Companies can and do this kind of thing as well, with varying degrees of success. Capturing the imagination of people with the skills needed for the problem is the key. Prizes help, along with fame and bragging rights. Intellectual property issues can get in the way for some companies. I’ll point to Local Motors as one of the leading examples of for-profit crowdsourcing. Their business model is sophisticated and highly refined, something I’ve written about here previously.

As for the hilarious title of the winning group, you might enjoy reviewing the history of the classic phrase, “All your base are belong to us.”

Does this bill promote innovation as advertized? What about that 15% rate hike for patent fees–a new 15% tax on the IP that entrepreneurs need. That’s the most immediate and obvious change. Guess which way that increased burden tilts the balance? Economics 101 suggests that making innovation more expensive is not likely to make it more abundant. But Congress may know better.

Congress apparently recognizes that we have a problem with the patent system, where huge backlogs exist that cause enormous delay and expense for inventors. The backlog and efficiency problem they are allegedly fixing, however, does not require all the unintended consequences of revising patent law but simply improving the administration of the PTO. For example, if Congress would refrain from siphoning off many millions of dollars of PTO funds each year, effectively taxing innovation and crushing the ability of the PTO to properly staff itself and keep its systems up to date, then the backlog could be easily resolved, in my opinion. Unfortunately, we seem to have another case of politicians proposing costly solutions that won’t solve the costly problems that they caused. As long as Congress can redirect funds received by the PTO, the administrative problems at the PTO will not be resolved by changes in patent law. (See “Patent Reform–A Tax on Innovation?” and “Let the Patent Office Keep Its Money.“)

While probably not solving the problems it allegedly fixes, the America Invents Act clearly raises a host of new problems that may lead to unpredictable results in costly litigation for years to come. The radical changes involving who gets patents and what is prior art use confusing language that strips the bill of the “certainty” that its proponents allegedly sought to restore in the system. See excellent reviews of the controversies in these sources:

• Joshua D. Sarnoff, “Derivation and Prior Art Problems with the New Patent Act,” 2011 Patently-O Patent Law Journal, http://www.patentlyo.com/files/sarnoff.2011.derivation.pdf.
• Eric Guttag, “Some More Heretical Thoughts on Strategies for Coping with First to File Under the America Invents Act,” IPWathdog.com, Oct. 5, 2011.
• Gene Quinn, “Prior Art Under America Invents: The USPTO Explains First to File,” IPWathdog.com, Oct. 4, 2011.

Harold C. Wegner of the respect form Foley and Lardner has published an analysis of the law (3rd edition, Sept. 29, 2011) which highlights its pervasive ambiguity due to poor drafting. This is a serious issue which will cloud patent law and hinder the quest for patent rights for years to come. Wegner also rules that the new law may increase backlogs because appeal judges will have to continue dealing with their heavy load of existing cases as well as take on added cases of “post-grant reviews” and other new administrative procedures (supplemental examination and transitional examination of business method patents) which are provided in the new law. The backlog is sure to increase and fees will be raised even more to cope. Meanwhile, the new post-grant review process has “dractonian” elements, as Wegner observes, that may further impede the ability of an inventor with a real invention to obtain a patent. Further, there are numerous details Wegner identifies in his 177-page text showing potential harm to “upstream” entities like universities and small inventors while benefiting those downstream entities that want to use the innovations of others for their business as cheaply as possible. I smell innovation fatigue.

In my view, the bill reflects fundamental ignorance about the nature of invention. The perplexing provisions on prior art highlight this. Years of litigation that will be needed to clarify what on earth is meant by the new prior art provisions as patent professionals already express exasperation over issues of derivation, inventorship, and prior art in the new law.

A crucial part of the ignorance here is on the nature of invention itself, amplifying the confusion created by the judiciary regarding what is patentable. Viewing business methods and software as somehow being non-technical, in spite of typically involving highly technical systems and tools, opens many cans of worms. If something is novel, useful, and non-obvious, why should it not be patentable if it involves computers and electronic data? But the judicial backlash against vaguely defined “business method patents” has been institutionalized in this new law, where business method patents dealing with the financial services industry (thank you, Wall Street lobbyists) have been given special treatment, allowing Wall Street to have a special route to invalidate patents that otherwise have survived basic prosecution, reexamination, and prior litigation. Section 18 of the law describes how those being sued by a “covered business method patent” can have a special hearing to invalidate the patent. That section includes this gem to define that key term:

(d) DEFINITION.–

(1) IN GENERAL.–For purposes of this section, the term “covered business method patent” means a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.

