Endless Innovation

What Jay Leno Can Teach the Fortune 500 About Innovation

In almost two weeks, comedian Jay Leno will be making his debut on a live comedy show to air at 10 pm. Not content to rest on his laurels, Jay Leno has been in intensive preparatiosn for his new show on NBC - running four miles a day, testing jokes at stand-up comedy venues and getting to the studio as early as 8 am - nearly one hour before anyone else - to tweak the design of his new set. Reflecting on a recent feature of Jay Leno in the Wall Street Journal, it's clear that there's a lot that Mr. Leno can teach the Fortune 500 about innovation:

(1) Understand who your core audience is. Jay Leno isn't trying to be anyone he's not -- and he's not about to alienate his long-time loyal fans with edgier jokes in prime time. In fact, he's more than content to make jokes about cats and TV remote controls, and not stray too far from his core comedic repertoire to make jokes about politics or ethnic groups. He's not trying to become Jon Stewart or Stephen Colbert.

(2) Don't be afraid to challenge assumptions about what works. After decades perfecting his late night routine, Leno found that live musical acts don't attract TV audiences. For his new show, he's planning to limit live acts to 1-2 times per week. To replace these live musical acts, Leno plans to have celebrity guests race cars around a custom-built track.

(3) Don't drink your own Kool-Aid. Leno may be a celebrity, but he's managed to keep it real. In fact, he's not terribly infatuated with the world of celebrity. Part of the reason why he's using the car-racing track is because he's figured out that there's some celebrities that we want to see, but don't particularly want to hear from.

(4) No matter how innovative you are, keep an eye on bottom line fundamentals. Mr. Leno may make $30 million in annual salary from NBC, but he's conservative in his financial dealings. He lives off his earnings from doing stand-up and banks his NBC salary: "It keeps your head straight. In TV they can fire your a** at any minute for whatever reason... OK, I'll be in Vegas."

Looking forward to September 14th -- if things go smoothly, Mr. Leno's segue to prime time may change the way broadcast and cable television networks go about programming their prime time TV shows.

[image: Mr. Leno, 1970s - 2009 via Wall Street Journal)

The Early Adopters Aren't Always Who You Think They Are

Within the tech world, the explosive growth of Twitter has (literally) been front page news over the past six months, with Twitter appearing on the cover of TIME Magazine and New York Magazine, among others. What's interesting is that Twitter's phenomenal growth hasn't come from where you'd think it would come from -- early adopters in the young teen demographic. In fact, as Claire Cain Miller of the New York Times points out, teenagers (like the New Jersey teen pictured above) would rather text their friends a message rather than post it on Twitter. Instead, Twitter has been embraced by an older demographic:

"Twitter’s unparalleled explosion in popularity has been driven by a decidedly older group. That success has shattered a widely held belief that young people lead the way to popularizing innovations. "The traditional early-adopter model would say that teenagers or college students are really important to adoption,” said Andrew Lipsman, director of industry analysis at comScore. Teenagers, after all, drove the early growth of the social networks Facebook, MySpace and Friendster. Twitter, however, has proved that “a site can take off in a different demographic than you expect and become very popular,” he said. “Twitter is defying the traditional model.”

Which raises an interesting question: Where else have the traditional early adopters not been the ones to spark widespread adoption of a new innovation? The New York Times points out that the Kindle, iPhone and GPS devices, among others, haven't experienced exponential adoption curves by young teens either. With a wave of Baby Boomers set to retire soon, it may just be the case that marketing to the 52-to-59 year-old demo may be more effective than marketing to the 12-19 year-old demo...

[image: New York Times]

The evolution of an iPhone app

Convert Design Evolution from tap tap tap on Vimeo.

The product development process is, if nothing else, a highly iterative process. In this fascinating two-minute clip from tap tap tap, it's possible to see each and every change that went into their final iPhone app Convert. Gizmodo calls it "an illuminating video if you're never thought about how much goes into good design."

