Next week I’m going to Silicon Valley, California and it is my Graceland. Since my teenage years I’ve been fascinated by Silicon Valley. All the new exciting computer and electronics stuff came from there, and the area was often mentioned in the tech magazines I read. So since my teenage years The Valley has inspired me to work with IT and electronics, but still I haven’t been there yet.

Next week I’m going to change that, and I have a couple of meetings there with people working in the area. I’m curious to learn more about Silicon Valley and what it’s like to do business from The Valley. I decided not just to be the ordinary tourist and just drive by the well-known companies like Apple, Hewlett-Packard, Cisco etc. I have to meet people who are living and working in The Valley in order to really get an impression of the Silicon Valley-way of doing business.

I’ll get back with comments from the trip later…

43% of Danish companies are innovative

Last week I read in the Danish business newspaper ErhvervsBladet that 43% of all Danish companies were innovative in the years 2005 to 2007 – according to Statistics Denmark.

Statistics Denmark considered a company to be innovative if it had introduced new or remarkable improved:

• Products
• Production processes
• Organizational methods
• Marketing initiatives

In general I don’t believe it’s so simple to define if a company is innovative or not. But I’m happy to see that more than 4 out of 10 Danish companies are developing their own platform within these areas.

In many smaller companies a very few employees drive the innovation. This makes the innovation process vulnerable because what will happen if one or more of these employees stops working for the company? Will innovation be slown down or put on hold? Or will the company manage to continue innovating? In many cases changes in staff can have severe impact on processes like innovation.

I see innovation as an ongoing process and not as project with a start and stop date. It’s important for the process to have several employees involved. The more employees who feels ownership of the process the stronger the process becomes and the more likely to succeed it will become.

When innovation is considered as a process with several employees involved, the process becomes less people-dependent. If one or more of the employees stop working for the company, the process will in most cases survive.

The innovation process can in many ways be compared to the company’s product roadmap. The company’s product roadmap is typically not people-dependent – so why should the innovation process be it? Where the product roadmap typically is very detailed, the innovation process can be more diffuse. It is possible though to have some degree of structure in the innovation process.

Form an innovation committee
Some years ago I worked for a Danish company which had a product committee. The Product committee was a group of employees from different departments of the company. R&D, Sales, Marketing, Production etc. had one representative from the department. The committee’s job was to present new product concepts to the company directors. By involving employees from different departments the committee could enlighten all kind of aspects of the concept before recommending it to the directors. And the directors got a far better decision basis than if only the R&D department had described the concept.

Unfortunately the company didn’t work with innovation the same way. One person was driving the innovation, and he had a lot of other things to do, so the innovation process was never really in focus. If the company had established an innovation committee like their product committee I’m sure the company could had been one of the most innovative companies in their market segment.

So, how do you establish an innovation committee? I would recommend having one member from each department in the committee so as many aspects of the process from idea to product can be covered. The committee will have two primary tasks:

• Creating and maintaining innovation roadmaps
• Contributing with new ideas and technologies to the organization

The committee should have a coordinator responsible for the overall control of the process. This person takes initiative to arrange meetings. Tasks like taking minutes, structuring thoughts, ideas etc. can be delegated to other members of the committee.

The Gatekeeper role
The employees in the innovation committee should be assigned gatekeeper roles. The gatekeeper has to observe developments and research within a specific field (typically the field they normally work with) – and get hands-on experience if possible. This way the committee keeps updated within fields relevant to the company. Gatekeepers can bring new knowledge to the committee meetings and share their experiences. The committee should have an intranet site where this knowledge can be shared electronically (preferable in a searchable database). This will ensure knowledge to stay in the committee/company in case an employee leaves the committee or company.

Innovation Roadmap
It’s difficult to give any direct tips on how the innovation roadmap should be formed and what it should contain. But in my opinion the roadmap should contain at least these four subjects:

• Opportunities
• “Need to do” actions
• Product convergence
• Competitor initiatives

Summary
To sum it up, I believe innovation should be considered a process with involvement of several people from a great part of the organization. I also believe that it’s risky to depend too much a few key employees. They might not stay with the company forever. The process can be controlled and handled by a special committee and knowledge can this way be shared in a structured way.

