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Innovation Blog

Call of Duty: Black Ops – Join the Queue

 by Shlomo Maital






 Long lines of videogame fans stood in line in wintry weather in London and other British cities, to be among the first to buy  Call of Duty: Black Ops,  the successor to  Call of Duty: Modern Warfare 2,  which went on sale at midnight yesterday (Nov. 8). Many of those in the queue got there 12 hours earlier.   In the game, special forces commandos engage in bloody battle in Russia, Vietnam and elsewhere.

   Modern Warfare 2 had sales last year that exceeded one billion dollars and was the biggest-selling and fastest-selling videogame in history.  Black Ops will probably exceed that record.

   The midnight stand-in-a-long-queue marketing ploy was perfected by the publishers of the Harry Potter books.  It generates huge buzz and creates vast amounts of free advertising, as the queues are covered on news broadcasts all over the world. The queues say to other potential buyers:  If you want to be cool, you better join the herd, you’re already late.  It is a way to generate what Malcolm Gladwell called a “tipping point”, a critical mass of buyers who create near-hysteria mainly by word of mouth, or word of Internet.

    Like all videogames of its genre, Black Ops is exceptionally bloody and violent.  Defenders say the violence is entirely virtual and may replace actual violence. Psychologists and others say videogames and TV and movie violence insure us to violence and actually encourage it by making it everyday and banal.  

    Whatever the case, I find it regrettable that this powerful technology is not being harnessed in order to educate, rather than just entertain.  There are, of course, educational videogames.  But the true talent in this area, the true innovators,  lie where the billion-dollar markets are, and those are in violent war games.  I just wish that once, just once, one of these brilliant innovators would tackle, for instance, a videogame that taught calculus or thermodynamics or medieval history or philosophy or physics.   

     We could have just a touch of violence.  How about a young Einstein confronting the renowned mathematician and physicist Henri Poincaré, who rejected his theories, and gently, purposely, stepping on his toe?  How about Napoleon surrendering to the Duke of Wellington, at Waterloo, and asking him whether the British barbarians actually put water in their wine, as was rumored?  Wellington responds, by serving Napoleon, his prisoner,  an Emerald Riesling white wine with his roast chicken dinner – unbearable torture.


Global Crisis Blog

America’s Economic Policy:  Load of Dung

By Shlomo Maital

  Author Clyde Prestowitz, who has just published The Betrayal of American Prosperity, recounted that he originally wanted to title his book Load of Dung, referring to the fact that just before Rome collapsed, loads of carts came in to Rome carrying a wide variety of goods, and left Rome carrying…dung.  Check the containers entering and leaving America, and the picture is not much different. 

    An article in the latest edition of Fortune magazine reveals that for the first eight months of 2010, fully 700,000 more containers entered the Ports of New York and New Jersey than left.  I wonder where they put them all ???   The same article reports that 45 per cent of the containers exported from America are empty – sent back to China, to be refilled and shipped to the U.S.

    In August, latest figures available, America’s trade deficit grew to $46 b., an increase.  For the past 12 months ending in August, The Economist reports that the trade deficit remains a staggeringly high $621 b.  Imports totaled $200 b., up $4 b. from July.  More than half the total trade deficit came from America’s trade with China, or a total of $28 b.

    Intel CEOPaul Otellini recently noted that “Intel is the ‘last one standing’”, because “no one else has built a new [semiconductor] factory  [in America] in five or 10 years.  Everyone is building it either offshore or through joint ventures somewhere else.  If [semiconductors] is the most important technology of the 21st C., and the first derivative is negative relative to building new factories here, it ain’t good.” 

     The only way the containers will leave America full, and not full of dung (or paper for recycling, as if often the case now), is if America makes a strategic decision to renew and reinvent its manufacturing, and to take the necessary steps to make this happen.  Exports from the US must rise, if the world is to achieve ‘rebalancing’,  and the only way to export, as far as I know, is when you actually make things and sell them abroad.  If you do not make things, you cannot export, no matter what the exchange rate for yuan-dollar is.   

Global Crisis Blog

Bernanke Denies Creating the Last Bubble –

And Claims Credit for Creating the Next One

By Shlomo Maital.  

   Fed Open Market Committee Chair Ben Bernanke faces a storm of criticism worldwide for his QE2 policy – the second round of quantitative easing, which sees the Fed purchase 10-year government bonds in massive amounts, totaling (by some accounts) some $1.5 trillion before the program ends.   The policy is not about buying bonds, it is about paying for them and thus creating huge new mountains of dollars.  The policy of spilling such vast amounts of dollars into the world is, to say the least, highly irresponsible, when the American dollar is still the world’s key currency and its stability is crucial to the wellbeing of every country that participates in world trading and global capital markets. 

