INNOBLOG

RFID, SAP data center, dedicated Verizon network, Windows CE with touch screen interface…for flavored water? The cola wars have come a long way from blind taste tests in the local shopping center!

With the limited release this summer of the new Coca-Cola Freestyle machines (pictured at left), Coke is essentially introducing a new business model into the fountain drink industry, one with serious disruptive potential. The system is about the size of a small Coke machine you would see on the street but features a large touch screen interface and single dispensing position. The consumer simply navigates through 100 varieties of beverages and then the machine uses micro-doses of flavor from canisters stored inside to precisely mix up the selection. Profiled in this recent InformationWeek article, the Freestyle is a consumer and customer service tool, a network node, an inventory and supply chain manager, quality control, and business intelligence agent all in one. The integration of these various functions and their associated data streams offers Coke the rare opportunity to improve their performance on the sustaining curve while simultaneously introducing a disruptive play into the market (for more on these curves, see The Disruptive Innovation Primer).

On the sustaining front, Coke is offering its consumers a wider array of drink choices at the point of consumption. They hope this greater array of choices will delight many consumers who leave the fountain disappointed that their preferred beverage was not offered. They also hope the increased number of options will capture a significant portion of the non-consuming market who have traditionally selected water or no beverage at all as the options traditionally available at the fountain were not to their liking. Both of these are significant competitive advantages that will move Coke further up the sustaining curve. However, increasing the number of flavors alone will not yield transformative growth.

The real disruptive potential here lies in the data, not the drinks. By mixing flavors on site in the machine and capturing purchase behavior real time, Coke is better able to test new offerings and immediately respond to market insights around existing and emerging consumption patterns at a hyper-local level. Each point of purchase becomes a kiosk through which Coke can interact with its consumers and test their reactions to new formulas and new messaging. It is no longer dependent on limited and lagging sell through data from its restaurant customers, rather, it can decide which beverages to present to the consumers based on time of day and recent consumption patterns. Much like Zara has done in the apparel industry, Coke is virtually eliminating the time lag between trend identification and capitalization.

Coke also made sure to address the “jobs” of their channel partners, namely the restaurants selling the beverages. By opening up the data to these outlets, Coke is expecting them to play an active and informed role in increasing beverage revenues while the RFID-controlled, networked inventory and supply chain control system promises to address long-standing frustrations.

As the benefits of this smart system are realized, we expect to see other restaurant chains shifting from competing fountain suppliers to Coke. 

After returning from a recent trip to Tokyo, friends were eager to hear about any culinary adventures I might have had. “Did you eat a lot of sushi?” They wanted to know. “Well, some,” I’d respond, “Mostly from 7-Eleven.”

That response tended to make people pause. The thing is, Japanese convenience stores (“combini”) are pretty fantastic. Although they are recognizably similar to their American counterparts, with snacks, drinks, and toiletries, there is a critical difference in the high-level job-to-be-done that the stores address.

In the United States, convenience stores seem to see themselves as solving a fundamental job-to-be-done like “Provide access to a mini-grocery store when the real grocery store is far away.” Under this rubric, convenience stores offer products like chips, tuna, and milk.

The overarching meta-job of a combini, however, is more like “Make inconvenient tasks more convenient.”  Under this theme, combinis sell delicious and cheap ready-to-go bento meals and mini-meals. They’re also the place to go to pay utility bills, buy concert tickets, or drop off luggage to be taken to the airport.

This strategy has proved extremely successful. 7-Eleven is actually Japan’s No. 1 food retailer and most profitable retailer overall, and the Japanese branch now owns its American parent.

A lesson here is that even companies that appear superficially similar to each other may be aimed at fundamentally different jobs targets, which dictate the strategic choices they make. The “make the inconvenient convenient” job has a lot of headroom to grow; plenty of things in life are inconvenient. This meta-job provides a platform for all manner of profitable offerings that would seem out of place in an American convenience store. 

