Breakthrough Innovations in Internal Combustion Engines

Introduced for the 2018 model year, Nissan/Infiniti has introduced a revolutionary new engine innovation that, for the first time, allows an engine to vary its compression ratio. For background, engines traditionally have either a high compression ratio, for efficiency, or a low compression ratio, tuned for power. However, Nissan has been working for more than 20 years on an engine that can do both- the efficiency of a high compression ratio with the performance of a low compression ratio. They have accomplished an astonishing 10% gain in efficiency compared to similar engines with the same performance, with half the cost of a hybrid system that would give similar gains in efficiency.

The question remains, though, was this a smart innovation to pursue? Companies are aggressively pursuing electrification, Nissan included. This would have been a breakthrough if it were introduced 10 or 15 years ago, but currently the breakthroughs in efficiency come from hybridization and electrification, from all segments of cars, from supercars, to minivans, to hatchbacks. While this could prolong the inevitable disappearance of the internal combustion engine, will it contribute enough to make up for its enormous R&D costs? At over 20 years and over 100 prototypes, Nissan made a long and expensive commitment to this technology. Does it even have 20 years of use in it? Furthermore, could they utilize this technology in new applications, such as truck engines, generators, etc.? Licensing could be a lucrative task if they could make large improvements in industrial engines that have traditional had poor efficiencies. Only time will tell, but this is definitely an innovation to follow closely.

–Ryan Gavin

Another Corporate Restructure or a “Cool, not Cold” Business Model?

The Chinese collective Haier, a multinational consumer electronics and home appliances headquartered in Qingdao Shandong Province, had been led by CEO Zhang Ruimin over its turnaround since the 1980’s. Its first wave of expansion was in Southeast Asia with countries like Indonesia, Philippines, Malaysia, etc. in the late 1990’s. The collective, a state-owned enterprise that resembles a consumer conglomerate, bought off GE Appliance in early 2016. With a foothold in the US, it seeks to inject innovation to spur growth in the company. It has also expanded and operates in the Middle East with countries like Pakistan, Jordan, etc., making Haier an international player. Ruimin’s next strategy is breaking up Haier to spur stagnating growth in the company.

Two factors play into this- Bill Fischer and Denis Simon of HBR state that although China is the second largest investor in R&D, their companies are not pushing out innovative technologies, so they usually doesn’t introduce disruptive business models. This comes from state policy of appropriating foreign IP coupled with lax IP enforcement. Second, Dominic Barton of Mckinsey has finally shown proof that meeting short-term expectations at the expense of neglecting long term investments in breakthroughs is like shooting yourself in the foot. He’s shown that, in a state of normalization (i.e. not an economic recession), corporations who follow a long-term strategy perform better against their short-term strategy counterparts. Many CEOs and business leaders (e.g. BlackRock CEO Larry Fink) have been rallying against short-termism for good reason; Gary Hamel and Michele Zanini show that the start-up culture hasn’t been giving America high economic growth like it used to as more wealth and power is appropriated to larger corporations. These CEOs have been sending out calls to action to these large corporations to embrace long-termism, and maybe Ruimin’s ambitious experiments will give a sustainable model to support innovation to inject a new growth mentality in Haier.

Haier has entered a new phase of its strategy, Networking Strategy. Essentially the strategy states that Haier will be producing products that meets the personalized demands of the consumers. They employ tactics such gauging customer feedback in social media forums. Ruimin moves further by adopting Open Innovation that has these tenants; user personalization, product innovation acceleration, and industry disruption. Its emphasis is “The world is our R&D center” through a focus on the customer.  Only time will tell whether he’s successful, but Ruimin’s entrepreneurial vigor has already produced a success, the Tianzun or Heaven in Mandarin which reflects this approach and its core principle of “customer service leadership.” Even the slogan comes from its customers that want to feel “Cool, not Cold.”

The major component of the restructure is splitting off existing units into smaller ZZJYT (zi zhu jing ying ti; Independent operating unit) which act has independent start-ups that compete for resources from corporate.  Haier maintains the corporate function in accounting, finance, and human-resource support. This is akin to a network of micro-enterprises with corporate acting like a venture-capital incubator. Ruimin has also taken a tactic from Zappos playbook by adopting Holacracy, a flat management system. The outcome is a customer focus embedded into these ZZJYT’s. With autonomy and control over various functions (i.e. R&D, marketing, sales and finance) to properly leverage the internet to connect with customers and each other. Most certainly, their short-term bottom line will have critics worried, but the new Haier might pan out and give critics those double-digit growth numbers they’ve been craving. Since this a long-term strategy, increase in profits and revenues maybe compromised as they invest in new ventures from the ZZJYT’s.

