Innovating Innovation: Old Metrics Failing to Capture New Curves?

Picked up a great blog post on A VC, Fred Wilson (highly regarded VC and principal of Union Square Ventures) about Steven Johnson's Time Magazine cover story on How Twitter Will Change the Way We Live.  Fred's exuberance for the article stems from the article's final few paragraphs.  In his words:

It's the finish of Steven's piece where he talks about "end user innovation" that is so brilliant. He makes this "larger point about modern innovation":

When we talk about innovation and global competitiveness, we tend to fall back on the easy metric of patents and Ph.D.s. It turns out the U.S. share of both has been in steady decline since peaking in the early '70s. (In 1970, more than 50% of the world's graduate degrees in science and engineering were issued by U.S. universities.) Since the mid-'80s, a long progression of doomsayers have warned that our declining market share in the patents-and-Ph.D.s business augurs dark times for American innovation. The specific threats have changed. It was the Japanese who would destroy us in the '80s; now it's China and India.

But what actually happened to American innovation during that period? We came up with America Online, Netscape, Amazon, Google, Blogger, Wikipedia, Craigslist, TiVo, Netflix, eBay, the iPod and iPhone, Xbox, Facebook and Twitter itself. Sure, we didn't build the Prius or the Wii, but if you measure global innovation in terms of actual lifestyle-changing hit products and not just grad students, the U.S. has been lapping the field for the past 20 years.

That's the thing that gets me so excited to get up and get going every day. Technology has reached a point where anyone can get involved with innovation. Patents and degrees matter a lot less. Imagining something and then coding it up is what its all about these days.

We are engaged in what Eric von Hippel calls "end user innovation" and it is a fundamental shift in the way society innovates. The Twitter founders are a perfect example. They built a simple tool to share short messages and it has become something entirely different.

The tools we are creating are allowing a much greater population to participate in the innovation process.  Opensource.  Crowdsource.  All new terms that describe an interconnectedness and an intellectual leverage unprecedented in history.  This should make for much more rapid, powerful, and unpredictable sources of new growth.  Google came alive about 10 years ago, captured a space, and quickly rose to become a goliath.  But just as quickly as Google rose to predominance, another rival could come and beat them at their own game, invent a new model, change the rules of the game, or the playing field altogether. 

I very much agree with the point that those decrying the U.S.' falling stature as the center of world innovation, are pointing towards metrics that described previous generations' sources of and success in innovation.  PhD's and patents are no doubt important, but perhaps new metrics describing the interconnectedness of a society, or the mass, quality, and rate of information transferred between members of a society at any given point, will better describe innovation power.  Of course, because this new curve has only just begun, we're far from being able to fully understand it and thus, measure appropriately. 

Stanford University's Responsible Supply Chains Conference Recap

I attended Stanford University's third annual conference on socially and environmentally responsible (SER) supply chains last Thursday, May 21.  The conference has doubled in size every year since 2006 and promises to be larger next year.  A full day of presentations and panels from executives at leading companies such as Cisco, Intel, Safeway, Disney, HP, Verite, and more made for a multitude of perspectives and approaches to the topic of sustainability in supply chains. 

A few general observations from the conference:

• The realm of social and environmental responsibility in supply chains is still very nascent.  It seems each company, industry, and the business world as a whole is still establishing definitions for what it means to be socially and environmentally responsible.  This dialogue, of course, is very important and will likely set the stage for a future platform to act from. 
• It seems greater success can be had when companies address issues of social and environmental responsibility in their supply chains from an industry approach.  This leads to a greater probability of standardization and leverage in the supply chain, which in turn, based upon presenters' comments, seems to foster faster and more widespread change in the supply chain as a whole.  Some critical factors for success gleaned from many of the presentations, despite the industry of a given company, are the following:
  • The involvement and commitment of top, C-level, management
  • The combination of efforts across companies within a given company
  • Honest and free communication within companies and with competitors (a very scary and challenging proposition for many companies)
  • A sharing of best practices and communication amongst shared suppliers within the industry (meaning--get your suppliers to talk and share with each other to benefit everyone as a whole)
  • Outside and independent verification to create transparency and accountability

A few other interesting takeaways:

• Cooperation amongst several companies within an industry to acheive industrywide social and environmental responsibility seemed to be easier to accomplish in B2B industries, and industries that did not generally "face" consumers or receive consumer and/or watchdog scrutiny.  Those companies that had more of a B2C orientation viewed supply chain SER as more of a competitive differentiator, and thus were less inclined to share information and resources with others. 
• I expect the conference will double in size and notoriety next year.  This is an issue the business world has only begun to explore.  I found myself wanting more nitty gritty dialogue from the conference, but as companies move down the path from the general questions of definition and the surface levels of implementation, I am sure the dialogue and topic will become much more comprehensive, heated, and fruitful.