On the other hand, the American meta-job of providing small grocery stores has pigeonholed the industry in a modern environment where access barriers to larger grocery stores are fairly low. Hopefully, American convenience store retailers can learn the lessons from their Japanese equivalents quickly — I could really go for some yakisoba.

• Retailers Cut Back on Variety, Once the Spice of Marketing by Ilan Brat, Ellen Byron and Ann Zimmerman | WSJ.com

  Will this affect the increased pace of incremental innovation in consumer packaged goods? "In the next year or so, these and a few of the other largest retailers are expected to slice the assortment of products in their stores by at least 15%, industry executives and analysts say. This is a challenge for manufacturers, who have grown accustomed to churning out incremental variations on popular products to maintain shelf space and keep their brands fresh in consumers' minds."

• IBM Aims for a Battery Breakthrough by Steve Hamm | BusinessWeek

  Article points out the GE, among others, is also making a play in batteries. "Industry leaders have called for just this kind of concerted effort amid concern that the U.S. will miss out on one of the most important technology shifts in history—the switch from gasoline to electricity as the primary power source for light vehicles. The worry is that the U.S. will trade its current dependency on the Middle East for oil with a new dependency on Asia for vehicle batteries. 'We lost control of battery technology in the 1970s,' laments Andy Grove, former chairman of chip giant Intel. 'Battery technology will define the future, and if we don't act quickly it will go to China and Japan.' "

• The 99-Cent iPhone App That Kills Print Journalism by Ray Richmond | The Wrap

  I have it. And it's good enough that it's hard to imagine how a publication could sell online access if it was also available via this iPhone app. Media disruption continues.

• MediaBugs Rethinks Corrections by Taking a Page from Programmers by Zachary M. Seward | Nieman Journalism Lab

  In a move borrowed from open source programming, startup MediaBugs purports to offer an improved, centralized method for media corrections. "Improved" partly because many media sites have no well-defined path for users to point out corrections, nor prominent place to publish corrections for readers to see.

I love a good list. I come from a long line of planners and little makes me happier than the feeling of organization that results from purging my head of the jumble of to-dos (all of them important action items that could be unintentionally forgotten in an instant if not written down!) onto a nice, clean sheet of paper. Ahh.

So when I was recently introduced to Toodledo, a site for “easy to use, online to-do lists,” I thought I’d surely found a new best friend. Toodledo would un-tether me from my paper-based list. I would be able to add to or retrieve my list on my Blackberry as I wandered about in the world, and I could separate categorically distinct to-dos like, “Go for a run” and “Figure out what I want to be when I grow up.” Most helpfully, I wouldn’t have two or three different lists with overlapping to-dos, each started when I didn’t have immediate access to previous lists. 

The odd thing is that I haven’t used Toodledo at all; in fact, I find it to be something of a turn-off. The site offers many tools to help the weary planner. I can "import tasks from other programs, collaborate with other users, or use “a special tool that analyzes dates, priorities, time estimates, and other characteristics to create a customized schedule of the best use of your time.” Upon registering for the site, I see links for sharing, filtering, sorting, prioritizing, and for files, goals, statistics, booklets, forums, and goals. But I can’t figure out how to just enter a task. When I finally find the tiny tab for adding a task, I’m prompted to enter a due date, folder, repeat assignment, priority, and note. I’m tired already.

The beauty of a list, to me, is the simplicity. I have one, uncluttered picture of my to-dos. In concept, Toodledo meets an unsatisfied job-to-be-done for me. But rather than starting with a bare-bones offering, Toodledo overkills with a product more like Microsoft Project than my paper list. Instead of serving as a selling point, Toodledo’s feature set comparison prompted me to look at some of its competitors that offer fewer features and, presumably, a cleaner, simpler product.

The lessons?

1. Beware of overshooting. While adding features often seems like a good idea, just because you can add them doesn’t necessarily mean that you should.

    

2. Choose defaults wisely. The site wouldn’t be so overwhelming if the default was simple, with the option to add on any/all features.

    

3. Think broadly about competition. Based on the “feature comparison chart,” Toodledo staff clearly see other to-do list websites as their competition. If they had thought about the paper-based list and the advantages it has, they might have rethought some of their strategy or messaging.

