Category: Innovation

The Prodigal Child of the Automotive Industry

DON’T LET ITS PETITE LOOK confuse you with its superb performance delivery on modern road – the micro city coupe “ForTwo” is just above 8 feet long, less than 5 feet wide and 5 feet tall. Weighing 818 kilograms and 3 feet shorter than a Mini Cooper, this Vikings have roll cages similar to racecars, anti-lock (ABS) brakes, advanced electronics, microprocessors and superior drivetrain that offer better stability, braking and general comfort. It has luxury enhancements such as GPS navigation, reverse sensing, night vision, assisted parking, climate control, smart card and keyless voice control. Of course, the smartest car is the one that is fully automated and drives itself.

A smart car is a mini-compact two-seater with advanced electronics and microprocessor that are perfect for crowded places and city driving. The first prototype known as the Micro Compact Car (MCC) was developed in 1994 by Swatch and Daimler-Benz and this ‘Swatchmobile’ was exhibited at the Frankfurt Motor Show in 1997. In fact, the word ‘Smart’ derives from cooperation between Swatch and Mercedes: Swatch Mercedes ART. The updated Smart “ForTwo” was released in 2008 in the USA.

What’s so smart about it?

The idea of building a small car came with Nicolas Hayek, the inventor of Swatch watches. He wanted to make a small car that would be fuel-efficient, environmental friendly and easy to park in confined spaces. Today, his progeny at DaimlerAG’s Smart division and other automakers such as Renault, and General Motors (GM) offer cars that have electric motors or hybrid engines and are fuel-efficient and environmentally responsible.

Although initially people were hesitant to go for Smart, now the notion is changing. Till date, more than 750,000 ForTwos have been sold in Europe and Japan. Subcompacts are also gaining much attention to the trend. Waiting lists and pre-booking for Tesla and Chevrolet Volt show that people are more concern about fuel economy and the environment. The Smart line has conveniently positioned itself among the high-end design and technology segment that targets urban upper middle class, especially the younger generation.

These micro-cars are small in stature but big on economy. Compared to a 7 feet wide Hummer H1, ForTwo is only 5 feet wide. In real life application this means that a Smart Car can back right up to the curb instead of parallel parking in line with other cars. Two or three Smart Cars can park that way in a single curbside parking space. In fact, Swatch wanted to make such a car initially for USA and European market, where parking space and gasoline come at a premium. The cars are ultra-maneuverable and quick of the line – it can even beat many supercars when it comes to acceleration in the city traffic. With its diminutive length, ForTwo can turn within a jaw-dropping 22.8 feet circle, compared to 35.7 feet from a Honda Civic.

With its Tridion Safety Cell in the front, Smart has also governed the safety issue quite well. This stiff structure activates a crumple zones of a colliding vehicle which creates a safety bubble around the passengers. The second generation ForTwo has been awarded 4 out of 5 stars in the Euro NCAP Adult Occupant Protection.

ForTwo is one of the most fuel-efficient four-wheeled vehicle with a conventional gasoline engine in the market. Obviously it cannot compete with a hybrid when it comes to mpg numbers, but it has an artsy design and is certainly easier to park than a conventional four-wheeler. It can snatch the last parking spot virtually anywhere and comes with a vast of color options for its unibody and Tridion Safety Cell. Environmentally, Smart is the most promising four-wheeled vehicle. As it is electric driven, it does not cause any environment pollution.

However, in case of price, Smarts are not so smart and never have been. The base price of a ForTwo automatic drive is $20,640 in the U.S. and $19,650 in the European market, not to mention the $28,750 price-tag of the all-electric ForTwo Cabrio (smart ED). Buyers seeking fuel efficiency also seeks bank account efficiency, and they can find a small conventional car with decent mileage for several thousand dollars less than the cost of a ForTwo.

The electrically assisted power steering offers very little haptic feedback from road surface, making ForTwo jump excessively at road bumps. The disc and drum brakes also feel artificial in expert hands.

