Saturday, December 1, 2007

Technological Substitution in Publishing

Information technologies (hardware and software) are playing a key role in innovations in industry after industry. They diffuse through an industry by improving procedures, processes and products. The diffusion usually begins with incremental changes aimed at improving costs, or more broadly, efficiency. This is like a virus infecting a living cell, the informed or informatized (we don’t have good language to describe the result) is transformed into something new.

Informed segments of the economy then multiply their effects on the industry radically changing it or destroying it. The publication industry is one of the industries being so affected. Information technologies have found their way into the processes of printing books, their distribution, the way they are sold, and even the way we communicate about the books. Now information technology is altering the very nature of publications, especially in the textbooks and supplemental materials used in K-12 education. And, now the information technologies developed to aid social change and societal development have begun to impact the industry, threatening to destroy it.

This article summarizes the meta research done on the industry searching for data that indicates the nature and rate of substitution of information technologies into print. There are two overall conclusions from this study. First, that there are indications of the substitution going on in a number of areas. And, second, that we lack a coherent set of data on the industry that would enable us to make firm predictions.

Tuesday, October 16, 2007

Technological Substitution in Publishing: Part 6 - Basel Products


It would appear that the electronic substitution for print in basal education products has begun. While the data indicates that the substitution is in the early stages, it does seem to indicate that it has begun. The data source for this is suspect as it is the results of two surveys without guarantee that the two survey populations were representative samples. Research in the field of substitution analysis generally agrees that if the substitution reaches 5%, the substitution models are accurate.

Friday, October 12, 2007

The Federal Idea

Different cultures give a different prominence to the idea of the individual, but one can sense a growing feeling of impotence, everywhere, in the face of institutions and government, local and global. Democracy used to mean that the people had the power, but now that translates into the people have the vote, which is not the same thing.

The vote is an expression of last resort, a useful reminder to our rulers of the source of their bread and butter, but hardly a way for individuals to influence what is going on around them. Moreover, in the institutions of everyday life, particularly those of business, the only people with the vote are those outside, the financiers or the governors. Those who work in them are effectively disenfranchised. Democracy has its limits.

If we want to reconcile our humanity with our economics, we have to find a way to give more influence to what is personal and local, so that we can each feel that we have a chance to make a difference, that we matter. We have no hope of charting a way through those paradoxes unless we feel able to take some personal responsibility for events. A formal democracy will not be enough. We have to find another way, by changing the structure of our institutions to give more power to the small and to the local. We have to do that, with all the untidiness which it entails, while looking for efficiency, and the benefits of coordination and control. But more is needed than good intentions to empower the individual to do what we want him or her to do. The structures and the systems have to change to reflect a new balance of power. That means federalism.

Federalism is an old idea, but its time may have come again because it matches paradox with paradox. Federalism seeks to be both big in some things and small in others, to be centralized in some respects and decentralized in others. It aims to be local in its appeal and in many of its decisions, but national or even global in its scope. It endeavors to maximize independence, provided that there is a necessary interdependence; to encourage difference, but within limits; it needs to maintain a strong center, but one devoted to the service of the parts; it can, and should, be led from that center but has to be managed by the parts. There is room in federalism for the small to influence the mighty, and for individuals to flex their muscles.

We think of federalism as applying to countries-the United States, Germany, Switzerland, Australia, Canada. Her politicians might not admit it, but the United Kingdom is really a federation of its separate regions, as is Spain, and, increasingly, even France, as its regions gain more autonomy. The concept, however, goes beyond countries. Every organization of any size can be thought of in federal terms. Hospitals, schools, local government, and most charities are, if we look at them with federal spectacles, made for federalism, local and separate activities bonded in one whole, served by a common center. All businesses of any size have federal propensities, and a need to be all the things which federalism offers.

Why has such a good idea not been so obviously popular? Few businesses are consciously federal, nor does history provide many, if any, examples of a monarch or a central power voluntarily moving to a federalist structure. The hard truth is that we are always reluctant to give up power unless we have to, and federalism is an exercise in the balancing of power. The federal idea is an example of the second curve, but one which too few institutions or societies develop until they are forced to. It is a very different, and very uncomfortable, way of thinking about organizations. It is messy, untidy, and always a little out of control. Its only justification is that there is no real alternative in a complicated world. No one person, or group, or executive, is so all-wise and so all-sensitive to be able to balance the paradoxes on their own, or run the place from the center, even if people were prepared to allow them to. We have to allow space for the small and the local.

Federalism relies on a set of Chinese contracts between its various parts and operates through doughnuts of varying size and shape, which leave, of necessity and of right, considerable space for local decisions. The goals of the parts have to adjust to the requirements of the whole, and vice versa. No one in a federal organization can have everything exactly as they want it. Therefore, it is an excellent example of putting the preaching of this book into practice, with all its difficulties as well as opportunities.
Let us be clear, federalism is not the easiest of concepts to make work, or to understand. Yugoslavia is hardly an advertisement for the concept, nor is Canada. California is creaking under an excess of federalism from within and without. IBM proclaims its conversion to the idea, but may not be its most successful exponent in the years ahead. A federal Europe frightens many, and not just in Britain. Nevertheless, we have to persevere because it is the best way to return some sense of meaning to our larger institutions, a way of connecting their purposes with their people.

Much of the confusion and difficulty arises from a misunderstanding of what federalism is. A confederation, for example, is not the same thing as a federation. A confederation is an alliance of interested parties who agree to do some things together. It is a mechanism for mutual advantage. There is no reason for sacrifice or trade-offs or compromise unless it is very obviously in one's own interest. A confederation is not an organization that is going anywhere, because there is no mechanism or will to decide what that anywhere might be. The Confederation of Independent States, which replaced the Soviet Union, will never be an effective body. The British Commonwealth, another confederation, is a thing of sentiment and language, not a real organization. These are not the stuff of federalism
.
Confederations adapt when they have to, usually too late. They do not lead, nor do they build. They are organizations of expediency, not of common purpose. The British would like Europe to remain an economic confederation, a common market. Many in the rest of Europe want a more federal state, one with a greater common purpose, within which sacrifices and compromises are acceptable, one in which the rich are readier to help the poorer, one with common standards and common aspirations.

What is true of Europe is also true of organizations.

Alliances, joint ventures, and networks are the tools of confederations, arrangements of mutual convenience, inevitably fragile as the conveniences change. Organizations with a clear purpose will want to be federal, not confederal. The distinction is important.

The key concepts in federalism are twin citizenship and subsidiarity. They are old ideas, re-invented for today's world.

From: The Age of Paradox, Charles Handy, Harvard Business School Press, 1995

Technological Substitution in Publishing: Part 5 - Supplemental Products


The educational supplemental products market is fragmented and complex. However, at a very high level it is possible to discern substitutions that are occurring. Print based supplemental products are in a steady decline. Other forms of supplemental products while increasing for a while, never gained a large market share and are now beginning to decline in market share. Electronic media based supplemental products are steadily increasing and will reach 90% of the market in 2020.

Tuesday, October 9, 2007

Technological Substitution in Publishing: Part 4 - Supplemental Instructional Materials

In “A Study of the Grade K-6 Supplementary Instructional Materials Market”, the authors use instructional time used as a measure of the penetration of various materials and technologies. This is a much better surrogate measure of the penetration of new technologies and concepts into the market as it doesn’t depend upon the cost of the technology or material. (This approach should be the basis for a thorough study of the substitutions ongoing in the education arena.) However, the data is limited. What is does show is that CDROM and the Internet are gaining share of instructional time at the expense of other media, as shown in the graph below.




Data: Study of the Grade K-6 Supplementary Instructional Materials Market, Hagen Marketing Research Inc., Lois Eskin Associates & Professional Publishing Services, 2004







Ultimately, it appears that the Internet will be the primary method for computer based instructional delivery.

Sunday, September 23, 2007

Technology Fountainheads

Technology Fountainheads: The Management Challenge of R&D Consortia

This book is a study of six R&D consortia in the US – Sematech, Semiconductor Research Corporation (SRC), Microelectronics and Computer technology Corporation (MCC), the Electric Power Research Institute (EPRI), the Gas Research Institute (GRI) and Bell Communications Research (Bellcore).

“The six consortia…were borne out of sense of industry crisis and/or deeply sensed need to advance the cause of industry R&D. In each instance, industry and/or government leaders articulated the need, advocated collective endeavor, and called for action.”

Why was Sematech successful?:

1. A viable, sustainable nationally important mission
2. Worked at precompetitive level
3. Outstanding leadership
4. Secured government funding
5. Industry led with 80% participation

Classification of R&D consortia;

1. Open membership
2. Exclusive membership
3. closed membership

Functions of R&D consortia:

• Development & dissemination of new industrial process technologies
• Technical education & training
• Environmental research (safety 7 health)
• Supply-industry infrastructure development
• Academic research & graduate education support
• End-product development & commercialization
• Industry standard-setting
• Industry disaster & crisis response

Strategy: “Vision is the basis for a call to action. The validity of a vision may depend upon the stature of those sounding the call, and on the premise that certain objectives can be met more effectively in a collective endeavor rather than the undertaking of a single firm.