    

4. Set expectations appropriately. Toodledo looks like a great tool for complex task management, just not for a simple to-do list. While it is clearly a good product for some people and needs, it fulfills a different job than one might expect based on its whimsical name.

    

Over the past decade, Google has inspired envy in trench-dwelling managers around the world. It's not just the unparalleled benefits. It's the way Google approaches innovation. Engineers are encouraged to dream up pet projects in their spare time. Teams self form around the best ideas. Market-based principles ensure that the best ideas receive funding.

It sounds chaotic, democratic...and intoxicating.

"Why can't we do that?" countless managers wonder. "Instead, we have to deal with crushing bureaucracy that favors our leaders' personal whims over the most game-changing ideas."

Management guru Gary Hamel praised Google in his book The Future of Management, positing that more and more companies would adopt the company's market-based system.

There is indeed much to admire about Google's approach, and much to learn from it. The system ensures that interesting ideas — even those that aren't obvious fits for Google's capabilities or core business model — receive some degree of attention.

However, Google's approach hasn't demonstrated that it can actually, you know, create successful businesses. Despite the hype, more than 95 percent of Google's revenues trace back to Web-based search advertising. Further, as the company's explosive growth has slowed, innovative employees have left to form new ventures. For example, Twitter was formed by former Google employees.

In a blog post last year, I said this recession would be Google's "moment of truth." Either it figured out how to bring appropriate discipline to innovation process to realize its latent potential, or it ended up looking like every other company.

Read the rest at Scott's Havard Management blog, Innovation Insights.

In many different ways and places, including in Scott Anthony’s new book The Silver Lining, we’ve been saying that the current economic climate is no reason to stop innovating. To the contrary, it’s a reason to keep innovating, or start innovating. But “keep innovating” is not just a mantra for start-ups. Established companies need to innovate as well. This issue’s feature article, Mark Johnson and Josh Suskewicz’s “Accelerating Innovation,” specifically addresses the challenges faced by established companies wishing to innovate in a world where start-ups always move more quickly than they can. Here is an excerpt:

In today’s environment, there is decreasing patience for slow-ramping innovation. In some contexts it is important for companies to seize first-mover advantage, while in others they need to follow fast, blunting the damaging effect of competitors’ innovation efforts. No matter the competitive dynamic, it is almost always helpful to get new products or services into market settings as quickly as possible, in order to enable rapid in-market learning and business model development.

 In this issue's Disrupt-O-Meter, Senior Director Kevin Bolen discusses Google's disruptive potential in the translation industry. Here is an excerpt:

On June 9th, Google made an interesting request of the citizens of the world — help us improve our translation technology and the web will be a better place for all! Now, if ever there was an industry ripe for disruption, the translation industry is it. Considered by some to be the world’s “second-oldest profession,” translation in today’s global economy is big business, $18 billion big. For years, a variety of startups, academics, governments and big tech companies have been chasing the “Holy Grail” of translation — a software application that can mimic human quality translation.

Also featured in the InnoBlog, Innosight Associate, Krystin Stafford, discusses the creative solutions behind important jobs-to-be-done in her article "Jobs to be done 'As Seen On TV'" and Analyst, Andrew Laing, discusses the many innovative ways games could contribute to better health in his article "Games for Health: An Opportunity for Disruption?" 

As always, thanks for reading Strategy & Innovation! All issues are available and free with registration here.

I found myself in a store last week that exclusively sells “As Seen on TV” products.  It’s not like I have exercise equipment under my bed, a rotisserie on my kitchen counter, and countless boxes of products designed to simplify my life falling out of the closet….but I was killing some time before a flight.  As I traversed the aisles, mentally noting all the products I had been tempted to buy but hadn’t, I realized I can truly appreciate the intention behind them.  Home inventors, from busy moms to retirees, have created solutions to their important jobs-to-be-done – and sometimes those solutions make it to market.

