Let’s start out with what innovation is not – and I’m aware that I’m going contrary to the definition that the media uses to PR a new startups. Innovation is not what an entrepreneur uses to captivate an adverse market. Innovation is also not what innovators do. Innovation is not devising ideas that reform social or economic structures. Innovators don’t change the world. It’s the user or consumer of the innovation who changes the world. Innovators distribute their idea and enable the user. But it’s ultimately the user, who brings about the change and thus the innovation. Innovation happens when an idea is accepted by the user.
Diffusion of Innovations (by Everett Mitchell Rogers) conceptualizes the adoption of an idea. In common speech, the Diffusion of Innovations goes today by a different name: Globalization. Diffusion of Innovation outlines the journey an idea takes from concept to global reach.
Think about the adoption of flat-screen TVs in the USA. Initially there were few early adopters. As prices dropped and acceptance increased, today we hardly see CRT TVs at all. There are still some Laggards. Where do you think the USA is today with HDTV?
Because communication technology has global reach, smaller players have a better chance than ever to have their idea distributed. Important to understand is that Diffusion of Innovation does not judge an idea on merit. Thus good and bad ideas can spread. For instance, microloans enable many small businesses in poorer regions to prosper (good). Whereas the incorrect notion that immunization leads to autism caused diseases that were nearly extinct to resurface (bad). You, as a user of an idea, still need your critical thinking skills – even when you are a laggard. As the saying goes, a hundred people can jump of a bridge, it still doesn’t make it a good idea.
Large enterprises use the Industrial Organizational business planning strategy to maintain their large market position in a segmented markets. This (abstract) model keeps the count of competitors small, creates barriers to entry, and predicts the likelihood of the next step of competitors. This strategy is most useful to maintain a dominant position.
Industrial Organization concentrates on the interrelation of large enterprises in markets with few competitors. Actions of a single player can have a direct effect on the market. Enterprises can exploit the benefit that arise from having only a few players because these few players can better control and manipulate the market. If more competitors entered the market, these enterprises would lose those benefits, and the market would become less attractive. Think Kellogg, General Mills and Post for the breakfast cereal market. They are flooding the market with all kinds of possible flavors leaving no shelf space at the supermarket for new competitors to enter the market. Regardless if these flavors are actually profitable, as long as they prevent new competitors to get shelf space. It works for them.
Barriers To Entry
Industrial Organization also outlines the barriers of entry. Various realities and forces can can keep new competitors out of the market. Think nuclear power plant. It takes a strong financial position to build a nuclear power plant, a strong political support, and a strong base in the local community to build one. All of those are barriers to entry to the market.
Further, the Industrial Organization business planning strategy assists enterprises in predicting competitor’s actions. Industrial Organization borrows from the Game Theory: There are finite amount of players (the competition) and finite choices for action. Think of your favorite board game. Correctly predicting your enemy‘s next move could determine your next move. Same applies in Industrial Organization. Anticipating the competitor’s next move, an enterprise could figure that it would be best to move first or to attempt to lead competitors astray.
Going back to the nuclear power plant example, according to Industrial Organization, solar power, windmills and other decentralized electric power solutions are a threat to your nuclear power plant operation. More competitors enter the market and make your market less attractive. Whereas other business planning tools would strongly suggest that such development is an opportunity. Nonetheless, Industrial Organization is a strong pillar in economic theory. It gave rise to micro-economics and behavioral economics. In my explanation of Industrial Organization above, I was one of the three blind men describing the elephant. It would take more that a short blog post explain Industrial Organization.
Named after the Russian American Igor Ansoff, the Ansoff Matrix is a classical strategic planning framework for your business from the year 1957. It lays out four growth alternatives:
1. Market Penetration – increase sales to your existing and new clients with your existing products or services.
2. Market Development – find new markets for your existing products or service with some modifications.
3. Product Development – increase sales by providing new products or services to your existing markets.
4. Diversification – increase sales by providing new products or services to new markets.
It’s also called increasing your market share. You increase sales to your existing market with your existing products or services. This can be achieved through price reduction, increase in promotion and distribution support, acquisition of a rival in the same market, and modest product refinement.
Your business would seek access to new markets with your existing products and services with some modification. You can go after a new customer segment or adding new geographic regions (domestic & foreign). For example, you modify your soda product into an energy drink, or you start offering your soda in Japan.
Your business develops or acquires a new product or service and offers it to your existing market. A marketing professional would call this cross-selling. When you buy a new car, chances are that you will finance it with a loan from the manufacturer. Car manufacturers are not banks and may not want to get into the finance sector; thus they may partner with another company for that services, whose core business is finance.
This is has the highest risk, since your company would enter a new market with a new product or service. It’s almost like starting a new company altogether. Diversification is a huge topic in itself. Diversification can be either related or unrelated. If it’s unrelated, your company will become a conglomerate, a collection of businesses with no relation to each other. But if it is related, it can be further categorized as concentric or vertical diversification. When Pepsi bought Pizza Hut, KFC and other fast food chains, this was a concentric diversification. A vertical diversification is if your business now provides a new service or product along your own supply chain.
Ansoff was clearly a pioneer when it comes to Business Planning Strategies. His matrix can still be applied but it’s not a commonly used business strategy tool anymore. Many markets, product & services can no longer be clearly separated. They interact with each other more so than ever in often surprising ways. Who would have thought that diapers and beer would sell to the same. Fathers on their way home from work buy diapers and beer. If Budweiser were to offer diapers, it would actually fall into Product Development on Ansoff’s Matrix.
Further, Ansoff Matrix has no dimensions for predictability, malleability, and harshness. Markets, when Ansoff wrote this matrix, weren’t as fast paced as today. But above all, the idea that a market can be orchestrated at all hasn’t entered anybody’s mind, yet. Simply put, Ansoff started the fire of business planning. Today, new business planning strategies stand on the shoulder of Ansoff’s work.
