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Tear Down These Walls! Make Every Worker an R&D Employee!
By Shlomo Maital
In a speech at the Brandenburg Gate near the Berlin Wall on June 12, 1987, President Ronald Reagan spoke directly to USSR President Mikhail Gorbachev, telling him, “Tear down this wall!” Two and one half years later, the Berlin Wall fell – on Nov. 9, 1989.
Those four words, ‘tear down this wall’, apply to innovation as well. To all CEO’s: Tear down the wall between your R&D engineers and your employees. Involve ALL your employees, down to the mail clerk, in coming up with winning new innovations, in products, services, processes and operations. Innovate everywhere. And get everyone to innovate.
A 15-year-old book, by Alan Robinson and Sam Stern, Corporate Creativity: How Innovation and Improvement Actually Happen (1997) is worth re-reading. The book shows how midlevel execs and junior employees are really familiar with the work, are close to the ‘coal face’, and know what needs improvement. If you listen to them, really listen, you can do wonders. Problem is, few CEO’s listen to them.
Here are a few examples. (some are cited by Naomi Darom, The Marker, March 29, p. 11). * American Airlines flight attendant Kathryn Kridel observed that most of the large 200-gram $250 caviar cans for First Class passengers were thrown away. She recommended 100 gram cans instead. Nobody listened, for two years. Finally American Airlines did listen, saved $567,000 a year and gave Kridel a check for $50,000. Not listening cost them over $1 m., at least. * Dr. Spencer Silver invented a pressure-sensitive adhesive, at 3M, tried to market it internally for six years (!), and failed – until co-worked Art Fry invented Post-It notes and built a machine to make them. * A Florida pilot complained that each time he took off from Miami, he had to make a huge detour around an air force base – that was abandoned, having been destroyed by a hurricane. He was encouraged to complain to the Federal Aviation Administration – and the detour was abolished, saving $900,000 yearly in fuel.
Every organization needs a system that encouraged, sparks, motivates, defines, processes and sorts employee-generated suggestions, both large and small. Above all, every organization needs to make employee-generated creativity a key part of its culture, and a part of every job description. Tell your workers: Do what you do well! And while you do it, see how you can change what you do, to make it better, faster, cheaper, and see if you can help fellow workers do the same. Often, simply recognizing good ideas is sufficient reward; you don’t need to throw large sums at idea-generators.
So – tear down those R&D walls. Everyone is R&D. Workers to whom senior management listens become more committed, more energized, and more empowered.
Innovate: Not “What” But “How”?
By Shlomo Maital
So, innovators, what is the question?
Is it “what shall I innovate?” That question focuses on new gadgets.
Why not ask, instead, “how shall I do what I do, better and different?” That question focuses on processes and on operations. I think it is hugely underinvested.
Here is an example. (Described in Matt Townsend’s excellent innovation blog in Bloomberg BusinessWeek, March 15, 2012). Nike tried to sell a flimsy mesh sneaker called the Sock Racer in the 1980s. It was comfortable but not durable enough. Nike never gave up. Now it is introducing a 5.6 ounce running shoe called the FlyKnit. It’s made from synthetic yarn woven together by a knitting machine! This is a totally new process for making running shoes. The manufacturing process is computer-controlled. The upper part of the shoe is knitted in a single piece, which is then attached to the sole. This cuts labor costs and offers huge opportunities for personalization. And it may even bring labor back to America. Traditionally, shoes are assembled from pieces. This is labor intensive and ideal for China. “This is a complete game-changer,” according to Charlie Denson, president of the Nike brand. “Eventually we could make these shoes anywhere in the world.” Even in America!
The Flyknit will cost $150 and will be sold in July. Lightweight shoes are growing in popularity, and grabbed nearly a third of the $6.5 b. U.S. running shoe market. The lightweights are growing at a torrid 14 per cent yearly.
Nike’s process innovation involved, first, a decision to create a shoe that replicates a sock, then, second, mimicing how socks are made. A team of engineers and programmers took a machine used to knit sweaters and re-engineered it to weave the upper part of sneakers. Tiny synthetic cables are knitted into the weave around the midfood for support. CEO Mark Parker started at Nike as a designer; he quickly saw the potential of this process innovation and pushed it. Very smart of Nike to appoint a designer as CEO. He gets it.
