INNOBLOG

Through July 18, enter an open source competition to identify "Disruptive Innovations in Health and Health Care: Solutions People Want," a competition funded by Robert Wood Johnson Foundation's Pioneer Portfolio and run in collaboration with Changemakers, an initiative of Ashoka that promotes enterprising solutions to social problems.

The Changemakers unique, open source competition platform provides a more dynamic and participatory means for the Pioneer Portfolio to engage innovators. Through July 18, entrants post their ideas on the Changemakers site, where a global network of social and private sector entrepreneurs gather and provide feedback and comments that the whole community can review.

A panel of judgesincluding Margaret Laws, director of the California HealthCare Foundation's Innovations for the Underserved program; Jason Hwang, Harvard Business School Fellow at Innosight; Sonal Shah, Global Economic Development, Google.org; and Nancy Barrand, RWJF senior program officerwill narrow the entry pool to 12 finalists. The Changemakers network will then vote on three winners, each of whom will receive $5,000 awards from Changemakers.

In addition, RWJF's Pioneer Portfolio will review competition entries and has up to $5 million available to support ideas that show potential for far-reaching impact.

We hope you will take part in this exciting opportunity either by submitting your entry for disruptive transformation, sharing your thoughts on the competition topic, and/or reviewing and responding to already-posted ideas. Entry guidelines, conversation threads and additional details are available at http://changemakers.net/en-us/competition/disruptive.

More information from the RWJF blog entry at: http://rwjfblogs.typepad.com/pioneer/2007/04/back_in_january.html

Sally shows off her ring to her friends at work. Paul proposed just last night. The stone sparkles in its setting as only a diamond can. Her friends are surprised at its size, since they know that Paul isnt exactly the most well-to-do guy around. "Is it real? One sheepishly asks. "Yes, it is a real diamond. Sally says, smiling.

Somewhere else Paul thinks about all the attention Sally is surely getting. He smiles, knowing that he never would have been able to afford such a ring if the diamond had come out of a mine.

Does this sound like a common experience?

Several companies, including Florida-based Gemesis and Massachusetts-based Apollo Diamonds are betting that it will be. Over the past few years theyve improved synthetic diamond technology to the point where they can now produce gem-quality colored and even colorless diamonds. And they can do it for substantially less than it would cost to process the approximately 250 tons of ore required to find a single, one-carat, natural diamond.

What remains to be seen is whether these synthetic, or "cultured diamonds, as producers at Apollo and Gemesis prefer to call them, are good-enough for consumers. Diamond simulants such as cubic zirconia and Moissanite still beat synthetic diamonds along the dimension most important to low-end customers: price. Will mid-tier consumers be willing to accept the trade-offs these higher quality synthetics offer relative to the real thing, gaining performance along the dimension of price for some loss of authenticity? Or perhaps synthetics have an edge along another dimension: as environmentally friendly and conflict-free?

The giant diamond producer and former monopolist DeBeers doesnt think so. The first "diamond fact on their website adiamondisforever.com reads: "Every diamond is immensely old, formed long before dinosaurs roamed the earth." This renewed marketing focus and their recent push to develop sophisticated machines capable of detecting synthetics indicates that they are committed to defending their main source of competitive advantage, creating scarcity via control over diamond mining and stockpiles. But how can DeBeers harness this disruptive development? One way is to look for how to grow the overall market. DeBeers has experience creating and selling synthetic diamonds for industrial purposes. One approach would be to take a stake in the disruptive entrant and use its marketing and research resources to expand that market by finding new applications for diamonds like heat-resistant wafers for semiconductors. Another is to find a new dimension of performance for natural diamonds. Emphasizing the exotic or historic origins of the stone as wine and food makers have done is one way to command a premium as lower cost substitutes enter the market. But in the end, DeBeers may find that they have been backed into the wrong part of the value chain.

One of the major ongoing themes driving the disruption of healthcare as we know it is decentralization of health services, as many types of care move from the specialist provider to the general practitioner to the home. In the news this week is another chapter in this evolution.

