Yes, this is the kind of thing I would read for leisure… don’t judge.

Next step: Planning a trip to visit China and India and learn about their innovation cultures first-hand.

Description of the report:

The return of the once-dormant economies of China and India to dynamism and growth is one of the most remarkable stories in recent history. The two countries are home to nearly 40 percent of the world's population, but until recently neither had played an influential role in the contemporary global economy.

In the past two decades, China and India have liberalized internal economic policy, treatment of foreign investment, and trade, and have experienced economic growth at sustained high rates. From the point of view of the United States, however, the most important development in the Chinese and Indian economies in the long term may be the strides they are making in developing their own domestic innovation capacities. After a long period of underinvestment, both countries have committed to growing their science and education systems to bolster research and further economic expansion.

Some observers of the recent growth have said that both countries are surging in their efforts to spur innovation; others have emphasized the potential of one country over the other; and still others have suggested that both China and India have a long way to go before achieving innovation-driven growth. With such a range of views, The National Academies set out to describe developments in both countries, in relation to each other and the rest of the world, by organizing a conference in Washington, D.C. The conference, summarized in this volume, discussed recent changes at both the macroeconomic level and also in selected industries, and explored the causes and implications of those changes.

via The Dragon and the Elephant: Understanding the Development of Innovation Capacity in China and India: Summary of a Conference.

Now a British architectural design firm is giving the more conventional combustion power plant a much-needed makeover. Of course, this plant doesn’t burn coal, but substitutes palm kernel shells instead.

Why not make these facilities good-looking and integrated into the environment? Sure, they lose their attraction as a movie setting for climactic clashes between humans and alien invaders, but they’re likely to endear much more good will with the surrounding community who views the plant out their kitchen windows.

Fancy-schmancy biomass plant

Excerpt:

Heatherwick Studio has just released its design for a biomass station on the banks of the River Tees in British town Stockton-on-Tees, for British company BEI.

The facility is expected to pump out 49 MWe–enough to power 50,000 homes. Those homes are expected to see their per capita carbon footprint cut by as much as 80%, since the electricity will be generated simply by biomass generators that will burn palm kernel shells, rather than coal.

Thomas Heatherwick, Heatherwick Studio’s founder, has a genius for offbeat architecture, made with experimental techniques–for example, he designed a colony of houses with tinfoil and a bridge that curls up like a snail.

This time, the building has been conceived as less of a power station, and more of a local attraction and amenity. The building’s skin will literally be green, made up of exterior panels planted with local grasses. Inside, in addition to offices and the biomass factory, there will be a visitor’s center.

via Heatherwick Turns Biomass Into a Thing of Beauty | Design & Innovation | Fast Company.

The terminology Poundstone uses seems roughly analogous to that employed by other businesses in portfolio planning, the BCG Growth-Share Matrix.

From the New York article:

Puzzles, anchors, stars, and plowhorses; those are a few of the terms consultants now use when assembling a menu (which is as much an advertisement as anything else). “A star is a popular, high-profit item-in other words, an item for which customers are willing to pay a good deal more than it costs to make,” Poundstone explains. “A puzzle is high-profit but unpopular; a plowhorse is the opposite, popular yet unprofitable. Consultants try to turn puzzles into stars, nudge customers away from plowhorses, and convince everyone that the prices on the menu are more reasonable than they look.”

Instead of puzzles, anchors, stars, and plowhorses charted based on popularity and profit margin, the BCG matrix uses stars, cash cows, dogs, and question marks organized by market growth rate and relative market share. So, the tools are similar in their mechanism but analyze slightly different marketing situations.

While a cash cow sounds like an expensive filet mignon, I can see why Poundstone wouldn’t want to label any restaurant dish with “dog”. These are both simple but powerful tools that can be used in strategic planning exercises to illuminate options for improving future profitability.

Another indispensible but deliciously simple strategy tool? SWOT.

Via Tyler Cowen’s Ethnic Dining Guide via Marginal Revolution via New York Magazine.

Take Christmas lights. As a teenager, I had no intrinsic motivation to hang the family Christmas lights. In my mind, hanging the lights had competition only with before-school snow-blowing as the most torturous task associated with miserable Midwest winters. Lights tangle. Ladders are a hassle and liability. And, inevitably, no amount of pre-hanging electrical testing will prevent one strand from inexplicably dying as soon as the decorating is complete.

But Ric Turner sees the winter differently. And he certainly has a better touch with electricity and lights. Take his recent project, turning his house and yard into an interactive Guitar Hero game sprinkled with over 21,000 lights.

Ric, you are engineering geek (guitar) hero of the week. I’m impressed by your imagineerativity. (Aren’t you impressed by my language innovation?)

By the way, I can safely compliment Ric only because I live too far from home to be conscripted into light-hanging service.

Read this explanation from Ric of how he created the lighting system.

And watch the video here:

Wright Brand bacon and its sexy new packaging

Wright and Interbrand have done their part in advancing bacon branding from an art into a science, as they finished a recent multi-stage, two-year bacon marketing project. You have to read some of the impressive marketing-speak stuffed in this press release:

… reposition Wright Brand so it could … become more emotionally relevant to consumers.

Emotionally relevant bacon? I guess that’s not implausible. I do occasionally turn to bacon for comfort when I’ve had a bad day.

… recommended brand position of “More of what you love about bacon”

Bacon is what I love about bacon. Are you selling free bacon?

… the strategic foundation for the updated brand mark and packaging system …

A plastic bag is now referred to as a “packaging system”?

… rooted in understanding and delighting the target market of bacon enthusiasts who love bacon …

I now have another item to add to my list of hobbies on my Facebook profile: “bacon enthusiast.”

via Package Design eSolutions #61, May 29, 2009.

Plastic reshaping wine trade — latimes.com.

Obama at Newton, Iowa factory

Obama used the town of Newton, Iowa and the Trinity Structural Towers factory there as an example of the potential for clean energy businesses to replace jobs lost in mature manufacturing industries. The Maytag appliance factory in Newton — now inhabited by Trinity with 90 employees — once employed 4,000 people before closing entirely as manufacturing shifted overseas.