Channels such as infomercials and the web have made it easier for home inventors to get their creations into the marketplace. Consider how many people adopt compensating behaviors and jury-rig solutions to life’s problems. For instance, have you ever seen someone using a walker with bright green tennis balls on the bottom? It’s a common solution to a defined problem and easy for consumers to find out how to solve. Sure, there are walkers with wheels on them, but cost is often a barrier and when a good-enough solution can be found for $3, why not?

Businesses have sprung up (some more legitimate than others) that make money by helping home inventors to patent and sell their products. Unfortunately, some home inventors don’t realize that there may not be much of a market for that product they came up with. Even if it’s a high-quality solution, the barriers associated with solving a job-to-be-done might not be that high and may be easily overcome, and compensating behaviors could be good enough. Sometimes good enough really is good enough.

The possibility of financial success from invention, as well as altruism to solving people’s problems, keeps a steady stream of new products in the market via non-traditional channels. Those that solve jobs that are truly important, widely-held, and unsatisfied by current offerings or compensating behaviors make it past the TV screens and into our homes.

• Google Wave Drips With Ambition. A New Communication Platform For A New Web. by MG Siegler | TechCrunch

  Description of the plans for Google's new uber-portal, Wave: "Wave offers a very sleek and easy way to navigate and participate in communication on the web that makes both email and instant messaging look stale." 

• Google Wave: Big Potential for Innovation Teams, by Chuck Frey | Innovation Weblog at InnovationTools

  First thoughts on what Google Wave could do for innovation teams: "Group brainstorming; collaboration around pilot projects or prototype products and services; industry intelligence gathering – identify and discuss “weak signals” and industry trends that could lead to new innovations."

• Paradigm Mechanics: Fundamentals for Learning and Innovation, by Chris Jones | Paradigm 101, sourcePOV

  "We need to understand our paradigms so that we can ‘un-learn’ the assumptions of the past, forcing a collective new look at potentially every aspect of the way things are done. To accomplish innovation for large ecosystems, we need to master the process of system definition and creation that are inherent in a paradigm shift. If you’re talking about frameworks, models, systems, abstractions or ground-rules, there’s likely a paradigm to be found. And if you’re a practitioner of information technology or engineering, bringing your understanding of design concepts and 'specfications' to the table will help."

• How to Make the United States Innovative Again, by Derek Thompson | The Atlantic Business Channel

  "What are innovators doing wrong? And how do you design a macroeconomic policy to unleash ideas? ...answers range from rescuing engineers from the clutches of the military, to hosting a big national innovation contest, to changing the way we tax companies." 

Last week, I attended the Games for Health conference here in Boston, an ambitious gathering with a very broad scope that brought together game developers, researchers, physicians, and academics (as well as the occasional consultant) to discuss the many ways games could contribute to better health. Topics ranged from cognitive fitness (think Brain Age) to “exergames” (like Wii Fit) to the use of games to educate and empower patients to simulations that could help train physicians – I even saw a game designed as a metaphor for addiction. Although it’s clear that the games-for-health space is still in its infancy, I was struck by the disruptive potential of many products and concepts.

Gyms and personal trainers, for instance, are already facing disruption from games: A personal trainer may push you harder and help you lose more weight than your grinning, non-sentient Mii, but a Wii Fit is less expensive (especially over time), much more convenient, and arguably more fun (not to mention the fact that Miis don’t complain when you miss a session). Typical disruptive patterns are already apparent in this industry as games get better and approach “good enough” for more applications; Electronic Arts’ new EA Sports Active title for the Wii, for example, is explicitly designed to deliver difficult workouts that make players sweat.

Medical education is another space facing disruption. Dr. Jeff Taekman, an anesthesiologist at Duke, discussed the development and applications of a software-based simulation of an operating theater, in which physicians can virtually come together and collaboratively practice on a simulated patient. We know all too well that disruption (and innovation in general) in the healthcare industry can be painfully difficult because the bar for “good enough” is fairly high. However, the developers of this simulation are doing exactly what they should to surmount that obstacle: finding appropriate foothold customers and circumstances (in this case, focusing on training teamwork and communication rather than specific skills and on continuing education rather than on medical schools), then testing and learning.

