Archive for technology
On October 15, 2015, Appleton, Wisconsin’s Paper Industry International Hall of Fame will be inducting six people into the Hall of Fame. One of them is an innovator and leader from ancient China who can be considered as China’s answer to Gutenberg. Gutenberg is frequently honored in the West as one of the most important inventors ever for giving us the world’s first book printed with movable type, a remarkable achievement from around 1455. As with many inventions long thought to have had European origins, there’s a touch of Eastern flavor in this one, for Gutenberg’s Bible came 142 years after the world’s first mass-produced printed book made with movable type, the large Book of Farming (Nong Shu) from China, printed in 1313 by Wang Zhen.
Wang Zhen was a Chinese official who recognized that vast amounts of agricultural technology scattered across China needed to be preserved to help all of China reduce famine and be more productive. He took a Chinese invention, movable type, and improved upon it to make a practical way to print an entire book. He used carved wooden blocks for each character, and developed a sophisticated way of arranging them on two rotating tables to allow typesetters to quickly find needed characters to place them in his press. The Nong Shu was printed and preserved many notable inventions in China, including an early form of a blast furnace driven with a reciprocating piston attached to water works, something long that to be a later European invention.
Recognizing Wang Zhen for his important role in the advance of printing is a fitting step for the Hall of Fame, and I look forward to many more Asian inventors, scientists, and business leaders being recognized in the Hall of Fame in future years. The historical contributions of China in numerous fields have received far too little attention, and I’m delighted to see folks in Appleton taking the lead in rectifying this problem. Kudos to the Paper Industry International Hall of Fame!
In a few days, I’ll be speaking about IP and innovation in China at the RISE 2015 conference in Miami, Florida, sponsored by INDA (a professional organization for the nonwoven fabrics industry). In my presentation, I’ll be sharing my “Dangerfield Theory” of IP and innovation in China. The Dangerfield Theory is based on comedian Rodney Dangerfield, who famously and repeatedly complained that he got no respect. China, in spite of remarkable advances in IP and innovation, continues to get no respect. Like Rodney himself, China is also a heavyweight, now leading the world in patents and IP litigation, and leading in the pursuit of many key technologies. Their innovation and IP is no laughing matter, but continues to just get no respect. This make China like Dangerfield, and for those companies and nations that ignore the threats and opportunities China creates, Chinese IP and innovation will also become “danger field.” Ignoring this field of danger and opportunity is foolhardy. It’s the kind of sleepy, lazy response we seen when a company or nation is beset by innovation fatigue.
The tendency of Chinese IP and innovation to be invisible to the West is an issue I raised in 2011 right after the Thompson Reuter Top 100 Global Innovators report for 2011 included nothing from China, Taiwan, or Hong Kong in its list of 100 top innovators based on international patent filings over the past three years. I was astonished at how Chinese IP could be so invisible and overlooked, given that Foxconn/Honghai Precision, the Taiwanese and Chinese partner of Apple, compared to Apple itself actually had 3 times as many US patents in the time period of interest. Honghai had roughly 50 times as many US patents field as some companies that made the list. Other heavy international filers like Huawei, ZTE, and Lenovo were also neglected.
I contacted Thompson Reuters to complain, wondering also if they had made errors in their search or forget to include Honhai Precision in their search terms. I was told that they had done the analysis accurately, relying on a proprietary algorithm that requires a company to file in the US, the EPO (Europe), and Japan for a patent to count as an “international” patent. This definition tends to discriminate against Chinese IP, in my opinion, for Chinese companies, when they seek international protection, are usually content with IP in China and the US, plus some other specific nations, but tend to do relatively few filings with the EPO or with Japan. Japanese companies naturally file their first, just as Chinese companies file first in China. Given the high political tensions between Japan and China, and the relatively small market it is for Chinese companies, the motivation to file in Japan is small, regardless of the quality of the invention. Insisting on filing in Japan rather than China puts China at a great disadvantage and favors the many Japanese companies that make the list. Requiring that a patent be filed in the EPO and Japan in addition to the US sets a very high bar that does not properly reflect whether an invention is good enough to be pursued with international IP.