This is only one example, but it does illustrate the gap between America’s past manufacturing heyday and the size of today’s clean energy industry, even considering the potential growth of the latter. We certainly need these new jobs in order to replace those recently lost, particularly in the auto industry. But how do we encourage the manufacturing of these new clean energy innovations to occur in the US rather than overseas? Will clean energy companies make their global operations decisions any differently than hundreds of other industries already have, shifting production to low-cost countries like China?

I hope so. This is not only an employment issue but a national security issue. We need control of local clean energy resources to replace our dependence on petroleum from the Middle East.

I am excited to hear that a cap-and-trade program might finally emerge in the US. As I’ve written before, until carbon emissions impose a cost on emitters commensurate with the impact of the emissions on the climate, none of our ambitious goals to cut energy consumption and increase renewable energy usage will be feasible.

Obama’s speech barely addressed the piece of the clean energy economy that will have the greatest impact on the state of Iowa — biofuels. Iowa already produces large amounts of corn-based ethanol, but most agree that ethanol derived from food crops is not a long-term solution. Moving forward, advanced liquid biofuels will be essential to reduce petroleum consumption, as many applications, particularly diesel engines, cannot typically not be replaced with batteries and electric motors. Future biofuels, such as cellulosic ethanol, will grow into a huge section of the agricultural economy, and agriculture is certainly Iowa’s backbone.

I look forward to watching these initiatives move forward. Let’s see what Congress does next.

Plus, they have some awesome new artwork for their 75 Minute IPA bottle label:

Dogfish Head 75 Minute IPA label

What’s a chumby? The quick answer is this: chumby is many things, and the list never stops growing.

We last wrote about chumby in April 2008, when they raised $12.5 million in a Series B round in order to “accelerate growth of the company, and expand and broaden the Chumby Network to other screen-based Internet connected devices such as LCD TVs and digital photo frames.”

Well, it looks like they are accomplishing their goal.

Chumby Industries, Inc. recently announced a new partnership with Broadcom to integrate the chumby network into devices, such as internet-connected TVs, set-top boxes, and Blu-ray players, featuring Broadcom’s chipsets.

Chumbys of all shapes and sizes

So, that means chumby is:

• chumby, a huggable, Wi-Fi-connected clock/radio/widget-playing device
• the chumby network, freely providing over 1,000 widgets in more than 30 categories, such as weather, social networks, photos, sports, news, entertainment, videos and more
• chumby-enabled, internet-connected digital photo frames
• chumby-enabled portable media players and portable TVs
• now, chumby-enabled, internet-connected TVs, set-top boxes, and Blu-ray players
• … and surely more to come

Video: Sneak peak of upcoming chumby integrations

What do all these different manifestations have in common? Answer: an open source, Linux-based platform and a cloud-based content network. The open source platform runs on a local device, chumby industries hosts the widgets, and the ‘net connects it all.

Not only does the chumby network provide live information to devices, but a user’s widgets are synchronized across various devices, providing a coherent experience from one screen to another. Many chumby widgets are social-enabled, allowing for sharing of content, photos, video clips, games or messages with friends who own a chumby-powered device.

Chumby Change

The chumby device. (Credit: chumby industries)

If the chumby network is free for users, then where is chumby making money? Selling chumby devices?

No, the iconic, padded chumby, currently selling for $200, is reportedly priced at a break-even point. (If you’d like to learn more about the manufacture of chumbys, and back-stories on Chinese society, read eye-opening accounts about setting up production in China from Andrew “bunnie” Huang, chumby’s VP of Hardware Engineering here.)

Instead, chumby aims to profit from the chumby content network, including:

• Sponsored advertisements, both interstitial (yes, they’re skippable) and embedded (like “this widget brought to you by Coca-Cola”)
• Service fees for subscription content
• Referral fees (pointing users to media, stores, products, etc)
• Payment fees (taking a cut from purchases)

Video: Preview of chumby on Broadcom-powered TV

What’s Next?

There’s no doubt that content previously confined to the internet is moving (finally) to other screens, particular TVs, but Chumby is facing serious competition for those eyeballs. It’s like there’s a piñata full of eyeballs, and chumby + Broadcom, Yahoo! + Intel, Sigma, Sony, and, without a doubt, Google and Microsoft, are all swinging sticks wildly in an attempt to crack that donkey open.

The battle has begun. But can chumby carry enough a big enough stick to the fight? They’ve made important partnerships and progress to date, but as they shift their focus away from their iconic chumby device (aka “iPod touch knocks up a hacky sack and has a baby”), can their brand compete with the mighty Yahoo!?

Chumby is the nimble lightweight in this fight. It’s small, nimble, and quick, and it can use its smaller size to take advantage of deals that companies like Yahoo! can’t afford because of it’s required rate of return.

It’s still early in this sage of convergence, probably just midway through Round 1, so sit back and enjoy the show.

In February of 2008, six guys in San Diego decided to fundamentally change the software community for the better.

You need only read the first sentence of OpenCandy‘s About us page to learn a telling amount about the new company: one, they carry a grand vision for the impact their product will have on the software business, and two, there are a lot of dudes at this place.

Let’s tackle the latter characteristic first.

Who are all these guys?

Well, they’re ex-DivX employees, particular those who were building Stage6, a high-quality internet video sharing service that never escaped the gravitational pull of beta, despite its popularity.

What’s their grand vision?

Simply put, their goal is to improve the distribution and monetization of downloaded consumer software. They aim to do this by helping increase software distribution volumes, by monetizing this distribution through referrals, by providing marketing data to software creators, and by helping consumers find relevant applications. To fund their pursuit of this goal, they’ve raised $3.5 million in Series A funding from Bessemer Venture Partners, O’Reilly AlphaTech Ventures (OATV) and angel investors including Reid Hoffman (Chairman of LinkedIn, Board of Mozilla), and Jordan Greenhall (Former CEO and Co-Founder of DivX).

How’s this work?

The OpenCandy plug-in is bundled with an existing software installer. Let’s call this software Orange. While Orange is being installed, OpenCandy recommends to the user another application that is, in theory, relevant to the user. Let’s call this recommended software Banana.

Banana is picked from a fruit basket pool of applications chosen by the publishers of Orange. Orange Co. can hand-pick free recommendations (no charge to Banana for being recommended), can allow OpenCandy to select paid referrals (a “bounty” is paid to Orange if the user installs Banana), or a mix of the two.

The user can then choose to opt-in and install Banana. I emphasize opt-in because the recommended software will not be installed by default, an important distinction from annoying installers like RealPlayer that try to stick the user with 20 extra programs.

