Category: innovation | 革新 | 독창성 | 改変

Innovation, alongside disruption are two of the most overused words in business at the moment. Like obscenity, many people have their own idea of what innovation is.

Judy Estrin wrote one of the best books about the subject and describes it in terms of hard and soft innovation.

Hard innovation is companies like Intel or Qualcomm at the cutting edge of computer science, materials science and physics
Soft innovation would be companies like Facebook or Yahoo!. Companies that might create new software but didn’t really add to the corpus of innovation

Silicon Valley has moved from hard to soft innovation as it moved away from actually making things. Santa Clara country no longer deserves its Silicon Valley appellation any more than it deserved the previous ‘garden of delights’ as the apricot orchards turned into factories, office campus buildings and suburbs. It’s probably no coincidence that that expertise has moved east to Taiwan due to globalisation.

It can also be more process orientated shaking up an industry. Years ago I worked at an agency at the time of writing is now called WE Worldwide. At the time the client base was predominantly in business technology, consumer technology and pharmaceutical clients.

The company was looking to build a dedicated presence in consumer marketing. One of the business executives brings along a new business opportunity. The company made fancy crisps (chips in the American parlance). They did so using a virtual model. Having private label manufacturers make to the snacks to their recipe and specification. This went down badly with one of the agency’s founders saying ‘I don’t see what’s innovative about that’. She’d worked exclusively in the IT space and thought any software widget was an innovation. She couldn’t appreciate how this start-ups approach challenged the likes of P&G or Kraft Foods.

Measure What Matters by John Doerr
I was recommended Measure What Matters by my friend and fellow ex-Yahoo Cathy Ma. Cathy found the book useful in her way through managing teams. In Measure What Matters, John Doerr explains the idea of objectives and key results or OKRs.

About John Doerr

If you’ve worked in or around the Silicon Valley technology space from the PC age through to the 2010s Doerr’s name will have a passing familiarity to you. Doerr was a salesman at Intel in the 1970s, realised that there were too many good people ahead of him and took an over in venture capital instead. Doerr was involved in funding:
- Compaq – Compaq kicked off the market for ‘IBM compatible’ PCs and made the first portable ‘IBM compatible’ PC. Soon after IBM was no longer the dominant player in personal computing leading to the Wintel duopoly. Compaq eventually offered a full range of large servers, workstations and PC when it acquired Digital Equipment Corporation and Tandem Computing. Compaq was in turn bought by H-P
- Netscape – Netscape Communications mainstreamed the internet browser, email client, web servers and email servers. The server software lives on in Oracle’s product line via the Netscape – Sun Microsystems alliance. The browser indirectly carried on through an open source project Mozilla
- Symantec – Symantec started off as a natural language processing company in the early 1980s, it became famous for its Mac antivirus software and then went into the DOS and Windows market after merging with Peter Norton Computing. It now has a consumer facing business called NortonLifeLock and the business focused software part of the business was sold to Broadcom
- Sun Microsystems – Sun Microsystems started off as a UNIX workstation manufacturer. Over time they built up a healthy server and software business that supported much of the infrastructure of the web. They were instrumental in the evolution of several key computing technologies, among them Unix – which influenced parts of the macOS that I am typing this post on, RISC processors in your smartphone, thin client computing like Google Docs, and virtualised computing that is instrumental for cloud computing. Sun Microsystems workstations were popular with investment banks, telecoms companies and internet startups bought their servers. The company’s decline can be marked by the dot com crash. Oracle bought Sun Microsystems and their technology lives on
- drugstore.com – was a first generation e-tailer in health and beauty products. Walgreens bought the business in 2011, and shut down the website five years later.
- Amazon.com – needs no introduction
- Intuit – Intuit sells financial software in the US. TurboTax helps Americans do their tax returns, Mint provides a personal finance dashboard for consumers and QuickBooks is accounting software for small and medium sized businesses
- Macromedia – Macromedia was a software company that developed tools for creatives and programmers. It was eventually acquired by Adobe. Macromedia products live on in the Adobe product range
- Google – the search engine.
About OKRs

For all of the companies that Doerr has funded he has advocated OKRs. The idea of OKRs came from Doerr’s colleague at Intel Andy Grove. OKRs are a collaborative process. The idea is that it is used with teams and the individuals who make up the teams. Management seeks to set challenging, ambitious goals with measurable results. The key results in OKRs are how you track progress towards the objective, create alignment within the team, and encourage engagement around measurable goals. They are also supposed to flex with circumstance, which is one of the key points of separation from Peter Drucker’s management by objectives (MBO).

The first part of the book Measure What Matters explains the origin and process behind OKRs.