While the task of preventing conception has long since migrated out from behind the pharmacy counter, to date the job of diagnosing infertility has been the province of specialist providers alone. According to Debora Spar, a Harvard Business School professor who studies the business of reproduction, fertility clinics took in $2.7 billion in 2002, and they are expecting robust growth as couples continue to delay starting families.

This month Genosis, a UK based biotech company, launched Fertell in the US, a his-and-hers at home fertility test that aims to bring fertility testing to the masses. And the masses might be interestedaccording to the CDC, 12% of women of childbearing age (15-44) and nearly 30% of adult men have experienced infertility.

For women, Fertell works by measuring levels of FSH (Follicle Stimulating Hormone), an indicator of the ability of the ovaries to produce eggs for fertilization. For men the test kit measures sperm motility, a likely cause of male infertility. The test is sold at drugstores and retails for around $100.

Fertell doesnt look at all causes of infertility such as irregular luteinizing hormone, estrogen, and progesterone, and is only 95% accurate (as opposed to >99% in doctor administered blood tests). However, the key benefits of the "good enough Fertell offering read like a page in the disruptive-innovation-in-healthcare playbook: competing against non-consumption in early detection of infertility, patient-managed care, privacy and convenience, speed and low cost.

Wal-Mart's announcement this week that it is forging ahead with banking services -- despite having been denied a broad banking license due to lobbying by community banks -- seemed to shock some in the financial services industry. It shouldn't have. The company's move is firmly in line with how it approaches new markets, but the approach is quite distinct from how US financial services firms have traditionally functioned. Wal-Mart is circumventing its recent lobbying defeat by partnering with an array of third party firms, such as GE, to provide a wide array of services such as debit cards, low-cost check cashing, and money transfers. It will use its brick-and-mortar infrastructure to great effect, but will also leverage the convenience of banking while you shop and its reputation for offering excellent value (in a market where pricing can be more than a little opaque). The focus of its effort -- for now -- will be on the unbanked, including immigrants. The firm is laying the foundation of a highly disruptive business. It will offer simple banking services, without the frills of branches, nicely-dressed staff, and drive-through tellers. While consumers may give up these now-standard features of the banking experience, they will gain convenience, value, and access (including the ability to set up basic accounts without all the Know Your Customer paperwork that hinders many who are currently unbanked). Wal-Mart is attacking a market that most banks don't value very highly, and on turf where the firm's asset and brand advantages give it a clear Right to Win. These are all harbingers of success. The move may startle many in the industry, but it shouldn't. Wal-Mart has often outsourced the provision of services that require different competencies than its core, e.g. optician services and health clinics. And there is vast experience overseas, particularly in developing countries such as South Africa and Brazil, of retailers creating powerful banking franchises. These franchises often start with financing purchases at the store, perhaps using transactional data to supplement spotty credit histories. How will financial services firms respond? Likely, many community banks will focus even harder on their long-term customers, who tend to be significantly older than the national average. That is not a formula for long-term success. Check cashing shops may lower price and consolidate -- hard times ahead. Big banks may ignore Wal-Mart's move given that it targets customers they have not traditionally valued. More prescient big banks will realize that Wal-Mart's success at the low tiers of the market will give it every incentive to move up and to start attacking the critical mid-market. Each of these competitors needs to create business model innovation of its own to respond effectively. Business model innovation has become a fashionable term of late, but it is harder to execute than many firms perceive. It must start with the customer value proposition, and then work its way through to the profit system and the firm's resources and processes. Unfortunately, many firms get this backward, fixing the profit system, resources, and processes in place, and thereby severely constraining the type of business model innovation that can occur. They would be well-served to chart their current model in a disciplined fashion, recognizing the divergences that must happen for the company to thrive in the new competitive environment. Then, they can systematically liberate the constraints that remove degrees of freedom from their desired response. It is not easy, but if it were then it wouldn't be so profitable. Wal-Mart's move adheres closely to the model of successful business model innovations. In this case, it has the requisite profit system, resources, and processes already in place. For Wal-Mart, banking is as natural an extension as Internet sales were to a leading catalog retailer of PCs -- Dell. We shall see whether competing banks will be the new Compaq.