Another important note is that the Banana software is not included with the Orange installer, so the size of the installer is not noticeably increased (only by the negligible size the OpenCandy).

In fact, it is not determined what software will be recommended until the Orange installer runs. When it does run, OpenCandy scans the user’s registry for installed programs, operating system details, and chosen language. This information is sent to the OpenCandy servers where some magic happens (including consideration of which recommendations are converting best), and then a personalized recommendation is sent back to the installer in response.

For example, if a user has several already developer tools installed, OpenCandy might recommend Notepad++, a popular text editor. If a user is installing Miro, an open source video player, OpenCandy might recommend Audacity, an open source audio editor.

(If this process threatens your sense of privacy, then you’re not alone. Several blog comments have echoed this sentiment, so OpenCandy’s CEO, Darrius Thompson, answered some of the frequently asked privacy questions here.)

If the user opts to install Banana, or whatever juicy personalized software is recommended that day, OpenCandy will download the necessary installer and handle the installation process. Opting in will not interrupt the in-progress Orange installation.

You can see screenshots of the process here.

Let’s talk money

OpenCandy is aiming to charge between $1 and $2 each time an application is installed through a recommendation. It then splits these revenues with the publishers of the original software.

The OpenCandy team learned a lot about sponsored recommendations at DivX, where the company was reportedly raking in around $20 million annually for bundling software like the Yahoo! Toolbar with the DivX player.

Trick or treat

So, what’s it going to take for OpenCandy to find success and change the software world?

Fundamentally, there needs to exist a strong, profitable market for downloadable consumer software, because OpenCandy’s business is built upon that ecosystem. Downl

Would you consider the research and development Microsoft is doing on the social networking aspects of email communication to be innovative?

My answer: Yes. Just from this short video I can tell Microsoft is one of the leaders in terms of investment in the way established communications methods, such as email, can be mined for increased usability, efficiency, and added value.

Why isn’t Microsoft recognized for innovation to the degree that they are, in reality, actually innovating?

My answer: Because they hide this stuff inside their monstrous corporation and don’t release it for the world to play with!

I have been reading about innovative enterprise collaboration research from Microsoft for years, but it seems that very little of these products actually get released into the wild. Microsoft is still stuck in its old behavior pattern of keeping products locked up internally and working to incorporate every desired feature before releasing the product to the public. 

That worked with operating systems (except maybe Vista, the scourge of my computing life) and office suites because they were used primarily by individuals perform siloed tasks.

Collaboration and communication software, on the other hand, is used to perform work across groups of people and the tool’s efficacy is largely determined by how well it integrates into human social behavior patterns.

Microsoft needs to kick these in-development projects out of the next and see if they can fly in the real world.

Microsoft needs to leverage the desire of its users to collaboratively participate in the development of their own solutions, collecting feedback from users and incorporating this voice of the customer into the next revision.

Take the lid off, Microsoft, and let us see what you’re cookin’! 

Social Views of Email on the Desktop | Chris Pirillo.

BUGbase with keyboard and display modules

No, this is about the BUG do-it-yourself gadget from BUG Labs.

From their site:

BUG is a collection of easy-to-use electronic modules that snap together to build any gadget you can imagine. Each BUGmodule represents a specific gadget function (ex: a camera, a keyboard, a video output, etc.). You decide which functions to include and BUG takes care of the rest, letting you try out different combinations quickly and easily. With BUG and the integrated programming environment/online community (BUGnet), anyone can build, program and share innovative devices and applications. We don’t define the final products – you do.

BUG debuted around CES 2008, and this year, at CES 2009, they announced five new BUGmodules. The BUGprojector sounds awesome, enabling the projection of a 480×320 screen (using DLP® Pico™ technology from Texas Instruments) anywhere. Another new module is BUG3g GSM, adding phone functionality and SIM card input. So, you can basically build your own custom phone with off-the-shelf hardware.

The BUGbase is an ARM-based computer running a Linux kernel and all the software is open-source. I know what you’re thinking… “An open-source, Linux-based phone. Are we talking about Android here?”

No, this is separate from Android, although there has been talk on the BUG boards about modding Android and running it on the BUGbase. But there is definitely some crossover in possible applications and customizability with important implications for the BUG Labs team and the future of their product.

Now that developers can buy an Android Dev Phone (or use a normal T-Mobile G1), many of the hobbyist applications that might have been created on the BUG can be built on Android instead. The G1 has many of the same features out-of-the-box that BUG provides in BUGmodules, including: touchscreen, keyboard, accelerometer, camera, Wi-Fi, Bluetooth, GPS, microphone, and speaker. Of course, the G1 doesn’t have a video projector yet, but the aforementioned features cover the most common use-cases for a handheld gadget.

The BUG product initially struck me as a great toolkit for college students studying computer and electrical engineering and computer science, or even mechanical engineering. The platform is entirely open and documented, including the electrical and mechanical CAD files. As someone who studied engineering, I can say that the BUG sounds like a more exciting project than the usual programmable rolling robots I played with in school. All those robots could do is run into walls.

With the BUG, I can build a gadget that hangs around my neck, detects when I’m walking, pulls my GPS location, and searches the internet (via Wi-Fi or 3G) for nearby ice cream shops. (This search behavior is based on the following logic: if I’m moving, I’m burning calories, so I’m probably hungry, so I definitely want some ice cream.)

But with Android and the G1, we can do the same thing (at least in theory), and the phone is smaller and cheaper than a BUGbase with all the necessary modules. Plus, if I write this application and other people like it, too, I can share it with thousands, or millions, of other Android users. The Android userbase is undoubtedly many times larger than the BUG community.

It seems that BUG is up against some serious obstacles, so what do they do to carve out their own niche?

I love ideas like this that encourage creativity, play, and learning, so I hope that the BUG is successful. Here’s a few stratey suggestions:

Evolve the BUG developer environment to a point where someone like me, a non-programmer, can handle creating simple applications. At that point, the device will be accessible to kids and can serve as a enriching learning environment. This puts BUG in the neighborhood of toys like LEGO Mindstorm. Android is focused for use by professional programmers, so BUG won’t have the competition in this market segment.

Create lower-cost components. This corresponds with the above recommendation. If there were a BUGbase with a reduced feature set and a lower cost, it could be used by children and by schools.

