You are currently browsing the monthly archive for August 2009.

The innovator and long-time producer of the CBS television program Sixty Minutes, Don Hewitt, has died. He left a massive legacy.

Hewitt produced CBS’s evening news under anchorman Douglas Edwards. He held a similar job under Walter Cronkite, then in 1963 launched Sixty Minutes, an hour-long program that almost always had three story segments. Until 1999 it was the #1 most watched program, and remains the longest-lived TV program in history.    

What was Hewitt’s secret as an innovator? (Other networks, of coursed, imitated Sixty Minutes, including ABC  — 24 Hours — and NBC,  but never came close). 

In preparing, initiating and editing the Sixty Minutes stories, Hewitt said he always tried to think about the average American viewer, on Sunday evening (the program’s traditional slot), after watching a football game. Nobody has to watch our program, he said. What will interest them? He applied the “Mabel” criterion. Will Herb call to his wife Mabel,  hey Mabel! You gotta come see this?, he said, or will he say, Mable, where’s the remote? Let’s watch the basketball game instead, this is boring.

Hewitt hated being bored. And he desperately fought never ever to bore the viewer. His talented team of reporters and journalists — Morley Safer, Mike Wallace, Leslie Stahl, Ed Bradley, Steve Croft, and others — rarely did.

“Tell them a story!” Hewitt repeatedly said. People love stories. When you are a child, what do you say? Tell me a story. Grownups do too! Sixty Minutes segments were almost always great stories. And Hewitt knew how to prepare promos, 30 second ‘teasers’ that got people to watch later that evening. 

“Tell them a story” is strong advice for innovators, too. Building a business plan? Focus not on Excel but on the story. What is the narrative? What is your product’s story? What need does it fill? Whose? Tell about the user, using it for the first time. A compelling story, in my opinion, is far more persuasive for investors and potential future hires  than a forty-page business plan.

Edward (Ted) Kennedy’s funeral is being conducted as I write these words. 

Kennedy was the youngest of four brothers. Joseph died as a pilot in WWII, Jack was assassinated by Lee Harvey Oswald and Bobby was shot by Sirhan Sirhan. He lived in the shadow of his older brothers’ memories. But in the U.S. Senate, where he served for 9 terms, as Senator from Massachusetts since 1962, a total of 47 years, he made his mark.  He authored 300 bills and his name was on another 1,000. He may have been the great Senator since Daniel Webster. The Boston Globe wrote, “By the early 21st century, the achievements of the younger brother would be enough to rival those of many presidents.”

Kennedy was not a philosopher or an ideologue. He was not good at expressing sweeping visions or innovative ideas.  But he was intent on changing the world. As one born into wealth, who had never known hunger or poverty, he was America’s leading champion of the poor, the sick, the immigrants, the underclass and the blacks. His innovative thinking found powerful expression not in ideas, but in implementation. He was able to win compromises against stubborn Republican foes. He used humor and good fellowship. 

As President Obama related in his remarkable eulogy, Ted Kennedy once won over a Republican committee chairman by shoving toward him a partially open envelope with excellent cigars. When the negotiation went well, Kennedy inched the envelope toward him. When it went badly, he pulled it away a few inches. An acceptable compromise was soon won. 

He had an endless string of personal tragedies, including one famous one that cost him any chance at the Presidency.  But instead of using them as excuses for quitting, he fought on. He was substitute father to the children of his murdered brothers Bobby and Jack.  

There are innovators who have sweeping ideas and who express them brilliantly. And there are those who are good at making things happen on the ground. Kennedy was the latter. If you have implementation skills, you are blessed.   Because in the end,  those who change the world are not always those with the ideas, but rather those with the staying power, courage, and common sense who can implement ideas.

The crisis was too short.

I have a sinking feeling when I read reports that the global recession is over. It’s not that I love unemployment, poverty, or crisis. It’s just that none of the fundamental illnesses that afflict our global markets have been cured or even addressed. A great many people who caused the crisis are eager to go back to business as usual, and will thus create sooner or later the next financial collapse. 

