INNOBLOG

 

• The Promise (and Perils) of Open Collaboration by Andrea Gabor | Strategy + Business

  Article looks to the quality movement for clues as to how open innovation, particularly open collaboration, can find wider adoption and greater success.

• Is This the Light Bulb of the Future? by Eric A. Taub | NYTimes.com's Gadgetwise Blog

  Phillips is the first company to enter the U.S. Department of Energy's $10 million contest to create a viable LED-based alternative to a 60-watt light bulb. Article discusses how the DOE plans to use the contest to come up with a technology that will address the faults of the launch of CFL bulbs.

• InnoCentive: A Market for Ideas | The Economist

  Discusses the initial success of Innocentive's partnership with the charitable Rockefeller Foundation to use Innocentive's approach to help solve problems posted by non-profits working in poor countries.

• Netflix Awards $1 Million Prize and Starts a New Contest by Steve Lohr | NYTimes.com's Bits Blog

  Article details the collaborative nature of the Netflix contest whose goal was to identify technology to better predict movie matches among users: "The way teams came together, especially late in the contest, and the improved results that were achieved suggest that this kind of Internet-enabled approach, known as crowdsourcing, can be applied to complex scientific and business challenges."

 

• When Open Innovation Becomes A Gimmick: Lessons From Campbell Soup Company, by Stefan Lindegaard | Leadership+Innovation blog

  Lindegaard identifies what appear to be problems with Campbell's new open innovation initiative, including a lack of focus.

• Unraveling Complexity: The (Heretofore) Missing Link for Achieving Collaborative Innovation, by Chris Jones | Driving Innovation in a Digital World blog

  Musings on the role of social media in collaboration for innovation: "I now believe that innovation in complex ecosystems will depend on an improved collaboration process – a new middle ground for problem solving – that balances large-scale central organizational approach with grass-roots contributions by individuals."

• Social Technology Growth Marches on in 2009, by Josh Bernoff | Groundswell blog

  Forrester's newest report on the adoption of social media finds that "in 2009, more than four out of five online Americans are active in either creating, participating in, or reading some form of social content at least once a month. " Interesting as a view of technology adoption and also for insight into the changing "jobs" of those embracing social media.

• Happiness: A Buyer's Guide, by Drake Bennett | The Boston Globe

  New research into behavioral economics has proved that money doesn't buy happiness. However, the same research has shown that some things we spend money on -- such as providing great experiences like restaurant meals and vacations -- provide more happiness than spending money on material possessions. So should companies be innovating more around providing experiences for customers as opposed to goods?

 

• Tips on Innovation & Entrepreneurship From Jeff Bezos by Om Malik | GigaOm blog

  Comments from on innovation an entrepreurship from Amazon's founder during a recent interview, such as "The trick to being an entrepreneur is to know when to be stubborn and when to be flexible: Be stubborn about the vision, but flexible about tactics."

• Innovation Perspectives for August, by multiple authors | Blogging Innovation

  Roundup of blog posts by six authors answering the question, "please describe the importance of innovation strategy to the success of an organization's innovation efforts."

• The 21 Heroes of Data Visualization by Maria Popova | BusinessWeek

  Slide show of interesting and inspiring visualizations of data sets by top designers illustrates the value of pattern-seeking.

• The New, Faster Face of Innovation by By Erik Brynjolfsson and Michael Schrage | MIT Sloan Management Review via Wall Street Journal

  Article on the ramifications of technology that makes innovation initiatives both speedier and cheaper to produce. Will this result in more disruptive innovation or will companies still be tempted to speed up incremental innovations?

   

 

• Hey, AP: Here Are 7 Money Making Ideas for You, by Erik Sherman | BNET Technology Blog

  Is the Associated Press doomed in an Internet age? Some have suggested this, and their increasingly protectionist stance seems to indicate they think so too. Business blogger Erik Sherman disagrees, offering seven ways AP can make money on the Internet.

• Stressed Brains Rely on Habit, by Jeff Akst | The Scientist

  "Rats that had been stressed repeatedly and unpredictably for three weeks were more likely than unstressed animals to continue performing habitual behaviors, even when it no longer made sense to do so." These findings have implications for innovation, since innovation requires an ability to break free of pre-existing patterns.

• Too Much Networking? by Alan Boyle | Cosmic Log Blog on msnbc.com

  "An overabundance of connections over which information can travel too cheaply can reduce diversity, foster groupthink, and keep radical ideas from taking hold" says the journal Science, citing that as a reason why most open-source software shows only incremental improvements from version to version. The article stops short of blaming the Internet and social networking for groupthink, probably because the Internet also fosters the kinds of weak ties that lead to breakthrough thinking.

• Vendor Sparks Art Concepts by Sarah Junek | The Southlake Journal

  A hand-restored cigarette machine rescued from the scrap metal pile after legislation banished them in 1997 now vends cigarette-pack-size art in a Keller, Texas, art gallery for an accessible price of $5.

• The Pushbutton Web: Realtime Becomes Real, by Anil Dash | Dashes.com

  A look at a set of enabling technologies that the author believes will lead to the next big "upgrade" for the web, "where any site or application can deliver realtime messages to a web-scale audience, using free and open technologies at low cost and without relying on any single company like Twitter or Facebook."

• Mindless Collectives Better at Rational Decision-Making Than Brainy Individuals, by Charles Q. Choi | Scientific American

  "New experiments show how ant colonies don't fall prey to irrational choices as humans sometimes do" - results could be illuminating for understanding how human "wisdom of crowds" can work.

• Open Innovation & Crowdsourcing Examples | OpenInnovators.net
  
  List and links to many services, software, platforms, and providers for open innovation and crowdsourcing, as well as some of the companies that are using these.

• Unboxed - Crowdsourcing Works, When It's Focused, by Steve Lohr | NYTimes.com

  "A look at recent cases and new research suggests that open-innovation models succeed only when carefully designed for a particular task and when the incentives are tailored to attract the most effective collaborators."

   

 

• "The Plural of 'Anecdote' is not 'Data' " by Suw Charman-Anderson | Strange Attractor blog, Corante.com

  Illustration of the dangers of data extrapolation for innovators (and everyone else, to). Twitter and online advertising are "pointless" to teens, says a 15-year-old intern for Morgan Stanley. Says Anderson, "the important thing about businesses like Morgan Stanley, and the journalists who write about them, is that they are supposed to be able to tell the difference between data and generalisations."

• "Thinking about 'Design Thinking' " by Fred Collopy | Manage by Designing blog, Fast Company

  Collopy feels that "design thinking is an unfortunate term for describing what designers have to offer to other disciplines, which seems the most common reason for using the term." Instead, he would propose "to invite lawyers, doctors, politicians and business people to design rather than to engage in design thinking...the product of the former is more likely to be perceived as — and to be — an actual design, rather than a plan, a report, an idea, or some other conceptual or intellectual byproduct."

• "Incandescent Bulbs Return to the Cutting Edge" by Leora Broydo Vestel | NYTimes.com

  Epitaphs were written for incandescent bulbs after Congress passed the 2007 bill mandating tough efficiency standards favoring CFL bulbs. Yet as often happens, the new constraint has switched on innovation in incandescent bulbs: "“There’s a massive misperception that incandescents are going away quickly,” said Chris Calwell, a researcher with Ecos Consulting who studies the bulb market. 'There have been more incandescent innovations in the last three years than in the last two decades."

• "The Extraordinaries: Will Microvolunteering Work?" by Linton Weeks | NPR.org

  Describes the new trend of "microvolunteerism." If you have a small chunk of time available, you can volunteer for a small task that can be done via smart phone, such as adding identifying tags to photos and videos for a museum. "Says Jacob Colker, 26, co-founder of the San Francisco-based Extraordinaries. 'We hope people might look differently at that ride on the bus and not just play video games.' "

   

Comes news today that Google will release a new operating system (OS) based on its Chrome browser. And of course the main question on everyone's mind is what effect this move will have on the incumbent Microsoft. Will the Chrome OS take down Microsoft's Windows?

First, let's be clear that the Chrome OS is not a disruption in and of itself. However, the Chrome OS is built to take advantage of a clear disruption taking place -- the rise of netbooks as an alternative to much more expensive laptop and desktop computers, which were overshooting customers even before the recession hit. Now netbooks are the one bright spot in an otherwise-slupmping consumer electronics industry. Netbook makers Acer and Asus have been disrupting HP, Toshiba, Sony, et al, some of which have released competing products.

Netbooks need operating systems too, and their introduction has offered a blank tablet for someone to come in and compete with Miicrosoft. Linux brings with it a host of compatibility issues, and Microsoft Vista has proven to be unsuitable for netbook use. Microsoft has made available a lighter version of XP and has Windows 7 coming out this fall, which is meant to be compatible with netbooks. Google poked its toe into the OS world with Android, its mobile OS, but Android does not play well with the x86 chip architecture of netbooks and isn't meant for them.

So enter the Google Chrome OS. Google and Microsoft are both giants -- neither is a come-from-nowhere upstart (sorry, Google fans -- those days are long past). So far there is no disruptor here, just two incumbents duking it out. If Microsoft wins, it gets a toehold in the never-ending fight to evolve and adapt with the technological times. It gets to keep playing as the PC evolves from desktop machine stuffed with standalone software and storage to netbooks and phones using the World Wide Web as a de facto OS, running applications and storing data in the cloud. If Google wins, it gets to build on and evolve from its search roots, gaining a platform from which it can grow its increasing apps-based business -- think Google Apps, Docs, and even Google Wave.

