INNOBLOG

Kevin Bolen co-authored this post.

It seems that everyone wants to know what the automakers will do differently in the increasingly unlikely event that they receive a massive Congressional bailout. Leaders suggest they'd like automakers to "be more innovative" and "reinvent their business model." But what exactly does that mean? And how would government officials monitor progress against these goals to see if the bailout is being well spent?

First, let's look at what it would take to "be more innovative." Our research and field work suggests watching whether automakers:

1. Place the customer at the heart of the innovation process: Firms that succeed in innovation are obsessed with learning more about the customer and, more specifically, the jobs they need to get done. Clayton Christensen likes to describe how millions of people use their car as an office, but no auto manufacturer has designed a car with desk space, power options for laptops and phones, Wi-Fi connectivity, and other features that would help get this job done. Looking for important, unsatisfied jobs-to-be-done could help auto manufacturers identify attractive growth segments and avoid commoditization. One sign that auto manufacturers have appropriately shifted their attention: an increase in the ratio of market research spending to advertising spending.

 

2. Have senior leaders actively engage in innovation: Leaders in many of the firms we work with and admire participate daily in innovation efforts. And this is not passive involvement. They join focus groups, observe behaviors, review project plans, help set prioritization parameters, evaluate funding requests, and develop and oversee unique organizational models to incubate the best concepts. Innovation is not simply a budget item for these leaders; it is second only to talent development on their personal to-do lists.

 

3. Create a diversified portfolio of ideas: No one can accurately predict what market demands will be five to 10 years from now. No one knows what the energy situation will look like. No one can predict the economic climate. No one knows precisely which early-stage ideas will take off and which will stagnate. Pinning a firm's future on a single breakthrough is unrealistic. A broad, diversified innovation portfolio can help companies withstand shocks and respond to market shifts. The freedom to fail in one area because of emerging opportunities in another is the hallmark of an effective innovation program.

Second, what would it really mean for the U.S. automakers to "reinvent their business model"? Our colleagues Mark Johnson and Clayton Christensen have an article with this very title in the latest Harvard Business Review.

One of the fundamental problems the article highlights is that many companies are held captive by their capabilities....

Read the rest at Scott's Harvard management blog.

Who is your competition? The question seems so simple, but a company that defines its competitive set too narrowly can miss disruptive attackers and high-potential growth opportunities.

Take, for example, a recent article in the Wall Street Journal describing Apple's surprising entry into the video game market. A few short months ago, Apple launched the "App Store," where iPhone and Touch users can download a wide range of applications. Some applications are free, others cost a few dollars.

A recent visit to the App Store showed that seven of the top 10 applications are games. More than 2,000 games are available in the App Store. Developers are taking advantage of unique features in Apple's products--like an accelerometer that tracks motion--to develop engaging, entertaining games.

One video game manufacturer--Nintendo--is watching this development closely. One of its executives told the Journal, "Whether you chose to play on your DS [Nintendo's handheld console] or listen to music on your iPod, we're already in the same competitive space for time."

In the very next paragraph, a Sony executive displayed a different perspective, noting that Apple isn't a threat because "the consumer is using the mobile gaming on the iPhone and iPod Touch as a time waster."

Anyone who has tracked this industry over the past couple of years would find these answers predictable.

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

Yesterday’s panel discussion at MIT offered what moderator Jim Poterba, former head of the MIT Economics Department and current NBER president and CEO termed “a real treat.”

Bob Solow (MIT) and Greg Mankiw (Harvard), two world-renowned economists who also hold opposing political philosophies, met to offer and discuss their perspectives on the most pressing economic topics the 44th president of the United States has to consider.

The numerous topics included the current state of the U.S. economy, income inequality, healthcare, foreign trade, energy, unions, and immigration. Yet despite pronounced differences in their political views, Solow and Mankiw were aligned in two major points.

First, they agreed that the grievous financial situation needs concerted action right now. The good news is that the U.S. is not experiencing a productivity shock; i.e., no part of our industrial base is destroyed physically. Recovery will thus happen with almost perfect certainty, even if the time horizon is unclear at this point.

Second, both researchers agreed that two sectors of the economy are of much more long-term importance: healthcare and energy. These two fields demand dedicated attention, since they directly affect the U.S. social safety net and national security. These two sectors also show enormous potential for growth.

Even the more conservative-leaning Mankiw recognized that President-elect Obama not only has access to a pool of highly-regarded economic advisors, but that he is in fact very likely to actually listen to these economists – which both Solow and Mankiw can also agree is a good thing.

So, if you are an innovator coping today with the imponderability of the current state of the economy, don’t get entirely caught up in it. Focus on healthcare and energy as two spaces where tremendous opportunities lie ahead.

The holidays are here. Get within 500 feet of a mall and you will be bombarded with sales signs, overwhelmed with Christmas carols, and swallowed by crowds of seasonal shoppers. While all of this may be overwhelming, there is one very good thing that comes with the hustle and bustle of the holidays – cookies.

I love cookies and there is no time of year more cookie-centric than the holidays. I have many fond memories of baking cookies with my mom, gleefully squishing Hershey’s kisses into the center of peanut-butter cookies and carefully painting icing on sugar cookies. This is why I was so fascinated by Arrowhead Mills’ “Bake with Me,” a line of baking mixes designed to encourage interaction between children and their caregivers. In addition to the baking mix, each box contains a promotional item, such as a cookie cutter or decorating stencil, to carry the interactive element from the box to the baking sheet.

Like most other baking products, there are sumptuous shots of sugar cookies, brownies, or cupcakes on the packaging, but what makes this packaging stand out on the shelf is that it also features a photo of a child in a chef’s hat happily mixing a bowl of batter. “The idea behind the package design was to develop a look that would really stand out on shelf to deliver the unique proposition; a fun activity for mom to do with their kids...,” explains Martha Seidner, a vice president at Smith Design, the agency responsible for design of the “Bake with Me” packaging.

All baking companies target functional jobs around taste, attractiveness of the food, nutritional value, and preparation time required. Arrowhead Mills has nailed the emotional jobs of parents, such as:

• Feel like a good parent
• Establish/reinforce my relationship with my kids
• Create lifelong memories with my kids

By targeting emotional jobs, “Bake with Me” effectively overcomes traditional resistance to baking mixes as less authentic (and lower quality) than baking from scratch by satisfying other (and arguably more important) jobs related to the parent-child relationship.

Well done! Now, let’s gather the family and friends and start baking some cookies.

In conjunction with Chuck Frey from InnovationTools.com, I am compiling a report on how and why to keep innovating during the economic crisis. We would love to hear from practicing innovators.

In essence, we would like to know how would you answer this question: What strategies should organizations use to maintain or expand their innovation initiatives, despite the current global economic downturn?

Please post your thoughts in the comments or email to me at rcinnosight -at- gmail.com. Replies will be compiled into a report and posted on innosight.com and on innovationtools.com. We'd like to get replies by Wednesday, November 19.