Shoemaking hasn’t changed for decades. Innovative Nike has finally thought about HOW shoes are made, now only about which shoes are made. Time to market is crucial; and the biggest time, apparently, in the life cycle of running shoes is the time the shoes spend on boats, in containers, coming from Asia. Eliminating that ship time could give Nike a huge advantage, and even bring manufacturing jobs back to the U.S.
Innovator: Can you change how you make your goods and services, and not just which goods and services you make? If so – you may just create substantial competitive advantage.
MF Global: Now We Know Who Stole the Money
By Shlomo Maital
Last December 14, I uploaded a blog about MF Global, and the $1 b. in investors’ money that was ‘missing’. (The Inside Story About MF Global: $1 b. of Customer Money Is STILL Missing).
An active investigation has been ongoing since. At the center of it is former U.S. Senator, NJ Governor and Goldman, Sachs head Jon Corzine, who ran MF Global when it went broke. The issue is: What was his role and responsibility, in MF Global using its investors’ funds to cover its own trading losses?
Now, comes a tiny back page piece, reporting that U.S. Congressional investigators have uncovered evidence, that Corzine himself sent email messages telling workers to use MF Global’s investors’ personal funds (for which MF has a fiduciary responsibility) to cover its growing overdraft. The overdraft was caused by Corzine’s taking a huge, wrongheaded $6.3 b. bet on European sovereign bonds (he bet they’d drop like a stone; they did not). To place his bet, he leveraged his firm’s assets by as much as five times!
Corzine told Congress that he never ever told his workers to use investors’ personal funds to cover the overdraft. Now, it appears that a “senior official” of MF Global sent an email to workers, in Oct. 2011, stating that Corzine himself authorized transferring $200 m. from an account of an investor, to cover an MF Global overdraft, on its account with J.P. Morgan Chase in London.
Now, lying to Congress is definitely a felony, that should bring a jail term, a lengthy one. Will Corzine go to jail? Doubtful. Did he authorize stealing investors’ private funds? For sure. Did MF Global wreck the basic trust that is so essential, between investors and the investment companies that manage their money? It did.
And will this tiny back-page piece about Corzine’s culpability go almost un-noticed?
It will, and it has. Alas.
Here, by the way, is the relevant section of the US penal code: (a) Except as otherwise provided in this section, whoever, ….knowingly
and willfully – (1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; (2) makes any materially false, fictitious, or fraudulent statement or representation; or (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under this title, imprisoned not more than 5 years..”
Creativity is a Choice, NOT a Gene:
Sternberg’s “Investment” Theory of Creativity
by Shlomo Maital
My next book will be about Building Your Creativity Muscles. The book came about as a result of my interactions with young people in many countries. Many of them were frustrated by boring jobs and by the total rejection their organizations provided, for any of their creative ideas. As a result, many had simply given up. Why bother? And they felt they had lost the creative spark forever.
So – my mission was to revive that spark, and to show them that creativity is a kind of muscle, that gets stronger, faster, and more flexible, as we use it. My book will contain stories of people who have changed the world with their creativity, along with exercises to emulate them. Creativity is YOUR choice, it is NOT some gene you inherited. But sometimes, you need to work out really hard, to get your creative brain in shape – much as you do when you train for a marathon, especially if you’re flabby and out of shape.
I found much support for this idea in the work of American psychologist Robert J. Sternberg, past president of the American Psychological Association, and someone who struggled in high school. His article “Creativity is a decision” (his Presidential address) appeared in the APA journal in Nov. 2003. In it, Sternberg says:
“….my colleague Todd Lubart and I proposed an investment theory of creativity, according to which creative people are like good investors: They buy low and sell high in the world of ideas. In other words, they propose ideas that others initially reject (buy low). Then they metaphorically raise the value of their investment. When they finally have convinced others of the value of their ideas, they move on to their next, usually unpopular idea (sell high). Creative people, then, are ones who are willing to defy the crowd. And indeed, in all domains of intellectual and other pursuits, creative people find that, rather than being rewarded for their creative ideas, they usually are punished.”