[video: Convert Design Evolution]

"Exploiting Chaos": Trendhunter's New Innovation Trends Book

One of my favorite trend-watching e-newsletters has always been Jeremy Gutsche's Trend Hunter - a site chock full of innovation that always seems to have its hand on the pulse of what's happening in business and popular culture. Jeremy's new book Exploiting Chaos offers managers 150 different ways to spark transformative change. Ahead of the official publication of the book on September 1, download a free PDF version of the first chapter of the book here.

Exploiting Chaos has already been named one of CEO READ's Books to Watch in 2009 and has picked up endorsements from the likes of Seth Godin, Guy Kawasaki and John Battelle. As bestselling author Daniel Pink notes, "EXPLOITING CHAOS is a rousing battle cry for the kind of creative, risky thinking that is most needed in times of change and disorder. Whether you're a CEO trying to stay ahead of the curve, a daydreaming teenager, or a wannabe trailblazer, this bold guide is the shake-up you need to check your assumptions, get inspired, and turn business-as-usual totally upside down."

Replicating a Corporate Innovation Process, Again and Again

After a long 10-month period in which the word "innovation" seemed to be deleted entirely from the lexicon of Corporate America's middle managers and top executives, I've been spotting more and more articles about the innovation efforts at some of America's leading companies as they battle their way out of a recession. It seems that each company is taking a particular tack to the issue -- but all of them share the idea that an "innovation process" can be replicated time and time again, rather than being something that occurs once (or not at all) in a very haphazard way.

For lack of a better word, there are various "flavors" of corporate innovation. Writing for Harvard Business, innovation guru Scott Anthony reviews Cisco's "innovation-by-committee" model, while Jessie Scanlon of Business Week recently took a closer look at the way that Whirlpool puts new ideas through the wringer. And, of course, articles about innovation at Google and the ways that employees bring their innovative ideas to top management are de rigeur for the mainstream business media.

What are some other "flavors" of corporate innovation?

[image: Whirlpool Washing Machines]

America's Most Promising Startups

Even during a recession, pockets of innovation are forming across the country. Business Week recently put together a great pictorial feature on 75 of America's Most Promising Start Ups. Some of these companies are a bit, well, quirky -- like a company that produces a product for picking up manholes quicker and easier or the (no joke) oven claw company -- but many of the companies identified by Business Week are helping to provide real solutions to seemingly intractable problems.

In the healthcare sector, for example, Banu Ozden's Smart Medical Consumer is able to position itself as the right company at the right time to solve some of America's healthcare needs. We all know the healthcare system is broken, we all know that Barack Obama is taking a hands-on role in the often volatile debate around the future of healthcare, and we all know the frustration of dealing with wrong (and often inflated) medical bills. Smart Medical Consumer is attempting to change all of that:

"Some people you just shouldn't mess with. When Turkish-born Banu Ozden couldn't get a straight answer from her health insurance company about treatment costs after being diagnosed with breast cancer in 2005, she got mad. And she got madder still as she went through treatment and received myriad bills filled with unintelligible codes and statements that didn't accurately reflect what she owed. When she finally sorted through the mess, she discovered that she had overpaid by about $4,000. Instead of simply complaining, Ozden, 44, decided to get even.

Formerly a computer science professor at the University of Southern California and director of computing systems research at Bell Labs, Ozden built a medical-billing management service designed for fellow patients. Her Web biz, Smart Medical Consumer, launched in January 2007, with $380,000 from angels. The New York-based company has spent no money on marketing but already has 1,000-some registered users who upload their confidential claims and invoices. Smart Medical Consumer plans to make money by selling ads to medical and pharmaceutical companies. Though Banu continues to undergo cancer treatment, she says she feels healthy and plays tennis when she can and would like to get back into windsurfing."

Innovation in the healthcare space is, in my opinion, just starting to heat up. Once the doors to U.S. healthcare reform get flung wide open, look for new innovations in "branded healthcare" as well. Any other ideas for start-ups (or established companies) that are coming to market with game-changing innovations?