The Smarts are also slow when it comes to speed and mileage. Although quick of the line, the latest ForTwos Cabrio can hit 0-60 mph in 10.2 seconds, compared to 5-7 seconds required for most of the conventional sedans. Its top speed has been capped only at 81 mph, as excessive speed drastically cuts mileage and electric range. The projected 70-80 miles of single range is also not practical when it needs 3 hours of charging through a 240-volt outlet or 16.5 hours through a 120-volt household plug.

Even Smarter

DaimlerChrysler debuted an all-electric version of the Smart Car, the ForTwo EV, at the British Motor Show in July 2006. Now in 2018, if offers ForTwo Electric Drive – a quirky hatchback with $24,550 price-tag and a mid-mounted, 80-hp electric motor that runs 70 miles with a single charge. The latest ForTwo Cabriolet is the ‘convertible’ version of the quintessential Electric Drive. Like its forebear, Cabriolet also comes with an electric powertrain and a surprisingly spacious cargo room.

ForTwo is not the only one in the Smart line. Toyota’s Scion iQ was a worthy competitor which held most of the Smart car records before its demise in 2015. Now, ForTwo faces stiff competition with Mitsubishi I-MiEV and Fiat 500e. Honda Fit and Chevy Volt may not be the smallest cars in the market, but when it comes to hybrid drivetrain, automotive intelligence and fuel economy, these cars boast a good competition in the Smart segment. Mini Cooper is another challenger that offers stylish yet tough performance. All of this cars are engineered to maximize passenger space, while minimizing exterior length. ForTwo also has its cousins from the Smart segment in Mercedes – Smart Roadster and Forfour. The latter is being rebuilt to offer a pint-sized 4 x 4 SUV for the USA and Brazilian domestic market. Hyundai is currently building complete self-driving cars for the next generation and Samsung is developing in-vehicle infotainment system. Both firms are vying in the industry to introduce hyper intelligent cars.

While it is evident that this Smart is a great choice for city car, what’s less clear is whether it will fully replace the gasoline-powered conventional cars. Only time will give us the answer. But, with fuel prices at historic highs and environment restoration a burning issue, it is the highest time for automakers to offer and consumers to adopt more fuel-efficient and eco-friendly Smart cars for daily commuting.

Today in business there seems to be a theory that “if it ain’t broke, then no need to fix it”. Whilst I agree to a point, the issue really becomes, why do things the way they have always been done just because they have been done that way?

This is where the art of disruption comes into play.

Who says you can’t reinvent the way that you do things?

Who says there isn’t a better and more effective way to run your business or engage with your clients?

You see as it is YOUR business… it’s YOUR rules!

The disruption model is how I have naturally done things in business right from day one without even realising.

Firstly, with my first brand, by me starting that with only $50, not spending a cent on marketing or advertising and then having a global brand. I didn’t have the “experience” or “business knowledge” at the start but I knew that I had a great product that people loved and that was all I needed but I never wanted to do it the traditional way. When it came to the proper business issues, I ensured they were molded into how we were already doing things and not the way everyone else was doing it. Our procedures had personality.

And now with my new business, what we have managed to do is to disrupt the “norm” when it comes to the whole referral process and word of mouth. Who says it always has to be done the way it always has? Not me!

We as a company are always looking internally as to how we can disrupt the normal way that we do things. It creates a culture of creativity and your industry thrives on creativity so this should be an easy way for you to think.

Running a business, the same way everyone is doing it or the way you always have doesn’t mean that it will work out. You see, when you add a bit of flare, a sense of cheek, a bit of mongrel into the mix, now your business has a personality of its own mixed with you, the owner’s DNA. Your personality, your desired personal outcomes HAS to be put into the business.

I am constantly looking for different and better ways to do things within my businesses. That way it makes running the business more fun (as that is what we should be having every day) and it actually makes you more present and deliberate in what you are doing and not so much on auto pilot mode.

It is very easy to just go with the flow, especially when things seem to be running smoothly. But as the business climate can constantly change, we as business owners need to ensure we are ready to change just as quickly.

So how do you add the disruption model into your business I hear you ask.