Focus on gadget applications not served by Android and smartphones. As a generalized and versatile platform, the BUG won’t be able to compete directly against devices designed to be phones and mobile internet browsers. So, focus on the capabilities that the Android and G1 can’t touch. This includes applications using the projector module and… well, I’m not sure what else. But I’ll keep my eyes open for cool ideas and add them when I find them.

That’s all for now. Do you have any more ideas? How does the BUG stand out against Android as a platform for gadget experimentation?

“Pew Internet and American Life Project reported that 53 percent of American adults play video games of some kind”

are just the kind of figures that lead to ridiculous venture capital funding mistakes. The number doesn’t tell me anything about how often they play (once a day or once a year), what is considered a video game (WoW or Brickbreaker), and whether the games are purchased or free.

An attractive statistic does not a functional business model make.

Posted by: Chris Zach | Dec 14, 2008 1:33:51 PM

via In-Game Advertising Starts To Drift | Epicenter from Wired.com.

It's all a big social media circle

It all started when I decided to apply for the position of Founder’s Associate at Twitter. Rather than a standard cover letter, I submitted a strategic analysis outlining Twitter’s current competitive state and its options to win the microblogging battle and larger social communications war. The primary tools used were scenario planning and Porter’s 5 Forces.

I then presented this analysis in a session at BarCampSD (San Diego) on November 12, 2008 to an audience with great interaction and sharing of thoughts.

Fast forward to the present. I have been a bit off the grid the last couple weeks while traveling home for Thanksgiving and working on the family business. So, just yesterday I read the news that Facebook had, so far, unsuccessfully negotiated an acquisition of Twitter.

About time. Their partnership was my first recommendation in the strategy presentation.

In my mind, at least an attempt by Facebook to acquire Twitter was inevitable for these fundamental reasons:

It’s a mutually beneficial relationship

Twitter gets a business model, as tweets are displayed amongst advertisements in users’ feeds.

Facebook buys Twitter’s large, existing userbase and brand recognition rather than battling Twitter head-on with a modified status feature.

They need each other

Twitter has, by far, the largest userbase of all microblogging services. But yet its size pales in comparison to the number of people using Facebook. It’s hard to imagine another way Twitter could scale its userbase so quickly.

Facebook is missing out on all the conversations that occur outside its walls on Twitter. It would be beneficial for Facebook user frequency and volume to have Twitter conversations integrated with profiles, the Facebook platform, and the rest of the user’s social graph.

I called this scenario “Slap in the Facebook World”, describing a situation where Twitter must either partner with Facebook or watch as Facebook builds a Twitter clone and leverages its size to bully Twitter out of the ring.

Other scenarios included in the presentation:

• “Twitter in the Cloud Behind the Curtain” — Twitter as a service provider, with revenue coming from premium API access
• “Microblogging the Microsoft Way” — The microblogging platform with the largest corporate userbase wins the consumer game
• “Open Sesame” — Open standards and open source win (e.g. Laconica) and no company makes significant revenues directly from the product

If you’d like to check out the strategy presentation, I’ve embedded it below.

Disclaimer: I made this presentation quickly and for the purpose of sharing indirectly, not for delivering a speech. Therefore, I don’t advise following my example in such text-heavy slides and lack of graphics. You will put your audience to sleep!

(For a concise summary of Detroits economic woes over the last few decades and through the recent loan requests, read here.)

The government has two fundamentally different questions on its hands in making these loan decisions.

Car Company CEOs at Bailout Hearing

For the Big (and shrinking) Three, the question is,

“Should the government bail out an industry that, regardless of the current recession, is responsible for driving itself to the brink of bankruptcy because of poor strategic decisions in product offering and labor management?”

For Tesla, the question is,

“Should the government bail out a high-tech startup that perhaps overreached in its goals for reinventing the automobile power system?”

Tesla Roadster

While all the companies concerned are “US automobile manufacturers”, the two questions are drastically different in reasoning.

Many have argued that bankruptcy is just the medicine Detroit needs to cure its financial woes. Others feel the painful restructuring process will do more damage to the local and national economies and related industries than is worth suffering, including the auto executives requesting the assistance.

I think the correct response lies somewhere in between. Now that the government has significant leverage over the auto companies, let’s use this bargaining position to our advantage. The EPA has always butted heads with auto industry lobbyists over fuel economy standards. Now the government can write the standards on its own terms. For example, we could model new standards after those in Europe with regulated CO2 emissions.

I’d like to avoid bankruptcies, if only for consumer psychological reasons. Consumers will avoid purchasing cars from bankrupt companies, and this will only exacerbate market share losses to foreign competitors.

But if Congress needs to send Detroit back home a couple more times (driving in their hybrids!) until they return with appropriately detailed and significant plans for their use of the loans, so be it.

Tesla is in a separate universe from the established companies. With its small size, it does not have the gravity in the national economy and its failure won’t send the US plummeting into an economic black hole.

On the other hand, its lofty vision of selling all-electric autos is a force far beyond its fleet size. While the sale of a few hundred Tesla roadsters will not make a significant impact on greenhouse gas emissions, the same bunch of battery-powered cars will exert undeniable pressure on the Big Three to respond with similar offerings.

Sure, Tesla’s only product costs $100,000 and is far out-of-reach for most Americans. But consumers will look at that vehicle and then walk into a Ford, GM, or Chrysler dealership and ask for the same thing at a third of the price. They’ll figure that with the R&D capabilities and scale of a major auto manufacturer, a plug-in auto at a reasonable price should be feasible.

Let’s face it. History shows that American auto companies lack the foresight to take longer-term, strategic factors (like the inevitable rise in cost of oil) into consideration when they do research and design vehicles. So, if they don’t possess the internal initiative to develop cleaner vehicles, then maybe Tesla is just the thorn in their sides we need.

Is it worth $400 million in loans to keep Tesla in place as a carrot to lead Detroit?

I think that is some produce that will really produce.

(Sorry, I couldn’t resist!)

But this post isn’t about that kind of automobile noise. This is about the noise emanating from Detroit in regards to the future of our nation’s decimated auto industry and how we — yes we, the people and our government — will be responsible for keeping the industry afloat.