-Eric Dominguez

Can you pay too much to innovate?

Intro from Gina:

In class we’ve been talking about what drives and motivates corporate entrepreneurs.  Common wisdom is that entrepreneurs are motivated by the promise of financial reward. Many entrepreneurship professors start their first class by posing this question to their eager students: “Who in here wants to get rich?”  And the hands shoot up.  I’m not so sure that’s the whole truth, of course.  But certainly, in the world of Corporate Entrepreneurship, the financial upside is not there.  Is that a problem? Below are one student’s thoughts on the matter:

At first glance, one might answer the question that titles this post with a resounding NO,because no one will complain on getting more money to do their job. And some might even say the more money they receive, the more effective and loyal innovators will be to the company. But if you really dive deeply enough into the question your answer may start to change. Hopefully, this post will help lead the change in the way you think about monetary motivation in innovation.

In a digital and knowledge-driven economy that thrives on high-risk competition, in order to grow and survive, companies have to continuously innovate. Innovation implies that companies gain new knowledge and transform this knowledge into new products and services. In order to do this and succeed, companies put a lot of pressure and stress on their employees to develop and produce profitable offerings ahead of the competition. On top of all that, an innovator’s career path is “plagued with risk and uncertainty, as well as career stalling obstacles” (Choi et al. [1]) Thus corporations need to attract, nurture, and keep the right employees who have a skill for exploration and that ability to develop and pursue unique ideas.  What you’d think is that organizations that wish to successfully cultivate an atmosphere for constant innovation, their knee-jerk reaction is to motivate through extrinsic rewards. That’s how they handle most problems.  But it turns out that financial payoffs don’t work as incentives for real innovators.

Extrinsic motivation is driven by outside forces, whether the motivation is a carrot or a stick (Amabile). Rewards express and reinforce the values and norms that encompass corporate culture and are used by managers to communicate desired attitudes and behaviors to employees. This prompts innovators to do their job to get something desirable, monetary compensation or status, or to avoid negative repercussions, demotion or firing. The most common extrinsic motivational reward is cold hard cash.  Through extensive research that spans decades, Amabile shows that in the short-term money does not start or stop innovators from innovating. In fact, monetary rewards negatively impact the process because “they eventually lead people to feel that they are being bribed or controlled” It can also prompt an influx of people who are not interested in innovation or even good at it to become attached to that line of work just because of the financial gains.

Bloomberg Tech put out a report on February 13, 2017, highlighting the fact that monetary reward is counterintuitive to corporate entrepreneurship, citing overcompensation as one of the reasons Google’s car project lost essential veteran employees. According to Bloomberg, the problem stemmed from an “unorthodox system” implemented in 2010, where Google agreed to pay key employees bonuses and equity along with the typical salary. On top of the awards a multiplier was added a couple of years later. This multiplier was based on small accomplishments of the car division, instead of the divisions overall performance. “Part of the problem was that payouts snowballed after key milestones were reached, even though the ultimate goal of the project…remained years away.” The snowballing eventually resulted in large numbers of staff members leaving the car division by late 2015.The veteran staff members left because the financial gains were so large, accumulating to over seven figures, that they no longer needed the job security.

The irony of it all is that Google used this reward system to keep valuable employees from going to competing companies. But in the end, the exact thing they were trying to prevent manifested itself. Some of the engineers that left went to work for rival companies or became rival companies by developing their own ventures in the same market. For instance, the previous leader of the self-driving car project, Chris Urmson, left the company in August and formed a startup that develops self-driving software. Similarly, in 2016 the director of hardware development, Bryan Salesky, left Google and became the co-founder and CEO of Argo AI, which was recently awarded a $1 billion investment by Ford to develop a virtual driving system. Google car projects co-founder Jiajun Zhu, and software lead engineer, Dave Ferguson, went on to start Nuro.ai, another self-driving startup.

The moral of the story is that money as an extrinsic reward should not be relied on to motivate corporate entrepreneurship because there is no ideal amount that can ever satisfy everyone. If a person is paid too little, or too much they will eventually leave the company in search for a better opportunity. As Jon R. Katzenbach puts it, “the more you rely on money as your weapon of choice, the more likely you are to encourage self-serving behavior.” Therefore, the answer to the title question is “No you cannot buy innovators.”