In 2012, the Thompson Reuters Top 100 Global Innovators report still had nothing from China. Its 2013 report finally mentioned Taiwan, but not Honghai/Foxconn. Only the Taiwanese semiconductor giant TMSC broke into the top 100. But the latest report from the end of 2014 finally mentioned a mainlaind Chinese company: Huawei. It’s about time. It’s not like Huawei just barely broke into the ranks of companies pursuing international IP. For several years they, like ZTE, have been in the top 5 international filers, according to the World IP Organization which administers PCT (Patent Cooperation Treaty) filings. Huawei is actually the world’s #1 international filer and has been for some time. Looks like they managed to barely break past whatever algorithmic blinders Thompson Reuters has, and for that tiny bit of progress, I guess we have to congratulate the folks at TR.
My soft and hesitant congratulations, though, may not be heard amid the roar of complaints that TR is facing for its related report, China’s IQ (Innovation Quotient), which praises China for its rapid rise in innovation and patent filings (in spite of meagre recognition on the Top 100 report). Some loud voices immediately complained, reminding us that Chinese innovation is weak and most of its patents are low quality. On Dec. 13, 2014, the influential magazine, The Economist, ran an editorial, “Patent fiction: Are Ambitious Bureaucrats Fomenting or Feigning Innovation?,” criticizing TR for theirÂ positive report on China and reminding us that China’ does not file as high a percentage of international patents as Japan, and suggesting that Chinese innovation and IP is “feigned” by bureaucrats and not driven by real inventions from real innovators. Still no respect!
Yes, there is a problem with poor quality patents in China driven by tax breaks. But that is changing as companies increasingly look to patents as strategic tools for the future, and are striving to increase quality. The quality problems in China may more severe than they are in the US, but the quality is improving, and expensive international filings are increasing, with China now #3 in the world, ahead of Germany, and likely to overtake Japan in a few years.
It’s true that Japanese patents are much more likely to be filed overseas than Chinese patents (something like 30% for Japan versus 5% for China), but this is not necessarily a reflection on the quality of the patent. The economic value is also an important issue. Japan is a small market. Its businesses prosper by selling products to many large foreign markets like the US, Europe, and China. There are strong economic reasons why Japanese companies would seek foreign patent protection. China, on the other hand, represents a huge and growing market. Apart from manufacturing for foreign companies using foreign IP, Chinese companies producing and creating their own products tend to find the Chinese market to be a big enough opportunity to keep them busy for years to come, and rely much less on exporting these to the confusing and uncertain overseas markets in the US and Europe. The economic incentives to seek IP overseas is less for many Chinese innovators than it is for Japanese innovators, and naturally we can expect foreign filings to be somewhat diminished, even when the invention is of high quality.
There is a tsunami of quality IP and advanced innovation coming from China. China is learning and rapidly improving its approach to IP. Those who continue to ignore the threats and opportunities coming from this very change will find that the “Dangerfield Theory of Chinese IP and innovation” ultimately means the joke will be on them.
A culture that can protect trade secrets is vital for innovative companies. Such a culture becomes especially important in collaborative innovation efforts where failure to protect trade secrets can severely damage partners and the offending companyâ€™s reputation.Â
Chinese companies are increasingly recognizing the value of what the West calls â€œopen innovation.â€ In fact, forms of open innovation were the basis of a great deal of innovation in China long before the term was coined in the West. Innovation in China tends to be fueled byÂ guanxiÂ with trust between partners being far more important than the legal details drafter by lawyers for a joint venture or other collaborative effort. Innovation in China, though still largely overlooked by the West, frequently occurs as trusted friends or acquaintances discuss their needs and challenges and find new solutions by crossing disciplinary borders. The many partnerships and allies involved with leading innovators like Ten Cent, Alibaba, Foxconn, and Huawei testify to the fluidity and rapidity of innovation in China achieved via collaboration and shared vision among partners.Â
However, when companies in China or anywhere collaborate to find innovation, the inevitable sharing of trade secrets between partners puts the players at risk should there be inappropriate disclosure. Two leaders may fully trust each other, but if one of them leads a company with a weak IP culture where individuals fail to respect trade secrets, the partnership can be destroyed and severe damage can be done. Those engaging in a collaborative venture should be aware of the risks and consider their own culture and processes, as well as the culture, processes, and track record of partners. Zealous efforts are needed to avoid harm, even when there is no intent to harm or defraud. Simple slips can disclose information inappropriately and hurt a partner and oneâ€™s own reputation. Those pursuing open innovation need to pay particular attention to trade secret protection and ensure that only a few well trained employees will be exposed to the trade secrets involved in the partnership.Â
Unfortunately, university culture in China and throughout the world, generally speaking, is inherently geared toward sharing and publishing information, so partnerships with universities should be carefully pursued with the realistic expectation that information may be leaked. Containing the scope of the partnership and minimizing any sharing of corporate secrets can reduce risks, while still allowing a company to tap the many riches of knowledge and innovation in Chinaâ€™s academic community, where many companies are finding success in advancing innovation.