Thomas Friedman opened an article in the New York Times, called “How to Fix a Flat”, on the subject with this:

Last September, I was in a hotel room watching CNBC early one morning. They were interviewing Bob Nardelli, the C.E.O. of Chrysler, and he was explaining why the auto industry, at that time, needed $25 billion in loan guarantees. It wasn’t a bailout, he said. It was a way to enable the car companies to retool for innovation. I could not help but shout back at the TV screen: “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?” If we give you another $25 billion, will you also do accounting?

As usual, Friedman’s ideas were thought-provoking. He received 594 comments on the article before commenting was closed.

Friedman paints a picture where auto executives steered their companies away from any long-term competitiveness toward short-term fixes and Michigan’s legislators shielded the industry from the regulation that would have forced it to compete globally.

And now the industry just isn’t asking for votes in its favor it’s asking for billions in financial support. See the industry’s latest innovation below in a comic by Signe Wilkinson.

Detroit's Latest Plug-In Design

Or Nick Anderson’s comic take:

Catch Detroit

I think it is the gift of a truly talented cartoonist to create comics like these, images that make the viewer laugh out of one side of his mouth while he winces with the other. These comics are painfully entertaining.

Friedman unfortunately chose to close the essay with a tired cliche: that all the auto industries need for redemption is a year of leadership from Apple’s Steve Jobs.

While I have deep respect for Mr. Jobs and his achievements leading Apple to design some of the most popular products of this generation, the problems facing Detroit are larger than any one person can repair.

The fundamental, underlying market mechanisms that steer the behavior of the American auto industry are like, well, a buggy GPS system — they told the industry to turn left in the middle of a bridge and now the industry is through the guardrail and plunging headfirst into the abyss. (For a visual, refer again to Nick Anderson’s comic above.)

Why are the product offerings of the Big (but shrinking) Three so out of line with current consumer demands? Because the companies tuned their product lines to produce the greatest possible short-term profit, without regard to their long-term global competitiveness.

When oil was cheap and carbon even cheaper (aka free), it made economic sense to build the most expensive vehicle a customer would buy, because the pricier the vehicle, the larger the profits. And by the way, this is America, and in America, we like to get a lot for our dollar, so the bigger the vehicle, the better. It’s the same game that restaurants are playing with ever-increasing portion sizes, in a way.

Cheap oil refines into cheap fuel, and cheap fuel does not provide much financial incentive for consumers to purchase fuel-efficient vehicles.

Free carbon (dioxide) means that the emission of greenhouse gases has no cost, and this leads to a similar outcome as cheap fuel, because fuel-efficiency and greenhouse gas emissions are related (inversely).

The problem is that oil isn’t cheap (the falling prices are only temporary) and greenhouse gas emissions aren’t free. Ultimately, greenhouse gas emissions have a cost and the price is paid by the environment in the form of climate change.

So, Detroit has been shielded from economic reality in the US by a curtain of cheap oil and cheap carbon. Suddenly the curtain is pulled back and, uh-oh, Detroit is caught on stage with its pants around its ankles.

It turns out that where Detroit’s competitors live — primarily Japan, Korea, and Europe — fuel is a few times more costly and greenhouse gas emissions are regulated by the Kyoto Protocol. The competitors have been preparing for the automobile market of the future for decades, but the Big Three were thrown into reality over the course of about half a product development cycle, and what a cold shower of reality it was.

Yes, the US has Corporate Average Fuel Economy (CAFE) standards, but I won’t even bother to dive into that controversy. Let us just agree that the regulations haven’t prepared Chevy, Ford, and Chrysler for today’s sudden market reality. After all, it was CAFE that laid the red carpet for the arrival of minivans and SUVs to displace place of wagons. Wagon, as “passenger cars”, were required to have higher fuel economy than minivans and SUVs, as “light trucks”.

In the end, the US was lacking the necessary indicators of cost to influence purchasing behaviors towards sustainable automobile designs. Additionally, the stock market rewarded short-term performance, so the auto companies had no incentive to take responsibility and guarantee their own long-term competitive strength. Since the industry was blind and could not look forward to plan for its own future, we — the US people and our government — are now responsible for taking the industry by the hand and saving it from running into a wall of bankruptcy.

The government may soon step in with financial aid, it looks like we the people might all be proud new owners of auto industry stock. Of course, that stock looks less like a stork carrying a bundle of joy and more like a burning, stinking bag on the doorstep.

Just don’t step on it.

In this scenario, the country’s investments in research (bioengineering bacteria to produce cellulosic biofuels, for example) pay off and we are able to increase our exports to the rest of the world.

The key factor, though, is that the product must be manufactured in the US if we want to reduce our trade deficits and subsequently our borrowing. Biofuel processing will probably always be somewhat localized, as the cost of transport is high, and we aren’t likely to have surplus fuel anytime soon as large as our oil appetite is today. However, we can produce the bacteria, fungus, or other microorganisms in the US and export them to plants around the world.

Here’s the BusinessWeek article and here is my original post.

Update: I just found another BusinessWeek article with four ways the country can use innovation to help the economy recover:

• Inject capital
• Think global
• Focus on public programs
• Support talent

As the New York Times addresses in the recent article “Rivals’ Visions Differ on Unleashing Innovation”, the financial crisis is diverting attention in the upcoming election from the candidates’ science and innovation policies to their approaches for fixing the economy today. Since the media suffers from attention deficit disorder and can only devote coverage to one issue at a time, I’ll use my blog to reach the masses (mini-masses?) and share the importance of innovation to the US’s future.

First, I’ll simplify the process of national innovation to the highest degree possible. Check out this 1st-grade-math graphic I created:

Innovation Math

Let’s break this equation down.

For the US to remain an innovation leader, the country needs money to be spent on research and development combined with talented people to do the work and discover breakthroughs.

Show me the money

Where’s the money come from? It is a combination of government and corporate research investment. If you’d like to compare the Presidential candidates on their technology investment policies, read here. Both candidates support making the federal R&D tax credits permanent, which is important for encouraging corporate investment. But Obama supports significantly more government investment than McCain, and I think Obama has it right. One example: Obama supports the investment of $150 billion over 10 years in developing clean technology.

Many groundbreaking technological advances were achieved on the back of government investment in space, defense, and university basic research — fields like computing and the Internet, medicine and nanotechnology, and transportation technology like RADAR. (Note to avoid angry emails: I didn’t say the government invented the computer, just that its investment advanced the progress.) When there is no clear connection between the basic scientific research and a commercialization opportunity with positive R&D ROI, the government is needed to provide the initial investment. The government then receives its ROI when companies later commercialize the progress in research, create jobs, and pay taxes.