   Prof. Bernanke, formerly an economics professor at Princeton University, now has a new justification for his policy. He says it will help boost the price of common stocks.   This is a remarkable statement.  Bernanke, who became Fed chair in 2006 when Alan Greenspan retired after 19 years of service, has joined Greenspan in denying that the Fed helped create the housing bubble, despite drastic interest rate cuts in 2001-3 and rapid credit expansion.  Yet he is now apparently trying to create a new one, possibly this time in Asia, to which much of the money he is printing is fleeing. 

   Here are the facts.  The Dow-Jones 30 Stock Industrial Average DJIA peaked at 14164.53 points in the summer of 2008, and then fell rapidly to 6,547.05 at bottom within a year, a drop of 54 per cent.  Since then the DJIA has recovered, to about  11,200 points, a rise of 71 per cent.  So stocks have already made up a large part of their losses.  Do they really need short-term short-sighted help, by massive printing of money?  Is this really what the American economy and American businesses truly need?  

   The QE2 policy is hugely irresponsible and should be stopped before it gets rolling. 


Innovation Blog

The Little Country That Can…and Will:  How Singapore Excels

By Shlomo Maital

   At Singapore’s Changi Airport last night, I learned a small lesson in why Singapore is one of the world’s wealthiest countries, despite having no natural resources.  It is because Singapore has built a culture of no excuses, seeking excellence in all that it does, because anything less will endanger its citizens’ wellbeing.  This culture was built right from the start, from the day Singapore achieved independence from Britain in 1965, and was shaped by its chief architect and first Prime Minister, Lee Kwan Yew, whose son now serves as Singapore’s PM. 

   Changi Airport is among the world’s best and most modern. Yet despite this, it is being massively refurbished and rebuilt.  Why?  Singapore insists on having the world’s best airport.  This is part of Singapore’s formula for attracting people and investors and multinationals.  And to have the best airport means constantly upgrading and improving, because the rest of the world is rapidly improving, too.  But it is not just about infrastructure, about getting your bag 12 minutes after the wheels of your plane touch down.  It is about service.

    I wanted to buy a present, but in the huge airport, did not know where to look. I spotted a young lady dressed in a bright red vest.  She was a tourism intern, studying at one of Singapore’s Polytechnic Schools. As part of her studies, she was required to do an extensive internship at the airport, working six hours every evening, with only a 30-minute break, and being on her feet the whole time, assisting travellers.

    I asked her where I could find a lady’s digital watch.  She told me (she knew where everything in the airport was, I know this, because I rudely gave her a small informal exam, out of curiosity).  Then she asked me politely if she could escort me to the store.  And she did. 

   Singapore’s port is among the world’s most efficient;  its system for charging for road use during peak hours, using transponders,   is now widely copied (including by London); and despite being a high-wage country, it remains a key manufacturing center for Asia.  It is corruption-free, because its civil servants are highly paid, hence do not need to take bribes – and most severely punished if they take bribes.  Singapore Airlines is among the world’s best, and it too insists on being #1, in aircraft, service and amenities.  Avis may have invented the slogan: We’re #2. We try harder.  Singapore’s mantra?  We’re #1. And we STILL try harder.

Innovation Blog

Co-Innovation: Version 2.0 of Coopetition –

How P&G Innovated with a Fierce Competitor

By Shlomo Maital

  Bloomberg Business Week has an interesting article in its latest edition by  G. Michael Maddock and Raphael Louis Vitón, about co-innovation, or co-creating innovation.  In this model, one company joins with, say, a fierce competitor, to create a new innovative product that neither alone could succeed in bringing to market.  It is a new version of an old idea, co-opetition, cooperating and collaborating with a competitor.

   In 2002, Procter & Gamble (PG) and Clorox (CLX) decided to co-create. Although they are traditionally fierce competitors in the cleaning category, they created a joint venture. Because of a discovery made during a diaper project, P&G was sitting on some technology that could enhance the performance of trash bags—but it didn’t sell trash bags. Meanwhile, Clorox owned Glad, a leading bag brand. The two got together and peanut butter met chocolate, so to speak.

[That reference to peanut butter meeting chocolate, of course, is a reference to Reese’s Pieces, one of my favorites, and they do NOT contain any chocolate, even though they are made by Hershey’s.  The inventor proposed them first to MARS (M&M’s) but was turned down.] 