Disruptions that bubble up from seemingly out of nowhere can happen quickly. Witness the way netbooks suddenly exploded onto the scene. Chrome vs Windows is about evolution, though, and like any evolution, this one isn't going to happen quickly. It will only be in years to come that we'll know how this story ends.

UPDATE:  Innosight President Scott Anthony has weighed in on this news over at his Harvard Business Publishing blog.  His view: There is in fact real disruptive potential in Google's approach, with two substantial hurdles standing in the way of success. First, Google has to demonstrate that it can go from merely flinging "good enough" products into emerging categories to actually building viable businesses. Second, Microsoft must move from the defensive netbook strategy it appears to be taking today (designed to insulate its core business) to a more offensive approach. Click here to read Scott's post. 

The blogosphere's response to Google's announcement late yesterday about its plans to release an operating system in the second half of 2010 was swift and strong. "Google Drops a Nuclear Bomb" on Microsoft crowed TechCrunch. "Google Launching OS, Firing Torpedo Into Microsoft (and Apple)," announced Silicon Alley Insider.

It continues to amaze me that any twitch by Google garners such breathless press when — publicity aside — the company has never materially impacted a market other than its core online advertising market (though, to be fair, it's had pretty monumental impact in that market!).

My own view is that there is in fact real disruptive potential in Google's approach, with two substantial hurdles standing in the way of success.

Before we discuss the hurdles, however, let's look at the disruptive potential. Google's introduction of the Chrome Internet browser last year heralded a more direct assault by Google on Microsoft's core applications and operation systems businesses. While that browser hasn't had huge market impact, it allowed Google to learn more about application development.

Chrome OS could continue Google's disruptive march. Google is smartly targeting the emerging netbook market. Netbook users don't want all of the features packed into operating systems created for more powerful laptops or desktops. Google is betting that it can optimize its operating system for the unique demands of netbook users.

Also, while Microsoft has made public proclamations about the strategic importance of the netbook market, it's always harder for companies to prioritize smaller, less profitable markets. Google's approach of starting simply and moving up-market is right out of the disruptive playbook.

What's in it for Google? As always, the easier Google makes it for people to browse the Internet, the more it can grow its core advertising business. Plus it makes strategic sense for Google to distract Microsoft from its widely publicized — and increasingly successful — efforts to crack into the search market.

Now, about those hurdles.

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

 

• 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.

 

 

• 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." 

 

 

• 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.

• Learning, and Profiting, from Online Friendships , by Stephen Baker - BusinessWeek

  Exploration of the innovation taking place as companies work to figure out how to make money from the wealth of data they're beginning to have about our online friendships.

• A Real ROI from Twitter? The Start of Social Medical Networks, by Tom Steinert-Threlkeld - Between the Lines blog, ZDNet.com

  Tweeting to your doctor about the status of your health could revolutionize the treatment of chronic diseases.

• Gin, Television, and Social Surplus, by Clay Shirky - Here Comes Everybody

  Participation in social networks represents the shift of "cognitive surplus" from billions of hours of TV watching to a more participatory culture.

• Getting Money from Readers Who Won't Pay for Online News, by Steve Outing - Editor & Publisher

  It's too late for newspaper publishers who are not already charging for content to start doing it, says Outing as he puts forth a business-model concept of multiple revenue streams and describes what some of those might be.

• TRIZ-enabled Mergers and Acquisitions, by Jim Belfiore - InnovationTools.com

  TRIZ, a well-established method used for product and process design evolution, has elements that can be successfully used as an early-stage M&A planning and research tool to help predict and identify potential evolutions of products, technologies and markets.

 

• Searching for Value in Ludicrous Ideas, Allison Arieff, NYTimes.com

  Whimsical, absurd, multi-functional idea mashups by artist Steven M. Johnson who describes his work as “Mix-’N-Match, outrageous extrapolation, speeded-up thinking, random/lateral thinking (which comes close to the hypnagogic state between waking and sleep where some claim inspired inventions and scientific inventions come through), and so forth.”

• How to build a bigger brain, Mark Wheeler, UCLA Newsroom

  Meditation could be the way to safely grow your brain, according to a study by UCLA researchers.

• An Invention That Could Change the Internet For Ever, Andrew Johnson, The Independent

  Background on the WolframAlpha "knowledge engine, scheduled to launch tonight (8 EDT). This software will understand questions and give specific, tailored answers in a way that the web has never managed before. Google is reportedly working on a competitor.

• Yes, I'm A CEO Who Really Uses Twitter - Forbes.com

  Communispace CEO Diane Hessan discusses why she's found Twitter compelling: "Twitter has brought me new ideas and new friends, and it has connected us to a world of people who are trying to be adventurous and innovative."

• How to Save Newspapers (Or, Why the NYT Should Acquire Twitter) - Umair Haque - HarvardBusiness.org

  Haque points out that Twitter is a great way for a newspaper to build four resources and capabilities that will save them: viral distribution, context, relational capital, and business model experimentation. And — "conversely, if Google snaps up Twitter instead, it likely really will be the end of newspapers as we know them."

• The Challenge of Recipes on Twitter - NYTimes.com

  The strict 140-character limit on Twitter posts is predictably enough inspiring creativity, including from Marueen Evans, whose tweets are entire recipes that work, once decoded. According to this article, Evans' tweets are "awesome acts of compression. Ingredients, actions, quantities, times and temperatures — both Fahrenheit and Celsius — boiled down to utmost richness, density and clarity. A dish, a meal, a trip to deliciousness magically packed into the tiniest carry-on bag."

• Kind of Blue: Pushing Boundaries with Miles Davis — HBS Working Knowledge

  MIels Davis as inspiration for business innovation: "Davis' ability to nurture talent is legendary...and...the process that led to Kind of Blue is an example of pushing boundaries and taking experimentation right up to the edge of failure in the pursuit of something new; Davis pushed his musicians 'to the edge,' but he did it in a way that effectively managed the risks. This might be something we can learn from in business as well."

• Understanding Dolly Parton, Broadway's Newest Composer -- New York Magazine

  Worth reading for the description of Parton's leap into Broadway, for which she has composed the music for a stage version of 9 to 5, and also for a description of her process for singing harmony: "She keeps trying variations on her riffs, which she calls 'my little curls' — an astonishing armamentarium of baroquely detailed turns, runs, melismas, appoggiaturas...not so much performed as shed. You’d think you could pick them out of the carpet when she was done."

 

The Internet has laid the foundation for a tremendous variety of disruptive innovations, enabling serious threats to everything from newspapers to brick-and-mortar stores to desktop word processors, but one segment has seemed to enjoy built-in protection from online disruption. Video games require relatively powerful hardware (in the form of fast computers or consoles), so games generally must be run on machines sitting next to the players. Sure, casual games can be hosted online, and games can even be purchased online, but the Internet just isn't good enough to stream the kinds of games that the Xbox 360 and PS3 can handle. Right?

Wrong: OnLive, a new company making its debut this week, is planning to offer streaming games that can be played by anyone on virtually any computer. This is a remarkable technical achievement, and it could usher in a powerful new business model that affects different incumbents in different ways.

On the one hand, game publishers like EA and Ubisoft are probably ecstatic. Owning the latest and greatest hardware necessary to play the latest and greatest games can be very expensive, and the high prices of gaming-oriented PCs prevent many people from even considering games with demanding system requirements. Making high-end games available to people with even low-end netbooks (as long as they have reasonably speedy Internet connections, which most people do) could greatly expand the market for their products. Unsurprisingly, quite a few of the big names in game development and publishing have already signed on.

On the other hand, hardware manufacturers are probably sweating bullets. OnLive could be hugely threatening to console manufacturers like Microsoft, Sony, and Nintendo, and high-end PC manufacturers like Dell and HP (which acquired Alienware and Voodoo, respectively, just a few years ago to gain a stronger presence in this lucrative segment). Why buy a $3,000 computer when OnLive promises almost exactly the same experience with a $300 computer and a cable modem? Even that's more than you'll need to spend: OnLive plans to sell a "MicroConsole" for less than $250.

"Good enough" technologies on the Internet have gotten better and better, from those prehistoric "newspapers by computer" to movie rentals and streaming video. As technology continues to improve and broadband becomes available to more and more people, who knows what will be disrupted next?

• Council on Competitiveness President to Senate Energy Committee: "America Leads in Innovation, but Is Bleeding Opportunities" - MSNBC Wire Services - msnbc.com

  Deborah L. Wince-Smith, president of the Council on Competitiveness, called for "focus" on turning energy research and development into real economic value.

• Firepower of the Lowly Caulk Gun - WSJ.com

  More effective in conserving energy than any green solutions on the market now is measuring where air is leaking into and out of a house and caulking those spots.

• The Music Industry's New Internet Problem - BusinessWeek

  Turns out that a large group of consumers would rather listen to streaming services than buy even mp3s, let alone CDs.

• TaylorMade's Innovation Test - BusinessWeek

  "The only way you are going to innovate," TaylorMade CEO Mark King says, "is if you build chaos into the system."

I received a thoughtful email from developer Stuart Henshall regarding this post on the potential for Twitter to come up with a business model. Stuart makes a great point:

Twitter is a pipe and we send signals down it. That means it’s not that different to the internet, just text-based. … The tweets that are valuable are the ones that escalate to conversations. An @ reply is also many times more valuable to the community than a DM. Both are an escalation. Both imply some form of relationship or exchange. Key word that! Exchange.