Internal and external innovation advantages
I like to divide innovation advantages into two groups when I compare products: Internal and External. I use internal innovation to describe innovative differences when comparing a company’s own products. Most companies have a basic assortment and an advanced assortment of products. With external innovation advantages I mean innovation advantages of one company’s product compared to a competitor’s product in similar category. I will in the following use simple examples to demonstrate the internal/external way of thinking. I use ketchup as an example – it’s a simple product we all know.

Internal innovation
Let’s take a look at Heinz Ketchup. Even though it’s a simple product without any high tech features, it’s possible to talk about product innovation. The regular Heinz tomato ketchup has been made since 1876, but a lot of variants have been developed since then. The new variants are developed to increase the market size and market share. Ketchup is no longer just ketchup. This is some of the variants Heinz offers:

• Organic Ketchup (for the environmental aware customer)
• Reduced Sugar and Salt Ketchup (better for your blood pressure and weight)
• Hot Ketchup (a spicy ketchup)

As illustrated above, by changing the ingredients, the ketchup gains advantages and become a new product even though it still is ketchup. Let’s take the Organic Ketchup as an example. Organic ketchup is made from organic tomatoes, and this product now appeals to environmental concerned customers who want to buy products made from natural organic ingredients which haven’t been exposed to chemicals etc.

In this case the innovation is represented by changing ingredients from regular to organic, which will be considered an added value by customers, and make customers feel good about their purchase. So in that sense you can say it’s an increase in performance.

External innovation
The opposite to internal innovation is external innovation. By external innovation I mean added innovation compared to the competitors products. A very good example of external innovation is the Heinz Stay Clean Cap bottle. After a while all ketchup bottles get greasy around the cap. Not a pretty sight on the dinner table. Heinz then introduced the Stay Clean Cap bottle, which made it easy to get the ketchup out of the bottle without getting a messy bottle.

This way Heinz gained a competitive advantage to other ketchup brands. The Stay Clean Cap bottle is in this example the external innovation. Heinz innovated their product compared to the (external) competitive products on the market, and for those who didn’t had a ketchup brand preference the smarter bottle could be the reason for buying Heinz.

The grey zones
In many cases internal innovation can also be considered an external innovation. So I typically use the internal innovation to define internal product segments and product roadmaps. I define Internal innovation as what you do to increase the market size/potential.

The external innovation I use to list unique selling points, do market segmentation etc. compared to competitive products and companies. In other words, I define external innovation as what you do to gain competitive advantages.

The design
In general I like the design. It’s minimalistic, classic, futuristic and sophisticated – typical Bang & Olufsen values. It’s almost an understatement. So much technology packed into so simple a design. Some critics have asked the obvious question: Why not use a touch screen display? Touch screen displays makes navigation easy, quick and user friendly – typical key selling points for Bang & Olufsen.

At the beginning I was tempted to think the missing touch screen was a handicap for the BeoSound 5. But after thinking deeper about it I have come to the conclusion, that it’s a brilliant idea NOT to use a touch screen. Why? Simply because of the WAF – Wife Acceptance Factor! Imagine how the BeoSound 5 would look like with a touch screen display after only a few minutes of use. Greasy fingers all over the glass surfaces, which is a well-known issue for e.g. BeoCenter 9000 owners. So if you don’t want to wipe your fancy, stylish audio system constantly, I’m sure you will be happy with the dial/button navigation.

The features
Bang & Olufsen has focused strongly on the MOTS feature in their marketing of the BeoSound 5. MOTS is short for More Of The Same and it’s a feature that identifies the music’s genre. You can use MOTS to play random music from the storage and MOTS will only pick music from the same genre. I think this feature is practical when you use BeoSound 5 for background music. It’s also an intelligent way to sort your collection of music. But I don’t think it’s as revolutionary as Bang & Olufsen wants it to be.

The graphical LCD display opens up for new possibilities when it comes to usability. Music stored on the system is shown with pictures of album covers and is easy to browse. The new BeoSound 5 is user friendly. Less than 2 minutes after getting my hands on it for the first time, I was familiar with the user interface.