-De Andra Salley

[1] Choi, Byung-Chul. O’Connor, Gina. T.Ravichandran. Navigating a Risk Averse Culture: The Effect of Strategic Human Resource Management Practices on Breakthrough Innovation(BI) in Large Firms.RpI working paper available from first author

Innovation with 3D Printing

An exciting trend in corporate entrepreneurship over the past decade or so is the adoption and implementation of additive manufacturing techniques. Although the products made with this technology are not always new in design, the upheaval of traditional manufacturing processes certainly represents a breakthrough change. Furthermore, the devices used to execute additive processes represent a whole new set of design challenges and, as a result, innovative solutions. While nimble and risk tolerant startups initially swarmed around 3D printing in order to fill the new market space (such as MakerBot, Formlabs, and Aleph Objects’ Lulzbot just to name a few), it is interesting to see how many large firms missed this first mover opportunity.

HP Inc. appears to have been one of the first major corporations to manufacture 3D printers; other notable early firms include Autodesk (consumer market) and Mazak (hybrid additive/subtractive machines). However, their Fusion Jet 3D printer was not actually released until 2016, despite how the 3D printer concept has been around since the 1980s. HP’s “Multi Jet Fusion process” capitalizes on their inkjet-based technological competencies in order to produce more precise parts in different materials/colors at speeds 10 times faster than pre-existing products. Considering the even longer delay for other corporations to pursue this market, I wondered, what led them to jump on the trend first?

The release of HP Inc.’s 3D printer came shortly after their split from the Meg Whitman led Hewlett Packard Enterprise. This may cause some to conclude that the best way for large firms to innovate is by becoming smaller! But, the development of the Multi Jet Fusion process was announced in 2014, before the split and leadership change. Nevertheless, the current CEO, Dion Weisler, stated that the split allowed them to be “more reactive to a market that we see is changing at lightening speed”. Furthermore, HP refused to cut R&D because, as Weisler said, they want to “keep the innovation engine alive”. Commitment to innovation from top management certainly bodes well for HP’s long-term success. Although, I wonder if innovation will remain within HP’s core strategy or simply be a passing fad. Perhaps a separate innovation department, not within R&D, could allow them to institutionalize innovation and to strike on market opportunities more quickly.

On the other side of the token, a fair number of firms have been finding ways to innovate with the new manufacturing capabilities that these devices provide. The aerospace industry in particular has used the technology because of its ability to create complicated parts with one operation and less overall weight. News stories of aerospace companies that are using 3D printing are becoming extremely prevalent with Lockheed Martin and Aerojet Rocketdyne both having recent announcements. These two companies aim “to speed production and lower costs” by using additive processes for components in satellites and rocket engines, respectively. However, the most intriguing story that I have recently encountered was about Adidas’ Futurecraft 4D shoes which combine an innovative 3D printing process with an innovative product design. Talk about a great combination! The soles are made using “Digital Light Synthesis technology” which combines light and specialty resins to achieve the desired layout. This is yet another example of corporate entrepreneurship that has stemmed from the additive manufacturing revolution. 3D printing is clearly opening doors to product and process innovations in many different industries.

Some questions to consider…

  • Are the Jet Fusion 3D and/or Futurecraft 4D breakthrough innovations?
  • Why has the adoption of additive manufacturing into corporate strategy taken so long?
  • What will be the next industry to leverage additive manufacturing for product innovations?

-Kyle DeVault

[1] T. Hessman, “18 Companies Leading the 3-D Printing Conversion”, Industryweek.com, 2017. [Online]. Available: http://www.industryweek.com/technology/18-companies-leading-3-d-printing-conversion#slide-0-field_images-154531. [Accessed: 18- Apr- 2017].

[2] A. Zaleski, “HP’s Biggest Gamble Is 3D Printing”, Fortune.com, 2017. [Online]. Available: http://fortune.com/2015/12/08/hp-3d-printing/. [Accessed: 18- Apr- 2017].

[3] R. Park, “Will 2D Printing Giants Succeed in 3D Printing Business? | All3DP”, All3DP, 2017. [Online]. Available: https://all3dp.com/can-2d-printing-giants-succeed-in-the-3d-printing-business/. [Accessed: 18- Apr- 2017].