(2) REGULATIONS.–To assist in implementing the transitional proceeding authorized by this subsection, the Director shall issue regulations for determining whether a patent is for a technological invention.

The drafters of this law apparently view “business method” inventions as distinct from “technological inventions.” If science were to rule, it would be clear that one cannot clearly distinguish between “technological inventions” and a claim involving data processing or management of a financial product or service when technology is involved. Why is a new use of a computer to advance financial services not “technological”? Why is it a less worthy invention than a new use of a polymer or of amide chemistry or of coherent photons? This probably relates to the non-scientific but widely held view among judges and politicians that information, data, and electronic signals are somehow not part of the physical universe and should be viewed as abstractions rather than concrete entities that relate to physical measures such as entropy and require tangible matter and real energy to manipulate. Note that “technological” is undefined, perhaps because it cannot reasonably be defined in this unreasonable provision of an fatigue-generating law. I wish the best of luck to the Director of the PTO in clarifying this opaque miasma.

The richest innovations transforming our era involve inventions rooted in the processing and manipulation of information and these innovations must be encouraged and rewarded, not excluded from patent coverage because some failing but well-connected ‘too big to fail” entities don’t want patents from others to stand in their uncreative way. The AIA clearly shows the power of those Wall Street entities in guiding legislation and giving them special breaks, breaks that will do anything but strengthen innovation. Like much of the rest of the law, it’s directed at fixing the wrong things in the wrong way. May wiser heads quickly repeal or massively revise this legislation before backlogs explode and innovation fatigue is further spread across the US system.

Meanwhile, from my vantage point in Shanghai, I see China increasingly strengthening incentives for innovation and strengthening patent rights. This bodes well for the competitiveness of China in the future. America will soon be wondering how to catch up. How about some real patent reform down the road?

For a rather optimistic but definitely helpful overview of the impact of the AIA on patent practice, see PLI’s page, “America Invents Act: How the New Law Impacts Your Clients and Your Patent Practice.”

William Gindlesperger is the founder and CEO of E-Lynxx. My source tells me he has over 25 years of experience in the printing industry, where found that the decision making process was antiquated and left companies vulnerable in many ways. He pursued business model innovation to come up with a system that could make the process transparent and more efficient. Under his business model, be provides software and services up front at not cost, getting paid only when the client saves real money from his work. Then he gets a cut of the savings. Low risk.

When a company turns to E-Lynxx, they receive software and training in how to use E-Lynxx’s open auction system. Bids are offered to a large array of qualified vendors who then bid on the deal. The vendors can see the competitive bids and so can the client. This transparency helps bring costs down substantially, often reducing print costs by 25-50%. E-Lynxx gets part of the savings. What’s not to like? Well, those who aren’t getting as much gravy might not like it, but if it’s your business, these kind of cost savings should be welcome news.

Here’s claim 1 of E-Lynxx’s first patent, 6,397,197, assigned to the CEO and founder himself:

1. A method for competitive bidding by print information product vendors comprising steps of: inputting a plurality of vendor records into a storage of a general purpose computer, each of said vendor records having a data field identifying a print information product vendor and a buyer identification data field identifying a buyer that said vendor is associated with, at least one of said vendor records having a vendor capability data representing a set of vendor manufacturing capabilities of the vendor identified by said record; inputting a buyer’s invitation-for-bid data into said general purpose computer, said buyer’s invitation-for-bid data having a buyer identification data, and having an invitation for bid on a print information product job from said buyer; calculating a vendor requirement data from said buyer’s invitation-for-bid data, said vendor requirement data representing a set of vendor manufacturing capabilities required for performing said print information product job; comparing said vendor requirement data to a plurality of said vendor records having a buyer identification data field identifying the buyer from which said buyer’s invitation-for-bid data was received; identifying at least one vendor record as qualified, based on said comparing; transmitting a vendor’s invitation-for-bid data based on said buyer’s invitation-for-bid data to each vendor identified by said at least one vendor record; inputting into said general purpose computer a plurality of bid data, each from one of said vendors to which said vendor’s invitation-for-bid data was transmitted, each of said bid data representing a bid price; identifying a bid data from said received bid data having the lowest represented bid price; outputting a selected vendor data representing the identity of the vendor corresponding to the bid data identified by said identifying step; and transmitting an order to the vendor represented by said selected vendor data.