I miss the possibility of playing a CD without first start up the PC and transfer it to the BeoSound 5 storage, which by the way is the included BeoMaster 5.

The digital dilemma
As with other Bang & Olufsen audio systems, the new BeoSound 5 offers MP3 playback. This represents a dilemma in my opinion. On one side most of us enjoy the benefits of MP3: More music on less harddisk space. On the other side you lose a lot in sound quality when you convert CD’s to MP3. You might not notice the poor sound quality of MP3 when listening to music on your MP3 player or kitchen radio. But you will notice it when playing MP3s on a $5,000 audio system like the BeoSound 5 with matching speakers. The sound quality of Internet radio stations is even worse. But fortunately BeoCenter 5 offers to store your music collection in a loss-free format.

So is it innovative?
Yes and no. Like it or not – if it’s not already, your music collection is going to be bits and bytes on a harddisk. And since it is so, why not choose to have the best possible user interface to manage the collection. BeoSound 5 might be that.

To date the BeoSound 5 is the best implementation of networked music I have seen. There are a lot of solutions on the marked which can do the same when it comes to storing and playing music on a networked harddisk. But this is the least nerdy and geeky solution of them all. Everyone can benefit from networked music with BeoSound 5 – if the price tag doesn’t scare you off.

So in that sense I believe the BeoSound 5 is an innovative product. But technology-wise the BeoSound 5 doesn’t bring anything new to the world. But the big question is: Are the typical (conservative?) Bang & Olufsen customer looking for cutting edge technology? I don’t think so…

SAAB seems to be in deeper problems than Volvo, but why? To give my input to that question, I start with my personal view. I drive a Swedish car myself - a Volvo. Why Volvo and not SAAB? Well, I like both Volvos and SAABs, but I have never seriously considered buying a SAAB. Basically I like the exterior design but the interior design is just too weird for me. And even though the materials are of a good quality, like in Volvos, I don’t get the same feeling of driving a luxury car when I drive a SAAB as when I drive Volvos. I know that SAAB for many years has told us that the instrument and center console layout and design are based on their many years of experience from the plane industry. But it still looks too weird to me - regardless how user friendly and logical the layout may be.

SAAB has for many years only had two models. The 9-3 and the 9-5. Volvo on the other hand has several models to choose from. From the small C30 - over the XC90 SUV - to the top model S80. Volvo has for many years been able to develop cars that reflect the trends. Volvo launched its first Cross Country (crossover) model in the late 1990s with the Volvo V70 XC (2.5 cm higher ground clearance, big bumpers and rough look). It was the beginning of a new line for Volvo, which today includes the models XC60, XC70 and XC90. The models became popular and other car makers like Audi followed with similar versions of their cars - starting with the A6. Do I have to mention, that SAAB not yet have launched their Cross Country-type model?

Volvo has renewed themselves several times when it comes to design, market segments, technologies etc. It’s like every new model is a new statement of where Volvo wants to go next - without losing the historic roots. The new XC60 and the coming S60 are not cars you would have expected from Volvo in the boxy 1980s or 1990s. Neither is the floating center console, which was introduced in the S40/V50 and now also is in the top model S80.

Volvo is owned by Ford and of cause Volvo uses components from Ford. But not in the same way SAAB has to use GM (Opel) components. Where SAAB in my opinion has suffered strongly from the ownership of GM, Volvo has kept its own identity and independence to create their own models. You will only find the Ford engines in the smallest Volvo series.

In my opinion it’s Volvo’s ability to innovate and renew themselves, and SAAB’s missing ability to do that, that is the difference between the two car makers.

Maybe we haven’t used the term user driven innovation earlier. But it’s exactly what we have been doing. The funny story is now, that Scandinavian companies are paying consultants handsomely to learn them to implement user driven innovation.

Designs that lasts
Another way we differentiate in, is in design. Typical Scandinavian design is elegant, sophisticated, simple and long lasting. Take Bang & Olufsen as an example. Many of their products still looks modern 10 years after they were introduced. Scandinavian design typically sends the signal, that the product is a long lasting product. The solid and quality-marked design says to you, that this product can last long, and the extra money spent will pay off in the long run.

