There is no question that the Napoleonic wars in Europe in the early 1800s stressed the community of states at the time. Great Britain, for instance, needed to crew their ships with experienced sailors. She had a problem, however, called the cat-o-nine tails. Do something wrong (sleep late, curse at the wrong time, etc.) and, on many royal ships, you could expect a whipping that might be life threatening. Once a crew realized that it served a captain capable of whipping for simple offenses, the ship's population was likely to  abandon ship at the next port. Can't blame sailors when you think about it. The navy had a plan, however. Whenever they came upon an American ship, especially a freighter, they'd stop the ship and take back anyone they suspected of deserting. Then the cycle would begin again. Yes, Parliament realized they had a problem in the Navy. They debated it in depth. A famous captain, Thomas Cochrane (Daughn, 17), even testified  in Parliament to the brutality of the navy. It didn't do much good. The brutality continued.

Patrick O'Brian's Jack Aubrey novels popularize Thomas Cochrane. Aubrey runs his ship sternly, yes, but equitably. A special captain who loves the heat of battle, his crew admired him for his fairness and his agressiveness against the enemy. A captured ship was worth a fortune when sold, a fortune the crew shared in. Aggression was good. So was fairness. Aubrey, Lucky Jack Aubrey in the novels, was skilled at sailing, aggressive against the enemy (America in some of the story, and France in other parts), and successful at capturing bountiful prizes.

In modern business parlance, we might say that Aubrey had experience and talent. He was able to apply his skills successfully against his competition. His team won, the Navy won, and so did his country. Not a bad combination.

References

Daughn, George C. 1812. The Navy's War. Basic Books. 2011. 

O'Brian, Patrick. Master and Commander.  W. W. Norton & Company. 1970.

Bill Bratton's approach to fixing neighborhoods in New York City was to fix the little things. If there were broken windows, fix them. If there was graffitti, remove it. Drug selling? Enforce the laws. The police department collected information about the immediate past and projected where problems would occur in the future. It worked pretty well.

The East Orange (NJ) Police Department tried to do better. Led by a Bratton alum, they installed enough sensors that they knew where shots were fired in real time, installed enough cameras that they knew when a single person was walking down a street in a high crime area, and, when, crucially, that person met up with someone in a car for a short chat. That chat caused the PD to respond with a roll-by just to see what was going on. The roll-by might be announced with sirens blaring. Some of the neighbors didn't really like the big brother-like attention. They did like the real reductions in crime (Ranadive, 118).

The Securities and Exchange Commission is filing fraud charges against hedge funds (Businessweek) which seem to be advertising improper gains. They're responding following examination of public data that seems to suggest a problem. They're using that suggestion to follow-up and ask questions. Then come the indictments. The industry, pretty obviously, sees this as some sort of violation of privacy rights. Some of it feels the same way to me. Let's see how the results pan out. There were necessary elements to this: we've had problems in the past that grossly effected the US economy, they have the data to check up on things, and, they have the willingness to ask questions in an environment where in the past they only followed-up after folks lost a lot of money. Times have changed.

What does this mean for business? All this relies on data mining. The first step requires data to mine. That means much of the financial data in your accounting and sales information may be useful in the long run. Analyzing it may be in order. Should you invest money in that analysis? Well, it takes money to make money; it takes an investment to reap the reward.

What about tools to mine that data? Tableau software, a new firm started by a Pixar alum (Kharif), has software that'll take a ream of data and present it graphically. The presentation many times shows relationships that aren't immediately obvious. That new obvious information may be actionable. That actionable  fact may turn, ultimately, into profits.

References

Hamilton, Jesse. A "Broken Windows" Approach to Fraud. Bloomberg Businessweek. 12-18 December 2011. 63. http://www.businessweek.com/magazine/the-secs-new-approach-to-fraud-12082011.html 

Kharif, Olga. Applying the Pixar Magic to Spreadsheets. Bloomberg Businessweek. 12-18 December 2011. 54. http://www.businessweek.com/magazine/the-secs-new-approach-to-fraud-12082011.html

Ranadive, Vivek and Kevin Maney. The Two-Second Advantage. How We Succeed by Anticipating the Future - Just Enough. Corwn Business. 2011.