Perhaps this is the toughest creativity “workout” of all. Are you prepared to put forward ‘weird’ non-conforming break-the-rules ideas? Are you prepared to struggle to implement them, despite huge opposition? It will be like climbing a high mountain, with thin oxygen, your brain telling you to quit at every step, your muscles screaming they can’t go any farther… and still you go on. And reach the summit. A great many people who changed the world went through this ‘exercise’ – more than once. Sternberg himself is one. And he’s edited a book, Psychologists Defying the Crowd, about other psychologists who did the same.
Become who you are, Nietzsche wrote. Inside every one of us, is a creative world-changing person. Become that person. Practice becoming him or her. Above all, don’t ever stop with just the idea. That’s worthless. Follow through, at least some of the time. Having new ideas is easy and fun. So much so, many people just live off the sweet nectar of ideation. It’s a waste. If you have a good idea, if it’s born in your head, it deserves to grow up to become something many people use and love.
Work out your creativity muscles daily. You’ll be amazed how fit you become, in no time.
Innovation Where It Counts: Save Lives, Don’t Invent Gadgets
By Shlomo Maital
A simple idea in economics is this: Put your money where it brings the highest marginal return. In medical care, America is disastrously failing to do this. The result costs thousands of lives!
According to a study by AARP (American Association of Retired Persons), published in their March 2012 Bulletin, “hospital errors cause 100,000 deaths yearly” in the U.S.”. These are all preventable deaths, notes the author Katharine Greider! These deaths are equivalent to a hurricane that would wipe out the entire population of South Bend, Indiana!
A study of Medicare found that 1 in 7 patients died or were harmed by their hospital care! How about those odds: 14.2 % you’ll be harmed or die. “The number of patients who die each year from hospital errors is equal to four jumbo jets crashing each week,” notes the author. U.S. surgeons operate on the WRONG BODY PART as often as 40 times a week!
A small investment in operations innovation could remedy this, and substantially cut the death toll. For example: Supply each nurse and doctor with an MDA (medical digital assistant) that provides instant comprehensive information on each patient and connects to a central databank. Some 1,500 lives were saved in 18 months in Michigan intensive care units, when a checklist was introduced for handling catheters! Just a checklist!
Yet America continues to spend $8,000 a year on medical care, double that of France or Canada, investing in very very very expensive procedures instead of investing in innovations that improve operations, prevent errors and save lives. For example: open heart surgery costs $324,000 (!), a heart transplant, $287,000, a liver transplant, $235,000; and a heart valve procedure, $133,000. These operations are done all the time.
It is true in general that there is massive underinvestment in strategic operations innovation, in companies. But in hospitals, this costly mistake kills huge numbers of people – and it is simply ignored.
Goldman Sachs: “Clients are ‘Muppets’”
By Shlomo Maital
Goldman, Sachs client?
An Op-Ed piece by former Goldman Sachs senior manager Greg Smith * has drawn enormous attention. If you thought Wall St. had mended its ways, after nearly destroying global financial markets and after the Occupy Wall St. movement – think again. Little has changed, according to Greg, who quit the company. Here are a few juicy excerpts:
* “..the environment [at Goldman Sachs] is as toxic and destructive as I have ever seen it…
* “Culture was what made the place great for 143 years. It wasn’t just about making money. But…today I attend derivatives sales meetings where not one minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off them.”
* “Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets”. Integrity? It is eroding.”
* “Goldman Sachs today has become too much about shortcuts and not enough about achievement. People who care only about making money will not sustain this firm – or the trust of its clients – for very much longer.”
Actually, I wish that Goldman Sachs clients WERE indeed Muppets. The leading Muppet, Kermit the Frog, has down-to-earth realism that would protect him from the robber barons of Goldman. For instance, in talking about his relationship with Miss Piggy (Goldman Sachs?) Kermit says, “Miss Piggy and I have a professional acting relationship. I act like a professional, and she acts like we’re having a relationship. Miss Piggy really hasn’t mellowed much. Piggy is a prima donna. And her reputation proceeds her, I’m afraid, just like her snout.”
