innovation

noun
1. 1.
the action or process of innovating.
"innovation is crucial to the continuing success of any organization"
syno
nyms
:
change, alteration, revolution, upheaval, transformation,metamorphosis, reorganization, res
tructuring, rearrangement,recasting, remodelling, renovation, restyling, variation

What is Innovation Management?
Innovation management is the process of capturing and managing organisational innovation.
Traditionally the territory of R&D teams, today many companies have organisation-wide
innovation management programmes. This is due to increased recognition that innovation is
essential for driving business growth and maintaining competitive advantage. Successful
programmes capture the creativity of employees at every level of the organisation so ideas
for new products, business models or process improvements, can be quickly discovered and
implemented for maximum value.
Wazoku Idea Spotlight provides a platform for managing innovation wherever and whenever it
happens. Ideas can come from anyone within your business, and shared with a community of
peers. The best ideas are routed to your experts and decision-makers to make sure that only
those that will drive your business forward are put into practice.
Optimisation, not control
Effective innovation management requires three things: a defined process model, a focus on
innovation, and the right tools to manage it. Its important however, to make sure that youre
optimising the process, not controlling it. A strict, hierarchical chain of command can stifle
innovation. Instead, employees need to feel individually empowered to drive change and
recognised for their innovation.
Thats why Wazoku Idea Spotlight is organic, social and democratic. It allows everyone in your
business to create and evaluate ideas with an equal voice. Informal peer networks can then
collaborate, refine and vote on ideas so that the best ones make it to the top and individual


innovators are rewarded.
Bottom-up emergence and top-down management
Great ideas dont usually come from prescribed brainstorming sessions. Inspiration can come
from anywhere and at any time. Your innovation management programme must support idea
capture from bottom-up, via employees, as well as top-down from management requests. This
flexibility allows you to solve known problems as well as capture unsolicited, spontaneous
ideas.
Using Wazoku Idea Spotlight, employees can submit ideas on anything, wherever they are, on
any device. All they need is an internet connection. In addition, managers can request ideas
on specific subjects to help address existing problems; just think of it as a virtual brainstorm.
How to Manage Innovation
Innovation has become managements new imperative. Everybody wants
to be the nextApple, Google or Netflix, nobody wants to be Kokak,
Blockbuster or US Steel.
Go to any conference these days and some whip-smart technogeek will
declare that you must, innovate or die, and then dazzle you a wide array
of case studies to illustrate the point. Youll feel inspired, then scared and
then have a few beers and go about your business.
Whats missing is a clear set of principles for action. What good is Steve
Jobs unfailing design sense when I cant even get my outfits to
match? How can Googles technological supremacy be relevant to me
when I cant even figure out my TV remote? In other words, we need to
take innovation down from the presentation screen and into working
life. Heres how to do that.
What is Innovation?
Unfortunately, innovation is often conflated with strategy. Strategy, after
all is a coherent and substantiated logic for making choices,
while innovation is a messy business which creates novel solutions to
important problems. Put simply, strategy is about achieving objectives,


while innovation is about discovery, we never know exactly where were
going until we get there.
You can see the conflict. If Feynman, widely hailed as one of the greatest
minds of the 20th century, feels like a stupid ape trying to put two sticks
together when working on a new problem, then there must be something
missing in all of those slick conference presentations.
Clearly, we need to develop frameworks for innovation that are separate
from, although compatible strategy.
The Three Pillars of Innovation
Finding novel solutions to important problems is not only hard, but
complex. There are, after all, a myriad of important problems at any
given time and countless potential approaches to each one of
them. Innovation seems like too small a word.
Nevertheless, I think we can move the ball further by breaking it down
into three discrete areas of activity.:
Competency: Every organization has its own history and set of
capabilities which determine its innovation competency. An old-line
industrial firm cant just wake up one day and decide to operate like a hot
Silicon Valley tech startup overnight, nor should they try. However, every
enterprise can improve.
Tim Kastelle, who researches innovation, has built a powerful
frameworkbased on competence and commitment that will help you
climb the ladder from laggard to world-class innovator.
Strategy: As an manager knows, resource allocation is critical to
strategy and therefore needs to be an integral part of aligning innovation
to strategic objectives.
Again, professor Kastelle provides valuable guidance with his version of
thethree horizons model which suggests a 70/20/10 split between
improving existing products and processes, searching out adjacencies and
exploring completely new markets.
Management: Even the most competent firm which deploys resources
wisely still needs to manage innovation effectively. This is my primary


focus.
Two Crucial Questions
Defining a managerial approach to innovation starts with developing a
better understanding of the problem you need to solve. Ive found that
two basic questions help clarify the path forward:
How well is the problem defined?: When Steve Jobs set out to build
the iPod, he defined the problem as 1000 songs in my pocket. He was a
master at defining a clear product vision.
Unfortunately, some problems arent so easy to frame, like how to create
a viable alternative to fossil fuels. So determining how well the problem
is defined is a key part of developing an actionable strategy.
Who is best placed to solve it?: Once Jobs defined the iPod problem,
it was clear that he needed to find a disk drive manufacturer who could
meet his needs and, once he did, he built one of the most successful
products in history. Yet, again, sometimes the proper domain to solve a
problem isnt so cut and dried.
One thing I like about these questions is that they clarify the issues
quickly. Either there is a simple answer or there isnt. Once you start
asking them, you are well on your way to defining a viable approach.
The Innovation Management Matrix
To follow up on the innovation questions, I developed the Innovation
Management Matrix, determining problem and domain definition allows
us to build a simple 22 matrix encompassing four basic types of
innovation:



Basic Research: When youre aim is to discover something truly new,
neither the problem nor the domain is well defined. While some
organizations are willing to invest in large-scale research divisions, others
try to keep on top of cutting edge discoveries through research grants and
academic affiliations. Often, the three approaches are combined into a
comprehensive program
Breakthrough Innovation: Sometimes, although the problem is well
defined, organizations (or even entire fields of endeavor) can get
stuck. For instance, the need to find the structure of DNA was a very well
defined problem, but the answer eluded even Linus Pauling, the most
talented chemist of the day.
Usually, these types of problems are solved through synthesizing across
domains. For instance, Watson and Crick solved the DNA problem by
combining insights from chemistry, biology and X-ray
crystallography. In a similar vein, many companies are learning to
embrace open innovation in order to pull in diverse resources.
Sustaining Innovation: Whatever you do, you always want to get
better at it. Every year, our cameras produce more pixels, our computers
get more powerful and our household products become new and
improved. Large organizations tend to be very good at this type of
innovation, because conventional R&D labs and outsourcing are well
suited for it.


Disruptive Innovation: The most troublesome area is disruptive
innovation, because its value isnt always immediately apparent. Notably,
Yahoo and Blockbuster had the opportunity to invest in Google and
Netflix early on, but missed the opportunity because they didnt see the
potential.
Disruptive innovations generally target light or non-consumers of a
category so require a new business model and therefore have high failure
rates. Venture capital firms who focus on disruptive investments expect
to that most will fail. One growing trend is for companies to establish
innovation labs, where they can test and learn without excessive risk.
World Class Performers
One thing that is especially confusing about innovation is that great
innovators tend to be quite diverse and different from each
other. Anybody seeking to define best practices by talking to successful
companies would find much of the advice contradictory.
The Innovation Management Matrix can help here as well, because upon
a little reflection it becomes clear that successful innovators tend to focus
on one area of the matrix.

Basic Research: While most basic research happens in academic


institutions, some businesses can excel at it as well. IBM research is one
that truly focuses on pushing the boundaries of science. In 1993, for
example, they accomplished the first quantum teleportation; a technology
that isnt likely to result in a product until after 2020. They continue
to lead in patents.
Xeroxs PARC division, on the other hand, shows both the potential and
the pitfalls of basic research. Major innovations such as the ethernet,
thegraphical user interface and the mouse were developed there, but
Xerox failed to commercialize them. They have since spun off the
division, which now operates as a high-end research outsourcing
contractor.
Breakthrough Innovation: There are those rare souls who are
capable of making breakthroughs, but usually only earlier in their
career. However waiting for a maverick genius to come along isnt a
viable business model.
Thats why many firms are turning to open innovation platforms such
asInnocentive, which allow outsiders to solve problems that
organizations are stuck on. Procter and Gamble has built its
own Connect + Develop platform which allows them to benefit from
expertise in a variety of domains across the world.
Sustaining Innovation: While everybody agrees that Apple is a
superior innovator, the truth is that they rarely produce anything truly
new. They didnt invent the digital music player, the smartphone or even
the tablet computer. However, they improve on earlier versions to such
an extent that they seem like theyre something completely new.
In a similar vein, Toyota makes cars just like any others, except
better. What both companies have in common is that they are masters at
adapting breakthrough innovations for existing markets (it was, after all,
Steve Jobs who most benefited from PARCs work). In essence, great
sustaining innovators are great marketers. They see a need where no one
else does.
Disruptive Innovation: While every new Apple product turns heads,
when Google comes out with something most people wont even
understand what it is much less how theyll make money on it. From


Google Maps to autonomous cars, they manage to fill needs we didnt
even know we had.
3M, the company that pioneered scotch tape and post-it notes, derives up
to 30% of its revenue from products launched in the past 5 years. Both
companies use a version of the 15% / 20% rule, where employees are
required to devote a fixed portion of their time to projects unrelated to
their jobs.
While thats not a viable solution for most companies, many firms are
trying to achieve the same effect on a smaller scale with innovations days,
hackathons and innovation labs, where employees are encouraged to
think beyond existing lines of business.
Building An Innovation Portfolio
While focus is important, no company should limit itself to just one
quadrant. Apple, for instance, is mainly a sustaining innovator, but
iTunes was certainly an important disruptive innovation. While Google
might be the greatest disruptive innovator on the planet, they spend
considerable resources to improve existing products.
So its important to develop an effective innovation portfolio that has one
primary area of focus, but also pursues other quadrants of the matrix as
well and builds synergies between varied approaches. Innovation is,
above all, about combination.
In the final analysis, innovation has little to do with flashy conference
presentations or exciting case studies. Much like any other business
process, effective management entails being able to infuse core principles
into everyday operations.
- Greg

Innovation
From Wikipedia, the free encyclopedia
For other uses, see Innovation (disambiguation).


Innovation is the application of better solutions that meet new requirements, unarticulated needs, or existing
market needs. This is accomplished through more effective products, processes,services, technologies,
or ideas that are readily available to markets, governments and society. The term innovation can be defined as
something original and, as consequence, new that "breaks into" the market or society. One usually associates
to new phenomena that are important in some way. A definition of the term, in line with these aspects, would be
the following: "An innovation is something original, new, and importantin whatever fieldthat breaks in to (or
obtains a foothold in) a market or society".
[1]

While something novel is often described as an innovation, in economics, management science, and other
fields of practice and analysis it is generally considered a process that brings together various novel ideas in a
way that they have an impact on society.
Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or
method, whereas invention refers more directly to the creation of the idea or method itself.
Innovation differs from improvement in that innovation refers to the notion of doing something different rather
than doing the same thing better

innovation


DefinitionAdd to FlashcardsSave to FavoritesSee Examples
The process of translating an idea or invention into a good
or service that creates value or for which customers will pay.

To be called an innovation, an idea must be replicable at an economical cost and must
satisfy a specific need. Innovation involves deliberate application of information,
imagination and initiative in deriving greater or different values from resources, and
includes all processes by which new ideas are generated and converted into
usefulproducts. In business, innovation often results when ideas are applied by
the company in order to further satisfy the needs and expectations of the customers. In
a social context, innovation helps create new methods for alliance creation, joint
venturing, flexible work hours, and creation of buyers' purchasing power. Innovations
are divided into two broad categories:


1. Evolutionary innovations (continuous or dynamic evolutionary innovation) that are
brought about by many incremental advances in technology or processes and
2. revolutionary innovations (also called discontinuous innovations) which are often
disruptive and new.
Innovation is synonymous with risk-taking and organizations that create revolutionary
products or technologies take on the greatest risk because they create new markets.
Imitators take less risk because they will start with an innovator's product and take a
more effective approach. Examples are IBM with its PC against Apple Computer,
Compaq with its cheaper PC's against IBM, and Dell with its still-cheaper clones against
Compaq.
What is Innovation? 30+ definitions lead to
one fresh summary
What is Innovation? 30+ definitions lead to one fresh summary: Fresh Thinking
that Creates Value
The Problem
From the Economist to Wikipedia to Websters to Barack Obama to Innovation Zen,
around the globe, we seek tangible answers for an intangible question: What is
Innovation? Definitions vary and people mean different things. After reviewing dozens
of definitions from a diverse set of sources, I propose a consensus on a simple
definitionas a basis for future conversations about Innovation. Note the red and green
highlighting in the following definitions that help lead to the consensus.
The 30 + Innovation Definitions
fresh thinking that creates value Richard Lyons via Economist article cited below
new products, business processes and organic changes that create wealth or social
welfare OECD think tank via Economist article cited below
The Economist. Something new under the sun: A Special report on innovation,
Vaitheeswaran, Vijay. October 13th, 2007, pg. 4
Technically, innovation is defined merely as introducing something new; there are no
qualifiers of how ground-breaking or world-shattering that something needs to beonly
that it needs to be better than what was there before. And thats where the trouble starts


when an organization requests innovation services from a consulting firm. Exactly what
are they really requesting? The fact is, innovation means different things to different
people.
Business Week.

Innovation is the specific instrument of entrepreneurship the act that endows
resources with a new capacity to create wealth.
Peter Drucker at Quotations Page
Innovation is defined aschange that creates a new dimension of performance
Peter Drucker at http://en.wikipedia.org/wiki/Innovation
Innovation: a creation (a new device or process) resulting from study and
experimentation; the creation of something in the mind; the act of starting something for
the first time; introducing something new
Wordnet
Innovation: First of all, here is my own definition of innovation: invention refers
to newconcepts or products that derive from individuals ideas or from scientific
research. Innovation, on the other hand, is the commercialization of the invention itself
Merriam-Webster Dictionary
The term innovation may refer to both radical and incremental changes to products,
processes or services. The often unspoken goal of innovation is to solve a problem.
Innovation is an important topic in the study of economics, business, technology,
sociology, and engineering. Since innovation is also considered a major driver of the
economy, the factors that lead to innovation are also considered to be critical to policy
makers.
Wikipedia
Something new or different introduced
Dictionary.com
Innovation is converting ideas to numbers


Information Week
Innovation is a process, involving multiple activities, performed by multiple actors from
one or several organizations, during which new combinations of means and/or ends,
which are new for a creating and/or adopting unit, are developed and/or produced and/or
implemented and/or transferred to old and/or new
Joerg Gemuenden at Innovation.cc
Innovation is then simply new technology, i.e. the systematic application of (new)
knowledge to (new) resources to produce (new) goods or (new) services
Maciej Soltynski at Innovation.cc
Any creative idea, getting implemented or realized successfully, is Innovation.
Hexaware Blog
The creation of new products and/or services
Investor Words
Innovation is imaginative activity fashioned so as to produce outcomes that are
bothoriginal and of commercial value
Innovation Productivity Blog
Something newly introduced
The Free Dictionary
PEOPLE using new knowledge and understanding to experiment with new possibilities
in order to implement new concepts that create new value
Think Smart Blog
Innovation: The practical translation of ideas into new or improved products, services,
processes, systems or social interactions
The University of Mebourne


Innovation. Something new or improved, having marketable potential, including (1)
development of new applications for existing technologies, (2) refinement of existing
technologies, or (3) development of new applications for existing technologies.
Zyn
Innovation lowers the costs and/or increases the benefits of a task
Yost
Innovation means venturing away from familiar ground into uncharted territory
SCS
Innovation needs structure. We need to originally explore the regions of creativity so we
can bring method to the madness of originality. We need to expand that special resource
known as innovativeness so that we are not dealing with a finite resource but with
arenewable one. We need to give everyone in an organization the chance to develop
innovative competencies. We need to make the systematic application of innovation real.

Real Innovation
Innovation is the creation of the new or the re-arranging of the old in a new way
Michael Vance at Famous Quote
To innovate is not to reform
Innovation Zen
Innovation: the introduction of something new
Edmund Burke at Famous Quote
Innovation is really about responding to change in a creative way; its about
generatingnew ideas, conducting R&D, improving processes or revamping products and
services. At another level, its also a mindset in your business; your employees are
always focused on continuous improvement and constantly thinking outside of the box
BDC


The successful exploitation of new ideas
Ber
Innovation is a process of taking new ideas through to satisfied customers. It is the
conversion of new knowledge into products and services
Vadim Kotelnikov at 1000 advice
Innovation: The process of creating a product or service solution that delivers
significantnew customer value. The process begins with the selection of the customer
and market, includes the identification and prioritization of opportunities, and ends with
the creation of an innovative product or service.
Ulwick, Anthony W., What customers want. New York: McGraw-Hill 2005, Glossary,180.
Innovation is not the result of thinking differently. It is the result of thinking deliberately
(in specific ways) about existing problems and unmet needs.
Razeghi, Andrew. The Riddle. San Francisco: Jossey-Bass, 2008,1, 24.
Innovation is the embodiment, combination, and/or synthesis of knowledge in novel,
relevant, valued new products, processes, or services.
Leonard, Dorothy, and Swap Walter. 1999. When Sparks Fly. Boston: Harvard Business
School Press, 7.
Innovation is the creation of something that improves the way we live our lives
Barack Obama quoted in Business Weeks In sub section, p. 6, November 2007
The Consensus
For the most part, the aforementioned definitions hit on two strong chords of what
Innovation really is. As a consensus summary definition, Innovation is



a) something fresh (new, original, or improved)
b) that creates value
Something new is not enough for the definition of innovation. There are plenty cases
where something new has no new value ( a new color of a product or a new chemical
produced that does nothing). Sometimes, the value creation results because the item is
simply useful to us. We can create a lot of fresh or new things that are of no use and no
value. It must create value to be innovation.
Also note that the something could be a process, product, or service and can start as
small as your ideas and thoughts in your brain. In that case, it might just be innovative
thinking.
On a parallel note, Sir Ken Robinson, author of Out of Our Minds: Learning to be
Creative, and a leading expert on innovation and human resources, suggested an
almost exact definition for creativity when he said: In fact, creativity, which I define as
the process of having originalideas that have value, more often than not comes about
through the interaction of different disciplinary ways of seeing things. Although he used
the definition for creativity, its a strong synonym of innovation.
Here is a good example: One of my colleagues discovered a new process to make the
sugar substitute, Xylitol, for 1/10 of the cost. Xylitol (found in Trident & Dentyne gum)
has the unique capability to actually help fight cavities. Read more about the
company here. As a result of this innovation, Xylitol could become cheap
enough (valuable savings) for us to use it more regularly, and thereby, improve our
teeth while we consume the sweets that typically ruin our teeth. Note that the process
was something new that created value.


Now that we understand what Innovation is, we can comfortably start writing and
collaborating with readers on this blog. In the next post, we explore what 7 key
principles and ideas to innovation.
Feedback
What other good definitions am I missing? Do you agree/disagree with my consensus
on what innovation is? I look forward to hearing your thoughts on one of the most
important words that will shape the future of our world and business.
































Types on innovation:






























(A) product innovation

A product innovation is the introduction of a good or service that is new
or significantly improved with respect to its characteristics or intended
uses. This includes significant improvements in technical specifications,
components and materials, incorporated software, user friendliness or
other functional characteristics.[1]


Examples of product innovation: first portable MP3 player; introduction of ABS braking, GPS (Global
Positioning System) navigational systems or other subsystem improvements in cars.
(B) marketing innovation

A marketing innovation is the implementation of a new marketing
method involving significant changes in product design or packaging,
product placement, product promotion or pricing.[1]
Marketing innovation is aimed at better addressing customer needs, opening up new markets, or newly
positioning a firm's product on the market, with the objective of increasing the firm's sales.[2] The
distinguishing feature of a marketing innovation compared to other changes in a firm's marketing
instruments is the implementation of a marketing method not previously used by the firm. It must be part
of a new marketing concept or strategy that represents a significant departure from the firm's existing
marketing methods. New marketing methods can be implemented for both new and existing products. [3]
For example, the first use of a significantly different media or technique - such as product placement in
movies or television programmes - is a marketing innovation.
(B) marketing innovation

A marketing innovation is the implementation of a new marketing
method involving significant changes in product design or packaging,
product placement, product promotion or pricing.[1]
Marketing innovation is aimed at better addressing customer needs, opening up new markets, or newly
positioning a firm's product on the market, with the objective of increasing the firm's sales.[2] The
distinguishing feature of a marketing innovation compared to other changes in a firm's marketing
instruments is the implementation of a marketing method not previously used by the firm. It must be part
of a new marketing concept or strategy that represents a significant departure from the firm's existing
marketing methods. New marketing methods can be implemented for both new and existing products. [3]
For example, the first use of a significantly different media or technique - such as product placement in
movies or television programmes - is a marketing innovation.
(C) process innovation

A process innovation is the implementation of a new or significantly
improved production or delivery method. This includes significant
changes in techniques, technology, equipment and/or software. [1]
Examples of of new production methods: are the implementation of new automation equipment on a
production line or the implementation of computer-assisted design for product development. An example
of a new delivery method is the introduction of a bar-coded or active RFID (Radio Frequency
Identification) goods-tracking system
(D) organisational innovation



An organisational innovation is the implementation of a new
organisational method in the firm's business practice, workplace,
organisation or external relations.[1]
Organisational innovation can be intended to increase a firm's performance by reducing administrative
costs or transaction costs, improving workplace satisfaction (and thus labour productivity), gaining access
to non-tradable assets (such as non-codified external knowledge) or reducing costs of supplies.[2]
The distinguishing features of an organisational innovation compared to other organisational changes in a
firm is the implementation of an organisational method that has not been used before in the firm. [3]
Examples: the first implementation of practices for employee development and improving worker
retention, such as education and training systems; the first introduction of management systems for
general production or supply operations, such as supply chain management systems, business
reengineering, lean production and quality-management systems.



\

15 Types of innovation
15 types of innovation (illustrated by car / mobility examples).
for inspiring your innnovation challenges.
Remarkable innovations combine different types !
1. Incremental innovation
Incremental innovation seeks to improve the systems that already exist, making them better, faster
cheaper.




2. Process innovation
Process innovation means the implementation of a new or significantly improved production or
delivery method.

3. Red ocean innovation
Red Oceans refer to the known market space, i.e. all the industries in existence today. In red oceans,
industry boundaries are defined and accepted, and the competitive rules of the game are known.
Companies try to outperform their rivals to grab a greater share of existing demand usually through
marginal changes in offering level and price. As the market space gets crowded, prospects for profits


and growth are reduced. Products become commodities, and cutthroat competition turns the red
ocean bloody. (source)

4. Service innovation
Service Innovation can be defined as a new or considerably changed service concept, client
interaction channel, service delivery system or technological concept that individually, but most
likely in combination, leads to one or more (re)new(ed) service functions that are new to the firm.
(source)

5. Business model innovation
Business Model Innovation (BMI) refers to the creation, or reinvention, of a business itself. Whereas
innovation is more typically seen in the form of a new product or service offering, a business model
innovation results in an entirely different type of company that competes not only on the value
proposition of its offerings, but aligns its profit formula, resources and processes to enhance that
value proposition, capture new market segments and alienate competitors. (source)



6. Sustainable innovation
Eco-innovation is a term used to describe products and processes that contribute to sustainable
development

7. Frugal innovation
Frugal Innovation is about doing more with less. Entrepreneurs and innovators in emerging markets
have to devise low cost strategies to either tap or circumvent institutional complexities and resource
limitations to innovate, develop and deliver products and services to low income users with little
purchasing power.(source)
Frugal engineering.



More examples Functionall Trend briefing
8. Blue ocean innovation
Blue Oceans represent the unknown market space, i.e. all the industries not in existence today. Blue
oceans are defined by untapped market space, demand creation, and the opportunity for highly
profitable growth. In blue oceans, competition is irrelevant because the rules of the game are not set.
Blue oceans can be created by expanding existing industry boundaries or by reconstructing industry
boundaries. (source)

9. Radical innovation
Radical innovations (sometime referred to as breakthrough, discontinuous or disruptive
innovations) provide something new to the world that we live in by uprooting industry conventions


and by significantly changing customer expectations in a positive way. Ultimately, they often end up
replacing existing methods / technologies. (source)

10. Open source innovation / Crowdsourcing
In production and development, open source is a philosophy or pragmatic methodology that
promotes free redistribution and access to an end products design and implementation details
c,mm,n

Volkswagen crowdsources its way to a Hover Car

11. Experience innovation
Companies that try to create holistic experiences by emotionally engaging their consumers.



12. (Im)possible innovation
;-)

13. Disruptive innovation
A disruptive innovation is an innovation that helps create a new market and value network, and
eventually goes on to disrupt an existing market and value network (over a few years or decades),
displacing an earlier technology.