Here’s claim 1 of their second patent, US 7,451,106:

1. A method for facilitating a buyer’s selection of a vendor via automated comparison of records and bidding by vendors of customized goods or services via a computer operated system, comprising steps of: prior to receiving job data from a buyer pertaining to a job for which the buyer seeks a vendor, receiving electronic communications from a plurality of vendors, the electronic communications being used in establishing a plurality of vendor records which are stored in an electronic memory associated with the computer system, the vendor records corresponding to each of a plurality of vendors and having vendor capability data identifying a plurality of capabilities for said vendor to provide a customized good or service; each buyer using the system generating an electronic communication providing information identifying a plurality of vendors for inclusion in a pool of vendors associated with said buyer to potentially receive a job solicitation, wherein the system stores electronic data sufficient to identify every vendor pool and its association with a corresponding buyer based upon the buyer transmitted vendor pool identification information which occurs prior to analysis of job data pertaining to a job for which bids are sought by or on behalf of the buyer; receiving an electronic communication defining a job data from or on behalf of at least one buyer, after said buyer’s vendor pool is determined, said job data including a job descriptor data which specifies a plurality of characteristics of said customized good or service for which said buyer wishes a bid; automatically comparing via a computer processor said vendor records to said job data, wherein said comparing includes comparing said plurality of characteristics for said customized good or service with corresponding plural capabilities for vendors from the pool of vendors associated with said buyer; automatically identifying via a computer processor at least one subset from the buyer’s associated pool of vendors as qualified for receiving the solicitation, based on said comparison; thereafter transmitting the solicitation to only selected members from the identified subset of the buyer’s associated pool of vendors; receiving bid response data from at least one of said vendors which received said solicitation, said bid response data identifying each of the vendors from which it was received and a bid price; and outputting to said buyer an electronic communication providing at least one of said bid response data.

And here’s claim 1 of 7,788,143:

1. A method for facilitating a buyer’s selection of a vendor via automated comparison of records and bidding by vendors for customized goods or services via a computer operated system, comprising the steps of: prior to processing job data from a buyer pertaining to a job for which the buyer seeks a vendor, receiving and processing electronic communications from a plurality of vendors, the electronic communications being used in establishing a plurality of vendor records which are stored in an electronic memory associated with the computer system, the vendor records corresponding to each of a plurality of vendors and having vendor capability data identifying a plurality of capabilities for said vendor to provide a customized good or service; receiving an electronic communication from or on behalf of any buyer using the system which provides information identifying a plurality of vendors for inclusion in a pool of vendors associated with the buyer to potentially receive a job solicitation, and storing electronic data sufficient to identify every vendor pool and its association with a corresponding buyer based upon the received electronic communications from the buyers providing vendor pool identification information, the vendor pool identification information being processed prior to analysis of job data pertaining to a job for which bids are sought by or on behalf of the buyer; receiving an electronic communication defining a job data from or on behalf of at least one buyer after the buyer’s vendor pool is determined, the job data including a job descriptor data which specifies a plurality of characteristics of said customized good or service for which the buyer wishes a bid; automatically comparing via a computer processor said vendor records to said job data, wherein said comparing includes comparing said plurality of characteristics for said customized good or service with corresponding plural capabilities for vendors from the vendor pool of vendors associated with the buyer; automatically identifying via a computer processor at least one subset from the buyer’s associated pool of vendors as qualified for receiving the solicitation, based on said comparison; thereafter transmitting the solicitation to only selected members from the identified subset of the buyer’s associated pool of vendors; receiving bid response data from at least one of said vendors which received said solicitation, said bid response data identifying a bid price for the corresponding vendor; and outputting to said buyer an electronic communication providing at least one of said bid response data.

Another patent is still pending.