Remember the movie Crazy People from 1990? Dudley Moore brings his new Volvo advertising pitch to his boss, saying: “Buy Volvo. They’re boxy, but they’re good. Be safe instead of sexy”. I think this movie quote says a lot about Scandinavian design. We might not produce the most fancy, sexy or flashing products. But we are very good at producing solid, well-designed long lasting quality products. We can’t beat the Chinese prices and we can’t beat the research pace of the United States. But we can produce a product you like, and want to keep for many years.

What’s innovative about that?
My favorite definition of innovation is this quote by Peter Drucker: “Change that creates a new dimension of performance”. The increased performance lies in the fact, that you want to keep using the product for years, and that the product isn’t going out of fashion for years. Bang & Olufsen achieves this in three ways. They put a lot of effort in the appearance of the product (design). They make the products so user friendly, that you want to use the product, and actually can get benefit of the features without having a higher technical college degree. Finally the BeoLink system makes it possible connect multiple products from Bang & Olufsen and benefit from linking the products together – new products as well as older products. The products can this way grow with your needs (and economy). I believe Bang & Olufsen’s approach is a good example of Danish innovation.

Over the years I have used a lot of different development kits from Microchip, National and other vendors. But lately I have missed an all-in-one development kit with all the features and connectivity options I  wanted. So I browsed the web and found what seems to be exactly what I’ve been looking for. I ordered a kit and now I’m going to play with it!

CYAN USB-Ethernet Board

You pretty much get everything you can desire from a versatile development kit with this one:

• 512KB Flash
• 16MB RAM
• 12 bit ADC/DAC
• 4x UART
• 10/100 Ethernet
• USB (host/slave/OTG)
• Eclipse-based IDE
• Software stacks

The price is even lower than expected. I payed only £49.00 (excluding VAT and postage) which I consider a great deal. The only thing missing is a 9V PSU but I had one I could use - so no problem there.

I sadly haven’t had the time to get more familiar with the kit yet so please return for a more thorough review. I have though decided to use this kit to make a mock-up for a new project. So I will get more familiar with the kit in the coming days/weeks.

Read more about the development kit from CYAN here: http://www.cyantechnology.com/acatalog/USB___Ethernet-Solved_Development_Kit.html

Some years ago I worked for a company with high innovation ambitions. The company wanted to move from selling simple high quality products to selling innovative market leading quality products. This transformation is not done over night, and in my opinion the management team was not ready to make the big decisions. Therefore the transformation never succeeded.

The management team wanted to go through with the transformation, but would they approve the new projects, which would take the company in that direction? Sadly, no. Betting on the sure thing - what the company has done successfully for the past 30 years - won every time. Why being so nervous about going in a new direction? Well, this could be some of the reasons:

• Development cost (new technology/methods = expensive)
• Development time (no track record of time consumption)
• Warrenty challenges (can existing aftersale service handle it?)
• Customer base (need to address new customers?)
• Market perception (how will the market react?)

Moving into new markets is associated with risks, and who are the initial stakeholders? The company’s management! The management team will always look hard at the opportunities and the risks because a failed product strategy can have serious economic consequences.

Hands in the pockets - not always the solution
Okay, so moving into new markets and new product areas can be risky business. But does that mean that you (the company) are safe by keeping  doing what you’ve always done? No! Maybe the current product strategy has worked for many years, but new technology, new competitors, new market segments etc. are changing the market rapidly. So just in order to keep the current market position most companies has to work hard. Sometimes this hard work includes taking chances and going in new directions. Just be aware of the risks and that something is always on stake. For someone. So think about the stakeholders and be prepared to answer their critical questions when you make your next fantastic concept proposal.

In my opinion an invention doesn’t have to be innovative. Let me give you an example. If I invent a product which haves the same purpose and solve the same problem as an existing product - just by doing it with a new method - it wouldn’t be innovative according to the quote. Simply because the new product doesn’t create a new dimension of performance for the user - it just solves a problem in a new way.