You can get everything that you need in the first two chapters covering 35 pages.

The Cult of OKR

The rest of the book is a series of self aggrandising endorsements of OK from senior executives who are OKR advocates:
- Larry Page of Alphabet
- Bill Davidow of Intel
- Sheryl Sandberg of Facebook
- Bill Gates on The Gates Foundation
It crosses the line for me and almost reads like a high water mark for Silicon Valley hubris; Doerr’s book was published in 2018. Three years later and:
- Bill Gates is in the most trouble he has been in since the Judge Jackson ruling
- Alphabet and Facebook are being assailed by regulators around the world
- Intel looks like a shadow of its former self. Its fabrication process are three years behind competitors. Customers are designing their own chips and AMD is eating their lunch in high performance processors
Secondly, Doerr’s book, whilst acknowledging Andy Groves role of OKR creator; fails to acknowledge that Andy gave a good descriptor of OKRs in his 1983 book High Output Management.

I think one of the reasons that I am not that keen on Measure What Matters, is that the book doesn’t work for culturally as a non-American. Instead I would recommend Andy Grove’s own book High Output Management. More books that might be of interest here.
May 22, 2021
The Exponential Era by Espindola & Wright
The Exponential Era is a business strategy book published by the IEEE Press as part of its series on technology, innovation and leadership. David Espindola and Michael Wright work at Intercepting Horizons and advise at the University of Minnesota.

The book is a concise 182 pages including its index. It has a satisfying hard cover about the height and width of a paperback book. The book proportions reminded of many of the books that we used to have my secondary school’s library. It felt right in my hand. Its a small thing, but it matters.

The secondary school analogy goes further; the book summarises knowledge and makes it relatively easily digestible.

The Exponential Era includes:
- The threat of platforms and their ability to disrupt market sectors
- Why people find it hard to grasp the change brought about by the future
- Megatrends with the kind of utopian tone that reminded me of Alvin Toffler, George Gilder and John Naisbitt
- Horizon monitoring
- Agile approach to development
- Test and learn
- Feedback based strategic decisions which relies extensively on the technology sector’s fetishisation of John Boyd’s OODA model
- The Innovator’s Dilemma
- Future business ethics
The book consolidates the kind of reading that people in technology and marketing would likely have read anyway. Chances are if you’ve already read books like Saving Big Blue, Measure What Matters, The Lean Startup and Zero to One, then The Exponential Era isn’t written for you.

Who should read this book?

Instead this book seems to be an increasingly diminished audience. A company too small for it’s management to have been lectured on disruption by McKinsey, Bain, BCG or Accenture. But still large enough to be concerned. Like McKinsey et al Espindola and Wright are looking to create disruption fear and sell their SPX methodology to re-engineer their business. I would have thought the c suite in most businesses would have at least done enough reading to have a high level understanding of the content in the book.

The book’s relentless utopian optimism reminded me a lot of business works from the 1970s to the dot com era. I think that The Exponential Era will be of most use to junior people at the start of their career looking for a primer rather than its intended audience.
May 18, 2021
Bullwhip effect aka Forrester effect
Bullwhip effect

I came across the bullwhip effect as a descriptor recently in discussions around the global chip shortage. Bullwhip effect is a concept that is well known in supply chain circles.

The bullwhip effect is also known as the Forrester effect. Disruption ripples back from the retailer, through the wholesaler, manufacturer, on to their suppliers and so on.

The usual causes for the effect are:
- Demand forecast updating – this might be where a company might want to change their product mix to match consumer demand, if a product is very successful or grossly underperforms
- Order batching – where members of the supply chain round up, or round down the quantity of orders. This happens with the periodic memory gluts or shortages affecting the technology sector
- Price fluctuations – price discounts can encourage non-linear increases in purchases as it becomes worthwhile for customers to stock up, hedging against increased prices down the line. Oil reserves would be a classic example of this phenomenon
- Rationing and gaming – buyers and sellers delivering over or under their order quantities. An example of this would be the actions of Enron in US electricity markets. This could be used in a positive way to promote changing the supply chain like renewable sources of electricity generation
What caused the global chip shortage that is driving the bullwhip effect?

There were three causes to the global chip shortage
1. Partial shutdown – The semiconductor industry went through a partial shutdown because of the COVID-19 epidemic. This meant that there was a smaller supply of chips.
2. Unusual increase in demand – Home working drove an increase in demand: increased sales in PCs, wi-fi routers, external hard drives, mice, keyboards, printers and so on. There was also a corresponding increase in home entertainment as consumers upgraded smart TVs, Apple and Roku set top boxes. This all coincided with the launch of the next generation of gaming consoles by Sony and Microsoft – which can usually drive a squeeze on their own
3. Supply chain disruption – A fire in Japan at Renesas Electronics. A trade war affecting Chinese semiconductor manufacturers. Freezing winter weather in Texas disrupting employees and their businesses. Now there is a drought in Taiwan affecting TSMC – the world’s largest semiconductor foundries
More related posts here.