Business method patents are still alive and can play important roles in some companies. Whether they are needed or not for this company, I like the innovative approach that E-Lynxx is taking to bring the procurement process into the light where more efficient transactions can occur with large costs savings.

Henry J. Eyring kindly allowed me to interview him about this forthcoming book that is scheduled for release later this summer. He displayed great passion for the mission of taking the blessings of education to more people at lower cost, and applying new tools and business models that can make this possible without sacrificing quality. Henry is concerned that the cost of a 4-year college degree has increased by 2 to 3 times since the 80s while starting salaries for graduate have remained flat in real terms, leaving universities vulnerable to classic disruptive innovation in which a once easy-to-ignore “inferior,” low-cost alternative improves gradually to the point where it can become a serious threat.

Online course content, once viewed as inadequate, is now generally accepted by students and can result in better educational performance, especially when used in hybrid models with face-to-face elements and with adaptive tools that respond to what and how students learn. Online models can allow a course to be customized to meet the learning styles and needs of a student, improving the quality of education. “Existing universities must view online learning as a sustaining innovation for their models,” Eyring says. Failure to embrace the potential of online learning will leave universities vulnerable to disruption, both from competitors and from budgetary pressures. “Even the best universities will be pressed to show better ROI.” They may need to become less universal, no longer offering the same graduate programs in all fields as they do in science and engineering. There is a need to change the very DNA of the university, the thrust of The Innovative University, a remarkable fruit of the collaboration between Henry Eyring, who began writing about the BYU-Idaho experience in 2008, and Clayton Christensen, who teamed up with Henry to add the framework of disruptive innovation and further insights from the Harvard perspective to complete this scholarly but highly readable work.

Like many of the best books about the future, this one is based upon a great deal of history. Much of the book explores the stages of development in education and business models for two very different schools, Harvard and Brigham Young University-Idaho (initially Bannock Stake Academy, then Ricks College and more recently BYU-Idaho). The scholarship is outstanding, the writing crisp and clear, and the stories told interesting and instructive. Some readers may not wish to grasp the historical foundations of these universities and the currents of change that have brought us to our present state. Fortunately, the book is organized to allow the impatient to turn to the latter portions of the book (say, Parts Four and Five) to access major conclusions and recommendations.

The authors chronicle the rise of BYU-Idaho from its humble rural Idaho roots to a bustling campus of over 22,000 students. Rather than ascend the traditional “Carnegie ladder” of adding ever more expensive programs and costly benefits, BYU-Idaho recently embarked on a path aimed at getting the most from the heavy investment in the physical campus and staff, while offering more students an enhanced education at lower cost. Much of this was driven by a Dr. Kim Clark, who came to BYU-Idaho after serving as a noted and respected Dean of the Harvard School of Business. Clark built on the foundation of major reforms implemented by the previous president, David Bednar. Change was also driven by the vision of leaders in the church that owns and oversees BYU-Idaho, The Church of Jesus Christ of Latter-day Saints. The resulting innovations include:

• a new trimester schedule that keeps the campus in heavy use year round;
• dramatic revision in course offerings such as modular majors and carefully tailored GE courses making it easier and less costly for students to switch majors or to customize their education;
• strengthening of internship program to better prepare undergraduates for employment;
• elimination of expensive inter-collegiate sports programs;
• combining online content and face-to-face instruction to reach more students and improve education (with many innovations on the path to high-quality online content);
• augmentation of faculty teaching with peer-to-peer assistance in which students who understand the material efficiently help their peers;
• extension efforts in several cities where online content is coupled with face-to-face mentoring to reach more students;
• establishing a common “Learning Model” for education, with emphasis on learning experiences and case studies that can be enhanced with peer-to-peer interaction and supplemented with online content; and
• elevating faculty pay to above-average levels to compensate for the additional effort required of the faculty to make the more intense BYU-Idaho system succeed.

The importance of online content as an element of disruptive innovation is emphasized in the book, which offers numerous valuable insights into the business models and applications of the technology that have brought success to BYU-Idaho, as well as the foundations for Harvard’s success and leadership in education. Those interested in either school or in higher education in general should appreciate the historical development and insights. Many other innovative schools are also highlighted in case studies throughout the book.