Although I left the conference excited by the many disruptive possibilities in the games-for-health space, it was abundantly clear that there is much R&D yet to be done to make these games even better. Popular games that seem healthy (like Brain Age) may sell well and be fun to play, but researchers don’t fully understand how (or whether) they really help people make lasting changes to their mental or physical health. As researchers and developers learn more about how games can help us get healthier and apply that knowledge to new and innovative games, more and more disruptive possibilities will undoubtedly emerge. 

A central tenet in The Silver Lining is that the tough times today are actually a hidden boon for innovation — scarcity will drive discipline, forcing innovators to focus on critical assumptions and make quick decisions. 

One organization that is trying to live these principles is Y Combinator. For those who haven't heard about it, the company was founded in 2005 by Paul Graham, who sold a startup venture to Yahoo in 1998 for about $50 million.

In just a few years, Y Combinator has funded 150 different software and Web services startups. Well known Web 2.0 companies Scribd, Xobni, and Loopt are Y Combinator alums, and me-too funds are springing up across the United States. Sequoia Capital invested $2 million in the business earlier this year.

Y Combinator's basic approach is to give promising ideas a small amount of seed capital (the average investment is less than $25,000), then house those startups for a short period of time. The startups get the capital, strategic input from the Y Combinator team (Graham and his wife), access to a robust network of potential investors, and the opportunity to learn from other Y Combinator–funded startups. In return Y Combinator gets a slice of the business.

In essence, Y Combinator is trying to develop a process to systematize early-stage angel investing. As Fred Wilson, a well known venture capitalist, told Inc. magazine, "Y Combinator is transformative. Paul gives these kids money, but he also gives him a methodology and a value system."

Read the rest at Scott's Havard Management blog, Innovation Insights.

• The Mossberg Solution Reviews Logitech Vid, by Katherine Boehret | WSJ.com
  Review of new good-enough videoconferencing-software aimed at non-techies: "If this was a free download for all, Logitech Vid would be a slam dunk for the consumer. But as of now, it is free only for people who use Logitech Webcams....For everyone else, the software expires after 30 days, with no option to pay for continued use. This means Logitech misses out on the growing number of people whose laptops and desktops have built-in Webcams, but who don't want to buy a Logitech camera just to use Vid (and shouldn't have to)." 

• Is Gen Y teamwork killing creativity? by Rebecca Thorman | Modite
  The group-forming inclinations of Gen Y aren't good for creativity, but "reverting back to a command and control structure is obviously not the answer, but decentralized leadership doesn’t mean we all have to hold hands. We can’t let the pendulum swing so far from one extreme to the other that we miss that happy medium where innovation soars." 

• In Recession Specials Small Firms Revise Pricing, by Dana Mattioli | WSJ.com
  Small businesses innovating during the recession by inventing ways to go after the low end. 

• Interview with Retired President X, by Braden Kelley | Blogging Innovation blog
  Report from a lunch with the recently retired president of a multibillion-dollar company. Nuggets include: "When people have an idea, they often just jump in and start developing the idea...often reinventing the wheel and repeating many mistakes...consider having people submit a short research paper...to show that they have researched those that have gone before them. At the same time, somehow we have to find a better way of capturing the learnings from failed efforts for those undertaking new projects to learn from." 

Last week saw the release of Innosight President Scott Anthony’s new book, The Silver Lining: An Innovation Playbook for Uncertain Times, published by Harvard Business Press. In this issue we are running an aggregated version of the Silver Lining checklist for innovation Scott has been publishing post by post on his popular Innovation Insights blog on the Harvard Business Publishing site. Here is an excerpt:

In today’s tough times, companies may feel like they have a choice: focus on innovation or survival. It is a false choice. Innovation has gone from a nicety to a corporate necessity. After all, remember what legendary trial lawyer Clarence Darrow — clearly channeling Charles Darwin — said: “It is not the strongest of the species that survives, nor the most intelligent, but rather the one most adaptable to change.” There’s little doubt that innovation is going to become harder as resources become tighter and competition becomes fiercer. Those companies that continue to focus on innovation have a rare chance to create substantial space between themselves and their competitors. Those that don’t will fall further and further behind.