If the vision is the basis of collective action, mission is an articulation of purpose. To be sustainable, a mission must promise the fulfillment of some broadly perceived need at the industry or sector level. It should attract the support of relevant constituencies – those whose backing can contribute to the consortium’s success, or whose lack of support could jeopardize its success from the onset.”

“A viable mission has several characteristics. First, it must not deal in domains of corporate core competencies or threaten consortium members’ competitive advantage. Second, it must offer firm-specific economic value. To the extent that a consortium reflects public purpose and the national interest, it will have validity and legitimacy. As a primary mission, however, collective or public purpose may attract support only in the short run. In the long run, return on R&D investments, becomes more the compelling objective – and at least for the United States, that measure tends to give priority to short-term results.”


Basic elements of consortium strategy:

1. its membership constituency, as well as other founders (that is, the markets it will serve
2. It’s R&D sourcing modes (basically the choice between an internal staff and external contracting)
3. Its product line, or range of services it will provide
4. Its pricing modes (that is, the forms in which its revenues are derived – e.g., one time shareholder fees, annual membership dues, cost per project charges)
5. Its R&D delivery systems (the channels used in the diffusion of new technology to member companies, their suppliers and their markets)

Theory of Consortia

“”The relevant theory, developed largely by Olson and Hardin, may be summarized as follows. A collective good is likely to be provided if the economic gain is great enough for one party or group that it alone would be willing to pay the full cost. Others may join the group if the net benefits to them contributing to the collective effort are positive, or if some attractive by-products are available through membership. Non economic benefits – for example the psychic rewards of belonging – may be relevant in small groups, but may decrease in importance for larger groups.”

“Current theory also holds that large groups will be less effective than small ones, on the grounds that:

‘The larger the group, the smaller the share of the total benefit going to any individual and the less likelihood that any small subset of the group, mush less any single individual, will gain enough from getting collective good to bear the burden of providing even a small amount of it.’”

I’m not sure that I agree with this. It seems like the premise is based upon additive rather than synergistic value. It would seem to be true if there was a decreased value for adding members. But, I don’t believe it’s true in general.

Benefits of Collaboration

“In theory, the economic rationale for the formation of a collaborative group is the anticipation of gain by some member or core group – a greater gain than if the member or core group were to undertake the same mission independently.”

• Cost sharing opportunities
• Sharing complementary knowledge
• Transitioning opportunities for firms moving into new fields of technology or diversifying into new businesses
• Risk reduction opportunities
• Monitor technological advances
• Risk of not collaborating
• Non economic motivations (especially for the core group)
• Potential for economic gain
• Improving the health of the industry
• Networking opportunities
• Sense of mutual dependence (smaller firms)
• Potential for selective and proprietary product offerings


Technology Fountainheads: The Management Challenge of R&D Consortia, E. Raymond Corey, Harvard Business School Press, 1997

Sematech: Saving the US Semiconductor Industry

Why Sematech consortium worked:

1. Members were willing to change
2. Members reduced interfirm secrecy
3. Solved problems with facts and information
4. Continuously reapplied the cooperative model
5. Accomplished specific, agreed-upon goals
6. Members avoiding “sandbagging”
7. Leverage continuous learning
8. Microchip industry profited by helping itself
9. The amount of investment was too big to dismiss
10. The organization was the optimal size
11. Leaders were willing to contribute without assurance of direct payback
12. Founding members brought with them the confidence of previous success

“The most important and timely success factor mentioned by everyone involved in Sematech is unprecedented cooperation among competitors requires an absolute belief in the necessity for collective action – a commonly held conviction that without hanging together, each will surely hand separately. In Sematech’s case that conviction was a widely held view that the industry’s survival was gravely endangered, and with it, the nation’s economic and military independence.”

“If it’s not competitive, it has to change.”

“The first empowerment was the decision to try. The second empowerment was the planning workshops, which said, ‘Try to do what?’”

“The biggest secret is that there is no secret.”

“One of the things we learned at Sematech early on was that all the secrets we were keeping from each other were basically the same secrets.”

“The prohibited areas of competitive collaboration were related to proprietary product and marketing issues. Legally allowed precompetitive collaboration involved core competencies or generic manufacturing process issues. The approximate proportions of the two types of information were eventually discovered to be a surprising 85 percent generic to 15 percent proprietary.”


Principles:

1. Being open to ongoing self-assessment and willingness to change
2. The recognition of long-term interdependence for survival
3. The importance of hearing every voice
4. The necessity of continually learning from learning
5. The moral conviction of the win/win rewards of systematically expanding mutual support


Sematech: Saving the US Semiconductor Industry, Larry Browning & Judy Shetler, Texas A&M University Press, 2000

Friday, September 21, 2007

Technological Substitution in Publishing: Part 3 - Student Device Technology

Student devices have changed from desk top to lap top over the years, and are now changing again to other types of devices. This substitution is summarized in graph below.




Data: America’s Digital Schools, The Greaves Group & The Hays Connection, 2006

While the number of data points is small, the data fits the Fisher-Pry model well, and supports common knowledge. Desktops are in decline and laptops have reached their maximum penetration of the market. Other types of student devices are rapidly gaining share of the market. While there is data presented in America’s Digital Schools on a number of other student devices, with the limited number of data points, it was impossible to segment the other device category. However, thin client, handheld, cell phones and portable gaming devices seem to be on the decline. While, tablet PCs and student appliances are gaining market share.

Saturday, September 8, 2007

Technological Substitution in Publishing: Part 2 - Reference Library

Substitution analysis is a powerful tool to examine and forecast the substitution of one technology for another. In this case, the substitution is electronic media for print media in the reference library. The surrogate data that we have is that provided by Association of Research Libraries. It is not the complete world of expenditures on reference materials for libraries, but it is representative, at least of the big libraries. The data that ARL provides is a measure of expenditures. This is a useful surrogate for the number of units, the number of users or the amount of material, all potentially more direct measures of the substitution. However, sales figures are quite often used as they provide an aggregate way of indicating the impact of the new technology on the market.

It is also important to note that there are multiple substitutions going on in a cascade of change from print - CD, LAN and Internet, to just name a few. If data were available on this level of detail, a multiple substitution model could be created.

The Fisher-Pry substitution model is often used to analyze a substitution like electronic for print media in the reference library. The relationship between the fraction of total market taken by the new technology, f, is often given as:

f = 1 /(1 + c exp(-bt))

where t is time, and c and b are empirically determined coefficients. In this case b and c were determined from the data provided by Association of Reference Libraries for the years 1992 to 2004.

When these data are analyzed utilizing the Fisher-Pry method, the graph shown in Figure 1 results. It clearly indicates that the substitution of electronic for print is well underway in reference materials. The crossover point will occur in 2008 and 90% substitution will be achieved ten years later.

Figure 1. Data: http://www.arl.org/



Taking 1990 as the beginning of the substitution, and the middle projection, the time to 90% substitution by electronic media will take 28 years.

One of the interesting, and most insidious aspects of this type of substitution, when the substitution is taking place in a growing market, is that a large percentage of the substitution has taken place before the old technology sees two successive years of decreased revenue. This is the case here as well. Fifty percent of the total time to 90% substitution has elapsed before the print media have experienced two years decline, as shown in Figure 2.

Figure 2.



There is an additional substitution going on and that is collaborative user generated content for traditional organized, hierarchical development and production. The reference industry is a pioneer in this substitution in Wikipedia. This is a substitution within the electronic reference resources, and unfortunately we have no data to indicate how this substitution is progressing. Revenue is not a good surrogate for this type of substitution as the results of the Wikipedia effort are available for free. The only possible measure would be the number of accesses or amount of time that people use Wikipedia versus other traditional reference resources. Wikipedia is certainly growing fast (Figure 3), in spite of professional criticism of the quality of the effort. Figure three indicates the growth in the number of English articles. The number of English articles is projected to be:

2007: 1.7M
2008: 4M
2009: 8.5M
2010: 18M

Figure 3. Source: Wikipedia



The transformation of the reference library has not been completed. There are many factors, trends and driving forces that could affect the future of the reference library. I think that the two most important trends affecting the future of the reference library, and by association, the reference publishing industry are: search engines vs. indexed collections, and proprietary vs. open content creation.

Search engines select information to be delivered to you based on your keywords matching them to the content of documents it searches, based on the algorithm of the search engine. It does not deliver the information that is "best" for the purpose of the researcher, as a reference librarian would, nor does it verify its authority, as indexed and abstracted peer reviewed articles/books/reports does. Most search engines will deliver documents that are current, are used frequently and are linked to my other documents (a type of authority measure). What search engines provide is quick, cheap access to over a billion web sites in the world. Given the high costs of the traditional system, and the rapid improvement of search engines, I see search engines providing a lot of the services now fulfilled by reference librarians, and the reference publishing industry.