What are these fundamental issues?

1. The U.S. dollar. There are too many of them, flooding the world, and you cannot run a global trading and financial system on a weak currency. America’s deficit this year is a staggering $1.58 trillion, even after optimistic revisions.   The world needs a stable currency. We had it, in the 19th C., under the gold standard. The “dollar standard” began in its life in 1944, under the premise, “the dollar is as good as gold”. And indeed it was, then. But in 1971-3, when the link between gold and the dollar was broken, the seeds of the current crisis were sown. We need a world central bank and a global currency. Had the crisis been deeper and more serious, perhaps we might have gotten one. Now, we won’t.

2. Capital flows. Enormous sums of ‘hot money’ race from country to country, seeking short-term profits. This is now expedited by super-high-frequency trading, in which computer algorithms running on supercomputers drive trading that occurs many times a second. This high-frequency trading could bring the next crisis, as indeed it did in 1987, when computer programs that drove both spot and future trading caused a feedback loop that crashed the US stock market by 20% in a day (on Oct. 19). 

3. Self-interest. Countries are still driven by selfishness and self-interest.Yet to make the global system stable and sustainable, we need intense cooperation and collaboration among countries. There is no sign of this. Each country pursues its own interest. When America’s interest calls for lower interest rates, the Fed cuts rates, even if global conditions need higher rates. America’s Fed cannot both be America’s central bank and the world’s central bank.  There is no effective body in which coordinated integrated global policies are set. Perhaps, had the crisis been deeper, such a body might have been born, as the United Nations was born out of the depths of World War II.

A great many other issues remain to be repaired, but will not be. Human memory is very short. As the media reassure everyone that “it’s over”, our behavior will return to that of the bad old days — until the next crash. And as a result, it will likely be a lot worse.

In this space, more than once, I’ve argued that in developing new products or services, less is more. Eliminating needless features is a far more powerful route to  market success than adding, endlessly, more and more new and unneeded features. What we want today, more than ever, is simplicity, not complexity. And erring on the side of simplicity is better than erring in excess complexity.

Now, Apple — according to Business Week, the company most admired as an innovator by other managers worldwide — has shown it gets it. Apple’s Leopard operating system, Mac OS X 10.5, has a new release, called Snow Leopard.  And, surprise, it is smaller, faster and more refined. Less, rather than more. It beat its announced release date by a whole month. And, get this, it costs only $30 (as an upgrade, for those who have Leopard already).

Snow Leopard starts up faster — 72 seconds, rather than 100 seconds in Leopard — and opens programs faster — 3 seconds for the Web browser (Windows Internet Explorer, eat your heart out!) — and halves the opening time the second time the same program is run. And above all, Snow Leopard is half the size of Leopard!

Writing in today’s International Herald Tribune, David Pogue notes that “Apple and Microsoft realized that the pile-on-features model was unsustainable”. *

Microsoft will release Windows 7 in October. We may see a strategy similar to that adopted in Snow Leopard. If so, those of us who have followed Microsoft’s incessant pile-on-the-unneeded-features-and-charge-more-for-them will be pleased and surprised. 

Pogue concludes: “The big story here is not Snow Leopard. It is the radical concept of a software update that is smaller, faster and better — instead of bigger, slower and more bloated. May the rest of the industry take the hint.”   

And my prayer is, may all innovators everywhere, not just in software, take the same hint. Leopards everywhere — you CAN change your spots.

*David Pogue, Mac’s new Leopard: A lot more from a lot less. IHT Aug. 27, 2009, p. 15.

The world’s central bankers are meeting in Jackson Hole, Wyoming, and are congratulating themselves on saving the world and on greeting the burgeoning global recovery, as France and Japan record positive GDP growth and America records less-than-expected GDP decline.

Beware. The crisis is not over yet, not by a long shot. Call this the ‘cry of the party pooper economist’ if you wish. But it ain’t over until the fat deficit sags. Here is my argument.