Create something. Design it. Test it. Sell it in limited quantities. Sell it in large quantities. Move on to your next creation. See something missing in all this? You've done all this work. You could continue to incrementally improve your product. We'd call this (or Clayton M. Christensen would) sustainable innovation wherein you continually improve the features of your product. In disruptive innovation you might take your current feature set and reduce it by a couple features while simplyfying your product. When you're done, the market may applaud because your product in not only cheaper, it is easier to use (remember all those not-used-very-often features you discarded).

There's another way to look at all this. You could take your creation as a series of different features that, when combined, look like your product. There is the housing in a medical device, say. Then there are the electronic features, the mechanical features, the software features, and maybe, the chemical features. All different and all requiring initial creation steps. Many machines might need only a small change to become completely different machines with somewhat different uses. Why re-create everything when you can re-use much of what you've already created, mash it together in a different way, tweak some of the different parts of the features, and end up with a completely new machine? What you've done is recombine a series of different platforms that you already had on the shelf with those few bits of changes, and, pretty cool, you've got a new product.

The medical device companies have been doing it for years. Savage and Cohen laud the time-saving - and cost saving - attributes of all this. You should too.

There's more to all this. Moore has talked for years about the chasm that you've got to cross if you want to take your new product into the general marketplace after all the early adopters have about finished up and are moving on to the next new thing. You can disrupt a new market with a new product. You can disrupt an existing market by removing features to simplify your product while, maybe, reducing price at the same time. Sometimes price doesn't have to reduce if you do things right. Moore takes all this one step - well, fifteen steps, really - further by describing what you do with marketing related to an existing product. He talks about (Moore, 63) Customer Intimacy, Operational Excellence, and Category Renewal in addition to the Product Leadership Zone that we've been talking about already. 

Distilled, we have an opportunity to take a simplifying strategy and to expand it or follow it with a series of other strategies that fit not only the age of your company, but the age of your product line as well.

References

Cohen, Frances. Embracing Change. Software platform technology and other time-saving techniques can boost innovation and reduce development time. Medical Product Outsourcing. April 2011. http://www.mpo-mag.com/articles/2011/04/embracing-change 

Moore, Geoffrey A. Dealing With Darwin. How great companies innovate at every phase of their evolution. Portfolio. 2005. 

Sargent, Bruce, Dr. Andreas Faulstich and Brian Jarvis. Platform Perfection. IVD instrument development time can be reduced through the effective use of platform technology. Medical Product Outsourcing. May 2010. http://www.mpo-mag.com/articles/2010/05/platform-perfection

We don't too often get a chance to tackle really big issues, or to create a strategy to address those issues successfully. When we in fact get to make a grand strategy, many times we never get to see how it works out, because those grand strategies take years, or sometimes decades, to play out.

George F. Kennan, in notes for a class at the National War College, drafted a strategy for dealing with the Soviet Union that he expected to play out over ten or fifteen years. As we all know, successful completion of his strategy took more than forty years. Here's the quote (Gaddis, 235):

Our task is to plan and execute our strategic dispositions in such a way as to compel Sov. Govt. either to accept combat under unfavorable conditions (which it will never do), or withdraw. In this way we can contain Soviet power until Russians tire of the game.

The strategy was about what to do about Soviet wishes to dominate the west over the decades following World War II, and in the years following during the nuclear build-up. The one key word, as you've probably already noticed, is a subtle one, but we all know it: contain. In two lines, Kennan laid out the American strategy for the next forty plus years. Reagan polished things a bit, but it was Kennan that originally laid out the strategy. Pretty interesting. Try to put your overall strategy in forty seven words. Even more interesting, yes?

Reference

Gaddis, John Lewis. George F. Kennan. An American Life. The Penguin Press. 2011.

Giving things away is a time honored practice in retail sales. We all know about the folks giving away free samples at the local grocery store on a Saturday morning. Giving things away to attract - or keep - customers works. There is a bit of disgruntlement about this, as some authors worry that, for instance, a contract is better than a frequent flyer program (Felton), or that free gets over done when you set up a methodology to give something away for free that you don't own as Napster was, and Google is, sometimes accused (Levine). Levine even takes a swing at Lencioni's Getting Naked, questioning the word loyalty and its assumptions about free.

For now, however, I'm pretty on board with Anderson's free and the steps he suggests for using the concept of free to sell more. He uses Microsoft's attack on freeware and open source software, two similar competitors that had the potential to take down Microsoft's hugely profitable operating system and business software/productivity products.