Well pretty easily actually. The next time you need to reach out to your customers, market your business or even look at new models to enhance your business growth. Just STOP and take a look at what you are about to do and how you were going to do it. I guarantee you that you would have just done it the same way you have always done it. Sure it may work for you but what if… just what if there was a better way, a cheekier way, a more fun way to do the same thing but due to you applying the disruption method your customers reacted in a better way, the marketing was received better or even your business ran smoother purely because you decided to have fun with the process not just the outcomes.

The “disruption” model enhances our ability to focus on either our systems, procedures, training and even the interaction we have with our clients. It forces you to really look hard at not just how things are done, but more so on whether you are getting the desired results that you were hoping for. I mean let’s face it. How many of you reading this right now have been working your butts off to only “survive”? that’s why maybe chucking a bit of disruption theory into the mix may just be the ting that is needed in your business right now.

Smart phones. Self-driving cars. Genetic manipulation. Every week seems to bring a new discovery or insight. The possibilities seem more boundless than ever. Yet there are some who say that human achievement is slowing down; and indeed, that it must slow down.

The View from America in 2017

Technology is ascendant in America. On a popular news website, a biomedical company named Draper describes their plan to turn a dragonfly into a living drone. Draper’s project aims at grafting a tiny solar-powered backpack onto a dragonfly and then wiring that backpack to the insect’s nerve cord. This allows an operator to steer the dragonfly. Draper foresees the ability to turn dragonflies into pollination machines for farmers and surveillance devices for intelligence agencies.

Elsewhere, in a lab several stories underground, researchers are fighting malaria through the use of genetic manipulation. Funded by the Gates Foundation, these researchers are experimenting with a species of mosquito most responsible for transmitting the disease. The researcher sits down at a microscope and hovers a needle over tiny mosquito embryos. The needle introduces DNA that will render the malaria-transmitting mosquitos infertile. If this particular mosquito population can be eliminated, the primary vehicle for malaria transmission is also eliminated.

Above the earth, scientists using the Hubble telescope have determined that the universe is expanding much faster than originally thought. Through the blinking of distant quasars, observations provide new information about our origins and hint at discoveries yet to come.

By Patent Applications: Is Innovation Really Slowing Down?

Despite these and countless other examples of discovery, some still say that innovation is slowing down. Many have decried these claims. Bill Gates himself has called such arguments “stupid”. And on the one hand, it is easy to see Gates’ rationale.

A popular argument that innovation is slowing down is based on the number of patent applications filed per year. Patents have surged in the years between 2011 and 2013; and while patentable inventions still appear in the millions each year, the rate of growth in 2014 was strikingly lower. The growth rate in 2015 rebounded somewhat but did not approach earlier years. From this perspective, innovation is not matching previous years.

However, patent applications are expensive, laborious and uncertain. Many reasons exist to forego them. In some cases patents are not even the appropriate protection mechanism for a discovery. As a result, counting only patent applications excludes certain areas of innovation. For example, following the legal case of Alice Corp. v. CLS Bank International, the commercial software development industry has relied on trademark more heavily than patents in recent years.

Patent approval can also be affected by bureaucratic moods. If a high percentage of patent approvals occur in one year, the US Patent and Trade Office may take a harder look at applications the next year to ensure a high quality of patents. As such, the percentage of approvals can vary widely from year to year. Anticipating a higher standard may result in fewer patents applications filed.

When one considers these external factors, the use of patent applications as a metric for innovation looks unreliable and potentially one-dimensional.

Tennis, Diminishing Returns, and Lotka Curves

The law of diminishing returns refers to the point at which the level of benefit gained is less than the amount of money or energy invested. This has broad implications, not only in the realm of economics but in other areas of human accomplishment. Professional tennis is an accessible example.

Roger Federer is a successful tennis player. Over a twenty year career, he has amassed over $101M in winnings. Meanwhile, according to Forbes writer Miguel Morales, the 92nd-ranked tennis player in 2013 (named Michael Russell) netted only about $75,000 after expenses. That remains decent money, and many would no doubt prefer a job as the 92nd-best tennis player in the world as opposed to a cubicle.