The authors use the theme of DNA throughout the book, and argue that successful educational reform requires changing the DNA of a university. “Genetic reengineering” is needed to build new models and systems that will be sustained over time and grow. The book is aimed at identifying and spreading the new genes that will result in healthier, stronger education. For those that resist and cling to the old DNA, disruptive innovation could one day overtake the universities and leave them unable to compete and unable to serve, saddled with shrinking resources, higher costs, and fewer students willing to endure their increasingly less competitive programs.

The learnings from the journeys of BYU-Idaho and Harvard University are extended to the broader challenges faced by institutions of higher education worldwide. How can they adapt their programs to be more efficient, to better serve more students at lower cost? How can they provide education without requiring students to take on a mountain of debt? How can education be more personalized, more customized, to help students better prepare for the careers or graduate educational experiences they desire? How can universities better achieve the missions of teaching and research? What tasks do universities really need to focus on for the future? The authors offer valuable guidance, based on extensive research and insights.

Though higher education has remained relatively immune from the pressures of disruptive innovation for years, the power of new business models and technologies coupled with social and financial pressures will lead to change that may surprise and even pummel many universities now on the traditional path of making education more expensive and elite. Christen and Eyring offer a monumental guide to avoiding the pain of disruption and capitalizing on the promise of positive disruptive innovation for those institutions with the courage and vision to become an innovative university. For educators, policy makers, parents and students, I recommend The Innovative University for breakthrough thinking that can help transform education.

Update, May 10, 2011

Further information below about BYU-Idaho is based on input from Steve Davis, their Alumni Director, derived from some online comments.

Since the decision in 2000 by President Gordon B. Hinckley to turn Ricks College into BYU-Idaho, the university has grown from a capped enrollment of 8,200 students on a traditional fall/winter track, to over 14,000 students each term and over 22,000 annually — largely because of the innovative 3-track (year round) enrollment. BYU-Idaho has also launched several online initiatives, including the Pathway pilot program, discussed several times in The Innovative University, that enables students to earn BYU-Idaho professional certificates, associate, or bachelor degrees while staying at home. The online offerings at BYU-Idaho are different than independent study in that each course is semester and cohort based. Students are part of cohorts, groups of students they will interact with to enhance the educational process. or example, students in an online section could have classmates from other Pathway sites, as well as regularly enrolled BYU-Idaho students.

Online content is coupled with face-to-face interaction at a local physical location to help students in multiple regions away from BYU-Idaho. Students meet weekly and take an Institute class for BYU-Idaho credit, but the remainder of their curriculum is online. This program is now operating at 23 domestic sites (all LDS Institutes) as well as Accra, Ghana, and Puebla, Mexico.

Nokia’s CEO, Stephen Elop, gave this speech to employees last week and the transcript has been posted on several sites such as Casey’s Daily Dispatch, the Wall Street Journal’s TechEurope Blog, Ongo.com, MSDN.com. It is brutal and painful. A few years ago tech stock experts recommended Nokia as one of the leaders in the business and best investment opportunities. But by focusing on their existing markets and competencies, they missed the changes that would envelope the market and misallocated their innovation resources. They are now on a “burning platform.”

There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform and inevitably be consumed by the burning flames. Or he could plunge 30 meters into the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice.

He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times – his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behaviour.

We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour.

Over the past few months, I’ve shared with you what I’ve heard from our shareholders, operators, developers, suppliers and from you. Today, I’m going to share what I’ve learned and what I have come to believe.

I have learned that we are standing on a burning platform.

And we have more than one explosion – we have multiple points of scorching heat that are fuelling a blazing fire around us.

For example, there is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed but very powerful ecosystem.

In 2008, Apple’s market share in the $300+ price range was 25 percent; by 2010 it escalated to 61 percent. They are enjoying a tremendous growth trajectory with a 78 percent earnings growth year over year in Q4 2010. Apple demonstrated that if designed well, consumers would buy a high-priced phone with a great experience and developers would build applications. They changed the game, and today, Apple owns the high-end range.

And then there is Android. In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high end, they are now winning the midrange, and quickly they are going downstream to phones under €100. Google has become a gravitational force, drawing much of the industry’s innovation to its core.

Let’s not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one-third of the phones sold globally – taking share from us in emerging markets.

While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.

The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.