Anderson lays out the Microsoft responses in stages, some of which we've known about from psychology for years:

• Stage 1 Denial (Anderson, 106): Basically, although its engineers were saying otherwise internally, Microsoft denied that there was a problem or ever would be a problem.
• Stage 2 Anger (Anderson, 108): Microsoft's salespeople used the best line I've seen about all this, "Free like a puppy." Yes, you can get a puppy for free at the pound, but what are the long terms costs of that puppy in time and money.
• Stage 3 Bargaining (Anderson, 109): Microsoft did a study that in fact did prove that its open-source competior Linux was, over time, more expensive than the Microsoft products. That got them at the table where they could at least state their case to the big users.
• Stage 4 Depression (Anderson, 110): Microsoft's lawyers had forbidden its engineers to try out Linux, as the open source mantra required that if they made any changes to the code, those changes must become public. Microsoft didn't want to share. That kept them from understanding what was going on.
• Stage 5 Acceptance (Anderson, 111): Microsoft finally realized they'd better get on board with opensource and by implication, freeware. Things settled down to eighty percent market share for Microsoft operating system product, with maybe twenty percent going to Linux based systems. There are three segments competing, free, free software with paid support, and "good old pay for everything (Anderson 111)."

Below is a good chronology of free in the tech arena, all tracing its roots back to a Stwart Brand quote in 1984. It is interesting to remember that even Brand realized that while some things should be free, there were instances where capitalism had a place to play.

Chronology of "Information wants to be free."

1984: "All information should be free" (Anderson, 94, and Levy).

1984: "On the one hand information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other (Anderson, 96, quoting Stewart Brand)."

2009: "Commodity information (everyone gets the same version) wants to be free. Customized information (you get something unique and meaningful to you) wants to be expensive (Anderson, 97)."

2009: "Abundant information wants to be free. Scarce information wants to be expensive (Anderson, 97)."

References

Anderson, Chris. Free. The future of a radical price. Hyperion. 2009. 

Felton, Eric. Loyalty. A Vexing Virtue. Simon & Schuster. 2011.

Lencioni, Patrick. Getting Naked: A Business Fable About Shedding The Three Fears That Sabotage Client Loyalty. Jossey-Bass. 2010.

Levine, Robert. Free Ride. How digitial parasites are destroying the culture business, and how the culture business can fight back. Doubleday. 2011.

Levy, Steven. Hackers: Heroes of the Computer Revolution. Penguin Books. 1984.

We all know about some of the levers for success Apple uses to dominate its marketplace like design, innovation and, well, Steven Jobs. We're all interested in Apple's continued success. So what is Jobs successor, Tim Cook, talking about when he discusses next steps? Production and operations efficiency (Satariano, 37). And Cook's reference, the one he recommends to folks who are trying to understand Apple from all points of view? Competing Against Time.

When you see the business (Bloomberg Businessweek) press quote a book written in 1990, you've got to wonder just what is going on. Management has changed in twenty years, hasn't it? Satariano and Cook remind us that there are things any manufacturing or out-sourcing operation would be wise to remember.

• Time and Business (Satariano, 39): Remember the timely business words like respons time, lead time, and up time.
• Time and Customers (Satariano, 83): You can force customers to take what you offer, you can insulate the organization from customers if you try hard enough, or, and this is where the profits are, you can embrace customers and "be sure that they are more satisfied with the service provided thaan they could ever have imagined."
• Time and Innovation (Satariano, 107): Every now and then you see an auto manufacturer realize that its entire product line is no longer very pretty and, suddenly, they show up at a trade show with not just one or two new cars, but five, or seven, or maybe even a product announcement encompassing all thirteen cars in their line. And they start winning awards. Reminds you of all things "i" at Apple, doesn't it?
• Time and Money (Satariano, 149): We've all been through the time and money story. Remember that this book was written in 1990. So we get it. Reduce raw materials. Reduce work-in-process. Reduce finished goods inventory. All good. Now, realize that reducing time and money doesn't mean foisting your inventory off on some supplier who has to warehouse things til you need them. That's not savings. It's waste - to everyone.
• Time and Strategy (Satariano, 253): Don't coexist with competitors. Anymore, no one is staying in one place for long. Retreat is another strategy. I don't much like that one. Attacking feels a little better. Indirect attacking with subtle changes that suddenly add up from incremental change to dramatic change is nice. Cut price by adding capacity isn't very subtle, but it does work. Apple even has a strategy of cornering the market of production machines so their competition can't, for instance, stuff a board quickly because Apple owns all the latest and greatest production machinery. That one hurts, especially if you aren't paying attention.