Stuart goes on to point out the many ways in which Twitter could benefit from selling services that allow users to escalate their conversations beyond basic tweets. Yet Twitter offers none of these "escalation" services – all of this development is taking place by outside developers like Stuart. The problem? Twitter has not offered these developers a way to make money from providing services that allow Twitter users to escalate conversations into exchanges, nor does Twitter offer any mechanism for developers pay for access to Twitter users. The end result is that developers can't make money from escalating exchanges and Twitter’s not making money they could make from providing the “pipeline” for the exchange.

Stuart again:

So Twitter if you want to make money you have to allow commerce to flow through your veins. You have to let me turn each Tweet into something more valuable. You have to keep it really simple and find a money model that doesn’t gouge my efforts.

Consider the Innosight construct for business model innovation. Key is the Customer Value Proposition – the way a company creates value for customers, or, in other words, helps customers get an important job done. “The best customer value proposition is an offering that gets that job – and only that job – done perfectly.”

It would seem that Twitter has an opportunity here to create value for the developers, who would then create value for the Twitter users. Yet according to Stuart, Twitter does not adequately engage its developer community and hasn’t optimized a value proposition for them, which would in turn help them solidify a value proposition for the user base. It is only when these customer value propositions are created and priced appropriately that the optimum value would be created for all stakeholders in this system – Twitter, the developers, and the Twitter users.

 

Several weeks ago I wrote about Twitter's disruptive potential. This is quite a popular subject right now, so I'll update with some of the more pertinent recent articles that have come out speculating on Twitter's potential:

AP technology writer Michael Liedtke wonders how Twitter, like other Web 2.0 applications  before it, will manage to "build on their great audiences and keep them engaged, without alienating them with a bunch of crap?"

In UK's TimesOnline, James Harkin surmises that Twitter is changing the very way we think, as "the delivery of a continuous stream of messages might well be slowly stretching our brains, turning us into creatures who are better at doing many different things at once" and positing that if Marshall McLuhan were alive today, he would Tweet his message about media.

Tim Beyers from Motley Fool believes Twitter could be a "billion-dollar business," based partly on an evaluation of Twitter's evolving potential as a source for breaking news, and partly on a valuation of individual Twitter users as equivalent to the going rate for focus group respondents: "marketers want instant pitches presented at the moment when they most matter to you. Twitter supplies the thought stream to enable that." Beyers followed up with a post describing how Twitter could monetize: " 'TwitterSense' or selling conversational intelligence to companies that would benefit from microtargeting."

 

 

A few people have asked for my thoughts about the second version of Amazon.com's Kindle e-reading device. The short answer (as I told a reporter from Advertising Age): a nice evolutionary move, but one that is unlikely to drive a step change in the product's adoption.

I've long admired the Kindle, particularly the simplicity of Amazon's integrated business model. It literally takes seconds to download content and begin reading. Some analysts suggest that simplicity has led Kindle users to triple their book purchases.

The original Kindle wasn't the most beautiful of devices. It was all too easy to accidentally press a button and advance a page. The second version of the device looks more attractive. It is significantly thinner and more ergonomic. It also has additional features, such as the ability to translate text into speech. The price is the same as the original Kindle.

The upgraded device should appeal to customers who liked the Kindle's premise, but didn't like its clunkiness.

Read the rest at Scott's Harvard Management blog.

Note: This article first appeared in the Jan. 28 issue of Strategy & Innovation.

Distributing software free or making a web application for free as a means of building an audience that can then be monetized has its roots in the time-honored tradition of freely distributed print publications that make their money from ad sales. Google, MySpace, and Facebook all make money in this way. Twitter, the micro-blogging service that looks like a standalone version of Facebook’s “status update,” is another such company. Started in 2006, Twitter has managed to gather around 6 million users (a smaller percentage of them regular “twitterers”) to its free service.

Twitter hasn’t developed any revenue streams or a business model to date, though that is reportedly going to change this year. Twitter’s founders have so far been running the company on $22 million in venture capital. Despite co-founder Evan Williams’ comments last November that he did not want to take more funding in 2009 in the face of an economy that has venture firms requesting larger amounts of equity in response to declining start-up values, the company made a deal for another $20 million in funding last week, which brings its total valuation to $250 billion.

So, we wonder, is Twitter well-positioned to drive disruptive success?

CUSTOMER	People who desire an easy means of one-to-many communication
SOLUTION	Web interface that allows for 140-character messages, plus replies, private direct messages, and search
BUSINESS MODEL	Currently free so as to build up audience (now just under 6 million); plans to develop revenue streams in 2009
COMPETITIVE LANDSCAPE	Facebook, blogging, plus me-too services like Yammer cropping up

 

Likely Outcome: Potentially disruptive, though if Twitter doesn’t develop revenue streams soon, may simply be purchased by another company

One thing Twitter cannot do is maintain its status quo. There are no large direct competitors for Twitter, and it seems unlikely that another large company would build a Twitter competitor rather than just buy Twitter. However, Twitter now has a host of me-too imitators, and first-mover status isn’t always an advantage. For example, neither Google nor Facebook nor LinkedIn was first in its respective space, nor was the iPod the first MP3 player. The first Twitter-like company – Yammer, for instance, which charges companies for closed employee networks – to actually figure out what service they could offer that customers would value enough to pay for could potentially kill Twitter.

So Twitter essentially has two potential outcomes: be acquired as a sustaining application for another company looking to build engagement, or develop a compelling, possibly disruptive business model on its own.

Considering the first outcome, potential suitors might include Google, Yahoo, or Facebook. A Facebook/Twitter merger has been discussed, and makes sense, since Twitter is essentially Facebook’s “status updates” feature, untethered from Facebook and available by SMS text message (there is a free Facebook application that allows Facebook users to populate their Facebook status updates with their Twitter “stream”). Last fall Twitter reportedly turned down a purchase offer from Facebook for $500 million, although the sticking point wasn’t necessarily the idea itself but the valuation of the Facebook stock that was being offered in return.

The second outcome offers much more interesting possibilities. Just two weeks ago, Twitter filled its first-ever business development position. Where should that person begin in developing revenue streams?

The most obvious answer for a Twitter revenue stream is Google AdWords-like ad sales on Twitter users’ profile pages and against search results. However, founder Evan Williams has said he’s averse to an advertising model.

If non-advertising-based revenue streams are indeed desired, the place to begin is with an understanding of the value Twitter holds for its customers. In other words, what jobs is Twitter fulfilling for its users? Back in December, I conducted a highly unofficial online poll of just over 100 Twitter users to ask them what Twitter was displacing for them. Facebook, isolation, email, and news media were all among the top results, although “Other” also ranked high. Reading into the open-ended comments, “Other” included “Craigslist, real conversation, sleep, PR, media gatekeepers, eating, and writing my dissertation.” Twitter could create a pay-for-service offering that specifically solves any of these.

Twitter could explore ways of charging companies to reach its users or use the site to gather feedback on their products. Twitter could also charge companies that use Twitter as a channel to advertise deals via “tweets” – Dell has said it made $1 million in revenue in 2008 through its Twitter channel.

Twitter is just now beginning a process of integrating search on the home pages of some of its users, a move that could lead directly into an advertising model.

There has been some speculation as to why Google and Yahoo have not attempted to set up a specific Twitter search (currently the only way to search Twitter is at search.twitter.com).

Conceptually, Twitter search amounts to a real-time news search, which is quite powerful and would be attractive for advertisers. It’s hard to imagine that Google would not want the opportunity to add Twitter searches to its AdSense network. It’s also hard to imagine how, if you had a web property with valuable content not already indexed by Google, you would not want to sell advertising there.

Meanwhile, the number of things my informal survey suggests that twitter might potentially displace, and the very breadth of revenue ideas being kicked around in the blogosphere and on Twitter itself, indicates real disruptive opportunities to develop a compelling business model. The discussion includes a large variety of features and analytics that Twitter could add and charge for, and two different “come up with a business plan for Twitter” contests. In fact, the most disruptive ideas may be somewhere down in the comments on one of those blog posts.

A couple of years ago I first heard the story of Markus Frind, the founder of dating website PlentyofFish.com who, it was said, worked about an hour a day on his site and was making $10,000 a month. That was annoying enough. Now, a recent profile of Frind in Inc. magazine says Frind works an hour a day and brings in $10 million a year.

I bring this up not to annoy you, but to point out that Frind has built his fortune mainly by following the disruptive playbook. His “blueprint,” as he described it to Inc.: “Pick a market in which the competition charges money for its service, build a lean operation with a "dead simple" free website, and pay for it using Google AdSense.”

We would add, find a market with significant amounts of nonconsumption. PlentyofFish.com is aimed at nonconsumers of sophisticated dating sites – people who people who want to browse profiles but are not ready to purchase. The unintended side effect of this was that PlentyofFish.com also turned out to be the “perfect place for paid dating sites to spend their huge advertising budgets.”

Frind is a master of resource constraints. He uses many fewer servers than most database-driven sites with his traffic, only has three employees, and resists adding features. He has even profited by *not* making what would to others be obvious improvements to PlentyofFish.com: “On a site this big and this complex, it is impossible to predict how even the smallest changes might affect the bottom line. Fixing the wonky images, for instance, might actually hurt Plenty of Fish. Right now, users are compelled to click on people's profiles in order to get to the next screen and view proper headshots. That causes people to view more profiles and allows Frind, who gets paid by the page view, to serve more ads.”

Finally, Frind has written code that tracks what users do and serves them profiles based on the preferences their search patterns suggest, not on what they say they want. Expressing a preference in your profile for blondes but spending your time searching for brunettes would get you more profiles for brunettes. In this way Frind indirectly listens to his customers. He doesn’t believe in directly listening to them. He told Inc., "I don't listen to the users," he says. "The people who suggest things are the vocal minority who have stupid ideas that only apply to their little niches."