[4] J. Vanian, “HP, Inc. CEO Dion Weisler Talks 3D Printing, Layoffs, And Being Nimble”, Fortune.com, 2017. [Online]. Available: http://fortune.com/2016/03/08/hp-ceo-qa-3d-printing-layoffs/. [Accessed: 18- Apr- 2017].

[5] P. Swarts, “Lockheed, Aerojet bet on 3-D printing for manufacturing – SpaceNews.com”, SpaceNews.com, 2017. [Online]. Available: http://spacenews.com/lockheed-aerojet-bet-on-3-d-printing-for-manufacturing/. [Accessed: 18- Apr- 2017].

[6] “Adidas Uses Light, Oxygen to Revolutionize Additive Manufacturing, Sports Industry | Sustainable Brands”, sustainablebrands.com, 2017. [Online]. Available: http://www.sustainablebrands.com/news_and_views/product_innovation/sustainable_brands/adidas_uses_light_oxygen_revolutionize_additive. [Accessed: 18- Apr- 2017].

IBM @ HIMSS 2017 – Healthcare, AI, and Transparency

Last February, Ginni Rometty, CEO of IBM, gave the keynote address at the 2017 Healthcare Information and Management Systems Society (HIMSS) Conference & Exhibition. This annual event attracts over 40,000 individuals from around the word that are currently working professionals, clinicians, vendors, and executives within the healthcare IT industry. Taking place in Orlando, Florida, Rometty’s speech emphasized the values and transparency in cognitive computing, especially through utilizing IBM Watson.

“Every new era [comes] with amazing, inspiring dreams, but they also come with questions,” she said. “We have to take [those questions] seriously. When a new era comes, it’s our responsibility to guide that technology into the world in an ethical and a really enduring way.” – Rometty

But, what does that mean for individuals working in the healthcare industry? This industry generates a massive amount of data annually that is impossible for working professionals to absorb, analyze, and use in a short period of time. By applying cognitive computing and artificial intelligence, thousands of journal articles on specific treatments or injuries can be collectively analyzed and presented for next steps with a patient’s track within seconds.

Will this technology replace doctors, or cause some to lose jobs? Rometty comments saying that “this isn’t man versus machine. This is man and machine together.” Some jobs will change, there will be an honest impact, but these new jobs will require a new set of skills. These “new collar” jobs are the future, and Watson will be there to assist. There will be a level of transparency with how AI functions, its purposes, and the business model around it. Especially within healthcare, this technology needs to be very secure as it becomes more personalized.

Will this initiative pay off for IBM? Watson Health is one of the company’s main focuses at the moment. It can be seen as a moonshot idea that is either a gamble or the next big return for the 100+ year-old company. The attendance and attraction at HIMSS 2017 for IBM was very strong, but it may have been due to individual curiosity about the recent failed partnership between Watson Health and MD Anderson Cancer Center. Can Watson Health bring personalized healthcare on a global scale? Will it fully be able to utilize its cloud-based technology for vast amounts of data and accurately analyze medical information through its integrated artificial intelligence? Will the addition of Watson Health create these “new collar” jobs and benefit doctors, or will medical check-ups and treatments be conducted by machines? Only time will tell, and all interested eyes within the medical and healthcare IT industry are on IBM Watson Health.

-Gavin Noritsky

Sources:

FierceHealthCare

HIMSS 2017: IBM’s Ginni Rometty talks trust, values in a cognitive computing era http://www.fiercehealthcare.com/analytics/himss-2017-ibm-s-ginni-rometty-talks-trust-values-a-cognitive-computing-era

Keynote at Healthcare Information and Management Systems Society (HIMSS)

Ginni Rometty, CEO IBM
https://www.youtube.com/watch?v=D58bqSJr6Mg&t=961s

When is an Intrapreneur really an Entrepreneur?

Rodney Williams is a smart and ambitious man. You can come to this conclusion by just reading a list of what he’s accomplished in his career so far. Williams has four degrees under his belt, including an MBA from Howard University. A marketer from birth, as a kid he perused ads and commercials, always thinking about how products and services can truly serve people. He is a natural entrepreneur, even having started several business ventures as a student.

It was when he was at P&G, though, that Williams’ talents really shone. As a brand manager for Pampers, he accomplished quite a bit; by 27 he had three patents and nine wards for his work at P&G. Williams had done well with P&G, but his entrepreneurial spirit had never left him. During a brain storming sessione was having at work, Williams thought of an idea, that data could be sent by inaudible sound waves instead of Wi-Fi or Bluetooth.

