Wednesday, December 2, 2015

Uncertain Health in an Insecure World – 66

“Stall Point”

Like the AirAsia flight 8501 that crashed last December into the Java Sea, fixed wing aircraft lose lift when climbing skyward too quickly.

Companies confronting a sudden business growth plateau are also said to have hit a “stall point”. Harvard Business Review studies of stalled Fortune 500 firms – good companies like 3M, Apple, Caterpillar, Levi Strauss and Daimler-Benz – show that the root causes are both knowable and preventable. Most such stalls are caused by management’s bad strategy choices and/or poor organizational design. What 1950's economist Joseph Schumpter called the “gales of creative destruction” can easily sink weaker companies, like the Uber Effect tanked the value of New York City Taxi medallions (below).

But is there an innovation stall point?

Eastman Kodak (est. 1888, above) is a business school case study on how not to manage an innovation pipeline. Whether through arrogance or ignorance, the Rochester New York global leader in film-based photography technology failed to commercialize digital photography. Kodak stalled, filing for bankruptcy protection in January 2012. Ironically, photo-sharing app company Instagram was sold in 2012 for US$1B to Facebook. Activist investors second-guessed Instagram’s CEO Kevin Systrom (below) when just eighteen months after his deal with Mark Zuckerberg, the company’s value was estimated at >US$5B.

Innovation is fast becoming an ennui-provoking buzzword.

As a perfect economic storm was brewing in the mid-1990’s, Harvard’s Clayton Christensen’s wrote The Innovator’s Dilemma, advancing the (then) novel management theory of disruptive innovation. Christensen’s disruptive innovation construct helped to explain the failure of respected and (once) well-managed companies.

Clay’s theory has since been much touted, and widely misquoted. 

Recently, his big idea has been called into question in the press and by scholars for being overly simplistic and too one-size-fits-all. One Christensen premise criticized by The New Yorker writer Jill Lepore (The Disruption Machine, June 23, 2014) is “disrupt or be disrupted,” the cliché kernel seized upon by Silicon Valley “upstarts who work at startups.”

If business theories are debatable, and innovation is ubiquitous, where is reality?

The U.S. National Oceanic and Atmospheric Administration (NOAA) satellites and harbor buoys capture gobs of real weather data to feed predictive analytics. I’ve watched scientists at U.S. Department of Energy’s Oak Ridge National Labs in Tennessee (above) manipulate weather forecasting models with Titan supercomputers to simulate global weather patterns and future bad events. TV’s The Weather Channel (TWC) accesses public versions of these big NOAA datasets and complex computer models, converting them into customer-friendly multi-media local marketing products (below).


TWC’s parent, The Weather Company, processes 100 gigabytes of big data daily. In April 2015, IBM partnered with NOAA to provide cloud-enabled weather forecasting and climate change models to its customers… data scientists, business professionals and software developers. Drug companies and pharmacies already rely on these weather models to predict when to increase the production of anti-allergy medications. On October 28, 2015, IBM purchased The Weather Company (below), including all of its digital assets and apps… everything except for The Weather Channel!

Innovation only matters if its benefits become widely accessible.

Henry Ford’s 1913 Michigan model-T auto assembly line improved production efficiency from >12 to 1½ hours per car, making driving available to the masses. Eventually, the rest of the U.S. and global auto industry caught up. Now Ford produces cars in Russia, China, India, Brazil, Romania and Thailand.

Since 1925, Bell Labs’ scientists have completely transformed global communications. Despite the U.S. government breakup of AT&T’s monopoly (1984), Bell Labs acquisition by Lucent (1996), and their merger with Alcatel (2007), Bell’s so-called Idea Factory has never stopped producing ideas.

Sure, there were stalls along the way. But we have all been forever changed by Ford and Bell Labs ideas.

In 1914, Thomas J. Watson joined the firm he later led and renamed International Business Machines (IBM, est. 1924). Watson’s IBM built its reputation on mainframe computing hardware and software. At a November 2015 healthcare innovation summit in Boston, an IBM executive described their new cognitive computing technology – Watson – as “The Weather Channel for the internet of things (IoT).” Today, IBM is thinking big about cloud computing… and Big Blue wants to be your IoT company.

However, last week at an IBM Watson Health advisory board meeting, this “really, really, really cool” technology that learns by reading the scientific literature, singing Bob Dylan, scanning medical images and collating personal genomics data, seemed stalled! IBM Watson’s health utilities are still prototypes – minimum viable products (above) – without a broad customer base. Sitting in lower Manhattan with big pharma & healthcare VP’s, patient advocates & physicians, and IBM programmers & marketers, the board struggled to triangulate Watson’s health value. At day’s end, we concluded that Watson was more of a “disruptive technology” than a commercial product.

This distinction – between innovation and disruptive technology – is important.

Disruptive technologies are breakthroughs that change the way people live. If Watson can truly enable the interface of EPIC’s electronic health record with CVS’ pharmacy database with Medtronic’s structured & unstructured medical device data flow, its relational insights will improve patient care and outcomes. Watson could become especially powerful in partnership with big pharma companies like Johnson & Johnson in treating chronic diseases that require daily decisions involving patients’ little data from wearable tech sensors like the Apple Watch (below).

Simplifying, life-enabling information – the equivalent of whether or not to bring an umbrella based on computer modeled local rain chances – quickly weaves itself into the fabric of day-to-day life.

The Galapagos Archipelago is a unique Pacific coast ecosystem, centuries in the making. In the absence of natural predators, species evolve slowly – evolve or fail – and outsiders provoke no fear. As the endangered booby bird dives (below), deftly pivots its wings and stalls onto the rocky shore, adaptation is evident. 

The foggy north Pacific basin called Silicon Valley is another unique ecosystem, one formed over just 50 years. With intense startup competition for risky funding, and “fail fast” fears driving a ruthless urgency among its entrepreneurial inhabitants, wise objects are evident in the channel.

Despite global pressures for speciation and innovation, sadly, neither of these ecosystems can be reproduced elsewhere in the world.

Disruptive technologies survive the natural rise and fall of such ecosystems, and man-made business theories. And like a single species, solo companies can no longer be counted upon to achieve creative disruption.

For lesser innovators, the dilemma, the ultimate stall… extinction… lurks!

In the Square, we choose to parse such distinctions. And if clever innovative ruses can no longer change human reality, then the two terms should not be confused. 

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