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Innovation Blog
Somali Pirates Revisited: Moving Up the Value Chain
By Shlomo Maital
In January, and again in March, I wrote blogs about the Somali pirates who capture ships off the Horn of Africa and hold them for ransom – about how innovation might solve the problem (outsource the naval protection to China? Put sticky goo on the decks of cargo ships?).
This time, I’m revisiting the Somali pirates, to use them as a model for innovators.
Don’t get me wrong. These pirates are criminals and should be brought to justice. But the world has greatly underestimated the ingenuity and enterprise of 16-year-old uneducated poor youths, who take rickety small boats hundreds of kilometers to board huge ships and hold them hostage.
Now, there is a new development. According to the Global New York Times [1], Somali pirates are moving up the value chain. Once, their mantra was, “we just want the money”. Typical startup guys. Now “the pirates are getting more ambitious”. They are scaling up, reinvesting profits, organizing and moving up the value chain.
Take, for instance, Mohamed Garfanji, a pirate boss. He organized the hijacking of half a dozen ships, and used the millions of dollars in ransom money, not on high living and women and drugs, but on building a small infantry division, well trained, comprising several hundred men, 80 heavy machine guns and fleet of large trucks with antiaircraft guns. This is a formidable force. It is now ‘for hire’, offered to local authorities who need law and order in a country where there has been no real central government since 1991 and no real force to oppose the Shabab, the rabble of Muslim fundamentalists. (An African Union force, and Ethiopian army contingent, have been ineffective). Garfanji offers real value creation to his clients. And he makes his mother proud.
2010 is proving to be a banner year for hijacking, with some 30 ships hijacked already, bringing millions in revenue. Piracy is definitely a growth industry. Shipping firms prefer to ignore the problem, and would rather pay ransom than invest in armed guards or other prevention measures. But the pirates are diversifying. They are reinvesting their income to hedge their bets, just in case the technologically-advanced world with its $2 b. aircraft carriers each housing 80 F-18 fighter jets really does figure out a way to deal with uneducated teenagers armed with Kalachnikovs and tiny motorboats. So far, the F-18s are losing.
[1] “Jeffrey Gettleman, “In Somali civil war, both sides embrace pirates”. NYT Sept. 1/2010.
Innovation Blog
Cotton Candy? Carmelized Popcorn? Sea Weed? Meet Chef José Andrés, World’s Most Creative Chef
By Shlomo Maital
Meat … Chef José Andrés. It’s not a spelling error. Chef José, the pioneer of molecular gastronomy, has this to say about meat:
“We overemphasize meat. Meat is boring. I love it. But only once in a while. Put meat in your mouth, chew it, in seconds all the juices are gone….then what? You are stuck for 20 more seconds chewing and chewing and chewing… with no flavor. This doesn’t happen with pineapple, asparagus, green peas. The future of gastronomy lies in vegetables and fruits, they are far more exciting than chicken. Take a chicken breast, the best ever made, compare it with a beautiful pineapple. Aroma? Acidity? Afternote? The chicken breast has none of these.”
Chef José was featured on a great 60 Minutes segment, interviewed by Anderson Cooper. He is Spanish, came to America with $50 in his pocket about 20 years ago, is only 41 years old, started and runs some of the world’s greatest restaurants, and is changing the world. His The Bazaar is the only LA restaurant given four stars by the LA Times. Innovators everywhere can learn a lot from him.
Ruth Reichl, author of the acclaimed Tender at the Bone and a former editor at Gourmet magazine, says about Andres: “… expect wonders, his food will do things you never imagine, it will float at you. Textures you didn’t ever think possible will be in your mouth. It’s not a gimmick. It’s a kind of magic, a circus of the mouth.”
Chef Jose thrusts at his interviewer what looks like a small ice cream cone. It’s not. It’s…well, bagel and lox, wrapped inside a tasty small wafer cone. Yum.
Chef Jose likes to surprise. He serves Cooper a cocktail, icy cold on top, foamy, with hot liquid on the bottom. Surprise! A key principle of innovation – do the unexpected. Chef Jose’s dishes have many many surprises.