The argument for just how the government should manage this investment in innovation is complicated, so I won’t attempt to solve that problem in this post. However, you can hear some interesting perspectives in this podcast from the journal Nature regarding the upcoming election and national innovation policy. Here are couple takeaways to pique your interest:

• Idea to create a new National Innovation Foundation to holistically manage innovation strategy for the US
• Countries like Taiwan, Japan, China, UK, Germany, and Singapore have national innovation strategies, but the US does not
• Over the past 8 years, the number of computer science graduates in the US has declined by 50%

It’s the people, stupid

Now, let’s move on to the people side of the equation. This is why I really wanted to write this post.

All that money won’t do any good if it isn’t paying and funding the research of talented, educated workers. Undoubtedly, you’ve heard by now horrific statistics, like “China is producing 10 times more engineers than the USA.” While numbers like this might be a stretch — read this article from BusinessWeek about the apples and oranges comparison — there is no doubt that global competitiveness is higher than ever before.

We need to get serious about changing the status quo and take real action to influence youth culture and increase the attractiveness of careers in science and technology. If we want to strengthen national innovation, why don’t we first get innovative with science advocacy? According to the above podcast, there are hundreds of programs across K-12 education advocating science, but let’s face it:

Children and teens are not the most receptive to ideas of what is cool and important coming from the classroom.

Children and teens learn what is popular and desirable from their social relationships with their peers.

These programs aren’t effective enough yet because the marketing is wrong. Let’s look at this problem as a business case study and see if we can find some insight that educators are missing.

(I wrote previously about the importance of science education and strategies for making science interesting in this post. Here, I’ll take a different approach to a similar problem.)

You’re the CEO of a company — let’s call it SciTechSchool Co. — and your business model is this: for every student you encourage to be passionate about science and technology and graduate with a related degree, your company makes $100,000. Woah! What a business opportunity!

(I don’t know what the government’s marginal benefit is for each additional scientist or engineer, but it’s reasonable, if not conservative, to think these people might pay an additional $100k in taxes over their lifetimes.)

Hm… How do you show kids that science is interesting? Do you offer after-school programs to teach them more about science after they’ve had a full day at school already? No, that obviously won’t work.

Maybe, instead of trying to push science at school, you look for ways to slip science into kids’ everyday lives? How do you make science a part of youth social fabric? You make small alterations to what kids are already doing, and without them even recognizing it, they’ll be using science regularly.

Let’s use video games as an example, because we know they garner a lot of youth attention. Say Halo is the game of choice. Want to encourage electrical engineering? Players must fix the virtual wiring in their weapons and suit after being hit before they will work again. Chemical engineering? Players collect chemical components throughout the game and then mix them in precise amounts for regenerative medicine. Mechanical engineering? Players must design their own protective gear and truck armor, balancing strength and weight for the best performance. Computer engineering? Players must program booby traps to capture the enemy, like a knockout gas that is discharged when a sensor detects an intruder.

Video games often involve problem solving by design, all your company needs to do is alter these problems a bit towards science. And this is just one example, the same principle could be applied to other youth pastimes, as well. How about a simple programming language on a mobile phone or a bicycle built for modifications and upgrades?

Let’s change the way we think about science education. If business won’t provide the toys, gear, games, and websites kids need to be science-minded naturally, then let’s create an agency to evaluate and designate “SciTech” products. Then, companies can advertise the benefit to parents, and we let them claim additional tax credits for the development of these products.

It’s due time we get innovative about keeping this country innovative.

I was doing some research recently into GPS solutions for flying as my father is training for his sport pilot license in pursuit of piloting his new powered parachute. Surfing around Garmin’s site, I was surprised to see the lack of support it provides for making a shopping decision. It’s not easy to pick the right device — in the automotive category alone, there are at least 31 different GPS devices from which to choose.

Although not unique in its lapse, I believe this sort of marketing shortcoming is entirely inexcusable. The most advanced shopping feature is a side-by-side comparison tool. How about a product advisor that asks questions about how I’m going to use my GPS or what features are important and then recommends the best options?

Want to navigate me to the best one?

I understand that Garmin does not retail its own products, but that shouldn’t keep it from helping me select the perfect product from its lineup at Garmin.com so I can go buy it at a nearby electronics store.

After all, who should be more helpful and knowledgeable regarding a product line than the company who designs and builds it? No doubt everyone in their marketing department could help me pick the right product if I met them over a beer at a local bar. But they can’t help me on their own company website?

This is a missed pre-sales opportunity, without a doubt. If I get to this site, I am already interested in Garmin’s products. Garmin needs to seize this opportunity and make sure that I find the right product from its lineup. Scaring me with a massive grid of options is as likely to send me clicking to a competitor as it is to present the best choice.

Keep the shopping simple. Don’t miss an opportunity to educate the customer on why they should by your product. 3 is better than 30 when it comes to encouraging the customer to make a decision and purchase.

Here’s the description of the event from MITEF:

Come for the excitement!

Come for the thrill of the competition!

Come to find out about some of the most innovative ideas in Chicago!

Join the Chicago innovation community as we celebrate the best and brightest new ideas that will shape our future.   Come cheer on 15 [actually 13] carefully selected presenters as they compete for a $5000 cash prize! [Split amongst the top 3 places: $3k, $1.5k, $500]

The presenting finalists will have 5 minutes and a whiteboard to describe their innovative concept in front of a panel of Chicago’s most experienced judges and an audience of 200 [I heard about 141 showed up].  No powerpoints, no props, no kidding.

As a participant, you’ll be a part of the process as your vote, over your mobile phone [if you had reception in the auditorium], will account for 20% of the total overall score.

The Whiteboard Challenge is the most exciting innovation event in Chicago and you don’t want to miss out.

The winning presentation was delivered by Dan Masterson for the Guardian Angel Outlet. See a video of the concept demo here.

Rather than talk give reviews of the concepts themselves in this quick post, I’m going to point out 3 helpful tips for delivering a less-formal whiteboard presentation as compared to a more-typical PowerPoint slide sleepfest presentation.