Courtship is a timeless ritual practiced by individuals around the globe. In the same way that governments, science and philosophy have evolved so has this enigmatic custom. In recent times technology and the internet have facilitated far more efficient dating than ever before. In fact, according to Jupiter research, internet dating is estimated to have become a $649 million industry in the United States in 2006. Recently a potentially disruptive technology has appeared within the dating landscape which could possibly shake up the internet dating industry. Companies such as MeetMoi (www.meetmoi.com) a VC backed start-up based in New York, have brought the courtship process to the mobile phone. This service allows users to connect with suitable singles that are currently out-and-about in the same vicinity using anonymous text and picture messaging.

Looking at dating through the Innosight, "Jobs to be done lens we see that many daters are over served in multiple dimensions. Most internet dating sites such as Match.com, LavaLife, Yahoo Dating and JDate stress the number of users and extremely detailed profiles as must-have features. Yet, most daters cannot benefit from more than one (or a few) good matches or necessary details. Instead, most daters are looking to "fill a lonely moment or "meet someone interesting now. While certain features, such as the ability to instant message through internet based-dating sites, allow some degree of immediacy, location based mobile dating could potentially change the paradigm.

The greatest question lies in the reaction of incumbent dating service providers. Will incumbents brush-aside the potential threat from mobile dating in order to continue serving their highly lucrative on-line subscribers better, or will they re-allocate resources to take on the potential threat from mobile? Further, is mobile dating a disruptive force or simply a sustaining feature that internet dating companies can choose to adopt? Whichever way the competition for daters pans out we are likely just at the beginning of the mobile dating phenomena.

We're told to drink 8 glasses (64 ounces!) of water a day. It is a tall order for most of us. Why is it so hard to drink all that water? Lets consider the jobs to be done relevant to water consumption; the things consumers are really trying to do when they drink or consider drinking water. Its pretty easy to brainstorm some:

"Get me hydrated
"Quench my thirst
"Lighten my load at the grocery store" (before I got a car and I walked to the grocery store with a backpack this was a very important job for me!)
"Make sure I'm getting fresh, clean water (no icky bacteria or contaminants that are bad for me)"
"Keep my calorie consumption low"

To get these jobs done people resort to compensating behaviors. They add flavor to their water by squeezing in lemon or steeping in slices of cucumber or berries. They purchase flavor packets that stir into water such as Kool Aid and Crystal Light that are small, easy to carry home and easy to store on the shelf. They purchase bottled water and refill the bottles at a water fountain.

Procter & Gamble has recently launched an extension to their PUR water filtration brand that targets these Jobs. The Flavor Options SKU lets consumers insert a flavor cartridge into a redesigned PUR pitcher or the faucet-mounted version. Users press a button when they want to add a flavor and can vary the level of concentration of flavor they want. The PUR Flavor Options package comes in Raspberry, Strawberry and Peach and contain no calories, no artificial colors or flavors. They use sweeteners like Splenda. It seems like it is a great alternative that would delight many consumers, providing a relatively inexpensive and healthy way to encourage more water and less soda for adults and children.

The pitcher sells for between $25 and $29 and you'll have to pay about $10 for two flavor packs. According to the package, each glass costs as little as 7 cents (vs. $1+ for bottled water or soda). The business model is nothing new to P&G a device plus a consumable (the blade and razor model). However, this does represent a different way to sell beverages and is disruptive to the bottled beverage industry by making it simpler and more convenient to get a tasty beverage.

Even if this particular application of the technology is not a blockbuster hit, think of all the things that could be done using this technology. This delivery mechanism could be used to add caffeine, vitamins or medicine to water. As always, we would love to hear your thoughts. Im definitely intrigued by the concept. Now if only I could taste it before I invest in the system and cartridge....