easy way for decision makers to fool themselves into making silly decisions and leads to all sorts of  trouble when these prognostications get folded into the financial outlook a company feeds to Wall Street.

But what if we look at R&D in a way that’s more predictable for the nature of R&D, then maybe we can get a more straight forward answer about what R&D to invest in. I think research and development that has the potential to lead to more R&D and more products is the best kind of R&D.  In a way it’s an indirect way to look at money. Put another way, it would be better to do R&D that will lead to more R&D and that can be leveraged into a greater number of products than doing R&D that dead ends when the effort is completed.

Let’s go back for a little bit to think about why a company or a person might do research and development.

1.  A problem needs solving to enable a product

2.  A company wants to enter an existing market

3.  A company wants to create a new market

Problem solving on the fly is basically incidental R&D — a problem comes up, the problem gets solved and life goes on.

The next two reasons for doing R&D require some forethought.  Entering an existing market is difficult because in order to be successful you have to offer a product that is better than the existing products and you have to be able to see into the future to predict whether this market has life left in it.  For instance, I pity the companies that invested heavily in variable printing only to see things get suddenly flipped over by the Internet, e-readers, electronic displays, and the Sustainability Movement.  As for creating a new market, that’s even trickier.  In that case it’s R&D by dumb luck or your company employs some visionaries who can create a vision of the future that appeals to customers.  Dumb luck and visionaries who actually predict correctly are hard to come by.  I think, though, the thing that binds these two reason to do R&D is the need for excellent vintage charts.  And I don’t mean vintage charts with products that have more features as time go by.  What I mean are vintage charts that take technology development and connect them with the trajectory of the markets they are entering.  This of course means linking it to future customer needs and not necessarily some made up vision of the market in terms of dollars.  A good example of some good products that probably came from a good vintage charting are Apple’s iPod to iPod Touch to iPhone and Magic Mouse and eventually to iPad.  These all took the idea of “touch” and expanded it into a technology development that built upon itself to create a string of products with excellent sales.

In thinking about vintage charting, you have start with a vision of the ultimate product or products and then move backward to unlock what technology developments have to happen.  In that process, you can move forward and to the sides to see product adjacencies.  I think if you happen upon a base technology development effort that spawns a grand tree of potential products and other R&D efforts, then you’ve got yourself something to pursue.  Your initial R&D effort will be rewarded with a future filled with products and growth.

I think, though, such activities should be done with scientists, engineers, and marketing.  Too often vintage charts are left only to marketing or engineering managers alone in cones of isolation.  You need the scientists and engineers to isolate the fundamental technology development components and you need the marketing folks to provide insight about customers.  Most importantly, though, an organization needs to have people who can look at matters across engineering and marketing and also have a compelling vision of the future.  And no, I don’t mean a vision of 10% growth year over year until we’re huge.  That’s not a vision of the future.  Those are goals for Wall Street and such goals can only be met by money and financial math manipulation.  What I mean is a technology and product vision and perhaps a 20 – 40-year outlook on society (For example, in 20-years we will create a mechanical suit that will result in a super soldier, or in 10 years all forms of entertainment will be on-demand).  This is difficult in times when companies choose put themselves at the mercy of Wall Street.  However, at some point if a company truly wants to be successful, then they have to concentrate on making something real rather than running a scam to create money from nothing.  Also, in the end, strong sales and excitement about new products always pleases Wall Street…So…well…’nuff said, right? Now get out there and invent!

It’s Been a While Since I’ve Rambled

It’s been a while since I’ve written an entry in this blog.  I think this says a lot about the state of things.  In general, there’s not much to say, and, in general, there’s not much nice for me to say.

About a month ago while driving home from a night out at the movies, my husband asked me if I wanted to go to Best Buy or Fry’s and wander the aisles.  My response was, “For what?”  That’s when we came to the sad realization that, beyond the iPad, there is nothing for gadget freaks and computer nerds to be excited about right now.  3D TV repulses me and there’s no reason to buy a new TV just because it has yellow pixels.  There are no new speed leaps in PC hardware and I already have a multitude of iPods and PC’s in various form factors.  Ironically, the next day, while listening to Marketplace on my local Public Radio station, one of the news stories was about how sales at Best Buy had fallen.  I guess my husband and my sentiments are widespread.  There’s nothing new and wonderful to aspire to purchase (except for an iPad) and we are only buying on necessity for the purpose of replacing  broken items.  Sadly enough, our non-functioning XBOX360 doesn’t rise to the level of necessity.  We are now watching Netflix VOD on the laptop that’s connected to our TV.