Competing against time. Jobs never mentioned it. Cook lives by it.

Reference

Satariano, Adam and Peter Burrows. Apple's Supply-Chain Secret? Hoard Lasers. Bloomberg Businessweek. 7-13 November 2011. 35.

Stalk, George Jr. and Thomas M. Hout. Competing Against Time. How time-based competition is reshaping global markets. The Free Press. 1990.

When George W. Bush began to consider his term in office, he asked a series of historians how to write a memoir, and, perhaps more importantly, what to talk about. The first step most of them recommended was to read Grant's Memoirs (Grant). Bush found that Grant didn't chronologically detail his experience as a leader. Rather he chose topics to focus upon that he found were crucial to the success of his presidency. Bush decided to do the same thing (Bush, xii).

The chapter entitled Quitting was about Bush's bout with alcohol. Running was about the decision to run in Iowa in 1999. Personnel was about how Bush used Dick Cheney to initially vet candidates for Vice President, and how, ultimately, Bush decided that Cheney was the best choice for VP. Day of Fire is about 911. War Footing was about putting the country into a state of readiness for war in Afghanistan. Chapters on Afghanistan and Iraq follow. In Leading, Bush says that his goal was to solve problems, not pass them on to future generations (Bush, 274). He meant to lead the public, not "chase the opinion polls." I guess we all know about the failures in New Orleans during Katrina. What we don't know was that things weren't quite like they seemed. Politics got in the way. So did missing a key point: when you see a problem confront it, don't wait for resolution from others.

Lazarus Effect was about the determination focus on solving the HIV/AIDS crisis. The Bush solution was successful. It focused on aleviating the pain as solving the infectious nature of the virus isn't done even now. The decision to send more troops to Iraq, never popular, is detailed in Surge. Bush's goal was the protection of democracy in Iraq. In his second inagural in 2005, Bush laid out his Freedom Agenda, a plan to support repressive regimes in Iran, Syria, North Korea, and Venezuela, among others. Financial Crisis is about the bursting of the financial bubble, and to Bush response to it, especially the bail-out of Bear Stearns, and the problems at Fannie Mae and Freddie Mac. The Epilogue quotes the Bible Psalm 18:22 as Bush is leaving the White House on the way to Obama's inauguration:

The Lord is my rock, my fortress and my deliverer; my God is my rock, in who I take refuge.

Reference

Bush, George W. Decision Points. Crown Publishers. 2010.

Grant, Ulysses S. Memoirs and selected letters : personal memoirs of U.S. Grant, selected letters 1839-1865  Library of America. 1990 edition.

David Brooks is well-known as an Op Ed writer for the New York Times. He breaks his normal form by writing about psychology and the development of the human brain in a book that almost feels like fiction, which, in a way, because it applies physical, biological and psychological attributes to fictional characters, it is.  The book works because the science flows out almost effortlessly in a descriptive manner that turns the normal self-help book on its head by not only telling you what you should do, but why. Since I've been working a lot on Drucker lately, I'll quote Brooks quoting Drucker (Brooks, 254):

The great business sage Peter Drucker said that about a third of the business decisions he observed turned out to have been right, another third turned out to be minimally effective, and another third were outright failures. In other words, there is a least a two-thirds chance that what we have done is wrong or largely wrong. We believe this is great, because we want to believe we are great. We want to preserve our own egos, so we're spinning ourselves. But the truth is life is about producing failure. We only progress through a series of regulated errors. Every move is a partial failure to be corrected by the next one. Think of it as walking. You shift your weight off balance with every step, and then you throw your other leg forward to compensate.

A way to make sure you are compensating properly? When you make a major decision, write up a one-pager describing your decision making process and the action you took. Revisit it in nine months to see how you did, what you can learn from it, and what changes need to be made now (Brooks, 259).

Ray Kurzweil, in his descriptions on computer efficiency and the likelihood of computers mimicing human brains, claims, basically, that the time when a computer works as well at decision making as a human brain is fast approaching. Brooks takes only a paragraph to debunk that hope. In describing the growth of a child, he describes a young boy running around the room, and, then, landing in his mom's lap, yelling during all this, "I'm a helicopter! I'm a helicopter!" Brooks knows, as we know, as well, that no computer can even fathom the processes that a five-year-old has gone through we he declares "I'm a helicopter!" Yes, computers are great. No, they're not ready to take over the world, a comforting thought.