 By Ashton Udall

Video of Ashton Udall's Guest Lecture at Stanford University and Upcoming Inventors Alliance - Silicon Valley, Seminar Annoucement

Here is a link to a video of a guest lecture GSS partner, Ashton Udall, made to Stanford University's Design and Manufacturing Forum last Friday.  The topic was Offshore Manufacturing for Start-ups and topics of discussion included basic steps in the process of offshore manufacturing and key factors for success.  Just click on View ME396 Seminars Online, and the video is Lecture 8. 

Ashton Udall will be giving a similar talk this upcoming Saturday on May 30th, at 10:30am, for the Inventors Alliance of Silicon Valley.  Event details can be found here. 

Consumerism Rebounding? But a Different Direction?

There has been much discussion in the media regarding the downturn's longer term impacts on consumerism, a topic I covered in this post.  Essentially, I discussed the changing of consumer habits as the downturn unfolds and what we may come away with as the consumer market as emerges.  Check out this NY Times article on the topic.  The articles conclusion on the impact of this experience on consumers and the changing job of marketers very much agreed with my own.  Looking for evidence of new consumers?

Richard Florida, of Creative Class fame, has written two interesting blog posts (here and here) looking at signs of change in consumers.  He cites a recent Pew Research Center study, which notes changing consumer perceptions towards common household items considered to be part of a core bundle of items consumers could be depended on to purchase. 

For example, the study cites consumers changing regard for microwaves--an item previously considered a necessity and now more a luxury (the product manager for microwaves at XYZ Inc. just tensed up).

Next, Florida tackles an article in Esquire by Nate Silver, which inquires about the decline of car culture in American society.  Silver ran some statistics, and his words:

To sort this out, I built a regression model that accounts for both gas prices and the unemployment rate in a given month and attempts to predict from this data how much the typical American will drive… [The results of the model are shown for the month of January in each year since 1980 in the graph above.]…

Americans should have driven slightly more in January 2009 than they had a year earlier. But instead, as we’ve described, they drove somewhat less. In fact, they drove about 8 percent less than the model predicted.

Just as product marketers, economists, and just about everyone, is desperate for signs of the bottom and subsequent upturn, so too Florida and Silver might be stretching for signs of major societal change.  But the data is compelling if not eyebrow raising. 

Panjiva, Sinosure, and Historic Futures - From Knowing Your Manufacturers to Knowing Where Your Products Are, These Firms Can Tell You

Supply chain information coming from all angles?  Information is power and these third party service and software providers are emerging to offer companies greater information about who their suppliers are and the location of their goods within them.

Three firms founded in the last 8 years are working to crack open global supply chains further to bring greater transparency.  One data mines customs records.  One issues credit reports on Chinese manufacturers.  One traces products through the chain of custody at the batch level.  When I prognosticate the statement of a supply chain executive in the near future:

I know the identities of all of the factories and suppliers involved in the production of every product I make, from final assembly and packaging to the materials suppliers 4 tiers deep. 

I know what customers they are all working with.  I know their capacity and exportation quantities at any given time.  I know their financial health.

...these companies are working to make it possible.

• Panjiva. Founded in 2006.  USA.  Panjiva data mines information on manufacturers using a variety of sources, including the US Dept. of Homeland Security (Customs), General Administration of Customs of the Peoples' Republic of China, fifty-five ISO 9001 auditing firms, forty-six ISO 14001 auditing firms, and several others, to offer companies reports containing information on which products a given supplier has shipped, which customers a supplier has shipped to, the quantity a supplier is shipping, and the frequency with which they ship.  The reports are designed to offer companies new methods of tracking the health and activity of their contract manufacturer base. 

• Sinosure.  Founded in 2001.  China.  As described by Jason Busch at SpendMatters: "Sinosure, was set up in 2001 as the monopoly provider for export insurance (essentially receivables insurance) for Chinese suppliers. Run by the Chinese government, Sinosure conducts supplier financial assessments of suppliers as part of the receivables insurance underwriting process. They base this assessment on government data sources as well as standard credit rating approaches (e.g., on-time payment for phone bills)"  In his posts on the topic here and here, Jason raises questions with good reason about the accuracy of information upon which Sinosure bases its credit ratings.  Josh Green, founder of Panjiva, which recently announced a partnership offering with Sinosure, responded that Sinosure simply presents another source of information to cross-check supplier information they already have, and that the agency itself bases its own insurance policies on the credit information they develop. 
  

• Historic Futures.  Founded in 2003.  UK.  Historic Futures has developed a trusted third party product traceability system, known as MyString, to allow consumers, retailers and brands to trace product through multiple companies in the supply chain back to source.  Historic Futures software and services allow companies much greater efficiency in the management and reporting of COO for raw materials used in their products, collection and analysis of KPIs throughout all tiers of the supply chain, such as "product miles", water use and energy consumed, and visualization/management of compliance and certification status beyond the first tier of the supply base.  Walmart's LoveEarth jewelry line, launched in summer of 2008, is one of their biggest and most notable projects.  Consumers can now go to Walmart's LoveEarth website, enter a batch number for a jewelry piece they purchased, and track the companies in the chain of custody from mine to retail.  

The reservoir of information in global supply chains is beginning to be tapped for greater internal management, as well as social responsibility, and marketing initiatives.  This is likely only the beginning.