We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.

At the midrange, we have Symbian. It has proven to be non-competitive in leading markets like North America. Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements, leading to slowness in product development and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, we will get further and further behind, while our competitors advance further and further ahead.

At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us.

And the truly perplexing aspect is that we’re not even fighting with the right weapons. We are still too often trying to approach each price range on a device-to-device basis.

The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem.

This is one of the decisions we need to make. In the meantime, we’ve lost market share, we’ve lost mind share and we’ve lost time.

On Tuesday, Standard & Poor’s informed that they will put our A long term and A-1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody’s took last week. Basically it means that during the next few weeks they will make an analysis of Nokia, and decide on a possible credit rating downgrade. Why are these credit agencies contemplating these changes? Because they are concerned about our competitiveness.

Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year. That means only 1 out of 5 people in the UK prefer Nokia to other brands. It’s also down in the other markets, which are traditionally our strongholds: Russia, Germany, Indonesia, UAE, and on and on and on.

How did we get to this point? Why did we fall behind when the world around us evolved?

This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.

Nokia, our platform is burning.

We are working on a path forward — a path to rebuild our market leadership. When we share the new strategy on February 11, it will be a huge effort to transform our company. But I believe that together, we can face the challenges ahead of us. Together, we can choose to define our future.

The burning platform, upon which the man found himself, caused the man to shift his behaviour and take a bold and brave step into an uncertain future. He was able to tell his story. Now we have a great opportunity to do the same.

Stephen.

Alex Daley’s commentary at Casey’s Daily Dispatch on this memo is among the best. A few excerpt from Alex follow:

But one of the mobile world’s most celebrated early stars is fading, and fast – Nokia. The Finnish mega-company traces its roots all the way back to the rubber industry in 1865. But it evolved over nearly a century and a half into the largest mobile phone supplier in the world. At its peak, the company accounted for the majority of all phones in the world. However, lately things have begun to unwind. Market share for the company has slipped from 39% in 2008 to 35% in 2009, and again to 30% in 2010.

Not only is their global market share decreasing, they’re being assaulted from every side and find themselves with shrinking influence, shrinking margins and shrinking options. Apple, RIM, and the contingent of Android phone manufacturers around the world have gulped up the overwhelming majority of the high-end smartphone market, where profit margins are high. On the other end of the spectrum, Chinese technology outfits have begun to lock up the massive lower end of the market, turning out designs and equipment at a breakneck pace.

Desperate to find relevance in a market moving on without the company, last year they appointed former Microsoft executive Stephen Elop to the position of CEO. He has been pretty quiet since he joined the company, taking his time to learn the business and get to the root of the issues that cause the market to value this technology giant at less than the $43 billion in revenue it generated last year. Quiet until now….

And [Elop's] use of the term “platform,” while symbolic, seems like a calculated choice for a company that staked its future on a failing developer platform known as Symbian, and a long delayed smartphone platform called MeeGo yet to even launch nearly four years after the iPhone was originally released….

The question of the hour is not just whether or not that will happen, but whose platform it will be. Apple doesn’t license. HP has locked up WebOS with its Palm buy. That really only leaves Google, whom Elop cites as a competitor, and Microsoft, his Alma Mater, which goes completely unmentioned in the damning note….

Elop’s failure to mention Microsoft was certainly deliberate, for a few days later he announced a major partnership with Microsoft aimed at saving the company. See “Microsoft, Nokia Agreement Signals New Smartphone Game,” a Feb. 14, 2011 story from EWeek.com.

Microsoft and Nokia announced a wide-ranging partnership Feb. 11, which will include running Windows Phone 7 on Nokia smartphones, in a combined bid to blunt the competitive momentum of Google Android and the Apple iPhone.

“We have a formidable plan to ensure our collective leadership in the smartphone market and in the ecosystem that surrounds it,” Nokia CEO Stephen Elop told a London press conference. “Our long-term strategic alliance will build a global ecosystem that creates opportunities beyond anything that currently exists.”

Now comes the hard part: actually building that ecosystem.