In other words, there is ample financial motivation to win tennis tournaments. And as such, many find it in themselves to do just that.

Both Federer and Russell have dedicated their lives to tennis. Both work at it year round. Both “try hard”. But at a certain point, trying harder and financial incentive showed less benefit for Federer than Russell. Something else made Federer a better player and helped him avoid the law of diminishing returns.

In his book “Human Accomplishment”, Charles Murray coined the phrase Lokta curve to visualize this phenomenon. The better tennis player you are, the fewer peers you have. While many players rotate in and out of the top twenty rankings, the top two or three rankings are usually held by the same people.

Over time, within this “elite of the elite” sampling, you can see the unparalleled separate from the merely excellent. Scores of players over the years have held the No. 1 rank for at least one week. Far fewer have held it over 100 weeks. Only one – Roger Federer – has held the rank for over 300 weeks.

If you were to map this distribution as a line across a coordinate plane, a Lokta curve would form: a high number for the total of players who held the No. 1 rank for one week, curving down to the fewer that held it over 100 weeks. On the far side of the plane is Federer alone with his 300 week reign.

The Finite Universe

Tennis can always accommodate more Roger Federers because the participants are mortal and inconstant. The laws of nature are not. Fields that rest on accumulated knowledge will eventually solve their questions, given enough time.

Looking back on his work in particle physics, Richard Feynman remarked how lucky he had been to live when he did. He compared it to the discovery of America – an event that can only happen once. It was an apt metaphor. The power of the atom had been intuited and sought after since the writings of Lucretius, nearly two thousand years prior. And in Feynman’s lifetime, he partook in the project that successfully split the atom at Los Alamos.

As great minds come to take their place on the Lotka curve, their efforts will answer many questions that touch on fundamental truths of nature. Some of those efforts will spawn new questions; others will settle the question. In the case of the latter, it can be argued that innovation’s work in that field is done. In this situation, one can see innovation as truly slowing down.

And yet.

The essence of innovation is new insight. As such, the matter is never entirely closed. Anatomy, a field long since thought to be explored, surprised everyone in early 2017. With new research and using new tools, the human body gained a new organ near the stomach: the mesentery. The symbolism is fitting. Discovered at the core of the human body, we can see uncharted territories remain within and without, and with it: opportunity for innovation.

Congrats on your promotion. Here’s your cap and your badge. I’ve just made you the head of a military fighting force. Bad news: you happen to be at war. Worse, you’re up against a superior force.

Now, here’s what the stats show will probably happen: If your military takes on a superior force in the conventional way, you have no more than a 28.5 per cent chance of winning.

However, if you refuse to play by the accepted rules of the game, your chances of winning, as verified by a study of wars spanning 200 years of human history, go up to a whopping 63.3 per cent. That’s a switch from ‘probably will lose’ to ‘probably will win’.

Do I have your attention?

Sometimes, breaking the rules is incredibly effective. In the business world, the same dynamic applies. You can topple industry giants if you act unconventionally. Sometimes, breaking the right rules can hand you an industry on a platter.

Rules and norms accumulate over time

As we explore the art of strategic rule-breaking, this idea is important: no system naturally tends towards simplicity. Left to evolve, everything becomes more complex, as each contributor builds new layers of rules and norms on top of old ones. Increasing complexity is actually the path of least resistance. Simplicity, far from being a natural state, requires intelligent design.

It’s a big part of the reason that so little disruptive innovation comes from within an industry. Taxi drivers didn’t invent Uber, and bankers didn’t invent PayPal, because the people within these industries think through the lenses of their own complex norms. It takes a rule-breaking maverick to see a thing afresh and venture that there might be a better way.

Fight complexity

Take Steve Jobs’s obsession with simple, clean, elegant design. In no small part, it’s what saved Apple upon his return to the company. But it meant saying no to a great many things. No to an extensive product range – keep it simple. No to extra buttons – keep it simple. No to excessive complexity – the system must be easy and intuitive to operate.

