Friday, June 23

Foxconn inside

Describing innovation as either product or process innovation is overly simplistic, especially in the case of services. It also fails to take into account the sub-components or systems within a product offering. The key questions here for established products are, "Which part of this product is not yet good enough in terms of technological performance?" and "In which part of the product is the technological performance too good?"

In addition to the many other "types" of innovation (i.e. service, process, business model, market etc.) we really need to distinguish between product innovation and sub-component innovation. There is an excellent paper on this topic if you can get your hands on it:

Gatignon H., Tushman, M.L., Smith W., and Anderson P.C.(2002) “A structural approach to assessing innovation: construct development of innovation locus, type, and characteristics,” Management Science; 48 (9), 1103-1122.

Taiwan News:

Remember "Intel Inside"? Branding sub components is still relatively rare, but Hon Hai, the Taiwan-based company at the center of a recent "Apple factories in China" scandle, must think it's a good idea. They have been using their Foxconn brand for quite a while now on many of their components.

Hon Hai (Foxconn) have also decided to get close to the action on automation and robotics technology in Japan. The company has decided to set up an R&D center over there, Digitimes reports, citing the Chinese-language Economic Daily News.

Japan is eager to counter the effects of its rapidly shrinking population on its economy; however, it's not so keen on immigration as a solution. Big problem. The government there thinks that robots will provide the answer.


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Thursday, June 22

An equation for idea generation

Many writers and business people agree that success and failure in new product development is reasonably predictable. Successful innovators are risk averse in many ways and seek out theory and practical tools to minimize uncertainty. At the same time, though, there is also a belief that any generic "formula" for success needs to be adapted according to context.

I came across this fascinating article the other day in Businessweek's Small Biz magazine. The author offers a three-part equation for boosting "big idea" generation. I'm sure it would also work for the important small ideas as well.

Here it is: Number of big ideas = (STIMULUS)Diversity/FEAR

After reading this article you start to think more about the significant differences among nations in terms of diversity. For example, look at the United States, a nation of immigrants/entrepreneurs from all over the world, and compare this with countries like Japan, Taiwan and South Korea, whose policies suggest that immigrants are viewed as a liability rather than an asset.

The STIMULUS and FEAR part of this equation are also described in the article.



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Monday, June 19

Globalization of research not so new after all

You read a lot these days on how firms active in multiple country-markets have to carry out their R&D in country-markets abroad. Among Japanese, American and European firms, European firms lead the field in terms of what percentage of R&D is carried out in "foreign" locations, followed by U.S. firms then Japanese firms. Whatever the rankings, it seems likely that the overall percentage of foreign R&D is likely to increase. Foreign R&D is hardly a new thing, though:

The book Birth of a Salesman, which describes the history of selling in the United States, reminds readers that Singer, a U.S. manufacturer of sewing machines, was already doing this in the 1800s:

"Many of the important innovations in the company's marketing strategy came from its offices in Britain and then were imported to America in the years after the Civil War.*"

This was partly due to the fact that the company had patent protection in its home market but not in the U.K. market. In a word, the U.K. market was more competitive, resulting in more innovation.

Here in Taiwan, the local banks, which were protected for many years, are going through turmoil as the more competitive foreign banks, armed with their accumulated knowledge in competitive markets, pile on the pressure. Catch up is slow for these Taiwanese banks because the technology (here, experience) is intangible. But catch up they will do!


* This was taken from:

Andrew C. Godley, "Pioneering Foreign Direct Investment in Britain," Business History Review 73 (Autumn 1999), pp. 414, 416-423.


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Wednesday, June 14

Dell and Apple's Taiwanese partners; IP protection in Taiwan

With around 80 percent of the world's notebooks manufactured by Taiwan-based firms, the island gets lots of visitors from Dell, Intel, AMD, Apple, Sony, to name just a few. Alex Gruzen, senior vice president of Dell Product Group, discusses Dell's parterships with its Taiwanese manufacturers in a recent Digitimes article.

The BBC has an article on how some of Apple's manufacturing partners, mostly Taiwan-based companies with factories in China, are exploiting China's abundant supply of cheap labor and lack of worker-protection laws. The BBC comments that Apple's MP3 products carry the statement: "Designed in California, Made in China." This is correct but fails to include the very significant role of Taiwan-based firms in the design and manufacturing of the iPod, Nano, and Shuffle MP3 players.

When we think of intellectual property theft, the copying of good-old text books often goes under the radar, but with books like this costing more than $100, it's no wonder that the American Chamber of Commerce has expressed disatisfaction with Taiwan's half-assed enforcement of its intellectual property laws in a recent white paper.








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Sunday, June 11

Thinking a bit about lateral thinking

After receiving an e-mail a while back from John Galt at Idonresources.com, I've started to gain an interest in thinking tools and lateral thinking. These tools can really change the way we look at reality.

There are many lateral-thinking puzzles out there and I'm sure many of them are familiar to people interested in innovation management. Here's one that I came across recently from the founder of the Destination-Innovation Web site:

A man has a business where he buys chairs for $5 and sells them for $4 and becomes a millionaire. How come? (If you want the answer, go to the bottom of this post.)

This type of question reminded me of a couple of sentences that I saw years ago to show how schema can affect our reading comprehension. Read these sentences and then read their endings, also at the bottom of the page:

A: "She was your typical blonde, she kept her nails . . . "

B: "Barrabus came by sea . . . "

So what's the point of using stuff like this? They can illustrate very clearly that our existing mental models/assumptions can be way off the mark -- miles off, and prevent us from solving very real problems.

Not only are there many tools available that can really stretch the way we think about problems, there also seem to be a few companies around that are offering "thinking environments," places where people can have a go at cracking some of their company's problems. Basically, anywhere other than the office.




Answer to millionaire question: The man had previously been a billionaire. [We automatically, and wrongly, assume that becoming a millionaire is a bottom-up process.]

A: ". . . all neatly lined up in jars in her basement."

B: "His feathers were so dirty and ruffled after the long trip." [The text was taken from a young girl's diary about her canary arriving at the new family home in another country.]

Here's an interesting video about "design thinking" from Tim Brown, CEO of IDEO. Worth checking out!




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Thursday, June 1

Fast followers in Asia

"They can and will follow him, first individuals and then whole crowds." - Joseph Schumpeter on the entrepreneur (1942, p.133)

Here are a couple of photos from the streets of Taipei, Taiwan. You can see how these logos are surprisingly similar:

A Taiwan-based coffee chain

A U.S.-based coffee chain

This is what firms are up against as they operate in Asia. If your business works -- or is perceived to be working -- you can expect a deluge of local firms to enter right behind you.





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