1. Embrace the whiteboard’s unique visual characteristics

By nature, an image on a whiteboard appears gradually as the presenter draws it, one line at a time. This has advantages over a digital presenation where it’s easy to overwhelm the viewer with too much information too fast. It also adds a subconscious suspense component as the viewer waits to see what’s going to show up, like Pictionary on business steroids.

When you’re presenting in front of a whiteboard, add visual information to the board gradually, at approximately the rate you’re divvying oral information. What you want to avoid are the extremes: talking for 4 out of 5 minues without drawing anything (you’ll lose the viewer’s attention as their eyes drift around the room to the captivating carpet stain) or drawing a complicated graphic in silence for 3 minutes (you’ll overwhelm the viewer as soon as you start talking again because you’ll have so much to explain at once).

2. Always write or draw the most important points on the board

If you’re telling the audience how many lives your product will save, or how many 100′s of millions of future customers are lining up at your door step ready to buy (must be hard to sleep at night), then make sure you write this number down (and include the zeros for big numbers — it adds drama as you draw them out, one Cheerio at a time).

And make sure you write the company or product’s name on the board. This is probably the most important thing a viewer should remember, right?

3. Watch game film — in this case, UPS commercials

What can brown do for you? In this case, it can teach you how to give a strong presentation when you’re writing on a board.

The gentle, Bob Ross-with-straight-hair presenter in these commercials (here, here, more here, and here, and on UPS.com here) can teach you a few presentation skills: even though you’re writing on a board, try to do as much talking as possible while facing the audience (people remember faces, not haircuts); draw neatly so that people can concentrate on the message (and not how you scribble like a 3rd grader); and finally, if you’re going to break tip #1 and draw something complex, at least do it right at the beginning so there aren’t interruptions to your flow for the rest of the presentation (the UPS guy gets a head start drawing during the preceding commercial, apparently).

What can whiteboard do for you?

$3,000, at least.

That’s a lot of dry erase markers.

The relatively low risks to launching a new Internet business, compared to physical ventures with higher capital requirements, also leads to exciting, experimental ventures that can afford to launch in a less-than-perfected state and then polish and revise their product as users provide real-world feedback.

But these same qualities that attract attention of aspiring startups, like honey for entrepreneurial bees, also leads to the recurring bubbles and hype that seem inextricably tied to the Internet business world.

The low up-front investment requirements and accompanying cheap maintenance costs lead to ventures with uncertain, and often completely unknown, revenue prospects. But this itself is not the problem. I won’t dispute that a business with hundreds of thousands or millions of passionate users has a realistic possibility of eventually discovering a method to monetize those customers — even if that business model is not apparent up-front.

The problem is that a profit-producing business model is not the only wrench missing from these companies’ strategic toolboxes. On the contrary, some of these ventures are so far from defensible profitability, they’re bringing a standard wrench to a metric party.

Let’s look at Slide, the social network widget company, as an example. In its fourth round of financing, they raised $50 million, valuing the company at around $550 million. They just opened an office in New York City from which to sell more advertising. If you need more background on Slide, read here.

As I said earlier, the problem for Slide isn’t necessarily that they haven’t cracked the humongous money nut that is their 170 million unique monthly viewers. Hearsay evidence says that their CPMs aren’t anything spectacular. But they will probably figure this out eventually.

The problem for Slide isn’t that they don’t already make tons of cash off their sky-high viewership numbers.

The problem for Slide is that they aren’t going to last long enough to solve the business model puzzle.

Let’s grab a few of Michael Porter’s 5 Forces out of the strategic toolbox and start wrenching on the broken machine that is Slide — let’s say, barriers to entry, threat of substitutes, and degree of rivalry, for starters.

Barriers to Entry

The barrier to entry in Slide’s industry, producing widgets for social networks, is like a speed bump in front of a monster truck. The driver might feel it, if he’s sitting just right.

Brand identity:

Almost nonexistent. No user cares who wrote the tool that allows them to chest bump their friends. They just care that they can now do it online and no longer have to risk pecular injury or social embarrassment should their super chest bump end in a super pile of flailing arms and legs.

Capital requirements:

Lunch money. It doesn’t cost anything to put your application on a social network and the network does the hosting for you. You might even have change left over for a rectangular piece of lunchroom pizza.

Threat of substitutes

Switching costs:

Again, almost nonexistent. What keeps me from uninstalling your application from my profile and never using it again? The years of experience I’ve accumulated and deep integration of my workflow with your software? Oh wait, that’s Photoshop. Nope, I can learn a new application in the time it takes to super fart on a friend.

Degree of rivalry

Product differences:

Does Slide possess a unique ability in the industry to design a widget user interface that revolutionizes the marketplace, a la the iPod in a sea of mediocre MP3 players? Nope. Their viewer advantage is due to moving first, network effects, and questionable practices in recruiting users’ friends to add an application. But now that Facebook, for example, has cracked down on runaway app invites and is redesigning the profile page layout, Slide’s previous advantages have melted away like a chocolate bar errantly placed near my laptop’s cooling fan. (I swear it’s about to burn up.)

Now Slide needs to rely on actual product development talent to provide useful, long-term solutions for their customers — not flash-in-the-pan fads, which will never scale into a large, predictable revenue stream. Investing in venture capital is already like gambling. Slide’s investors have either steel balls or empty skulls to want to scale up the risks even greater and bet big on a company, like Slide, whose fortunes ride on something as unpredictable and finicky as consumers’ flavor-of-the-week poking preference.

Not to mention that the social networks themselves can quickly duplicate Slide’s applications on a whim and erase Slide’s business model. The next day, what were the basis of an entire company are now one of a hundred features of someone else’s product.

Sliding into home (aka The Conclusion)

If you’ve made it this far, it’s should be sufficiently clear that the strategic flat tire that will drag many Web 2.0 companies off the information super highway and into the ditch of dot-com blowouts isn’t simply their lack of a business model.

The fact that companies like Slide can build huge viewership numbers isn’t a freestanding sign of success. McDonald’s gives away millions of free toys every year. But with every one, it’s selling a burger-like hockey puck or nuggets that taste like chicken. And making money off of them, too.

Right now, Slide’s products are the equivalent of Happy Meal toys I didn’t ask for. If I show up at Facebook and find a Kung Fu Panda figurine in my Inbox, I’ll probably have fun with it for a while. I might even tell my friends to get one so we can start a big plastic-throwing fight.