Wednesday, September 5, 2007

Technology Substitution in Publishing: Part 1 - Introduction

Information technologies (hardware and software) are playing a key role in innovations in industry after industry. They diffuse through an industry by improving procedures, processes and products. The diffusion usually begins with incremental changes aimed at improving costs, or more broadly, efficiency. This is like a virus infecting a living cell, the informed or informatized (we don’t have good language to describe the result) is transformed into something new. Informed segments of the economy then multiply their effects on the industry radically changing it or destroying it.

The publication industry is one of the industries being so affected. Information technologies have found their way into the processes of printing books, their distribution, the way they are sold, and even the way we communicate about the books. Now information technology is altering the very nature of publications, especially in the textbooks and supplemental materials used in K-12 education. And, now the information technologies developed to aid social change and societal development have begun to impact the industry, threatening to destroy it.

This series of eight blog entries summarizes the meta research done on the industry searching for data that indicates the nature and rate of substitution of information technologies into print. There are two overall conclusions from this study. First, that there are indications of the substitution going on in a number of areas. And, second, that we lack a coherent set of data on the industry that would enable us to make firm predictions.

Substitution analysis is a well accepted method of technological forecasting in use for 36 years. In these analyses, the Fisher-Pry model was used. The Fisher-Pry model predicts characteristics loosely analogous to those of biological system growth. It results in a S-curve (more formally, sigmoidal curve) familiar to many because the curve is in the shape of an S. These natural growth processes share the properties of relatively slow early change, followed by steep growth, then a turnover as size asymptotically approaches a limit.

The Fisher-Pry substitution model is often used to analyze a substitution like electronic for print media in the reference library. The relationship between the fraction of total market taken by the new technology, f, is often given as:

f = 1 /(1 + c exp(-bt))

where t is time, and c and b are empirically determined coefficients.

Thursday, August 23, 2007

Keeping Austin Wyrd

Note: This essay is about the city I live in - Austin, Texas.

When I first heard the unofficial slogan for Austin, "Keep Austin Weird", I was turned off. The word "weird" had too many negative connotations for me. But, then I remembered an old mythology that I had written about in March, 1989 for Creativity!, a now defunct IBM magazine*. And, some conversations with Natalie Shell (http://www.natalieshell.com/) helped connect the two concepts together and I decided to do some further research. I now understand that the concept of "wyrd" is exactly right for Austin. What do you think?

Once upon a time

A great tree grew in the earth by a pool of water that was spring fed from the bottom.
The tree was known as the "World Tree" in some customs, "Tree of Life", or "Word Tree" in others.
The pool of water nourished the tree’s roots.
The tree dropped water from its leaves back into the pool.
The pool was known as the "Well of Wyrd".
The pool was tended by three women whose names meant:

  • All that has gone before,
  • How the past shapes the being now, and
  • That which should become.

The "Well of Wyrd" is layered with past life, represented by the dew from the tree.
And, is constantly being replenished and stirred by the spring at its bottom.
Those who drank from the pool gained wisdom.

The Anglo-Saxon word "wyrd" is derived from a verb, "weordan", to become, which in turn is derived from the Indo-European root "uert" meaning to turn. Wyrd literally means that which has become.

In a wider sense, "wyrd" refers to how past actions continually affect and condition the future. It also stresses the interconnected nature of all actions, and how they influence each other. In metaphysical terms, "wyrd" embodies the concept that everything is turning into something else while both being drawn towards and moving out from its own origins. "Wyrd" can be thought of as a process that continually works the patterns of the past through the patterns of the present into the patterns of the future.

By the way, Shakespeare borrowed from this mythology when he created the three witches in Macbeth:

"Double, double toil and trouble;
Fire burn and cauldron bubble."

The cauldron was the well of wyrd. Stirring the well of wyrd created chaos. And, the three women became witches, who were weird. Hence our modern connotations.

The concept of "wyrd" is complex and deeply ecological. The system of the well and the tree is obviously ecological with respect to the physical world. But, by deeply ecological, I mean that it also applies not only to the physical system, but the social, spiritual and information systems as well. It is "glocal" as well involving the individual and all of humanity. Our past, ancestral and experiential, affects us continually. Yet there is the interplay of our personal wyrd and the universal wyrd and the role we must play in creating our own destiny. We interact with that which has become to create personal patterns that affect and are reflected in the universal patterns. These universal patterns then exert forces that shape our lives.

The patterns created by individuals at a certain time and place create the sprit of the community that shapes the beliefs and behavior of everyone in the community. Every action we take, or don’t take, will have implications for own future choices as well as the future choices of others in the community. Therefore, we have ethical obligations to think carefully about the possible consequences of everything that we do. We are affected and constrained by our past actions, but we are constantly creating what should become through our reaction to present situations.

The three young women tending the tree and the well don’t just simply represent the past, present and future. They stand for:

all that has gone before
the process by which what has gone before and its bonds and connections shape the being that is now
the obligations that exist between people, that must be fulfilled, that shape the present being into what should become

Barton Springs Pool is our Well of Wyrd archetype. It is a physical manifestation of the process of wyrd. We get constant reminders of our past actions and their impacts and constraints on the pool. It is spring feed, but our present state of being produces water that flows into the pool, often polluting it. Dedicated people have fought hard to maintain the obligations we have to each to each other and the future to at least keep it as it now is. As an archetype of our community and its spirit, the pool should be protected, sustained and nurtured. It’s no wonder that people who swim in the pool regularly speak of it as a spiritual experience. It is a spiritual place.

If it is safe to drink the water from the pool, drinking of it should provide wisdom if one reflects on why the water is safe to drink.

I don’t think we’ve done as well on the social, spiritual and informational aspects of our wyrd. We do have a history center, but what about modern history? I don’t think anyone is studying the process of how we have become who we are. And, I’m equally sure that no one is thinking about the network of obligations we have to each other and how that should shape our future.

Keeping Austin wyrd has to become more than an unofficial slogan. It has to become how we perceive, think and act.

* I republished this essay on my blog (http://www.innovationtravelogue.blogspot.com/200)6_11_01_archive.html).

Tuesday, July 3, 2007

iPhone

When I moved from Wappingers Falls, NY to Austin, TX in 1980, I was moving from one IBM location to another. I was supposed to have the position of Technology Manager for the IBM Austin site. I didn't find out until I got there, that the position was filled. So, I had some time to get acquainted with the technology important to the site. Austin had been a second source manufacturing facility for typewriters and was transitioning into electronic hardware software systems, then in the form of word processors.

I did a research project on the key technologies important to the future of systems similar to word processors and concluded that they were all going to merge - audio, visual, text, electronic communications, and all digital. When I tried to communicate that to Austin IBM executives, I was met with blank stares. I might as well have been from Mars.

The iPhone has finally done just that. And, there's still more to come. Watch what happens when TV goes all digital.

Crowd Gaming

MSNBC.com has come up with a new way to entertain yourself before the movie begins. They have developed motion sensors that are placed throughout the theater that can tell which way the crowd is moving. What’s the fun in that? The crowd controls a ball and paddle like the ancient video game “Breakout.” The goal is to break the wall of news on the screen provided by MSNBC.com.

http://www.trendhunter.com/trends/crowd-gaming-what-to-do-before-the-movie-starts/

I've been looking for a demonstration of crowd gaming for awhile. This is a visual demonstration of collaboration.

Friday, June 15, 2007

Democracy in America

“Americans of all ages, all stations of life, and all types of disposition are forever forming associations…In democratic countries knowledge of how to combine is the mother of all forms of knowledge; on its progress depends that of all others.” Alexis de Tocqueville

“In Democracy in America, published in 1835, Tocqueville wrote of the New World and its burgeoning democratic order. Observing from the perspective of a detached social scientist, Tocqueville wrote of his travels through America in the early 19th century when the market revolution, Western expansion, and Jacksonian democracy were radically transforming the fabric of American life. He saw democracy as an equation that balanced liberty and equality, concern for the individual as well as the community. A critic of individualism, Tocqueville thought that association, the coming together of people for common purpose, would bind Americans to an idea of nation larger than selfish desires, thus making a civil society which wasn't exclusively dependent on the state.

Tocqueville's penetrating analysis sought to understand the peculiar nature of American civic life. In describing America, he agreed with thinkers such as Aristotle, James Harrington and Montesquieu that the balance of property determined the balance of political power, but his conclusions after that differed radically from those of his predecessors.