  How well did the joint venture between P&G and Clorox go?  According to the authors:

“Both companies have since been rewarded richly for the decision. How richly? Well, two years later, P&G paid Clorox $133 million to increase its investment in the joint venture from 10 percent to 20 percent. Here’s what P&G Chairman A.G. Lafley said at the time: “The Clorox-P&G joint venture will be a win for consumers—and for both companies. We expect that the combination of Clorox’s well-established Glad business and P&G’s R&D expertise will provide consumers with important new products and outstanding value. We look forward to the opportunity to work with the Glad team to bring new innovations to the market.”

 What are the advantages of co-creating innovations?  You often gain “channels” you do not have yourself.  Each partner brings half the solution; you do not need to develop all of it on your own.  You get two energized teams, rather than just one.  

  Find a locomotive already steaming down the track, say the authors (an idea raring to go, looking for an implementor), rather than build one and then try to create a head of steam.  Partner with it, hitch your railroad car to it, and then watch your top and bottom lines go.

Innovation Blog

Personal Creativity Machine – Do YOU Have One?

By Shlomo Maital

I have been a management educator for 26 years, dating back to 1984, when I began teaching R&D engineers in MIT Sloan School of Management’s Management of Technology M.Sc. program.  For years, I taught a disguised version of microeconomics, showing how simple economic tools could be used by innovators to create and develop great new products.  I wrote two textbooks on this and it seemed that they were reasonably useful for managers and engineers.  But lately, in my workshops for managers, I’ve discovered that there is a far deeper need than economic tools.  Managers need personal creativity tools.  They have worked for years for large global bureaucratic organizations, in most cases (very few large global organizations are NOT bureaucratic), and their innate creativity has been brutally beaten out of them.  Many of them believe that they have lost it – that they are no longer creative, though they once were.  I find this particularly sad and disheartening, because I know for certain that high-potential creativity exists in every human being, and is often repressed, but never destroyed.  Every five-year-old child is super-creative.  Buy them an expensive toy, and they take it out of the box – and play with the box, making it into anything and everything.  Kids haven’t yet learned the rules. So they create as if there were none.  (See Sir Ken Robinson’s wonderful TED lecture on how schools destroy creativity, and why we need to reinvent them). 

So lately, in my workshops, I have been helping my managers build “Personal Creativity Machines” (PCM’s).  These are individually-tailored toolboxes, unique for each individual (no two PCM’s are alike, just a no two persons’ fingerprints are the same).  They are designed to be used daily, to prevent rust from gathering, and to be applied to absolutely everything and anything we do, not just to inventing gadgets.  They are aimed at enriching our lives, because it is far more interesting to do things better, faster, easier, differently, than to do the same thing the same way again and again, until our brain cells die from fatigue and boredom.  My students’ PCM’s seek to empower individuals and restore their faith in their own creativity, to show them that the fires of invention may have been partially doused by bureaucrats, but the spark never EVER goes out completely, and it can and should be re-energized into a raging flame of innovation. A PCM is a structured orderly process for identifying needs and finding innovative ways to satisfy them.  “Brainstorming” is rarely effective. There has to be SOME structure in creativity, though every person needs different types of such structures.

Your PCM has to be tailored to your own passions, interests and learning styles, and to the environment in which you function.  It requires a difficult inward journey of self-discovery, and a difficult prolonged outward journey to the edges of the universe, to explore human society and human needs that want and need innovators.   I have been astonished at the variety and quality of these PCM’s, that each manager-student creates at the conclusion of my workshops.  I now have a very rich collection.  One day, I think I will gather them into a book.  The idea?  Not for readers to borrow them, but to inspire readers to invent their own unique PCM.

Do YOU have a PCM?  Do you use it regularly?  Why? Or why not?  

Innovation Blog

Rwanda – Not Genocide, Wired!

By Shlomo Maital

   BBC journalists are the best and the worst.  The best, because they produce programs like Peter Day’s Global Business, and tell us about a country known forever for genocide, Rwanda, which is trying to become known for bandwidth and fiber-optics.  The worst, because the National Union of Journalists is on strike at BBC, protesting pension reform; they somehow don’t understand that in the global crisis, the value of pension-fund assets have fallen drastically, meaning that their benefits have to fall too.  French workers seem to have a problem grasping that fact, too.