One of the troubling trends in US patent law, a trend I first heard about roughly a decade ago in a course “Drafting and Crafting Winning Patents” from Patent Resources Group, was the tendency for courts in patent litigation to twist the claims to limit their scope. Among the many examples of courts finding language or lack of language in the specification to import unintended and often questionable limitations into the claims is a 2011 case, Retractable Technologies, Inc. v. Becton, Dickinson & Co.. It took creative mental gymnastics by the court to rule that the “body” of the claimed syringe must not read on two-piece bodies, contrary to logic and evidence within the claims themselves. See the response of IP Watchdog to see how this decision may contradict fundamentals of established patent law. The Patent Prospector blog offers this view:
Somewhat subtlety, but most assuredly corruptly, the courts are on a continuing crusade to limit patent protection. In the past four years, the capriciously subjective Obzilla (KSR) has trampled many patents, where an objective evidentiary standard would have left them standing. In this episode, Retractable Technologies v. Becton, the crusade against patent enforcement continues, but from a different angle, with the CAFC distorting well-settled claim construction precedent to squeeze the scope of claims.
The courts seem increasingly ill-disposed toward protecting property and intellectual property rights, especially those of individuals and small companies lacking political clout. Is that due to corruption or just the twisted anti-property (well, anti-other-people’s-property) ideological bent that many of our leading universities impose on students? To be fair, many large companies also bemoan US patent law trends where intellectual property is increasingly taxed and stalled (e.g., through high costs and delay at the USPTO, and the siphoning of patent fees by Congress to pay for their excesses elsewhere), where claim scope is being limited, and where the capricious uncertainties and cost of litigation are ominous. To revive the US economy, there really is a need to strengthen innovation by strengthening and accelerating our patent system and strengthening, not diluting, property rights.
Meanwhile, here in China, there are serious efforts to strengthen enforcement of IP rights, to encourage patent pursuit (e.g., with generous tax incentives and some special incentives that local governments may add in some areas), and to facilitate enforcement. There is a rush in China to create IP and it will have profound long-term effects in terms of global competitiveness. I think that China will become the technology leader of the world and the IP leader, and the U.S. will pay dearly in the end–royalties and more. The U.S. needs to regain its IP and innovation momentum and abandon capricious judicial changing of the rules at the expense of innovators.
Many people in the West think of China as a copier exploiting the IP of the West and generally ignoring IP rights. In reality, China, the nation where I now live, has made steady and rapid progress in building an IP system and in enforcing and respecting IP rights. Companies are increasingly able to protect their IP in China and have it enforced successfully. Successful experiences in enforcing IP has led some Chinese consumer products companies, for example, to become much more serious about protecting their innovations in China and beyond.
Chinese companies are now racing to create strong patent portfolios not only in China but overseas as well. China’s tax incentives contribute to this as does its increasingly strong patent system, and the strong investment in R&D in this nation and the growing technical competence and creativity of China has led to a serious need to protect Chinese IP from infringement by the West and others. China is becoming the world’s leader in filing patents. In 2011, China is expected to overtake Japan and the United States for the #1 spot as top patent filer. They appear to be leading the world in terms of the number of patent law suits being pursued in Chinese courts, with significant awards being made that should encourage companies to pay more attention to patents here. In many areas, Chinese innovators are leading the world and are backing up their work with aggressive international patent filings. My own study of biofuels patents, for example, shows that China is becoming the world’s top source of IP related to biofuels and other plant-based bioproducts. Chinese universities are filing patents in many areas and have even had success in courts enforcing them. China on all fronts appears to be accelerating its move toward being a source of global IP and innovation.
The July 13, 2011 issue of the China Daily that I picked up last week illustrates the growing importance of IP. Page 5 had a story, “Courts Do More for IPR [Intellectual Property Rights] Protection.” The article reported that the Chinese government is seeking to learn from experience in the West to further improve and accelerate its legal system to strengthen IP protection. I should note, though, that Chinese courts already have a reputation for being much faster than Western courts, so I hope they don’t learn the slow part from the West. The article also reported that over 9,000 arrests have been made in the past 9-months in efforts to crackdown on piracy and other violations of IP rights. Nearly 13,000 underground factories have been closed in another campaign and nearly 5,000 gangs selling illegal goods have been broken up. In this 9-month period, 2,492 IP cases were brought to Chinese courts and 1,985 cases were adjudicated.
