Google's "70-20-10" Formula

According to CEO Eric Schmidt, 70 percent of their resources are channeled to the core business of internet search and advertising, and 20 percent is channeled to adjacent products such as desktop and product search services. The remaining 10 percent is focused on highly experimental products - innovations important for the long term.

Liisa Välikangas, Managing Director of the Woodside Institute, wrote an interesting piece called The golden spur: Innovation independence. In it, she reveals some surprising facts about the importance of personal independence in the innovation process.

For instance Google's independence formula is particularly revealing: the company has a management philosophy that requires it to dedicate 10% of its investment to employee- initiated projects unrelated to the core business.

It is observed that the importance of efficiency and reliability in business has stifled our freedom to explore new things. The author argues that the “freedom to explore” factor is essential to innovation. And innovation is essential to sustained competitiveness. Today's leadership challenge is learning to manage the independent thinkers who refuse the constraints of professionalism and instead innovate on their own terms – in other words, as amateurs.

This freedom is facilitated by communications technologies that enable individuals to participate increasingly on their own terms. Companies need to unleash their human talent and raise their level of innovation so that they can compete globally. To accomplish this, managers must respect their employees' independence – the very source of innovation. Liisa further states that the case for innovation is the case for the labor of love, that is, the work of passionate amateurs.

Honeybee Network - Grassroot Innovation

http://knownetgrin.honeybee.org/honeybee.htm

Check out the above link …It is about a remarkable person and a remarkable organisation.The HoneyBee Network was incubated by Prof. Anil Gupta at IIM Ahmedabad in 1988. The Network uncovers and documents grass root innovations from rural and small town India and tries to spread the knowledge and helps the inventors get a fair economic reward for their creativity.

Crowdsourcing- The Long Tail

The word was first coined by Jeff Howe in a June 2006 Wired magazine article.

Wiki : Crowd sourcing is a neologism for the act of taking a task traditionally performed by an employee or contractor, and outsourcing it to an undefined, generally large group of people, in the form of an open call. For example, the public may be invited to develop a new technology, carry out a design task, refine an algorithm or help capture, systematize or analyze large amounts of data (see also citizen science).

The term has become popular with business authors and journalists as shorthand for the trend of leveraging the mass collaboration enabled by Web 2.0 technologies to achieve business goals.

Recently read "The Long Tail " by Chris Anderson . It is a must read for anyone who wants to understand the future of business. The book gives a very interesting perspective on : what happens when there is almost unlimited choice? It also shows why online models Amazon, Ebay etc are so successful by adhering to the 'rules' of long tail.

The future of business does not lies in 'hits' but in 'misses' ( the endless long tail). He refers to the concept of 'crowd-sourcing' quite liberally. Some examples of crowdsourcing that come to my mind...Wikipedia , InnoCentive, Threadless , Amazon , Netflix etc

Diruptive thinking

Recently attended a video conference by Prof Richard D'avani (Tuck School of Business-Dartmouth,VA) on 'Hyper competition' . What should companies do in an competitive environment to succeed? and what should be the right strategy...?

One insight gained is..' self-cannibalization'..i.e...rather that wait for the competition to assail and rip apart the competitive advantage, firms should constantly engage themselves in continuous innovation. Being first is not always the same as being the best. Entry barriers are trampled down or circumvented.Goliaths are brought down by clever Davids with slingshots. We've seen and heard the stories in corporate world - Ford vs Toyota , Merill Lynch vs Schwab , Yahoo vs Google, Microsoft vs Sun Micro system etc etc.

As competition enters, the industry always shifts from Monopoly( only one player, excessive profits) to Oligopoly ( few more players , sustainable profits) to Perfect Competition( many players , no Abnormal profits). Hence to stay and continue enjoying that phase of (sustainable or excessive profits) , the companies should disrupt the market place on a regular basis( i.e constantly innovate and redefine the rules of the game) ...such that competition will always have the 'catching up' to do.

Take for example what happened to Ford in US ( huge distribution, service and dealer network panning American continent);in came Toyota with "TQM" and cars that didn't need repair and wait time for delivery. Ford was always engaged in 'catching up' by asking " what is Toyota doing next?" , while Toyota was busy self-cannibalizing its competitive advantage and moving ahead by asking " what next?" Or for that matter..what happened to the music industry in last one decade is for everyone to see. The digital revolution has crossed all barriers and changed the music industry today. Maybe the advent of "I" ( Apple's I-Phone and I-Pod) is a just the beginning ( more on this later...)

Innovation Redux

Google's Marissa Mayer gave an interesting presentation at Stanford University.
Here is a snapshot of her presentation : (This holds good for any company, society etc be it FMCG , Financial Services, Hi tech, education etc)
Notions of Innovation redux :

Efficiency vs/and Creativity

Having read considerable literature on 'creative process' mapping, sometimes I wonder, how should organisations balance the equation between Efficiency( viz. results) and Creativity?

• Will relentless emphansis on efficiency make a company less creative?
• Can you set up a process around 'Innovation' , which by its very inherent nature is a disorderly process?
• Can a 'creative mindset' be used to hard-wire a company( on processes)?
• How to decide between 'sameness' ( as demaned by quality process Six Sigma) and 'uniqueness' (as valued by Creativity)?

While process excellence demands precision, consistency and repeitition, innovation calls for variation , failure, and serendipity.
Let me know your views...