He serves what looks like a solid green glob. Cooper pops it into his mouth. Whoops…It’s all liquid inside. And – it’s actually …seaweed. Cooper says, “It’s all I can do not to lick the plate! But we’re on camera!”. Jose says: OK. Turn off the cameras! Next, Cooper gets an incredible dish – cotton candy wrapped around seafood. Cotton candy is the most amazing invention ever, exclaims Chef Jose. Again – surprise! Cooper tries his clam chowder. Surprise! It has potato in it. Who in the world puts potato into clam chowder?? Surprise! Chef Jose does. Break the rules. Molecular gastronomy.
How does Chef Jose know if what he makes is good? The MiniBar. This is a small place in Washington DC, where there are places for only six people. There, you are served his experiments, and you give feedback. The waiting list? Well, it’s only slightly harder to reserve a seat there than to get a seat next to Jack Nicholson courtside at a Lakers game.
Chef Jose teaches a course at Harvard University in culinary physics. There, he teaches about molecular gastronomy – how you analyze gourmet cooking by deeply understanding the structure, texture and interaction of the molecules of the ingredients you use. I wonder if he makes lunch for his students.
The thing I liked best about Chef Jose is the fact that for the past 17 years, not long after he arrived in Washington DC from Spain, he has been volunteering for Robert Eggar’s DC Central Kitchen. There he trains former drug addicts and criminals to become chefs in intensive 12-week courses. He raised $1.5 million to support the school. He and his students prepare meals daily for 4,000 needy people in the DC area. And he has hired 10 of his graduates to work in his own eight restaurants.
“We chefs should be more outspoken about the way we are feeding America,” he insists. “We should be committed to the 97 per cent of Americans who don’t eat in restaurants.”
Chef Jose is married to Patricia and they have three daughters.
Innovation Blog
Can You Smash the Vase? And Do You Know When to Smash It?
By Shlomo Maital
The best definition of diplomacy I’ve ever heard comes from my friend Bilahari Kausikan, Second Permanent Secretary (i.e. deputy minister) of Foreign Affairs, Singapore, an exceedingly wise and experienced diplomat who has tracked world affairs through the soles of his feet, and with his very sharp eyes, for almost three decades. He first joined Singapore’s Foreign Affairs ministry in 1981.
“…diplomacy is akin to making a beautiful vase. You shape it from clumsy clay, but if it is necessary, you smash it.” [1]
Bilahari goes on to explain that developing foreign relations, at huge effort, in a changing world may demand that the very persons who did so, who created the vase, at enormous cost, may be told this: “we may well ask you to take it and smash it. And then you must do it without any hesitation”.
Innovation is very similar to diplomacy, as Bilahari defines it. You fashion new things out of very clumsy clay. You hope they will be beautiful. You have a great deal of ego and emotional capital invested in the vase you created. Since beauty is in the eye of the beholder, you perceive it to be very beautiful indeed.
But alas, you turn out to be wrong. Nobody wants the vase, nobody likes it. This becomes crystal clear very quickly after the innovative ‘vase’ reaches the market. (This is why you must get it to market desperately quickly; until you do, you will never know for sure).
When this happens, you must smash the vase, without hesitation. Close the business, dump the product, and move on.
This is one of the hardest parts of innovation – as Peter Drucker called it, “abandonment”, a key part of his famous NYU course that he taught in the 1950’s. It is something that we professors of innovation do not really teach sufficiently.
Innovator – you may oppose capital punishment, but in your work, you may need to impose it. You may need to sentence a much-beloved idea to death. If so, do it quickly and decisively. As Bilahari Kausikan notes, this toughness of mind at the end of the process – knowing how and when to smash the vase — is as essential as the creativity that begins it.
[1] In Chua Mui Hoong, Pioneers Once More: The Singapore Public Service 1959-2009, p. 126-7.
Innovation Blog
Rethinking Innovation: Start at the Bottom, Not the Top!
By Shlomo Maital
Anil Gupta
Sometimes, rarely, you find pearls in advertising supplements.
The Global New York Times’ “Dawn of the New Decade” ad insert seeking investment in Asia (as if Asia needs money and investment, rather than the overspending America) has an interesting interview with Anil Gupta, INSEAD Professor and expert on globalization. [1]
Here is Gupta’s ‘take’ on the changing world of innovation:
“Enterprises that hope to emerge as the global leaders in 2020 will also need to think differently about innovation. Traditionally, innovation has originated in the developed countries….within industries, at the top of a product range, for example, a Lexus, and then worked its way down to, say, a Toyota Corolla. ..In order to capture the very large market opportunities in the low-to-middle segments [in emerging markets], the leading global enterprise of 2020 will need to be good at not just top-down innovation but also at frugal innovation, whose roots would lie in the low- and middle-income markets of emerging economies.”