The uniquely American mores and opinions, Tocqueville argued, lay in the origins of American society and derived from the peculiar social conditions that had welcomed colonists in prior centuries. Unlike Europe, venturers to America found a vast expanse of open land. Any and all who arrived could own their own land and cultivate an independent life. Sparse elites and a number of landed aristocrats existed, but, according to Tocqueville, these few stood no chance against the rapidly developing values bred by such vast land ownership. With such an open society, layered with so much opportunity, men of all sorts began working their way up in the world: industriousness became a dominant ethic, and "middling" values began taking root.” Wikipedia

Tocqueville’s Democracy in America is a classic. His penetrating insights into the nature of American society and our form of democracy enabled him to make predictions about its future, many of which are still valid today. This work is credited at inventing sociology.

Looking back at the history of America’s development Heffner points out that, “…our early leaders, even the Jeffersonians, were themselves far from equalitarian in outlook. They believed in government of and for the people, but not by the people. And, more important, they were much too dedicated to the principles of individual liberty and freedom ever to equate them necessarily and irrevocably with equality and democracy.” When Tocqueville was studying America, a democratization process was underway through Jackson. He questioned ,”…whether American’s older concern for individual differences and freedom, could long survive their new penchant for equality and democracy. For as conditions became more equal, Americans seemed more and more to take pride not in their individuality, in their personal liberties, in their freedom, but rather in their sameness. So that as Tocqueville wrote: ‘…every citizen being assimilated to all the rest, is lost in the crowd, and nothing stands conspicuous but the great imposing image of the people at large.’”

“Through out history”, writes Heffner, “kings and princely rules had sought without success to control human thought, that most elusive and invisible power of all. Yet where absolute monarchs had failed, democracy succeeds, for the strength of the majority is unlimited and all-pervasive, and the doctrines of equality and majority rule have substituted for the tyranny of the few over the many the more absolute, imperious and widely accepted tyranny of the many over the few.”

The concept of equality was so important to Tocqueville’s analysis, and to our consideration of the future of democracy, that the history of the concepts’ development is worth repeating. And, since I can’t improve on his writing, bear with me as I allow him to trace the history. “…when the territory was divided amongst a small number of families, who were the owners of the soil and the rulers of the inhabitants; the right of governing descended with the family inheritance from generation to generation; force was the only means by which man could act on man; and landed property was the sole source of power. Soon, however, the political power of the clergy was founded, and began to increase: the clergy opened their ranks to all classes, to the poor and the rich, the vassal and the lord; through the Church, equality penetrated into the Government, and he who as a serf must have vegetated in perpetual bondage took his place as a priest in the midst of nobles, and not infrequently above the heads of kings.

The different relations of men with each other became more complicated and numerous as society gradually became more stable and civilized. Hence the want of civil laws was felt; and the ministers of law soon rose from the obscurity of the tribunals and their dusty chambers, to appear at the court of the monarch, by the side of the feudal barons clothed in their ermine and their mail. Whilst the kings were ruining themselves by their great enterprises, and the nobles exhausting their resources by private wars, the lower orders were enriching themselves by commerce. The influence of money began to be perceptible in state affairs. The transactions of business opened a new road to power, and the financier rose to a station of political influence in which he was at once flattered and despised.

Gradually the diffusion of intelligence, and the increasing taste for literature and art, caused learning and talent to become a means of government; mental ability led to social power, and the man of letters took a part in the affairs of the state. The value attached to high birth declined just as fast as new avenues to power were discovered. In the eleventh century, nobility was beyond all price; in the thirteenth, it might be purchased. Nobility was first conferred by gift in 1270; and equality was thus introduced into the government by the aristocracy itself.

In the course of these seven hundred years, it sometimes happened that the nobles, in order to resist the authority of the crown, or to diminish the power of their rivals, granted some political influence to the common people. Or, more frequently, the king permitted the lower orders to have a share in the government, with the intention of depressing the aristocracy. In France, the kings have always been the most active and the most constant of levelers. When they were strong and ambitious, they spared no pains to raise the people to the level of the nobles; when they were temperate and feeble, they allowed the people to rise above themselves. Some assisted the democracy by their talents, others by their vices. Louis XI and Louis XIV reduced all ranks to the same degree of subjection; and, finally Louis XV descended, himself and all his court, into the dust.

As soon as land began to be held on any other than a feudal tenure, and personal property in its turn became able to confer influence and power, every discovery in the arts, every improvement in commerce or manufactures, created so many new elements of equality among men. Henceforward every new invention, every new want which it occasioned, and every new desire which craved satisfaction, was a step towards a general leveling. The taste for luxury, the love of war, the empire of fashion, and the most superficial as well as the deepest passions of the human heart, seemed to co-operate to enrich the poor and to impoverish the rich.

From the time when the exercise of the intellect became a source of strength and of wealth, we see that every addition to science, every fresh truth, and every new idea became a germ of power placed within the reach of the people. Poetry, eloquence, and memory, the grace of the mind, the glow of imagination, depth of thought, and all the gifts which Heaven scatters at a venture, turned to the advantage of the democracy; and even when they were in the possession of its adversaries, they still served its cause by throwing into bold relief the natural greatness of man. Its conquests spread, therefore, with those of civilization and knowledge; and literature became an arsenal open to all, where the poor and the weak daily resorted for arms.

In running over the pages of our history for seven hundred years, we shall scarcely find a single great event which has not promoted equality of condition. The Crusades and the English wars decimated the nobles and divided their possessions: the municipal corporations introduced democratic liberty into the bosom of feudal monarchy; the invention of fire-arms equalized the vassal and the noble on the field of battle; the art of printing opened the same resources to the minds of all classes; the post-office brought knowledge alike to the door of the cottage and to the gate of the palace; and Protestantism proclaimed that all men are alike able to find the road to heaven. The discovery of America opened a thousand new paths to fortune, and led obscure adventurers to wealth and power.”

And, here we are now with new tools that level the playing field, and value, not in the land, but in ideas growing. Both coming together to open the possibility of new type of democracy. Tocqueville concludes, “…that the gradual and progressive development of social equality is at once the past and future…” of history.

Democracy in America
Alexis de Tocqueville
Edited and abridged by Richard Heffner
Signet Classic, 1984

The Spirit of Democratic Capitalism

This is an incredible work of scholarship and insight. It is not an easy read, but a read filled with insights almost on every page. The magnitude of the task to identify and explain the spirit of democratic capitalism that gives the form energy and success is formidable. Michael Novak is almost uniquely qualified to take on this task. He is a theologian, deeply steeped in the Catholic tradition, a history, philosopher and an economist. The Wall Street Journal gave the book high praise when it published that the book was “The most remarkable and original treatise on the roots of modern capitalism to be published in many years.”

Many things, having full reference
To one consent, may work contrariously;
As many arrows, loosed several ways,
Fly to one mark; as many ways meet in one town;
As many streams meet in one salt sea;
As many lines close in the dial’s center;
So may a thousand actions, once afoot,
End in one purpose, and be all well borne
Without defeat.

Shakespeare, King Henry V

Is there anything about human nature that Shakespeare didn’t touch?

Novak begins the book with, “This book is about the life of the spirit which makes democratic capitalism possible. It is about the theological presumptions, values and systemic intentions.

What do I mean by ‘democratic capitalism’? I mean three systems in one: a predominately market economy; a polity respectful of the rights the individual to life, liberty and the pursuit of happiness; and a system of cultural institutions moved by the ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, and economy based on markets and incentives, and a moral-cultural system which is pluralistic and, in the largest sense, liberal.”

He argues that “…political democracy is compatible in practice only with a market economy. In turn, both systems nourish and are nourished by a pluralistic liberal culture.”

“The first of all moral obligations,” he admonishes, “is to think clearly. Societies are not like the weather, merely given, since human beings are responsible for their form. Social forms are constructs of the human spirit.”

Or, in religious terms, he writes, “The world as Adam faced it after the Garden of Eden left humankind in misery and hunger for millennia. Now that the secrets of sustained material progress have been decoded, the responsibility for reducing misery and hunger is no longer God’s but ours.”

The book is divided into three parts. “In Part One, I try to put into words the structural dynamic beliefs which suffuse democratic capitalism: its Geist, its living spirit. In Part Two, I examine briefly what is left of the socialist idea today, so as to glimpse, as if in a mirror, a view of democratic capitalism by contrast. In Part three, I try to supply at least the beginnings of a religious perspective on democratic capitalism.”

Novak comments in the introduction to the book that he was a democratic socialist. He know sees this a unworkable and the second part is devoted to discrediting the concept in theory and practice. As a result, I found Part Two of the book to be the least enjoyable or insightful. Part One provides to foundations of the concept of the trinity of democracy, capitalism and pluralism. Part Three is the most theoretical of the three sections and for me, was an indictment of widely held theological concepts that have kept areas like South America impoverished.

No short book review like this can do justice to this work. It is a work that needs to be studied and discussed in depth.

However, the one profound truth that emerges for me from these 460 pages is how delicate the balance is between democratic polity, capitalistic economy and a pluralistic society. And, any attempt to change this balance ought to be viewed with alarm, because I just believe that people in power are not thinking of our pluralistic, democratic, capitalistic system as a whole.

