TIMnovate

Innovation Blog

“No Excuses” vs. “Nothing Can Be Done”

By Shlomo Maital

  Consider Hyundai, the Korean car company.  

   A decade ago, Hyundai was at the bottom of J.D. Powers’ Initial Quality rankings (defining the quality of new cars within 90 days of purchase).   Everyone knew this.   The fact that Hyundai was cheap but defective made its future as a global car brand very doubtful.

   Hyundai’s Korean managers knew this.  They did two things.  Hyundai was restyled, so that today it looks as sleek, modern and well-designed as any of its competitors.

   But they did something else.  They set as their goal, making Hyundai top-rated in the J.D. Powers’ rankings.  Not “good”.  Not “very good”.  Tops.  Better than Honda.  Better than Toyota. 

   Laughable?  Impossible stretch goal? Perhaps.   But Hyundai leadership did something else.  They insisted on “no excuses”.   There will be no acceptable excuse for anything but top quality in the manufacture and production of Hyundai motor cars — the “Accent” and the “Elantra”.     

   They did not say:  Nothing can be done.  It is impossible to achieve the quality standards of Toyota and Honda, because (a) (b) (c) (d), etc.   They said, no excuses.

   In one of the most dramatic changes in the automobile industry, here are the results for J.D. Powers’  June 2009 Initial Quality rankings:

Best Subcompact Toyota Yaris; 

       close behind:  Hyundai Accent,  Honda Fit

 Best Compact Hyundai Elantra;

   close behind:  Toyota Prius, Honda Civic.    

  If you know people who own a Hyundai, ask them if they’re happy. I have.  Chances are, the answers will be highly favorable.

    “No excuses” is a powerful part of a company’s culture.  Singapore has built an entire wealthy nation on it.   Define the best practice benchmark.  Aim for it. And accept no excuses.  It is as simple as that. 

Innovation Blog

Induction?  Deduction? No!  Abduction!

By Shlomo Maital

    In the history of science,  it is known that Francis Bacon, in the late 16th C.,  urged scientists to engage in induction:    Observe carefully, then generalize and theorize based on those observations.  

    Today, that approach is the foundation of what is known as grounded theory:  deeply-engaged involvement with a company or product or team or organization, data collection, and only then, organizing the data into hypotheses and theories.[1]  This, I believe, is how management research should be done. 

    But it isn’t.   Why?

     Bacon was soundly defeated by Descartes, who preached deduction.  He  said that first one begins with a set of assumptions and hypotheses,  and only then, moves on to collect data and test the hypothesis — what is known today as the scientific method.

     Now, along comes Roger Martin, former McKinsey partner and now Dean of University of Toronto’s Rotman School of Management.   I’ve visited Rotman several times, and find it is one of the few business schools that practices innovation, rather than simply teach it.  The reason is its Dean, Martin, and principal donor, Joseph Rotman.

     Martin urges abduction.  (No, not the kind that means to kidnap).  Abduction, to Martin, means “the logic of what could be”.   He builds on the forty-year-old concept of anthropologist Gregory Bateson, (Steps to an Ecology of the Mind, 1972), who described a form of reasoning, “this is to this, as that is to that”, that leaps laterally, through story and analogy, finding links where others see none.  Writing in Business Week, together with his colleague Jennifer Riel,   Martin uses Research in Motion (RIM), Canadian inventors of Blackberry, as a powerful example.   He notes that when an innovator comes up with an imaginative idea, those who fund and judge it often demand validation, proof — using deduction and/or induction,  “what is”.   This is often not possible, especially for truly imaginative ideas. 

     Instead, those squareheaded nay-sayers should apply a different type of logic: abduction, from the Latin “ab” , from,   and “deducto” , to carry or lead.

   Writes Margin: “….When facing an anomalous situation, we can turn to a third form of logic: abductive logic, the logic of what could be. To use abduction, we need to creatively assemble the disparate experiences and bits of data that seem relevant in order to make an inference- a logical leap-to the best possible conclusion.” 
        Martin recounts the story of RIM: 
   “At Research in Motion, makers of the ubiquitous BlackBerry, abductive logic is embedded in the culture. Mike Lazaridis, RIM’s founder and co-CEO, encourages his people to explore big ideas and apparent paradoxes to push beyond what they can prove to be true in order to see what might be true. “

         RIM began by making beepers.  Its founder pressed RIM workers to see the ultimate beeper  (abduction).  Martin urges organizations of all kinds that seek to be innovative to practice abduction, just like RIM:   

  “Asking what could be true – and jumping into the unknown-is critical to innovation.  Nurturing the ideas that result, rather than killing them, can be the tricky part. But once a company clears this hurdle, it can leverage its efforts to produce the proof that leaders depend on to make commitments-and turn the future into fact,”  says Martin.