GDP rises when imports fall by more than exports. And imports in America fell rapidly, giving GDP a boost. GDP rises by governments pump demand into the economy. And governments in America, Japan and Europe have been doing this desperately. America’s $1.2 trillion deficit is enormous. 

Now, it follows that when imports in one country fall, exports in other countries also decline, because world imports equal world exports. Exports were the powerful engine of global growth during the 1995-2007 boom. It is not good news that imports have fallen, because it implies that the growth engine, exports, also is sputtering. 

Nor is it good news that government demand has injected metamphetamine into the US and European economies. At some point, governments will need to find an ‘exit strategy’ for their fiscal stimulus plans, as government debt balloons alarmingly and as creditors refuse to lend any more. Just as metamphetamine (“speed”) addicts suffer withdrawal, so do economies when governments cut spending. And eventually they have to.

It is quite possible we will see weak sputtering recoveries that turn into new, mild recessions at the end of 2010. Companies should at least make this one of the scenarios that they seriously consider.

So, congratulations,  Ben Bernanke. You’ve managed to persuade your President, Barak Obama, to reappoint you as FOMC Chair. But plan on at least another year or two of long worried nights in your office on “H” St. in Washington. Your plans to play your saxophone again may have to be deferred.

Jamaica’s Usain Bolt astounded the world by breaking world records in the 100 m. and 200 m. races at the World Athletic Championships in Berlin, each time by 11/100 of a second — a blink of an eye, yet a huge difference in the supersonic world of short races. So did his teammate Shelly Ann Fraser, who won the women’s 100 m. race. My nickname for her is Lady Blur. If you want to photograph when she hits her stride, better have a very fast camera. 

Interviewed on Eurosport, Fraser revealed some valuable lessons we can learn from the achievements of the Jamaican team. (The interview itself was an innovation — filmed as she rode in the back of an official car, on her way to the track, answering questions posed to her on a laptop). 

Where did she learn to run so fast?

“From my mother,” she laughed. “When I was impudent, she would chase me to punish me. I learned to outrun her when I was 10!”  

What did the Jamaican track team learn from Usain Bolt?  

He is an inspiration, she said. He is crazy. He encourages us to have fun, to enjoy the experience. And he teaches us to relax. You perform better when you are relaxed. Bolt, of course, is super-relaxed. He jokes, gestures and makes faces before and after races, and sometimes, in preliminaries, even during them. Make no mistake. Bolt and the team are driven by aspiration, and train very very hard. But they also know how to enjoy the moment, and their smiles light up TV screens as they are introduced just before the races begin. It is a joy to watch them, compared to the tight tense drawn expressions of other runners, who inevitably lose to the Jamaicans.

Innovation and achievement thrive in an atmosphere of fun and laughter. This is contrary to what many organizations believe. Shelly Ann Fraser confirms this, as does Bolt himself. 

Laugh! Enjoy! Savor the moment! And watch the ideas flow.

Can human beings create life? The very question seems sacrilege. Yet an August 20 BBC report (Victoria Gill, “A step closer to synthetic life”) indicates significant progress toward it.

At the J. Craig Venter Institute, in Rockville, MD., scientists have “successfully transferred the genome of one type of bacteria into a yeast cell, modified it, and then transplanted into another bacterium. This paves the way to the creation of a synthetic organism – inserting a human-made genome into a bacterial cell.” We are thus a step closer to altering and engineering the building block of life — the DNA inside our cells. The results were published in the journal SCIENCE.

Leading researcher Sanjay Vashee explained that:

…the work overcame a hurdle in the quest to create a fully synthetic organism. “Bacteria have ‘immune’ systems that protect them from foreign DNA such as those from viruses,” he explained. He and his colleagues managed to disable this immune system, which consists of proteins called restriction enzymes that home in on specific sections of DNA and chop up the genome at these points. Bacteria can shield their own genomes from this process by attaching chemical units called methyl groups at the points which the restriction enzymes attack. The scientists modified the original genome of the bacterium Mycoplasma mycoides, whilst it was inside the yeast cell. Then they either attached methyl groups to it, or inactivated the restriction enzyme of the recipient bacterium, before transplanting the genome into its new cell. 