Now Williams could have gone and tried to run with this opportunity inside of P&G. He even compliments them as the place he wanted to be as a brand manager, because, as he says, they “wrote the book for brand management.” He liked how they developed and brought products to market. Though Williams had the resources at P&G to commercialize products under well-known brands, he was always forging his own path when his ideas didn’t fit the traditional brand model or well understood product categories that P&G dominated.  So Williams, instead of continuing to be an intrepreneur, did his research and returned to the world of entrepreneurship.

Williams had decided to try to do this new enterprise on his own. What he did was reach out to a friend, Chris Ostoich, and they kicked the idea around. When the two had developed the idea a bit, they asked their engineer friend to see if it could be done. He told them it could but it would be tough, and to bring their idea to a startup competition SXSW. Here they got a lot of attention for their idea, including a lot of people and investors that wanted to be part of their new company, LISNR. It was then that Williams finally quit his job at P&G to fully develop this venture.

After doing my analysis on the articles I had read I reached out to Rodney William’s. I had asked him if my previous analysis was right, was he a champion at P&G? He said that I was right in what I thought. That he had a great idea and the culture wasn’t right at P&G and he had an idea that he wanted to keep completely to himself. Lastly, I asked if innovation was a key component in his new company. He said that “Innovation is a part of LISNR’s DNA it’s in our culture and will be how we succeed.” This statement wasn’t just interesting to see what he thought of innovation, but its place perhaps in LISNR’s success.

-Andrew Garwys

Sources:

http://www.forbes.com/sites/matthunckler/2017/01/20/how-a-lifelong-marketer-leveraged-his-experience-in-corporate-innovation-to-launch-a-tech-company/#7b670f2b1d59

http://www.forbes.com/sites/rodneywilliams/2016/12/01/how-i-arrived-at-my-big-idea/#620cb99e1268

How to Live for 120 Years

“Every CEO talks about making his or her company more innovative, but for GE it’s a matter of survival. GE is a corporate mainstay, the only original stock left in the Dow Jones industrial index, which began tracking the performance of large public companies in 1896. It must succeed now in a world in which the only constant is change”.

– Boston Globe, April 17. 2017

As reported in this recent article by the Boston Globe, GE has successfully operated for over 120 years. But how have they managed to do this? The answer lies in the performance of a number of best practices and a willingness to change.

GE has long been an industrial exemplar in terms of technical and managerial best practices. It should not be surprising then that in this era of ever-quickening change they have continued to lead in this way. GE has long been distinguished for its internal employee development programs whether it’s helping employees continue their technical education with graduate work or placing them in leadership training programs to become more effective managers. This in itself is a best practice. Three more best practices, as identified by the Harvard Business Review, are “(1) resource allocation that nurtures future businesses, (2) faster-cycle product development, and (3) partnering with start-ups.” In terms of resource allocation, it can be tempting to funnel too much money to expand the current cash cow business, and while these must be adequately supported, it is equally if not more important to invest in future businesses that are just emerging. Today’s emerging ventures will be tomorrow’s cash cows. Related to this is achieving a fast product development cycle; that is, not only does GE invest in future businesses, but they consciously move quickly to develop them. For example, GE has worked extensively with Silicon Valley entrepreneur Eric Ries to implement “Agile” and “Lean” methodologies. Finally, GE is partnering with startups as part of an “open innovation” strategy in which startups provide novel business opportunities and capabilities and GE provides capital as well as 120 years’ worth of experience in launching new businesses.

One particular area where GE has invested for the future is in digital capabilities through the creation of its new GE Digital division in 2015. This story started with the emergence of big data analytics and the Internet of Things (IoT) as new, high potential technologies. GE recognized the implications for its business and the importance of leading this wave of technology. In fact, it is changing GE’s entire business model. Rather than its traditional “transactional” relationship with customers – in which GE sells a physical product and may provide some maintenance service – GE is shifting to an “expanded customer outcome” relationships in which IoT product integration can provide improved asset management for customers. In essence, GE has moved from selling hardware to selling a platform as a service (PaaS). This is a truly inspiring example of GE’s willing to change with the times; not only did they create product innovation and develop an entire new digital competency, but they innovated at the business model level, a huge shift for the company.

GE has spent the last 120 years continually growing by continually innovating. They have learned and now model a number of best practices, especially the ability and willingness to constantly change.

-Andrew Eagan

Sources and further reading: