From Karim R. Lakhani in Harvard Business Review:
Some tech pundits were surprised that Google decided to shut down Wave yesterday just a year after its launch andchastised the company for its decision. But I’m not surprised and I applaud the company’s decision to pull the plug after it was clear the market wasn’t interested in Wave. From my vantage point as someone who studies innovation, Google’s decision was exactly the right move and provides some very important lessons for managing innovation in both small and large organizations.
The first lesson, of course, is that uncertainty haunts all innovation attempts. Charles Kettering, inventor and VP of R&D and Board Member of GM (1920-1947) famously noted that when it comes to innovation: “You don’t know when you are going to get the thing, whether its going to work or not and whether its going to have any value whatsoever.” In essence Kettering implied that any innovation attempt faces a combination of temporal, technical and market uncertainty. Even a company like Google, recognized for its wealth of intellectual talent in its employees, was not able to figure out before hand if there would be a market for Wave. Some types of uncertainties are simply not resolvable before the fact, and the only true way to find out is to make the investment and launch an innovative product in the market place. Google should be applauded and rewarded for pioneering a risky project and publicly launching it so that it can learn from the market.
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From the International Center for Research on Women:
In a new, groundbreaking study, International Center for Research on Women examines how cutting-edge innovations can transform women’s lives. The ICRW report analyzes how a variety of innovations that used technology, changed social norms and strengthened economic vitality helped women.
Researchers identified seven core approaches – or levers – needed for any innovation to create meaningful change for women.
They include:
- Creating strategic partnerships among governments, the private sector and civil society.
- Including women in the design and implementation of innovative ideas.
- Having committed support from governments as well as efforts at the grassroots level.
ICRW’s findings come at a critical moment.
Social, political and economic shifts globally are creating a perfect storm for innovations to benefit and potentially empower women. Take foot-pedaled water pumps. In sub-Saharan Africa, women in rural communities traditionally are responsible for collecting water to irrigate the crops that feed their families and that sell in markets. It can be a time- and labor-consuming effort.
For the web page…
For the research brief…
From Edward Tufte, as told to Jimmy Guterman in the MITSloan Management Review:
On the (Very, Very Bad) Design of Corporate Web Sites
The front page of a good news site will have 300 links on it. That’s great. And so the question is: How come your corporate Web site has only seven links on its opening screen, and the links are called “sharing our values,” “participation” and so on? No user has ever asked Google to show him all the Web sites about sharing your company’s values.
A corporate Web site should do what a good news Web site does. If you look at the really successful Web sites where there are millions of hits, especially nonfiction Web sites, the New York Times and Google News, they all have 300 links on the opening page. How come businesses don’t do that? How come the links are to “sharing,” “participating” and “our values”? That’s flabby design for flabby content. The models for presenting nonfiction should not be what your competitors are doing, but rather excellence in reporting nonfiction. And there are terrific examples out there for reporting nonfiction.
The kind of conformity toward flabbiness in corporate Web sites is astonishing, and they’re imitating each other in their content and design flabbiness. It’s silly. People are inherently distrustful of them. And yet most of those sites are, in fact, about reporting facts. But they get softened up by the marketing people. You get all these pressures that tend to normalize design, that tend to make it like other corporations and that make things intellectually flabby and visually flabby. They turn into pitches.
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From The Economist
It is
hard to overstate the importance of Toyota in Japan’s business psyche. The company has long been regarded as the pinnacle of Japanese innovation, manufacturing quality and industrial strength—particularly since it overtook General Motors in 2008 to become the world’s biggest carmaker. Its “lean” manufacturing techniques and culture of continuous improvement were the envy of the business world. Companies sent delegations to tour Toyota’s factories in the hope that some of its magic would rub off on them. Within Japan the firm was considered the nation’s industrial champion, as the sun seemed to set on other giants such as Sony and Hitachi.
But within a few weeks all this has changed. Problems with “unintended acceleration” of its cars, which the firm has only belatedly taken seriously, have triggered an escalating crisis and the recall of a whopping 8m vehicles. Toyota’s woes were compounded on February 9th when it said it would also recall 440,000 hybrid vehicles, including the celebrated Prius, to fix a problem with their brakes. The firm’s reputation for quality, on which the business was built, is shattered. Its market capitalisation has dropped by an amount roughly equal to the entire value of Ford. But the greatest damage has been done by its misreading and mishandling of the crisis.
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From The Economist
• London Business School has topped the first of the year’s important global MBA rankings. It has taken the top spot outright in the Financial Times list of the top 100 full-time programmes, after sharing the honour with Pennsylvania’s Wharton School last year.