In this issue we are beginning to reach into our archives and highlight some of the valuable and relevant articles there. The Clayton Christensen article below, “Defining 'Performance' in the Disruptive Innovation Model,” is one such article.  Here is an excerpt:

When I set out to explain the theory of disruptive innovation, I purposely chose the somewhat generic term "performance" to describe how products, services, or technologies improve over time. This is reflected in the core diagram of the disruptive innovation model, which describes the performance trajectories of technologies over time. The diagram's axes, "performance" and "time," illustrate the observation that over time performance improvements tend to outstrip customers' ability to absorb those improvements. This results in "overshoot," companies offering new attributes for which customers are increasingly unwilling to pay premium prices.

Also in this issue Innosight Manager Robyn Bolton discusses the new rave Daily Candy and how it may have lost some of its sweetness and Senior Associate Natalie Painchaud discusses how persuading customers to adopt new habits can be critical for innovation.

As always, thanks for reading Strategy & Innovation! All issues are available and free with registration here. 

This article is the final installment of a 10-part series highlighting what companies need to do to transform uncertainty into opportunity. The full list will be posted on HarvardBusiness.org and SilverLiningPlaybook.com. The Silver Lining is available now.

10. Does your organization have a plan to help leaders transform themselves?

Einstein once defined insanity as doing the same thing and expecting different results. Managers hoping to transform their businesses have to start by transforming themselves. They have to build the capability to confidently confront the paradoxes they will increasingly encounter.

Unfortunately, most research shows that few leaders have developed the capability to deal with paradox. Why? Historically, success hasn't required it. Fortunately, management can follow a range of strategies to begin to drive the personal reinvention that must precede corporate reinvention.

For example, a manager at a Fortune 100 company who heads up new business development activities launched an online business with a relative during his "nights and weekends" to get first-hand entrepreneurial experience.

Read the rest at Scott's Havard Management blog, Innovation Insights.

It's tough out there, but companies that think their choice is to innovate or to survive are missing the point. Innovation is a corporate necessity, not a nicety. 

There's little doubt that innovation is going to become harder as resources become tighter and competition becomes fiercer. But, those companies that continue to focus on innovation have a rare chance to create substantial space between themselves and their competitors — those that don't will fall further and further behind.

The Silver Lining: An Innovation Playbook for Uncertain Times makes the case that today's turbulent times make mastering innovation a competitive necessity. The book aims to provide corporate innovators and entrepreneurs with practical guidance to seize the ample opportunities that still exist in today's markets.

The following 10-point checklist synthesizes The Silver Lining's key messages and provides practical guidance for leaders looking to realize opportunities in their markets. Each item links to a blog post describing the item in more depth

Read the rest at Scott's Havard Management blog, Innovation Insights.

This article is part of a 10-part series highlighting what companies need to do to transform uncertainty into opportunity. The full list will be posted on HarvardBusiness.org and SilverLiningPlaybook.com. The Silver Lining is available now.

9. Does your organization have systems and structures to make innovation repeatable?

There is a long held view that innovation is random. Because innovation is unpredictable, the best a company can do is to identify important innovations early and react appropriately. But decades of research and applied work has brought great clarity to the world of innovation. While we're still far from perfect predictability, companies that manage innovation like a process can sharply boost the returns on their investment in innovation.

One example of a company that has built an "innovation factory" is Procter & Gamble. The company follows a very structured approach to innovation. At the heart of its effort is an obsessive focus on the consumer. It has systems to encourage innovation, such as different processes for different types of ideas. It has a range of structures to support innovation, such as a $100 million corporate fund to invest in ideas that wouldn't naturally fit within an established unit. And it treats innovation as a strategic effort, with senior leaders actively involved in innovation efforts.

Read the rest at Scott's Havard Management blog, Innovation Insights.