14. User led innovations
The user is king. Its a phrase thats repeated over and over again as a mantra: Companies must


become user-centric. But theres a problem: It doesnt work. Heres the truth: Great brands lead
users, not the other way around. (source)

15. Supply chain innovation
Supply chain innovation is about applying best practices and technological innovations to your own
supply chain in order to reduce such cycle and wait times and other waste (to use a Lean term) in
your in-house processes. (source)


Random inspiration










The Seven Essential Characteristics of Innovative Companies
What makes a company innovative? Innovation is nothing more than a tool that enables companies to achieve
unique, strategic goals. It should not simply be a slogan, nor an end unto itself, argues Jeffrey Baumgartner. To
be truly innovative, an organization should have seven essential characteristics.
What makes for an innovative company? An innovation initiative is not enough. Having the word
innovation in your company slogan or all over your web site is not enough. Indeed, I would argue
that any kind of focus on innovation as an end is detrimental to innovation. Innovation is nothing
more than a tool that enables companies to achieve unique, strategic goals. Here are seven
essential characteristics of innovative companies. How well does your organization do?
1. Unique and Relevant Strategy
Arguably, the most defining characteristic of a truly innovative company is having a unique and
relevant strategy. We all know what companies like Apple, Facebook and Google do. Thats
because they make their strategies clear and relentless follow them. An innovative smaller player
may not be recognised globally, but its leaders, employees, business partners and customers all will
have a clear idea of the companys strategy. If a business does not have definable, unique strategy,
it will not be innovative. Bland strategies, such as to be the best, do not provide a path to
innovation in the same way clearer strategies, such as to be on the cutting edge of mobile
communications technology, to build the worlds safest carsor to deliver anything anywhere do. If
your strategy is vague or fails to differentiate your company from the competition, you should change
this situation as quickly as possible!
2. Innovation Is a Means to Achieve Strategic Goals
Highly innovative companies do not see innovation as an end, but rather as a means to achieving
strategic goals. Just as a good camera is an essential tool that enables the photographer to take
professional images and the saw is an essential tool for the carpenter, innovation is an essential tool
for visionary companies intent on achieving their strategic goals. Indeed, if you look at the web sites
of the worlds most innovative companies, they tend not to trumpet innovation, but rather corporate
vision.
3. Innovators Are Leaders
The one thing innovation provides more than anything else is market leadership. When companies
use innovation to achieve strategic goals, they inevitably take the lead in their markets.
Unfortunately, this does not always translate to being the most successful or profitable. Amazon has
been an innovator from the beginning, setting many of the standards for e-commerce. Nevertheless,


it took some years for the company to become profitable. Cord was one of the worlds most
innovative car companies, launching cutting edge innovations such as front wheel drive and pop-up
headlights in the 1920s and 30s. However the company was never very successful financially and
went out of business in 1938. On the other hand, innovators like Apple and Google have been
financially successful as a result of their innovation. In short, innovators are leaders, but not always
profitable leaders!
4. Innovators Implement
Most businesses have a lot of creative employees with a lot of ideas. Some of those ideas are even
relevant to companies needs. However, one thing that differentiates innovators from wannabe
innovators is that innovators implement ideas. Less innovative companies talk more about ideas
than implementing them!
5. Failure Is an Option
I would argue the the most critical element of business culture, for an innovative company, is giving
employees freedom and encouragement to fail. If employees know that they can fail without
endangering their careers, they are more willing to take on risky, innovative projects that offer huge
potential rewards to their companies. On the other hand, if employees believe that being part of a
failed project will have professional consequences, they will avoid risk and hence innovation like
the plague. More importantly, if senior managers reward early failure, employees are far more likely
to evaluate projects regularly and kill those projects that are failing before that failure becomes
too expensive. This frees up resources and budget for new innovative endeavours. However, in
businesses where failure is not an option, employees will often stick with failing projects, investing
ever more resources in hopes that the project will eventually succeed. When it does not, losses are
greater and reputations are ruined. As a result, companies that reward failure often fail less than
those that discourage it.
6. Environment of Trust
The Innovative company provides its employees with an environment of trust. There is a lot of risk
involved in innovation. Highly creative ideas often initially sound stupid. If employees fear ridicule for
sharing outrageous ideas, they will not share such ideas. Likewise, if employees fear reprimand for
participating in unsuccessful projects, they will not participate (see item 5 above). If employees do
not trust each other, they will be watching their backs all the time. If they fear managers will steal
their ideas and claim them as their own, employees will not share ideas. On the other hand, if
employees know they can take reasonable risks without fear, if they know outrageous ideas are
welcome, if they know that their managers will champion their ideas and credit them for those ideas,


these employees can be creative, implement ideas and drive the companys innovation. In short,
creativity and innovation thrive when people in an organization trust each other and their
organization.
7. Autonomy
Along with trust, individual and team autonomy is a key component of innovation. If you give
individuals and teams clear goals together with the freedom to find their own paths for achieving
those goals, you create fertile ground for innovation. But, if managers watch over their subordinates
shoulders, micro-managing their every move, you stifle the creativity and individual thought that is
necessary for innovation. Of course giving employees autonomy means they may make mistakes.
They may choose inefficient routes to achieving goals. But at worst, they will learn from their
mistakes and inefficiencies. At best, they will discover new and better ways of accomplishing
objectives. Most importantly, if you hire intelligent, capable, creative people and give them the
freedom to solve problems, they will do so. And, in so doing, they well help innovation to thrive
throughout the company.
What Do You Think?
There you have it, the seven essential characteristics of a creative company. What do you think?
How well does your company fit? Have I missed an essential characteristic? Id love to know your
thoughts.


Evolution of Innovative Management
Evolution of Innovation Management: Three major trends

Dr. Eric Viardot, professor and researcher of Business Policy Department at EADA
In my new book Evolution of Innovation Management: Trends in an International Context,
published byPalgrave MacMillan and co-edited with my colleague Alexander Brem, I am exploring
how companies are coping with the recent trends in innovation. The various contributions to the
book identify three major trends in terms of strategy, management, and geography.
First, when it comes to the strategy for innovation, there is an increasing tendency for companies to
extend their outside reach through a collaborative innovation strategy in order to explore fresh
and radical ideas. The innovation network has extended progressively from the internal collaboration


to the consumer collaboration, then the distributors and other business partners collaboration, e.g.
suppliers; with the open innovation, the network is opened to any willing participants and requires an
open collaboration strategy. Some authors are even suggesting a fifth ring of ecological
collaboration when the participants interact with each other and are structured in an ecosystem
which and can generate substantial and valuable knowledge to the company. Apple, Google, or
Facebook are some of the most visible firms which have managed to create and to leverage an
ecosystem of customers, third parties, developers, academics, even regulators, to develop effective
platforms to build new applications and solutions. However, they need to prove that this strategy
leads to revenue on the long term.
The second trend is that innovation management has now clearly emerged as a subset of strategic
management. Companies consider that innovation is too important to be left only in the hands of the
R&D department. Innovation has to be organized, managed, and evaluated by the top management
of the company.
How firms can more effectively use collaboration to develop and manage innovation is one of the
challenges of innovation management. Various contributions in the book emphasize the role of
communication but also the importance of an innovative culture and the need for leadership in the
management of innovation. At a time where a large majority of companies consider that they do not
measure correctly their performance in innovation but they have to, the book offers also new insight
about the qualitative and quantitative KPI of the success in innovation management.
When it comes to the exploitation of open innovation, new tools are now emerging in innovation
management. They include the use of scenario-based learning, social network analysis, mobile
social network management, and communities of practice to support innovation. All those emergent
tools are analyzed in depth, as they are opening new avenues for making innovation management
more effective.
The third trend which is shaping the future of innovation in business is without doubt
the globalization of innovation. Companies from emerging countries have embraced the road to
innovation lately with their own cultural background; but they are becoming serious contenders. The
book provides notably some fascinating examples of how Brazilian, Chinese and Indian firms are
changing the rules for innovating successfully.
In Brazil, the governmental institutions, at federal and local level, have made considerable effort to
build an integrated system of science, technology and Innovation which has put Brazil ahead of all
the other emergent countries in term of technology innovativeness and intellectual property.
The Chinese innovation champions are confronting the weight of tradition around hierarchy and
observance, face and harmony. But in the past, China has been the source of major inventions and
there are no reasons why it should not come back to a prominent position in the future.


Indian companies have less support from the government but they can be extremely creative. Their
frugal innovation model is using limited resources to create low-cost products that are
environmentally sustainable and that work for individual communities. In some cases those frugal
innovations are even finding their way into the developed market.
Significantly, the innovations coming from emergent countries are taking place in locations where it
is most urgent to solve economic, social, and ecological issues. They are paving the way for what is
the plain road to innovation management for this twenty-first century: to deliver products and
services that are not only valuable but also sustainable.
factors influencing innovation
F Fa
Four Factors Driving the Need for Innovation
Everyone, and I mean everyone, talks about innovation. Weve got CEOs, academic leaders, the President of the
United States, talking about innovation. Its clear everyone thinks that innovation is important. The challenge with all
of this talk of importance is that few people stop to define WHY innovation is important. Whats driving the need for
more innovation? We all seem to agree that more innovation and more frequent innovation is important, even
necessary. But are we to accept this as an article of faith? Should we allow innovation consultants, elected officials
and business leaders to tell us innovation is important, but not demonstrate the underlying reasons why innovation is
increasingly so important?
Ill try to describe at least four factors that I think are driving the need for more innovation. Given the time, Im sure we
can jointly come up with many more drivers, and you are welcome to add those in the comments section. These are
distinct factors yet intertwined and to some extent mutually reinforcing.
1. Decreasing Product Life Cycles, Driven by Increased Competition, Customer Expectation, Environmental
Shifts
Used to be, in the dim, dark recesses of history, circa 1980, that a company could design, develop and commercialize
a product and expect it to have a long useful life. Those days, sadly, are over. Many products, driven by expectations
of lower cost, are less robust and less reliable. We consumers are more willing to use something and throw it away
rather than repair or recycle. We have short attention spans and demand new capabilities from existing products. The
media leads us to new shiny objects and causes us to reject our existing products. Whatever the reason, the
expectation of long product cycles is a fallacy. And as product life cycles shorten, firms must engage in discovering
new needs and generating new ideas for new products far more often than they did previously.
2. Increasing Global Trade, Opening the Door to More Competitors from Every Region
Trade barriers have fallen globally. This means far more competitors have access to markets, and far more product
offerings in a range of features and price points. Where a customer may have had only a few choices in years past,
he or she has literally dozens of choices now. This range of choices has increased competition, increased customer
choice and developed in consumers an expectation of constant change. Buyers remorse is growing, as any new


device is immediately replaced by something slightly better the new day or week. Innovators understand that while
the treadmill this creates is difficult, they must either get on the treadmill and create a stream of new products and
services, or be able to disrupt the treadmill.
3. The Rapid Distribution of Information and Education
Time was, most advanced education happened in only a few countries, which were the sources of most innovation.
Today, India generates far more highly trained engineers than the US does. Elite educational systems are being
distributed in many sectors of the globe. Look at major US universities opening locations or partnerships in Qatar and
China. As more education and knowledge is distributed, more insight and more capability is developed globally. That
means more regions have a greater depth of knowledge and are able to generate far more valuable ideas at a far
greater pace than ever before. This simply accelerates the global ability to generate more interesting and valuable
ideas.
4. Reduced Cost of Entry into Markets and Industries
Open markets and lower trade barriers have provided increased access to markets, but other factors have reduced
the cost of entering many markets. The internet by itself has transformed the marketplace, making it far easier to find
interesting products in regions that may not have been available previously. The internet has lowered selling and
marketing costs dramatically and linked many more people across the globe. Increasing wealth in many emerging
economies means more capability to develop products and services. Lower cost of marketing, lower cost of
development, increasing access to capital in emerging economies means more ideas, more products and services.
Conclusion
Shorter product/service lifecycles, reduced barriers to trade, increasing access to information and lower cost of entry
and lower cost of capital globally drive far more product and service development. To simply keep up with the
change, innovation is important. To get ahead of this wave, innovation is a must.
- See more at: http://www.innovationexcellence.com/blog/2012/02/17/four-factors-driving-the-need-for-
innovation/#sthash.JFVDwbtj.dpuf



Traits of Innovative Organization

The Seven Essential Characteristics of Innovative
Companies
Jeffrey Baumgartner
What makes for an innovative company? An innovation initiative is not enough. Having the word
"innovation" in your company slogan or all over your web site is not enough. Indeed, I would argue
that any kind of focus on innovation as an end is detrimental to innovation. Innovation is nothing
more than a tool that enables companies to achieve unique, strategic goals. Here are seven essential
characteristics of innovative companies. How well does your organisation do?


1. Unique and Relevant Strategy
Arguably, the most defining characteristic of a truly innovative company is having a unique and
relevant strategy. We all know what companies like Apple, Facebook and Google do. That's because
they make their strategies clear and relentless follow them. An innovative smaller player may not be
recognised globally, but its leaders, employees, business partners and customers all will have a clear
idea of the company's strategy. If a business does not have definable, unique strategy, it will not be
innovative. Bland strategies, such as "to be the best", do not provide a path to innovation in the same
way clearer strategies, such as "to be on the cutting edge of mobile communications technology", "to
build the world's safest cars"or "to deliver anything anywhere" do. If your strategy is vague or fails to
differentiate your company from the competition, you should change this situation as quickly as
possible!
2. Innovation Is a Means to Achieve Strategic Goals
Highly innovative companies do not see innovation as an end, but rather as a means to achieving
strategic goals. Just as a good camera is an essential tool that enables the photographer to take
professional images and the saw is an essential tool for the carpenter, innovation is an essential tool
for visionary companies intent on achieving their strategic goals. Indeed, if you look at the web sites
of the world's most innovative companies, they tend not to trumpet innovation, but rather corporate
vision.
3. Innovators Are Leaders
The one thing innovation provides more than anything else is market leadership. When companies use
innovation to achieve strategic goals, they inevitably take the lead in their markets. Unfortunately,
this does not always translate to being the most successful or profitable. Amazon has been an
innovator from the beginning, setting many of the standards for e-commerce. Nevertheless, it took
some years for the company to become profitable. Cord was one of the world's most innovative car
companies, launching cutting edge innovations such as front wheel drive and pop-up headlights -- in
the 1920s and 30s. However the company was never very successful financially and went out of
business in 1938. On the other hand, innovators like Apple and Google have been financially
successful as a result of their innovation. In short, innovators are leaders, but not always profitable
leaders!
4. Innovators Implement
Most businesses have a lot of creative employees with a lot of ideas. Some of those ideas are even
relevant to companies' needs. However, one thing that differentiates innovators from wannabe
innovators is that innovators implement ideas. Less innovative companies talk more about ideas than
implementing them!
5. Failure Is an Option
I would argue the the most critical element of business culture, for an innovative company, is giving
employees freedom and encouragement to fail. If employees know that they can fail without
endangering their careers, they are more willing to take on risky, innovative projects that offer huge
potential rewards to their companies. On the other hand, if employees believe that being part of a
failed project will have professional consequences, they will avoid risk -- and hence innovation -- like
the plague. More importantly, if senior managers reward early failure, employees are far more likely to
evaluate projects regularly and kill those projects that are failing -- before that failure becomes too
expensive. This frees up resources and budget for new innovative endeavours. However, in businesses
where failure is not an option, employees will often stick with failing projects, investing ever more
resources in hopes that the project will eventually succeed. When it does not, losses are greater and
reputations are ruined. As a result, companies that reward failure often fail less than those that
discourage it.


6. Environment of Trust
The Innovative company provides its employees with an environment of trust. There is a lot of risk
involved in innovation. Highly creative ideas often initially sound stupid. If employees fear ridicule for
sharing outrageous ideas, they will not share such ideas. Likewise, if employees fear reprimand for
participating in unsuccessful projects, they will not participate (see item 5 above). If employees do not
trust each other, they will be watching their backs all the time. If they fear managers will steal their
ideas and claim them as their own, employees will not share ideas. On the other hand, if employees
know they can take reasonable risks without fear, if they know outrageous ideas are welcome, if they
know that their managers will champion their ideas and credit them for those ideas, these employees
can be creative, implement ideas and drive the company's innovation. In short, creativity and
innovation thrive when people in an organisation trust each other and their organisation.
7. Autonomy
Along with trust, individual and team autonomy is a key component of innovation. If you give
individuals and teams clear goals together with the freedom to find their own paths for achieving
those goals, you create fertile ground for innovation. But, if managers watch over their subordinates'
shoulders, micro-managing their every move, you stifle the creativity and individual thought that is
necessary for innovation. Of course giving employees autonomy means they may make mistakes.
They may choose inefficient routes to achieving goals. But at worst, they will learn from their mistakes
and inefficiencies. At best, they will discover new and better ways of accomplishing objectives. Most
importantly, if you hire intelligent, capable, creative people and give them the freedom to solve
problems, they will do so. And, in so doing, they well help innovation to thrive throughout the
company.


that influence innovation and Methodology of Systemic Management
The 8 characteristics of innovative organizations
In my years of observing many different organizations of different sizes,
different industries, and different stages of growth and development I have
noticed a few things about innovative organizations. These are the
organizations that are always coming up with new ideas, new products, new
ways to serve customers and add value. I have tried to boil these down to just
a few characteristics.
1. Celebrate failure: OK, thats not really accurate. No one really
celebrates failure. But they do celebrate the attempts at successful
innovation. They do not consider an idea that does not end up as a
rousing success as career ending. And they always seek to learn from


these pursuits. They encourage employees to introduce new ideas and to
always look at what they are doing with an eye towards doing it better.
2. Supportive atmosphere: Innovative organizations provide an open
environment with the freedom to kick around and explore ideas even
seemingly crazy ones. These offices often have white boards, flipcharts,
markers, conference tables everywhere to encourage on-the-spot
creativity. Meetings are usually not boring and sometimes include
laughter as crazy ideas are discussed and debated.
3. Open culture: These organizations encourage people to get to know each
other across the company. After all, its not just a marketing person, or a
salesperson, or an engineer that will bring a great new idea to market.
Its a cross-disciplinary team working together.
4. Openness with customers: And I dont just mean a once per year
satisfaction survey. Im talking about proactively inviting customers to
talk openly about company performance and provide ideas and input into
developing new products and services. Ask them to participate in product
and service design, development, and testing.
5. Market knowledge: In innovative organizations, everyone knows who the
organizations target markets are, who their customers are (and their
needs), and who their competitors are. They know the organizations
products and services and how they compare to those of their
competitors. They keep abreast of market trends and the leadership
team actively helps them stay up to date.
6. Clear mission/vision: Employees of innovative organizations really
understand the organizations mission and vision and can live within
(and sometimes push the boundaries of) them. This is a result of a
culture that involves them in strategic thinking. New ideas are tested


against this strategic vision to see whether the new idea moves the
organization closer to that vision.
7. Set employee expectations: Innovative organizations expect employees
to come up with good ideas. Often its actually built into the hiring and
measurement processes. These organizations look for ways to identify
prospective employees who are not just experienced and technically
competent in what they do, but also demonstrate a spark of creativity, a
willingness to take risks, to offer ideas, and are comfortable in an open,
creative environment. These are the people who are willing to be the
first to draft a document that others will review, revise, and edit. These
are the people who may begin a sentence with This may sound crazy but
what if we.. Employees are encouraged to help recruit like-minded
people.
8. Broad-perspective employees: Employees bring their different
perspectives, their different talents, and different mindsets. They might
come from differing backgrounds, different academic disciplines, even
different industries. They are open to exploring and adapting new ideas
from almost anywhere. They also dont feel constrained by what has
been tried before.
The Worlds Most Innovative
Companies 2012
Why are some companies able to create and sustain a high innovation premium while others dont?
The answer is not complicated: People, process, and philosophies (what we call the 3Ps). They differentiate the best
in class from the next in class when it comes to keeping innovation alive and delivering an innovation premium year
after year.
On the people front, the behaviour of leaders mattersbig time. In our initial study on disruptive innovators published
with Clayton Christensen in The Innovators DNA, we found five discovery skills that distinguished innovators from


non-innovators. Innovators ask provocative questions that challenge the status quo. They observe the world like
anthropologists to detect new ways of doing things. They network with people who dont look or think like them to
gain radically different perspectives. They experiment to relentlessly test new ideas and try out new experiences.
Finally, these behaviours trigger new associations which allow them to connect the unconnected, thereby producing
disruptive ideas.

Related

5 September, 2013
The World's Most Innovative Companies 2013



7 March, 2013
Are Accountants and CFOs Killing Innovation?

8 November, 2012
Creating and Sustaining the Innovative Edge
Click here to view complete list.
As part of our research we developed an assessment to determine how much individuals engage these skills. We
found that top management teams innovation skills make a serious difference. In fact, leaders of high innovation
premium companies scored at the 88th percentile on our assessment of the five skills of disruptive innovators. By
comparison, CEOs of average companies scored at only the 62nd percentile. Put differently, innovative leaders spent
approximately 31 percent of their time actively engaged in innovation-centered activities compared to only 15 percent
by leaders of less innovative companies. Doubling the time a senior leader personally invests in getting new ideas
usually delivers significant returns.


Lessons From Leaders
For example, Fabrizio Freda, CEO of Este Lauder (# 23 this year; #44 last year) excels
at challenging the status quo by playing the outsider. He learned this lesson early in his career, as he moved from
Procter & Gamble to Gucci and back to P&G again.
The experience outside [P&G] gave me a lot more authority in challenging the status quo, says Freda, I stayed the
challenger forever. The trilingual (Italian, French, English) executive has lived throughout Italy Naples, Rome and
Florence and in Germany, Switzerland and Belgium. During his time at Gucci, Freda oversaw international
marketing and strategic planning. While at P&G, he worked in many divisions including cough and cold, laundry,
health and beauty, and most recently, as president of global snacks. Freda is the quintessential observerand as he
observes he both watches and listens. After arriving at Este Lauder, he spent six months on a listening tour,
zigzagging across Lauders worldwide operations in 140 countries. I strongly believe in the power of listening, says
Freda. Listening, he says, helps him connect the dots. The way my thinking and creativity goes is listening,
connecting and creating.
S.D. Shibulal, co-founder and CEO of Infosys (#19 this year; #15 last) is both observer and experimenter. In his 30
years at Infosys, Shibulal says, There is nothing that I have not done. He was the first sales person, has done
account management, launched its internet consulting practice, is a network expert, helped design and launch its first
ecommerce application, and has been the head of both delivery and sales. To get a new perspective, Shibulal took a
five-year sabbatical to work for another firm, Sun Microsystems. Hes also known as an experimenter and gadget
freak. Shibulal has always been fascinated with taking things apart and putting them back together. When he buys
the latest device, he never uses it as it is. He examines it, takes it apart and refits it to his needs, turning fad into art.
Before PDAs were popular, he had assembled his own version with different parts from a RadioShack store. Thats
why at Infosys, where geeks are a dime a dozen, he is revered as a gizmo guru.
The Process of Innovation
Weve found that successful leaders not only personally understand how innovation happens but they try to imprint
their behaviours as processes within their organisation.
Jeff Bezos (Amazon, #3) looks to surround himself with people at Amazon who are
inventive. He asks all job candidates: Tell me about something that you have invented. Their invention could be on a


small scale say, a new product feature or a process that improves the customer experience, or even a new way to
load the dishwasher. But I want to know that they will try new things. When the CEO asks all job candidates whether
theyve ever invented anything, it sends a powerful signal that invention is expected, and valued. Bezos is also a
great experimenter (with multiple patents to his name) and claims that, I encourage our employees to go down blind
alleys and experiment. In fact, we have a group called Web Lab that is charged with constantly experimenting with
the user interface on the website to figure out improvements for the customer experience. The point is that leaders
like Benioff [of salesforce.com] and Bezos dont just do it themselves, they think about replicating themselves and
their behaviours throughout their organisations.
In contrast, weve seen many innovators who dont seem to care about coaching or building innovation skills in
others. They are good at creative problem solving so why delegate it to others who arent as good at it? This can be a
huge barrier to building an organisation with true innovation capability. So having innovative leaders is necessary but
not sufficient for sustaining an innovation premium.
Apples performance under Steve Jobs, versus other leaders, powerfully illustrates the importance of innovative
leadership. From 1980-1985 during Jobs initial tenure at Apple, the companys innovation premium averaged 37
percent. Without Jobs, Apples premium dropped far below zero (an Innovation Discount) from 1985-1998. But with
Jobs back at the helm Apples innovation premium eventually jumped to 50 percent. Jobs impact is undeniable. But
what will happen now? Did Jobs sufficiently build innovation capability throughout Apple? Does Apple have sufficient
innovation skills within the top management team and processes that encourage and support folks as they try to
think different like Steve Jobs?
What we do know is that if the leaders of a company dont get innovation, the organisation doesnt stand a chance.
The bottom line is that leaders of innovative companies consciously set the example by modeling innovation
behavioursand imprinting those behaviours within their organisation as processes. Their personal actions help to
make innovation matter to others.

This article was originally published by Forbes. To read the full article go here.
Hal
Gregersen is Senior Affiliate Professor of Leadership at INSEAD.


2. Innovation Projects Management
nnovation and Entrepreneurship
(1985)
Peter Drucker
Over 20 years since publication, Innovation and Entrepreneurship is still the landmark
work on a subject that, before Drucker, had had little real analysis.
At the beginning, the author is clear that his book is not about the psychology or character of
entrepreneurs. It is not the mysterious flash of genius so often ascribed to the wealth creator
that interests him, but actions and behavior - how innovation and entrepreneurship can be boiled
down to a system that can be learned and applied by anyone. Drucker was unusual among
business gurus for working with people in all types of organizations including unions, girl scout
bodies, science labs, churches, universities and relief agencies. His message was: wherever you
work, there is huge scope for changing how you do things that can make a massive difference.
The author began teaching innovation and entrepreneurship in the mid-1950s, and this book
represents three decades of testing of his ideas. Many of the examples come from his own
experience as a consultant, or from the experience of people he taught. Though some have now
dated, overall this is a timeless work that should be read by any aspiring entrepreneur or
organization-starter.
Its management, stupid
Innovation and Entrepreneurship starts with Druckers drawing attention to a mystery: why, in
the American economy from 1965 to 1985, despite inflation and oil shocks, recessions and major
job losses in certain industries and government, there had been huge jobs growth. The jobs 40
million of them - had not been created by large corporations or government, but mostly in small
and medium sized businesses. Most people explained the growth in one word: hi tech.
In fact, only 5 or 6 million of the new positions came from the technology field. The key
technology driving jobs growth, according to Drucker, was not widgets and gadgets, but
entrepreneurialmanagement. The force of the entrepreneur, he suggests, is always greater than
the current state of the economy. Even the famous Kondratieff waves cycles of technology
and production that are meant to drive economies did not explain a lot of economic growth.
Management, or how things can be done better, is best appreciated as a social technology, as
much as a discipline like engineering or medicine. Drucker notes that the huge success of
McDonalds was in large part due to better management of a service that had previously been run
by Mom and Pop owners. Everything - the product, the time it took to make it, the way it was
made, the way it was sold and served - was refined and standardized beyond belief. This was not
high tech, Drucker observes - it was doing things in a different, better way, and in the process
creating new value.