A formidable plan? I’m sorry, but part of me cringes when anyone declares that the plan they created is “formidable.” Too close to “fool-proof.” And we went from desperation on the brink of ruin on a burning platform one day to a formidable plan the next? Eweek mentions some reasons to restrain enthusiasm:

“Microsoft wins big in this arrangement, having gained a partner for an OS that is struggling in the market and losing share even among its current device suppliers (e.g., HTC),” Jack Gold, principal analyst of J. Gold Associates, wrote in a Feb. 14 research note. “Nokia brings huge scale and can dramatically increase WP7 market share beyond its traditional reliance on vendors with much lower market share. And this precludes Microsoft from having to enter the device market directly (as it did with its Kin disaster).”

However, some analysts see the deal as a decidedly negative one for Nokia, particularly in the longer term.

“We think Nokia has created a new set of issues—a lack of ecosystem control, margin decline and a raft of new royalty payouts—in return for a ‘unique relationship,’” Lee Simpson and Andrej Krneta, analysts with Jeffries & Co., wrote in a Feb. 14 research note. “With WP7 as Nokia’s new primary smartphone OS, why would any operator take an end-of-life product (Symbian)? This can only cap the top line for Nokia going through 2011 and much of 2012.”

The analysts believe that Nokia’s first Windows Phone 7 devices will be “hollowed out ‘N8s’ or the like,” referring to one of the manufacturer’s higher-end smartphones. “Despite longer-term assertions of speedy time to market designs, the overhauling of road maps (and cancellations near-term) will likely dent near-term progress and leaving Nokia dangerously exposed to further market-share erosion.”

I wish Nokia success, but feel that it will take more than Microsoft to bring them success. Innovation fatigue needs to be addressed at multiple levels in the company and the culture radically strengthened to reach their destination. Otherwise, further fatigue may stand in the way.

I was impressed enough with what I heard that I changed my evening plans to drive down to Chandler and attend an open house at Local Motors hosted by Jay himself. He allowed photography, so below you can see some views of Jay speaking and some shots of his vehicles in various stages of construction. The Rally Fighter that I am standing by sells for $59,000. It’s an incredible rugged, safe, and fun car that is legal on the road but a load of fun off road as well. It’s able to do very nice jumps.

These cars weigh much less than other cars their size, offering a huge bonus in mileage. Great engineering and innovation at many levels makes this possible.

The microfactory concept involves assembly of a small number of vehicles at a time in sustainable, efficient processes.

Jay Rogers demonstrates a $300 crimping tool

Jay shows the wire harness for the Local Motors Rally Fighter

Jeff Lindsay in front of an early Rally Fighter from Local Motors

Inside a Rally Fighter

Initial frame, before welding

A portion of the body, before the custom vinyl wrap is added.

The frame. Remarkably strong, protective, and light.

A portion of the frame.

This baby can jump.

Coming together....

A sweet car: the Rally Fighter by Local Motors. This was one of the first vehicles produced.

Colonies of the ant Temnothorax albipennis nest in small crevices between rocks. When the rocks shift and the nest is broken open, these ants must quickly choose a new nest to move into. During the first phase of the decision-making process, a small portion of the workers leave the destroyed nest and search for new crevices. When one of these scout ants finds a potential nest, she assesses the quality of the crevice based on a variety of factors including the size of the interior, the number of openings (based on light level), and the presence or absence of dead ants. The worker then returns to the destroyed nest, where it will wait for a short period before recruiting other workers to follow her to the nest she found using a process called tandem running. The waiting period is inversely related to the quality of the site; for instance, a worker that has found a poor site will wait longer than a worker that encountered a good site. As the new recruits visit the potential nest site and make their own assessment of its quality, the number of ants visiting the crevice increases. During this stage ants may be visiting many different potential nests. However, because of the differences in the waiting period the number of ants in the best nest will tend to increase at the greatest rate. Eventually, the ants in this nest will sense that the rate at which they encounter other ants has exceeded a particular threshold, indicating that the quorum number has been reached. Once the ants sense a quorum, they return to the destroyed nest and begin rapidly carrying the brood, queen, and fellow workers to the new nest. Scouts that are still tandem-running to other potential sites are also recruited to the new nest and the entire colony moves. Thus although no single worker may have visited and compared all of the available options, quorum sensing enables the colony as a whole to quickly make good decisions about where to move.