Clearing away clutter, resisting the creep of added complexity and disbanding out-dated rules requires a simplicity champion. It requires leadership willing to challenge existing systems.

How much do bad rules really cost you?

At the most glib level, mindless adherence to rules is merely annoying, sometimes even the stuff of comedy (Google the Little Britain skit ‘Computer says no’). But is that sufficient justification to embark on a campaign to overhaul your systems?

It turns out we can do a lot better than that. There are plenty of compelling reasons for reducing and relaxing the rules in your organisation. Here are 6 of them.

As part of your own efforts to change the rules-based culture at your company, this list may be useful as you begin to persuade others to your point of view. Why not present it at your next staff meeting? Ask attendees if they’ve seen real-world examples of each idea. Let their passionate discussion begin to drive the change:

The cost of rules

1. Speed

Rules entail processes that have to be followed. Each process may take a small amount of time in isolation. But pile rule upon rule and even a simple procedure can become an unreasonably slow process. The slower things happen, the greater the total lethargy.

Sometimes useful things are not allowed to happen at all, because a rule flat out prevents them from being done. Other times, a useful idea can’t get to market quickly enough. It took Google two years to get all the vetting they needed from Legal and Marketing to release Google+. By then, Facebook had such a critical mass that Google’s excellent compliance didn’t matter.

2. Willingness

When simple acts are slow to do because of the burden of procedures, the willingness to do them drops. People perceive that going above and beyond is too much trouble. They are trained and conditioned to actively reduce their contribution.

With decreased speed and increased procedures, the word ‘no’ is heard so often it becomes a form of cultural conditioning. ‘No’ trains away initiative and propensity for risk-taking. ‘No’ starts to become normative. It becomes your organisation’s default setting.

3. Mistrust

The greater the weight of the rules, the more you need people watching people, in order to enforce those rules. In an ideal organisation, where people are trustworthy and operate in a high-trust environment, you require only one person to police each person: themselves. Hierarchy becomes zero-sum and need not accumulate.

4. Loss of talent

Feelings of empowerment and a sense of purpose are among the chief needs of employees. Feelings of disempowerment are strong incentives to leave. Maintain a sense of powerlessness and frustration long enough, and you might haemorrhage top talent.

In a rules-based culture, the highly obedient, low-initiative workers stay; the frustrated innovators and high-initiative workers leave. Taken to its logical conclusion, everyone who remains blindly obeys the rules and kowtows to authority, because no one has the ‘radical value’ not to. You create the conditions for extreme groupthink.

5. Security trumping risk-taking

In cases when rules directly contradict goals, your people will tend to choose safety and job security over risk and bold action. The possibility of messy innovation attempts is shut down, precluding the possibility of smartcuts that can equal exponential growth. Multiply this behaviour and eventually no risks are taken, severely diminishing potential.

6. Silos galore

In a high-rules culture, people tend not to focus on the big picture. They lose sight of the mission. They are terrified of contradicting the internal norms and rules of their team or division, and will tend to prioritise behaviour that creates safety for themselves within that smaller division (silo), over behaviour that helps the company as a whole. They may not even know how their contribution helps the organisation, which can create immense conflict between divisions. Unfortunately, your competition will not honour your internal divisions. They may see opportunity in such weakness.

The result of these accumulated costs will be that growth will only happen incrementally in your organisation, if at all.

They also introduce all the inherent dangers of a behemoth that is unable to adapt to change.

Think of it like an old locomotive steam train, running with irresistible momentum on set railway lines. You may run your behemoth to optimised perfection, but if you’re the Kodak of your industry, making film, and you can’t adapt your optimised perfection to the new reality of digital, your optimised behemoth will run, perfectly and unswervingly, with great and irresistible momentum, right off the edge of a cliff. Disruption kills off the dinosaurs that can’t adapt.

Which rules does your organisation cling to, for no reason other than that the rules have always existed? What if you appointed yourself to champion the drive toward greater simplicity and agility? After all, they’re your rules. You can break them. And the ones who do so strategically acquire the leverage to topple the industry giants. They gift themselves with the space necessary to create truly disruptive innovation.