Reference

Brooks, David. The Social Animal. The hidden sources of love, character, and achievement. Random House. 2011.

Kurzweil, Ray. The Singularity is Near. Viking. 2005.

Having struggled through Machiavelli's various texts, and Unger's inspired biography, I have begun to understand the difference between Machiavelli's brand of ruthless leadership, and, say, Kouzes and Posner's demand that leaders reflect on what the people around them demand from their leader, or Bennis's "deployment of self through positive self regard (Bennis)". All this bred a bit of cynicism when I began to read Credibility. Ruthless leadership certainly is different from responding to demands of followers. There is a dichotomy. We do have a choice.

Kouzes Epilogue "Character Counts" (Kouzes, 201) does summarize the demanding point of view (from an anonymous source):

Be careful of your thoughts, for your thoughts become your words;

Be careful of your words, for your words become your deeds;

Be careful of your deeds for your deeds become your habits;

Be careful of your habits, for your habits become your character;

Be careful of your character, for your character becomes your destiny;

And, finally, from Kouzes: 

Be careful of your leadership, for your leadership becomes your legacy.

Reference

Bennis, Warren. Notes for a speech at University of California Irvine. 2000. 

Kouzes, James M. and Barry Z. Posner. Credibility. How Leaders Gain and Lose It. Why People Demand It. Jossey-Bass. 2011. 

Unger, Miles J. Machiavelli. A Biography. Simon & Schuster. 2011.

There is a whole new section in the business book realm, namely, books on loyalty. Witness the titles (Felton, 181):  

• Loyalty Rules
• The Loyalty Effect
• Why Loyalty Matters
• Lessons in Loyalty
• The Customer Loyalty Solution, and finally,
• Getting Naked: A Business Fable About Shedding the Three Fears That Sabotage Client Loyalty.

So, let's talk about loyalty, and some of the things that seem to productively produce loyalty, when, on closer examination, they might not produce loyalty at all:

1. You've been with your credit card company all these years. You're a loyal customer. Other people get lower rates on their credit cards. You call in, asking for a lower rate, and are denied. The solution? Don't call customer service. Call the section that deals with people who want to drop their card. That section can make a deal, not the loyalty section (Felton, 183).
2. Local breweries have all been, basically, closed down or bought up. Think you're buying the local brew? Probably not. Pabst is a local brew. It's not made by Pabst any longer. It's made by MillerCoors (Felton, 187). Go figure.
3. TV ads target 18 to 34 year olds. Why? Because, once you choose a brand, you'll stick with it for life. Al Reis (Felton, 189) says that's not so. Sure you buy a small Chevy when you're just out of college. When you get a raise, you buy a BMW, not a bigger Chevy, right?
4. The Beatles started out as the best boy band in the sixties. Once they were established, loyalty, even among friends, couldn't keep the band together. Each of them was justified in leaving the band and going out on his own (Felton, 191).
5. Buy a company with loyal employees who you have no loyalty for. Why have they been there so long? Maybe, just maybe, they can't get a job anywhere else (Felton, 194). Think about it.

Finally, a comment on binding a customer to you for life. Make it a contractual relationship. That's probably the best way - not talking about loyalty, or some sort of loyalty program (Felton, 199).

Felton writes the Postmodern Times column for the Wall Street Journal. Maybe he's got a point.

Reference

Felton, Eric. Loyalty. A Vexing Virtue. Simon & Schuster. 2011.

Some statistics wonks get together in Las Vegas. The topic was, supposedly, how to protect the casinos from rogue players. There were two resulting messages from the meeting.

The first is relatively obvious. The casinos are completely covered when it comes to protecting themselves from rogues. No one really gets away with anything. They do it by limiting the size of the bets a player can make. With lots of players, all playing to relatively small sized bets, nothing can go wrong, basically. The maxim, "the house always wins," is true.  

Here's the second message: The casinos are clueless when it comes to protecting themselves. All the technology they have is worthless to protect them. Witness (Taleb, 130):

• Their biggest loss in a long time wasn't at the gambling tables. Rather, it was the $100 million they lost when - you know all about this - Siegfried and Roy closed down because some tiger bit the wrong performer. Not predictable.
• A mad contractor at the casino was mad about his treatment. Since he knew all about the construction of the casino, his plan was to dynamite the place. Not predictable.
• Some employee decided to hide the reports to the IRS the casinos are supposed to make when gamblers strike it rich. Again, not predictable - and stupid, as well.
• Finally, a casino's owner's daughter was kidnapped causing the owner to dip into the till, a seemingly good thing to do, although it was in fact very illegal, and, again, not predictable.