What is an entrepreneur?
The entrepreneur, wrote Frenchman J B Say in 1800, shifts economic resources out of an area
of lower and into an area of higher productivity and greater yield.
This was the original definition and the best, Drucker maintains.
Entrepreneurship is not a personality trait; it is a feature to be observed in the actions of people
or institutions. Entrepreneurs in health, education or business work basically the same way.
Essentially, they do not just do something better, but do it differently.
Classical economics says that economies tend towards equilibrium they optimize, which
results in incremental growth over time. But the nature of the entrepreneur is to upset and
disorganize. He or she is a wildcard that generates wealth through the process economist Joseph
Schumpeter described as creative destruction. This involves dealing with uncertainty and with
the unknown, and having the ability to exploit change or respond intelligently to changes. It is a
misconception, Drucker says, to think that everyone who starts a new business is being
entrepreneurial. People do take a risk in opening a shop or a franchise, but they are not
really creating anything new, not creating a new type of value for the customer in a way
that, say, McDonalds did.
The risk myth
Drucker asks: why does entrepreneurship have the reputation of being very risky, when its
purpose is simply to shift resources from where they yield less, to where they yield more? In
fact, it is less risky than just doing the same thing better; in following this course it is easy to
totally miss out on new opportunities and run an enterprise into the shoals without hardly
noticing. Embracing change and assiduously trying out different things is actually the best way
to invest resources. He points to the amazingly successful record of constantly innovating hi-tech
companies Bell Lab, IBM, 3M (today, you would say Apple) - to see that this is true.
Entrepreneurship is only risky, he observes, when so-called entrepreneurs violate elementary
and well-known rules. It is not risky when it is 1) systematic, 2) managed and 3) purposeful.
He notes:
[E]ntrepreneurship is not natural; it is not creative. It is workEntrepreneurial businesses treat entrepreneurship as
a duty. They are disciplined about itthey work at itthey practice it.
Entrepreneurship can exist in large organizations, and in fact Drucker says
they must become entrepreneurial if they are to have long-term futures. General Electric in
America, and the retailer Marks and Spencer in the UK are both big companies which have
strong records of creating new value. The big expansion in American universities from the
original elite college system was driven by entrepreneurship: finding new customers for higher
education by providing new worth and relevance. This was not a case of taking great risks
rather, identifying opportunities.
How to be an innovator


According to Drucker, innovation is whatever changes the wealth-producing potential of
already existing resources.
The best innovations can be alarmingly simple, and often have little to do with technology or
inventions. For example, there was nothing technically remarkable about creating a metal
container that could be easily offloaded from a truck onto a ship, but the advent of container
shipping as a standardized system of moving things around the globe was an innovation that
quadrupled world trade.
Many of the greatest innovations are some kind of social value creation, such as insurance, the modern hospital,
buying by instalment, or the textbook. Were it not for the humble textbook, which emerged in the mid-seventeenth
century, universal schooling would not have been possible, and if American farmers had not had access to instalment
purchasing, the surge in agricultural productivity would not have happened. This financial innovation allowed them to
become much more productive today, instead of having to wait years to afford a purchase.
Drucker suggests that science and technology are actually the least promising of all the sources
of innovation, generally taking the most time to realize any benefits, and costing the most. In
reality, anything that takes advantage of an unexpected change in society or a market is actually
quicker, easier or more likely to result in success.
The entrepreneur is on the look out for:
The unexpected: an unexpected success, failure, or event (see below);
Incongruities: between things as they ought or are said to be and how they actually are;
Problems with an existing process for which no one has provided a solution;
Changes in how an industry or market operates that takes everyone by surprise;
Demographic (population) changes; and
Changes in perception, mood or meaning.
The unexpected success
Drucker includes several fascinating examples of the unexpected success, and the extent to
which those involved were able to take advantage:
Macys, the New York department store, did poorly for several years because it considered itself primarily a
fashion store, and was downplaying the growing effect of appliance sales on its bottom line. To the
companys directors, these sales were an embarrassing success. Only later, after it had accepted the place
of appliance sales as a bona fide part of its image and range, did the store again prosper.
Many antibiotics developed for humans can be used on animals, yet when vets tried to buy these drugs they
met resistance from the manufacturers. Allowing the drugs to be sold for animal use was beneath them. But
another firm bought the rights to the drugs and marketed them specifically to vets, as a result creating the
most profitable segment of the pharmaceutical industry.
IBM and Univac initially made computers aimed at the scientific market. Both were surprised by the interest
from business users. IBM steamed ahead, though, when it lowered itself to sell to the business market.
After television began, everyone knew that book sales in America would plummet; no one would be
bothered to read again when they could enjoy TV. In fact, the opposite happened; book sales boomed. Yet it
was not the traditional bookstore owners who took advantage of this. Large book chains were established,
not by book lovers, but by experienced retailers who worked out which titles generated most profit per feet of
bookshelf.
The big American steel companies, used to gargantuan steel-making complexes requiring huge investment,
did not invest in the new type of mini mill, even though they were throwing off cash and profits, because it
was not how things were done.


Changing your whole direction to take account of an unexpected success requires humility. If
you are a company that has staked its reputation on a particular quality product, but a cheaper,
less grand product has booming sales, it is difficult not to view it as a threat, because, as Drucker
puts it, The unexpected success is a challenge to managements judgment.
Industries change because newcomers, outsiders and second raters are willing to create new
products or change old ones that segment the market. They see niches which the existing players
either are not interested in, or do not see the market potential of. Often, the entrepreneur does not
create a new product, Drucker observes, but simply appreciates the value of an unexpected use
for it. To an uncommon degree, they keep their eyes and ears open.
The customer is everything
Most people associate innovation with the bright idea, like the clothes zip or the ballpoint pen.
But Drucker notes that barely one in five hundred such bright ideas ever cover the costs of their
development. On its own, innovation is not worth a great deal. It is only when it meets the
market through the catalyst of entrepreneurial management that you start to create things of great
value. An innovation is much more than a technological advance; it is an effect in economy
and society something that changes the way people do things. Real innovation is always about
the end customer.
For example, De Havilland, the British company, produced the first passenger jet plane, but
Boeing and Douglas took the industry lead because they created ways for airlines to finance such
expensive purchases. Dupont did not just invent Nylon. It created new markets for its product in
womens hosiery and underwear, and automobile tires. The innovator must figure out the market
and system of delivery of their product, or the markets will be taken away from them.
In receptivity to new innovations, conventional wisdom is often wrong. The King of Prussia
predicted failure for railroads, because, he asserted, no one will pay good money to get from
Berlin to Potsdam in one hour when he can ride his horse in one day for free. No one expected
people in poor countries to buy television sets, given their high cost. But the experts misjudged
the wish for people living in villages to have a window on the larger world, and they found a way
to buy TVs anyway.
You cant do market research on peoples reactions to things which dont yet exist. In this sense,
innovation will always be a risk, but becomes less risky when you remain open about how, and
by whom, your innovation will be used.
Good innovations are very focused, Drucker observes, not trying to do many things, but just one
thing extremely well. They are not too clever, and can be used by simpletons. They attract the
comment, Why wasnt this done before? The economist David Ricardo once said, Profits are
not made by differential cleverness, but by differential stupidity. He meant that the most
successful products or services are those which allow their users not to have to think. They save
effort, money and time. A good example: the disposable razor developed by King Gillette. Prior
to it, shaving was a time-consuming and difficult business best left to barbers if you could
afford them.


Drucker writes, [Anyone] who asks the question, What does the customer really buy? will win
the race. In fact, it is not even a race since nobody else is running. People do not buy products,
but what the product does for them. The purpose of innovation is to provide satisfaction where
before there was none.
Final word
In his field, Drucker always seemed to be years, if not decades ahead of anyone, and Innovation
and Entrepreneurship was, perhaps remarkably, the first to treat the subject in a systematic, non-
sensational way. It is not suggested you throw away your existing books on these subjects, yet
you could quite easily prosper by following the advice of this one alone. It is an endlessly
fascinating work that should bring new rigor to your thinking about ways to create new value.
Get it for the many examples and elaboration of themes of which there is not room to cover here.
One particularly useful chapter relates to the Dos and Donts for starting any new venture.
The book concludes with Druckers noting that the welfare state had been with us for over a
century, but that the burden it had put on wealth producers meant it would not be around for
long. He then wonders: is it being replaced by the Entrepreneurial Society? In most countries
today, entrepreneurialism is more than a fad; there are university programs, foundations and
policies focused on creating a new generation of wealth creators. Drucker died in 2005, but he
saw the future clearly.

Research and Development

The Importance Of R&D To Innovation
Research and Development plays a critical role in the innovation process. Its essentially an
investment in technology and future capabilities which is transformed into new products, processes,
and services.
In industry and technology sectors R&D is a crucial component of innovation and a key factor in
developing new competitive advantages (Heneric, Licht, and Gofka in Europes Automative Industry
On The Move: Competitiveness In A Changing World).
One company in particular has devoted itself to R&D and as a result constantly soars ahead of its
competition. If you want a great example of an innovative firm
Look No Further Than Intel
When it comes to R&D and innovation Intel is the holy grail company. This absolutely massive
company entered the market with a bang, slid back slightly in the early 2000s but from 2006 onward
has been doing spectacular.


What happened in 2006? Intel greatly sped up its product lifecycle process. Through something
called Tick-tock, an alternating system of innovation (http://en.wikipedia.org/wiki/Intel_Tick-Tock)
which uses microarchitecture innovation and process innovation to continually drive ahead. This is
fancy computer engineer speak for the fact that each year they modify one of two things that are
critically important for the speed and power of microprocessors.
Intel regularly blows away their competition. The truth is that with their massive investment in R&D
and never ending ability to ship new and better product other companies simply cannot keep up.
Where Intel releases products and people are delighted, competitors like AMD release theirs to not
quite the same surprise.
Is R&D Really That Important?
Remember back to the article on the recipe for innovation? One of those ingredients was knowledge,
another technology. R&D directly supports the development of both of these things (depending on
your industry but certainly the former of the two).
When a company takes the time to invest in R&D they get a huge influx of knowledge. This is what
makes Intel so amazingly successful: Their R&D all boils down to useful knowledge that the
company can use to further develop its main product lines.
R&D really is that important note that it is merely a tool (and an expensive one at that). R&D exists
to gain knowledge, not as an entity in itself.
What About Small and Medium Business?
Companies like Intel have billions to spend on R&D but most smaller businesses do not have the
same capabilities. That does not mean R&D is impossible. The OECD released a book
called Science, Technology and Innovation: Implications for Growth. In it they mention how
government funding has been increasing for R&D to small and medium enterprises and venture
capitalists have also recognized the importance of these smaller entries.
While they note that the role of venture capital is not to support R&D with technology businesses in
particular it often ends up where venture capital money flows into R&D of increasingly risky
investments.
Additionally, do not forget that while R&D is typically internal your business can take advantage of
public resources and eternal knowledge to get its hands on the knowledge because, at the end of
the day, useful knowledge is the most important thing your company needs. The R&D department is


worthless on its own the knowledge is what youre after and such knowledge can often be
purchased through acquisitions, patents, hiring employees, etc.
Running A Better R&D Department For Innovation
Matheson and Matheson identified nine factors in their book The Smart Organization: Creating Value
Through Strategic R&D in which best practices can be found for R&D departments.
Those 9 areas are:
1. The decision basis
2. Technology strategy
3. Portfolio management
4. Project strategy
5. Proper organization and process
6. Relationship with internal customers
7. Relationship with external customers
8. R&D culture and values
9. Improving decision quality
They gathered these 9 areas through looking at companies with extraordinarily high hit rates, firms
like Gillette and 3M which really seems to succeed more than they fail. Running a great R&D
department goes beyond the scope of the site but we would invite you to check out their book. It is of
extremely high quality and when it comes to management and R&D its hard to find a better or more
comprehensive resource.
From here a great place to look is at knowledge acquisition. Is your R&D department delivering what
it should be? If you dont have an R&D department, what knowledge does your firm need to acquire
and how can it obtain it?
THE ROLE OF R&D IN UNILEVER
Share
Brands and innovation are at the heart of everything we do. We focus on rolling out more
innovations faster and to more markets.


MEETING CHANGING CONSUMER NEEDS
Unilevers key goal is to double the size of our business while reducing our overall environmental
impact. And innovation is core to that aim, says Genevive Berger, Chief Science Officer.
Across the global business, our R&D teams work on cutting-edge science with a consumer focus
that we can quickly convert into commercially viable applications. R&D is also the place where we
invent what the consumer needs and even where we invent what he doesnt know he needs or
what he is dreaming of.
Unilevers R&D priorities are to be inventive, develop great quality brands, and obtain scientific proof
that all our products deliver on their claims. Our innovations are also supported by clinical trials to
ensure safety for consumers and compliance with international regulations.
INNOVATION & OUR BRANDS
Innovation is one of the key levers we can pull to drive growth in the business. Its the life-blood of
our business and our brands, continues Genevive.
Through our comprehensive portfolio of products designed to meet the needs of diverse consumers
around the world, we believe we have the opportunity to deliver timely and far-reaching impacts on
society.
Successful innovation is based on deep consumer understanding. The balance we seek to achieve
is to marry our global strength in science and technology with our knowledge of peoples habits,
tastes and behaviours.
We aim to give consumers a great experience when they use our brands better than the
competition. We are increasingly identifying a funnel of new ideas that disrupt the norm in all our
categories foods, home and personal care. And having the ability to move these ideas across
categories further unlocks new market opportunities, says Genevive.
Just as importantly our focus in innovation also covers areas such as design, packaging, marketing
and advertising, in order to get our brand benefits across more persuasively.
Among the interesting developments over the last few years, have been the launch of Dove Nutrium
Moisture which offers skin essential nourishment, and Knorr Stock Pot, an intensely flavoured jelly-
based bouillon. Were increasingly focusing on applying knowledge across categories to create
products too, such as Signal White Now toothpaste which was developing by using a variation on a
unique brightening agent first discovered by our laundry specialists.
INNOVATION THROUGH EXPERTISE
Our ability to apply breakthrough technology and science across categories is enabling us to benefit
from much bigger market opportunities than we previously imagined, sums up Genevive.
R&D improves the quality and functionality of our products. It streamlines our manufacturing and
distribution networks. It drives cost savings. In fact, across many areas of the business, it is
absolutely critical


Research and development


From Wikipedia, the free encyclopedia

This article needs additional citations for verification. Please help improve this
article by adding citations to reliable sources. Unsourced material may be
challenged and removed. (August 2013)


Cycle of research and development
The research and development (R&D, also called research and technical development or research and
technological development, RTD in Europe) is a specific group of activities within a business. The activities that
are classified as R&D differ from company to company, but there are two primary models. In one model, the
primary function of an R&D group is to develop new products; in the other model, the primary function of an
R&D group is to discover and create new knowledge about scientific and technological topics for the purpose of
uncovering and enabling development of valuable new products, processes, and services. Under both models,
R&D differs from the vast majority of a company's activities which are intended to yield nearly immediate profit
or immediate improvements in operations and involve little uncertainty as to the return on investment (ROI).
The first model of R&D is generally staffed by engineers while the second model may be staffed with industrial
scientists. R&D activities are carried out by corporate (businesses) or governmental entities.
Contents
[hide]
1 Background
2 Business
3 Government expenditures
o 3.1 United States
o 3.2 European Union
4 See also
5 Notes
6 External links


Background[edit]
New product design and development is more often than not a crucial factor in the survival of a company. In an
industry that is changing fast, firms must continually revise their design and range of products. This is
necessary due to continuous technology change and development as well as other competitors and the
changing preference of customers. Without an R&D program, a firm must rely on strategic
alliances, acquisitions, and networks to tap into the innovations of others.
A system driven by marketing is one that puts the customer needs first, and only produces goods that are
known to sell. Market research is carried out, which establishes what is needed. If the development is
technology driven then R&D is directed toward developing that market research indicates will meet an unmet
need.
In general, R&D activities are conducted by specialized units or centers belonging to a company, or can be out-
sourced to a contract research organization, universities, or state agencies. In the context of commerce,
"research and development" normally refers to future-oriented, longer-term activities in science or technology,
using similar techniques to scientific research but directed toward desired outcomes and with broad forecasts
of commercial yield.
Statistics on organizations devoted to "R&D" may express the state of an industry, the degree of competition or
the lure of progress. Some common measures include: budgets, numbers ofpatents or on rates of peer-
reviewed publications. Bank ratios are one of the best measures, because they are continuously maintained,
public and reflect risk.
In the U.S., a typical ratio of research and development for an industrial company is about 3.5% of revenues;
this measure is called "R&D intensity". A high technology company such as a computer manufacturer might
spend 7%. Although Allergan (a biotech company) tops the spending table with 43.4% investment, anything
over 15% is remarkable and usually gains a reputation for being a high technology company. Companies in this
category include pharmaceutical companies such as Merck & Co. (14.1%) or Novartis (15.1%), and
engineering companies like Ericsson(24.9%).
[1]
Such companies are often seen as credit risks because their
spending ratios are so unusual.
Generally such firms prosper only in markets whose customers have extreme needs, such as medicine,
scientific instruments, safety-critical mechanisms (aircraft) or high technology military armaments. The extreme
needs justify the high risk of failure and consequently high gross margins from 60% to 90% of revenues. That
is, gross profits will be as much as 90% of the sales cost, with manufacturing costing only 10% of the product
price, because so many individual projects yield no exploitable product. Most industrial companies get 40%
revenues only.


On a technical level, high tech organizations explore ways to re-purpose and repackage advanced
technologies as a way of amortizing the high overhead. They often reuse advanced manufacturing processes,
expensive safety certifications, specialized embedded software, computer-aided design software, electronic
designs and mechanical subsystems.
Research has shown that firms with a persistent R&D strategy outperform those with an irregular or no R&D
investment program.
[2]

Business[edit]
Present-day R&D is a core part of the modern business world. Major decisions in firms are made on base of
research and development.
Research and development is of great importance in business as the level of competition, production
processes and methods are rapidly increasing. It is of special importance in the field of marketing where
companies keep an eagle eye on competitors and customers in order to keep pace with modern trends and
analyze the needs, demands and desires of their customers.
Unfortunately, research and development are very difficult to manage, since the defining feature of research is
that the researchers do not know in advance exactly how to accomplish the desired result. As a result, higher
R&D spending does not guarantee "more creativity, higher profit or a greater market share".
[3]

Government expenditures[edit]
United States[edit]
President Obama requested $147.696 billion for research and development (R&D) in FY2011.
[4]
Much of this
spending is devoted to basic research on the mechanisms of disease, which acts as the foundation for the
pharmaceutical industrys research where the Federal government supports graduate students and
postdoctoral researchers in academic labs. On March 14, 2000, The United States and Britain signaled
solidarity against the aspirations of private companies looking to profit from early discoveries in the race to map
the basic human genetic code (DNA). Pharmaceutical companies also hired students as interns while they are
still at under the Federally grant provisions of the University.
European Union[edit]
The funding from government organizations, like the European Union's Seventh Framework Program (FP7),
and their alliance with R&D has made their research more efficient. However, government-funded research that
paid for the work in discovering the human genetic code (DNA) has patent-restrictions.

the innovation cycle








The framework for member engagement
The Innovation Cycle represents a framework for classifying the different stages and stakeholders related
to the development of innovation.
EAI has defined this structure to facilitate and organize the work of its many members, organizations and
stakeholders engaged in innovation and to facilitate the provision of activities, services and networking
related to each individual segment.
The Cycle can be thought of both as a sequence, moving from one of the segments clockwise through to
the next, or as standalone segments that apply a focus to the collaboration efforts of members.
Whether your needs and interests correspond with the early stages of innovation, that is, education and
professional enhancement, or at a later stage like funding and business development, you will find the
Innovation Cycle a vital tool as you navigate the community activity, events, volunteer opportunities and
innovation services offered through EAI.











"
The Innovation Cycle is composed of the six segments representing the EAI vision of activities perceived
as fundamental to Europes innovation based competitiveness."
he innovation cycle


Select one of nine case studies of innovation







To turn an idea into a successful product, you will need to manage the activities in the diagram
above.

All these tasks depend on the others and any of them can be a source of innovation.


Effectively managing all of these activities is essential for success.
For more information about the role of each activity in the innovation process and a real world
example, select a case study using the diagram or menu.




Idea- identifying a market opportunity
ha! I've got an idea! I know the kind of thing that people need to solve a particular
problem or enjoy life more or save time and money. I'm sure people will buy it if I can
work out the details.


The person who says this is seeing an opportunity. They still need to do research
(to test the idea and understand how it could work) and all the other things
needed to turn the idea into something that people can use.

'Chance favours the prepared mind' is a famous quote from Louis Pasteur, a
scientist who made important discoveries about bacteria and viruses. Anyone can
have a good idea, but it helps to be thoughtful, observant and interested in how
things work.

Most ideas are not brand new. They build on old ideas. They might combine ideas
that nobody has thought to combine before. So learning about how different
things are made and how they work, and about problems of the past and how
they were solved, helps to develop a 'prepared mind'.

An idea needs a champion to see it through to commercial success. The champion
can be the person who had the idea, but often it is another person someone
who is enthusiastic about the idea and can see that it has a future.

One idea can start a small business or even a great industry. But more ideas are
needed to keep the business or industry going: ideas to improve a product or to
develop related products. These ideas create fresh opportunities; they attract new
buyers or sell extra things to established customers.

Creative problem solving: strategies and
exampleshttp://www.quantumbooks.com/Creativity.html






ResMed breathing aids based on a bright idea

Some people wake many times each night but do not realise it. What happens is
that the muscles holding the airway open relax too much, blocking the flow of air
to the lungs for a few seconds or longer (up to a minute). This obstructive sleep
apnea can cause high blood pressure, which can lead to heart attack or stroke if
not treated. Apnea also causes daytime sleepiness, which can lead to accidents at
work and on the road.

Dr Colin Sullivan was a young researcher at the University of Sydney when he
noticed that many heavy snorers have sleep apnea. While other doctors thought
that snoring was not a problem, he realised that it could be a symptom of this
serious condition. And he saw a solution to the problem: he developed and
patented a machine that maintains air pressure in the patient's airway during
sleep. It delivers air via a small mask over the nose.

Sullivan approached Dr Peter Farrell, who was then working for a multinational
healthcare company, for financial support. Farrell backed the idea and later
became the leader of ResMed, the company that grew from their partnership.
Their machines have improved the quality of life for many people, and ResMed
has grown to be a global company.





Diagram of unobstructed
airway.
Courtesy of ResMed


Diagram of obstructed
airway.
Courtesy of ResMed


Introduction

Snorers have long been the butt of jokes. Their partners
are pitied for losing hours of sleep while the snorers
seem to sleep well.

There is a long history, too, of 'cures' for snoring: advice
on the best sleeping position; various gadgets to attach
to the nose or mouth; pills, potions and sprays;
hypnosis; and surgery to change the shape of a
patient's airway.

Positive air pressure (air supplied at a pressure a bit
higher than that of the atmosphere) was first used to
assist breathing in the 1970s. The patients were tiny
premature babies, a very different group to the mostly
overweight men for whom snoring is a symptom of a
serious problem. Without positive air pressure to inflate
their immature lungs, many premature babies cannot
begin to breathe.

Sleep apnea was recognised as a serious problem in the
1950s, but it was thought to be quite rare. In the 1960s,
instruments began to be used to monitor the amount of
oxygen in blood as well as the rate of airflow via the
nose and mouth. This allowed researchers in sleep




Sleep apnea chart.
Courtesy of ResMed

clinics to check patients' breathing as they slept.


Photo of young Sullivan.
Courtesy of Colin
Sullivan


First device.
Courtesy of ResMed


Seeing the opportunity

When Dr Colin Sullivan began work at the University of
Sydney's sleep clinic as a young medical researcher, his
friends ribbed him for choosing such an unglamorous
area of research.

In 1979, he studied some patients who were heavy
snorers. He noticed that they had apnea and he guessed
that other snorers could also have this condition. As his
father was an inventor, he had grown up with the
attitude that problems can be solved. He had the idea of
supplying pressurised air via the nose (nasal continuous
positive airway pressure, or nasal CPAP) to keep his
patients' airways open during sleep.

To test the idea, he glued tubes into a patient's nostrils
and connected them to a vacuum cleaner (no that's not
a joke!) set up to blow air into the tubes. This worked
for some patients, although others could not get to sleep
while hooked up to the experimental machine.

So Dr Sullivan had developed and tested a treatment for
sleep apnea and he had realised that the condition
might be fairly common. He had seen an opportunity to
improve many people's quality of life and to create an
industry.

His next step was to develop a device to supply the
positive air pressure via a mask, rather than through
uncomfortable tubes. He patented his first nasal CPAP
device in 1981, but further development and design
work would be needed to make it suitable for mass
production and everyday use.


Grasping the opportunity

It was not easy to raise money to develop the
innovation. In 1986 Sullivan approached Dr Peter




Photo of Peter Farrell.
Courtesy of ResMed


C. Sullivan.
Courtesy of ResMed


Patient using mask.
Courtesy of ResMed

Farrell, who was setting up the Baxter Centre for
Medical Research in Sydney on behalf of Baxter
Healthcare, a large US company. Farrell, a graduate in
both chemical engineering and bioengineering, was
looking for research projects to commercialise. He saw
the promise of Sullivan's work. Baxter bought Sullivan's
patents and funded further development of the device
and mask.
When I finished talking with Colin I realised that, with a
prevalence of sleep disordered breathing at at least 2% of
the population, the potential was enormous, if we got the
thing right; we now know that the figure is closer to 10%.
Colin had developed a device which, although it worked
amazingly well, was cumbersome and not very user
friendly. I immediately saw that we could add substantial
value with our engineering expertise. Colin had already
done the fatal flaw first test since he was able to get
patients to use the device regularly at night at home.
However, the pump was powerful enough to run a
swimming pool and it sounded like a freight train in a
tunnel; I knew that we could do much better since we had
resources which Colin and the University didn't have access
to. And it's always easier if one gets in very early into a
potentially huge market. The rest, as they say, is history.
Dr Peter Farrell
By 1989, the technical development of CPAP had led to
a marketable device and Baxter had decided to move
away from respiratory therapy. Farrell grasped this new
opportunity, raising money from staff and investors for a
management buyout. The company (then called
ResCare, later renamed ResMed) bought the CPAP
patents from Baxter, which provided support while the
company became established.

So who was the innovation champion? In this case, both
Sullivan and Farrell can be said to have championed
CPAP. Both believed strongly in the product from the
first, and both have promoted it enthusiastically. Dr
Farrell has won awards as an entrepreneur, based on his
role in raising funds initially and then leading the
company to global success. And Professor Sullivan has
maintained a close association with ResMed while
continuing his clinical research and university teaching.

Creating new opportunities




Many people continue to create new opportunities for
the company. Some are medical or engineering
researchers, marketers or trainers employed by the
company. Some are clinical specialists who liaise with
the company about the needs of their patients and the
results of treatment.

ResMed employees also create new opportunities by
systematically searching, summarising, compiling and
distributing research findings in the broad area of sleep-
disordered breathing. This information helps researchers
and clinicians in the search for ways to improve
treatment and develop new products.
The science behind the cause, effect and treatment of sleep
disordered breathing made a sudden awakening with
Professor Sullivan's initial 1981 report. Prior to 1981 total
publications on the subject numbered about 500,
subsequently there have been 9,000 appearing at the
current rate of 60 per month.
Dr Charles Barnes, scientist, ResMed
(update of a statement in ATSE Focus, Mar-Apr 2001,
see http://www.atse.org.au.)



A recent product.
Courtesy of ResMed


The impacts

Seeing and grasping the original opportunity, and
creating new opportunities by investing in technical and
clinical research, and by sharing information, are helping
the Australian economy. While ResMed has become a
global company, with its shares listed on the New York
and Sydney stock exchanges and its international board
meeting in the USA, it has kept its main office, research
and training sections, and manufacturing plant in
Sydney.

One area of research has brought positive air pressure
treatment back full circle: as a result of Professor
Sullivan's research, ResMed is making devices to assist
the breathing of premature babies.

Nasal CPAP and related products made by ResMed have
helped thousands of people, saving the lives of some
and making others happier and more productive. The
company employs over 1000 people and is a major force
in Australia's medical devices industry.




Links

ResMed Ltd. http://www.ResMed.com
When snoring is a problemhttp://www.mhcs.health.nsw.gov.au/health-public-
affairs/mhcs/publications/3315.html
Professor Sullivan http://www.sleep.med.usyd.edu.au/About_Us.htm
Sleep Disorders Australia http://www.span.com.au/apnea/index
American Sleep Apnea Association http://www.sleepapnea.org
ATSE, Sleep disordered breathing and
ResMedhttp://www.atse.org.au/publications/focus/focus-barnes.htm

Key People

Professor Colin Sullivan, Sydney University and Royal Prince Alfred Hospital
Dr Peter Farrell, President and Chief Executive Officer, ResMed

Jobs and skills

Scientist
Medical specialist
Electrical engineer
Electronics technician
Mechanical engineer
Entrepreneur

Discussion questions

K-6

1. What does the term symptom mean? List three symptoms of a common cold.

2. Why do some newborn babies need help breathing? Discuss with your classmates
newborn babies you have seen. What is a premature baby and what are some of its
characteristics?

3. Discuss some medical devices you have seen at your doctors surgery or the local
hospital and what they do. On a sheet of paper (or the board) draw two columns. On the
left side list some medical devices you have seen. On the right side list their purposes
and discuss with the class.

4. Write a story about a person who snored and was helped by a ResMed breathing aid.
Discuss why snoring can be a problem for the snorer and their family. Describe changes
in your own body when breathing in and out. Draw a picture of a person using the
breathing aid.

7-10

1. What is obstructive sleep apnea and what problems can it cause? What are some of
the symptoms of obstructive sleep apnea? Draw a diagram of the components of the


human respiratory system and visually indicate what happens in a patient with
obstructive sleep apnea.

2. Investigate some of the reasons why premature babies may have breathing problems.
What respiratory devices are used for these babies?

3. Design an advertising campaign to promote a respiratory breathing aid. Consider the
name of your product and its target market. Now suggest the most appropriate media for
advertising your product to your target market group.

4. Discuss the implications of technology such as ResMeds breathing aids in enhancing
the quality of life.

11-12

1. Research the current procedures for patenting medical devices. Identify some of the
potential problems in patenting medical devices and explain how legal battles can be
avoided. Consider how these procedures and problems apply to ResMed and its patents.

2. Discuss the advantages and disadvantages of non-invasive and minimally invasive
medical techniques such as ResMeds breathing aids.

3. Select a ResMed respiratory device and design a television commercial or print
advertisment for a medical journal and a womens magazine.

4. Conduct some market research in your classroom on the need for a product such as
ResMeds breathing aid and prepare a design brief based on your findings.
RESOURCE-organize people, finance and facilites
I ve got a great idea, but what do I need to make it a successful product? Ill definitely
need some money and materials, and maybe some people to help me out. Ill need some
space to put it all together too. Am I a good organiser?


The person who says this is about to start finding and managing their resources.
Every innovator, whether an individual or a multinational company, must obtain
resources and manage them effectively if their innovation is to succeed.
Resources include people, knowledge, funds and facilities.

Resources can be obtained in many different ways borrowing funds and peoples
time, obtaining royalties from licensing agreements, reinvesting early profits or
selling products/services. Once these resources are obtained, they need to be
managed throughout the life of the project.

One of the most important resources for a firm wanting to innovate is the
expertise and adaptability of its staff. Innovators usually need to find a team of
people with the appropriate knowledge and skills to make and market their
innovation. Considerable investment is needed to ensure the technical and
managerial skills necessary for innovation to continue.




Facilities to develop the innovation, whether its a small room or a large factory,
are crucial for the innovation to succeed. Finding the appropriate facilities and
utilising them efficiently can make the innovation process much easier.

AusIndustry commercialisation information http://www.ausindustry.gov.au
Innovation Management Toolkit
(Canada)http://prodt.businesscanada.gc.ca/CFDOCS/Firm_en/index.html
Innovation Management Association of Canadahttp://www.imac-
acgi.ca/home.html



Redfern photonics group managing a new industry

Australia in the late 1980s was performing world-leading research in the area of
photonics. The formation of the Australian Photonics Cooperative Research Centre
(CRC) using the Commonwealth Government Program brought together this
research and focussed it on commercialising innovation.

The CRC launched its first company in 1996, called Indx. The company produced
a world leading innovative optical filter that enabled large amounts of information
to be transferred along optical fibres. The CRC later sold this company and was
the first CRC in Australia to have such a significant commercial success.

A network of companies then sprang from the Australian Photonics Cooperative
Research Centre. Nine years after being established, the centre had created
eleven start-up companies or joint ventures to commercialise its technology. One
of the keys to its success was managing resources to combine the right kind of
financial support with the right people to keep innovating.




Don Nicol, co-founder of
OFTC and Chair of
Australian Photonics Pty
Ltd. Courtesy Redfern
Photonics.


The opportunity in an emerging industry

Co-ordinated research in Australia into the applications
and use of photonics began in 1989, when the Optical
Fibre Technology Centre (OFTC) was formed at the
University of Sydney. At about the same time, the
Photonics Research Laboratory (PRL) was established at
the University of Melbourne. Other pioneers of photonics
in Australia were the Optical Sciences Centre at the
Australian National University and the Optical
Communications Group at the University of New South
Wales.

The existence of these optical communications and
photonics research groups established an opportunity
for Australia to participate in the developing global
communications industry. The challenge was how to



make best use of Australias world leading research in
photonics.


Don Nicol, from the Overseas Telecommunications
Commission (OTC) had a vision of creating a photonics
industry for Australia. He along with Mark Sceats,
George Molditch, Mori OConnor, Tony Stokes and Ian
Bassett formed the Optical Fibre Technology Centre
(OFTC) at the University of Sydney. They recruited
Simon Poole to be the founding director. One of the
important aims of the centre was to commercialise its
photonics research.
I believed that photonics was a key telecommunications
technology with great growth potential and that
Australias early presence in the field and the relatively
low cost of setting up component fabrication ... made it
a suitable area where we could build up an industry.
Don Nicol, co-founder of OFTC and Chair of Australian
Photonics Pty Ltd.
In 1991 an opportunity arose to expand Australias
photonics research and development by forming a
national research group. The Commonwealth
Government started up the Cooperative Research Centre
(CRC) program which gave funding to universities,
CSIRO and industry groups to collaborate on research
and development. The OFTC and others at The
University of Sydney, University of Melbourne,
Australian National University and University of New
South Wales formed the Australian Photonics CRC in
1992, with the CSIRO and five industry partners all
contributing to the research and development programs.
The Australian Photonics CRC co-ordinated over 90% of
Australias research into photonics.
Because of the CRC we now have a much deeper and
richer set of possibilities.
Don Nicol, co-founder of OFTC and Chair of Australian
Photonics Pty Ltd.
The Cooperative Research Centre Program was launched
by the Australian Commonwealth Government in 1990.
It aimed to strengthen collaborative links between
industries, research organisations, educational
institutions and government agencies. The CRCs
undertake collaborative research and education
programs in the areas of natural sciences and
engineering. By 2001 the program was supporting 64
centres. The Government contributes approximately
$140 million per annum to the Centres, with a large


amount of support from industry partners. The program
has survived changes in Government and has made a
significant contribution to Australias innovation system.

For more information about the Commonwealth
Government CRC Program
seehttp://www.dist.gov.au/crc/index.html.


The Indx company logo.
Courtesy Redfern
Photonics.


Chris Howells, CEO of
Redfern Photonics and
former non-executive
chairman of Indx.
Courtesy Redfern
Photonics.


Starting to commercialise

The Australian Photonics CRC was set up in 1992 with
the assistance of government funding and industry
partners. An important aim for the CRC was to
commercialise the products of its research. This was
necessary to bring in funding to enable research and
development to continue.

The first commercial success for the CRC was the
formation of the company Indx Pty Ltd in February
1996. Indx was founded and managed bySimon Poole,
who had been the founding technical director of OFTC
and important in setting up the CRC.
I had long had an entrepreneurial streak and had been
looking for the right opportunity to create a start-up
Indx was the right one to take the plunge with.
Simon Poole, Founding Director of Indx.
The company was formed to manufacture and market
optical filters that enable large amounts of information
to be transferred along optical fibres. Indx products
were based on unique, world-beating manufacturing
technology developed and patented by the CRC.

The most difficult part of managing the companys
resources was getting cash to make the business grow.
Simon and the Indx board members explored every
avenue to find people to financially support the
business.
What ultimately was the success for Simon was that he
connected to a customer.
Chris Howells, CEO of Redfern Photonics and former
non-executive chairman of Indx.
The company was able to find an important customer for
their technology in Fujitsu. Indx created a market for its
products by working with Fujitsu to develop products
specific to Fujitsus needs.

In 1997 the CRC sold the Indx intellectual property,



technology and the staff of six people to US company
Uniphase Inc. By 2001 the company, part of JDS
Uniphase, employed 300 people in North Ryde and was
still expanding. The company in turn became an industry
partner in the Australian Photonics CRC.
When it became clear to Uniphase that Simon had great
technology, a good team, and also had customers
starting to buy the products, it was just so easy.
Chris Howells, CEO of Redfern Photonics and former
non-executive chairman of Indx.


The CRC-Redfern
photonics network of
companies. Courtesy
Redfern Photonics.


Continuing innovation

The Australian Photonics CRC continued innovating. It
used the profit from selling Indx to invest in a new
company and by 2002 nine new companies had been
created by commercialising technology developed by the
CRC. To manage the large amount of important
intellectual property being generated by the CRC it
created the private company Australian Photonics Pty
Ltd. Another company called Redfern Photonics was
formed to commercialise this intellectual property.

Redfern Photonics raised money from investors and
brought together the right combination of people to
successfully commercialise R & D from the CRC. It
supported smaller companies until they were large
enough to be independent. The Redfern Photonics
network of companies grew to include seven subsidiaries
or investee companies by the end of 2001. For more
information about Redfern Photonics
see http://www.redfernphotonics.com.



Redfern Photonics uses
trade fairs and
exhibitions to promote its
products and raise
funding. Courtesy
Redfern Photonics.


Managing resources

The CRC and Redfern Photonics were careful in
managing resources. They formed small companies
around important innovations and key intellectual
property. They needed financial backing from investors,
people to manage the businesses and facilities to house
them.

Redfern Photonics acted as an incubator company. When
an innovation was ready to be commercialised, a
company was formed around the innovation. Redfern
Photonics nurtured the company and helped it survive
and grow. It provided management assistance and
access to business, marketing, human resources,




Mark Sceats. Courtesy
Redfern Photonics.







financial and technical support services, and helped to
seek financial support. It also invested its own finances
to start the company off. This process was designed to
create companies that became financially viable,
independent and ready to leave the incubator in two to
three years.

Intellectual property

Knowledge, or intellectual property, is a key resource
that every innovator needs to manage. The Australian
Photonics CRC produced so much important intellectual
property that it set up a separate company to manage it
called Australian Photonics Pty Ltd. Intellectual property
is such an important part of the innovation process that
there is another separate case study devoted to it. For
more information seePatent protect your intellectual
property.


Redfern Photonics
recruited for talented
staff using these
billboards. Courtesy
Redfern Photonics.


The right people

An important part of Redfern Photonics success at
creating new businesses was the team of people
involved. Chris Howells, CEO of Redfern Photonics, had
been involved in the information and communications
technology industry for some time. He founded
NetComm, a private company, in 1982 which later grew
to generate A$50 m turnover annually and was listed on
the Australian Stock Exchange. Chriss experience
starting up NetComm was of tremendous value when he
became involved in Redfern Photonics. He used his
network of colleagues and recruited nine people from his
previous NetComm team. Together they had the right
knowledge of international markets, trends, technologies
and brand positioning. Because they had worked
together before and maintained the network of
communication, they could fast start Redfern Photonics
and get things happening.
I think Redfern was able to pretty rapidly deal with the
opportunity because we were able to learn from so
much of the stuff we got out of the NetComm base
theres no question.
Chris Howells, CEO, Redfern Photonics.
The key people involved in forming the CRC, including
Don Nicol, Mark Sceats and Simon Poole, were all
focussed on making their research relevant and
commercial. While there was no initial plan for how this
would happen, the driving force of people brought about
the initial formation of Indx. This company



demonstrated that photonic technology could be
commercialised successfully and inspired the CRC to
commercialise more of its work.
While the CRC may create some bits of intellectual
property, it really is the bringing in of talented people
from the world of commerce, with all their experience
and back pains from failures, that is really important
there.
Mark Sceats, CEO, Australian Photonics CRC.
Raising money

For the CRC to market and sell its innovations, the first
thing it needed was money. The Government through
their CRC program allowed the CRC to use future grant
funds to get Indx started. When Indx was sold, the net
profits were more than ten times the initial investment!
The Government got its money back with more left over
to fund new businesses.

Redfern Photonics was established by the CRC using
some of the revenue from the sale of Indx. Redfern
Photonics then took care of finding more funding to
establish and grow new businesses out of the innovation
happening at the CRC.

Each new innovation to be commercialised was unique.
Once a business case for the innovation had been
developed, Redfern Photonics approached people in the
venture capital industry to encourage them to invest in
the new company. Redfern Photonics understood the
products to be sold, the customers who were going to
buy them and the risks involved in commercialising each
product.

The early stage of getting an innovation into the
marketplace can be very expensive. For every dollar you
spend researching and developing an innovation, you
need to spend maybe $100 to make and market your
innovation. As the company had little success in
sourcing the funding they needed in Australia, Redfern
Photonics approached investors in the US, Europe and
Asia to get this early stage funding. From March 2000 to
the end of 2001 the group had raised more than A$200
million in venture capital.

Once the investors agreed to support the business, the
new company could get started on making and selling
its products, and hopefully making a profit for the
investors. At the end of 2001 there was only one out of


the seven subsidiary or investee companies that was
making revenue by manufacturing and selling a product.
The others were still developing their products and
manufacturing techniques while trying to keep the
company afloat. Redfern also invested in each of the
subsidiary or investee companies it built, creating an
incentive for it to help the companies succeed.
We look to maximise the value of the business but
theres no textbook on how you do it.
Chris Howells, CEO, Redfern Photonics.
Not only did Redfern Photonics have to find money to
help other businesses grow, it had to develop itself as a
company. Its role was as a business that builds and sells
companies. To attract people to work at Redfern
Photonics, it offered employees share options in the
company.
Its vital for new emerging industries to have that
incentive. Otherwise people are very nervous about
going into an industry they dont know.
Karen Emanuel, Group Marketing Manager, Redfern
Photonics.
The shares, or stock options, have given staff an
incentive to stay and make the business successful. In
2002, Redfern Photonics aimed to become a public
company by listing on the stock exchange.
Most of what we do is not really rocket science. The real
rocket science is done in the CRC If youve got good
products, finding customers and selling products is no
big dealItsactually designing the products and
manufacturing high yields thats hard.
Chris Howells, CEO, Redfern Photonics.
For more information about venture capital see the
Australian Venture Capital Association
websitehttp://www.avcal.com.au.


The home of Redfern
Photonics at the National
Innovation Centre,

Facilities, communication and networks

A place to run your business and create your product or
service is a necessity for any company. The location of
Redfern Photonics has been of huge importance to the
success of its business.

Redfern Photonics and the Australian Photonics CRC are
based in Sydney, NSW, at the Australian Technology
Park (ATP) http://www.atp.com.au. The Australian
Technology Park was set up to house university research



Australian Technology
Park. Courtesy Redfern
Photonics.


The planar waveguide
facilities at UNSW.
Courtesy Redfern
Photonics.

centres and start-up businesses together. The
universities and businesses interact, creating
opportunities for new ideas and collaborations.
Information flows between people both formally and
informally.
Whenever you go to get a coffee downstairs the coffee
shop is always buzzing. Theres a lot of information
flowing and interaction between people.
Karen Emanuel, Group Marketing Manager, Redfern
Photonics.
Communication between staff at all levels of Redfern
Photonics is vital to the success of the business. From
Directors exchanging their experiences with other start-
up companies to engineers discussing how products can
be improved.

The network (or cluster or groups) that has formed
between universities, industry partners and new start-up
companies has created a unique environment that
facilitates productive communication. Photonics
researchers, managers and marketers are all within the
same building and can easily meet to discuss new ideas.
The cluster of companies that have formed from the
CRC is a unique model for Australia. In other countries
where several companies producing related technologies
have formed in the same proximity there have also been
many benefits.
Once a cluster forms, the whole group of industries
becomes mutually supporting. Benefits flow forward,
backward and horizontally... Interconnections within the
cluster, often unanticipated, lead to the perception of
new ways of competing and entirely new opportunities.
Porter, M. E., The Competitive Advantage of Nations,
The Free Press, New York, 1990.
The products made by the group of Redfern Photonics
companies cover many aspects of photonics
communications technology. The customer or supplier,
or both, may be another Redfern Photonics subsidiary or
investee. These relationships between the companies
enable cross-fertilisation of ideas. Companies can
improve their products more easily by communicating
directly with their customers and addressing their
needs.

For more on clusters in information and communications
technology (pdf) seehttp://www.warren.usyd.edu.au



The future
It took Taiwan 20 years to establish its micro-electronics
industry. So we have given ourselves 20 years to
develop a photonics industry in Australia. Redfern are
about half way through, and it has to be said that the
first eight years were about changing the research
culture.
Mark Sceats CEO Australian Photonics CRC.
The Australian Photonics CRC continues to enhance its
internationally recognised and commercially relevant
research in photonic technology. It aims to expand
Australias photonics industry by improving the transfer
of photonic technology into industry through
commercialisation. To achieve this, it needs a supply of
scientists, engineers and people skilled in the area of
photonics. The CRC provides postgraduate training
opportunities for students. It is also focussed on
promoting awareness of photonics as a career
opportunity for school students.

The mission of Redfern Photonics is to build ten global
information and communications technology businesses
by the year 2006, and be the major participant in one of
the leading suppliers of high volume photonics
components and systems.
A lot of what these guys today build in a box in ten
years time will be on a single chip, a photonic chip as
opposed to an electronic chip.
Chris Howells, CEO, Redfern Photonics.

We are just on the verge of the photonics integrated
circuit, so that is the next big thing.
Mark Sceats, CEO, Australian Photonics CRC.

There is a huge way to go. The task is exponentially
becoming more difficult because scale creates more
complexity: we have to engage with a lot of very skilled
people in the world of finance, commerce and
technology, other than core photonics, in order to be
successful.
Mark Sceats, CEO, Australian Photonics CRC.

The signs are right for Australia to be a global presence
in a fast growing important industry. This means
vigorous industrial activity, good jobs and exports.
Don Nicol, co-founder of the OFTC and Chair of
Australian Photonics Pty Ltd.






Links and references

Australian photonics CRC http://www.photonics.com.au
The Photonics Institute http://www.photonics.edu.au
Redfern Photonics http://www.redfernphotonics.com
The photonics dictionary http://www.photonicsdictionary.com
Photonics forum http://www.aeema.asn.au/photonicsforum
Optical fibre technology centre http://www.oftc.usyd.edu.au
See photonics http://www.see-photonics.org.uk/introducing/links.html
Communicating with light fibre opticshttp://www.science.org.au/nova/021/021key.htm
Scientific American article http://130.94.24.217/2001/0101issue/0101stix.html
Beginners guides to optical
networkinghttp://www.lightreading.com/section.asp?section_id=29
Virtual photonics (second spin-off company)http://www.virtualphotonics.com/index.html
AusIndustry commercialisation information http://www.ausindustry.gov.au
Looking for ways to fund your company? Australian Technology Showcase
article http://ats.business.gov.aus
Australian Academy of Technological Sciences and Engineering, Commercialising
Innovation The Second Step Workshop Proceedings, Sydney, 10 May
2001http://www.atse.org.au/publications/reports/nsw-commercialising.htm

Porter, M E The Competitive Advantage of Nations, The Free Press, New York, 1990.

Unpublished, Powerhouse Museum interview with Chris Howells, CEO of Redfern
Photonics, and Karen Emanuel, Group Marketing Manager, Redfern Photonics, 23 Jan
2002.

Key people

Dr Don Nicol, OTC and co-founder of the CRC
Prof. Mark Sceats, co-founder of the CRC
Prof. Rodney Tucker, co-founder of the CRC
Dr Simon Poole, founder of Indx
Chris Howells, CEO of Redfern Photonics

Jobs and skills required

Research scientist/physicist
Electrical Engineer
Process Engineer
Technical Managers
Marketing Officer
Financial Officer
Patent Attorney
Business Analyst
Venture Capitalist



Discussion questions

K-6

1. How many different ways can you think of to send a message to someone far away?

2. How have lighthouses been used to communicate messages using light? Find out the
main differences between lighthouses today and lighthouses of the past.

3. What are the benefits of faster communication systems? How do different people
around the world use these communication systems?

4. List the kinds of things at home, school or in the workplace which might be able to
utilise photonic technology (eg. computers, email, internet).

7-10

1. What does Chris Howells, CEO of Redfern Photonics, consider to be the key ingredients
to success when developing an innovative product?

2. Describe the types of resources needed to make an innovation successful.

3. Design a communication system using light relay stations so that the messages can
be sent around corners or up stairs. What is the role of the relay station? Consider how
you might adjust this innovation for the visually impaired. Use a table to document your
signals and their meaning. Work as a group and assign different students to different jobs
- eg. data recorder, table-maker, machine builder.

4. Identify some applications for photonics communication systems. What is the benefit
of using photonic systems over traditional methods for these applications?

11-12

1. What is a CRC? Explain its importance in terms of securing government funding.
Discuss some of the risks involved in the formation of CRCs.

2. Explain the importance of industry partners. What role did they play in the
development of the Australian Photonics network of companies? What are the advantages
of cooperative structures compared to individualistic and competitive approaches?

3. Explain the difference between a company and a public company.

4. Locate and record definitions of the term innovation using a variety of sources.
Discuss what is innovative about Redfern Photonics and the Australian Photonics network
of companies.




RESEARCH- investigate the possibilities
I need to find out all the facts in order to create the best, most profitable and most
sustainable product.


Research is needed at every point in the innovation cycle. Researchers must
assess many possibilities in order to identify the most appropriate raw materials,
the most efficient processes, packaging and marketing strategies.

Research ranges from testing materials to asking consumers about their buying
habits. It relies on careful choice of questions, for example:
What's the cheapest, strongest material that can be used for the purpose?
How can I minimise the amount of material and energy used to make or
use the product?
How effectively does my product do the job for which it is designed?
Is the product safe?
How does my design allow for the product to be recycled after its use?
Who will buy this product, through which outlet and for what price?
Thorough research is essential in the early stages of innovation; this is often
carried out in universities or CSIRO and other government organisations.
Continual reassessment is important as the product develops; this research is
often carried out by industry.

Research that involves scientific testing needs to be unbiased and carefully
controlled. In any scientific experiment or test, the test process is repeated and
only one thing (called a variable) is changed at a time. As well as the people,
plants or animals being tested in the experimental group, there must be another
group that is used as a control. For that control group the variable is not changed,
providing a baseline against which experimental results are compared. The
individuals in the control group are as similar as possible to those in the
experimental group and are treated the same way apart from the variable being
tested.

For example, to test whether plants can survive without water, take a large group
of plants that are all the same size, age and species. Divide the large group into
two to create one experimental and one control group. Grow the plants in similar
soil, give them the same amount of sunlight but stop watering the experimental
group. Keep watering the control group. You can be pretty sure that if the
experimental group dies while the control group remains healthy, the death is due
to lack of water.

Tests of medical products often include double-blind trials in which neither the
patient nor the doctor knows whether the patient is receiving medicine or a
placebo. This allows researchers to rule out the effects of "expectation of success"
by either the doctor or patient. A placebo is a substance which has no medical
properties but has the same form, eg tablet or cream, as the active medicine. A
placebo has no physiological function but might assist the patient psychologically.
The medicine and placebo are packaged in the same way but can be identified by



a number provided by the researchers. The doctor simply records the number on
the patient's file. Researchers are the only ones who know which packages
contain medicine and can correlate results at the end of the trial.

International Centre for Scientific Researchhttp://www.cirs.net/indexenglish.htm
CSIRO Australia http://www.csiro.au



Australian tea tree oil research for a healthy future

Tea tree oil is a powerful antiseptic. The aboriginal Bunjulung people of the NSW
north coast have known about it for thousands of years. They use it to take the
sting out of cuts and insect bites, and to successfully treat bacterial, viral and
fungal infections. Tea tree oil is extracted from the leaves of a small native
Australian tree, Melaleuca alternifolia.

The oil contains high concentrations (up to 35%) of an alcohol called terpinen-4-ol
that's thought to be responsible for most of the oil's antimicrobial activity. There
are more than 100 other chemicals in the oil.

In 1925, Arthur Penfold, a chemist and curator of Sydney's Technological Museum
(now the Powerhouse Museum), demonstrated that tea tree oil was 13 times
more powerful than phenol, the standard antiseptic of the time. To do this,
Penfold gathered leaves from the bush, steamed them to release the oil, and
distilled the oil from the water. He then tested the oil on the bacterium that
causes typhoid.

For ten years Penfold provided oil to doctors and dentists for clinical trials. Results
were so convincing that tea tree oil was sent to war with troops during World War
II. During the war, however, penicillin was introduced to treat bacterial infections.
The world fell in love with new antibiotics like penicillin and forgot about tea tree
oil.

Interest in tea tree oil was rekindled in the 1980s. Growing bacterial resistance to
antibiotics is partly responsible for this renewed interest. The tea tree industry
has developed dramatically from one relying on harvesting of naturally occurring
plants to one characterised by highly mechanised intensive plantations. Australia
leads the world in the supply of high quality tea tree oil and associated products.
It currently produces about 400 tonnes of oil a year, most of which is exported to
North America and Europe. Research has played a vital role in the development of
the industry and will be essential for its future.




Research for a growing industry

There are about 300 tea tree growers in Australia, all
hoping to compete successfully in a world market. The




Close up of a tea tree
leaf. Courtesy Thursday
Plantation.


A section through a tea
tree leaf showing a vein
beneath three oil glands.
Technological Museum,
Sydney.

industry body, the Australian Tea Tree Industry
Association (ATTIA), is working closely with the Rural
Industries Research & Development Corporation (RIRDC)
to develop a profitable and environmentally sustainable
industry. They hope to lead the world in marketing,
value-adding, product reliability and production. Research
is needed in this young industry in order to meet those
goals.

Current research is under way in a number of areas. Two
examples of the importance of research to the tea tree
industry are:
Testing the safety and effectiveness of tea tree oil
in laboratory and clinical trials designed to meet
the standards of Australian and international
regulatory authorities. This will lead to
development of new products in the areas of
animal and plant health and industrial hygiene.
Safety tests will provide information for
formulation and labelling of products.
Developing production systems that are both
ecologically sustainable and profitable. Maximising
the yield of oil will make best use of valuable
resources, such as land and water.
For more information about the tea tree industry see
the http://www.teatree.org.au orhttp://www.rirdc.gov.au.


Professor Thomas Riley.
Courtesy University of
Western Australia
Department of
Microbiology.




Testing safety and effectiveness

Tea tree oil must meet national and international
standards for safety and efficacy before it can be
accepted as a valid antiseptic agent. Until recently, claims
about its power were based on anecdotes or on outdated
scientific methods.
For pharmaceutical and medical communities to accept
tea tree oil as a bona fide antimicrobial agent, the results
of investigations need to be published in international
journals acceptable to these groups. Only when this
occurs will tea tree oil move out of the realms of quackery
and alternative medicine.
Professor Thomas Riley, Department of Microbiology at
the University of Western Australia, 1998.
Professor Riley leads a team of scientists investigating the
antimicrobial activity and safety of tea tree oil. So far
they have demonstrated, using test tube (in vitro) trials,
that the oil is active against a wide range of bacteria,
viruses and fungi. For more information about their



research seehttp://www.meddent.uwa.edu.au/teatree.


Testing bacteria growth
in tea tree oil. Courtesy
University of Western
Australia Department of
Microbiology.


Laboratory trials

Before registering a health-care antiseptic, the Food and
Drug Administration of the USA requires a list of all the
organisms that are killed by the antiseptic. Riley's team
designed experiments to test the susceptibility of
organisms to tea tree oil. They aimed to identify the
minimum concentrations of oil that would inhibit growth
or kill particular micro-organisms. They tested many
micro-organisms including:
Escherichia coli, which causes gastroenteritis
Pseudomonas aeruginosa, a penicillin-resistant
bacterium that infects wounds, burns, and the
urinary and respiratory tracts
Methicillin-resistant strains of Staphylococcus
aureus (Golden staph), a major cause of hospital-
acquired infections
Streptococcus and Staphylococcus species, which
cause skin infections including impetigo
Propionibacterium acnes, which plays a role in
acne
Candida albicans, a fungus that causes thrush
infections.
The team grew the organisms in several warm broths
containing varying concentrations of tea tree oil for 24
hours. They found that the growth of most of the
organisms was inhibited at an oil concentration of
0.25%v/v (volume/volume, ie 0.25ml of tea tree oil
added to 99.75ml of broth). Most of the organisms died at
0.50% while an oil concentration of 3.0% was needed to
kill the penicillin-resistant bacteria Pseudomonas
aeruginosa. All of these findings have been published in
international journals.

Clinical trials

Controlled, double-blind clinical trials are under way to
test the effectiveness of the oil in treating a number of
infections, including thrush, impetigo, methicillin-resistant
golden staph, and cold sores caused by the Herpes
labialis virus. These projects are funded by RIRDC and
Australian Bodycare Pty Ltd, and involve hospital patients
in Western Australia and NSW.


Skin sensitivity trials

Skin sensitivity trials have been carried out to determine




Patch tests containing
tea tree oil are used to
determine skin
sensitivity. Courtesy
University of Western
Australia Department of
Microbiology.

the prevalence and characteristics of allergy or sensitivity
to tea tree oil. This research is essential for the
formulation, packaging and labelling of products. The
research involved testing more than 200 healthy
volunteers for allergy to tea tree oil using two different
tests, the prick test and the patch test. Ten different tea
tree oils were tested.

The prick test involved applying oil to the skin, then
breaking the skin with a needle. Other common allergens,
including dust mite and grass, were tested at the same
time (on different areas of skin!) to determine whether
the volunteers were more or less allergic than average.
Any reactions were noted immediately.

The patch test involved sticking squares of material
soaked in different concentrations of oil onto each
patient's skin. Patches were left in place for some time
and then checked. This test detected delayed irritant
reactions and allergic contact dermatitis. Any volunteer
who showed a reaction to tea tree oil was tested again
with 100% oil, 10% oil and then the major oil
components.

The prevalence of allergy in the whole group was 2.9%
(up to a possible 4.8% if mild reactions are included).
Incidence of reactions to the other common allergens
indicated that the test subjects were somewhat 'more
allergic' than the general public.

Irritant reactions were particularly concentration
dependent, which means that many of these reactions
should be avoidable if a lower concentration of oil is used
in formulations. Very few reactions occurred in response
to tea tree oil components. Subsequent tests
demonstrated that allergic reactions are generally caused
by oxidation products of tea-tree oil, rather than the fresh
oil itself. These findings provided valuable information
regarding the formulation and packaging of the oil
products. That is, low concentrations should be used and
the oil should be stored in brown glass bottles, away from
heat and light in order to prevent oxidation.

Developing production systems

Research in this area aims to boost the amount of oil
produced by each tree in order to maximise the yield
from available resources, including land and water. The
main focus is on the selective breeding of high-yielding
trees and on the appropriate management of trees in




A tea tree plantation.
Courtesy Thursday
Plantation.


A tea tree oil production
system. Courtesy
Thursday Plantation.

















different growing areas and climates.

Selective breeding of trees

Growing the highest yielding trees in a plantation makes
sense. In the past, people grew seeds collected from a
limited number of bush trees. CSIRO and NSW Agriculture
have increased the quality of seed available for growers
as a result of eight years' research at the Wollongbar
Agricultural Institute, near Lismore, NSW. They have
created a 'seed orchard' which produces high quality
seed.

First, they assessed the variability in oil yield and quality
from individual trees in their field trials. They
progressively culled inferior trees and developed
controlled pollination techniques to produce desirable
hybrids. Genetic technologies were also employed in the
research. They identified the genes responsible for oil
yield and quality, and breeding lines can now be DNA
fingerprinted. The first batch of improved seed was
distributed in 1997, and the second-generation seed
orchard was established from seedlings in 2001.

A 30% increase in oil yield is predicted through use of this
improved seed, and further culling of the orchards over
time is expected to give improvements of 60%. The
results of this ongoing research will help to maintain the
financial viability of the industry.

Managing plantations

A research project in the Atherton Tableland of North
Queensland has implications for the way trees are
managed for maximum oil production. In the 1990s,
tobacco quotas fell and farmers on the Tableland replaced
their tobacco crops with tea trees. Previously the tea tree
industry had been located almost exclusively in northern
NSW and was very new to Queensland.
In these areas tea trees are being grown in different
climates and on different soil types. Little was known
about the levels of production or how to manage the
trees. Growers had used information from NSW to help
establish plantations; however there was a real need for
research work to adapt and alter this information and
determine the factors which affect oil concentrations and
yields in these areas.
Dr James Drinnan, RIRDC Communications.
The research involved collaboration and cooperation
between the NSW Department of Agriculture, the


Australian Tea Tree Industry Association, and the Rural
Industries Research and Development Corporation.

Because all tea tree farms on the Atherton tablelands are
irrigated, much of the research focussed on the best way
to tailor water use to the needs of the crop. Irrigation is a
major expense, so it needs to be as cost-effective as
possible. A water monitoring system (Enviroscan) was
installed on a farm that had soil and water use typical of
the area. Sensors were installed in the soil at 100-800
mm depths to determine the water requirements of
seedlings, mature trees, and trees regrowing after
harvest.

Researchers also measured changes in oil yields from the
trees throughout the year and in response to irrigation.
Research in New South Wales had already shown that the
amount of oil obtained one day after irrigation was less
than half that obtained from the same crop four days
after irrigation. This sort of information is crucial for the
maximisation of yield from a plantation.

Other research has shown that tea trees have high
requirements for iron, zinc and copper. And the optimum
harvesting time is either December or just after the wet
season in April.

Thus research has demonstrated that the major factors
influencing yield are genetics, irrigation and nutrition. It is
essential to start with seeds from good genetic stock, to
regularly irrigate and fertilise the crop, and to harvest at
the appropriate time. This information has changed the
farming practices and profits of growers in the Atherton
Tableland and is potentially valuable for growers wishing
to establish plantations in other parts of Australia.

The Rural Industry Research and Development
Corporation funds many of the research projects currently
under way in the tea tree industry. Reports on those
projects can be found athttp://www.rirdc.gov.au/reports.


Tea tree oil products

The impacts

Through the research efforts of academics and the
Australian tea tree industry, the properties of tea tree oil
are becoming recognised and accepted within mainstream
medicine. Production methods have been improved in the
last 20 years such that the volume of tea tree oil
produced in Australia has increased by almost 20 times.
More than 80% of this oil is exported, usually as bulk oil.



sold by Thursday
Plantation. Courtesy
Thursday Plantation.



Links and references

Australian Tea Tree Industry Association http://www.teatree.org.au
Rural Industries Research & Development Corporation http://www.rirdc.gov.au
Wollongbar Agricultural
Institutehttp://www.agric.nsw.gov.au/general/centres/wollongbar
CSIRO http://www.csiro.au
University of Western Australia Tea Tree
Researchhttp://www.meddent.uwa.edu.au/teatree
Technical paper by UWA researchers http://www.teatree.co.uk/research.htm
Tea Tree Oil UK http://www.teatree.co.uk
Thursday Plantation http://www.thursdayplantation.com.au

Key organisations

Australian Tea Tree Industry Association
Rural Industries Research & Development Corporation
University of Western Australia Tea Tree Oil Research Group
Thursday Plantation

Jobs and skills

Scientists (biologist, chemist, immunologist, horticulturalist)
Plantation manager
Farmer
Nurse

Discussion questions

K-6

1. What did the Aboriginal Bunjulung people of the NSW north coast use tea tree oil for?

2. Using a tape recorder, interview an expert (botanist, horticulturist, gardener) about
how to grow a tea tree.

3. Research an Indigenous Dreaming story about tea tree.

4. Using a digital camera record images of tea trees and tea tree products. Look for trees
in gardens, (eg. botanical gardens), in plant nurseries or in your local area. Make a
collage, drawing or diagram which shows the process of making tea tree oil.

7-10

1. Research how Indigenous peoples used tea tree for antiseptic purposes. Draw a


timeline to show how different people in different times used tea tree oil to treat
infection.

2. As a market researcher, what kinds of questions would you ask consumers about a
product like tea tree oil? Design a questionnaire to ascertain buying habits.

3. List the main micro-organisms used in laboratory trials to test tea tree oils antiseptic
qualities. Discuss the findings of these trials.

4. What is ecological sustainability? How important is it to the tea tree industry?

11-12

1. What kinds of questions might a scientific researcher ask when investigating the best
way to create a product?

2. What is usually required before a pharmaceutical or medical preparation is accepted as
safe and effective?

3. Why are skin sensitivity trials so important?

4. Perform a first-hand investigation to measure the pH value of a range of tea tree
products.

PATENT- protect ur intellectual property
I want to make sure no-one steals my good idea before I can develop it for the
marketplace. Maybe I should keep it a secret. What else can I do?


Intellectual property is a name for the legal rights people have to protect the
results of their creative work. Innovations often include new designs, logos and
technologies that have been specially created. Patents, trademarks, copyright,
design registrations and secrecy are some of the aspects of protecting your
valuable intellectual property.

Innovators can use intellectual property rights to provide security for their ideas
while they develop them into commercial products. To obtain a patent on a novel
product or process, the innovator must apply to the Patent Office. If the patent is
granted, the innovator has exclusive right to use the invention for a limited time.
In return the innovator has to publish details of the invention.

Not every innovation can or should be covered by a patent. If only the external
appearance of a product is novel, the product design can be registered.
Trademarks can also be registered to obtain legal protection, while copyright is
automatic. For more information about intellectual property in Australia
seehttp://www.ipaustralia.gov.au.




Intellectual property, like other forms of property, can be traded. It can be sold to
another person or firm. It can be licensed to another firm, which allows it to use
the intellectual property for a set time in return for a fee. A joint venture to
develop a product allows the benefits of intellectual property ownership to be
shared between the companies involved.

Strategies for protecting and using intellectual property are an essential part of
running an innovative business. Such a strategy can prevent competitors from
circumventing existing patents and producing very similar products.
Failing to protect intellectual property has been acknowledged as one of the main
mistakes firms make in their commercial efforts, even though it may seem
expensive or unnecessary in the first steps of product development.
J McKeogh and A Stewart, Intellectual Property in Australia, 2nd edn.,
Butterworths, North Ryde, 1997.

Intellectual property, in creating rights and providing security, acts as a stimulant
to and incentive for innovation.
Office of the Chief Scientist, Department of the Prime Minister and Cabinet, The
role of intellectual property in innovation, Strategic overview, Volume 1,
Australian Government Publishing Service Canberra, 1993.
World Intellectual Property Organisation http://www.wipo.int/index.html.en
IP Australia http://www.ipaustralia.gov.au/index.html
Institute of Patent and Trademark Attorneys Australia http://www.ipta.com.au
The Intellectual Property Society of Australia and New
Zealandhttp://www.ipsanz.com.au
Links to IP resources http://www.ipmenu.coml
Intellectual Property UK Patent Office http://www.intellectual-property.gov.uk



Bishop Technology Group the power of patenting

Arthur Bishop's greatest contribution to Australian life may not be his inventions,
but his proof of a very simple proposition: that exporting Australian knowledge
can be just as valuable as exporting our manufactured products.

Bishop's Sydney-based company produces ideas in the form of designs. It
employs a team of engineers and encourages them to think and experiment. It
uses patenting laws to protect the devices they invent. These devices are
developed as products and licences granted for their manufacture. The company
also develops new machines and industrial processes to build these new devices,
patents the machines and earns royalties on each machine as well as each
product made. Engineers in the company are taught about the process of
innovation and patenting.

Bishop's key inventions are variable-ratio steering technology and a rotary valve
for power steering. Both produce safer and more precise car steering and
handling and are used in over 11 million new cars each year. Yet none of them



are made by Bishop's company they are all made under licence or in joint
ventures with car makers. Bishops patent royalties are worth A$14 million a year.
Some element of technology developed by Bishop is used in 20% of the
passenger cars made in the world each year.



Arthur Bishop at the
drawing board with his
designs. Courtesy
Bishop Technology
Group Limited.


Introduction

Arthur Bishop has been described as a modern-day
Leonardo da Vinci. He is one of Australias most creative
inventors. His productive engineering career began after he
completed an engineering diploma and an auto engineering
apprenticeship. At the start of World War II he was
employed as a process designer with the Department of
Aircraft Production, where he was required to redesign
sections of the landing gear for Beaufort and Beaufighter
aircraft.

Arthurs major aircraft innovation was a variable-ratio nose
wheel steering and damping mechanism that eliminated
wheel vibration or shimmying. After WWII this invention
was taken up in the UK and US, and Arthur began making
money from his patent royalties.

Confident that this aircraft invention could be used in cars,
Arthur travelled to Detroit, USA, to convince the big car
makers that his method was better than the traditional
technology for steering a car. He set up a research
laboratory employing several people, but failed to convince
the car makers to take up his ideas.

Arthur also approached European car makers to use his
ideas. Without a satisfactory method for manufacturing the
designs, his bids were not successful and he returned to
Australia.

Back home, Arthur was able to further refine his ideas. In
1970 GMH pioneered Bishops power steering in the HQ
Holden Kingswood using a patented hourglass shaped
worm gear to provide variable steering response. Ford
Australia followed suit a year later on their Falcon range of
vehicles.

Both companies changed to rack-and-pinion steering in the
early 1980s and called on Bishop to design a variable-ratio
rack-and-pinion arrangement to match the hourglass worm
design. After gearing experts and manufacturers claimed it
would be impossible, Bishops development team figured out
how the variable-ratio system would work, and how to
mass-produce it.




Use of variable-ratio steering in Australian cars gave Bishop
the proving ground he needed to eventually succeed
overseas. Arthur Bishop was recognised internationally as
the originator of the variable rack-and-pinion steering
concept.


Variable-ratio rack-and-
pinion steering
mechanism. Courtesy
Bishop Technology
Group Limited.


Graph of steering ratio
with turn. Courtesy
Bishop Technology
Group Limited.


Bishop variable ratio
rack and pinion steering.
Courtesy Bishop
Technology Group
Limited.


Bishop steering technology

The mechanical system used to steer a car is usually one of
two basic types. The most common type of steering
mechanism is the rack-and-pinion system. The steering
wheel is connected to a pinion which, when rotated, moves
the horizontal rack that controls the movement of the front
road wheels. For more information about car steering
systems seehttp://www.howstuffworks.com/steering.htm

The steering ratio for a car is the ratio of how far the
steering wheel must be rotated to how far the front road
wheels turn. A higher ratio means that the steering wheel
must be rotated further to turn the front road wheels, but
less force is required to do so. By making this steering ratio
vary with the angle of turn, Arthur Bishop created a system
that was stable when driving at speed on the highway but
also easy to turn slow corners or when parking a car. For
more on Bishops variable-ratio rack-and-pinion steering,
see http://www.bishopsteering.com/VR.htm

Several people had tried to develop such a system before,
but had concluded that it was not geometrically possible.
Arthur and his team not only developed a practical variable-
ratio steering system, but also created a new warm forging
technology to manufacture the components. At each stage
of the development process, Arthur and his team patented
their ideas. This included the process for making the
components and the mass production machinery used in
manufacturing.

The Bishop Technology Group, founded by Arthur Bishop in
1985, introduced numerous steering system innovations to
the automotive industry. The companys team of engineers,
designers and intellectual property experts ensured that
Bishops steering technology was taken up in the North
American, European and Asian markets. By 2002, Bishop
Technology Group had three sections, specialising in
steering technology, manufacturing technology, and
innovation respectively. For more information see the Bishop
Technology Group website,http:///www.aebishop.com.





Patent drawing for
variable ratio steering.
Courtesy Bishop
Technology Group
Limited.


Dr John Baxter with the
Bishop Torque and
Angle Sensor (BTAS),
another Bishop steering
innovation. Courtesy
Bishop Technology
Group Limited.


Using intellectual property
The patent system plays an essential role for the innovator
in preventing others pirating his ideas before he has had
time to perfect them.
Arthur Bishop, BRW, 31 July 6 Aug, 1982, p 34.
Since he applied for his first patent in 1943, Arthur Bishop
has developed many related patents. He has created a
pyramid or fence of patents to protect his ideas, all
potential uses, other similar ideas and even the machines
that turn his ideas into products. This makes it difficult for
other companies to copy his ideas, and encourages them to
buy a licence to use them legally.

When he developed the variable-ratio steering mechanism
he patented not only the device, but every variation and
application he could imagine, and also the machines and
processes that make them. This gave him time to perfect
the idea and profit from its use in millions of cars.
Its important to patent other ways of accomplishing the
same object, but also to find and cover the best way to
manufacture, or the best process associated with that new
idea. And so you build up a matrix or pyramid of protection
around the idea. That makes it much more invulnerable to
challenges by other manufacturers who very often have
resources which go far beyond the innovators.
Arthur Bishop, 1992.
Arthur Bishops approach to the protection of his intellectual
property has seen his patents argued over in courts in the
UK, Japan and Germany.
We have to be very vigilant about defending our patents. If
an inventor or innovator is perceived as being weak in
defending his industrial property in the marketplace, that
market will walk all over him.
Dr John Baxter, Joint Managing Director, Bishop Innovation,
IP Australia, Bishop Case Study
http://www.ipaustralia.gov.au/strategies/case/X_bishop.htm
The Bishop Technology Group has continued to innovate
based on Arthurs model of creating layers of patents around
a product. By carefully wording patents and strategically
planning intellectual property development, the company
can deter competition.
Its like youre Hansel and Gretel dropping the white stones.
Youre dropping patents into the system all the time and
basically your competitor never gets a chance to pick up all



the stones because youre always dropping new stones in
front. Theres a strategy in there of laying down a network
of interlinked patents All the information is there, but
intellectually it is very hard for somebody to come along
later and unravel it.
Dr John Baxter, Joint Managing Director, Bishop Innovation.
Licensing

The Bishop companys main product is intellectual property
that relates to transport engineering. The company creates
intellectual property and then licenses it to other companies.
The model we have to use in this country is more based on
intellectual capital rather than actual physical capital, and
intellectual property is all about intellectual capital. The
business model that Arthur has expounded for years has
really been building on intellectual capital, and licensing is a
very good model for commercialising that resource.
Dr John Baxter, Joint Managing Director, Bishop Innovation.
After first patenting his ideas, Bishop initially exclusively
licensed the steering technology. Once the technology and
products were accepted in the marketplace, the licenses
were re-negotiated as non-exclusive. By patenting both the
product, the manufacturing process and the manufacturing
equipment, the income from licensing fees is maximised.
The money earned from the licensing activity is returned to
the company, so research and development can continue.

By setting license fees at a suitable amount, the Bishop
Group encourages companies to license its technology
rather than attempting to develop their own solutions. The
company has its own equipment manufacturing division in
Sydney called Bishop Manufacturing Technology. Foreign
companies often purchase the equipment from this Bishop
division rather than taking up the licence to make their own
equipment.


Forging cell in the
automated
manufacturing plant built
as part of Bishop
Steering Technology

Joint ventures

Through joint ventures, the Bishop Technology Group can
develop intellectual property while ensuring the technology
has commercial applications. It can use partners knowledge
and facilities to assist in creating intellectual property. It can
also participate in manufacturing the products without
having to outlay all the necessary capital costs.
A joint venture is a very good way to leverage your way into
in-house manufacture. You have a strategic partner put up
half the capital and also they often give you volume and an



joint venture with
Mercedes-Benz
Lenkungen GmbH (MBL)
in Germany. Courtesy
Bishop Technology
Group Limited.

initial market for the product.
Dr John Baxter, Joint Managing Director, Bishop Innovation.
Teaching innovation

The Bishop Group teaches its employees about the process
of innovation. Seminars about patents and commercialising
technology help develop employees knowledge. Creative
thinking is encouraged and enthusiasm is directed into
strategic areas. Arthurs approach to innovation and
intellectual property has become an integral part of the
company.

The process of innovation at Bishop begins by creating
intellectual property. The company reviews all the prior
patents and intellectual property in its field of interest,
including car magazines and other publications. To create
very novel patents or further strengthen existing patents,
the company files provisional patents based on new
intellectual property. Prototyping and refinement of the idea
then progresses until the completed patent is filed 12
months later.
One thing about the business of building a patent fence
around something like this is that you really have to explore
every possibility. Having been laying this patent pattern
since 1955, Im pretty confident there isnt another way
around this tricky problem.
Arthur Bishop, Wheels Magazine, April 1981, p 61.



The impacts

After 50 years as a professional inventor, Arthur Bishop has
created hundreds of separate innovations. His company,
Bishop Technology Group, has expanded to employ over 220
people in Australia, USA and Germany and has generated
over 350 patents or patent applications. Bishops
innovations in steering technology are used in one in five
cars produced around the world.

Bishops model of selling ideas and intellectual property is
unique in the area of steering technology. The strategic
development and protection of intellectual property has
been critical to Bishops success.




DESIGN- Model and test it for users


What will it look like? How will it work? I've got a great idea and I want to test it out. First
I need to decide what I want it to do. Then I'll make a model and see if it works.


The person who says this is about to start designing. Designing is the part of the
innovation cycle that will turn the sum of your ideas and research into a product,
system or environment.

Design determines how an innovation works and looks, how people use it, how it's
made, what it's made from, even how it's packaged. At the end of the line, design
also determines how a product is disposed of - or whether it can be recycled or
reused.

The user reacts to design in two important ways: first by assigning all sorts of
values (like status, sexiness and desirability) to external appearance; and second
by assessing how performance measures up to expectation.

A designer needs to understand the practical and visual requirements as
described in the brief. Investigating possible solutions, modelling, testing and
evaluating the results ensure the final design meets as many of these
requirements as possible.

Design Institute of Australia http://www.dia.org.au/DIA2000menu.cfm
Design Council UK http://www.designcouncil.org.uk/design/
Exploring design and
innovationhttp://www.brunel.ac.uk/research/exploring/home.html




Sydney 2000 Olympic Torch a unique design project

The Sydney 2000 Olympic Games was an important event in the history of
Sydney and Australia. Sydney's infrastructure and organisational abilities were
under scrutiny from all 199 nations (10 651 athletes) attending the Games. The
Games were declared the 'best games ever'. In addition to the accomplishments
of athletes in the stadium, there were significant achievements in Australian
design and technology leading up to the Games. One of these was the
development of the Sydney 2000 Olympic Torch.

The torch featured many design and technology elements that had not been used
in earlier Olympic torches. Several groups collaborated in its development. The
exterior was designed by Blue Sky Design, modelling was done by Box and Dice
and manufacturing by GA & L Harrington, all based in Sydney. The innovative fuel
combustion system was researched and developed by Adelaide University and
Fuel & Combustion Technology Pty Ltd.

The torch received recognition around the country, including an Australian Design
Award. It became an icon of the Sydney 2000 Olympic Games and took its place
in the collection and exhibition of the Olympic Museum in Switzerland alongside
all other Olympic torches. The design of the torch was integral to the innovation



and to its impact.




The Olympic torch. Gift
of the New South Wales
Government. Part of the
Sydney 2000 Games
Collection.


Introduction

Celebrations erupted on 23 September 1993 when Sydney was
announced as the host city for the 2000 Olympic Games. From then until
the Games opened, many Australians worked hard to make the Games
succeed.

The torch relay is important in the lead-up to each Olympic Games. Every
relay begins when a sacred flame is lit from the sun's rays in Greece. The
flame then travels to the host city, and its arrival signals the beginning of
the Games. The first torch relay of the modern Olympic Games was
conducted in 1936 in Berlin. It was inspired by ancient Greek traditions
described in drawings and writings.

The Sydney 2000 torch relay was the longest ever. The flame travelled 27
000km from Greece to Sydney via several Pacific islands and many towns
in Australia. Cathy Freeman, who later won an Olympic gold medal, was
the last to carry the flame and used it to light the Olympic Cauldron.

Every country that hosts the Games designs its own torch. The Sydney
Organising Committee for the Olympic Games (SOCOG) wanted the torch
to become an icon of the Sydney 2000 Olympic Games and represent
Australia's skills in manufacturing and design.
It is a policy of the International Olympic Committee (IOC) that all
aspects associated with the Torch reflect the culture of the country
hosting the Olympic Games. It is considered imperative that Australian
organisations are involved in this design and development process to
assist in the promotion of Australia's future vision and demonstration of
local technical capabilities.
Olympic Torch Relay - Handheld Torch and Portable Cauldrons,
Invitation for Proposal, SOCOG, 1998.
Sydney Morning Herald Sydney 2000 Torch Relay news site
(archive) http://www.smh.com.au/olympics/torchrelay/



Mark Armstrong.
Courtesy Blue Sky

The design brief

November 1998 SOCOG invited forty firms to participate in the tender to
design and manufacture the Olympic Torch. One of the companies that
responded to the tender was Blue Sky Design, based in Sydney.
The Olympic torch was a piece of industrial design that had a fascination
for industrial designers.
Mark Armstrong, Creative Director, Blue Sky Design.



Design

The torch design brief was a thorough document that outlined the
aesthetic and technical requirements for the torch. The design had to
embody the spirits of Sydney, Australia, the athlete, Olympia, innovation
and sustainability. It had to be safe and easy to use, and stay alight even
if it was upside down.

The torch had to be simple, lightweight (less than 1.5kg) and low in cost.
It had to produce a highly visible flame that would burn for at least 20
minutes with efficient use of fuel and minimum emissions. The torch had
to operate in rain or hail, winds up to 65km/h and temperatures from -
5C to 45C. It would need to travel in different environments and via
different means of transport including boat, bicycle, canoe and horse.

Production of 14 000 torches and 1000 commemorative torches had to be
completed by March 2000. Prototypes needed to be ready in February
1999 to be launched in March 1999.
Our first response was to say, yes, this was something we wanted to win,
so we formulated a design strategy to win the tender. In fact, it turned
out that winning the tender was the actual design process.
Mark Armstrong, Creative Director, Blue Sky Design.



Concept sketches for the
torch design. Courtesy
Olympic Co-ordination
Authority and Blue Sky
Design.


The hunting boomerangs
that inspired the designs


The innovation

The first step for Blue Sky Design in approaching the Olympic Torch
project was to assemble a team. The company quickly formed
partnerships with the best people in the fields required. Blue Sky
collaborated with RMIT University Centre for Design to address the
environmental aspects of the torch design. Manufacturers GA & L
Harrington joined the collaboration along with Box and Dice model
makers. Blue Sky approached Phillips Electronics to provide financial
backing for the design and development process.
When you win a tender you have to have a team with all the right skills.
So that was how we responded, was first collate the very best partners
we could, and have a winning team.
Mark Armstrong, Creative Director, Blue Sky Design.
Investigation

Blue Sky Design had never designed an Olympic torch before. To
understand the history and tradition of the Olympic torch, the designers
began by doing research. They analysed the design and technology used
in each of the previous Olympic torches and learnt from problems other
countries had experienced. For information about Olympic torches used
before Sydney 2000, see the International Olympic Memorabilia
Federationhttp://www.collectors.olympic.org/e/fimo/fimo_torches_e.html.

To address the look described in the brief the designers focused on the



different 'spirits' suggested: of Sydney, innovation, Olympia, the athlete
and sustainability. Blue Sky created image boards for each of the
different aspects. The spirit of Sydney included the Opera House sails and
the water of Sydney harbour. Innovation included the orbital engine and
the Victa lawnmower. The spirit of the athlete was 'higher, faster,
stronger'.
It's something of our culture with the Opera House and the lightness. It
had to be sporty like a Kevlar racing bike. It had to be unique and
surprising like a Sarich engine or a piece of biomedical equipment
that's a little bit about Australia's culture as well.
Mark Armstrong, Creative Director, Blue Sky Design.
These image boards helped to inspire the designers when creating the
initial design drawings. The senior designer for the project was Robert
Jurgens. He began by making sketches to try and embody all the
characteristics required of the brief.

The designers looked for inspiration in natural and built environments to
help develop a strategy that would appeal to the judging committee.
Another significant influence was the shape of the hunting boomerang
that they had in the studio as they were developing the designs.
[We wanted to] convey the curve of the boomerang without making it too
obvious.
Robert Jurgens, Senior Designer, Blue Sky Design.
All that stuff had to come out in the early sketches, and then we modelled
up four designs in our tender because we weren't quite sure which way to
go.
Mark Armstrong, Creative Director, Blue Sky Design.


The four designs
submitted by Blue Sky.
Courtesy Olympic Co-
ordination Authority and
Blue Sky Design.


Developing alternative solutions

Blue Sky Design submitted four designs with its tender application. Each
one addressed a different combination of the design elements from the
brief. The first design had a high tech approach with a carbon fibre
handle. The second design was more traditional, with a wooden handle
and the Opera House sails in a cup around the flame. The third design
was inspired by the athlete and the shape of a boomerang. The fourth
design was symbolic, with the outer layer representing the white sails of
the Opera House and the inner blue layer the waters of the harbour, with
the shape inspired by the hunting boomerang.


Choosing a solution

It took Blue Sky Design six weeks from receiving the brief to submitting
its proposal to SOCOG. It was chosen as one of four submissions to
progress to the final selection round.




The chosen design.
Courtesy Olympic Co-
ordination Authority and
Blue Sky Design.


The designers focussed on one design in the final round. From their
interviews with the SOCOG committee, they decided that the symbolic
design would be the one that would most satisfy the committee and the
brief.


The centre core of the
model was machined
from a solid piece of
aluminium. Courtesy Box
and Dice Pty Ltd.


The plastic inner shell
after vacuum forming.
Courtesy Box and Dice
Pty Ltd.


The shells were finished
before being stuck
together to form the
model. Courtesy Box

Modelling

For the final selection round, Blue Sky Design decided to produce a
model. This was to help the selection committee and the designers
visualise the final product. Blue Sky refined the torch design using
computer-aided design (CAD) and then emailed the CAD file to Box and
Dice model makers.

Box and Dice machined all the parts for the model. The centre core was
made from aluminium and then used to form the shape of the plastic
inner and outer shells. The model makers Allan Ismay and Rick Perrior
decided that when the three layers were put together the torch looked
too long. They also decided that the angles of the layers at the top of the
torch didn't look right. So in discussion with Mark Armstrong they
changed the design as they modelled it, making it shorter and changing
the angle of the outside layer so more of the blue layer could be seen.
The outer surface of the torch was treated using a water-based printing
process that created layers and textures on the surface.
We knew we had to have an exotic surface - just to have anything
because just to have a metal shape, or a plastic shape is nothing we
were searching for finishes and materials that we could embody the
design with, and enrich it.
Mark Armstrong, Creative Director, Blue Sky Design.
The model weighed about 5 kg. Box and Dice hollowed out the aluminium
core and inserted a grille in the top to simulate a burner. The three
sections were glued together, a traditional model-making technique. Box
and Dice made a clear plastic stand in the shape of a hand to present the
torch to the Committee.

Blue Sky Design presented the model to the SOCOG Torch Review
Committee, along with a lifecycle analysis of the torch and documentation
about emissions, flame burn and manufacturing costs. The design was
sent to the International Olympic Committee for approval, and Blue Sky
was selected as the firm to continue with the torch design and
development. The winning design, conceived by Blue Sky Design senior
designer Robert Jurgens and creative director Mark Armstrong, was
unveiled in March 1999.



and Dice Pty Ltd.



The perspex torch model
being tested in a water
tunnel. Courtesy
Adelaide University
Turbulence, Energy and
Combustion Group.


The effect of wind on the
torch flame. Courtesy
Adelaide University
Turbulence, Energy and
Combustion Group.


The wooden punch and
steel die used to make
prototypes for testing.
Courtesy GA & L
Harrington.


Testing

Adelaide University and Fuel & Combustion Technology Pty Ltd (FCT)
were commissioned by SOCOG through a separate tender process to
develop the burner system for the torch. Through an extensive research
and development process, they created a system that resulted in a new
patent. The torch was prototyped and tested intensively to ensure it
satisfied the technical requirements within the constraints of the exterior
design. The torch shape was tested in a water tunnel to check its
aerodynamics. The shape of the flame and its ability to stay alight in
different environments were also tested. The manufacturer, GA & L
Harrington, was closely involved in the prototyping process. For more
information about the design and development of the burner system see
Turbulence, Energy and Combustion Group at university of
Adelaide http://www.tec.adelaide.edu.au

Manufacturing

Once the torch design had been selected, GA & L Harrington began the
manufacturing process. This presented challenges because there were no
engineering drawings to work from. The engineers had to use the model
made by Box and Dice, along with the design brief, to identify potential
problems and solutions for the manufacture of the torch.

The problems they had to overcome included the difficulty of forming the
three curved shells of the torch in the chosen materials, particularly the
stainless steel inner layer. The middle and outer layers were made from
aluminium. Fitting the three shells together and producing the correct
colours and texture finishes was also difficult. Special micro-machining
techniques were developed to manufacture the choke that regulated the
gas flow in the torch. The torch design was fine-tuned in consultation with
Blue Sky to ensure the combustion system fitted inside the torch. For
more information about how GA & L Harrington solved these problems
see http://www.galharrington.com.au/torch.htm.





This draw die was used
to form the torch shape
during manufacturing.
Courtesy GA & L
Harrington.



Pat Rafter with the
Olympic torch in front of
the Sydney Harbour
Bridge and Olympic rings.
This was a fantastic
promotional opportunity
for the Sydney 2000
Olympics and an exciting
moment for the crowd.
Photo by Mike Keating.
Copyright News Limited -
www.newsphotos.com.au.


The Olympic torch design
project culminated in the
dramatic lighting of the
Olympic cauldron by
Cathy Freeman at the
Sydney 2000 Olympics
Opening Ceremony.
Copyright News Limited -
www.newsphotos.com.au.


The impacts

Olympic torches were carried by 10 000 people in Australia and another 2
000 in Oceania and Greece. The flame and torch travelled through all
states to within a one hour drive of 85% of the Australian population. As
the torch travelled through the country, 188 community festivals were
staged around community cauldrons lit by the flame. The torch relay
began on 12 May 2000 and finished on 15 September 2000 when the
Olympic cauldron was lit and the Sydney 2000 Olympic Games began.

The torch relay created excitement and anticipation in the lead-up to the
Games. Some of the design team were given the opportunity to run in
the relay, including Mark Armstrong and John Harrington. Mark
Armstrong was amazed to see the effect the torch had on the crowd.
People clamoured to hold the torch and have their photograph taken with
it. The torch was a powerful tool for building enthusiasm for the Sydney
2000 Olympic Games.
I was shocked that people could just be so caught up in a flame on a
stick. It's still just a piece of industrial design, it's a piece of engineering,
it's a nice looking thing, that's it. But when I was there in the torch
relay I really had a lump in my throat. It was just incredible to see how
much it meant to other people, which I didn't realise.
Mark Armstrong, Creative Director, Blue Sky Design.
The Olympic Torch won an Australian Design Award in 2000 for Industrial
Design. The SOCOG committee was so impressed with the design process
used for the torch that it requested the same team of people create the
community cauldrons and the Sydney 2000 Paralympic Torch.
This outstanding collaboration has resulted in a finely resolved and
ergonomically sound product, which meets both the technical and
symbolic requirements of the brief.
Judges' citation for the Australian Design Award for Industrial Design
2000.

For us at Blue Sky the project has been very special and uplifting. The
team just "clicked" and each member from the designers to the



production engineers has demonstrated a passion for the project which is
quite extraordinary.
Mark Armstrong, Creative Director, Blue Sky Design.
ABC Torch Relay Archive Stories about people's relay
experiencehttp://http://abc.net.au/torch/
Newsphotos Torch Relay Photo Archivehttp://www.newsphotos.com.au/



DEVELOP- improve the technology
Will it do the job? Could it be made at a cost that people would pay? Research shows that
my idea is sound, but technical development is needed to prove that a product is possible


Scientists, engineers, technicians and tradespeople examine ways to make sure the idea
works. They might try using a few different materials before they find the best one. They
might develop new materials or new processes to make the product. They certainly have
to work out how to make it.

They might test prototypes under different conditions, such as at a range of temperatures.
They might run them for many hours to simulate normal use over many months. They
might even test them to destruction.

A product must do the job for which it is sold, or customers won't buy it or will demand
their money back. Many products must meet standards set by governments. They should
be safe to use. Ideally, parts should be reusable or their materials recyclable at the end of
a product's useful life.

Technical development is often thought of as tied to research, and the activity is called
research and development (R&D). It is indeed often the same team that works on both,
but different skills and approaches are needed.

Technical development is expensive. It is not much use doing it if nobody is going to want
the product. The developer is often convinced that it will sell, but investors will be
attracted to back the project only if potential buyers have shown interest. The technical
people might work with designers and market researchers to make design models and
prototypes and test customers' reactions to them.

Pharmaceutical
developmenthttp://www.merckfrosst.ca/e/research/r_d/pharmaceutical_r_d.html

Engine testing during
developmenthttp://www.orbeng.com.au/orbital/engineeringServices/testingValidation.htm






The vanadium battery a technical development saga

We need to store electricity for one of two reasons: we don't want to use it at the same
time as we generate it; or we want to use it to power a vehicle or a portable device.
Many different types of battery have been developed for these purposes, but all have
their drawbacks. One important problem with rechargeable batteries is poor efficiency
less electricity can be drawn from them than is used to charge them.

In 1984 at the University of NSW, Dr Maria Skyllas-Kazacos began to research the
possibility of using solutions of vanadium (a metallic element) to store electricity. Her aim
was to develop a new battery.

The research soon showed promise, but the development of the battery took many years
and a huge amount of human energy. The R&D team persisted because their tests
showed the battery could be very efficient and could have a variety of applications.

The developers tested a wide range of membrane and electrode materials and developed
a new type of conducting plastic. They designed some components of the battery and
selected others. They tested different ways of assembling the components.

After years of refining the components, and making and testing batteries, the patented
technology was licensed to several companies. The first to license the battery was
Mitsubishi Chemical Corporation and its subsidiary, Kashima-Kita Electric Power
Corporation. They developed large batteries for use in load levelling: storing electricity
generated in times of low demand and releasing it for use in times of high demand. The
vanadium battery could also be used to store solar or wind energy, which are not
generated continuously, and in vehicles, if charged vanadium solutions could be obtained
from service stations.

The vanadium battery is now being manufactured in Japan by Sumitomo Electric
Industries and is being exported around the world.
Products- make lots of them
I can make one widget in my workshop or my kitchen, but how could I make thousands of
them? I'd need a factory, well trained people, machines, reliable supplies of raw materials,
a system to manage production, and a testing process to check that quality stays high.


Making many copies of a product is called mass production. It begins with raw
materials of consistent content and properties, uses various machines and
processes to transform them into the desired products, and packages the
products for distribution and sale.

Manufacturing usually takes place in a factory designed to move the raw materials
to the machines to be processed in the correct sequence. People, robots,
computers and conveyor belts make this happen. People maintain the machines
and manage the whole process.

The designed shape is transferred to materials via custom-made moulds, dies,



jigs, and cutting tools, collectively called tooling. Materials might need to be cut,
melted, shaped, and joined. Surfaces might need to be finished by painting,
polishing, or affixing decals.

Quality assurance is important in manufacturing. It involves checking the raw
materials, inspecting the product at various stages of manufacture, and checking
the finished product. Checking can involve visual inspection, machine scanning,
weighing, testing physical properties in a laboratory, and operating to ensure that
a part or product functions correctly.

Manufacturing requires large financial investment to set up and to introduce
innovation. Attention is paid to reducing costs such as the amount of energy and
material used to make each product. Retaining workers through enterprise
agreements and good workplace practices, such as occupational health and
safety, reduces costs associated with training new workers.

Mass Production and Henry
Fordhttp://www.spartacus.schoolnet.co.uk/USAmass.htm



Caroma dual flush toilet made in quantity while maintaining quality

Caroma led the world in making dual flush toilets, which use less water and produce less
sewage than conventional toilets. Because of this innovation, backed up by substantial
investment and a commitment to quality, Caroma has become a successful exporter.

One Caroma factory makes vitreous china toilet pans and cisterns, the main raw material
being clay. The moulds are complex, and the process takes several days, as the wet clay
dries slowly and is then glazed and fired in a large kiln. Another factory makes plastic
cistern parts, plastic toilet seats, and some plastic cisterns. The processes used for
making the plastic parts are injection moulding and compression moulding.

The work is carried out by people and robots, presses and conveyor belts. All processes
are closely monitored, and samples are taken regularly for testing. The plastic valves are
all tested as they are made, and the completed cisterns are filled with water to test that
they flush correctly and don't leak. The factories are registered with the international
standards organisation, and visited regularly by independent inspectors, to demonstrate
that they follow world's best practice.

The company has also attained registration affirming that it meets world's best practice
in environmental management, using materials and energy efficiently and not producing
dangerous wastes.

Attaining registration for both standards was a long and difficult process that required
people to change their thinking. And maintaining the standards requires constant careful
management of all aspects of manufacturing.

The introduction of a new toilet to production is a complex process, but continuing
innovation is essential. Marketing, R&D and manufacturing departments are all involved,


and management must give approval before money is spent on the expensive tooling
needed to mass-produce parts for the new product.
Introducti
on

Flush toilets
have been
in use for
over 200
years. They
make our
lives more
pleasant by
flushing
bodily
wastes
away, and
thus
reducing
our
exposure to
bad smells
and nasty
diseases.
Imagine
living in a
crowded
city without
a sewerage
system!

However,
the
traditional
WC (water
closet) used
a lot of
water. This
meant that
a lot of
water had
to be
supplied
and a large
volume of
sewage had
to be piped
away and
treated.




Before
Caroma
began
developing
the dual
flush toilet,
the average
Australian
toilet used
about 11
litres of
water for
each flush.
Some
companies
made
toilets with
two flush
volumes,
but without
separate
buttons;
they were
difficult to
operate and
often failed
to flush
properly.
Now most
new toilets
made in
Australia
use only 6
litres (full
flush) or 3
litres (half
flush).

Caroma
owns
factories in
Sydney,
Melbourne
and
Adelaide. It
makes
baths,
basins and
bathroom
accessories
as well as


toilets.


Slip ready for use.
Courtesy of Caroma
Industries Ltd


Greenware cisterns,
with moulds in
background.
Courtesy of Caroma
Industries Ltd


Robot spraying
glaze.
Courtesy of Caroma
Industries Ltd



Making vitreous china toilets

Most toilets are made from vitreous china. Vitreous means glassy: the
china has a strong atomic structure that makes it waterproof and
resistant to damage, and a smooth surface that is easy to clean. Caroma
manufactures all its pans, and most of its cisterns, from vitreous china.

The raw material is clay, which is obtained from quarries in Victoria,
bagged, and trucked to factories in Melbourne and Sydney. At the
factory, it is delivered to the 'slip house' and fed into ball mills, large
rotating drums containing loose steel balls that crush the clay. The
crushed clay is sieved and mixed with minerals, fluxes and water to
make 'slip'.

Each factory makes several different designs of toilet pan and cistern, as
well as china basins. Each design has a unique 'original mould' crafted for
it. This is copied to make many 'production moulds'.

The mould for a toilet pan is quite complex and is made in several pieces,
which are clamped together before use. Slip is poured into the mould and
left to set for about an hour. The plaster mould absorbs water from the
slip during this time.

Next, the mould is unclamped and the resulting 'greenware' is dried over
three days. Drying begins in the open space of the factory, assisted by
many fans, and finishes in a large dryer. If items are not properly dried
they can explode in the kiln!

Hot air is pumped into the factory at night to dry the moulds. Each
production mould can be re-used about 100 times.

The next step is glazing, to give the surface its smooth and shiny finish.
The glaze, composed mainly of silica (silicon dioxide) and nepheline (a
silicate mineral), is made in the slip house. A small amount of green
vegetable dye is added. A robot sprays the glaze onto each item as it is
brought to it on a conveyor belt. The green dye allows the robot to sense
which parts of an item have been sprayed and which are yet to be
sprayed.

The items are then stacked on kiln cars to carry them into the tunnel kiln
for firing. They take about 20 hours to move slowly through the kiln,
being heated gradually to 1200C in the central zone, then cooling
gradually before they emerge. In the hot zone, the vegetable dye
vaporises and the slip and glaze vitrify. The material shrinks as it
vitrifies, but it maintains its shape.

The next step in making a cistern is to assemble the plastic components
inside it. Most are made in Caroma's Adelaide factory and trucked to



Toilet pans and
cisterns emerging
from the kiln.
Courtesy of Caroma
Industries Ltd

Melbourne and Sydney. A few are made by other companies.

At every point in the production process, the items are individually
checked. Once the cistern is assembled, it is filled with water to check
that it fills and flushes correctly and does not leak.

Making ceramic
mouldshttp://www.www.ferringallery.com/gallery/thayer/articles/ceramic
stechnical.html
How to make a two-piece
mouldhttp://www.garlic.com/~7Eblufrogg/dolls/mold.htm
Sanitaryware models, moulds and
caseshttp://www.sacmi.com/English/ceramic/pdf/modelling.pdf


Automated
production of plastic
pipe.
Courtesy of Caroma
Industries Ltd


Injection moulding
machine.
Courtesy of Caroma
Industries Ltd


A robot at work in

Making the plastic parts

In addition to the plastic cistern parts, the Adelaide factory makes plastic
seats and cisterns. Most of the plastic is sourced from formulators in
Victoria; a small amount is imported from overseas and compounded
locally.

The appropriate plastic is chosen for each part. Two fabrication processes
are used by Caroma: injection moulding and compression moulding. Each
mould (also called a tool) can be used to make millions of parts.

Injection moulding tools are made of hard steel, with their surfaces hard
chromed. To make a part, thermoplastic granules are poured into the
mould and subjected to heat and pressure. It takes only seconds for each
part to be made.

One process that has been fully automated is assembly and testing of the
valves that control water flow in the cistern; if a valve fails the test, it is
disassembled and usually reassembled. This is all done just a few
seconds after the valve parts are made, so any recurring problems noted
in testing can be addressed quickly. Automating this process took many
years of research and development.

Compression moulding is used to make toilet seats because consumers
like the solid feel of thermoset plastic, which cannot be injection
moulded. Enough granulated plastic is spread inside the mould to slightly
overfill it. The powder is heated to 145C. The mould is closed and
subjected to pressure of 400 tonnes. The plastic flows to fill the mould,
with the excess squeezing out (rather like toothpaste). The lid is made in
a separate mould.

Then the seat and lid must be hinged together. Most are assembled by
hand, but one production line has a single robot taking the whole process
from raw material to packaged product.

Simple diagrams of plastics



Caroma's Adelaide
factory.
Courtesy of Caroma
Industries Ltd

manufacturinghttp://www.plastiquarian.com/manufact.htm

Packaging the product

In many factories, packaging is a highly automated operation, with
robots doing most of the work. At Caroma's vitreous china factories,
where the products are heavy, breakable and varied, they are mostly
handled by people. After a final inspection, the products are packed in
cardboard boxes and stacked on pallets.

The plastic toilet cisterns and seats are also mostly packed by people.
More robots will probably be introduced in the future to automate this
part of the factory's operation.



Caroma staff
discussing a new
design.
Courtesy of Caroma
Industries Ltd


Skilled craftsmen
modifying the trial
mould.
Courtesy of Caroma
Industries Ltd


Introducing a new product

W hen Caroma developed the first dual flush toilet, new design was
combined with old. In contrast, the 6/3 litre toilet was designed from
scratch. This made it a more satisfying project for those involved, but it
cost millions of dollars. It was not just the cistern that had to be
redesigned; the shape of the pan also had to be changed to ensure the
toilet flushed properly.

A new toilet design is first discussed by the marketing and R&D
departments. An industrial designer uses computer-aided design (CAD)
to produce images to fit the concept. The product is market tested by
showing images to potential buyers.

A model maker mocks up the design in plaster, and then spray paints it
so that it looks like the real thing. This is used for more market testing,
and changes are made if necessary. The design must be approved by in-
house committees and finally by company executives before going into
manufacture.

An oversized model is then made. It is oversized to account for the fact
that greenware shrinks when it is dried and fired: each linear dimension
shrinks by 11.8%, the major change occurring in the kiln.

The model is used to make a plaster mould. This 'trial mould' is taken to
the trial cast room in the factory. The expert modellers there pick up and
resolve problems. They make trial pieces (toilet pans and cisterns) using
the mould and send them to the main kiln to be fired. When they are
happy with the modified mould, it becomes the 'original mould'.

If you think of the final product as positive, the original mould is negative
(it fills the space immediately around the product).





Adding final touches
to a case.
Courtesy of Caroma
Industries Ltd

The original mould is returned to the R&D department, where it is used
to make a resin and fibreglass 'case'. This is positive, being the shape of
the product surrounded by a gap the shape of the mould, then more
resin to form the outside shape of the mould. The case will be used to
make thousands of plaster production moulds.

An engineer in R&D prepares control documents, which are dimensioned
drawings for the Quality Assurance (QA) department to follow when
checking samples from the production line. And a technical writer
prepares detailed information for buyers and installers.

In Adelaide, the company makes a major change to the internal design of
the cistern parts about once in ten years, but makes minor changes
about once a month. All design for new parts is done in-house using a
high-level CAD program called CATIA. There are no longer any drawing
boards in the design office.

An external consultancy uses Moldflow (software developed in Australia
to simulate plastic flow) to optimise the design of each new tool. This is
extremely worthwhile, as tools are very expensive. The modified CAD
data are then used to make the tool.
We are pushing the parameters of our process very hard and looking for
very small percentage gains.
John Eagle, Engineering Services Manager, Caroma (Adelaide)


Each product is
carefully inspected.
Courtesy of Caroma
Industries Ltd


Quality assurance

The company aims to make its products using world's best practice. It
demonstrated this commitment by attaining ISO 9001 registration, and it
works hard to maintain accreditation. Experts from Quality Assurance
Services (QAS), a subsidiary of Standards Australia, visit twice each year
to audit the process.
The ISO 9000 family of standards represents an international consensus
on good management practices with the aim of ensuring that the
organization can time and time again deliver the product or services that
meet the client's quality requirements.
International Organization for Standardization
Achieving ISO9001 registration took about a year. It involved following
set procedures, changing some processes, and monitoring product
quality. The main change needed was in people's thinking.

A major, long-standing aspect of quality assurance (QA) is constant
checking of materials. The Sydney QA lab is beside the slip house and
samples every batch of slip. It has its own tiny kiln for test firing.
Laboratory staff carry out a range of tests, including specific gravity, flow
characteristics, thermal analysis, colour checking, water absorption, and
susceptibility to crazing.




The QA staff also select finished toilets from the production line to be
tested. These toilets are taken to a laboratory in the R&D department,
which follows procedures set by QAS or an overseas body. For example,
it tests the amount of splashback and the efficacy of flushing. The lab is
registered with the National Association of Testing Authorities, which
means its methods are so rigorous that it does not need to send samples
to other labs for further checking.

Caroma's R&D manager, Dr Steve Cummings, sits on a US standards
board and is involved in discussions about international standards. This
type of involvement by companies usually ensures that standards are
realistic and that standards evolve as product innovations are
introduced.

Workers carry out a visual inspection of each piece after firing and
condemn those with unacceptable flaws. They also enter details of any
minor problems into a computer, so that any trends can be traced back
and the process fixed. The R&D department does production
troubleshooting.

Barcoding is being trialled in Sydney, and its full introduction will allow
the history of each piece (which batch of slip it was made from, who
dismoulded it and when, and when it was fired) to be kept with it and
retrieved at any time.

Barcoding is central to QA at the Adelaide factory. QA auditors routinely
use handheld devices to read barcodes and send the information via
radio communication to a central computer. The auditors also enter notes
on the devices and send them to the computer to be linked to the
barcodes for quick analysis of production problems.
QA just makes good sound business sense, and we didn't go for ISO
registration because someone told us to, but because it fits in with our
philosophy.
John Eagle, Engineering Services Manager, Caroma (Adelaide)
International standards
organisationhttp://www.iso.ch/iso/en/ISOOnline.openerpage

Managing energy and waste

The company has achieved ISO 14001 registration, which means that it
uses best environmental practice. As with ISO 9001, registration took
lots of work and needed people to change their thinking.

The plaster from worn out moulds can be re-used. Water is reused in the
slip house and is not pumped off site.

After drying and dismoulding, pans and cisterns are inspected by people.
Any greenware that fails this check is sent back to the slip house so that



the material can be reused. Once pieces have been fired, those that fail
QA checks are ground up and the material is used in making roads, as
there is no way of recycling vitreous china.

Waste thermoplastic from the Adelaide plant is sent to another company
to be reprocessed and returned to Caroma for use. Recycling schemes
can only work if there is a market for their products; Caroma supports
recycling by buying plastic from several reprocessing companies to make
cistern parts.

Waste thermoset plastic cannot be recycled. As it is made from urea and
formaldehyde, two simple organic substances that are commonly used in
fertilisers, the waste material is sold for that purpose.

Making vitreous china is an energy-intensive process, so improvements
in energy efficiency can lead to significant cost savings and reduced
environmental impact. The gas supply company and independent
consultants have helped improve energy efficiency at the Sydney factory.



Managing people

The Caroma factories employ hundreds of people, so managing people is
just as important as managing materials and processes.

The company has negotiated enterprise agreements with unions that set
out pay, conditions and responsibilities of management and workers. The
aims of these agreements are to improve the quality of working life and
job security of employees while improving the competitiveness of the
company.

One way in which the quality of working life is improved is by providing a
healthy and safe working environment, safety equipment and ongoing
safety training.

The company also provides training to improve and broaden skills, with
the aim of improving productivity, efficiency and flexibility while
providing a career path for workers prepared to become multi-skilled.
Caroma, like most Australian manufacturers, employs many people from
non-English-speaking backgrounds, and training must be tailored to their
needs.

The impacts

Caroma led the world in making dual flush toilets. Now, many countries
require dual flush toilets to be installed in new buildings. This has led to a
huge saving in water use and the amount of sewage generated. In some
cases, the building of new dams and sewerage works has been deferred
because of this reduced demand.

This innovation has also led to an increase in the number of people
employed by Caroma and its (mostly Australian) suppliers, and in export
income for Australia. Toilets are not an obvious export item for Australia,
being fairly labour-intensive to make as well as costly to transport


Sell- advertise and inform people
What sort of people will buy my product? Should I make a TV ad? Or could I get peoples
attention by sponsoring an event? It costs a lot to sell something new.


Developers and designers must have an idea of the target market for their
product as they work. To find out what buyers really want, market research is
usually needed. Surveys or discussion groups allow researchers to test ideas
about the product with potential buyers. As the product is being developed, early
surveys or models can test customer reaction to potential designs and help refine
the product before it reaches the marketplace.




A marketing campaign can start before a product is available. Computer
generated images or models can be used in print advertising, and radio interviews
can be used to talk up the product and build up interest. Production and
distribution networks must be ready when people want to buy the product.

Knowing who the customers are helps marketers choose where to sell the product
and how best to advertise it. It also assists in selecting people to endorse the
product.

Distribution agents must be trained and supported in their efforts to promote and
sell the product. This can include point-of-sale advertising provided by the
company. The Internet has become an important medium for getting information
to potential customers and for selling products.

Marketing of technical and industrial
productshttp://www.robertwinton.com/contents.htm



Victa how it became Australias number 1 mower

Mervyn Victor Richardson developed the Victa rotary lawn-mower in August 1952.
It was not the first rotary lawn-mower ever developed, but it was cheaper, lighter
and easier to use than the mowers that came before.

Mervyn advertised his new mowers and sold them from his home. Demand for the
mowers was high with the growth of post-war suburbia. Soon Mervyn had to
expand the business to a new location and Victa Mowers Pty Ltd was born.

From the early days Victa effectively used marketing to promote and sell its
mowers. It pioneered TV advertising in Australia, using celebrity endorsements
and combining them with extensive newspaper and print media campaigns. Victa
set up a network of distributors and trained them in promotion and sales.

Within two years of setting up the business, Victa had sold 20 000 mowers and
was beginning to export them. The company continued to improve the
technology, design and marketing of its products by responding to customers
needs. By 2002, after almost 50 years of operation, 6.5 million Victa mowers had
been sold in 30 countries around the world.



Introduction developing the Victa

While the Victa rotary lawn-mower was not the first of
its kind, the light weight and ease of manufacture were
innovative. A British patent for a rotary lawn-mower
exists from 1932, and Lawrence Hall built a rotary lawn-
mower in Sydney in 1948.




The peach-tin prototype.
Powerhouse Museum.
Photo by Sue Stafford.


The Mowhall rotary mower developed by Lawrence Hall
was made from a heavy plough disc and marine engine.
It required two people (one to push and one to pull) and
was never a great commercial success. Mervyn Victor
Richardson saw the Mowhall being demonstrated in
1948. In 1949 when Mervyns son, Gary, started a
mowing business, Mervyn decided to build two lawn-
mowers for Gary to use. The mowers used imported
Villiers two-stroke engines with a traditional horizontal
rotating reel. Mervyn continued to build and sell these
mowers after the mowing business was closed.

In August 1952, Mervyn had the idea to put one of the
engines on its side to drive a blade rotating in a
horizontal plane. He assembled a prototype from a few
scraps of metal and a peach tin for a fuel can. The
prototype was tested and worked it cut fine grass,
long grass and weeds.

Mervyn then began selling his new mower. He called it
the Victa Rotomo 18 and advertised demonstrations at
his own home. Within three months he had sold 30
mowers. On 13 February 1953 Victa Mowers Pty Ltd was
formed. The company expanded, moved location and by
1958 had 3000 employees building 143 000 mowers a
year for export to 28 countries.

Of great importance in the rapid initial success of the
Victa mower was the innovative promotional methods
used. Victa quickly found a niche in the market and
established its name as a supplier of reliable, affordable
mowers.


The first Victa mower
newspaper
advertisement.
September 1952
February 1953. From
Powerhouse Museum
Victa Archive. Courtesy
of Victa Sunbeam.

The beginnings of marketing and promotion

When Mervyn first developed his Victa mower, his most
successful sales technique was direct demonstration.
Over the summer of 1952 53 he demonstrated the
mower at his own home. He and his family made the
mowers in their garage. Mervyn placed a newspaper
advertisement encouraging customers to visit his home
and see the mower in action.

The advertisement resulted in an astonishing demand
for the lightweight lawn-mower that could turn what had
once been pasture or bush into civilised, elegant lawn.
Soon Mervyn could not keep up with the demand. He
gave up his old job to become full time manager of the
business and moved the company to a shed in





A sketch of the shed at
Mortlake showing
production of Victa
mowers. Sketch by
Robert Emerson Curtis.
Courtesy Victa.


Cutting grass is fun so
this leaflet from 1955
says. From Powerhouse
Museum Victa Archive.
Courtesy of Victa.

Mortlake.

Victa continued to advertise in newspapers and radio,
and the demonstrations continued to sell the mowers.
The mower was advertised as new, reliable and
revolutionary. There was no lawn too fine, no growth
too tough.

Some customers used the mowers for tasks that werent
in the instruction manual: to cut down trees; power
small boats; or cut gravel. Victa welcomed the
surprising and unique publicity this brought.


A newspaper
advertisement from 1960
promoting the leisure
opportunities the Victa
could provide. From
Powerhouse Museum
Victa Archive. Courtesy
of Victa


The first big campaign

In 1958 the company moved to a new factory and
developed a five-year plan. It wanted to make the best
product on the market, be the first into volume
production and distribution, and base the business on a
low-price mower that a middle-income family could
afford. It established a network of over 900 dealers
around the country to promote and sell the Victa lawn-
mower.

At the same time Victa began a major advertising
campaign to promote the Victa lawn-mower and name.
The company used an all-media approach. It ran two-
page advertisements in national weekend papers. Its
radio campaign covered all states and used a catchy
jingle. Victa pioneered the use of television advertising
in both Sydney and Melbourne. A two-minute film called
Mowing Places with Victa was distributed to cinemas
around the country.





The Victa could Cut fine
lawns to perfection and
eat through TOUGH
jungle growth in this
leaflet from 1957. In
early advertisements
well-dressed women
were mowing the lawn
with a Victa it was so
easy to use! From
Powerhouse Museum
Victa Archive. Courtesy
of Victa Sunbeam.

Up until this time, Victas advertising had focussed on
the ease of use and functional abilities of the mower.
The company promoted the mower as being able to cut
any height of grass and weeds and cut right up to fences
and walls. The campaign of 1958 59 continued to
highlight these features, but also promoted the mower
as a labour-saving device.

Slogans such as Dont be the last man on your street to
own a Victa and Summer weekends are too precious to
waste encouraged homeowners to have the kind of
smooth, trim lawn everyone admires without sacrificing
hours of the weekend. Promotional feature supplements
were inserted in major national newspapers to inform
people about lawns, how to care for them and, of
course, which was the best mower to do the job!


A leaflet from 1960
showing early use of the
turns grass into lawn
slogan. From
Powerhouse Museum
Victa Archive. Courtesy
of Victa.


This newspaper
advertisement from
spring 1960 says that
Grass is growing think
of mowing. The peak
mower season was
approaching. From
Powerhouse Museum
Victa Archive. Courtesy

Turning grass into lawn

It was during 1959 that the slogans turns grass into
lawn and Australias top selling mower were
introduced. These slogans featured in much of Victas
advertising for the next 40 years. The active print media
campaign promoted Victa as Australias favourite. In
January 1959 the public were told that over 250 000
Australian families turn grass into lawn with Victa
mowers.

The Victa mower was promoted as an essential
ingredient for a relaxing weekend. There were over
three hundred and seventy five thousand families using
Victa to bring extra hours of weekend leisure. Families
were even encouraged to buy Dad one for Christmas
and help him cut that laborious mowing marathon into a
stroll.

A useful public relations exercise for Victa during this
time was its community mowing section that provided
services to charitable organisations. Victa staff visited
schools, churches, cemeteries and other sites, mowing
and looking after the lawn for free. This activity gave
Victa free publicity in local newspapers and raised the
profile of the company within the community.

Russell Jennings, the advertising manager of Victa at the
time, treated lawn-mower sales as a seasonal business.
He adjusted the campaign according to the peak mower
season in different states. After a couple of days heavy



of Victa.

rain followed by humid weather, sales increased as the
grass grew rapidly. Dry spells, of course, subdued
demand.

Jennings considered the day of the week as an
important factor in achieving maximum impact for Victa
advertisements. He concentrated advertising at the end
of the week and the weekend to catch the man with a
lawn during his most receptive periods while he is
contemplating with little enthusiasm the chore of cutting
the grass with a hand mower, or just after he has done
it in this laborious manner.

The network of Victa agents around the country
promoted the mower using point-of-sale brochures,
posters and other literature. These dealers also
advertised the Victa mower as part of their own press
advertising campaigns. In 1959 the companys total
sales rose to 142 909.

Continuing innovation

Victa introduced more innovations to the basic
lightweight mower including height adjustment,
automatic zip coil starting, folding handles, rear grass
catcher, plastic grass catcher, the worlds first plastic
carburettor, vortex noise reduction technologies and
the mulch and catch that could either catch or return
the grass to the lawn. These innovations were the focus
of media campaigns to promote new products. The
company also encouraged people to trade in their old
models for new ones by promoting the advantages of
the new models over the old.


In this leaflet from 1970
Lawna Green
encouraged dealers to
prepare for the upcoming
February sales peak.
From Powerhouse
Museum Victa Archive.
Courtesy of Victa.

Marketing techniques used by Victa

Turing the first 50 years of selling the Victa lawn-
mower, there have been two main avenues for
promoting the product: media campaigns and promotion
at the retail outlet.

Retail promotion

Since Mervyn Richardson set up Victa Mowers Pty Ltd,
the company has focussed much of its marketing efforts
on influencing what happens in the shops where people
buy mowers. In the beginning the company established
a network of retail outlets and agents. The dealers
included a rainwater tank maker, travel agent, picture
theatre proprietor (who apparently turned his chocolate





Selling mowers has
remained a seasonal
business as shown in
this graph from the 1970
Lawna Green dealers
leaflet. From
Powerhouse Museum
Victa Archive. Courtesy
of Victa.


The 2002 campaign
promoted 50 years of
Victa as a reliable,
quality brand of mowers.
Courtesy of Victa.


This logo was first used
by Victa in 1966 and was
still in use in 2002.
Courtesy of Victa.

counter into a Victa display!), undertaker, barbershops
and other diverse businesses. They all provided service
and spare parts to Victas service standards.

Victa published booklets and other literature to inform
dealers about the products and encourage them to
promote Victa. The company provided creative ideas for
ways to promote the product. Dealers used these ideas
and also came up with their own unique ways of
attracting customers to buy Victa mowers from their
store.

Victa offered price incentives and exclusive ranges to
encourage distributors to promote its products. By 2002
there were 500 specialists and 1000 retailers
distributing Victa mowers.

Media campaigns

When the Victa mower was first developed, media
advertising focussed on creating public awareness of the
product. The early TV and press advertisements
promoted the functions of the mower and its advantages
over previous technology.

As the Victa mower became recognised in the
marketplace, advertising was used to promote new
models and innovations. Some campaigns focussed only
on promoting the Victa brand, such as Victa knows
Aussie lawns.

Victa used all types of media as part of its campaigns.
The company pioneered TV advertising and used
newspapers, magazines, radio and cinema advertising.
In 2001 Victa began using the Internet to provide
information to potential and existing customers about its
products and services.

Celebrities endorsing the Victa mower featured in
campaigns of the 60s and 70s. Cricket players and
groundsmen from Queensland and Victoria were used to
give the company a local identity in these states.
Formula one racing driver Allan Moffat and TV
personality Noel Brophy featured in a series of TV and
print advertisements in the mid-1970s as part of the
Zip-Hip-Hooray campaign.

Each new product or innovation launched was
accompanied by a media campaign. The most recent
campaign based on a new product was the Mulch and
Catch campaign in 1996 7. The new product was able


to create mulch from the cuttings and return it to the
lawn, or catch the cuttings in the grass catcher. The
campaign used TV, gardening magazines and general
press promotion. For examples from this campaign see

Service- communicate with ur customers
How can I help my customers use my product? Can I improve it in some way? Do I need
to provide after-sales service or training?.


After a new product has been sold or a new system installed, innovators must
provide the necessary information and support for their customers or clients. Staff
should be available to provide post-sales service and information through
brochures, manuals, training videos, training sessions, maintenance agreements
or telephone hotlines.

The demand for businesses to provide services with their products is increasing
and is being driven by:
customers demand for greater value and attention to specific needs
novelty of products creates a demand for training and information about
use
cost the more expensive a product, the more likely clients are to
request maintenance services
regulations and standards encourage provision of compliance services
outsourcing of skills encourages supplier firms to add services to
products.
Companies which cultivate customers through market research, after-sales
service and support networks create loyalty to their products and a reputation
that increases sales. Their customers can provide valuable feedback about
problems, possible improvements, new uses and potential new markets for
products.





Incat Catamarans providing service around the world

Until recently most passenger ferries operated at speeds of 19 knots or less, with
long turnaround periods to unload and load passengers and vehicles. During the
1990s, large catamaran ferries made of aluminium started operating on ferry
routes around the UK, then on other ferry routes around the world. These ferries,
first made by Incat in Hobart, operated at twice the speed of conventional ferries
and had very short turnaround times, allowing operators to provide twice as
many trips as before and dramatically reduce travel times for their passengers.




The introduction of the Incat ferries, and others made by Incats competitors,
sparked a revolution in ferry transport which continues today. Incat and other
companies like Austel established a new shipbuilding industry in Australia which
dominates world markets for high speed ferries and provides skilled jobs for
thousands of Australians.

Incats ferries have been successful in world markets not only because of their
innovative design features, but also because of the innovations in service
provided to the owners and operators of the ferries. This package of a high-
performance product with tailored services has allowed Incats clients to
customise each ferry to suit their own requirements, and to maintain and repair
the ferries to minimise downtime and loss of revenue.



Incat passenger ferry
The Lynx is operated in
New Zealand. Tranz
Rail.


Incat history

The wave-piercing design developed for Incats high
speed catamaran ferries allows the twin hulls with sharp
bows to pierce the waves rather than riding over them.
This innovation in design for fast, lightweight catamaran
ferries was a collaboration between Robert Clifford, a
boatbuilder and ferry operator, and Phillip Hercus, a ship
designer.

The first small prototype, called Little Devil, was built in
Hobart in 1983 and its performance in sea trials
encouraged them to build a 28 metre passenger ferry
called Spirit of Victoria which began operating in 1985.
The partnership between Clifford and Hercus ended in
1988. Phillip Hercus continued to design ferries for
shipbuilders around the world, from his company Incat
Designs in Sydney. Robert Clifford set up a group of
Incat companies to make large aluminium catamaran
ferries in special facilities on the Derwent River in
Hobart.

The first Incat ferry that could carry vehicles and
passengers was a 74 metre wave-piercer called
Hoverspeed Great Britain. On its delivery voyage to the
UK in 1990 this ferry broke a longstanding record for a
transatlantic crossing by a passenger vessel.

Through the 1990s the speed, capacity, and passenger
comfort of the aluminium ferries made by the Incat
group were improved by several design changes: by
increasing the length of the ferries to 98m which greatly
increased their capacity and made them less affected by
individual waves, a change to waterjet propulsion, and
by adding adjustable flaps and a retractable T foil to
improve the trim and smoothness of the ride in rough



conditions. Recent Incat ferries also provide moveable
mezzanine vehicle decks which allow operators to
quickly change the amounts of space for cars and
trucks. These design innovations were supported by
high levels of service to customers to assist them in
purchasing, operating, and maintaining their ferries.

Through the 1990s the Incat group had remarkable
success. Over 30 of its catamarans were sold or leased
to ferry operators in Europe, Asia, South America, New
Zealand and Australia. The wave-piercing design and
ability of its skilled workforce to work with aluminium
gave it a clear lead over other shipyards in construction
of large high-speed ferries. During the 1990s it was
estimated that Incat had about 40% of the world market
for large high speed ferries.

However in recent years it has seen increasing
competition from shipyards in Europe and from other
Australian companies such as Austal in Perth. As the
world market for large passenger ferries became
oversupplied in 2000 and 2001, Incat was forced to
restructure its operations and increase its efforts to
lease ferries. Incat management envisages opportunities
for its ferries in new applications such as high speed
troop carriers and rapid freight services.

For more information about Incat
visithttp://www.incat.com.au


Lounge, bar and shop of
The Cat operating in the
US. The ferry interiors
can be designed to
order. Courtesy Incat
Tasmania.


Product service packages

The success of the Incat catamaran ferries in the 1990s
came from Incats development of an innovative
product-service package that included services such as
training, on-board maintenance and diagnostic systems,
remote diagnostic services via radio and satellite links,
and a mobile response team that offers repairs to any of
the ferries within 24 hours.

Pre-sales service

Incats customer service begins prior to sale with
financial planning services and customised fit-out plan
for clients.

The companys finance division assists buyers and
operators to secure finance for purchasing the Incat
ferries. It introduces customers to appropriate banks,
financial companies and insurers, and also helps them to




Interior seats of the
Bentayga Express
operating in the Canary
Islands. Courtesy Incat
Tasmania.

find taxation and legal advisors. Incat also assists
buyers to calculate their potential operational costs and
provides advice on planning and developing port
infrastructure.

Incat has an in-house interior design group that can
design and install a layout, seating, carpets, fittings, and
colour scheme to meet the needs of clients in order to
best meet the needs of their passengers. Interiors can
include facilities for shops, kiosks, outdoor seating,
dining areas, lounges, toilets, child play areas, and
ramps for access by passengers with disabilities. Incat
also has staff to design and apply the livery (exterior
paint scheme and logo).


Members of the US
military participating in a
High Speed Craft Safety
and Systems Course run
at Incats Tasmanian
training facility. Courtesy
Incat Tasmania.


Training and delivery services

Incat provides training in Hobart for crews of new
customers. One training course provided is a High Speed
Familiarisation Course which trains the new ferry crew
to use Incat ferries safely at high speeds. This enables
ferry owners and operators with no previous experience
in high speed ferries to rapidly gain this experience and
bring the new vessel quickly into operation.

Incat and the Australian Maritime College in Hobart have
also developed the High Speed Craft Safety and
Systems Course. This course includes familiarisation
with the layout and operation of the main systems on
the vessel (such as propulsion, steering, ride control,
navigation, communication, and air conditioning). It is
designed to show how the new technologies enable the
vessel to be operated more efficiently and flexibly to
meet changing seasonal demands such as different
mixes of passengers and vehicle sizes.

Technical staff accompany new crews on the delivery
voyage from Hobart to assist in learning about
inspections, reports and the maintenance schedules
designed for the major equipment on the ferry. On some
of these delivery voyages, new speed records have been
set and trophies awarded (eg Hales Trophy) publicity
about these records benefits both Incat and the new
owner.


Maintenance services

In 1999 a dedicated Technical and After Sales Support
Unit was established at Incat. This group assists owners
and operators of Incat ferries to maintain reliable




On board staff can view
data from operating
systems and
communicate with
technical staff in Hobart.
Courtesy Incat
Tasmania.

services for their customers. Incat staff work with ferry
operators to streamline regular maintenance and quickly
deal with any problems which could lead to a ferry being
out of action (downtime).

New Incat ferries are fitted with Litton Integrated Ship
Information Systems (ISIS) which receive and store
data from instruments in all the onboard operating
systems and display a selection of this data to the crew
at the bridge.

A tool for ship operators to diagnose problems has been
developed by Incat staff. It is called VISIT, or Vessel
Information Systems Interactive Telemetry. This tool
links the ships computer with the Incats main computer
in Hobart. On-board technical staff can access data,
such as drawings and specifications, from Incat in
Hobart to diagnose potential problems. Incat technicians
at Hobart can work with on-board operators without
having to travel to the ship. Operators can email images
of on-board equipment and instruments to Incat to
assist in identifying problems and taking appropriate
action.

The VISIT system was developed and tested on
DevilCat, the Incat ferry which operated on the Bass
Strait route. It has now been installed on many of the
Incat ferries around the world. VISIT has proved to have
four main advantages in the maintenance of Incat
ferries:
It allows on-board schedules for inspection and
maintenance of operating systems (eg the
propulsion system) to be reviewed and, if
needed, reconfigured to improve them.
Data from the ships ISIS computer system can
be collected and sent to Incats design office to
help improve design and development of new
technologies.
It gives technical staff on ferries access to a
bulletin board which provides information and
advice from staff on other Incat ferries about
particular maintenance issues and methods of
dealing with these, and updates from suppliers
of equipment used in the ferries.
VISIT allows Incat technical staff to monitor
maintenance checks made on-board, assess
whether schedules are being followed, and
advise on any problems.
Repair services

Incats technical staff can join a team for emergency


work on any of its ferries within 24 hours. Suppliers of
key components for the ferries, such as engines, have
service agreements with Incat that also provide for a 24
hour response to emergencies.

The VISIT system, as well as functioning as tool for
facilitating maintenance, provides assistance in
diagnosing problems and carrying out repairs. It gives
on-board technical staff access to a pool of experts at
Incat and at the suppliers of the equipment (eg the
engines). On-board staff can send and receive digital
photos, drawings, sketches, tables, and other
information to assist technical staff at Incat. It also
allows Incat staff assisting with dry docking and other
procedures to access any technical information needed
for the procedure.