In the same issue, page 17 had a section called “ipscene” with IP-related news stories from around China. There were reports on China’s proprietary subway noise reduction technology being installed on Beijing’s new line 10; on the rapid growth of China’s LED industry; on the advances in diesel design from Yuchai Group which now has over 600 patents and has become a leading force in “green power”; and on a low-cost solar water heater being patented by inventors from Jinan. There was also a report on prison terms and fines for producers of counterfeit liquor. On the same page was a half-page article on grassroots inventions at a national innovation exhibit, and an article about educating Chinese children to boost innovation.
That’s a lot of IP and innovation content for a popular newspaper, and reflects the importance of these topics in China.
As the West continues to make patents more difficult to obtain and less valuable, frustrating innovators and contributing to innovation fatigue, China is doing the opposite. They are out to build a stronger IP system and make IP more valuable. They are encouraging the pursuit of IP protection and the creation of IP, and will continue to surpass the West in many measures. The pace of innovation in China continues to accelerate. Now companies, such as the one I work for, will increasingly be concerned not with copying what the West has, but in preventing the West from copying what is created here. There are further ironies to be revealed in this adventure.
Allergan (NYSE: AGN), the major multi-specialty pharmaceutical company with expertise in ophthalmology and beauty, has been on a tear in the stock market, driven by its bold approach to innovation. The market cap, now $25 billion, has roughly doubled in the past year. I heard CEO David Pyott speak to Jim Cramer on Mad Money last night and am impressed with the financial commitment to innovation. I am also impressed with the new product development work that is done in extending great products to new fields. For example, BotoxÂ® (Botulinum Toxin Type A), used so successfully for cosmetic surgery, also has potential to modify hyperactive bladders or juvenile cerebral palsy. Their expertise in neuroscience is also being applied to migraine headaches, where a promising product is in Stage 3 clinical trials. The BotoxÂ® approach to skin beauty is being enhanced with JuvedermÂ® hyaluronic acid (HA) dermal filler formulation, a material that can be injected into the skin to fill some wrinkles. They are also addressing the challenge of obesity with their FDA-approved laproscopic band, a less invasive approach to bariatric treatment. In ophthalmology, one of their most profitable segments, a host of products treat eye conditions such as glaucoma or dry eye.
Allergan’s products are well suited for the needs of the aging baby boomer population and appear to be riding a wave of technical success well matched to a demographic wave. Many growth opportunities still exist, and with the heavy investment in innovation and research, Allergan appears poised to continue growing, something that is unusual for many large pharmaceutical companies these days.
The company began in 1950 when chemist Chemist Stanley Bly developed anti-allergy nose drops and got the help of his friend, Gavin S. Herbert Sr., who owned a pharmacy. Two years later, after listening to advice from a pharmacist about patient needs, they developed an eye drop with anti-histamine, the first such eye drop in the United State. Sales skyrocketed and Allergan became a major player in ophthalmology, which today makes up almost half of their business still.
Listening to market feedback and acting on clues and suggestions from knowledgeable people like a pharmacist allowed Allergan to quickly shift its focus and its product array in the early days to address an important unmet need. This led to eye products, not just nose drops, and the opportunity in ophthalmology that will continue to be huge for Allergan, now representing nearly 50% of sales, if they can keep an eye on innovation.
A painful message from the CEO of Nokia, shared below, reminds us that the pain of disruptive innovation often catches major incumbents unaware. As they listen to their existing customers and improve existing products and services, often incrementally, they may not sense the tsunami of change that is coming from afar. The innovations that will disrupt them often seem not good enough to threaten their core business. By ignoring the threats and opportunities around them, they continue to focus on core competencies and core markets and feel little pain until the new competition, ignore too long, has developed the skills and competencies to strike at the core itself. When the pain is felt, it is often too late. When the heat of a raging fire is finally felt and awakens you from your dreams, it is often too late. You may escape if you are lucky, but the building is likely to be lost. How will Nokia cope? Read the speech below, then we’ll discuss their newly announced plans.
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 platformâ€™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 â€œburning platform,â€ 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 â€“ his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a â€œburning platformâ€ caused a radical change in his behaviour.
We too, are standing on a â€œburning platform,â€ and we must decide how we are going to change our behaviour.