[1] “Bridging the Chasm Between Management Education, Research, and Practice: Moving Towards the Grounded Theory Approach”, by Shlomo Maital, Srinivas Prakhya, and DVR Seshadri:  VIKALPA, Jan.-March 2008

Innovation Blog

Science Breakthroughs by 2020:  20/20 Vision?

By Shlomo Maital

 In its Jan. 7  issue, the science weekly Nature [1] asked leading scientists to predict the coming decade’s developments in their field.  Here are some of their views:

   Internet:  Google research director Peter Norvig:

 ¨  Content will be a mix of text, speech, still and video images, histories of interactions with colleagues, friends, information sources and their automated proxies, and tracks of sensor readings from Global Positioning System devices, medical devices and other embedded sensors in our environment

     ¨  The majority of search queries will be spoken, not typed, and an experimental minority will be through direct monitoring of brain signals.  …   The results we get back will be a synthesis, not just a list.   A decade from now, the result will summarize the major approaches, contrast their differences, automatically translate any foreign documents into my language, and then rank the results by efficacy or place them in a table or chart as appropriate.  

 Personalized medicine:  David B. Goldstein,  Duke University

   ¨      ….here’s one confident but uncomfortable prediction of what personalized genomics could look like in 2020. The identification of major risk factors for disease is bound to substantially increase interest in embryonic and other screening programmes. Society has largely already accepted this principle for mutations that lead inevitably to serious health conditions. Will it be so accommodating of those who want to screen out embryos that carry, say, a twentyfold increased risk of a serious but unspecified neuropsychiatric disease?

     ¨  Some advances will be relatively uncontroversial, such as the development of tailored therapeutic drugs based on genetic differences that are otherwise innocuous. Others will be transformational, such as the identification of definitive genetic risk factors that provide new drug targets for conditions that are often poorly treated such as schizophrenia, epilepsy and cancers.

 Energy:  Daniel M. Kammen,  Director of the Renewable and Appropriate Energy Laboratory, University of California, Berkeley

  ¨  By 2020, humankind needs to be solidly on to the path of a low-carbon society — one dominated by efficient and clean energy technologies. It is essential to put a price on carbon emissions, through either well-managed cap-and-trade schemes or carbon taxes. Creative financing will also be needed so that homes and businesses can buy into energy efficiency and renewable energy services without having to pay up front. An example is the Property-Assessed Clean Energy financing mechanism, which my lab is helping to design and promote.

 ¨  Deployed widely, these kinds of [alternative energy] solutions and the development of a smart grid would mean that by 2020 the world would be on the way to an energy system in which solar, wind, nuclear, geothermal and hydroelectric power will supply more than 80% of electricity.

Global governance:  Jeffrey Sachs,  Director, the Earth Institute

¨  By 2020, the world needs an effective system of global governance for managing sustainable development. It will require systematic improvements in four areas.

¨  First, politics must take account of technical expertise. In international negotiations such as the Copenhagen climate process, negotiators spend a lot of time arguing over the legalities of agreements but little time discussing technological options.   

¨  Second, public and private investments in new technologies should be managed as part of an integrated system. Almost all environmental challenges, from greenhouse-gas emissions to the depletion of groundwater resources, demand technological transformation. Achieving this will need a mix of public and private enterprise.  

¨  Third, corporate lobbying must be restrained: it is one of the greatest dangers to sustainable development. In the United States, corporate influence through lobbying, campaign funding and misleading advocacy campaigns has been an enormous obstacle to effective regulation of the economy and environment.  

¨ Finally, global financing for poorer countries must improve if international agreements on climate, land use and biodiversity are to succeed. The record of aid delivery to poor countries is dismal.  

 Synthetic biology: George Church, Professor of Genetics, Harvard Medical School

¨ In the past decade, the cost of reading and writing DNA has dropped a million-fold, outstripping even Moore’s law for exponentially increasing computer power. The challenge for the next decade will be to integrate molecular engineering and computing to make complex systems. The development of engineering standards for biological parts, such as how pieces of DNA snap together, will permit computer-aided design (CAD) at levels of abstraction from atomic to population scales. Biologists will have access to tools that will allow them to arrange atoms to optimize catalysis, for example, or arrange populations of organisms to cooperate in making a chemical.

¨ The obvious application will be in manufacturing and delivering drugs more efficiently. However, these treatments might be superseded by smarter ones, such as oral vaccines and ‘programmable’ personal stem cells or bacteria (which exploit sensors, logic and actuators harvested from natural and lab evolution) that could, for example, sense a nearby tumour, coordinate an attack and drill into the cancer cells to release toxins. Another application is in the production of chemicals, biofuels and foods — for example, the development of parasite-resistant crops or photosynthetic organisms that can double their biomass in just three hours. As costs drop, such technology will allow developing nations to leapfrog fertilizer-wasting, fossil-fuel-intensive and disease-rife farming for cleaner, more efficient systems, just as they are leapfrogging costly landlines in favour of mobile-phone networks.