This article is part of a 10-part series highlighting what companies need to do to transform uncertainty into opportunity. The full list will be posted on HarvardBusiness.org and SilverLiningPlaybook.com. The Silver Lining is available now.

8. Does your organization have a plan to "love the low end" in existing and emerging markets?

Customers in established markets are becoming increasingly value conscious. Competitors are growing increasingly fierce. Eighty percent of the world's population and 40 percent of the world's economy (adjusting for purchasing power parity) constitutes just 10 percent of revenues for S&P 500 companies.

Companies around the world have to figure out ways to love the low end, or they will fail to deflect looming threats and miss promising growth opportunities. Loving the low-end requires doing more than stripping out features and costs. It requires that companies build business models that deliver what low-end customers value.

Start by identifying market tiers where your existing solution provides too much performance, or customers that should consume your offering, but can't afford it or access it.

Read the rest at Scott's Havard Management blog, Innovation Insights.

While it is far too early to say that the skies have parted, it at least feels like the ground isn't shaking as much as it was in late 2008. Companies are generally turning from asking, "What surprise is coming next?" to "What do we need to do differently to thrive in today's tough times?"

One thing that almost all large, established companies need to do differently is compete in emerging markets. Want proof? Eighty percent of the world's population and 40 percent of the world's economy (adjusting for purchasing power parity) constitutes just 10 percent of revenues for S&P 500 companies.

University of Michigan Professor C.K. Prahalad has long urged companies to tap into the fortune at the bottom of the world's economy pyramid. What once was a strategic nicety is increasingly a competitive necessity. Companies that don't find ways to love low-income markets will struggle to meet growth targets, and increasingly cede the innovation agenda to companies based in those markets.

In Chapter 7 of The Silver Lining, I argue that companies seeking to win in emerging markets need to fundamentally re-thinking their strategic approach. In yesterday's "era of optimization," companies could succeed by selling tweaked versions of their existing products or services to relatively wealthy consumers in emerging markets. They could further succeed by shrinking or de-featuring those solutions to reach less wealthy consumers.

This approach is akin to saying, "We've made a meal that customers in developed markets find delicious. Who wants it? Can't afford the whole thing? Maybe a bite will do!"

Read the rest at Scott's Havard Management blog, Innovation Insights.

• What Will Journalism LookLike in the Future? 14 Scenarios from IDEO
  The design firm shares some prototyles for collectively sourced, hyperlocal forms of journalism.

• Unboxed: Who Says Innovation Belongs to the Small? by Steve Lohr - NYTimes.com
  Lohr cites The Innovator's Dilemma in saying that much future innovation won't be by small-scale disruptors but systems-level innovations in energy and healthcare by big companies that have the skills and scale to tackle such projects.

• ESPN to open "ESPN Innovation Lab" at Disney's Wide World of Sports to test new broadcast technologies, by Joseph Garcia - OrlandoSentinel.com
  "The facility will allow the cable-sports giant to test new applications such as virtual graphics during events staged at Disney's sports venues. Think concepts such as the "EA Virtual Playbook" that ESPN has used as part of its pro football and basketball coverage or the strike-zone graphics used during baseball games. Because the Wide World of Sports venues are in year-round use, ESPN believes they will make an ideal spot to test and tweak new broadcasting concepts during actual in-game conditions.

• Q&A with search expert Danny Sullivan on Microsoft Bing, by Nick Eaton - Seattlepi.com
  Audio and an edited transcript of an interview in which Sullivan discusses to disruptive potential of Bing and the ways in which Microsoft might make money from it.

This article is part of a 10-part series highlighting what companies need to do to transform uncertainty into opportunity. The full list will be posted on HarvardBusiness.org and SilverLiningPlaybook.com. The Silver Lining launches June 1.

7. Does your organization constantly seek to share the innovation load to de-risk innovation?

In the early 1980s, Bob Reiss had an insight: if he moved quickly, he could capture an opportunity in the then-emerging trivia game market. He invested $50,000 of his own money, and formed relationships with a range of individuals and companies. A friend invented the game for him. TV Guide helped to create trivia questions and brand the game. Swiss Colony helped with warehousing. A specialist helped ensure Reiss collected from slow-paying retailers. In the end, Reiss parlayed his $50,000 investment into a cool $2 million — and all of his partners profited nicely as well.