The disruptive playbook doesn’t account for all of Markus Frind’s success – the Inc. article makes him sound like the rare person who’s managed to make his personality quirks work for him and not against him. But PlentyofFish.com is a great example of how one person can master disruption and benefit handsomely.
 

I'm testing out a new shared bookmarks service called Diigo, and am planning to regularly post quick links and summaries to what I and others from Innosight have been reading. Delicious never worked so well for me for this purpose, so we'll see how this goes! Hope you enjoy the links! 

• 10 Lessons for Organisations About Supporting More Networked Innovation - Nesta Connect

  Great information from in-the-trenches experience in networked innovation by the UK's National Endowment for Science, Technology and the Arts
  

• Technology Levels Playing Field in Race to Market Electric Car - WSJ.com

  No start-up has grown into a major auto maker in at least half a century -- yet new automakers are emerging in electric car business, uniquely suited to disruptive entrants because of low barriers to entry (once the battery technology is accounted for). Example: Chinese battery manufacturer BYD has just begun selling a plug-in electric ca in China for about the Chinese equivalent of $20,000.

• The Renegades at the New York Times - New York magazine

  Disruption inch by inch: Young New York Times interactive designers and coders bring quirky, often unheralded innovations to NYT online.
  

 

Two emerging technologies entering the living room. One still largely a pipe dream, and likely to be expensive upon introduction. The other seemingly just around the corner, and likely to be reasonably priced. Which one is most likely to gain rapid adoption?

While the disruptive models generally favor cheap-and-quick technologies, my money is on the expensive pipe dream (three-dimensional television) over the almost-here-and-affordable offering (televisions with embedded Internet capabilities)--unless companies can break from past patterns and embrace simplicity.

The simplest way to assess a technology's potential is to ask whether it helps the consumer do what they are already trying to get done....

Read the rest on Scott's Harvard Management blog, Innovation Insights.

Online microblogging and social networking service Twitter started in March 2006 but didn’t really hit its stride until the past few months ago. September 2008’s 5.57 million visitors represented a fivefold increase within a month’s time. This usage curve has dovetailed with my own Twitter experience. I signed up for Twitter as @ReneeCallahan in the spring of 2007, when a number of my blogging friends were signing up. I couldn’t figure out what to do with it until this past October, when I joined a group of people “tweeting” snippets from the Business Innovation Factory’s BIF-4 conference.

Since then I’ve stepped into the Twitter conversation stream several times each day and have come to value the camaraderie and knowledge-sharing I find there. It's truly amazing how much information can be put into a 140-character post.

I’ve begun to wonder whether Twitter has in it the seeds of disruption. First thing I'd need to know is, if Twitter is in fact disruptive, what is it disrupting? Social media consultant Laura Fitton of Pistachio Consulting (@Pistachio) helped me gather information on this by putting up a quick survey using Google Docs and publicizing it to her 12,500 twitter followers. Here's what 128 respondents felt Twitter disrupted when they were allowed to choose all applicable answers:

When the respondents were forced to choose only one answer from the list, the results looked like this:

Open-end answers to the question included: Craigslist, real conversation, sleep, PR, media gatekeepers, eating, and writing my dissertation. There was also a fair amount of comment in the open-end answers as to whether Twitter is truly disruptive.

In order for Twitter to disrupt, it would need to display the characteristics of disruptive innovation: it would need to be a good-enough, low-cost solution to a job that anough people were trying to get done that it would create a new market at the low end of an established market.

What do you think? Is Twitter potentially disruptive? If so, what might it be disrupting?

Today's tough economic climate is surfacing an interesting debate: should emerging Web 2.0 disruptors prioritize financial results or audience growth?

Yes, this is a trick question.

Companies really should focus on a third variable: learning that helps them iterate towards a sustainable, scalable business model.

A pair of recent articles highlighted different approaches taken by emerging Web 2.0 leaders. One article, in the most recent BusinessWeek, focused on social networks. The article described how Facebook recently reduced its revenue targets to focus on growing its user base. One board member told BusinessWeek, "If we stopped growing, we could make money, but it makes no sense for us to stop growing."

On the other hand, leading rival MySpace, which is owned by the News Corp conglomerate, has more of a profit focus. It has a smaller overall audience than Facebook (and Facebook's lead is widening), but a stronger overseas presence and about twice Facebook's revenues.

The other article, in The New York Times, talked about emerging models in so-called microblogging, where users blast short updates to friends, family, and followers. Twitter has become an industry leader, with users raving about the transformational power of its no-more-than-140-character "tweets." More than three million people have tried Twitter, but the company lacks a clear business model.

"If we spent time monetizing early on," its Chief Executive told the Times, "it would have meant we weren't doing other things that made the product better for users."

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

Mention "Google," and innovation watchers immediately think of the company's seemingly paradigm-busting approach to innovation, where engineers spend up to 20 percent of their time working on passion projects, teams self-form around ideas, and internal market mechanisms prioritize, shape, and scale ideas. Add in Google's legendary perks, and it is no surprise that the company has attracted the world's attention and envy.

There's just one problem: Google's paradigm-busting approach hasn't delivered meaningful results. A recent Wall Street Journal article highlighted how Google's core business--online advertising--constitutes 97 percent of its revenue. Despite the company's ability to fling new products and services on the market, it has failed to create meaningful new growth businesses.

Slowing growth has led analysts to question the company's cost structure and efficiency efforts. In response, the Journal article described how Google plans to bring in Six Sigma efficiency experts to optimize key operating processes. It is rationalizing its innovation investments to focus on a few big areas that have the greatest growth potential. Chief Executive Officer Eric Schmidt said it will stop having people work on "dark matter" projects that "aren't really that exciting."

The company has reached its innovation moment of truth, where the world finds out whether it really has a revolutionary approach to innovation.

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

The Nov. 12 issue of Strategy & Innovation has been posted, featuring these stories:

• Are You Ready for the Next Generation of Innovation? by Stefan Lindegaard explains that the move toward open innovation requires a new mindset and a new set of skills; it is no longer enough to just be a good project manager, researcher, engineer — or leader. What skills are required for this “next-generation mindset”? In his article, Lindegaard discusses these skills: collaboration, relationship-building, stakeholder management, and communication.
• Innovators' Insights:  Sick Economy Visits Doctors by Krystin Stafford discusses the affect that the economic downturn could have on physicians' practices and what innovations they might consider to minimize a drop in their revenues while ensuring that their patients get quality care.
• Disrupt-O-Meter: RingCentral Digital Line vs. Microsoft Office Communicator by Renee Hopkins Callahan describes the competitive struggles in the business VoIP space. Is tiny start-up RingCentral better positioned for growth in the enterprise than Microsoft, which historically has owned the enterprise?

 With thisi issue we are once again making the full Strategy & Innovation issue available as a .PDF download (you will need to register before downloading). The previous four digital issue sof Strategy & Innovation can also now be downloaded in .PDF format.

This New York Times article describes the positive fallout that resulted after Ph.D. candidate Johnny Chung Lee posted a YouTube video last December showing how the Nintendo Wii remote controller could transform a normal video screen into a virtual reality display (an idea I also referenced in this Emerging Technology Watch article). So far, the video has been seen more than six million times, helped Lee get a job with Microsoft and helped him get listed in this year's MIT Technology Review Young Innovators Under 35.

Lee's choice of YouTube to disseminate information about his invention was perhaps more innovative than what he actually invented. Sais the Times: "Contrast this with what might have followed from other options Mr. Lee considered for communicating his ideas. He might have published a paper that only a few dozen specialists would have read. A talk at a conference would have brought a slightly larger audience. In either case, it would have taken months for his ideas to reach others."

Also, demonstrating his invention in a YouTube video allowed Lee to not only reach millions of people, it allowed for him to receive feedback and essentially test his ideas — an illustration of one of the prime uses of social media: listening to others. Those others might be your customers if you are using social media as a marketer. If you are an inventor, listening to others gives you valuable information on how your idea works and how it might be tweaked — which essentially is the value of a prototype.

Mr. Lee himself told the Times, “ 'Sharing an idea the right way is just as important as doing the work itself. If you create something but nobody knows, it’s as if it never happened.' "

Scott Anthony recently blogged about Google’s new Chrome browser, concluding that the offering has potential as a disruptive threat to Microsoft. I agree, but not because the browser itself is particularly remarkable; specifically, I see Chrome as a small part of a larger, Google-backed movement toward more Internet-based computing as opposed to Microsoft’s current desktop applications. I think that Chrome itself is a sustaining move in the browser space, but that it may help foster more disruptive change.

I’ve been using Chrome since its debut, and there’s no doubt that it’s clever. The frame the browser creates around the sites it displays (known to developers as its “chrome” – get it?) is impressively small: there’s no menu bar, tabs are all the way at the top, and the status bar at the bottom only pops up when it needs to, leaving extra space to view websites the rest of the time.  Useful features and shortcuts abound, like the versatile, search-capable address bar known as the “omnibar”.

Chrome is also technically innovative: it’s speedy, of course, and there are many innovations under the hood. One of the cleverest enhancements is the way tabs work. Each tab is completely separated from all the others, so when an especially complex (or unfortunately buggy) website causes problems and a tab crashes, everything else keeps humming along smoothly.

Finally, it’s… well… cute. Its features are introduced in a comic. Chrome reminds you that browsing in its unique incognito mode (in which no history is kept and no cookies are saved) won’t protect you from “secret agents” or “people standing behind you.”  When a tab crashes the error message is “Aw, Snap!” Typing "about:internets" into the address bar will take you to a Ted Stevens joke.