[image: Banu Ozden of Smart Medical Consumer via New York Times]

The Evolution of Publishing

Spurred by the growing mass-market acceptance of the Kindle e-book reader and the launch of the 800-pound Espresso print-on-demand machine, the publishing world is continuing to evolve in response to changing technologies and changing consumer preferences. What's interesting about this evolutionary change within the publishing world, according to Knowledge @ Wharton, are the psychological and social hurdles that companies like Amazon Kindle must overcome as they slowly wean consumers off physical books and on to digital e-books:

"For instance, says Joseph Turow, who studies new media as a communications professor at the University of Pennsylvania's Annenberg School, many readers are subconsciously affected by knowing that the book they see in a store was produced and shipped at significant expense by a major company -- a sign that someone who knows the business saw fit to invest in the author. "A large part of the problem is psychological," says Turow. "The fact that publishers have to pay a lot for making a book is kind of a gate to ensure that it has value.... I think the fact that there's a physical copy that has to go through hoops is part of how people judge the value of something. And that is going to be with us for a long time."

Then there's the psychological issue of how people like to "show off" their intellectual sophistication with bookcases crammed to the gills with impressive titles and thick bindings:

"Today, many people give pride of place to book collections, buying or installing vast numbers of shelves to help themselves do so. "Part of it is a symbolic kind of thing," says Wharton marketing professor Americus Reed II, who, with Williams and two other colleagues, uses Kindle as a "mini-case" in the school's core MBA marketing strategy course. "[When] you walk into somebody's house and look at their bookshelf, you can get a quick impression about a person based on the contents of the shelf. Those sorts of social signals are going to be important to people."

At the end of the day, the problem for Amazon may be that it has been "too successful," inspiring a whole raft of e-book reader imitators. For now, Amazon's breadth of titles available gives it an advantage -- something that Barnes & Noble is already working to overcome with the recent announcement of the Plastic Logic e-book reader.

Bruce Sterling's Scenarios for the Future: Favela Chic and Gothic Hi-Tech

Without a doubt, Bruce Sterling is one of the leading visionary thinkers helping to shape the future of innovation. Ever since the 1970s, he's been imagining the future and sharing his vision for what could be -- and coining lots of new terms along the way that eventually enter the popular lexicon (like blobjects and spimes). As Sterling recently explained in his closing address at the reboot 11 conference, one possible scenario for the future is the "favela chic" scenario, in which material wealth is non-existent, but individuals are plugged into the grid and satiated with Facebook and Twitter. Over at Influx Insights, Ed Cotton summarizes Sterling's remarks at reboot 11:

"According to Sterling, the coming future does not look or act like any future we've previously thought about. This new future is being defined by a new theory which he shares with William Gibson called 'a-temporality" (which he describes as steam-punk with metaphysics). His view of the future is darkly labeled "transition to nowhere"; no more booms and bad weather..."

According to Sterling, the future comes in two flavors:

(1) Gothic Hi-Tech: "Steve Jobs creates something brilliant, but you have to suffer from health problems."

(2) Favela Chic: "You have lost everything material, no job or prospects, but you are wired to the gills and really big on Facebook."

So what does all this mean for the average tech-savvy, capitalistic uber-consumer? At the end of the day, Sterling suggests keeping things that are beautiful, things that have emotional value for you, and things that are just plain useful. Everything else you own -- and that's probably 80% of all your material possessions, you can simply get rid of. (For the full video of Sterling's speech, check out this 43-minute reboot video)

Of these two scenarios, I think Favela Chic is more realistic. Relentless growth from nations like Brazil (home of some of the world's grimmest favelas), India and China means that entire communities may lack paved roads and decent infrastructure, but still have amazing super-fast broadband access and the ability to communicate with the farmer located four time zones away.

[image: Favela Rocinha by Julio Aguiar on Flickr]

The Top 7 Events for Innovative Thinkers

Pop!Tech 2008 Visualization from Tom Wujec on Vimeo.