• Two business-school heads are on the move. Arnoud De Meyer, the director of the Judge Business School at the University of Cambridge, is stepping down to become president of the Singapore Management University. Professor De Meyer had previously helped INSEAD set up its Singapore campus. Meanwhile, Ted Snyder, who confirmed he was leaving Chicago’s Booth School in December, is to take up the reins at Yale School of Management.
• No surprise that 2009 wasn’t a good one for the MBA job market. The MBA Career Services Council has just released the results of its autumn survey, which show that 79% of business schools saw a decline in on-campus recruitment last year. Traditional sectors such as financial services and consulting were hit particularly hard. But the CSC did note signs of recovery, with some areas—including energy, government and healthcare—seeing increased activity.
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From The Economist
Henry Hazlitt, one of the great popularisers of free-market thinking, once said that good ideas have to be relearned in every generation. This is certainly true of good ideas about business. A generation ago Margaret Thatcher and Ronald Reagan did an excellent job of making the case in favour of business. Today it looks as though the case needs to be made all over again.
It is hardly surprising that business has fallen from grace in recent years. The credit crunch almost plunged the world into depression. The new century began with the implosion of Enron and other prominent firms. Some bosses pay themselves like princes while preaching austerity to their workers. Business titans who once graced the covers of magazines have been hauled before congressional committees or carted off to prison.
Business people have been at pains to point out that it is unfair to judge all of their kind by the misdeeds of a few. The credit crunch was the handiwork of bankers (who lent too much money) and policymakers (who fooled themselves into thinking that they had abolished boom and bust). Corporate criminals like WorldCom’s Bernie Ebbers and Tyco’s Denis Kozlowski were imprisoned for their crimes. Avaricious bosses like Angelo Mozilo, who pocketed more than $550m during his inglorious reign at Countrywide, are exceptions. The average American boss is actually paid less today than he was in 2000.
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From, Matt Pressman Vanity Fair.
AOL went from pioneering powerhouse to laughed-at laggard when changing technologies made their business model of charging people for e-mail accounts and Internet access obsolete. So now
they are remaking the company with an entirely different strategy: selling ads against original content produced by an army of well-paid professional journalists. Unfortunately, that’s the same business model that has driven America’s newspapers to the brink of ruin.
When most people think of AOL, they think of it as the e-mail provider for people who aren’t with it enough to switch to a free service such as Gmail. But while the bulk of AOL’s revenue still comes from its old-school subscribers, the company’s future is in the content business (with a sideline in social networking). In advance of its long-awaited split from Time Warner, which will occur next month, AOL has been on a hiring-and-acquisition spree. It now owns upward of 75 niche blogs and news sites, including DailyFinance.com, Engadget.com, and Fanhouse.com, staffed in large part by reporters who used to work in print. C.E.O. Tim Armstrong said at a conference last month that AOL employs more than 3,000 journalists.
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From Schumpeter, in The Economist.
In the normal run of things the management world is divided into dozens of mutually suspicious tribes—theoreticians versus practitioners, publicity-hogging gurus versus retiring academics, supporters of “scientific” management versus advocates of the “humanistic” sort. But this month has seen unusual comity: the leaders of all the management tribes came together to celebrate the centenary of the birth of Peter Drucker, a man who is often described as “the father of modern management” and “the world’s greatest management thinker”.
The celebrations took place all around the world, most notably in Vienna, where Drucker was born, in southern California, where he spent his golden years, and in China, where he is exercising growing influence. The speakers were not limited to luminaries of management: they also included Rick Warren, the spiritual guru of the moment in America, Frances Hesselbein, a former head of the American Girl Scouts, and David Gergen, an adviser to both Republican and Democratic presidents.
To mark the centennial, the Harvard Business Review put a photograph of Drucker on its cover along with the headline: “What Would Peter Do? How his wisdom can help you navigate turbulent times”. Claremont Graduate University in California, where Drucker taught, boasts not one but two institutions that are dedicated to keeping the flame alive: the Peter Drucker and Masatoshi Ito Graduate School of Management and the Drucker Institute. The institute acts as the hub of a global network of Drucker societies that are trying to apply his principles to everything from schools to refuse collection. It also produces a “do-it-yourself workshop-in-a-box” called “Drucker Unpacked”.