The message? There are some things that, no matter how much you prepare for them to happen, you can not predict. No, you probably can not plan for all the risks. If you can't reach the grapes, as Taleb says (Taleb, 297), distain them. They're probably sour anyway. Don't play somebody else's game trying to get them. Just move on.

"In Black Swan terms, this means that you are exposed to the improbable only if you let it control you. You always control what you do; so make this your end."

Reference

Taleb, Nassim Nicholas. The Black Swan. The Impact of the Highly Improbable. Random House. 2007.

References

The time for stimulatory economic policy is apparently past.

Two points of view to now consider (Economics Focus):

• Either government intervention (with its attendant inefficiency breeding, reduced competition, lobbying encouragement and government supported production facilities producing products nobody wants) is past, or
• Now may be the time to consider industrial policy.

Competent industrial policy requires disinterested, benevolent policymakers who do it well (Economics Focus, 84). Key points:

• Governments should avoid open-ended incentives that in time entrench incumbents and raise consumer prices.
• Like patents, ... industrial policies should eventually expire.
• What matters is not whether governments can pick winners - they cannot - but whether thay have the good sense to let losers fall by the wayside.

References

Economics Focus. Tinker, tailor. The Economist. 1 October 2011. 84. http://www.economist.com/node/21530958

Aghion, P. M. Dewatripont, L. Du, A. Harrison & P. Legros. Industrial Policy and Competition. 28 June 2011. http://www.economics.harvard.edu/faculty/aghion/files/Industrial%20Policy.pdf

Rodrik, Dani. The Return of Industrial Policy. Project Syndicate. 12 April 2010. http://www.project-syndicate.org/commentary/rodrik42/English

Here's what it took to make WalMart green (Humes, 235):

1. Start with the hire-fire guy: A company has to become sustainable from the top down. 
2. Bake it in: Sustainability must be part of every employee's mission; relegate it to its own department, and it will fail.
3. Waste = money (with real question being whether it's los or found money).
4. Carbon = energy = money. (That's right, cutting carbon emmission can make money.)
5. Burst the bubble: Talk to environmentalists and activists, consider their criticism and advice-it's free.
6. Green is what the next generation of customers cares about.

The CEO at WalMart, Lee Scott, got interested first. Taking its time, WalMart focused on a few initiatives. Yes, some of it was driven, early on, by making a better image. Then they realized there was money to be made.

There was the health care media debacle when WalMart healthcare insurance was too costly and under-utilized. Light bulbs came next, with the conversion from incandescent to florescent. A big, early initiative was making all the cotton garments WalMart sells green. First step was to convert entirely to organic cotton. Cotton growers had to to convert from old way (with insecticides and fertilizers) to organic way,  which took years, forcing WalMart to make an unexpected, and first-time ever multi-year commitment to their suppliers. Either that, or they wouldn't supply WalMart. And - here's the reason to do this, in addition to the important social aspects - it made money for WalMart. Probably will for you, as well. First step: get the CEO on board.

Reference

Humes, Edward. Force of Nature. The unlikely story of Wal-Mart's green revolution. Harper Business. 2011.

Generic Strategies

Innovation Catalysts (Martin) at Intuit: Select coaches from across the organization who focus on innovation stepwise: Painstorm - find the pain point, Soljam - solutions are prioritized and focused, Codejam - go to test with good enough code, maybe even faked code to see what works. An example is Mobile Bazaar, a market-place on-line where Indian farmers figure out where to take their perishable products to market for the highest price.

Innovation Cheaply (Bettencourt): Off-the-shelf, in-hand innovations for fast implementation - re-use innovations that failed to launch, old capabilities that resurface as new, products customers like for unknown reasons, split up bundled products into stand-alone products, re-combine components into a new product, simplify an over-designed product that failed. Rainbird figured out how to re-configure an existing product to include new drip features to take to market quickly for immediate payback.

Innovation Against Free (Bryce): Analyze how much you are losing from paying customers, better free, then up-sell, cross-sell, and bundle free with paid offerings. Ryanair offers free or discounted tickets and makes up the difference by charging for other services.