He does not cover the social technologies that extreme democracy covers. Almost in passing, he states, “…in a world of instantaneous, universal mass communications, the balance of power has shifted. Ideas, always a part of reality, have today acquired power greater that that of reality.”

Ideas are even more important now. And, we have tools beyond the mass communications he mentions. We are all responsible for the careful and thoughtful implementation of these tools to improving our pluralistic, democratic, capitalistic system.

The Spirit of Democratic Capitalism
Michael Novak
Madison Books, 1991

Thursday, June 14, 2007

First Democracy

"Democracy is government by and for the people. That is hardly a definition, but it will do for a start. As a next step, I shall propose that a government is a democracy insofar as it tries to express the seven ideas of this book: freedom from tyranny, harmony, the rule of law, natural equality, citizen wisdom, reasoning without knowledge, and general education.”

Paul Woodruff
First Democracy

All good principles for an innovation commons.

Read the book summary at http://illuminatedinnovant.blogspot.com/2007_06_10_archive.html

First Democracy

I really enjoyed this book, and I want to thank Paul Woodruff for making this academic research accessible. I think we need a lot more of this right now. We are in a time period of radical change, when much of what we accepted as “truth” is shifting out from under our feet. During times of great change, it’s wise to relearn the basics. Who are we? What are we all about? And, where do we want to go?

Woodruff opens his introduction with, “Democracy is a beautiful idea – government by and for the people. Democracy promises us the freedom to exercise out highest capacities while it protects us from our worst tendencies. In democracy as it ought to be, all adults are free to chime in, to join the conversation on how they should arrange their life together. And no one is left free to enjoy the unchecked power that leads to arrogance and abuse.

Like many beautiful ideas, however, democracy travels through our minds shadowed by its doubles – bad ideas that are close enough to easily mistaken for the real thing. Democracy has many doubles, but the most seductive is majority rule, and this is not democracy. It is merely government by and for the majority.”

So Woodruff goes back to the first democracy – the ancient Athenians. He traces the development of the first democracy and describes its principles. Voting, majority rule, and elected representatives are generally accepted ideas in American democracy, but they were not part of the first democracy.

“These three doubles are not democracy. Voting is not, by itself, democratic. Majority rule is positively undemocratic. And, elected representation makes for serious problems in democracy. I have begun to say what democracy is not. Can I give a positive account?

Democracy is government by and for the people. That is hardly a definition, but it will do for a start. As a next step, I shall propose that a government is a democracy insofar as it tries to express the seven ideas of this book: freedom from tyranny, harmony, the rule of law, natural equality, citizen wisdom, reasoning without knowledge, and general education.”

The tools of the first democracy are unique to the time, culture and size of Athens:

Legal system: No professional judges or prosecutors. Any citizen could bring charges against another, and any citizen could serve on panels of judges that correspond to both our judges and juries.
Governing body: The Assembly consisted of the first 6,000 men to arrive at the Pnyx (a hillside not far from the Acropolis)
Checks on majority rule: The powers of the assembly were limited by law.
Lottery: The lottery, chosen equally fro the ten tribes, was used for juries, for Council of the 500, and for the legislative panel.
Elections: Some important positions were filled by election, especially those that required expert knowledge in military or financial affairs.
Accountability: On leaving office, a magistrate would have his record examined in a process called euthunai (setting things straight)

Woodruff describes the progression of ideas that preceded the Athenian democracy. Then he devotes a chapter to each of principles of the first democracy:

Freedom from Tyranny: “Tyrant (tyrannos) was not always a fearful word, and freedom (eleutheria) was not always associated with democracy. The two shifts in ideas were gradual and simultaneous. By the time democracy was mature, Athenians at least knew what they meant by tyranny – a kind of rule to be avoided at all costs. And, in contract to that, they knew what they meant by freedom. These two ideas we have inherited. And they are priceless.” Woodruff writes. “No one sleeps well in tyranny,” he continues. “Because the tyrant knows no law, he is a terror to his people. And, he lives in terror of his people, because he has taught them to be lawless. The fear he instills in others is close cousin to the fear he must live with himself, for the violence by which he rules could easily be turned against him.” He warns that democracy itself can be come tyrannical, the tyranny of the majority, “…democracy could be come a tyranny of hoi polloi, literally, of the many.” In Athens this became to mean the poor who banded together, acting as tyrants, supporting the interests of the poor over the rich. This led to a two party system, as the rich banded together to form the party of the few (hoi oligoi), the oligarchs. “If the people’s party went too far towards tyranny, then the oligarchs plotted civil war. If the oligarchs succeeded in gaining power, then, the people’s party would withdraw to plot their own violent return.” The Athenians recognized this oscillation and came to agreements to limit the rise of tyranny.
Harmony: “Without harmony there is no democracy.” Woodson comments. “What would government FOR the people mean if the people are so badly divided that there is nothing they want together? Without harmony the government rules in the interests of one group at the expense of another. If harmony fails, many people have no reason to take part in government; others conclude that they must achieve their goals outside of democratic politics altogether; or, violence, or even the threat of terror.”
The Rule of Law (Nomos): “When law is the ruler, no one is above the law. This seems like an idea that everyone would welcome, but in truth if has had many enemies, and still does. Individuals are always looking for ways to put themselves or their government above the law. Big business seeks endless protections against the law, world leaders scoff at international law, and ordinary citizens see nothing wrong with obstructing justice.”
Natural Equality: “James Madison did not believe in the equality of the rich and poor, and so he and other founders of the United States Constitution made sure that the rich would have greater power than the poor. Voters would have to show that they enjoyed a certain level of wealth. Not so in democratic Athens. Penniless citizens – and there were many of these – insisted that they should be free to take part in their government. They went to battle for this. And they won.”
Citizen Wisdom: “In First Democracy, ordinary people were asked to use their wisdom to pass judgment on their leaders.” Woodruff concludes, “…the heart of democracy is the idea that ordinary people have the wisdom to govern themselves.”
Reasoning Without Knowledge: “Reasoning without knowledge is essential in government,” he writes. “Doing it well requires open debate. Doing it poorly is the fault of leaders who silence opposition, conceal the basis of their reasoning, or pretend to an authority that does not belong to them.”
Education (Paideia): “Paideia is the lifeblood of democracy,” he writes. “…paideia should give a citizen the wisdom to judge what he is told by people who do claim to be experts. So we should call it super-expert-education.”

Woodruff concludes the book with an afterword entitled Are Americans Ready for Domocracy? wherein he takes each of the principles and asks questions about the present state of democracy in America. He ends the book with, “Are we ready to shake off the idea that we are already a perfect exemplar of democracy? Are we ready to put the goals of democracy foremost in our political minds, as many Athenians did? Are we ready to admit our mistakes and learn from them, as they did? Most important, are we ready to keep the great dream alive, the dream of a government of the people, by the people and for the people?”

First Democracy: the Challenge of an Ancient Idea, Paul Woodruff, Oxford University Press, 2005

Monday, May 7, 2007

Opportunity

The first announcement I heard upon entering the terminal of Chicago’s O’Hare airport was that it was illegal to solicit transportation at the airport. After getting my bag and walking towards the taxi stand, a man dressed is a suit solicited me for a limousine ride to downtown. After a brief bargain on the price, I accepted his solicitation in order to get a clean, well kept car. I figured that if the car was a nicely dressed as the driver, it should be an improvement over the taxi. I was not wrong.

On the drive into downtown Chicago, which took almost an hour, the driver made various business deals over his cell phone taking notes on scraps of paper. The one that caught my ear was his attempt to find out about a car wash for sale in McAllen, Texas. I am from Austin, Texas and have done some consulting in the area. He was trying to find the owner or real estate agent, and he patiently, but persistently, would not take “I don’t know” as an answer. After several phone calls, writing notes along the way, and flawlessly driving in Chicago traffic, he finally got the name of the real estate company offering the property. He still had to get that number and the follow that lead.

I asked him if he was trying to buy the car wash. He said that he was. I asked if he had ever been to McAllen. He said that he had and that his cousin lived there. It was his cousin who gave him the lead to a car wash for sale. I volunteered that the McAllen area was still fast growing and that real estate values had held. McAllen is on the border with Mexico and has benefited because of trade with Mexico. He said that that was what his cousin told him and that real estate values in Chicago had dropped by 30%.

As we drove on in silence I looked out the window and saw a sign from the Bank of America that had two messages on it that changed:

Opportunity is everywhere
If you know where to look.

I’m not so sure it’s knowing where to look, but knowing how to look that is key. Opportunity can be right in front of you, but if you can’t see it, it’ll do you no good. Yogi Berra was right when he said, “You can see a lot just by looking.”

Did I mention that this guy was from the Mid East? I’m not an expert, but I think he was speaking Arabic on the phone to a friend. His English was good and he was demonstrating many of the characteristics of an entrepreneur. I’m sure he will do well.