Prof. Gupta cites as an example Tata Group’s Nano car, the world’s cheapest, and its strategic plan to bring out an electric Nana in the EU and US, matching the performance of domestic equivalents at 1/3 less cost. “We’ll see this phenomenon in many industries, from tractors to banking,” he notes.
Innovator: Can you shift your focus from premium-priced ‘toys’ bought by those with scads of money, to low-priced products that even low-income groups in low-income countries can buy? The late C.K. Prahalad identified “fortunes at the bottom of the pyramid”… but apparently, according to Gupta, there are also superior innovation opportunities down there.
[1] “Emerging economies change the game for global corporations”, Global New York Times Friday Aug. 27, 2010, Dawn of the New Decade.
Global Crisis/Innovation Blog
Global Crisis as an Oil Spill: Let’s Help Nature and Evolution
By Shlomo Maital
Oil eating bacteria
BBC reports today that the army of scientists researching the oil spill in the Gulf of Mexico have found that oxygen levels in the Gulf (normally excessively high after an oil spill dumps tons of hydrocarbons into the water) have not risen as much as expected.
Why? It turns out that deep in the Gulf, oil-consuming bacteria have been proliferating rapidly and have been gobbling up the bad sticky goo. Normally, such bacteria are few and far between. But suddenly, when their food supply expands a thousand-fold, they leverage their bounty by multiplying. It is Nature’s way, and evolution’s way, of dealing with nasty surprises.
When the sticky oil has been eaten up by the bacteria, who transform it into energy needed to grow and to reproduce, the existing bacteria will run out of food. They will die off, and their numbers will fall back to what they were before the oil spill.
It occurs to me that the Global Crisis 2007-9 is very similar. Financial services firms of all kinds (Fannie Mae, AIG, Goldman Sachs, speculators, hedge funds, private equity, VC’s) all proliferated, like bacteria, when their ‘food supply’ suddenly became rich and plentiful (booming capital markets fed by the ‘oil spill’ of Alan Greenspan’s low-interest come-and-get-it-while-you-can money and credit).
Now that ‘food supply’ has dried up, mostly, and all those ‘financial services bacteria’ (no, I will not call them ‘germs’) will perforce shrink and decline, as they should. At least, they will, if we behave rationally. If we act to preserve them, as Geithner and Obama have, we are simply creating another oil spill, probably a worse one.
Often, after terrible wildfires, Nature appears utterly destroyed, burned. In an amazingly short time, green shoots appear; indeed, some plants and trees need the fire in order for their seeds to germinate. Similarly, in the Global Crisis, those green shoots can and will reappear, if we let them. But if public policy is bent on preserving the deadwood, there will be no air and water and earth for green shoots.
Global Crisis/Innovation Blog
How Internet Brings People Closer Together
By Shlomo Maital
In his seminal article 43 years ago, psychologist Stanley Milgram showed how very small our world is, in his Small World experiment. [1] Milgram showed we are only, on average, six ‘degrees of separation’ apart from one another.
According to Wikipedia: Six degrees of separation (also referred to as the “Human Web”) refers to the idea that everyone is at most six steps away from any other person, so that a chain of, “a friend of a friend” statements can be made to deliver a package from one person to any other randomly-chosen person in six steps or fewer.
Now come several new studies showing how the Internet has sharply reduced those six degrees to three or fewer.
- In 2001 a Columbia University Professor, Duncan Watts, used an email as a ‘package’ and found , with 48,000 senders and 19 targets in 157 countries, the average number of intermediaries was six.
- The average distance on Twitter (based on a study of 5.2 billion ‘relationships’ when Twitter users follow other users) is 4.67.
- Twitterers, or Tweaters, who also belong to the 14 largest Yahoo groups have only 3 degrees of separation.
- Yahoo Groups, in turn, the world’s biggest online discussion boards, have 150 million members, and 10 million groups, in 25 languages. This is perhaps even more surprising than Facebook’s 500 m. users, because Yahoo’s discussion groups create meaningful conversation, communication and interaction. The biggest are “Athenians”, “Pure capitalism”, “Capitalists forever”, “globaltaxrevolt”, “blowback”, “clearcutforum”, “fireflyflash”…etc.