Get real, Goldman Sachs. Like Greg and Kermit say: We’re on to you!
- Greg Smith, Why I am quitting Goldman Sachs, NYT March 14, 2012
Are YOU for Sale? Living in a Price-Tag Society
By Shlomo Maital
The Price-Tag Society
Are YOU for sale? NO? Are you sure? There is a terrible joke about a well-heeled man who offers $10k to a classy blonde for the right to spend a night with her. When she refuses, he tells her, well, now we know what you are, it’s just a matter of negotiating the price. More and more, our society is behaving like that man. Everything has a price.
Writing in The Atlantic (April 2012),* philosopher Michael J. Sandel offers these examples of a price-tag society: You can buy the services of an Indian surrogate mother for $8,000 (1/3 the going rate in America). You can emigrate to America for $500,000 (that gets you a green card). You can sell space on your forehead to display commercial advertising (a single mom in Utah was paid $10k by an online casino to install a permanent tatoo of the casino’s Web address on her forehead). You can be a human guinea pig in a clinical trial, for $7,500. You can fight in Somalia or Afghanistan (for a private contractor) for $1,000 a day. If you’re a second-grader, you can earn $2 for reading a book.
“We live in a time where everything can be bought and sold. Over the past three decades,”, notes Sandel, “markets – and market values – have come to govern our lives as never before. We did not arrive at this condition through any deliberate choice. It is almost as if it came upon us.”
The problem with the price-tag society –one of many problems – is that it is grossly unfair. Those who have money can buy anything, including privileges. Those who lack it cannot buy anything, because everything costs money. Even democracy has a price. Lobbyists in America pay line-standing companies, who pay homeless and others $15-$20/hr. to stand in line to hold a place for a lobbyist who wants to attend a Congressional hearing. Conservatives say this is great for the homeless and the unemployed. Others think it is less than great, when money buys even the chance to hear (and influence) Congressional discussions.
Oscar Wilde once said that a cynic is someone who knows the price of everything, and the value of nothing. I have used this definition often, to define “economist”. Have we economists created a society, where everything has a price, and NOTHING at all has a true value? Because some things are so intrinsically valuable, they should never ever have a price tag, subject to the laws of supply and demand, rather than the laws of fairness, ethics, and justice. Not everything needs a market. There is a limit to the realms of our lives where economics rules. It’s time to define those limits. Economists, get out of the way.
- What Isn’t For Sale? By Michael J. Sandel.
Three Cultures: Why Innovation Fails
By Shlomo Maital
“Why don’t organizational innovations occur, or if they do, fail to survive and proliferate”? This is the issue addressed by the great MIT scholar Edgar H. Schein, in a 1996 article, “Three Cultures of Management” (Sloan Management Review Fall 1996). He cites the standard answers, like ‘resistance to change’. But his explanation is far more persuasive and powerful.
“In every organization, there are three particular cultures among its subcultures, two of which have their roots outside the organization and are therefore more fundamentally entrenched”, Schein writes. There is the internal culture of the organization. But, in technology-driven cultures, there is also the ‘engineering’ culture. And in addition, there is the ‘managerial’ culture. Very often, those cultures clash. Schein might have added that, in the age of globalization, there is also ‘national culture’. For instance, Israel has a sometime informal, get-it-done cut-the-corners culture that often clashes with organizations’ disciplined, orderly, by-the-book culture (such as Intel).
Culture, recall, is simply shared values. Engineers, for example, share the key value of quality and perfection. Make it work, make it right. This is in part why it is so hard to convey the concept of “minimum viable product” (part of ‘get to market fast’ strategies) that are part of many organization’s value of ‘speed’. The engineers in R&D simply will not part with the product, until by their culture it is perfected. That, often, is too late.
Recently, Goldman Sachs’ culture of profit maximization clashed with one of its senior managers’ values (create value for the customer, not for the bank). He quit, in a very public manner, blasting Goldman Sachs in a NYT Op-Ed.