These innovations allow Chrome to do the things other browsers do (they all get at the same Internet) and to do them incrementally better. Through that lens, I’m not sure how successful Chrome will be; remember, as Scott mentions, Microsoft’s Internet Explorer maintains a 72.2% market share despite the existence of superior alternatives. All major web browsers out there are equally free, and many are also open source.

Viewed as part of a larger strategy, however, Chrome could be a small part of a truly disruptive change in computing. Google has been pushing hard in recent years to expand the range of jobs consumers are able to do online in the cloud, from word processing to working with spreadsheets to creating presentations, and Chrome is a speedier, more stable platform for those sorts of applications than other browsers. Furthermore, because Chrome is open source, Google is making it easy for other developers to adapt its features.

Chrome may not be disruptive to other browsers, but it will help enable the adoption of Internet-based computing which, as it provides enhanced portability at a low (or no) price in exchange for fewer features, fits the disruptive mold nicely.

On its own, Chrome is nothing earth-shattering, breathless pundits prophesying the gruesome demise of Microsoft notwithstanding. On the other hand, Chrome’s features do make Internet applications marginally easier to use and more reliable, and Google is working diligently to continue that trend. Relying entirely on the Internet to get our computing jobs done may seem difficult to imagine now, but viewed as part of a larger movement Chrome is certainly a small step toward a much "cloudier” future. 

It didn't take long for the hype machine to gear up. Seemingly minutes after news began to appear about Google's new Web browser (called "Chrome"), pundits started talking about "browser wars" and Google's "Microsoft killer." In this case, the hype might be justified, if Chrome delivers on its disruptive potential.

Early descriptions sound ominous for Microsoft. Google's browser was built from the ground up to make it easier and faster to run Web-based applications. It is completely open source, meaning developers can modify the source code and easily design applications that work with the browser. And of course, it is free.

Google hopes the browser will lead more people to spend more time using its applications, browsing the Internet, and contributing to its advertising revenue. Further, it hopes to lessen the chances that Microsoft uses its browser dominance to subtly push people towards its own Web sites and applications. 

Chrome presents an obvious threat to Microsoft's Internet Explorer software. But Chrome could do much more. ...

Read the rest at Scott Anthony's Harvard Management blog.

An article in the Wall Street Journal today described how a startup company called Cuil Inc. has assembled a “dream team” of engineers to try to dethrone Google Inc. Odds are that Cuil (pronounced "cool") ends up like the seemingly unbeatable team of NBA players that finished sixth in the 2002 FIBA world championships.

Cuil’s search engine launched today. It claims to cover three times the number of Web pages that Google covers (in trial runs this morning it ran very slowly and found nothing under my name!), and displays its results like a magazine. President and co-founder Anna Patterson, an engineer who helped build Google’s search index, told the Journal, "You can't be an alternative search engine and smaller. You have to be an alternative and bigger."

To top Google, Cuil built a top-flight team of engineers with search experience at eBay, IBM, AltaVista, and, of course, Google. It is backed with more than $30 million of venture capital.

Cuil is playing a dangerous game. ...

Read the rest on Scott's Harvard Business blog, Innovation Insights.

At some point during the past few years, Adobe’s Flash technology became one of the most often used formats to encode streaming video on the Internet. From its start as a niche animation tool in the mid-1990s to one of the top streaming video formats today, Flash has followed a decidedly disruptive path, taking market share away from all traditional streaming video format heavyweights.

In the late 1990s, as Internet connections became capable of carrying streaming video content, a format battle arose. RealVideo, a purpose-built platform designed to handle the challenges of Internet streaming, quickly captured dominant share. Windows Media, despite the inclusion of its player within all Windows-based PCs, lagged far behind, slowed initially by poor video quality and streaming capabilities. Finally, despite offering the highest video quality, Apple’s Quicktime format lagged Windows Media’s share, suffering from a lack of promotion, the need to download and install a player application, and niche ownership of Macintosh computers.

A few years prior to the format wars of 2000, San Francisco’s Macromedia acquired a vector-based animation package, FutureSplash, and rebranded it as its Flash product. Flash was easy for novice and experienced developers alike to use, and its applications and animations could also be easily compressed to a small, Internet-friendly file size. As Flash applications and animations began to pop up throughout an increasingly interactive Web, Microsoft agreed to bundle the Flash plug-in within Internet Explorer 5. By 2000, it was being distributed within all AOL, Netscape, and Microsoft web browsers. In 2002, it shipped within all releases of Windows XP for an installed base within 92 percent of all Internet-connected PCs.

Initially, Flash was a format perfect for interactive applications and animations, but could not be used for the encoding of video. Over time, however, as the Flash platform evolved, it became capable of supporting increasing content frame rates. Soon, the line began to blur between animation and video. In 2002, after the release of new capabilities within Macromedia Flash MX and Flash Player 6, Flash’s broad installed base compelled developers to begin to use Flash as a format for encoding video. While its video quality lagged that of incumbent formats, Flash was “good enough” for some web video content, particularly in light of the fact that the majority of users could consume such video without needing to download and install a separate player application — a big plus.

Over the last six years, and more recently under Adobe’s ownership, Flash adoption has grown dramatically. Today, television channels including CBS, NBC, CNN, and ESPN, along with user-generated content sites such as YouTube, MySpace, Google Video, and Yahoo Video, all encode their videos using Flash. CBS.com, for example, is also just one example of many sites streaming Flash video 720p HD. According to a report published in April 2008, Flash-powered online video websites are now responsible for substantially more than 91 percent of online video traffic. While RealNetworks' RealVideo, Microsoft Windows Media, and Apple Quicktime remain players in the world of online video, Flash has clearly taken the lead.

Since its acquisition and re-launch by Macromedia in 1996, Flash has followed a classic disruptive trajectory through the world of streaming video. Its initial foothold, the world of web-based animation, provided a perfect niche for Flash to incubate. Bundled within all major web browsers, Flash then hitched a ride on a dynamite distribution mechanism, finding a home within 98.45 percent of all Internet-enabled PCs as of June 2008. Improvements to Flash technology, combined with its installed base, next enabled it to move up-market, tackling increasingly complex content until the line between animation and video was gone, along with the lead that had been enjoyed by the streaming video format incumbents.

I have to give credit to the folks at advertising agency Modernista! for dismantling the company’s existing website in favor a “site-less” approach. In this disruptive move they’ve done much more than simply save on site design.

By foregoing the breadth of information available on a traditional site, they focus viewer attention on the company’s art and creativity. It’s a big win (and just plain cool).

The company’s new homepage consists only of a small menu that floats over the viewer’s referring site or over the Modernista! entry on Wikipedia. Click on the “Print work” menu tab and you’re directed to the company’s work as presented on Flickr; click on “TV work” and up pops a You Tube page with videos of Modernista!-created ads.

This new approach is different, budget and very simple. To many, it would be a leap down in terms of the traditional metrics that define good website design. The company’s “conventional” website was a resource-intensive, complex site that resembled a kooky (yes, I said it) haunted house. It was impressive yet overwhelming, flexing the firm’s creative muscle with more animation than most viewers could handle. The new site is perhaps less user-friendly for those expecting a traditional website structure, and offers less context for the depicted company work. The new format could also yield negative user-generated critiques of Modernista!’s work on the social media pages that serve as its website.

The trade-off for these drawbacks? A cleaner site that demonstrates the firm’s creativity, confidence in letting its ads speak for themselves and comfort incorporating Web 2.0 platforms in its work. The site has generated more blog traffic and buzz in a wider range of forums than a traditional website with fancier features would have done, with this blog post as a case in point. Isn't that the goal of a website as a marketing tool? And the move isn’t one that other leading advertising agencies are likely motivated to follow. Voila! Disruption.

But that’s just the web site. The real disruption will be if Modernista! applies a similar leap-down approach in developing client advertising campaigns that have worse performance on some traditional dimensions but are, perhaps, simpler and more affordable relative to conventional advertising.

 

The iPhone 3G hogged its share of the spotlight over the weekend. The “twice the speed, half the price” phone sold upwards 1 million units over the weekend. But while most of the spotlight was focused on the new phone itself (and the difficulties experienced during the launch), I believe time will show the iPhone App Store — a iTunes-integrated online store that allows consumers to easily install a seemingly endless variety of games, utilities and other applications — was the Apple release most deserving of the weekend spotlight.

The new features (3G antenna, standard headphone jack, etc.) are improvements, don’t get me wrong. But they are the sort of sustaining improvements that customers expect, and they don’t exactly break new ground. I doubt whether these features alone can propel the iPhone to the level of success that Apple’s other “i” product has achieved. (If they could, you’d see a lot more buzz about the LG Dare and the Samsung Instinct).

It is the App Store that adds features in a disruptive way that other phones can’t match. With it, the Apple finally gives consumers a way to conveniently add third-party programs to their phones. (I’ve used both Palm OS and Windows mobile devices and can testify that until now this has been neither a quick nor a convenient process). In the same way that the iTunes music store made the iPod much more than another digital music player by allowing the consumer to easily buy, organize, sync and play music, the App Store makes the iPhone more than another smartphone. It turns it into a computer in your pocket, ready to be customized with the applications that you want.

How significant will the effect of the App Store be? Well, if the history of the iPod before and after iTunes is any guide, the effect will be enormous.

Prior to the release of iTunes in April, 2004, no more than 1 million iPods has been sold during any quarter. After it was released for Windows in October of 2004 (it was a Mac only release for the first few months), at least 4 million iPods (and as many as 22 million!) have been sold every quarter.