People often think of entrepreneurs as risk seekers. In fact, most entrepreneurs ruthlessly seek to mitigate risk. They know that what they are doing is inherently risky. Good entrepreneurs find partners who are best positioned to handle key pieces of risk.

Read the rest at Scott's Havard Management blog, Innovation Insights.

There are very few things I rave about. But there is one thing on that very short list that I considered worthy of a take-you-by-the-shoulders-and-stare-you-dead-in-the-eye rave: Daily Candy.

For the uninitiated, Daily Candy is a daily email customized to the city in which you live (12 cities so far) that uses wonderfully witty and snarky prose to give you the latest info on fashion, beauty, food, entertainment, and culture.   Their recommendations are so unique that pretty much anything I own that elicits compliments was discovered through Daily Candy.

This is why I was both interested and surprised this week when Daily Candy and Target announced a partnership in which Target would advertise in Daily Candy’s emails and Daily Candy editors would provide content for a new section on Target.com that highlights up-and-coming designers. As I read the WSJ.com article I had 3 nearly immediate reactions:

1. I didn’t know Daily Candy was owned by Comcast.
2. This is GREAT! I love Target and if Daily Candy will help me find the coolest stuff there that’s even better!
3. Wait a minute, are Daily Candy emails going to start “recommending” Target products? I don’t want that. Anyone can buy Target stuff.

Once I recovered from my retail roller-coaster, I was struck by the fact that the combination of two things I truly enjoy (Target and Daily Candy) could combine to become LESS than the sum of their parts. Both satisfy my jobs-to-be-done better than alternatives — Target because it provides access to interesting products and very cool design at a low cost and Daily Candy because it helps me find unique statement pieces well worth their premium. But the partnership between the two increases the attractiveness of one (Target) while compromising the attractiveness of the other (Daily Candy).

As a business person, I completely understand the business rationale that drove the partnership — Daily Candy gets guaranteed ad revenue from Target and Target attracts more visitors increasing the ad rates they can command. But as a raving fan of Daily Candy, I feel like their pursuit of new revenue streams may compromise their ability to satisfy my important jobs around unbiased recommendations for unique products.

This tension highlights two principles we often stress with our clients — focus on your consumers and build a solution that satisfies their important jobs better than existing solutions then build a business model that supports the solution.   Making choices that change the solution or the business model in a way that compromises your ability to satisfy your consumers’ important jobs (in a real or perceived way) creates space for competition.

Daily Candy continues to have a relatively unique approach and style that keeps it on my list of raves. But I’ve stopped physically accosting people and proclaiming its virtues. And, depending on whether the partnership impacts its current solution, the once-inconceivable may become possible — relegating the daily email to the Spam box.

This article is part of a 10-part series highlighting what companies need to do to transform uncertainty into opportunity. The full list will be posted on HarvardBusiness.org and SilverLiningPlaybook.com. launches June 1.The Silver Lining

6. Does your organization match technological experiments ("can we?") with strategic experiments ("should we?")?

No company would launch a new technology into a market without carefully testing the technology's viability in the laboratory. Yet, companies regularly launch new businesses into a market without carefully testing their strategy's viability.

Companies need to embrace strategic experiments which help to answer questions such as: will the customer buy the product? Will they repeat, if that's necessary? Will competitors crush us? Can we make money? Can we scale? Using smart, low-cost experiments to answer these questions can lower the risk of individual innovation initiatives.

For example, in 2004, Procter & Gamble was on the verge of pulling the plug on a high-potential product due to uncertain market forecasts and high development expenses. The team believed that the opportunity was bigger than the projections, so they cooked up a plan to test the product via the Internet. In-market learning improved the offering and increased confidence in the market potential. P&G launched the product under the brand name "Align" earlier this month.

Read the rest at Scott's Havard Management blog, Innovation Insights.