And of course, underlying everything, there are sweeping changes in culture. Management culture is changing, as profit maximization becomes discredited. Organizational culture is changing, as more companies are forced to relate with greater respect to their customers.
Innovator: As an exercise, I recommend this: Draw three circles. One for organizational culture, one for management culture, one for engineering culture. List the core values you find in each (for your own specific context). Look very closely at the intersection of the three circles. Think about potential clashes. Will these clashes hamper the innovation you plan or are involved with? What can you do about it? It is very hard to change cultures. Sometimes it’s easier to change the project.
Ed Schein’s article is rather old, nearly 16 years old, but is still valid. Sometimes, the old truths are still the best ones.
Oreo Cookies: Happy 100th Birthday – What’s Their Secret?
By Shlomo Maital
We almost missed it. Oreo cookies are 100 years old. In 1912 Nabisco developed the Oreo at its Chelsea factory in New York City. It was actually launched as an imitation of Hydrox cookies, made by the Sunshine company. Nabisco’s superior marketing and advertising eventually led to Hydrox’s demise. The Oreo cookie is simply a sandwich — two chocolate wafers with a crème filling.
Nobody knows the origin of the Oreo name. Wierdly, Oreo cookies became the best-selling cookie in China, in 2006, after Kraft foods made the cookies far less sweet (Asian palates are far less fond of sweets than American palates) and sold them in small packages to reduce the cost of a package.
Oreos have a high-tech link. Lou Gerstner, who became CEO of IBM in (I believe) 1993, rescued the crumbling IBM, because he knew how cookies crumble – he had been CEO and Chair of Nabisco. His marketing skills came in handy for the super-nerdy IBM.
Nabisco has of course proliferated Oreo varieties (I counted about 30), with different sizes, shapes, fillings, etc. – all to capture supermarket shelf space. But the original Oreos is still the most popular.
The big mystery is, what is the secret of Oreos? Why has it had such a long and successful life? Is Nabisco just really good at maintaining a legacy cash-cow product? Does the cookie simply taste good? Does it combine taste with ‘fun’ (remember how as a kid, you separated the wafers and licked the cream, deliciously circumventing parental restrictions on candy?) Does Oreos benefit from nostalgia, as parents enjoy buying Oreos for their kids, because they themselves loved Oreos when they were kids?
Before You Die: Tell Your Fans Why You Did It
By Shlomo Maital
This is the ultimate reality show. In China, a program with 40 m. viewers interviews Death Row inmates, sometimes just minutes before they die. The interviewer, wearing silk scarves, perfect hairdo and immaculately dressed, contrasts sharply with the distraught interviewees. Her name is Ding Yu. Many of the prisoners confess their crimes and beg forgiveness from family and friends, before they are executed. A documentary has been made, Interviews Before Execution, which will be viewed worldwide on BBC2.
The interviewed prisoners sit in leg irons, with a prison warden attending. Ding Yu starts with some trivia (favorite foods, colors) but then cuts to the chase, asking about motives, crimes, feelings, fears. Her goal seems to be to wring apologies from the distraught prisoners.
Her program has run now for five years, and has a prime-time Saturday night slot on national TV.
Ms Ding has covered more than 250 cases in Interviews Before Execution. She told a child killer: ‘Everyone should hate you.’ Her interviewees also included a jealous divorcé who stabbed his ex-wife in front of her parents. The shocking and macabre interviews have made Ding Yu, a household name across China. In one scene, a prisoner in his 20s falls to his knees before his parents, who have been allowed to see him. He pleads: ‘Father, I was wrong. I’m sorry.’ Moments later, his parents see him about to be led away to his death. His distraught mother apologizes for beating him once as a child and implores her son: ‘Go peacefully. It’s following government’s orders.’ Prison officers then push her aside and drag him away. In another scene, a firing squad of about 20 men is briefed by a senior officer before executing condemned prisoners. ‘Some criminals will be very tough and difficult. That means they’ll be dangerous,’ the officer tells them.
The death penalty is wildly popular in China. The Chinese believe strongly that for some 55 different crimes, death is deserved.