Of course, there are differences. Consumers already had well-established habits relating to buying and listening to music that the iPod + iTunes could build on. Similar habits relating to the use of third-party applications on mobile devices may not be as prevalent. And this time, the competition isn’t as far behind. Google is hard at work pushing its own mobile platform, Android, with headset makers and application developers (and might even be developing a Google phone). Also, incumbents like Nokia, which acquired Symbian recently, aren’t sitting still either. Both may be able to offer consumers devices that are as flexible and application ready as the iPhone in the near term.

In the face of these challenges, it will be interesting to see whether Apple will be able to repeat the success of the iPod. It is doing plenty right. But will it be enough?

 

Being a Bostonian and a big sports fan, I found myself with the Ticketmaster website loaded in my web browser at exactly 10:59 am this morning. While I had a sense that my quest for Celtics playoff tickets would shortly present me with a challenge, I had no idea that surmounting that challenge would contribute to a multipurpose innovation making an important contribution to society.

After a tough loss last night, our beloved Celtics are locked in a 1-1 struggle with the Detroit Pistons. With home-court advantage now gone, the Celtics head to Detroit for two games. Were either the Celtics or the Pistons to win the next two games, at a minimum, a decisive fifth game would take place back in Boston on Wednesday evening, May 28. As a result, the Celtics announced that they would put tickets to that decisive fifth game on sale at 11:00 am this morning.

Refreshing my web browser quickly, I hoped to be one of the first fans to reach the Ticketmaster page through which I would submit my ticket request. 10:58 am. 10:59 am. The page had yet to load. 11:00 am. Suddenly, the page was visible! I entered in the number of tickets I hoped to purchase, along with my desired arena section and price level. I clicked Submit.

After a brief delay, I was presented with a CAPTCHA. Developed at Carnegie Mellon University and standing for “Completely Automated Public Turing test to tell Computers and Humans Apart," a CAPTCHA is a challenge measure that websites implement to protect themselves from automated software programs. Often a distorted set of words or numbers and letters, modern CAPTCHAs are very hard for software programs to read while humans can identify the characters fairly easily.

After the CAPTCHA is presented, the website requests that the user type the exact set of characters into a text field. While humans are able to complete the task, software programs nearly always fail. As a result, requests from humans are allowed into the system — often services such as email account registration or ticket brokering — while automated requests are denied. Since spammers and ticket resellers often try to use brute-force, automated request programs, CAPTCHAs have become a sometimes bothersome, but necessary verification measure.

In my particular case, I encountered a CAPTCHA provided by the reCAPTCHA system, a program also created at Carengie Mellon and used by Ticketmaster. While completing the verification exercise, I noticed the following text on the right side of the page:

Digitize Books One Word at a Time
By entering the words in the box, you are also

helping to digitize books from the Internet Archive

and preserve literature that was written before

the computer age.

 

While tickets for the fifth playoff game sold out almost immediately and I was stymied there, I did some research into the reCAPTCHA system. As it turns out, reCAPTCHA was developed to help digitize books while also protecting systems from automated requests. The reCAPTCHA system presents two words to the website visitor — one word that an optical character recognition (OCR) program has been unable to read, and another word that several humans have correctly identified. If the visitor identifies both words correctly, the system passes the initially unknown word to additional visitors. If those visitors enter the same text response as the first, the system accepts the translation.

                According to a recent article, the use of reCAPTCHA by Ticketmaster, Facebook, Twitter, StumbleUpon, and other sites is helping Carnegie Mellon’s book archiving project successfully identify approximately one million words every day. Despite such a pace, Carnegie Mellon reported in late 2007 that approximately 100 million books remained to be digitized, a task that will still take 400 years to complete, despite the contribution of reCAPTCHA.

                While I was unable to secure a pair of Celtics playoff tickets, I was somewhat heartened by the fact that I had contributed to a worthwhile effort without knowing it.   

Here at Innosight, we often encourage would-be innovators to consider taking a business model from one industry where it is well established into another where it is not. This type of play is often very disruptive, as the imported business model allows an entrant to either meet a previously unsatisfied need or meet an already satisfied need, but in a cheaper or more convenient way. MinuteClinic, for example, is a disruptor weve been tracking for some time now that has realized success by applying a fast-food business model to healthcare.

Baby Plays is another example of this type of disruption that is just starting to build momentum. Baby Plays was launched last October by a Houston, Texas mother who became frustrated as she watched her home fill with toys her twin infant sons quickly lost interest in. As she thought about how she could rent DVDs online, she realized that a rental option for toys would satisfy her need perfectly. But since no company she could find was offering such a service, she decided to launch one herself.

The Associated Press called it "Netflix for the toddler set. I think its a very appropriate label. Not only does the service work a lot like Netflix does (you pay a monthly subscription fee, create a wishlist of toys, etc), but I think Baby Plays is similarly disruptive.

It isnt a solution for everybody (at roughly 30 dollars a month it seems a bit expensive), but I think for many young, stressed-out mothers, or for those who might only occasionally care for children, like grandparents, the convenience offered by Baby Plays will trump online buying from eToys or trips to brick-and-mortar outlets like Toys R Us.

The influential Wall Street commentator Henry Blodgett has some darned good advice for Yahoos Jerry Yang as he begins to digest Microsofts 45 billion dollar takeover bid:

Bring Steve [Ballmer, Microsoft CEO] a copy of The Innovator's Dilemma and ask him to read it before he goes to sleep. Suggest he focus on the chapter that describes how some companies have successfully resisted being disrupted (by creating stand-alone entities that are free to destroy the mothership).

Blodgett is exactly right. As he argues, Microsoft is so focused on sustaining its massively successful core products Windows and Office that its approach to the Internet is inherently shackled. It has never fully embraced the dynamic power of the Internet to unleash transformative new business models. Instead, it has used the Internet in a sustaining fashion to supplement its core properties (Internet-based help for Microsoft Word, anyone?), while clinging to web 1.0 platforms like Hotmail.

Unsurprisingly, MSN continues to lose ground to Google. While everyones favorite search engine wholeheartedly embraces cloud computing as the ultimate destiny of the Internet and fashions its business model accordingly, Microsoft demurs. Cloud computing, after all, will spell the death of its core products as we know them.

This, of course, is the sort of classic behavior that Clayton Christensen describes in his books. The essence of the Innovators Dilemma is that powerful incumbent companies become blinded by their success to the point where they cannot understand or contextualize new, different, and disruptive business models that threaten their core businesses. This pattern has played out in industry after industry, from the disk drive companies, minicomputer manufacturers, and integrated steel mills that Christensen first wrote about to the newspapers, cable TV providers, and department stores that continue to get disrupted today.

Microsoft is no different. Over a decade after it publicly committed to the Internet and took on Netscape, the company still has not opened the aperture to new and different business models, still has not thought outside the box about what the Internet is and can be. Unless it handles the Yahoo acquisition correctly by maintaining an appropriate degree of autonomy, or, as Blodgett calls it, leaving it free to destroy the mothership Googles disruptive march will continue.

Wikia, a for-profit company started by Wikipedia founder Jimmy Wales, made news yesterday when it took the cover off Wikia Search, ending months of speculation about what shape the high-profile startups open source search engine would take. Currently online in its alpha stage, Wikia Search promises that its open architecture will strip away the black box that surrounds search as run by the Googles of the world and ultimately leverage the collective wisdom of the internet to provide better search results.

Reviews thus far, however, havent been very positive. The blogosphere has not been too high on Wikias capacity to return even mediocre search results.

The reviews dont seem to faze Mr. Wales or the folks at Wikia too much, however. One need only click on the "about us button on the Wikia Search home page to find that even its creators dont have any illusions about where their product stands now: We are aware that the quality of the search results is low; Mr. Wales put it even more bluntly in a response to Michael Arringtons review over at Tech Crunch, writing "Yeah, the search sucks today.

This all begs the question: why would they take the cover off of Wikia Search if they absolutely knew it was terrible?

One might think that the answer, as it often does here on the Innoblog, lies in the patterns of disruption. Perhaps Wikia, the story goes, understands that to displace an incumbent the entrant needs to make trade-offs, developing a product that is worse than the incumbent along some dimensions while improving along other dimensions, particularly those that consumers really value. So it has pushed out a search engine that is worse along traditional metrics that define quality in search (like relevancy of results), but better along other dimensions (it provides a sense of community and channels human involvement). With time, Wikia doubtlessly hopes, its community will rapidly improve the quality of its search, elevating it to a level where it matches or overtakes the leading incumbents like Google or Yahoo.

It sounds like a decent story. And it might be. But just as I thought back in August when I wrote about Wikias acquisition of Grub, I dont think it will work. I have two reasons.

First, while many disruptions start out inferior to incumbents, they are at least good enough to attract a core group of consumers. Wikia is so disappointing that it might even fail to meet the good enough standard for even the tech-oriented, open source banner-waving, down-with-the-corporate-stranglehold-on-the-internet set to commit to it. Its index is so small right now that the search can, in many instances, barely be said to work. And its community-oriented features are limited, allowing account-creating users to do little more than post pictures, evaluate search results and write mini-articles describing search terms.