More information

Chip shortage is starting to have major real-world consequences

Global chip shortage: everything you need to know | CAR Magazine

The global semiconductor shortage can be explained by the bullwhip effect

Chip industry pressures spur Renesas to diversify | Financial Times

Taiwan’s chip industry under threat as drought turns critical | Financial Times

Texas winter storm blackouts hit chip production | Financial Times
May 11, 2021
Japanese insights & things that made my day this week

Japanese insights

Creative Culture ran a roundtable that provided with Japanese insights across brands and consumers. Well worth a watch.

Key outtakes

Kawaii or cute occurs in areas that you wouldn’t expect it. From Hello Kitty airlines and maternity wards to Miffy being used to sell mortgage services.

Miffy selling mortgage service on a Japanese print newspaper advertisement

Imagine 2060, more than 40% of Japan’s population will be 65 and older. This changes what market segments look like; no point chasing the latest generation. It will change what marketing will look like and what products will be sold. It would be an exciting time for product designers, creatives and strategists working with local clients who are willing to embrace the opportunity.

Couple by Norimutsu Nogami

Newsprint and television are still popular media in Japan (and more popular than marketers are willing to admit outside Japan). These media still have a strong influence on consumers and are represented more strongly in the media mix by Japanese companies. In terms of Japanese insights for brand marketers this means that brand building should be less of a challenge from a media investment point of view than it would be in in some western markets or China.

Japanese television by buck82

Consumers shop daily or every other day. This is because they don’t have enough space to keep their groceries. So there are convenience stories in every neighbourhood. Retailers want to keep minimum inventory, so they receive frequent, small deliveries almost daily. Since there is a rapid turnover this in turn allows innovation around product innovation. Special edition Kit-Kats are the example most familiar to consumers. But you can see different products in the convenience store at different times of the day.

Family Mart Convenience Store, Harajuku, Tokyo by MD111

More Japanese insights here.

China

Moving from Japanese insights to Chinese strategy, the Center for Strategic & International Studies discusses what is needed for the west to have a better China strategy.

Technology

The Computer History Museum in Silicon Valley, took the opportunity to interview Mark Markkula. Markkula was an engineer and product marketer involved at Fairchild and Intel during the early days. He put in seed capital into Apple and sat on the board until 1997.

If you watch nothing else on this post, watch this discussion between Stephen King and Jeremy Bullmore at J Walter Thompson. Bullmore ended up as chairman of J Walter Thompson, eventually retiring in 1987. King established the first account planning department in the advertising industry at J Walter Thompson in 1968.

May of the problems outlined are similar to problems today.

April 17, 2021
Lee Dunne + more things

Lee Dunne

How Lee Dunne challenged the depiction of working-class mothers | RTÉ – I originally didn’t know Lee Dunne as a novelist. Instead he was part of my childhood. Lunchtime listening when I wasn’t at school was Harbour Hotel, a radio soap opera written by Lee Dunne that gave a good sense of everyday life. The graininess of listening to the show on medium wave added to the experience. Dunne wrote each episode a bit like Roshomon, with each character talking about an event (like an argument) from their perspective. RTÉ’s obituary also focuses on Dunne’s social commentary literature that was banned by the Irish government in the 1960s through to the mid-1970s. Lee Dunne like James Plunkett wrote about the everyman. Plunkett’s work differed from Lee Dunne in that it had more of a socialist tenor to the content. Lee Dunne had particular success with his 1969 novel Goodbye To The Hill, more Ireland related content here.

Beauty

Shu Uemura to Exit Korean Market | BoF – Shu Uemura, a Japanese beauty brand owned by L’Oréal, is exiting the South Korean market in September after 16 years. While some speculate this is due to Korean consumer boycotts of Japanese products that began in 2019, L’Oréal states the withdrawal is part of a strategy to optimise its brand portfolio and respond to local market demand. Another contributing factor is likely the intense competition within the Korean beauty market. Shu Uemura currently operates over 70 outlets in the country.