Milgram’s original study got a package from someone in the American Midwest to a pastor in Cambridge, MA. Today, we can get an email message from anyone, anywhere, to anyone else, anywhere, in about the same number of handoffs.
In this smaller shrunken world, will the Internet ultimately foster the idea that all of us are brothers and sisters, regardless of ethnicity, race or religion, and that we can use technology to achieve deeper human understanding?
Will the tendency of our political leaders to lead us into conflicts and wars be replaced by the tendency of ordinary people surfing the Web to seek understanding and peace?
[1] Stanley Milgram, “The Small World Problem”, Psychology Today, 1967, Vol. 2, 60-67.
Innovation Blog
Want to Think Creatively? Shut Down Your Brain!
By Shlomo Maital
Today’s Global New York Times carries a great article by Matt Richtel, who is based in San Francisco and who covers the digital world. [1] Richtel cites scientific evidence that shows “when people keep their brains busy with digital input [cellphones, iPad, iPod, iPod, and so on], they are forfeiting downtime that could allow them to better learn and remember information, or come up with new ideas”.
Richtel interviewed Dianna Bates, who while churning her legs on an elliptical machine at a fitness center is listening to songs on her iPod, then tapping out an email on her iPhone and watching HD television.
All this activity is an antidote to the boredom of exercise, Richtel says. But hey – let’s hear it for boredom!
I myself am a confirmed jogger, and love to do 5 km. runs along the boardwalk in my city Haifa, or sometimes 10 kms. on the weekend. Some of my very best ideas have come from those runs. The prolonged monotony and rhythm of running provide the perfect seed bed for thinking creatively. Your mind detaches itself from your body, floats above your head at 10,000 feet, and wanders, tackling all the problems you have buried deep in your subconscious just waiting for the chance to solve them. If you do not create down time, and if your mind is constantly busy with its variety of digital gadgets, when will it have the space and time to ‘float’ and to create?
What is the evidence for this?
● People learn significantly better after a walk in nature than after a walk in a city.
● Digital games are increasingly played for shorter and shorter time periods; one mobile game, stacking blocks, gets played for an average of 2.2 minutes. That is potential down time that is lost.
● At the fitness center Richtel visited, of 70 cardio machines, 67 have TV’s attached. Recently, when the cable TV went down, patrons went ballistic. But one fitness fan gets it. He looks out at the pool and the palm trees. “I come here to clear my head,” he says.
So, innovator – get bored. Do monotonous things without any toys. Watch your mind wander – and be surprised at the things it tosses at you. Be sure, however, to capture them – I always run with pad and pen.
[1] Matt Richtel, “Digital devices deprive brain of needed downtime”, Global NYT Aug. 24/2010.
Innovation Blog
Want to Be Very Rich? Here is How! 8 Steps to Wealth
By Shlomo Maital
“It’s not about money!”
Research and my own experience with entrepreneurs show that the main motive for launching new businesses and products is not wealth or money, but rather, change-the-world aspirations, the quest for positive impact and the desire to create.
Nonetheless – for those who do want to become very wealthy, a study by Keren Zuriel-Harari, published in the August monthly magazine of the Israeli business daily Calcalist, provides 20 proven ways, based on substantial research (by others).
I will recount here only eight of those 20, some of the more unusual and surprising ones. If you email me, I will try to provide the rest, in English.
1. Do a double undergraduate major. Combining two fields is a powerful tool for innovation, which often links “X” and “Y” in ways others haven’t thought about.
2. Stay married. Divorce slashes your personal wealth by 77 per cent. Staying married increases it by 93 per cent.
3. Rent your house, don’t buy it. The opportunity cost of putting your assets into a house is high, those funds could be used elsewhere more effectively, especially after the housing bubble burst.
4. Be tall. Tall people are richer; presumably they command respect and others accept their leadership more readily.
5. Eat proteins.
6. Be dyslectic. Dyslectic people find creative ways to overcome their deficiencies, and this translates into other realms, like innovation.