My second problem with Wikia is that it seems to be trying to be a low-end disruptor in a market that isnt yet overserved by leading incumbents. Low-end disruption, the type of innovation that starts off poorly but improves, eventually disrupting incumbents by being "good enough along traditional dimensions and better along new, customer-valued dimensions, typically works only when consumers are overserved by incumbent solutions. But with web search, people arent overserved by the Googles of the world. Instead, people are underserved, they consistently want more out of search engines than even the leading incumbents can provide today. In underserved markets, entrants only succeed by besting incumbents at the things that incumbents do best. Does Wikia really hope to produce more relevant search results than two-hundred billion dollar market cap search companies?

Bottomline: Wikia needs a game-changing feature in a market where a game changing feature might not even exist. The best search engines arent yet serving consumers at the level that they want. Wikia is going to have a difficult time doing any better. I predict a tough road for Jimmy Wales & company ahead.

When people think of successful innovations they often picture technological innovations; conjuring up images of the latest gadget or the most-talked about website. These associations are by no means erroneous, innovation success often includes a component of technological improvement or application, but associating innovation success only with a technological edge doesnt complete the picture. The reality, one that firms often miss, is that successful innovators dont just develop an innovative technology, product or service, they develop an innovative business model that allows an idea (be it new or old) to flourish.

Few places is this reality more apparent than in the realm of municipal Wi-Fi.

Over 400 municipalities large and small across the United States have built, are building or are planning to build municipal Wi-Fi networks. Here's a Map. But many of these projects, including some high profile ones like San Francisco, have stalled recently as the same firms that only a couple of years ago were falling all over themselves to bid and win municipal Wi-Fi contracts are discovering that their business models are not sustainable.

Earthlink and other companies who bid on early municipal Wi-Fi projects frequently agreed to build and maintain the networks at their own expense. They also made other concessions; agreeing to share revenue from ads and subscriptions, to provide free access to city workers and to pay for space on city light poles where access points would be mounted. These companies hoped to create profitable networks by relying on the public to sign up, replacing their current internet subscriptions (whether dial-up, DSL or Cable) with municipal Wi-Fi offerings.

But city residents havent subscribed in the numbers that were anticipated. Glenn Fleishman, an editor at wifinetnews.com told Business Week that only 1-2% of populations have signed up, much lower than the 15-30% subscription rates expected. The reluctance of the public to adopt municipal Wi-Fi is forcing EarthLink and others to pull back. New EarthLink CEO Rolla P. Huff said in his July 26th earnings call that his company would "delay any further build-outs and scale back operating expenses. An understandable move given that EarthLink has lost money for the past four quarters and estimates that it will continue to lose money throughout the end of this year.

It seems to me that EarthLink has committed two classic innovation blunders. First, it took a disruptive technology (Wi-Fi) and tried to apply it using a sustaining-type model (general public internet access), leading to significant losses. This blunder, however, would have been quickly corrected had they not compounded it by committing a second blunder; Instead of testing the assumptions of their business model in a cheap, low risk way (by first building Wi-Fi networks in smaller cities or by building a network for limited and specific uses instead of general public access), EarthLink tried to "go big immediately. It wasnt patient for growth, nor impatient for profit.

In so doing, EarthLink learned that it isnt reasonable to expect a profit from public subscriptions and ads. It learned that it should require cities to cover some of the costs of construction, or at least sign up as anchor tenants for the network. These are lessons that theyve spent untold millions learning. Millions that they neednt have spent if theyd have followed the principles of disruptive innovation that we at Innosight advocate.

And following the principles of successful disruptive innovation is exactly what Id recommend to EarthLink now. Im convinced that Wifi still has disruptive potential. (Even if other technologies, like WiMax loom on the horizon). To harness this disruptive potential, EarthLink (and others) should look first to develop profitable foothold markets, remembering that it should be patient for growth, but not for profit.

EarthLink might find that municipal WiFi is better suited to smaller cities and markets where other competitors (the DSL and Cable internet providers of the world) are absent or less willing to lower prices in order to respond, and where rollout costs are lower. Indeed, many of the 400+ municipalities that have built, are building or are planning to build Wi-Fi networks are smaller, "tier 2 or "tier 3 communities. Not all of these small communities are success stories. For every St. Cloud, FL there is a Lompoc, CA, but the stakes are lower and the sort of lessons EarthLink needs to learn in order to finally develop the profitable business model it needs before it can make it in San Francisco and other big cities will come cheaply and with less pain.

It might also apply jobs-to-be-done thinking to municipal Wi-Fi. What jobs, other than giving the public internet access, can municipal Wi-Fi get done? St. Cloud, FL found that emergency response services including firefighters and EMTs were greatly benefited by Wi-Fi. Corpus Christi, TX built a municipal Wi-Fi network in order to more efficiently and cheaply monitor utility usage. Perhaps convincing cities to subsidize subscription costs as a way to help bridge the "digital divide amongst city residents meets a political job. While each municipality is going to have its own unique set of jobs, I would bet that many of the jobs will be present in most communities. If it can turn municipal Wi-Fi into solutions for these sorts of jobs (particularly those that cant be accomplished by competing technologies like DSL or Cable), it might find success.

The bottom line is that municipal Wi-Fi is a technology that companies like EarthLink (whom I have singled out here in this entry because of their prominence, I could have written about others) have failed to apply with a sufficiently innovative business model. But if they can learn the right lessons from their struggles and develop a better business model through the application of disruptive innovation principles and jobs-to-be-done thinking, there is still hope.

In recent days, Google, Microsoft, and Apple have all announced new online storage offerings. Approximately 17 months after Amazon.com launched its own "Simple Storage Service, the widening race to stake claims in online storage heralds the impending emergence of a new platform, or paradigm, that has massive disruptive potential.

On August 7, Apple announced that user accounts on its .Mac service would now feature 10GB of storage, increased from 1GB. According to news reports, the increased storage level would not result in an increase in the yearly subscription rate ($99) for .Mac.

Two days later, on August 9, Google announced that folks with Google accounts could purchase additional online storage capacity over-and-above the free 2.82 GB allotted to Gmail and the free 1 GB allotted to Picasa Web Albums. For $20/year, one can purchase an additional 6 GB of storage (the minimum upgrade level) and there are three greater price/storage tiers up to an additional 250 GB of storage for $500/year. At present, the storage can only officially be used for Gmail and Picasa accounts, although one suspects that through the use of an extension such as Gmail Drive (not approved by Google), individuals could use that space to drag-and-drop any file for remote storage.

On that same day, Microsoft announced that Windows Live SkyDrive, an upgrade to Windows Live Folders, was publicly available. Still in beta, the service comes with 500MB of free online storage that folks can use, much as the Gmail Drive solution noted above, to drag-and-drop any file for remote storage. SkyDrive also allows for the posting of files to public directories that anyone can browse.

Given the decreasing cost of storage solutions and the revenue generated by online advertising, it is not surprising that free or inexpensive online storage options are beginning to enjoy accelerating growth in both variety and capacity. Coupled with the growing availability of wired and wireless broadband connectivity, it seems to be just a matter of time before the mainstream user transfers the majority of his or her storage from local/attached solutions to cloud-based solutions. Ultimately, only limited applications will required the type of performance that local/attached solutions can provide while cloud-based solutions will be less expensive, more accessible, and more reliable from a data backup standpoint.

Consider the implications of the following scenario. End-users are already beginning to discover the benefits of no cost, ad-supported, online services. The depth and breadth of those services will expand extremely quickly and it is likely that the majority of frequently-used applications will move online, perhaps with the exception of performance-intensive applications. As Google and other providers have already proven (and as we have blogged about here, here, here, and here), some of the local client-based applications used most frequently by consumers and enterprises, including electronic mail, word processing, and spreadsheets, can be quite compelling in an online-only form.

The expanding availability of high-bandwidth, low-latency connectivity will also make it possible for end-users to increasingly store their own personal files online, making them easily accessible from any connected client with that accessibility delivering tremendous value. Furthermore, it seems likely that if end-users are willing to accept a certain level of advertising (say, the interaction with one advertisement a day or listening to a brief audio advertisement before the beginning of a song), online hosts may be more than willing to offer free, unlimited multimedia files to end-users to draw them to such advertisements or to have greater access to their habits and preferences.

The logical progression of this scenario finds end-users completing an increasing amount of those computing jobs-to-be-done online, particularly those of a personal nature. Further, consider end-users accessing their music or video files from a personal computer at home, a mobile phone while walking, a car while driving, or an airplane while traveling. Next, consider end-users knowing that they can always access all of their content from any location, just so long as they have some connected, smart client device, from a mobile phone or personal computer to a vehicle or watch to a television or other appliance, within reach. The value of such accessibility, particularly if it is ad-supported, is clear and significant.

Upon the premise that a rapidly growing percentage of end-users are willing to accept advertisements and give up some personal information in return for free content and services, the long-dominant American model of personal computer-centricity and repeated hardware and software upgrade cycles now comes into question. With the exception of computing-intensive jobs, such as video game playing and high-performance computing, there is no reason why the vast majority of applications and vast majority of end-user content will not simply find its way online in the future.

Once end-user tasks shift from local applications and storage to online storage and online access to information and applications, the age-old emphasis on local computing resources will begin to fade. Rather than building or purchasing personal computers with significant hardware specifications and thick, expensive layers of local software, from the operating system to office suites, end-users will increasingly look for connected client devices with browsers capable of satisfying their particular jobs.

If the job is one of content creation, for example, the end-user will seek out a client with a large-display, keyboard and mouse, and a browser capable of delivering a compelling, hosted, word processing, spreadsheet, or presentation application. If the job is one of mobile content access, the end-user may select a small client device in the form of a mobile phone or media player with limited display and input capabilities, but long battery life, portability, and a browser capable of accessing and playing streaming multimedia through speakers or headphones.