Maybe Tom Watson, the founder of IBM was right, when he adopted as his vision in the 1930s, “World peace through world trade.”

Friday, April 13, 2007

Market Driven Innovation: A Systematic Method to Focus and Encourage Innovation

This chapter argues the need to focus on efforts to produce effective and efficient innovations and presents a new approach to target those innovation efforts. It proposes a market-driven innovation methodology as a means to approach the organization's opportunities and threats.
Paul Schumann & Donna Prestwood

From: Innovation Management: Concepts and Cases, edited by B Sujatha, ICFAI Books, 2006

Thursday, April 12, 2007

Innovation History of the Automotive Industry

View Video (wmv, 4MB, 1 min)

This is a compressed view of the innovation history of the auto industry from the 1820's to the 1970's. The innovation profile is displayed as a matrix of nine different types of innovation as described in Innovate! The cycle is repeated three three times in the one minute video. For more information about the history read below. For more information about the innovation model, visit The Innovation Roadmap

History
A classic example illustrating these observations about innovation strategies is the U.S. automobile industry. There were five major stages in the development of strategy in the auto industry from the 1820s until the 1970s.

Experimenters and Hobbyists: The Early Days
The search for a self-propelled wheeled vehicle began with Cugnot's steam-powered tricycle. Other technological competitors followed, with internal combustion engines and electric motors providing energy sources. During this period the fastest car was, surprisingly, an electric vehicle.

From the 1880s to the 1920s there was a rapid proliferation of different versions of the automobile. Hundreds of companies were created, each with its unique approach. Carriage shops in many cases acted as the incubator. To own a car during this period required daring and at least a modicum of mechanical ability. Purchasers were the early adopters, experimenters, and hobbyists, who weren't concerned about repairing the frequent breakdowns, and certainly not totally dependent on the auto as a means of transportation or business. There were few roads, and those were of poor quality.

The breakthrough innovation of Cugnot resulted in many distinctive and incremental product innovations. Competitors were searching for the right technologies and the right configurations to meet market needs. The thrust of this innovation activity was breakthrough and distinctive product innovations. There was not a lot of focus on process or procedure innovations.

Search and Learn: The Development of the Ford Model T
When Henry Ford began his search for the perfect car, there was still a great deal of technological uncertainty. No one knew for sure which engine type would win. Certainly no one knew which configuration would best fit the market. Ford went through a process of searching, trying different configurations of internal combustion engine autos, to find the car for the "common man." The "Model T" designation was not capricious but the result of trials A through S, which culminated in 1908 in the Model T. The major innovation strategy during this period was a continuation of the distinctive product innovations of the past, along with a movement toward incremental product innovations.

A Car for Everyone: Exploiting the Model T
Ford correctly recognized that the driving forces for change in the United States were creating a need for cheap, reliable, independent methods of transportation. He correctly understood that if he could rationalize the manufacturing system and drive the cost down, he could capture a large share of the market. To improve the reliability and decrease the cost, Ford instituted a series of product, process, and procedure innovations:

• Product innovations
Four-cylinder engine (cost, efficiency)
Works completely enclosed (more reliable)
Durable (stood up to bumps)
Reliable (didn't strip gears)
$825 price (competitors', $2000)

• Process innovations
Reinforced-concrete factory with windows /skylights
Interchangeability of parts
Moving assembly line
Task/part segmentation

• Procedure innovations
High pay (double competitors)
Nonstop eight-hour shift rotations

The results of all of these innovations plus an incredible number of subsequent incremental innovations produced impressive cost reductions.

An example that has been reported shows the depth of the rationalization. Ford requested that gears be shipped in wooden boxes, and he specified the dimensions of the pieces of wood in the boxes. This wood was just the right size to be used as is for the floorboards of the cars. Ford had all the cars painted black, and all the parts black. This maximized the interchangeability of the parts, simplifying inventory. The joke was that you could get any color Model T you wanted as long as it was black.

The results were impressive. Ford created the auto industry and dominated it for years. Some people even credit him with the creation of the consumer society we live in. He made the cars cheap enough to be purchased and paid the workers well enough that they could become consumers.

Ford took the results of what he had learned about the product design and configuration and focused on breakthrough, distinctive, and incremental process and procedure innovations.

Spectacularly successful as this strategy was, Ford made the mistake of believing in it too much. On his deathbed, he is reported to have said that the only thing wrong with the Model T was that it stopped selling.

As Abernathy and Wayne have pointed out:

"The strategy of cost minimization single mindedly followed with the Model T was a spectacular success. But the changes that accompanied it carried the seeds of trouble that affected the organization's ability to vary its product, alter its cost structure, and continue to innovate."

From Rural Utility Vehicle to Living Room on Wheels: GM's Response
Environmental forces were at work in this market to create change. People's social values were changing. They wanted more choice, more comfort, more luxury. Women were becoming drivers, and the open carriages and hand-crank starter were definite drawbacks. People began to have more disposable income and attached status to the type of automobile they owned. Porter explains that:

"The classic example of the risks of cost leadership is the Ford Motor Company of the 1920s. Ford had achieved unchallenged cost leadership through limitation of models and varieties, aggressive backward integration, highly-automated facilities, and aggressive pursuit of lower costs through learning. Learning was facilitated by the lack of model changes. Yet as incomes rose and many buyers had already purchased a car and were considering their second, the market began to place more of a premium on styling, model changes, comfort, and closed rather than open cars. Customers were willing to pay a price premium to get such features. General Motors stood ready to capitalize on this development with a full line of models. Ford faced enormous costs of strategic readjustment given the rigidities created by heavy investments in cost minimization of an obsolete model."

GM took advantage of Ford's preoccupation with an obsolete strategy and developed cars for everyone. They offered different price ranges, flexibility of choice, optional features, and a host of technological innovations, not the least of which was Kettering's electric starter and battery system. Alfred Sloan, the founder of GM, was quoted by Abernathy and Wayne as saying,

"Mr. Ford ...had frozen his policy in the Model T,...preeminently an open-car design. With its light chassis, it was unsuited to the heavier closed body, and so in less than two years [by 1923], the closed body made the already obsolescing design of the Model T noncompetitive as an engineering design ....

The old [GM] strategic plan of 1921 was vindicated to a "T," so to speak, but in a surprising way as to the particulars. The old master had failed to master change ....His precious volume, which was the foundation of his position, was fast disappearing. He could not continue losing sales and maintain his profits. And so, for engineering and marketing reasons, the Model T fell .... In May 1927 .... he shut down his great River Rouge plant completely and kept it shut down for nearly a year to retool, leaving the field to Chevrolet unopposed and opening it up for Mr. Chrysler's Plymouth. Mr. Ford regained sales leadership again in 1929, 1930, and 1935, but, speaking in terms of generalities, he had lost the lead to General Motors."

While GM certainly produced many process and procedure innovations, the principal innovation strategy was a return to a distinctive and incremental product innovation thrust. As a result of correctly reading the driving forces for change and interpreting their impact on consumers, GM dominated the auto market for a number of years. However, as Abernathy, Clark, and Kantrow point out, even when imports began to make inroads,

"The comfortable maturity into which American automobile makers drifted during the 1950s and 1960s kept all such potentially disquieting questions at bay. Like their counterparts in other manufacturing industries, executives in Detroit felt they had found the key
to unlock forever the boundaries of a secure domestic market. Their confidence was soon to cost them dearly."

Synthesizing Market Demands: Development of Toyota
In the 1950s and 1960s there were new driving forces for change. The United States was being suburbanized. People were fleeing from the inner cities and were in the process of creating the present‑day megalopolises of Los Angeles, Houston, and Atlanta, to name just a few. The car became essential to get around cities that were created by and for the car. But even more than that, the people left in the suburbs needed a second car. People had enough disposable income for two cars but would have liked to have a smaller, cheaper car for the second car.

There was a niche entry at the low end, Volkswagen, and the German manufacturer found a very successful niche market. Detroit tried to respond by building small cars, but found that it could not produce small cars cheaply enough to compete. The only way that Detroit could take cost out was to reduce quality, and that produced some disastrous results and eventual return to the big-car formula. To quote Abernathy, Clark, and Kantrow:

"In retrospect, then, we can see that Detroit's early flirtation with a new calculus of automobile design and production was at base a continuation of past practice, a somewhat half-hearted attempt to view the competitive dynamics of the industry in different terms. Just how strong a grip the logic of large car production had on the industry can be seen in the compacts' steady increase in size and weight during the years they were in production. Indeed, each year seemed to bring a few more inches and a few more pounds until, by the late 1960s, even a once trim car like the Falcon had added a foot in length and 500 pounds in weight. Detroit, in effect, first tried to build small cars by making little big cars."