Over the past few months, Iâ€™ve shared with you what Iâ€™ve heard from our shareholders, operators, developers, suppliers and from you. Today, Iâ€™m going to share what Iâ€™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 â€“ 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, Appleâ€™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 â‚¬100. Google has become a gravitational force, drawing much of the industryâ€™s innovation to its core.
Letâ€™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 â€“ 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 donâ€™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, â€œthe time that it takes us to polish a PowerPoint presentation.â€ They are fast, they are cheap, and they are challenging us.
And the truly perplexing aspect is that weâ€™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 arenâ€™t taking our market share with devices; they are taking our market share with an entire ecosystem. This means weâ€™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, weâ€™ve lost market share, weâ€™ve lost mind share and weâ€™ve lost time.
On Tuesday, Standard & Poorâ€™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 Moodyâ€™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. Itâ€™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 havenâ€™t been delivering innovation fast enough. Weâ€™re not collaborating internally.
Nokia, our platform is burning.
We are working on a path forward â€” 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.
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 worldâ€™s most celebrated early stars is fading, and fast â€“ 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, theyâ€™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 â€œplatform,â€ 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 doesnâ€™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 issuesâ€”a lack of ecosystem control, margin decline and a raft of new royalty payoutsâ€”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.
Design matters in innovation. Sometimes good designers and engineers working together can find ways to combine functional and decorative elements for elegant success. Sometimes two elements can be combined into one when synergy between two formerly distinct features or products can be found. Today we bring an example from Japan to illustrate this.
Toppan Printing in Japan has developed a smart label that combines holographic security with RFID technology. Holographic labels, of course, are primarily for anti-counterfeiting but also add decorative features. RFID is a utilitarian tool for adding information to packaging and products for improved tracking. Toppan has combined them here. The cool thing is that the metallic antenna needed for transmitting and receiving radio signals–normally a metallized spiral or other shape that tends to be unattractive–has become part of the aluminum metal of the metallic holographic label. This combination of two technologies with a single element uniting both in an attractive, appealing way is a good example of simplification through unification and finding synergy between technologies.
Toppan calls it the RFID Crystagram. An example of the RFID Crystagram is shown on the left below, and the act of electronically scanning the Crystagram is shown on the right.
The problem in large organizations, and the US federal government is pretty much the world’s largest, is that numerous entities have their own turf and their own advancement in mind, and without special efforts being taken will naturally work in ways that cause conflict and delay. Leaders must carefully work to align these interests and incentives toward organizational objectives, but this can be almost impossible when an organization gets out of control. Adding a new committee or bureaucracy in addition to everything else will rarely be the most effective path forward. Meanwhile, those who may have the answer and want to bring their expertise to the table find themselves discouraged, worn down, ignored, and ultimately punished for their passion to innovate and help. Welcome to organizational innovation fatigue, and welcome to the Gulf Coast disaster.
Several voices have discussed the need for innovation in dealing with the disastrous oil leak in the Gulf Coast. There are so many intriguing opportunities for technology–oil absorbent materials, new chemistries for dispersing or attacking the oil, controlled burnoffs, skimming and oil collection systems, barrier technologies to keep the oil away, materials that coagulate oil, and a host of proposed technical solutions for addressing the root cause and stopping the leak. Many of the proposals should be considered and tried. This is not the time for bureaucracy. This is not the time for the government to be shutting down efforts with its bureaucracy. If the Coast Guard is worried about inadequate fire extinguishers, round up a batch and take them over to the relief effort to help, not hinder the State of Louisiana as it tries to protect itself. But what the Coast Guard did in this case is akin to what happens thousands of times each day in companies and government around the world, contributing to the innovation fatigue that stymies much needed efforts at innovation and progress.There are some bright spots of innovation amidst all this mess. Kevin Costner of Hollywood fame has been developing a company with patented technologies for cleaning oil-contaminated water. Ocean Therapy Solutions (http://ots.org) represents a case of successful technology transfer that began in the US Dept. of Energy and some national labs. The technology has now emerged as clever centrifugal separators that split a contaminated stream into highly separated water and oil-rich streams. Portable units mounted on boats can go into contaminated waters and process large quantities of ocean water, recovering oil and returning much cleaner water to the ocean. Their website includes a couple of interesting videos, including one of Kevin testifying before Congress. The system has received relatively little interest for the past decade and the factory has been dormant, but now awareness is rapidly increasing and BP is deploying some of these units for use in the Gulf. A single unit can process 200 gallons per minute or more.