The standard Corporate model of centralized new product development and decision making has its advantages, but also many limitations. When rapid growth or adaptation is necessary, innovation often works best when many minds can contribute their talents, insights, networks, and scouting activities to the search for fruitful new places to colonize. If decisions are fully centralized, they take forever and many good spots will be ignored. More rapid and efficient pursuit of innovation requires distributed authority and the involvement of many and systems that can tap and respond to the efforts of many without the endless waiting for one all-knowing top dog to sift through the data and make a decision. How flexible is your organization, really? How distributed and dilute is the power to act on innovation opportunities? What systems do you have to tap the knowledge, skills, and networks of all employees?

Horn of Innovation Schematic

The Horn of Innovation vs. the Funnel

See their page about the template and its use, or just download the PowerPoint file directly. Enjoy!

Can’t help mentioning this: I had a technical problem with the above Pixetell and sent an email to their tech support team. I had a response within minutes. In fact, I had a phone call – the kind that takes real people using real time – and the quickly helped me troubleshoot the problem and get this post working. Wow! Miracles still happen–or at least great customer service. Love Pixetell. Great way to turn PowerPoints or whatever you have on a computer plus your voice into a recorded presentation that you can share with a URL, embed into a blog, or save as a movie. Pixetell is a product of Ontier, Inc.

The opportunities from the agricultural potential of Brazil are mind-boggling. The biodiversity of the few parts I saw was overwhelming, and that was only a minute sampling. By strengthening the airport system in Brazil, there are many opportunities to move away from supplying bulk commodities like fiber and coffee to providing value-added consumer products shipped directly to consumer markets. A nationwide effort to enhance transportation is needed (and is underway). One product area where I eagerly await further progress is in the field of beverages. For example, all over Brazil there are drinks based on the guarana berry from the Amazon, including the wildly popular Antarctica brand carbonated beverage. These are more popular than cola beverages and frankly, they taste much better. This one of many Brazilian flavors waiting to emerge into the US market.

Brazilian businesses have also evolved a variety of interesting business models, including efficient methods for managing buffets where you pay by the kilo. I would welcome that approach here.

The business area that most impressed me for its innovation was in the field of education, and distance education is particular. I had the privilege of meeting with the CEO of POSEAD, a remarkable company offering distance learning service to Spanish and Portuguese speakers. They have drawn upon 40 years of experience in a non-profit educational organization, CETEB, along with many years of commercial experience, to create a rapidly growing business that solves some of the real problems of education and training in emerging nations, where the cost of commuting to a school or training center may exceed monthly incomes. They have developed advanced diagnostics and delivery systems to really understand what a student is doing, what they need, and how to get them to move forward. There are so many mistakes that can be made by newcomers in this area, especially in meeting the needs of Spanish and Portuguese speakers, but they’ve figured out how to avoid them and have created a remarkable efficiency in their systems that results in extremely low cost.

Some of the innovation in education goes back to a remarkable woman, Rosa Pessina, who long ago recognized that the pressure to build more schools to accommodate burgeoning classes in the earlier grades was treating a symptom, not the cause of the problem. Her analysis showed that class sizes were suffering because too many students were failing to advance in school, resulting in low graduation rates and high class sizes as kids went back through the same grade more than once. She then developed programs for accelerated learning to help these kids quickly get back to the right grade for their age, making the students feel better about the class they were in and enhancing motivation. This was the beginning of the non-profit organization CETEB, and those who participate in its accelerated learning programs have a 94% success rate, if I remember correctly–an extremely high percentage that go on to graduate. CETEB’s services include distance learning tools to help Portuguese and Spanish speakers. There is a huge opportunity here for the United States, where we have the children of many Spanish-speaking immigrants doing poorly in the schools. If they do not gain an education, the risk for ongoing poverty and crime is much higher. By accelerating their progress and helping them gain education at low cost, remarkable social good could be achieved here in the U.S. Governors, CETEB awaits your call!

There are layers of innovation in other areas in both CETEB and POSEAD, including how they quality and prepare content, how they form alliances, how they manage the challenges of certification and regulatory burdens, and in general how they identify and meet the needs of students and communities. There are brilliant minds at work here, and I feel that it’s time for US schools, companies, and governments to explore collaborative efforts. I’d be happy to help make a connection.