Detroit's insistence on following its old business theory caused a backlash. There were attacks on the quality and safety of the small cars, and a general discrediting of the large U.S. automakers. Kotler et al. describe the situation:

"The U.S. automobile companies ignored these warning signals and continued to build larger and more expensive regular automobiles. This total ignorance of consumer demand led to significant negative car buyer attitudes-a pro-foreign, anti-Detroit syndrome. As Donald Peterson, vice president of car planning and research for Ford's Product Development Group, observed: "People believed that we make too many changes for change's sake-i.e., non-functional changes. There's a credibility gap. People don't believe our advertising. It has done more harm than good."

Toyota was watching. They saw the success of Volkswagen, the driving forces for change, the changing needs of auto buyers, and the power of innovation to redefine the small auto with quality. As Kotler et al. state,

"As strategic planners of the highest order, the Japanese aim their marketing efforts, not at where the competition is situated, but at where they think the competitive battlefield will be in the future."

Toyota did extensive market research in the United States using Volkswagen as the prototype. They used U.S. market research firms and U.S. data, and beat us at our own game. Their first entry, the Toyopet, was not a success, but they stuck with their new business theory and the result was a restructuring of the market.

Toyota focused on distinctive product, process, and procedure innovations. Then their thrust was incremental innovations across the board. Eventually, Toyota became the market leader.

Becoming Your Company's Futurist

View the Video (wmv, 147 MB, 72 minutes)
Market research is in the cross hairs of change. Demographic, sociopolitical, technological and economic forces are driving significant, maybe even revolutionary, change in your industry. In times of systemic change, you have to ask yourself the question, "Does my company need a prophet in order to have a profit?" I think that the answer is a resounding "Yes!". In this talk I will establish some steps you will have to take to become your company's futurist. I will discuss three steps - how to develop insights about the future, how to use those insights to become competitive, and how to become a futurist. In addition I will briefly describe the potential business opportunity of strategic market research for companies in your industry.

Paul Schumann is a practicing futurist with expertise in creativity and innovation. He has lived long enough to see forecasts fail and succeed, including some of his own. He had a thirty year career with IBM in three very different arenas - as a technologist and technology manager in semiconductor technology, as an internal entrepreneur creating the first independent business unit within IBM, and as a cultural change agent developing a more creative and innovative culture. Since retiring from IBM he has been consultant as a business futurist with programs in creativity and innovation. He is the founding president of the Central Texas Chapter of the World Future Society (http://www.centexwfs.org/). And he is member of the Advisory Board to the MRA, the Austin Center for Community-based and Nonprofit Organizations and the American Creativity Association. More information about Paul can be found on his web sites - http://www.theinnovationroadmap.com/ and www.glocalvantage.com.

Talk given at Competing in the Research Coliseum, 20th Annual Joint Conference, Southwest Chapter, Marketing Research Association, 4/7/06

Autobiography in Five Chapters

Chapter One:
I walk down the street and there's a deep hole in the sidewalk. I fall in. I am lost. I am helpless. It takes forever to find a way out.

Chapter Two:
I walk down the same street and there’s the same deep hole in the sidewalk. I pretend I don't see it and I fall in again. I can't believe I'm in the same place. It takes a long time to get out.

Chapter Three:
I walk down the same street and there's the same deep hole in the sidewalk. I see that it is there. I still fall in. It's a habit; but my eyes are open and I know where I am. I get out almost immediately.

Chapter Four:
I walk down the same street and there’s the same deep hole in the sidewalk. This time, very carefully and cautiously I manage to walk around it.

Chapter Five:
It occurs to me to walk down a different street.

Not sure where this came from originally. I've had it around for over twenty years.

It sure seems to apply to my life, but I'm always cycling between Chapter 3 and 4...

Tuesday, April 3, 2007

What do you think is the most important question in the world now?

Note: This was a question posed for a number of Conversation Cafe's recently. The following is my answer.

I think that the most important question facing the world now is how to create a set of values that transcends, but can be accepted by, the world’s major spiritual traditions, ethical systems and cultures while supporting simultaneously pluralism and integration. Without some shared values, we cannot have a world conversation.

Omar Khayyam had an answer to this question when he wrote in the Rubaiyat:

"The Grape can with logic absolute
The two and seventy jarring sects confute…"

By confute the translator probably meant ‘argue away’ or he could have meant confuse.

Of course Khayyam also wrote about wine:

"…I wonder often what the vintners buy
One half so precious as the wine they sell."

Khayyam would probably be surprised to find that the answer in today’s world is not the wine that is sold, but the process of selling and buying, or business, that is having the most successful conversation in the world. Is it the values of business that can be shared over most of the world? Are our global conversations going to be business?

When confronted by Marley’s ghost in Dickens’ A Christmas Carol, Scrooge comments on Marley’s condition – captive, bound and double ironed – not comprehending the reason for his condition, "But you were always a good man of business…"

The ghost responds, "Business! Mankind was my business. The common welfare was my business; charity, mercy, forbearance, and benevolence, were all my business. The dealings of my trade were but a drop of water in the comprehensive ocean of my business!"

Science, and technology as well, have established a successful global conversation. Are secular values the only ones that can deal with the two and seventy jarring sects?

Religion and politics seem to have had the most difficulty establishing a global conversation. Violence seems to be the value of this global conversation.

Ecology may be the conversation for today’s environment. It is based on science with strong components of technology and business, and it embraces the values of life, common to most of the world. The realization that we are all affected by the environment, individuals, business and governments, coupled with the fact that anything anyone does, or doesn’t do, affects everyone else, could drive the values of ecology toward the forefront of the world’s conversation.

What do you think?

Saturday, March 31, 2007

A Formula for Sustainable Global Prosperity

Listen to Interview (mp3, 27MB, 1 hour)

David Pearce Snyder, Life-Styles Editor of The Futurist magazine, is a data-based forecaster whose thousands of seminars and workshops on strategic thinking have been attended by representatives from most of the Fortune 500 companies, and from local and federal government agencies, educational institutions and trade associations. Before entering private practice as a consulting futurist in 1981, Mr. Snyder was Chief of Information Systems, and later, Senior Planning Officer for the U.S. Internal Revenue Service, where he designed and managed the Service's Strategic Planning System. He was also a consultant to the RAND Corporation, and served as an instructor for the Federal Executive Institute, and for Congressional and White House staff development programs. Mr. Snyder has published hundreds of studies, articles and reports on the specific future of a wide range of U.S. institutions, industries and professions, and on the socio-economic impacts of new technologies. He is the editor/co-author of five books, including Future Forces and a sequel, America in the 1990s, both published by the American Society of Association Executives. He has appeared on Nightline, the Today Show, CNN, MSNBC, and the BBC World Service.

The common assumption that the Information Revolution will create a new generation of high value/high pay rank-and-file jobs remains an article of faith that is not reflected in current hiring patterns or official long-range employment forecasts. To the contrary, routine workplace activities are increasingly being automated, infomated, and commoditized, reducing the need for skilled labor. Simultaneously, macroeconomists expect that international competition made possible by free trade and our new global infostructure, the Internet, will increasingly drive local labor markets worldwide to pay comparable wages for comparable work. But real revolutions arise from the bottom up, and a confluence of spontaneously adopted technical innovations and collegial workplace practices is currently foreshadowing a grassroots reinvention of work itself that can be expected to increase the value added and the income earned by rank and file employees. What is emerging is an absolutely unexpected yet intuitively compelling social invention, open collaboration, uniquely capable of mobilizing the creative capacities of workers everywhere to exploit the productive potential of information technology, and to address the growing inventory of social, economic, environmental and biomedical challenges confronting the future of human enterprise.

David Pearce Snyder
Consulting Futurist
The Snyder Family Enterprise
8628 Garfield Street
Bethesda, MD 20817
301-530-5807
david@the-futurist.com
www.the-futurist.com

Extreme Creativity

Listen to Interview (mp3, 15MB, 30 minutes)

How will the practice of creativity be a driving force in the future world of work? What role can we play to take advantage of the current uncertainty to leverage creative thinking? What are the links between strategic and creative thinking? How do you totally engage the brain in the creative process? Come and engage your brain in this thought provoking session that will stimulate your thinking!

Ann Herrmann-Nehdi is CEO of Herrmann International, publisher of the Herrmann Brain Dominance Instrument (HBDI) which is based on extensive research on thinking and the brain. Multiple applications of whole brain technology include creativity, strategic thinking, problem solving, management and leadership, teaching and learning, self-understanding, communication and team/staff development. Ann seeks to apply the principles of whole brain technology to her varied responsibilities: from day-to-day operations, to sales, to workshop design and presentations. Having resided in Europe for 13 years, Ann brings a global perspective to the company. Since joining Herrmann International USA 19 years ago, Ann has expanded the network of international offices to 16, spanning Europe, the Pacific Rim and Latin America.