Kudos to Kevin and his team! He certainly has an advantage with his name recognition and extensive networks–without that, he may have been viewed as just another voice in the wind claiming to have something. There are others with technologies and potential solutions. May they also find their way to make a difference. May all the innovation fatigue factors remain far from Kevin Costner and all others seeking to bring something new to help us fix the Gulf Coast disaster.
Last year I discussed the bold technology transfer and commercialization work of Exploit Technologies in Singapore under the leadership of Executive Director Boon Swan Foo. Their goal is an important one for the economy of Singapore. They are working with a booming portfolio of patents from the intense research being funded by the government of Singapore, seeking to license the patents and promote full commercialization. Mr. Boon has recently retired, turning the keys over to the new CEO, Mr. Philip Lim. I had the privilege of meeting Philip when I was at Singapore last year to speak at Innovation and Enterprise Week 2009, a remarkable event held at Biopolis. Philip Lim shares some of his thoughts in Part 1 and Part 2 of a blog post at Exploit Technologies. I’d like to share and comment upon a few of his thoughts from Part 2, as reported by Alfred Siew:
What are the biggest technologies to focus on?
With some 800 to 1,000 patents within A*Star to tap on, new Exploit Technologies CEO Philip Lim would be hard-pressed to name a few.
Still, gamely, he does point out a couple, during an interview.
One area is nano-imprinting lithography (NIL), a manufacturing process that is set to bring many benefits to making electronics that control, say, the liquid from an inkjet printer, or even for biomolecular sorting devices in the emerging bio-sciences equipment market.
Another area is ultrawideband (UWB) technology, a radio technology that promises to transfer audio and video over the air with speeds that are more common on wired connections.
With it, hi-fi equipment would one day do away with messy cables used to connect them together.
Taking over from long-time A*Star stalwart Boon Swan Foo, Philip says his main task is to group together complimentary expertise in the hottest fields, so as to come up with more products that can go to market fast.
He also intends to incentivise people to play as a team. By combining knowledge of market requirements, as well as the expertise that A*Star has, Exploit can help map out emerging and potentially viable areas which Singapore can focus on, he says.
For example, with UWB, the expertise of two A*Star institutes – the Institute for Infocomm Research (IÂ²R) for its UWB design, and the Institute of Microelectronics (IME) for its expertise in manufacturing electronics – can easily be combined.
He notes: “One has the hardware (IME), the other has the software (IÂ²R); put them together and you got UWB!”
“We want to be more outcome-focused and customer-focused in the way we do things,” he says, referring to a more streamlined approach to getting technologies out from the lab bench to retail shelves.
But he is not a number-cruncher, he explains. “We see ourselves as facilitators… KPIs, while tangible, have their limits.”
The dollar value of licenses made possible with Exploit, he notes, does not count the multiplier effect of the entire value chain of a technology. For example, technology behind a simple, low-cost keypad can be used in a much more expensive handphone, and has more value than its mere licensing fee.
“If we can generate ‘economic outcomes’, like sustainable innovation and more jobs for Singapore, then we’ve done our jobs,” says Philip, of Exploit.
He adds: “If we do more here, companies will like being based here. Instead of moving to cheaper manufacturing bases, they will want to stay in Singapore to keep in touch with the latest technologies.”
“For $1 in licensing, we may be creating thousands of dollars in economic value if jobs are kept here.”
Economic outcomes are what it’s all about. Philip wisely recognizes that successful tech transfer of government-funded R&D can result in long-term economic value for Singapore. They are focused on a long-term plan that will bring more companies and more jobs to Singapore to take advantage of the talent, the technology, and the culture of success that is being crafted.
One of the challenges for commercialization success in the Singaporean model will be continually crafting a portfolio of not just patents, but know-how and other intellectual assets that create synergy with the marketing story that fits the technology and business opportunities being developed. The marketing perspective needs to be brought into the technology plans and the IP strategy to create portfolios that encompass winning business models and can quickly give a partner a competitive advantage. The world beyond 2010 increasingly will rely on ecosystems of partnerships for success, united by the energy of clever business models in which marketing savvy and IP prowess go hand-in-hand. A*STAR and Exploit Technologies have the vision, and they are continuing to build the discipline and partnerships to make it happen. I look forward to watching this story unfold in the coming years.
Congratulations to Philip Lim and Exploit Technologies, and best wishes in your path forward to innovation success!