Six Sigma is Deadly for Innovation - But then I’ve said that before!
Every so often, doubtless in a doomed bid to make the whole process of growth and innovation more predictable, some bright spark comes up with the idea of trying to apply six-sigma quality controls to the innovation process. They seem to think that if only innovation could be made more orderly, a more predictable result would ensue. I've said it before, and will say again, six sigma is not the appropriate tool to try to find new things. It's very helpful for optimizing things that already exist, but the parameters that allow it to work properly are totally different in an uncertain and unpredictable world. I was first made aware of the difficulties of using six sigma in this way back when I was doing a fair amount of senior-level executive development at 3M. A new CEO was trying to bring some order into what had become a rather chaotic corporate process, and six sigma was one tool that was being used - as it later turned out - inappropriately, for innovation. I had said it wasn't a good idea at the time. And I guess the company has now caught up. In a recent Wall Street Journal article, CEO George Buckley was quoted as saying: ...it isn't a process. The quality improvement process Six Sigma's worked wonderfully in our factories, but we tried it in our labs and it doesn't work. It's obvious why. The creative process is a discontinuous process. You can't say if I put more money in it I am going to get more out." Well, Bravo for that! Ready to take on stage/gate anyone?
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- Posted Rita McGrath on March 29, 2010
Jigsaw - creating a market for contact information
Anne Ferguson, my assistant, drew this one to my attention. The company in question, Jigsaw, is trying to create a market for contact information, using a variant of the ‘free labor’ theme I’ve written about before. Here’s the idea: Each member adds contact information (the more detailed, the better) into the Jigsaw database. For doing this, members get points added to their accounts. Members can then search for all the contacts in the database and access them for a charge of points. When you enter a new contact, or significantly update a contact, you “own” the contract. Whenever anybody “buys” the contact, you get a percent of the proceeds in terms of points. For points (or payment, I presume) the company will also help create customized lists for marketing purposes.
It’s an interesting idea—you swap your rolodex for the chance to have a peek at the information in someone else’s. Contacts, by the way, have no choice about being entered. I checked on my own information and found that someone had put me into the database, and I hadn’t even known it. I’m intrigued by the combination of incentives to share private information and the benefits promised if others leverage your private information. The “sell” on Jigsaw’s overview page says:
How Jigsaw Helps
Bypass gatekeepers. Go straight to decision makers and influencers. If you’re a salesperson, recruiter, marketer or business owner, Jigsaw will save you precious time.
Interesting that the company’s main selling point is to help people bypass gatekeepers whose job it is to protect the target contact from unsolicited communications. One wonders how long before those who would prefer their information to remain private initiate action to get Jigsaw to remove those private contact details.
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- Posted Rita McGrath on April 21, 2008
Enraged customers will create opportunities in the wireless space
Business Week recently described the sad state of the art of wireless phone services in the United States. Wireless companies, it seems, generate more customer complaints than any other industry. Even more than airlines. Wireless companies, in fact, according to the Better Business Bureau, generate the most complaints out of all 3,900 industries it tracks! Customers are so enraged at some wireless companies’ practices—signing them up for two year contracts for minor changes in service, charging them for supposedly ‘free’ downloads like ring tones, and of course (my favorite) providing poor coverage in general - that regulation has started to look pretty good to lawmakers. But which lawmakers? Ah, there’s an interesting dilemma. States are starting to get into the act, threatening the industry with the kind of nightmarish regulation that industries such as insurance are dealing with right now - state by state requirements with slight differences among them. A so-called ‘wireless bill of rights’ looks like a nice juicy political win for the state lawmakers.
The carriers, of course, don’t like this idea at all, and are investing in federal regulation of cell phone services. I guess better one regulator than many, is their thinking. Meanwhile, they are investing loads of cash in fighting the state regulatory initiatives in places like Minnesota.
So how is this likely to proceed? One lesson, I think, comes from the experiences of manufacturers such as the US auto industry - during the period when they were relatively protected from foreign competition, quality was terrible, pricing high, and innovation basically incremental. It wasn’t until a real competitive threat appeared in the 1970’s that automakers started to upgrade their service and performance, by which time they had alienated so many customers that many won’t even consider buying a US-made car. Similarly, the wireless carriers have used their oligopoly positions to offer pretty poor service including many ‘enrager’ features for the average customer. This is bound to create an enormous opportunity at some point for players who can offer a better experience. Why is the iPhone so popular? It addresses some of the device based enragers, although it still can’t overcome the limitations of the AT&T network that it runs on. But, that is highly likely to change. And customers sure will be motivated to flock to an alternative, should one present itself.
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- Posted Rita McGrath on March 28, 2008
Social Trends among the younger generation - opportunities?
I was recently at the Microsoft Global Accounts Summit, which is a high level meeting for the company’s top customers. Among the fascinating agenda items was a presentation by Robbie Bach, President of Microsoft’s entertainment and device businesses (yes, he’s the guy responsible for much of Microsoft’s reputation for “cool” among some customer segments!).
He made a very interesting observation about how different the younger generation is from those that came before in terms of how and with whom they network, socially. To whit:
The generation of consumers growing up now is the most social generation in history. When I grew up I had friends in the neighborhood. We’d get together with people in the house. This generation of kids have friends in the neighorhood, but their definition of ‘neighborhood’ is completely different. Teens and people in their twenties have an average of 53 friends. The fascinating thing is that 20% of them they have never met in person.
These virtual friends open up all kinds of opportunities for changing the experiences people have with your products and service offerings, and I believe we are only beginning to scratch the surface of the implications of this. Trends that have already been noted include the potential for viral marketing among loosely grouped bunches of people, the use of friend recommendations to enhance reputation or sell products and the evolving definition of who is a trusted source. There are also major downsides that companies really need to think about before making potentially stupid moves. One I read about just the other day is that when you and your boyfriend/girlfriend break up, and you change your status on sites such as Facebook, it tells all your friends! Imagine the multiplier effect of having all that heartbreak out there in public where everyone can see it.
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- Posted Rita McGrath on March 05, 2008
Second order effects of sub prime about to land on insurance
Apparently “the insurance industry is bracing for an increase in arson among homeowners who see setting the house afire and collecting the insurance payment as an alternative to foreclosure”. This according to the January 21 Fortune.
What an interesting example of several things: The law of unintended consequences - who anticipated that financial troubles could spill over into coverage troubles for insurers? The consequences of second order effects - that every major industry wide event will have side effects. And finally, the vital importance of having early warnings in place. If I were working in home insurance right now, you betcha I’d be both watching homeowners in a risky situation and making sure I warned them off.
Of course, the entrepreneurial angle of this is that there must be opportunities to be had in staving off these issues or helping insurers anticipate them more rapidly.
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- Posted Rita McGrath on January 15, 2008