Her personal goal is to promote better understanding of how individuals and organizations think and become more effective, as well as enhance learning and communication technologies worldwide through the application and development of whole brain concept. Ann is an advisor to the American Creativity Association, and has served such clients as Bank Of America, Coca Cola, General Electric, BMW, Target, Cintas, Cisco Systems, Hallmark, IBM, Milliken, Novartis, the US Forest Service and The Wharton School, Vanderbilt, as well as many educational groups. A powerful and highly energetic speaker, Ann has delivered keynotes and large group presentations around the world including events for ACA, CPSI, ASTD, ISA, American Planning Association, Training, the International Alliance for Learning and Innovative Network.

Herrmann International, celebrating its 25th year in 2006, was founded by Ned Herrmann, a Past President and founding member of the ACA and major contributor to the association for many years before he passed away in 1999. Ned, a physicist by education, was Manager of Management Education for General Electric where he began his groundbreaking study of the brain, creative human development and learning which resulted in the formation of the HBDI. The HBDI has been used worldwide to profile individuals’ learning and thinking styles and preference in accordance with brain theory. Herrmann developed and validated the HBDI and the Whole Brain Model while at GE, and designed several workshops that are internationally recognized for their use of cutting-edge creativity-learning models. Herrmann authored several books outlining his findings, including The Creative Brain published in 1996; The Whole Brain Business Book, published in 1998.The work of the North Carolina company has been featured in O Magazine, Business Week, USA Today, Discover, Scientific American and the Harvard Business Review. Herrmann International, with affiliates world-wide, continues to research and develop products and applications in the fields of thinking, creativity, leadership and learning.

Friday, March 30, 2007

Prisoners of Our Thoughts

Listen to the Interview (mp3, 19 min, 9MB)

Drawing on his book, Prisoners of Our Thoughts: Viktor Frankl's Principles at Work (Read a Book Review, PDF), Dr. Alex Pattakos underscores the close relationship between creativity and the human quest for authentic meaning in life. Indeed, the intrinsic motivation to "actualize creative values" is one of the primary sources of meaning that defines our human-ness. Moreover, the will to meaning is based upon our individual and collective willingness to be held responsible--for our attitudes, our beliefs, and our behaviors. In this regard, Dr. Pattakos calls for a new paradigm that connects creativity with responsibility. In other words, we not only have a responsibility to be creative and to inspire creativity in others, but also to ensure that our personal and collective creative outputs are "responsible" and seek to make a positive difference in the world.

Dr. Alex Pattakos, affectionately nicknamed "Dr. Meaning," is the founder of the Center for Meaning and a principal of The Innovation Group, based in Santa Fe, New Mexico, USA. He has had a long-standing passion for creativity as an academic (he began teaching creativity courses at the University level in the early 1980s), as an author (he's published extensively on the relationship between creativity and learning within complex organizations), and as a practitioner (he's worked in/with the government, corporate, and nonprofit sectors). In 1986, he received the "Creativity Award" from the University of Maine for his pioneering work in distance learning. The World Future Society credited him with inventing the concept of the "Electronic Visiting Professor" and IBM showcased his work as an innovation in academic computing.

More recently, Dr. Pattakos has integrated his passion for creativity with the emerging discipline of Innovation Management (see: www.seedsofinnovation.com ). Among his recent publications is the book, Prisoners of Our Thoughts, already translated into eight foreign languages, which applies the wisdom of his mentor, Dr. Viktor Frankl, to contemporary work and personal situations and provides a meaning-centered platform for innovative action. In addition, he is a member of the Honorary Advisory Council for the Statue of Responsibility Foundation (www.SORfoundation.org ), which seeks to erect a Statue of Responsibility monument, an idea that originated with Dr. Frankl, on the West Coast of the USA (as a "book-end" to the Statue of Liberty) by the end of this decade.

Alex N. Pattakos, Ph.D.
Principal, The Innovation Group
223 North Guadalupe Street, #243, Santa Fe, NM 87501-1850
(505) 820-0254 (direct)
alex@themeaningdifference.com
www.themeaningdifference.com
www.seedsofinnovation.com

Whither the Creativity Clan: Challenges for Global Solidarity

Listen to the Interview

Kirpal Singh is an internationally recognized writer, the author of 15 books, and a Singaporean icon. Among other things, he teaches courses on and directs a program on creativity at the very innovative Singapore Management University.

Kirpal Singh
School of Economics & Social Sciences
Singapore Management University
90 Stamford Road
Singapore 178903
65.68220207
kirpals@smu.edu.sg

Wednesday, March 28, 2007

USC Stevens Institute for Innovation Launches; Showcases Breakthrough Innovations
Posted on : 2007-03-28 | Author : University of Southern California
News Category : PressRelease


LOS ANGELES, March 28 /PRNewswire/ -- During a day long celebration of innovation at the University of Southern California today, USC President Steven B. Sample announced the strategic plan, mission and vision for the newly-named USC Stevens Institute for Innovation, the university's bold, new approach to harness and advance breakthrough research and innovation for societal impact.This is the first time a major research university has created a university-wide, centralized hub out of the Office of the Provost to consolidate innovation transfer operations and innovator development and to be the catalyst for educational and co-curricular programming. Additionally, this is the first time such an undertaking has included innovations from all disciplines -- from cinematic arts and music to sciences, medicine and engineering -- focusing efforts on innovators as well as the innovations."Innovation isn't confined to science and technology. It can also be social or artistic, with creative ideas taking the form of start-ups or licenses, new products or services, or even nonprofits and new organizational models," Dr. Sample said. "It is this broader -- more inclusive -- definition for innovation that makes it relevant and powerful within a research university. At USC we are dedicated to breaking down the barriers between disciplines and pursuing innovation that meets societal needs in areas that include education, human health and safety, the arts, the environment, and urban policy and planning."To celebrate the USC Stevens launch, innovators from a variety of disciplines, research centers and USC schools including the School of Pharmacy, Institute for Creative Technologies, Information Sciences Institute, Roski School of Fine Arts, School of Cinematic Arts, and School of Social Work demonstrated their inventions at the showcase. Some of the innovations displayed included: * Wei-Min Shen's Superbots -- Identical modular units that can connect to create robots that can stand, walk or crawl; * Leapfrog lunar landing vehicle -- A working space vehicle that provides small companies the option to explore revenue generating business opportunities on the lunar surface; * A breakthrough Alzheimer's disease therapy that uses a new way to promote neural stem cell generation in the brain to sustain the regenerative capacity and cognitive function of the brain; * The Pano Chamber -- A 9-foot in diameter, immersive, 360 degree video, motion graphic and still display interactive video and audio panoramic display environmentSaid USC Trustee Mark Stevens, Sequoia Capital partner and the naming donor of the Institute, "A chasm exists between academia and business. Although both rely on innovation, the academic world pursues publication, societal impact, and betterment of humanity while the business community generally pursues a return on investment, financial gain and competitive edge. With USC Stevens designed to bridge the gap between the academy and society in such a unique manner, USC has demonstrated its pioneering spirit in redefining what it means to be a major research university in the 21st century."A Unique ApproachThe primary focus of USC Stevens is on developing, supporting and nurturing both the innovator and the innovation. To that end, USC Stevens plans to soon announce specific awards, grants and educational programs to support student innovators."The greatest innovation transfer we can do as a university to make an impact on society occurs every May, when we graduate thousands of future innovators from USC," said Krisztina Holly, Vice Provost and Executive Director of USC Stevens. "Our approach centers on ensuring our researchers and student innovators are empowered with the tools and support necessary to continue to make societal impact, now and in the future."To expand on our effectiveness, USC Stevens will build cross-functional teams within the staff and volunteer network, in thematic areas of interest, to design specific programmatic support within each area based on unique needs. The first team will be in Arts and Media, followed closely by Life Sciences, which will launch in conjunction with the opening of the USC Stevens office on the HSC campus.USC Stevens will soon open an office on the USC Health Sciences Campus to serve the specific needs of the health science researchers, particularly at the Keck School of Medicine and School of Pharmacy.USC Stevens will grow to nearly 30 staff, and will begin to offer a variety of programs to USC researchers and students, including workshops, educational programs, student groups, and resources in innovation; intellectual property management; IP protection and licensing for USC-owned IP; information on volunteer, investment, and sponsored research opportunities at USC; and community-building events to connect innovators and investors. Programs will be built over the next several years in response to needs identified in various thematic areas.About USC Stevens Institute for InnovationUSC Stevens Institute for Innovation is a university-wide resource in the Office of the Provost, designed to harness and advance the creative thinking and breakthrough research at USC for societal impact. USC Stevens identifies, nurtures, protects, and transfers the most exciting innovations from USC to the market, and in turn, provides a central connection for industry seeking cutting-edge innovations in which to invest. Furthermore, USC Stevens develops the innovator as well as innovations, through educational programs, community-building events, and showcase opportunities. From the biosciences and technology to music and cinematic arts, USC Stevens connects faculty, students, and the business community to create an environment for stimulating and inspiring the process of innovation across all disciplines.