Why does Drucker continue to enjoy such a high reputation? Part of the answer lies in people’s mixed emotions about management. The management-advice business is one of the most successful industries of the past century. When Drucker first turned his mind to the subject in the 1940s it was a backwater. Business schools were treated as poor relations by other professional schools. McKinsey had been in the management-consulting business for only a decade and the Boston Consulting Group did not yet exist. Officials at General Motors doubted if Drucker could find a publisher for his great study of the company, “Concept of the Corporation”, on the grounds that, as one of them put it, “I don’t see anyone interested in a book on management.”
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The Economist writes in praise of the ideas of Russ Ackoff,
Today’s crisis is the result of a catastrophic failure, primarily in the financial system but also of our economic and political systems. Mr Ackoff spent most of the past half-century as the premier evangelist of systemic thinking, which he contrasted with the reductionist, atomistic thinking that had long dominated humanity’s approach to problem-solving in his view. Time and again, he would point out, decision-makers faced with crises failed to heed Albert Einstein’s warning that “we can’t solve problems by using the same kind of thinking we used when we created them.”
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Oct 19th 2009 From Economist.com
It aims to combine the flexibility and quality of craftsmanship with the low costs of mass production
Lean production is the name given to a group of highly efficient manufacturing techniques developed (mainly by large Japanese companies) in the 1980s and early 1990s. Lean production was seen as the third step in an historical progression, which took industry from the age of the craftsman through the methods of mass production and into an era that combined the best of both. It has been described as “the most fundamental change to occur since mass production was brought to full development by Henry Ford early in the 20th century”.
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The methods of lean production aim to combine the flexibility and quality of craftsmanship with the low costs of mass production. In lean-production systems a manufacturer’s employees are organised in teams. Within each team a worker is expected to be able to do all the tasks required of the team. These tasks are less narrowly specialised than those demanded of the worker in a mass-production system, and this variety enables the worker to escape from the soul-destroying repetition of the pure assembly line.
By Cosma Shalizi American Scientist
THE MYTH OF THE RATIONAL MARKET: A History of Risk, Reward, and Delusion on Wall Street. Justin Fox. xviii + 382 pp. Harper Business, 2009. $27.99.
The Myth of the Rational Market, by Justin Fox, is an account—popular but thorough—of the roots, rise, triumph and ongoing fall of the theory of efficient markets in finance. This school of thought is an exemplary specimen of a type of social science that flourished after World War II: It has mathematical models at its center, has supposedly been empirically validated by statistical analyses, is indifferent to history and to institutions, and takes as an axiom that people are intelligent, farsighted and greedy. Unlike many economic theories, the efficient-market school has been influential beyond academia. It helped reshape ideas about how companies should be run, how executives should be paid, and indeed how the economy should be regulated (or not) to promote the general welfare. (In comic-book form: A mild-mannered social science by day, at night efficient-market theory puts on a cloak of ideology and struggles for the Capitalist Way.) The theory contributed, arguably, to setting up the crisis that has gripped the world economy since 2007. Its story is of much more than just scholarly interest.
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A new analysis of the original data from the famous Hawthorne Studies by Steven D. Levitt, and John A. List questions the conclusion found in most textbooks.
The “Hawthorne effect,” a concept familiar to all students of social science, has had a profound influence both on the direction and design of research over the past 75 years. The Hawthorne effect is named after a landmark set of studies conducted at the Hawthorne plant in the 1920s. The first and most influential of these studies is known as the “Illumination Experiment.” Both academics and popular writers commonly summarize the results as showing that every change in light, even those that made the room dimmer, had the effect of increasing productivity. The data from the illumination experiments, however, were never formally analyzed and were thought to have been destroyed. Our research has uncovered these data. We find that existing descriptions of supposedly remarkable data patterns prove to be entirely fictional. There are, however, hints of more subtle manifestations of a Hawthorne effect in the original data.
The London Review of Books has recently published The Money that Prays, an article by Jeremy Harding about banking in the Islamic world and how it fares in the economic downturn.
Last September, as dust and debris from the tellers’ floors began raining onto the empty vaults below, a note of satisfaction was sounded by bankers in the Arab world. Financial institutions sticking to the tenets of Islam, they announced, were largely immune from the debt crisis. Devout Muslims may lend and borrow under certain conditions; they can even buy and sell debt in the form of ‘Islamic’ bonds, but most other kinds of debt trading are frowned on. Al Rajhi Bank, based in Saudi Arabia, and the Kuwait Finance House posted impressive profits in 2008. Both have come under some nervous scrutiny in 2009 but their ability to weather the recession that has set in behind the credit crunch is not at issue.