This realization brought about further thoughts about the current state of things.  There’s a push/pull conundrum with the jobs situation.  People are holding back on spending because they feel insecure about their jobs and finances and companies aren’t hiring because there’s not enough demand for produces and services.  I think though, that job and financial insecurity are only a  part of the demand problem.  I think a big part of the demand problem is that there’s nothing exciting and new for consumers to consume.  Why do I say this?  Well, because of Apple, of course.  Despite the downturn, they continue to churn out great products and they don’t seem to be having any problem selling them to cash strapped consumers.  And believe me, my unemployed-behind is saving my husband’s money for a Christmas iPad.

I’m tired of hearing companies whine that they won’t hire because there’s no demand for their offerings.  My response to that line of complaints is “what are you offering?”  If it’s not something new and exciting, regardless of state of the economy, demand will slump.  In good times and bad companies have create demand by innovating and coming up with great new products to drive consumption.  So, in other words, big companies are going to have to spend some of the money they are sitting on, hire some people, and offer some great new products and services in order to kick start demand and spark the economy.  At the same time, there has to be investment in innovative small companies to get new ideas out.

My Dad likes to say that the economy won’t  revive until some sort of phenomenal shift happens — something on scale of the Internet or the steam engine.  I’m not sure if I agree.  It seems to me that there are a lot of “little” things that can get done, too.  Interestingly enough to me, it seems like clean energy isn’t fueling people’s imaginations.   I thought the clean energy revolution would be a phenomenal shift, but it isn’t.  Why?  I think it’s because oil is very much ingrain in our worldwide psyche.  I’m not sure I understand this emotional attachment to oil, but despite the damage being done to the Gulf, I hear the tears in people’s voice as they talk about the spilled oil ruining the environment, while at the same time, ruining job prospects and a way of life in which oil and fishing are intertwined.  The same is true for families in the coal mining industry — it’s like coal mining is part of the family.  It’s weird to me — why love something that kills you and hurts everyone on the planet?    Also, I think oil and coal are tangible whereas solar, wind, nuclear, and the biological and chemical methods of energy generation seem abstract to most people.   I imagine “blue collar” workers don’t see how they fit into a world that they associate with hard science and engineering — though, it seems entirely ridiculous to me, but understandable since BP saw it fit to fire the very engineers and scientists that could have prevented or more reasonably responded to the Gulf oil spill.  (By the way “technicians,”  “engineers,” and “scientists”  are not interchangeable!)  Anyhow…it seems to me that our reliance on fossil fuels is emotional and until that emotional tie is cut, other forms of energy generation cannot rise in its place.  The “everyday worker” has to see how they fit into a new energy future before they will buy into it.    Making alternative energy seem more accessible is a good problem for marketers to solve…

On the other fronts…well,  inventing new ways to print money never got us anywhere.  Yet, “Wall Street innovation” will continue, driven by finding new ways to scam people without technically breaking the law…personally, I don’t need it…but I imagine the new legislation that just passed will fuel a whole new round of “Wall Street Innovation…”

On a personal front, I’m watching and participating in the electronic manga revolution.  I want to be more active in it.  I think, though,  this is one of those things in which the large companies have to reach out to the smaller companies and hobbyist groups to get things moving in the right direction for consumers.  I just hope lawyers and greed don’t blind folks such that we end up losing the current opportunity.

Innovation Means Putting Consumers’ Needs First

This is a long read but a good one.  I think this is a great example of executive communication that reaches across management, engineers, and other individual contributors.  I particularly like at the end of the interview in which Mr. Provoost explains simply how beans and innovation are connected.

My thoughts on this … well first off all, I’m anxious to see what’s new in lighting.  I have seen the slow emergence of LED over the past couple of years, but nothing big at the Home Depot yet.  Like everyone (and every company), I’m looking for any manner to decrease my electricity bill.  I’m also encouraged with this CEO’s positive thoughts about innovating in the midst of a recession.  Yes, I agree, being squeezed to optimize can drive innovation.  I really like the idea of adversity being inspiration.   Anyhow, give this a read and feel good about innovation and get excited about lighting.


Here’s a link to the article

Philips Lighting CEO Rudy Provoost: Innovation Means Putting Consumers’ Needs First

Published: February 20, 2008 in Knowledge@Wharton