Five China market strategies that domestic brands do better than foreign brands | Daxue Consulting – I would add western brands rather than all foreign brands

Consumer behaviour

NewNew™ on the App Store – god this dark. In th sage words of Matt Muir – how else do you describe a new app, with significant VC funding, whose main purpose seems to be to allow ‘creators’ (we’ll come back to that word) to earn money from their ‘fans’ in exchange for letting said ‘fans’ determine the course of their life, in some sort of modern, ersatz version of The Diceman?

How China’s online hate campaigns work – Protocol — The people, power and politics of tech – In today’s China, a nationalist campaign involves something far more complex than paying people to post scripted messages parroting Beijing’s line. The government has mastered the craft of influencing people’s genuine emotions and having these ordinary users do the trolling and doxxing — for free. Oftentimes, this means appealing to misogyny or chauvinism, something that virtually guarantees more clicks. Many videos and articles attacking Xu have tried to paint her personal life as promiscuous and delinquent. Web users have frequently called Xu a “female Han traitor,” a dog whistle that conflates concepts of chastity and national loyalty

Europe

Why Can’t Europe Cope With the Coronavirus? – Carnegie Europe – Carnegie Endowment for International Peace – EU states are too integrated to manage the crisis separately and not integrated enough to do so collectively, an inability to make rapid decisions, and a breakdown of trust between governments and the governed

Ethics

P&G reportedly testing Chinese workaround to Apple’s privacy changes | Marketing Dive – I find it hard to believe. if they’re seriously considering this, P&G have their head up their ass on ethics. They don’t need to do highly targeted marketing because Byron Sharp. This just looks like a waste of money

Finance

How China structures loans to become Africa’s “preferred” lender — Quartz Africa – Chinese contracts contain broad confidentiality clauses that stop borrowers from sharing details about the contracts, or sometimes even the fact that they exist. And with a confidentiality clause in every contract in the dataset since 2014, the contracts had become more secretive over time. Most of the clauses commit the borrowing countries not to disclose any of the contract terms or related information, unless required by law.

Hong Kong

The Rise and Decline of Hong Kong – From the British Colonial Era to the Chinese Communist Takeover | The Greater China Journal

Hong Kong’s electoral changes: the Communist Party is taking over | Hong Kong Free Press HKFP – good summary of the different structures and challenges in the new Hong Kong ‘electoral’ system

Hong Kong’s elites should think about an exit strategy – Nikkei Asia – The most serious concern for Hong Kong’s elites is the impact on their interests if China’s economic integration plan is fully implemented. Hong Kong’s tycoons may see this plan as a great opportunity and believe that their connections on the mainland will help them. But they may be in for a rude shock. Beijing wants to integrate Hong Kong’s economy not to enrich its tycoons, but to make the city’s economic future even more dependent on the motherland. In this process, Beijing would understandably give preference to mainland players, in particular state-owned enterprises, at the expense of Hong Kong’s businesses. – this covers all the reasons why I think Jardine’s pivot to Indonesia is smarter than Swire doubling down on mainland China

Ideas

Zhang Baijia: Reflections on China’s Research on Frontiers and Relations with Neighboring States | 高大伟 David Cowhig’s Translation Blog – Hard intelligence is specific information; soft intelligence is the understanding that makes possible the interpretation of hard intelligence. I found this differentiation fascinating delineating information and knowledge

Information security

Israel Reportedly Behind Cyberattack That Caused Blackout at Iran Nuclear Facility – reminds me of the Tehran show on Apple+ about Israeli spec ops and hackers in Iran

Apple Mail Zero-Click Security Vulnerability Allows Email Snooping | Threatpost

Media

Cannabis streaming service sets debut date, program slate – The Third M – MM+M – Medical Marketing and Media – High Times meets NBC. What’s next Crypto News Network for the bitcoin and NFT fans?

Retailing

The great British retail reopening | Vogue Business – The 12 April reopening of all physical stores in the UK is an occasion for optimism, but it’s heavily laced with caution. “The big question is how much of the massive increase in total share of spend will online retain?” says Richard Hyman, veteran UK retail analyst. His rough estimate, he says, is about 85 per cent. “If online hangs on to a material portion of spend, then the cost of selling something in a shop will have gone up significantly.”

Covid’s effect on Rodeo Dr, Oxford St, and Russell St retail closures — Quartz – worthwhile looking at for its retail information and its beautiful interactive design

Technology

Job search | Amazon.jobs – interesting job ads. Amazon is looking for a lot of product designers and software engineers to work on visual search and augmented reality as part of the ‘next generation of shopping innovation’ – I found this via the ex-Yahoo! employees groups on LinkedIn. Yahoo! had a large contingent of people working in areas such as image and video search that would be of interest to Amazon now. The team is based just down the road from Sunnyvale in Palo Alto

April 13, 2021