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Entries in consumer demand (17)

Tuesday
Feb032015

Fear of disruption, changes in demand driving corporate VCs?

A November article in the Economist looked at the drivers for the recent growth in corporate venture capital (CVC) activity, noting that a broad range of companies (from 7-Eleven and Boots to BMW and Citigroup) are making investments in startups. 

Setting up VC arms is a way to identify life-threatening changes to their business early, so that they can adapt or, better yet, get in on the act, says Ben Veghte of America’s National Venture Capital Association"

It's clear there has been a surge in this area: the number of CVC units worldwide has doubled to 1,100 over the past five years, and that 25 of the 30 firms making up the Dow Jones Industrial index have one. What's up for discussion and debate are the drivers for this growth. Some view the rising CVC activity as a bubble driven by available cash and a hot IPO market that is likely burst -- as previous CVC booms have done.

Others see new elements: a desire to make strategic investment in new companies that align with corporations' long-term strategies, and a fear that their current businesses could be disrupted by these same class of startups. And there is the lure of faster, less-expensive innovation that these small, agile companies could provide (compared to internal R&D).

What's your view -- will the trend continue? And what's the best purpose for corporate venture capital investments?

-- Segundo Saenz

Thursday
Jan292015

What Andrew Hargadon teaches us about innovation

Many organization strive and struggle to innovate in order to grow (or stay alive). “Innovation” is arguably among the most popular and durable semantic fields in the business vernacular. We have to admit nevertheless, innovations that measurably affect their ecosystem (organizations, consumers, etc) are not as frequent and easy to produce as we would like.  Andrew Hargadon's excellent 2003 book, How Breakthroughs Happen: The Surprising Truth About How Companies Innovate, gives us a number of powerful insights into the mechanisms involved in successful innovations:

  • They are not “inventions”, they usually leverage decade-old technologies
  • They are not heroic breakthroughs, they usually involve a heterogeneous network of people and organizations
  • Innovation is, according to Hargadon, a phenomenon that emerges when we are able to form new relationships between objects, ideas and people -- effectively combining previously unrelated capabilities and technologies. "Innovators are no smarter, no more courageous than the rest of us – they are simply better connected. They find ways to exploit the networked landscape”. The many examples in this book and articles illustrate this phenomenon in a very compelling way.

So where does this take us? This is arguably Hargadon’s most powerful and practical contribution: he goes on to codify the profiles (“nexus”) and capabilities (“nexus work”, “technology brokering") needed to improve and organization’s ability to innovate. This basically aims at taking advantage of the patterns that seem to be consistent symptoms of successful innovations (see above) and build the mindsets and capabilities to provoke and nurture them.

Behind Hargadon’s work, there are decades of keen observation of the major innovations (from penicillin to the iPhone). It is also a powerful practical extension of the Actor-Network Theory (Bruno Latour, Michel Callon, John Law, etc), an approach to social theory and Science and Technology Studies. This theory supports the interpretation of major change as emerging network phenomena, providing a solid, fertile framework to understand and (attempt to) manage complexity for businesses faced with innovation challenges.

It is also a humbling framework as it flies in the face the the hero inventor and breakthrough success as the result of individual prowess.

You can read a short paper outlining Hargadon's thoughts on how breakthroughs happen here. His 2000 HBR article on Building an Innovation Factory, written with Robert I. Sutton is also of interest (and features the images, below).

-- Yassine El Ouarzazi

Monday
Jan262015

Patagonia's approach to values

Outdoor apparel company Patagonia appears to break the rules of how consumer goods companies approach marketing, profit, and consumer communications. Despite this--or because of it--the company is a success story, tripling its profitability and doubling in size over the past few years.

Some examples of Patagonia's unorthodox approach include:

  • Running Black Friday advertising saying "don't buy this jacket"
  • Sharing (certain) innovations with competitors
  • Using company funds to support (potentially polarizing) issues the company believes in

Rose Marcario, Patagonia's CEO, was interviewed by Fast Company this month and the conversation turned to these apparent paradoxes. Marcario's response centered on the companies values: since its founding, Patagonia has placed value on the quality and durability of its products and a respect for the planet and the environment. By making a durable product, backed by a full guarantee, customers don't need to buy as much, reducing the overall environmental impact. Mercario believes that customers seek out Patagonia because they know what the company stands for. She also notes that the company has more freedom to express its values due to its private ownership.

Being a private company really gives you a lot of ability to express yourself and not be confined by this mentality that profit has primacy over all things."

Of course, Patagonia is not the largest (or most affordable) outdoor apparel brand, but we find Ms. Marcario's perspective interesting in that she seems to be describing her company's take on quality, responsibility, freedom, and mutuality. What do you think?

-- Clara Shen

Image source: Urbantimes.co

Thursday
Jan082015

Behavioral economics for consumer insights, digital currencies, and corporate culture in job transitions: Catalyst weekly briefing

Each week we are scanning the horizon for interesting content on topics we like that we will post for your reading pleasure. These may be items that we agree with, or not, on issues that touch in some way on what we are working on in our labs. We hope you enjoy them, and that they provoke discussion and additional thought.

The full briefing, with abstracts and links to original sources, is available here.

IN THIS ISSUE

» MUTUALITY LAB

  • Digital currencies will be the disruptive innovation of 2015: Walter Isaacson

  • Collaboration needed between Western volunteers and those they are helping abroad

  • Farmland assets offer incentives for investors willing to overcome barriers

    » CULTURE LAB

  • Executive Coach Ed Batista provides guidance on transitioning to more senior roles

  • Creative, fun employee manuals used to reach into culture at EF China

    » DEMAND LAB

  • How behavioral economics can give consumer insight

  • Retail loyalty programs dependent on store quality

Tuesday
Dec232014

Weekly Content Briefing, December 23rd

Each week we are scanning the horizon for interesting content on topics we like that we will post for your reading pleasure. These may be items that we agree with, or not, on issues that touch in some way on what we are working on in our labs. We hope you enjoy them, and that they provoke discussion and additional thought.

The full briefing, with abstracts and links to original sources, is available here.

IN THIS ISSUE

» MUTUALITY LAB

  • Western world should have looked to fiscal policy, rather than QE measures to fix economy: Richard Koo, Economist

  • Despite global pact to enforce climate control, opposing forces remain

» CULTURE LAB
  • Creating a culture of agility helps companies prepare for disruption

» DEMAND LAB

  • Understanding, adapting to customers in the digital era

  • Using translators to bridge strategy with analytics to get the most out of big data