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Innovate Your Business – Not Just Your Product

By Shlomo Maital

business-innovation

   Psychologists sometimes use a ‘word association’ approach. Say a word. What comes to your mind first?

   Say, “innovation”. Do you picture a gadget? A product?   Most of us do.

   But what about all the other areas, where fresh ideas are needed? What about the way you make things, the way you sell and market them, the way you motivate your workers – and in general, the way you design and run your business.

   Business design and operations are, for many innovators, a dark corner. No light shines there.

     Among experts, there is controversy.   Guy Kawasaki, the marketing guru of Apple’s Macintosh, founder of garage.com, and author of Art of the Start, claims that creativity is vital for innovative products but when it comes to designing the business to implement them, stick to conventional white-sliced-bread methods.  

   We disagree.   Business design innovation can bring bigger dividends that product innovations, which often fail.   If you can build a unique innovative business design around an existing product, you can win big.

     Here are four examples.

*   Mobileye is a Jerusalem-based global company selling warning systems for vehicles, founded in 1999. Founders Amnon Shashua and Ziv Aviram raised money innovatively, unconventionally, by avoiding venture capital and appealing to a list of wealthy people interested in high-tech. Those investors proved far more patient than VC’s and enabled Mobileye to take nearly 8 years to develop its product, ready in 2007. Mobileye now has annual global sales of $350 m., and a profit margin of some 60 per cent.

* Netscape provided the world with one of the first browsers and its IPO in 1995 led off an enormous dot.com boom.   Netscape’s business design was ‘give it away’ – charge zero for the browser.   This innovation has since been widely imitated. Netscape’s browser was a powerful marketing device, used by millions, to advance sales of its software products.  

* El-Op: this wholly owned subsidiary of Elbit, a market leader in electro-optics, uses a unique approach to innovation – bottom-up.   Workers are encouraged to submit ideas to a website, and they are quickly passed on to mid-level managers and the head of operations. In many organizations, innovation is confined to product innovation emerging from R&D departments. This often leads to a false assumption, that ONLY the R&D department has innovation in its job description. At El-Op   innovation is part of the job description of every worker. Moreover, research has shown that process innovation – innovation in operating procedures – is far more profitable and pays a far higher ROI, return on investment, than product innovation, because new products often fail when introduced to the market. At El-Op, many hundreds of ideas emerging from line workers have saved the company millions of dollars over the years.

* Toyota: This leading automobile company introduced just-in-time in its manufacturing process. Until then manufacturers stockpiled mountains of components in advance. Toyota asked, why? Why not have the components delivered just in time to use them in production? Why not eliminate costly component warehouses?   The cost saving and efficiency gains were enormous. This innovation was based on challenging a conventional assumption.

     What we learn from this is simple.   Innovate everywhere, everything, all the time. Make fresh new ideas part of the job description of every worker.   Listen carefully especially to workers who are “at the coal face” (where the coal is mined), because they are the ones who really know what is going on and what needs to be changed. Make sure that each fresh idea is acknowledged, read, studied, tested and either implemented or shelved for some future date, and that the person who proposed the idea is updated at every stage. And create an award ceremony for innovators. Just recognizing the creativity is often enough to stimulate it tenfold.

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There is Only One Eye in Mobileye: And It Saves Lives

By Shlomo Maital

amnon-shashua-ziv-aviram_blue_logo

Amnon Shashua and Ziv Aviram

     If 93 per cent of road accidents are caused by drivers, then there has to be ways to help drivers avoid crashes. The problem is a global one. Worldwide, there are 1.5 million road deaths yearly and 15 million injuries as a result of car accidents.

     An Israeli startup called Mobileye, founded in 1999 by two friends, one a Computer Science professor and the other, a CEO specializing in retail, seems to have the answer. Here is the story.

     Shashua recalls being asked at a conference in late 1998 by a car maker whether two cameras could identify the location of a vehicle.   Humans, animals and insects use two eyes to gain perception of depth.    Shashua answered, “Why two? It can be done with one.” He knew this from his computer science research; he had published a seminal article titled “3D visual recognition from a single 2D image” the year before.   The fact that there is only one “eye” in Mobileye was an iconoclastic idea initially rejected by all, and is today, a standard.    Shashua recalls, “We (Shashua and Aviram) decided to develop a company….. The decision was taken when we were on a motorbike trip in the Negev. The company was launched in mid-1999. The idea was to use a single camera along with advanced software to warn drivers. At the time no-one thought this monocular device was possible. It was unique.”

       Mobileye uses visual systems and software to warn drivers of impending collisions.   The device warns drivers if their vehicles are about to stray into another lane, and if they are dangerously close to a vehicle ahead. It has been installed in 12 million vehicles in the world, in Israel, US, Japan and Korea. And it works. In an age when many accidents are caused by drivers distracted by cell phones, it is definitely life-saving.

         Insurance company data audited by an actuary show the device cuts accidents by half. An Israeli Transportation Ministry regulation now requires all heavy vehicles over 3.5 tons to install this device, as of Nov. 1.

       Mobileye is based in Jerusalem, employs 700, will reach revenues of $350 m. this year and net income of some $200 m.   It is partnering with Intel and BMW to prepare the technology for future self-driven cars.  

    Here is the two entrepreneurs’ vision of the future for autonomous driving:

         “Robot cars do not drive like humans,” Shashua observes. “They are too slow, too conservative. Cities won’t agree to this. How can we teach self-driven cars to drive safe, but like humans?   We are proposing a solution. And our future includes this solution. This will be much bigger than the existing car industry. This is “wow” squared!”  

       Aviram adds: “18 years ago, we started a company that had vision-based technology to prevent car accidents.   Today our vision is much wider. We are a provider of infrastructure to enable autonomous driving systems. It will be very hard to produce such systems without Mobileye.     There will be a total change in how and what we drive. There will be no parking lots. People will not own cars. Sales of cars will fall by half. The brand of your car will be of no importance. You will summon a car when needed and it will drive you to where you’re going.”

       “In 20 years,” Aviram claims, “it will be illegal to drive.”   Considering the enormous human toll accidents take today, that may be a breakthrough.

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
June 2019
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