7. Go on a diet. Thin people are richer.
8. Rise early, before 6 a.m. Early-risers, like early-birds, get the worm. Late-sleepers become one.
Innovation Blog
“The sky is falling on venture capital…”
By Shlomo Maital
“Once upon a time there was a tiny, tiny chicken named Chicken Little. One day Chicken Little was scratching in the garden when something fell on her head.
“Oh,” cried Chicken Little, “the sky is falling. I must go tell the king.”
Chicken Little was wrong. The sky was not falling. In contrast, according to Joseph Ghalbouni and Dominique Rouziès, “the sky is falling on the venture capital rainmakers”. Their Harvard Business Review article “The VC Shakeout” [July-Aug. 2010] claims that “venture capital hasn’t worked for a decade and must be radically restructured if it’s going to influence innovation – and make solid returns to investors”.
“There are few signs that things will improve any time soon,” they report.
The VC model is broken in three places. First, there are fewer promising startups in which to invest. Second, VC’s are unable to create IPO’s and acquisitions, for their exits. Third, the lengthening time it takes for VC’s to extract their money lowers the internal rate of return by spreading that return over many more years.
The VC value proposition needs radical change. It doesn’t work for investors, because the return on investment is too low. It doesn’t work for entrepreneurs, because the VC promise of handholding, managerial expertise and daily mentoring is rarely fulfilled. The same shakeout that is afflicting the entire banking and financial services industry is now assaulting the VC’s.
“Venture capitalists must return to their roots of being more patient, hands-on consultancies that nurture their startups until they are sustainable,” note the authors.
I have known many venture capitalists over the years. Frankly, very few of them were humble – many were over-the-top arrogant – though for years the data showed they had much to be humble about. That hubris may have kept the VC industry from facing the facts and radically reinventing itself, until, now, when it is almost too late.
This is bad news for America, which is counting on its innovation to pull it out of the deep hole it is in. And it is bad news for Israel, which counts on global VC funds to fuel its startups. Both nations will have to find a substitute, and there is not much time left in which to do so.
Oh – and as for Chicken Little? The story ends, “….just as [Foxy Loxy] was about to lead them into his den to eat them… …the sky fell on him. “Oh dear,” said Chicken Little. “We’re too late,” said Henny Penny. “Poor Foxy Loxy,” said Ducky Daddles. “No sense in going to the king,” said Goosey Loosey. “Nothing to do now but go home,” said Turkey Lurkey. And they did.
Poor Foxy Loxy. If only he had listened…
Innovation Blog
Tobacco Leaves as Solar Power Plants: Breakthrough from Technion
By Shlomo Maital
Prof. Noam Adir
This is one of the neatest pieces of research I have seen, in recent years, and it comes from my university, Technion – Israel Institute of Technology, here in Haifa.
According to a paper published in the prestigious Proceedings of the U.S. National Academy of Sciences, and cited as “must read” by a leading organization of senior biologists, four Technion researchers have made a breakthrough in researching “greenest of the green” energy – literally, producing energy just as green plants do, through photosynthesis. [Larom Shirley; Salama Faris; Schuster Gadi; Adir Noam. “Engineering of an alternative electron transfer path in photosystem II”].
In photosynthesis, plants absorb solar energy and convert it into efficient chemical energy. But how?
Prof. Gadi Schuster (Dean of the Biology Faculty), Prof. Noam Adir (Faculty of Chemistry), and doctoral students Shirley Larom and Faris Salama found a key protein that extracts electrons from water and moves them through a membrane (in both bacteria and plants) that isolates the electricity flow and keeps it from escaping. The researchers changed one single amino acid in the large protein molecule, from a “positive” charge to a “negative” one, so that electrons can flow OUT of the membrance instead of being trapped inside it. They did this without harming the basic functioning of the protein, so that the bio-engineered plant or bacterium grows completely naturally, to create large amounts of the vital protein. Note the interdisciplinary nature of the research team. The collaboration between chemistry and biology was crucial and shows how current and future breakthroughs will require such cooperation as standard. Perhaps it might be wise to merge the Biology and Chemistry faculties everywhere?
The Technion team also found an electron-carrying protein that could absorb the electrons emitted by the reverse photosynthesis process and transfer them to a kind of battery.
Imagine, the team suggests, a few tobacco leaves that could supply electrical energy equivalent to a one square meter photovoltaic cell.
What a redemption for tobacco – enriching people’s lives rather than shortening them!
TIMnovate 