    Thanks to the strike, old programs are being rebroadcast on BBC, and so I was happy to hear one that I missed last March.  It is Peter Day’s account of Rwanda’s plan to invest $50 m. of its own money, using South Korea’s expertise, to criss-cross the country with a fiberoptic network, bringing broadband access to villages.  Rwanda is a small African nation, a democracy, with 11 m. people, largely rural, formerly a Belgian colony (Belgium was among the very worst of the colonial powers).  Its GDP per capita is only $1,000 and its main industry is subsistence agriculture.  In 1994 some 1 million Tutsis were massacred by Hutu tribespersons, while the UN watched.  The massacre was a direct result of Belgium’s policy of favoring the Tutsi tribe, causing burning resentment among the Hutus. 

     Rwanda is already enrolled in the OLPC One Laptop Per Child program, launched by MIT Professor Nick Negroponte.  So Rwanda, under its visionary foreign minister Louise Mushikiwabo and controversial (but visionary) President Paul Kagame, is seeking to become Africa’s first fully ‘wired’ African nation. Kagame has a 2020 goal: Make Rwanda a middle-income nation in a decade. That will take 10 per cent annual growth.

   Many Rwandans earn their subsistence living by herding cows.  Ms. Mushikiwabo’s vision is to have Rwandan children use their laptops to help their parents modernize their agriculture and herding.  Perhaps if Rwanda succeeds, other larger nations will follow suit. 

     It is significant that South Korea is aiding Rwanda.  South Korea was torn apart in the early 1950’s by civil war between North and South.  The country was ruined.  It has rebuilt the economy, through hard work and innovation, and South Korea has become an exporting superpower, with exports comprising well over 40 per cent of its GDP, and global innovators like Samsung leading their markets with clever inventive products.  Now South Korea is aiding another country torn apart by disastrous civil war.  It is sensible for South Korea, not America or France or Germany, to run this project, precisely because of this empathy. 

    We should wish Rwanda well with its venture.  One day I would love to visit Rwanda and see the fruits of their innovative efforts.


Innovation Blog

Camera Chips Restore Sight

By Shlomo Maital

 An amazing report on today’s BBC news reports about an innovation that can restore sight to those suffering from a congenital disease that damages the retina. 

  The innovation implants a microchip, very similar to those that give cell phones and digital cameras their ability to convert images into digital signals,  just below the retina.  The chip conveys electric pulses to the brain, and the brain, that amazing organ, converts those pulses into images.  Those who formerly had no sight at all, and were totally blind, are enabled by the device to regain some 2 per cent of their vision. This sounds like very little – but it is sufficient to recognize objects, identify sources of light, to see forks and knives, and even to read letters that are 5-10 cms. high.

   The operation shows promise to restore vision more widely to the vision-impaired. 

Global Crisis Blog

Made in China America:

It’s NOT Their Labor Costs!

By Shlomo Maital

  An American steelmaker, Bill Hickey, who runs Lapham-Hickey Steel Co., explains on BBC’s Business Daily why China is competing unfairly with his company.  It’s NOT about the cheap labor, he says.

  The price of steel on world markets today is about $235 per ton.  The cost of shipping steel from China to the U.S., for instance, is $70-$80 per ton, even at today’s depressed shipping costs.  The remaining costs are labor and materials. Materials cost about the same on world markets, and give China no advantage.  The cost of labor per ton of steel is no more than $35/ton.  Labor is an almost negligible input. So China faces a disadvantage of $80/ton in shipping its steel to the U.S., while US-located steel companies have no such costs.  Suppose, now, that Chinese labor costs nothing at all, it is absolutely free.  It still would not give China a sufficient cost advantage to enable them to export steel in massive amounts to the U.S. 

  What then does give China the advantage?  Capital, not labor!  China’s government subsidizes the capital used by steel producers in many ways.  Chinese banks are largely government-run and supply cheap credit.  Land is subsidized.  And above all, China’s government offers up to a 40 per cent subsidy per ton, by ensuring that the Chinese currency, the renminbi, is undervalued, meaning that you pay fewer dollars for a unit of Chinese money, in order to buy Chinese steel.   China uses its capital to buy U.S. dollars,  which is directly equivalent to paying a 40 per cent subsidy to its steel exporters, equivalent to about 40 percent of the price of steel, or about $100/ton. 

    Of course these numbers apply not only to America, but to other countries as well – all the countries who make steel, or who used to, before China blew their plants out of the market. 

    Why doesn’t America fight back?  Why don’t other countries?  In an era of high and rising unemployment, when jobs are scarce, why are countries importing unemployment when they import steel?

   It is a mystery. 

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
November 2010
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