¨  As electronic chips hit conventional manufacturing limits, they will be replaced by atomically precise and fault-tolerant biological circuits. Three-dimensional ‘bio-printers’ could make nearly all manufactured goods much less expensive. The grand challenge will be to anticipate the many unintended consequences of the synthetic biology revolution — ecological, economic and social — and to safeguard against them.

Universities: John L. Hennessy, President, Stanford University

¨  Perhaps the largest threat to our research universities over the next decade is the financial challenge facing governments. In the United States, for example, budget deficits have caused many states to reduce their funding for public universities, and at the federal level, there is likely to be no growth or a cut in funding for research programmes.

¨ To address these financial and intellectual challenges, universities need to be willing to change how they see their research and teaching mission. The scale and complexity of today’s global problems demand a more collaborative, multidisciplinary approach.

 ¨ Traditionally, universities have been structured around disciplines and departments. The agencies that fund research often reflect that structure in their financial support of projects. That rigidity can be a barrier to innovation, and to the need to educate students for a more collaborative working environment.  Therefore, universities and funding agencies need to encourage working across disciplines — for example, through academic centres based around broad themes rather than narrow fields. The challenge will be to do this without abandoning the traditional disciplines and the role they have in ensuring excellence.

¨ As financial pressures increase, institutions may be forced to make difficult decisions — prioritizing areas in which they have sufficient existing strength or student interest and collaborating with peer institutions that have greater capability in other fields. Continuing support for fledgling cross-disciplinary efforts in difficult financial circumstances will require vigilance.

Global Crisis

The American Ship IS Sinking – Ask Jeff Garten!     By Shlomo Maital

  In 2005, I wrote an article for the Israeli business daily Globes; the heading was “The American ship is sinking!”.  It was mostly ignored, except for a handful of financial services managers who attacked me for  raining on their picnic.

   It is now 2010.  The American ship IS sinking.  But don’t take my word for it.  Listen to Jeff Garten, whose scary article “Toward a post-dollar world” was recently circulated by McKinsey Global Research Institute

   Jeffrey  Garten   was the Undersecretary of Commerce for International Trade under the Clinton administration and former Dean of the Yale School of Management. Before this, Garten served on the White House Council on International Economic Policy under the Nixon administration and on the policy planning staffs of Secretaries of State Henry Kissinger and Cyrus Vance of the Ford and Carter administrations. He is the author of five books.

   Here is a summary of his argument.

1. Massive deficits and debts of the United States, and the shift of economic power from West to East, have led (and will lead in future) to a massive decline in the U.S. dollar.  This will change everything. The world will be radically altered, with a new distribution of winners and losers.

2.  Within a decade, the U.S. could be borrowing close to $750 b. a year just to pay the interest on its massive debt.  To close the gaps, while keeping the dollar at its current strength, taxes would have to be raised to sky-high levels and spending brutally slashed.  No US leader will have the courage to even begin to do this, including Obama.

3.  Washington therefore will have little choice but to take the time-honored course for big-time debtors: Print more dollars, devalue the currency and service the debt in ever-cheaper greenbacks.    The U.S. will thus camouflage a slow-motion default.  It’s the easiest way out.

4.  By 2020 China India Indonesia Korea and Vietnam together could generate more wealth than the U.S., Europe, Japan and the EU combined.  Intra-Asian trade is booming and Asian currencies will become widely used in trade and investment.

5.  A much cheaper dollar is a sad development for the US, it will make its citizens poorer and they will pay higher prices for everything they buy abroad.

6.  A weaker dollar will make the US a bargain basement for foreign direct investors, allowing them to pick off  America’s most prized corporate assets. It will diminish the political influence and prestige the US had while the dollar has been king.

7. A weak dollar will bring higher interest rates.  This will bring American overspending to a screeching halt.

8. The decline of the dollar will lead to an era of competitive devaluations — the competitive battlefield will encompass agriculture, alternative energy and other technologies.

9.  An alternative to a global monetary system based on the dollar is the new imperative.  That means a multicurrency framework, including the euro, yen, renminbi.

10.  Companies and investors everywhere ought to be planning for this new world.  A world in which the dollar has lost a good deal of its strength will have profound impact on geopolitics, the global economy and global trade and finance.  It marks the end of the American empire.  LITTLE THINKING HAS BEEN DONE ABOUT WHAT ALL THIS WILL MEAN AND HOW IT IS BEST HANDLED. IT IS TIME THAT CHANGED!

   Food for thought?  Have you and your company worked out Item 10?  What will you do to prepare for a rapid 30 per cent fall in the dollar? 

     It’s one thing when an obscure Israeli writes that the American ship is sinking. It is quite another, when a top AMERICAN expert who helped shape the current global economy says it.