Innovation Quickly (Brown) at P&G: New-business creation groups, innovation guides, innovation manuals, disruptive innovation college with sustaining innovations to existing products, commercial innovations (like packaging up-grades) to existing products, transformational and sustaining innovations (take a cheap product and up-grade it so it in applicable in a new, higher margin, market), and finally, disruptive innovations like entering a new business with radically new products (like the Swiffer mop) .

Innovation Pyramid (Rangan): Two steps - first realize that focusing on the folks with money isn't always the best of strategies, then, when you are focusing on the folks with greats needs but little money, divide them into segments, even at the lowest levels, and, then, target offerings at specific needs, like shaving with out shaving creme (or maybe even water).

Innovation Org Chart (Tushman): Yes, let innovation happen in the trenches; Yes, have multiple ideas competing against each other; Yes, have the final decisions made strategically, at the top, not in accounting or by competing departments and divisions. IBM, because a general manager was making the decision, was able to focus resources on new product launch SWAT teams. USA Today, because the CEO was forcing the issue, was able to refocus on the web (to the detriment of the print division) and launch new editions (like USA Today Sports) exclusively on-line.

Some closer-to-home examples:

• Vizio, which started out as a flat-screen TV manufacturer, is launching an entirely new product line - light bulbs.
• Allergan, which started out as an ophthalmic supplier, is launching line extensions for its Botox line of wrinkle removers, and adding new products by acquisition (like the Lap-band for obesity).
• T3 Motive has a two tier strategy of first making products for large target markets (like selling many units, all at once, to the government, for instance, and then, later, it is planning to sell single units to consumers).
• IRIS Technologies has re-focused its product lines from remote sensing devices to battery technology to take advantage of DOD requirements for power in remote locations.

References

Bettencourt, Lance A. and Scott L. Bettencourt. Innovating on the Cheap. Harvard Business Review. June 2011. 88. 

Brown, Bruce and Scott D. Anthony. How P&G Tripled Its Innovation Success Rate. Harvard Business Review. June 2011. 64.

Bryce, David J., Jeffrey H. Dyer and Nile W. Hatch. Competing Against Free. Harvard Business Review. June 2011. 104.

Martin, Roger L. The Innovation Catalysts. Harvard Business Review. June 2011. 82.

Rangan, V. Kasturi, Michael Chu, and Djordjija Petkoski. Segmenting the Base of the Pyramid. Harvard Business Review. June 2011. 113.

Tushman, Michael L., Wendy K. Smith and Andy Binns. The Ambidextrous CEO. Harvard Business Review. June 2011. 74.

Over time, we've spent a lot of time talking about growth strategies. Most of that time has, however, been spent talking about the strategies popularized by Clayton M. Christensen (Christensen), disruptive strategies. Moore reminds us that there are three other generic growth strategies to consider, some of which aren't as risky as disruptive strategies.

Moore differentiates growth strategies four ways (Moore, 98):

1. New products for new markets: Disruptive Innovation
2. New products for existing markets: Product Innovation
3. Existing products for new markets: Application Innovation
4. Existing products for existing markets: Platform Innovation.

Disruptive innovations target either complex systems markets, or volume operations (Moore, 75). In strategy, for years we've used a product market matrix delineating the likely risk of new strategy investments. The emphasis on new products for new markets always has been the most risky. It still is. In terms of risk, both product and appliction innovations are probably less risky. One relies on marketing strengths, the other on product innovation. Platform innovation seems to be the least risky. Interestingly, platform innovation seems to occur in the bigger companies. The classic example is the automotive industry. One car's under-lying architecture might be exactly the same as another's with just the body panels changed for appearance's sake. A local medical device contract manufacturer has derived a series of solutions to common problems. Clients bring their ideas for manufacturing. The contractor rearranges existing modules to solve the customer's problems. Prices are theoretically lower and production (or, maybe, engineering) times are faster.

We have made the point over time that working a flipchart with a small team might not be the best way to select new strategies. If you intend to grow, one of these four generic strategies might make sense. Each has a different amount of risk attached to it. A process to evaluate your strategies before you put them into action probably makes sense, as does a risk analysis that looks both at the short term and the longer term. 

Reference

Christensen, Clayton M. The Innovator's Dilemma. When New Technologies Cause Great Firms to Fail. Harvard Business School Press. 1997.

Moore, Geoffrey A. Dealing With Darwin. How great companies innovate at every phase of their evolution. Portfolio. 2005