Over at Mashable, Josh Catone has compiled a great list of the Top 7 Places to Watch Great Minds in Action. There's TED, of course, which started on the West Coast but has blossomed into a truly global phenomenon. On the East Coast, there's the highly-acclaimed Business Innovation Factory event in Rhode Island and PopTech! in Maine, as well as GEL ("Good Experience Live") in New York City and ideaCity in Toronto. Big Think is a global online forum connecting people and innovative concepts. Finally, there's the BIL Conference, which started on the West Coast as a mini "un-conference" for people who couldn't get into TED, and now proudly announces that "there's one every year wherever TED is being held." So what exactly is BIL?

"BIL stands for “Breeding. Impromptu. Luminary.” [BIL] is an ad-hoc conference for big thinkers that’s held each year in whatever city is hosting TED. BIL originally began as a group of people planning to crash the TED conference in 2007 in Monterey, California (where TED was held back then), but as the group grew, they decided instead to hold their own unconference across the street.

BIL is a conference style more than it is a conference. Like Barcamp, anyone can organize and hold their own BIL conference. So BIL conferences are popping up all over the world as places “for passionate people to come together to energize, brainstorm, and take action.”

The whole "un-conference" concept is one to watch. Not sure there's any proof for this, but I'm wondering if the naming of BIL was a clever reference to "BIL and TED's Excellent Adventure"? If so, BIL looks like a most excellent adventure.

[video: Pop!Tech 2008 visualization]

Starbucks and "Lean Retailing" innovation

Throughout 2009, Starbucks has been making waves about how much it is changing in response to new consumer spending patterns. First, it was the announcement that it planned to revisit the pricing of its coffee and baked goods and go back to basics with the re-introduction of Pike's Place coffee. Then, it was the announcement that it would consider closing down some superfluous Starbucks stores and pursue other cost-cutting measures. This week, it was rumors on the Internet of a "stealth" Starbucks brand known as 15th Avenue E Coffee and Tea. But I literally spilled my (think) coffee this morning when I read that Starbucks was embracing Japanese-style "lean retailing" techniques as a way to break out of its funk. This is serious MBA-case study type of material.

All that talk about "lean retailing", of course, hearkens back to the 1980s, when U.S. companies by the hundreds embraced the "lean manufacturing" techniques of the Japanese in order to become more competitive. That, in fact, appears to be exactly what Starbucks CEO Howard Schultz has in mind. Today's Wall Street Journal article even mentions that Starbucks has a "VP of Lean Thinking" who is an acolyte of the Toyota lean manufacturing system:

"Pushing Starbuck's drive is Scott Heydon, the company's "vice president of lean thinking," and a student of the Toyota production system, where lean manufacturing got its start. He and a 10-person "lean team" have been going from region to region armed with a stopwatch and a Mr. Potato Head toy that they challenge managers to put together and re-box in less than 45 seconds.

Mr. Heydon says reducing waste will free up time for baristas -- or "partners," as the company calls them -- to interact with customers and improve the Starbucks experience. "Motion and work are two different things. Thirty percent of the partners' time is motion; the walking, reaching, bending," he says. He wants to lower that.

If Starbucks can reduce the time each employee spends making a drink, he says, the company could make more drinks with the same number of workers or have fewer workers."

This is incredible, groundbreaking stuff. Starbucks is even doing all kinds of "motion studies," where they analyze how baristas move and where ingredients are located, to see if they can save a few seconds here and there, in order to make their coffee-making process more efficient. The lean retail experts are also analyzing the total time spent at Starbucks drive-in windows, to get that number down as much as possible. Around the cafe, they are utilizing timers, to make sure that fresh coffee gets brewed every eight minutes.

If it were a different company, say, Dunkin' Donuts or Mickey D's, I don't think the adoption of Japanese "lean retailing" methods would be so newsworthy. But this is Starbucks -- which staked a fortune on creating a global brand around $4 coffee and a leisurely, stay-all-you-want type of experience curated by knowledgeable baristas. If Starbucks is already embracing Japanese-style efficiency, look for other companies to take cover under the guise of "lean retailing" to pare back on just about everything...

[image: Starbucks Speeds Up, via Wall Street Journal]