In other words: Just as doctors use anti-rejection drugs on patients receiving organ transplants, so have the Venter scientists found ways to neutralize the cell’s own protection mechanism that rejects “foreign” DNA, by inactivating the appropriate protective enzymes. To do this, they first had to discover how cells reject foreign DNA.  

Venter remains a controversial figure. His work largely pioneered the decoding of the human genome, by mechanizing and automating the process, speeding it up by two orders of magnitude, at a time when conventional scientists doubted this approach and the government fought it or refused to fund it. 

Why do other scientists find the rather arrogant Venter so irritating? Perhaps, the BBC report notes, precisely because they cannot dispute the quality of his science or the creativity of his break-the-rules thinking. 

One of the Venter team’s ultimate aims is to transplant a fully synthetic genome into a bacterial cell – creating bacteria that can be programmed to carry out specific functions – for example, digesting biological material to produce fuel.

Is your value proposition authentic?

• For years, Intel sold its microprocessors on the basis of Mhz (megahertz, or speed), even though the vast majority of PC users needed only a small fraction of the Pentium’s Mhz. The value proposition was: more Mhz is better. For the most part this was not true.

•  For years, digital camera producers have sold cameras on the basis of megapixels — the equivalent of megahertz.    

More megapixels is better. This too is false.

Writing in the New York Times*, camera expert David Pogue notes:

For years now, the world’s camera companies have been taking the public for a ride. They’ve taught us to believe that what makes one camera better than another is the number of megapixels it has — when, in fact, the number of tiny colored dots making up a photo has very little to do with its color, clarity or even detail.  

How can a value proposition that lacks authenticity — or, more bluntly, a value proposition that is utterly false — survive for so many years? It’s a mystery. Or, perhaps a conspiracy — a kind of industry paradigm that all players find it convenient to adopt. 

Sooner or later, though, as Shakespeare observed in The Merchant of Venice,  “the truth will come out”.   

Slowly, though, the truth is getting out. Recently (at long last), camera companies have begun diverting their research efforts from “how to get more megapixels” to “how to get better photos.” They’re working on things that really do matter in a consumer camera, like sensor size, stabilization — and fixing low-light photography.

Sony and Canon have now each brought out digital cameras that have new value propositions — customer benefits that really do matter. They take great pictures in very low light — something ordinary digital cameras cannot do, megapixels or not. 

Earlier, Intel radically changed its business model, shifting from selling megapixels to selling longer battery life (with its Centrino chipset), so that we could “unwire our world”. It was a risky gamble, but in general paid off, because it was authentic. We consumers do like to unwire our world, do enjoy longer battery life through smaller cooler microprocessors, and really don’t care that much for Mhz. The Centrino concept and design originated in Israel.
An important management issue is illustrated here. Ask yourself these questions:
•  What technical parameter or parameters drive my value proposition?
•  How do these technical parameters translate into clear simple value creation and customer benefits?
•  Is this value proposition authentic, or synthetic?
•  If synthetic, how can I alter our value proposition, to link it more closely with true customer benefits, and how can I achieve competitive advantage by doing so?
Intel did it. Now Sony and Canon are trying. So  should you. Start with your customer. Ask what the customer really wants and needs. Translate that into a  technical parameter. Seek enabling technology, and when you achieve it,  communicate the benefits to your customers clearly and simply — and authentically.

* David Pogue. Low light becomes a highlight. New York Times, Aug. 19, 2009.

A flood of press reports has announced the end of the global recession, as economies in Germany and France show GDP growth for 2Q 2009, and the world’s largest economy, U.S., shows the 2nd Q GDP quarter-to-quarter decline was only 1 percent (compare with minus 6.4 percent in Q1). 

These reports are highly misleading. They prove that global managers must go well beyond reading these reports and ‘crunch’ the numbers themselves. A quick trip to the U.S. Bureau of Economic analysis website ( reveals the composition of America’s GDP decline. The numbers (see below) show the recession is definitely not over.