But just because you’re good at getting millions of people to play with your free toys for a while doesn’t mean you’re the next Google.

Slide, if you’re listening, remember this:

You need to do something unique and useful.

Uniqueness is different than novelty. Novelty wears off quickly because it’s replaced quickly. Uniqueness comes from solving a problem in a way no one else can.

Usefulness is different than full of users. Making decisions expressly to grow your viewership, when you aren’t making much money off viewers, is aiming at the wrong target. Aim to be useful, first, to just a small number of people, and your audience will grow as everyone realizes your product is indispensable.

Be unique and useful first, and eventually you will find your proverbial chicken-flavored nugget of gold.

The Internet as been creating many opportunities for small companies (including sole proprietors) to act bigger than they could afford in the offline world, and the branding world is no exception.

My client is a successful, talented, and established artist. He is looking for help in differentiating himself from the abundant competition going forward. Considering his openness to innovation and taking a unique path from typical artists, I believe his biggest opportunities for differentiation are not in the content of a future painting but in establishing himself as a brand that encompasses his artwork and extends far beyond it.

This presentation will focus on leveraging the power of the Internet to create a brand with much further reach than could be achieved by an individual offline.

Please feel free to borrow what is useful (as I’ve borrowed from others to create this) and leave any comments if you think I’ve left something out.

I’m particularly looking for some strong examples of small businesses or individuals who’ve created a well-known brand online — ideally outside of the tech industry, to prove that you don’t have to work in tech to use technology to your brand advantage.

OUTLINE

• Why do I need to build a brand?
  • What is the Internet’s role in branding?
  • How does this brand extend into the real world?
• Why build a dialogue and a community?
  • How do I build a dialogue and a community online?
  • How does this extend into the real world?

IN PROGRESS

• What are examples of (personal) brands built online?
• What are examples of dialogues and communities built online?
• What is my brand?

PRESENTATION NOTES

Why do I need to build a brand?

• People do not connect to products or services.
  • They connect to the brand accompanying a product or service.
• Consumers have too many choices — a brand provides differentiation
• Perceived value beyond the basic commodity level is carried in the brand
• The brand is the expectation or promise of value
• A strong brand reduces the need to compete on price alone
• A strong brand gives employees focus and a sense of purpose in their work

What is the Internet’s role in branding?

• It’s easy to be visible on the Internet
  • You are able to publish up-to-date information whenever you want
  • The information is available to anyone with Internet access around the world
• Information on the Internet is largely persistent
  • Once it is created, it exists “forever”
  • A piece of information only has to be published once for it to be communicated continuously
  • Example
    • In the analog world, a story about the inspiration for a print must be told individually to each customer, or broadcast in a newsletter
      • After its initially delivered, its power to impact additional customers falls off quickly
    • In the digital world, the same story is published once but lives onward, easily being forwarded to others, referenced in links, and arrising in search results
      • A larger audience can be reached and in serendipitous ways
• People increasingly look to the Internet first to learn about a company before making a purchase or to answer a question
  • Your website will be the first impression for many potential customers — what do you want it to say about you?
• Digital information is easy to share with others
  • Nothing builds a brand more intimately or effectively than a recommendation from a trusted friend or family member
• Your Internet branding machine is working while you are sleeping
  • You can take a vacation half way around the world to New Zealand, but your brand can still be growing as, for example, a blog post you wrote sparks discussion on a much-debated topic
• The Internet can bring your products to life in a way that is not possible on paper or through words
  • Videos, slideshows, and capturing navigation add interest and depth to information
• Most popular tools for online branding
  • Blogs, online videos (YouTube), social networks (Facebook), websites, email newsletters

How does online branding work offline?

• All content created for online publication can be repurposed for printing or presentations
  • Offer to be a presenter at banquets, art shows, fundraisers, conservation group meetings — anywhere you can share knowledge and be seen by potential customers
  • A blog post forces you to think through an experience, event, activity, or piece of knowledge and put it into words
  • This composed, thoughtful perspective is then prepared next time the topic comes up at a banquet, art show, dinner, or interview
• Writings can be distributed in print magazines and newspapers or with purchases

Why build a dialogue and a community?

• Fans, customers, friends, and colleagues are an important marketing vehicle for your brand
  • What they say about you is crucial to the shaping and publicizing of your brand
• Communicating with people in a dialogue rather than talking at them engages and compells them
  • These people are much more likely to share your brand with their family and friends

How do I build a dialogue and a community online?

• Be yourself
• Be compelling to your audience, open, authentic, consistent, transparent, and well-known
  • People forgive mistakes and differences in opinion when the speaker is sincere and honest
• Share and talk about your own passions
  • The topic won’t have impact if it’s something you don’t love
• Be a teacher
  • Share with people from your unique knowledge and experiences
  • If you give away something of value, the receiver feels valued
• Ask questions
  • To learn what customers want
  • To learn from others’ experiences
• Use your influence
  • Use your name, publicity, and network to reach out and help others
• Be open to contact
  • Publish an email address and answer all emails within 24 hours
• Share a common cause with the community
  • Chances are you share a common passion outside of your business connection with your customers
    • Examples: conservation, environmentalism, green living
  • Designate a place for these people to meet and share ideas and experiences
    • Social network, blog
  • Make it easy for the community to share what they’re doing with their friends and spread the brand

How do I take online dialogue and community offline?

• Meet in-person with customers beyond purchasing decisions
  • Have important, engaged customers visit the studio and see Larry at work
    • They will more than make up for the time required with their recommendations to new customers
  • Talk about more than the artwork when giving presentations
    • What do you care about?
    • People will see who you are as a whole person (your personal brand), not just a painting-creator

What are examples of personal brands?

• Gary Vaynerchuk
  • Took a wine store and made it undeniably unique in personality
  • He does not try to appeal to everyone — that would only water down his brand and his uniqueness
    • He is himself and people appreciate it
  • He gives a face and a personality to what is otherwise an impersonal experience — buying wine online
  • He does all he can to engage with his fans
    • Answers all emails
    • Encourages people to write
• Looking for more great examples! (Particularly outside of the tech industry)

What are examples of dialogues and communities built online?

In progress

What is my brand?

Will work through this exercise with the client

Some sources at which you might take a peak:

The Brand Gap

First Impressions, Marketing, Brand, and Participants