Join Founder and Chairman of the Venture Café Foundation, Tim Rowe interviewed by Horst von Wendorff about growing the Venture Cafe from a community idea to a volunteer supported organization over the past five year. Tim walks the ideas path from the Muddy Charles Pub, to Teresa Esser’s book (of the same name), through CIC to District Hall and the first Venture Cafe expansion in St. Louis, MO. Finally, Tim and Horst talk about how to connect and be a “contributor” with the Cafe community.
Listening to your co-worker’s Euro-pop song can perhaps be tolerated noise pollution. But seriously, is there anything more distracting than hearing only one side of a phone conversation? Involuntarily your brain tries to fill in the information gaps, what the other person is saying. It’s destructive to your productivity and concentration at work.
White Noise has the wonderful effect that it drowns out significant amount of noise pollution, such as a phone conversations. When you sit across from someone, who’s on a phone call. You can see him or her speak and hear some inaudible words, but the White Noise removed the distraction. Thus, you now work without interruption.
Also, when noise pollution wakes you up in the night, it’s not the sound of the noise itself that wakes you up, per se, but the sudden change or inconsistencies in the noise level that jar you. Whereas, White Noise creates a masking effect, blocking out those sudden changes that frustrate your sleep.
White Noise is an equal amount of every frequency, from low to high, that a human ear can hear. It sounds like a fan running. It’s a constant “shhhhh” sound. You might mistake it as the A/C running.
With these major benefits, I’m surprised that White Noise generators are not as common as they should be. White Noise generators have been around since the 1960s. I’ve heard them in upscale offices and some co-working spaces. Some have tried to create smartphone apps to produce White Noise. Unless you hook up your cell phone to a larger sound system, the limited frequency range of smartphone speakers disqualifies such noise from being White Noise. If it’s not White Noise, it’s more likely to be another source for noise pollution.
This is the #1 best selling White Noise generator from Amazon.
I grew up in Germany starting to learn English in 5th grade. (The standard in Europe is to learn two foreign languages to graduate from High School, but please don’t ask me about my French.) Language itself is not simply a means of communication; it’s an integral part of the culture, people’s behavior and thought process. By studying a foreign language, you also learn the culture, values and norms of that society. …and that’s when it hits you! Language confines.
In my effort to liberate and expand English, here are three words from the precision-loving German language which stood out to me. True to the German style of communication, these words get straight to the point: no honey, no flowers, no regards for politeness, say it as it is.
Schadenfreude [shahd-n-froi-duh] – This is the joy one experiences about someone else’s misfortune. For example, someone intentionally cuts in front of you and you have to slam the brakes to avoid an accident. But then at the next turn the police pulls him over for reckless driving and issues a ticket. The joy you experience at that moment is called Schadenfreude. It closely relates to payback or revenge, but payback and revenge implies that the misfortune was created artificially, while Schadenfreude just lets you sit back and laugh as others weep.
Kummerspeck [koom-uh-r-spek] – Kummerspeck is a combination of two words: kummer means sorrow or grief, and speck, which means bacon. Grief-bacon is not a term vegans use to express their social view on our eating habits; rather, Kummerspeck pertains to the weight gain caused by emotional eating. If you’ve ever headed straight to the fridge after another disappointing performance from your favorite baseball team, chances are that belly is a fine example of Kummerspeck.
Drachenfutter [dra-kken-fut-tr]- Literally translated as dragon-food, Drachenfutter is what one would give to a spouse after one forgets an anniversary, or what one would give to earn the favors of future parents-in-law. Just like food offered to an ornery fire-breathing dragon, Drachenfutter is what keeps one from being burned to a crisp, or in some cases, from sleeping on the couch.
If you have more words you think should be added to the English language, I’d love to hear about them.
Language allows us to communicate in concepts – to share ourselves – just as I’m doing in this blog post. Yet, it also confines us because if there’s no simple ready-to-use word for it, we’re are forced to abbreviate our expression and thus meaning – or utter lengthy TL;DR monologues. For instance, much of our language assumes duality, such as Yes/No or Good/Bad. I propose that, in an effort to liberate language and thus ourselves more, by bringing trinity into our daily language.
Yes/No – A computer science engineer can tell you that machines only understand 0 and 1, binary language. There’s a current for 0 and another current for 1. What happens when we turn off the computer? It’s neither 0 nor 1. There’s a third stage. What do you say when your significant other asks you “Honey, do I look fat in this?” Having a third choice for yes and no would be pretty nice, eh? I propose “moo” as the third option deriving it from the Japanese word off the same sound. Your computer is in a moo state if you turn it off; and, most importantly, you’re not sleeping on the couch for either lying or being hurtful to your significant other.
Good/Bad – Excluding religion, nothing is absolutely good, and nothing is absolutely bad. An economist would argue that there’s no such thing as a free lunch – everything has an opportunity cost. An automated ticketing machine for your subway is faster, cheaper, and works 24/7, thus its good. Conversely, we could argue that same ticketing machine is bad because now there are fewer jobs, short people can reach the buttons, and tourists can’t read the instructions. That’s bad, right? Mh, ticketing machines are neither bad nor good. Third option, please?
Why bring up Good/Bad at all after discussing Yes/No/Moo? Yes/No/Moo is a logical. Good/Bad is a judgement, a human judgement. Imagine a beautiful sunset – it’s good because it’s beautiful. The observer judges the sunset to be beautiful. Once we remove the observer, can a sunset still be beautiful? One could argue that it’s an intrinsic beauty. An observer is not needed for it to be beautiful. We really need a third option to good and bad to express when something is neither good nor bad, yet has value of a third option.