The data reveal the following:
•  Neither business investment nor personal consumption has achieved positive growth, nor have exports
•  By far the biggest contributor to US economic growth was the decline in imports; this boosts GDP, because imports are deducted from GDP. Imports continued to decline sharply in Q2, because people spend less when they are jobless and impoverished. 
•  The much-touted fiscal stimulus package, which has spilled over $1 trillion into the US economy and created enormous deficits and debt burdens, contributed only 1.1 percent to US GDP growth, and in Q4 2008 and Q1 2009 actually caused GDP to decline. The vaunted ‘cash for clunkers’ program, in which Americans are paid thousands of dollars for trading in old cars to buy new ones, is hard to detect in the numbers. Motor vehicle sales caused GDP to decline in Q2.
•  Inventories continue to decline, meaning that companies are still selling off inventories instead of producing new goods, which reduces GDP. And they still have much more to sell.

To simplify: America’s GDP is falling more slowly mainly because people are too poor and too pessimistic to buy imports. Is that great news? This cannot fuel a recovery, because as is well known, America sent most of its production off-shore, so substituting local production for imports requires bringing home its offshore factories (back-sourcing) — a process that has barely begun.
United States:   Quarter-to-Quarter % Change in GDP 
                                            2008 Q4                 2009  Q1               2009  Q2
GDP                                  -5.4 %                      – 6.4 %                     -1.0 %
Of which:
Personal consumption        -2.2                          + 0.4                         – 0.9
Gross business investment   -3.9                           – 9.0                          – 2.6
Government consumption   +0.2                          -0.5                          + 1.1
Exports                                  – 2.7                           -4.0                          – 0.8
Imports                                  +3.2                         +6.7                          + 2.2

A close inspection of French and German data will reveal, I believe, that those countries too are far from out of the woods.

The tougher the constraints, and the more hostile the environment, often the more innovation and creativity flourish. This is certainly true of the Incas, whose empire in the Peruvean Andes was ended by the Spanish invasion and conquest in around 1530. The story of Incan innovation is nicely documented in a recent Discovery Channel program.

The Andes Mountains have peaks higher than the highest mountain in the American Rockies. The Incas lived at elevations of around 4,000 m. Their descendants today have larger hearts and lungs than Americans or Europeans as a result. 

How do you feed your people, in a cold mountainous region whose weather is notoriously unstable? By growing food.   But how, on steep mountain slopes? Answer — terraces. The Incas perfected terracing — creating flat stepped areas on steep mountain slopes that resisted erosion and on which crops could be grown. They brought the soil from afar and it remains fertile to this day. They used guano (bird droppings) for fertilizer and protected the birds that supplied the guano. They were the first to plant potatoes, a vegetable brought from Peru to Europe by the Spanish, and developed more than a hundred varieties. Agronomists claim as many as half the vegetables we cultivate and consume today originated with the Incas. The Incas developed many varieties of maize (corn), also imported later to Europe. The Incas used medicinal herbs. They knew, for instance, that quinine was effective against malaria.

How do you ensure an ample water supply? The Incas built irrigation channels, diverting and even straightening whole rivers. How do you know what plants to grow, and how to grow them? By experimenting. The Incas built a remarkable experimental farm, in the shape of a huge terraced bowl. The bowl covered several temperature and climate ranges, from bottom to top. The Incas, who had no written language, were skilled mathematicians nonetheless and had a system for recording data based on knots tied on ropes. They  placed water containers at various elevations in their experimental ‘bowl’ and then measured the rate at which the ice in the containers, frozen during the cold nights, thawed and became water. 

Machu Picchu, discovered by an American explorer, is known as the Lost City of the Incas. Its elevation is 2,430 m.   It was completed in the year 1462, then abandoned a century later, probably because its inhabitants were wiped out by smallpox brought by the Spanish, and to which the Incas had no natural resistance. Today Machu Picchu is a popular tourist site. Some of its buildings reflect the Incas’ amazing skill at building with enormous stones, transported across the mountains for huge distances.

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
August 2009