If an end-user is simply looking for glanceable information, he or she may choose a small client in the form of a stylish, connected, watch with a wearable design, but minimal display capabilities and a limited browser capable of displaying only text-based information such as news and instant messages. Perhaps the end-user is driving to work and would like his or her messages read verbally as well as access to streaming audio, maps, and directions the browser built into the car would do the trick. During breakfast, a display on the side of a refrigerator, perhaps coupled with a limited browser and touchscreen, would deliver the morning news in a manner conducive to passive consumption, rightsized to the relevant job.

Prior to the delivery of applications or content, online hosts would identify the characteristics of the client device, the browser, and the connection and deliver an appropriately-formatted experience. If the client device and browser are full-featured and able to leverage a wired, low-latency, high-bandwidth broadband connection, the host would deliver a rich, pleasing, bandwidth-intensive experience. On the other hand, If the client device and browser are designed for mobility and online via a spotty, high-latency, relatively low-bandwidth connection, the host would adapt, greatly reducing the feature set delivered and ensuring that only the most essential bits and pieces of information found their way to the client device. Essentially, content and applications would be available in any location, at any time, and end-users would select the most appropriate client device and browser for their specific needs, tasks, and usage profile.

The implications for this scenario on the business of software, hardware, services, and content are significant and the potential for disruption is widespread. Will the network finally become the computer? Are the days of the personal computer and packaged software, as we know them today, numbered? How soon might this scenario play out? What are your thoughts?

This past weekend, Wikipedia founder Jimmy Wales new startup, Wikia, announced that it had acquired an innovative web crawler called Grub, moving it a step closer to offering an open-source search engine. But is the Grub acquisition a step in the right direction?

Grub works differently than the webcrawling systems used by search leaders such as Google or Yahoo!. Rather than maintain a giant bank of computers that "crawl the internet, indexing it as they go, Wikia can use Grub to spread out the computing burden. Anyone can download the client and contribute their own processing power and bandwidth to the effort.

The innovation isnt just a cost-cutting measure. According to Grubs website, "Almost 50% of the database a search engine uses is either out-of-date, or incomplete at any given time. For this reason, Jimmy Wales says that "search is broken.

I wont argue with that fact that 50% of a search engines database is either out-of-date, or incomplete. Im not a search guru and really dont know. But as a user of search engines like Google and Yahoo (and, occasionally Windows Live), I have some doubts as to whether the comprehensive index Wikia hopes to create is really the way to innovate in search.

Grubs stated goal of creating and maintaining an up-to-date, comprehensive internet index is an innovation that consumers cant absorb. Based on my own experience, I think that the Googles and Yahoos of the world do a fine job of indexing. The pages they leave out are probably not the ones most people want to find. Most peoples frustrations with search arent related to incomplete or out-of-date indexes, but probably have more to do with the difficulty of finding the right combination of keywords that bring up the desired search results.

Grubs index just isnt an innovation in the right direction, it wont be valuable to the end user. What Wikia needs for success is a better search experience for the end user. It might need to be better at semantic search, or maybe it needs to leverage an open community like Wikipedia does in order to give search results a human touch. The problem is that both have been tried, at least in part, before. Will Wikia be able to succeed in an area where so many others have failed?

Wikia is supposed to launch "the first stab of something by the end of year. I suppose well see how innovative it is then.

Over the weekend the Wall Street Journal celebrated "10 years since the blog was born by inviting twelve commentators (a spread of folks including politician Newt Gingrich, actress Mia Farrow, and SEC Chairman Christopher Cox) to write about what blogs mean to them.

They didnt ask me. And Ill spare the personal perspective. But blogs are worth writing about here because they fit so many of the classic patterns of disruption:

Blogs provide better performance along some dimensions (customizability, timeliness of information, focus) while sacrificing performance along others (accuracy).

Early on, blog creation required a significant amount of technical know-how, meaning that blogs took hold first with a small number of users who had the knowledge to use them the internets tech savvy. But the base of those creating and reading blogs, and the number of topics blogs cover, has expanded as the technology has become more accessible. Blogs are gaining popularity in all spheres where traditional print media plays, including sports, politics and entertainment.

Blogs also go where traditional media cant into the realm of social networking, allowing friends, families, and others to share their lives through print, pictures and (increasingly) video, online.

Many in the traditional media dismiss blogs, focusing on their deficiencies. This is a classic error right out of the Innovators Dilemma. Of course, their criticisms have some merit, many blogs offer low-quality content, poor writing, and inaccurate reports that circulate rumors. But many disruptions start out this way, and then improve until they are "good enough for the mass consumer.

Blogs are already moving upmarket and improving. The term "Professional Blogger is no longer an oxymoron. Some in the traditional media realize this ESPN, for example, recently purchased the popular basketball blog TrueHoop.com to complement its other online news offerings.

And I think that blogs still have a lot of disruption left in them. Many Americans still dont know what a blog is, and most dont read them even fewer create and maintain them. But the numbers, as shown (appropriately) on this blog, show that growth is strong. (There are many neat graphs tracking the blogosphere there, I suggest you take a look).

As a final irony blogs here, here and here point out that the Wall Street Journal didnt get its facts quite right, blogs are more than a decade old.

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.

Amazon.coms recent forays into Internet services have puzzled many analysts and investors. There is great concern that the company is spending way too much time, effort, and money so far removed from and potentially at the expense of its core retail operations. Amazon spent a decade, and billions of dollars, building its e-commerce platform to the point where it reached massive success. So why, Wall Street wants to know, is Amazon so intent on moving beyond retail?

The answer, we believe, is that Jeff Bezos understands that the key to sustained success is business model innovation. Amazon has deftly moved into new categories and new markets with flexibility and creativity. They consistently look for ways to leverage core capabilities and monetize excess capacity to create potentially disruptive businesses. Undoubtedly, Amazon must be sure to keep its core retailing operation healthy and should not over-commit to new ventures before they prove profitable, but investors should take comfort in the fact that Bezos has an uncanny knack for this most elusive of innovation disciplines.

Consider Amazons corporate evolution: as soon as it established itself as a leading online book seller it began leveraging the platform and infrastructure it built to move into new categories, and in a matter of years became a full-fledged online department store and the webs premiere retailer. Amazon has also leveraged its online real estate and customer base, establishing itself as a broker of transactions and leaser of web space to other retailers. These profitable initiatives have generated synergies that fortify Amazons core business selling other merchants books, for example, vastly expands Amazons catalog, making the site ever more of a one-stop shop while contributing to the overall growth of the business.

Now, Amazon is further unbundling its finely-honed core capabilities and leveraging its world-class core assets. A recent Business Week article describes their latest initiatives a series of calculated moves intended to transform latent capacity and aptitude into profit centers that strengthen the overall business and plant seeds that might grow into disruptive blockbusters. Notice how each initiative solves an important Job to be Done, in comparison to market alternatives:

Elastic Compute Cloud: Amazon leases computing horsepower over the web; the equivalent of one server costs about 10 cents an hour. Computing-hungry startups can make expensive capital equipment investments by buying their own servers or can lease the processing power they need when they need it at a very low cost leasing a full year of power equivalent to one server would cost just $876.

Simple Storage Service: Amazon leases digital storage at 15 cents per gigabyte per month. Buy backup drives or zap it over to Amazon for a buck eighty a gig a year.

Amazon Mechanical Turk: Amazon matches up online temp workers with companies that need menial tasks done. There are some menial, frustrating tasks that any bozo on the street can do easily but that computers just cant do right; when these tasks present themselves companies can either hire interns, tie up their low-level employees with mindless work, or, in some cases, simply leave loose ends untied. Now they can have Amazon connect them with an online temp painlessly, rapidly and at a miniscule cost.

Fulfillment by Amazon: End-to-end e-commerce operations and logistics. Companies can operate their own e-commerce operations and frequent eBay sellers can buy new shelving units for their garage and wait in line at the post office everydayor they can outsource part or all of the process to the worlds most efficient e-commerce logistician. Amazon warehouses merchandise and handles orders, payments, and shipping.

Will all or any of these new ventures grow into blockbuster businesses? That remains to be seen. At the very least Amazon is laying groundwork for a role in the digital future and casting its bets in the hopes of landing something substantial. This aggressively forward-thinking corporate mindset is exemplary, as it generates multiple revenue streams, unlocks new growth opportunities, and could lead to the transformation of markets; it may well transform earths biggest retailer into the premiere web services company.

See: "Jeff Bezos' Risky Bet," Business Week, November 13, 2006

Google recently acquired Writely, a free, online-only word processing tool that has been described as a "web word processor", or a "wiki with permissions". The current version of Writely appears to have about 90% of what you would find in something like Microsoft Word. Regardless of how you describe it, its an XML, internet based word processing system that may open up a completely new way of composing and sharing information.

Initially, our thoughts are that Google will launch this free tool where it is good enough, starting at the low-end by focusing on improving the interface and web capabilities for creating and editing web-based documents such as email and blogs. It is an improvement over current methods " such as drafting documents off-line in MS Word for editing and then moving the text online. It is possible that it will take root as more and more collaboration and communication migrate to online settings.

One of the features of the XML based word processing program is that it will allow users to create as well as store documents online. It is also conceivable that this product could easily take on off-line functionality making it a direct threat to Microsoft. The real value of an offline Google word processing tool becomes apparent when you take into account that having created your document in XML, it is immediately publishable to the web and immediately searchable. The end result is the ability to publish anything to the web quickly and easily from your desktop or the web leveraging Googles processing power and internet reach.

Dont worry about advertising around your new article, Googles ad sense has that taken care of as well.