A T-foil in the making.
Courtesy Incat Tasmania
and MDI.


The T-foil design. It is
deployed at high speeds
to ensure a smooth ride.
MDI.


Retrofits, refits and trials

Incat have successfully retrofitted and refitted their
ships to adapt to new uses and customer requirements.
In the early 1990s, customers reported that the high
operating speed was resulting in excessive ferry motion
in high seas causing passengers to become seasick.
Incat collaborated with supplier Maritime Dynamics Inc
(MDI) and ferry operators Condor Ltd and Sea
Containers to develop a solution to the vehicle motion
problem. Incat ferries were retrofitted with retractable
T-foils or trim tabs to control the ride motion and
improve passenger comfort.

Incat has also carried out refits of their ships for special
purposes, most notably for military trials. In the late
1990s the Royal Australian Navy used the Incat built
HMAS Jervis Bay for carrying troops between Australia
and East Timor. This was followed by the refit of an
Incat ship in 2001 for use by the U.S. military and coast
guard. This ship, called Joint Venture, was used to
evaluate the military suitability of the high speed
catamarans and determine the operational requirements
for putting them into military use. Incat has formed a
partnership with US shipbuilding company Bollinger and
hopes that the military potential of their ships will be
realised as a result of this tria




The Joint Venture was
built and refitted by Incat
for use by the US
military. Paul Farley.



Approaches for Technology Development

Participatory technology development
From Wikipedia, the free encyclopedia

Indonesian farmers carrying out their own research into control oftungro disease on rice (Photo by FAO Community IPM
Programme)
Participatory technology development (PTD) is an approach to learning and innovation that is used
in international developmentas part of projects and programmes relating to sustainable agriculture. The


approach involves collaboration between researchers and farmers in the analysis of agricultural problems and
testing of alternative farming practices.
Contents
[hide]
1 Origins
2 Process
3 Facilitators
4 See also
5 References
6 External links
Origins[edit]
The origins of Participatory Technology Development can be found in a number of approaches, concepts and
techniques that became popular in the 1970s and 1980s:
Farming systems research and extension, an approach that introduced social-economic issues into
organisations previously dominated by biological and chemical scientists. FSR/E also promoted the idea
on 'on-farm' trials;
Appropriate technology, a concept that recognises the importance of matching the design of technology to
the resources and culture of the user.
Indigenous technical knowledge, a concept that recognised the importance of local expertise and
traditional wisdom;
Participatory rural appraisal, a set of techniques that promoted the involvement of rural people in decision-
making.
Process[edit]
One of the leading authorities on this process is the Centre for learning on sustainable agriculture -
ILEIA based in the Netherlands. ILEIA has described PTD as a process between local communities and
outside facilitators which involves:
gaining a joint understanding of the main characteristics and changes of that particular agro-ecological
system;
defining priority problems;
experimenting locally with a variety of options derived both from indigenous knowledge and from formal
science, and


enhancing farmers experimental capacities and farmer-to-farmer communication.
[1]

Facilitators[edit]
PTD facilitators are usually researchers, sometimes consisting of a team that includes both biological and
social scientists. While PTD is closely linked to research, it often crosses the boundary into agricultural
extension because it involves learning activities with farmers.


Structures[edit]
The system components of a Technological Innovation System are called structures. These represent the
static aspect of the system, as they are relatively stable over time. Three basic categories are
distinguished:
Actors: Actors involve organizations contributing to a technology, as a developer or adopter, or
indirectly as a regulator, financier, etc. It is the actors of a Technological Innovation System that,
through choices and actions, actually generate, diffuse and utilize technologies. The potential variety
of relevant actors is enormous, ranging from private actors to public actors, and from technology
developers to technology adopters. The development of a Technological Innovation System will
depend on the interrelations between all these actors. For example, entrepreneurs are unlikely to
start investing in their businesses if governments are unwilling to support them financially. Visa-verse,
governments have no clue where financial support is necessary if entrepreneurs do not provide them
with the information and the arguments they need to legitimate policy support.
Institutions: Institutional structures are at the core of the innovation system concept.
[9]
It is common
to consider institutions as the rules of the game in a society, or, more formally, (...) the humanly
devised constraints that shape human interaction.
[10]
A distinction can be made between formal
institutions and informal institutions, with formal institutions being the rules that are codified and
enforced by some authority, and informal institutions being more tacit and organically shaped by the
collective interaction of actors. Informal institutions can be normative or cognitive. The normative
rules are social norms and values with moral significance, whereas cognitive rules can be regarded
as collective mind frames, or social paradigms.
[11]
Examples of formal institutions are government
laws and policy decisions; firm directives or contracts also belong to this category. An example of a
normative rule is the responsibility felt by a company to prevent or clean up waste. Examples of
cognitive rules are search heuristics or problem-solving routines. They also involve dominant visions
and expectations held by the actors.
[12][13]

Technological factors: Technological structures consist of artifacts and the technological
infrastructures in which they are integrated. They also involve the techno-economic workings of such
artifacts, including costs, safety, reliability. These features are crucial for understanding the feedback
mechanisms between technological change and institutional change. For example, if R&D subsidy
schemes supporting technology development should result in improvements with regard to the safety
and reliability of applications, this would pave the way for more elaborate support schemes, including


practical demonstrations. These may, in turn, benefit technological improvements even more. It
should, however, be noted here that the importance of technological features has often been
neglected by scholars.
[14]

The structural factors are merely the elements that make up the system. In an actual system, these
factors are all linked to each other. If they form dense configurations they are called networks. An
example would be a coalition of firms jointly working on the application of a fuel cell, guided by a set of
problem-solving routines and supported by a subsidy program. Likewise, industry associations, research
communities, policy networks, user-supplier relations etc. are all examples of networks.
An analysis of structures typically yields insight into systemic features - complementarities and conflicts -
that constitute drivers and barriers for technology diffusion at a certain moment or within a given period in
time.
Dynamics[edit]
Structures involve elements that are relatively stable over time. Nevertheless, for many technologies,
especially newly emerging ones, these structures are not yet (fully) in place. For this reason, mostly, the
scholars have recently enriched the literature on Technological Innovation Systems with studies that
focus on the build-up of structures over time. The central idea of this approach is to consider all activities
that contribute to the development, diffusion, and use of innovations as system functions.
[15]
These
system functions are to be understood as types of activities that influence the build-up of a Technological
Innovation System. Each system function may be fulfilled in a variety of ways. The premise is that, in
order to properly develop, the system should positively fulfil all system functions. Various lists of system
functions have been constructed. Authors like Bergek et al.,
[16]
Hekkert et al.,
[17]
Negro
[18]
and
Suurs
[19]
give useful overviews. These lists show much overlap and differences reside mostly in the
particular way of clustering activities. An example of such a list is provided below.
Note that it is also possible that activities negatively contribute to a system function. These negative
contributions imply a (partial) breakdown of the system.
Seven system functions[edit]
As an example, the seven system functions defined by Suurs are explained here:
F1. Entrepreneurial activities: The classic role of the entrepreneur is to translate knowledge into
business opportunities, and eventually innovations. The entrepreneur does this by performing
market-oriented experiments that establish change, both to the emerging technology and to the
institutions that surround it. The Entrepreneurial Activities involve projects aimed to prove the
usefulness of the emerging technology in a practical and/or commercial environment. Such projects
typically take the form of experiments and demonstrations.
F2. Knowledge development: The Knowledge Development function involves learning activities,
mostly on the emerging technology, but also on markets, networks, users etc. There are various
types of learning activities, the most important categories being learning-by-searching and learning-
by-doing. The former concerns R&D activities in basic science, whereas the latter involves learning
activities in a practical context, for example in the form of laboratory experiments or adoption trials.


F3. Knowledge diffusion / knowledge exchange: The characteristic organization structure of a
Technological Innovation System is that of the network. The primary function of networks is to
facilitate the exchange of knowledge between all the actors involved in it. Knowledge Diffusion
activities involve partnerships between actors, for example technology developers, but also meetings
like workshops and conferences. The important role of Knowledge Diffusion stems from Lundvalls
notion of interactive learning as the raison-dtre of any innovation system.
[20]
The innovation system
approach stresses that innovation happens only where actors of different backgrounds interact. A
special form of interactive learning is learning-by-using, which involves learning activities based on
the experience of users of technological innovations, for example through user-producer interactions.
F4. Guidance of the search: The Guidance of the Search function refers to activities that shape the
needs, requirements and expectations of actors with respect to their (further) support of the emerging
technology. Guidance of the Search refers to individual choices related to the technology but it may
also take the form of hard institutions, for example policy targets. It also refers to promises and
expectations as expressed by various actors in the community. Guidance of the Search can be
positive or negative. A positive Guidance of the Search means a convergence of positive signals -
expectations, promises, policy directives - in a particular direction of technology development. If
negative, there will be a digression, or, even worse, a rejection of development altogether. This
convergence is important since, usually, various technological options exist within an emerging
technological field, all of which require investments in order to develop further. Since resources are
usually limited, it is important that specific foci are chosen. After all, without any focus there will be a
dilution of resources, preventing all options from prospering. On the other hand, too much focus may
result in the loss of variety. A healthy Technological Innovation System will strike a balance between
creating and reducing variety.
F5. Market formation: Emerging technologies cannot be expected to compete with incumbent
technologies. In order to stimulate innovation, it is usually necessary to create artificial (niche)
markets. The Market Formation function involves activities that contribute to the creation of a demand
for the emerging technology, for example by financially supporting the use of the emerging
technology, or by taxing the use of competing technologies. Market Formation is especially important
in the field of sustainable energy technologies, since, in this case, there usually is a strong normative
legitimation for the intervention in market dynamics.
F6. Resource mobilization: Resource Mobilization refers to the allocation of financial, material and
human capital. The access to such capital factors is necessary for all other developments. Typical
activities involved in this system function are investments and subsidies. They can also involve the
deployment of generic infrastructures such as educational systems, large R&D facilities or refueling
infrastructures. In some cases, the mobilization of natural resources, such as biomass, oil or natural
gas is important as well. The Resource Mobilization function represents a basic economic variable.
Its importance is obvious: an emerging technology cannot be supported in any way if there are no
financial or natural means, or if there are no actors present with the right skills and competences.
F7. Support from advocacy coalitions: The rise of an emerging technology often leads to
resistance from actors with interests in the incumbent energy system. In order for a Technological
Innovation System to develop, other actors must counteract this inertia. This can be done by urging


authorities to reorganize the institutional configuration of the system. The Support from Advocacy
Coalitions function involves political lobbies and advice activities on behalf of interest groups. This
system function may be regarded as a special form of Guidance of the Search. After all, lobbies and
advices are pleas in favor of particular technologies. The essential feature which sets this category
apart is that advocacy coalitions do not have the power, like for example governments, to change
formal institutions directly. Instead, they employ the power of persuasion. The notion of the advocacy
coalition is based on the work of Sabatier, who introduced the idea within the context of political
science.
[21]
The concept stresses the idea that structural change within a system is the outcome of
competing interest groups, each representing a separate system of values and ideas. The outcome is
determined by political power.
Cumulative causation[edit]
Since Carlsson and Stankiewicz introduced the concept of a Technological Innovation System, an
increasing number of scholars have started focusing on dynamics. A recurring theme within their studies
has been the notion of cumulative causation, closely related to the idea of a virtuous circle or vicious
circle, by Gunnar Myrdal.
[22]

In this context, cumulative causation is the phenomenon that the build-up of a Technological Innovation
System accelerates due to system functions interacting and reinforcing each other over time. For
example, the successful realization of a research project, contributing to Knowledge Development, may
result in high expectations, contributing to Guidance of the Search, among policy makers, which may,
subsequently, trigger the start-up of a subsidy program, contributing to Resource Mobilization, which
induces even more research activities: Knowledge Development, Guidance of the Search, etc. System
functions may also reinforce each other downwards. In that case interactions result in conflicting
developments or a vicious circle! Recently scholars have increasingly paid attention to the question of
how cumulative causation may be established, often with a particular focus on the development of
sustainable energy technologies.
[23]

Acquiring new technologies and capabilities[edit]
To improve competitiveness and retain sustainability, firms require new technologies and capabilities. In
this age of rapid innovation and complexity, it is challenging for the firms to develop internally and remain
competitive at the same time. Merger, acquisition and alliance are some of the ways to achieve this, but
the primary driver is the desire to obtain valuable resources. Many acquisitions failed to achieve their
objectives and resulted in poor performance because of improper implementation.
1. Improper documentation and changing implicit knowledge makes it difficult to share information during
acquisition.
2. For acquired firm symbolic and cultural independence which is the base of technology and capabilities
are more important than administrative independence.
3. Detailed knowledge exchange and integrations are difficult when the acquired firm is large and high
performing.
4. Management of executives from acquired firm is critical in terms of promotions and pay incentives to
utilize their talent and value their expertise.


5. Transfer of technologies and capabilities are most difficult task to manage because of complications of
acquisition implementation. The risk of losing implicit knowledge is always associated with the fast pace
acquisition.
Preservation of tacit knowledge, employees and literature are always delicate during and after acquisition.
Strategic management of all these resources is a very important factor for a successful acquisition.
Increase in acquisitions in our global business environment has pushed us to evaluate the key stake
holders of acquisition very carefully before implementation. It is imperative for the acquirer to understand
this relationship and apply it to its advantage. Retention is only possible when resources are exchanged
and managed without affecting their independence.

3. Innovation Competencies Promotion


Importance of Managing Creative Employees
10 TIPS FOR MANAGING
CREATIVE PEOPLE

When the Harvard Business Review published a post called Seven Rules For Managing
Creative People a few months back, the reaction was an almost universal, Oh, please!
This was due to the fact that most of the advice in the piece was bizarrely off base
("surround them with semi-boring people." What?), but also because of the patronizing
tone and the assumption that "creatives" are a breed of brats demanding a different set
of operating instructions.
That said, the topic is a valid one--there is an art to getting the most out of your teams of
creative professionals. When the job is to conjure the next brilliant idea out of thin air,
against deadline, via a combination of inspiration, hard work, experience, intuition, and
confidence, getting the best work out of creative people on a consistent and efficient basis
can be tricky business.
Nurturing and managing a workforce of creative professionals requires a certain degree of
sensitivity to individual skills. Creatives are individual people and have unique things that
motivate them. So when you respect understand that, thats a pretty good cocktail,
says Evan Fry, executive director of creative development at Crispin Porter + Bogusky.


Evan Fry and Dave Swartz
Fry is speaking from experience. CPB recently installed Fry and creative director Dave
Swartz in positions dedicated to inspiring, encouraging, teaching, supporting, and
organizing the agencys creative and design departments.
Seen as an investment in creative talent, the new roles have allowed Swartz--a longtime
agency fixture--and Fry--who recently returned to CPB after nearly four years at
crowdsourcing agency Victors & Spoils--to focus on helping creative people succeed. As
experienced creative leaders, both say the most important element in fostering the talent of
others is instinct, or as Fry puts it, A Spidey sense for creative talent"--but there are a
number of distinct things that business leaders can do to set its people up for success.
Here, Fry and Swartz share 10 ideas on how to manage creative talent. While they admit
some seem deceptively simple, they say that the mere process of introspection required in
understanding what a company needs from its talent--new and veteran--aids in clearing the
way to help others.


SET THE BAR.

Its one of those things that often just happens: Through a series of deadlines, projects, staff
turnover, and a lack of constructive navel gazing, a companys processes and DNA become
routine and unspoken. But Fry and Swartz say a useful starting point for any creative
company looking to evaluate how to foster its talent is to first look at the overall entity. Ask
questions like, 'what kind of team do we need here; what works well for the individual
agency process that we have?' Every agency works differently, so different skill sets or
different temperaments work better at different places, says Fry. This is helpful when
building new relationships with new people, but its also helpful in pointing out to people who
are here that these are the areas you need to foster.
IDENTIFY AND LEVERAGE TRAITS OF INDIVIDUALS.
When undergoing this process at CPB, Fry says that he and Swartz took what can be
considered a creative inventory of each persons skills. The idea? To have an up-to-date
understanding of their talent. "We thought, What traits work best at CPB in those roles?"
says Fry. "We got really clear about that, maybe for the first time, and put it down on paper.
These are the skills and traits people need for certain roles, not just for new roles but for
people here as well. If you have an objective assessment of everyone, you can work to


optimize those strengths by assembling the right skills and talents for projects. This sounds
extremely simple, but in the ad agency world, Ive seen its not always that overt.
CATER TO STRENGTHS.

Knowing the ways in which people produce great work is as important as knowing what
specific skill they can add to the team. Sometimes you just need to empower," says Fry.
"Certain creative talent responds really well to having a long leash, and we like to
encourage CDs to let this happen with people weve identified as having the stuff to do it, no
matter what their title may be or their level of experience. Sometimes certain people really
respond to healthy competition. Youll see it will inspire and motivate certain creatives to
dominate and crush it, where others dont respond to competition at all. We encourage
whatever suits a person. Weve seen what trial by fire can do. Some people really respond
and then all of a sudden theyre your next leader.
KEEP YOUR HANDS DIRTY.
While Fry and Swartz are tasked with mentoring and managing the agencys talent, they
also get involved in the actual work, be it running a pitch or covering a shoot, when needed.
We will be called in as a creative team so not only do we have our duties running the
design department and helping art directors, were thrown into a pitch and will run those


things and set the tone, and that helps. Its leading by example, says Swartz. And it helps
when it comes to people respecting what we do. If we have a suggestion, they know its
because were also experiencing the process day to day.
SUGGEST--BUT DONT NECESSARILY IMPOSE--A
PROCESS.

Creative people are often as protective of their process as they are of their ideas. Someone
waltzing in with a do-it-like-this mandate is about as welcome as . . . well . . . its not usually
welcome. Yet individual processes are prone to log-jams that outsiders are better equipped
to see. Suggesting process therefore must be done delicately. There can be some method
to the creative madness, says Fry. In any process, like a pitch, we kind of know the beats.
We know theres a client meeting, when theyll want to see a strategy, then early work, then
finished work. Sometimes helping someone is as simple as putting a calendar up and
outlining when certain pieces get done or being clear about when theyll get feedback on
work. It can make it more efficient and make sure the thinking happens at the right times
without the worry getting in the way. Some people are more predisposed to organization
than others. But sometimes its about making little lightbulbs go off.


CREATE HEALTHY CONFUSION.
While structure has its benefits, so does a bit of chaos. Or, as Swartz calls it, healthy
confusion. He says that when working with designers, its actually more productive to keep
them busy with multiple projects at once. Theres always a lot on everyones plate and
thats kind of by design because part of the creative process is incubating ideas, Swartz
says. Idea incubation comes from when you read your brief, do a few hours of work, and
then you stop. You may hit a wall and then suddenly youre in a grocery store and you think
of something. Thats because your brain works on it over time. So when youre in a healthy
confused state, you get a lot of work done. You learn how to manage it. Its important to
have a lot on your plate--not to burn you out but to give your brain time to focus on
something else.
ENCOURAGE SWITCHING OFF TO SWITCH ON.
All that said, burning creative talent out is a legitimate concern. As Fry says, You cant
switch on unless you have an off position. It may be easier said than done--many agencies,
CPB included, have a reputation for tough hours. Fry says he and Swartz are working at
being more conscious about keeping weekends a little more free at CPB, and that means
getting everyone from account teams to CDs on board. It takes some work, but
organization can help a lot. I keep a calendar when everyones on vacation, when meetings
are. . . . Being prepared ahead of time is the biggest key. It doesnt always happen, but
were taking steps wherever we can to anticipate things and alleviate the pressure so its not
crushing people all the time.


KEEP THEM PRODUCING.

Creative talent lives to make stuff. When theyre not making things, they get unhappy, prone
to relocate, or worse, creatively uninspired. So Fry says its important to ensure people are
continually putting new work out into the world. It sounds simple, but its about keeping in
mind how to keep people in positions to get things done. We focus on getting work into the
meeting because beyond that, its often out of your control--budgets shift, clients change
things, work dies. . . . Ideally the work being sold is spread around. And if its not working for
a creative talent and a given place, you have to encourage people to keep going for it, and
get in a situation where you can be producing. From a leadership standpoint, you have to
remember why theyre here so they dont lose perspective.
MAKE RETENTION A CONSCIOUS CHOICE.
That creatives routinely switch agencies after a couple of years is accepted practice in
advertising. But Fry and Swartz believe it doesnt need to be that way. Swartz, a 25-year
CPB veteran, and Fry, who is among the agencys many boomerang employees (those
who leave and then come back), say part of their job is to foster an environment that people
dont want to leave. Everyones going to get itchy feet here and there, and anyone whos
doing good work is going to get courted. But keeping your culture healthy is huge. You have


to understand its not just about money as these people are being courted. Its always about
culture. Culture is what retains talent, says Fry.
KNOW WHEN TO--AND BE ABLE TO--SPEAK THE TOUGH
TRUTH.

Fry says the creative management work he and Swartz do is essentially about helping
people take charge of their own careers. This can be through encouragement, organization,
keen pairing, and sometimes offering really tough advice. Say Fry, Sometimes saying the
hardest thing is the best mentorship you can give, as opposed to letting someone stay in a
rut
Managing Those Creative Types
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Bestselling author Richard Florida tells why creativity adds to the bottom line -- and how companies can
keep it flowing.
In Part 1 of this interview, Richard Florida, Ph.D., author of the bestselling The Rise of the Creative
Class and the recently published Flight of the Creative Class, discussed the value of creativity in
business. As defined by Dr. Florida, creativity isn't the sole province of artists and musicians -- it's the
ability to find better ways to make products or to find and fill needs that no one noticed existed.
Understanding the nature of creativity is more important than ever, Dr. Florida argues, because while the
industrial economy is fading away, the creative economy is taking its place. This means that a new class
of workers -- creative workers -- is coming to the fore. Creative workers constitute 30% of the American
workforce, add trillions of dollars to the country's GDP, and earn 50% of the salaries, notes Dr. Florida,
who is the Hirst Professor of Public Policy at the School of Public Policy at George Mason University and
a Nonresident Senior Fellow at the Brookings Institution. He is also a Gallup Senior Scientist, one of a
group of renowned scientists who lend their
expertise to The Gallup Organization's research.

At the end of Part 1 of this interview, Dr. Florida
issued a stern warning: America is in real danger
of losing its economic dominance. Other nations
have creative workers, and those countries are
doing far more to support, attract, and grow their creative class. In the second and final part of this
interview, Dr. Florida uncovers what creative workers really want, how to manage them, and whether it's
even possible to keep them around.
GMJ : Does every business have a creative component? And how can you evaluate creativity?
Dr. Florida: Every single human activity requires creativity, and anyone who tells you differently doesn't
get it. Whether it's farming, the production of automobiles, or hair cutting -- every job role has a creative
component, and every person is creative.
But it can be hard to evaluate creativity. What tends to happen is that companies give the toughest
problems to the best people, but then they can't evaluate who's best because the best people -- the most
productive people, the brightest people -- have the toughest problems to solve. That makes it hard to
compare because people are working on different kinds of problems.



But people also have different abilities, people have different skill sets, and people have different
capabilities. Everyone needs the opportunity to contribute their creativity. The organizations that will win
over time in this Darwinian competition will be those that consistently and continuously harness talent,
creativity, knowledge, and ability everywhere.
GMJ : So how should managers cultivate creativity in their employees?
Florida: Make sure that each employee has the opportunity to contribute. Make sure that every worker
feels challenged and motivated. Make sure that your creative people have time to apply themselves
creatively and are not putting out silly and counterproductive fires all day.
Remember that people really want the respect of their peers; peer recognition and the power of the team
really work. So make sure that workers can gain peer respect, and don't be afraid to use peer pressure to
hold employees accountable for what they're doing. I mean, it's just common sense. But don't think that
you can evaluate creativity by a time clock. Any manager who believes that productivity can be measured
by the number of hours employees work should immediately be moved to another job.
Creative people want the freedom to work on their own terms and on their own time. They want to be
responsible. That doesn't mean there's no accountability, but the accountability doesn't come from sitting
at a desk counting time. Instead, the accountability is: "Do you deliver? Do you meet your performance
measurements? Do you produce quality work in a timely way? Do you contribute?"
GMJ : What value does creativity add to an organization?
Florida: The real source of value in a company is increasingly the creative energy of its workforce. The
great lesson of the 1980s, which Toyota taught the world, was that we could increase efficiency and
quality by getting more and more workers involved. Toyota's management system harnesses shop floor
workers' intelligence to gain efficiencies through continuous improvement. But I think that those lessons
have now been learned. Being a high-quality and efficient producer of goods and services isn't enough --
organizations really need to harness the creative energy of their workforce. I think we've gone down the
wrong road of trying to manage creative workers. We've tried to apply a lot of industrial management
techniques, which don't work, and we have to break nearly entirely with that.
GMJ : How do creative workers interact? Is there a team mentality for creativity?
Florida: There's another component to creative capital. The value of the organization isn't just embedded
in individuals' heads; it also exists in the relationships between people. It exists in the relationships


between software developers and engineers, for example, but it also exists between the user and the
representative of the company.
Companies should limit turnover not just because replacing workers costs a ridiculously high amount of
money, but also because it breaks up those long-term relationships. The SAS Institute and other
incredibly creative companies constantly monitor and learn from their environment. They see users and
customers not only as the source of money, but as the source of key relationships, and SAS has a 98%
customer retention rate. So if a customer works with the same salesperson, and the salesperson works
with the same sales engineer, and the sales engineer can call someone on the development team that
he's known for years, they build up an accumulated stock of knowledge and interaction. This is real
creative capital, but it's stored in the relationships that exist among the employees and customers of
organizations -- and it's invaluable to both inventing new products and solving problems.
GMJ : What do creative workers really want? If the creative class earns half the salaries, is it money?
Florida: Virtually all the literature on the psychology of creativity and of creative people suggests that
creative people simply do not respond to financial incentives. The grave lesson that we learned from the
Internet bubble and dot-com bust is that attempts to use stock options and financial incentives to motivate
creative people is just fraught with problems.
At the height of the Internet bubble, Peter Drucker said that you cannot bribe the knowledge workers on
whom these industries depend -- you need to treat them as if they are volunteers whose commitment to
your organization is contingent. Creative people respond to intrinsic rewards; they are trying to enact their
personalities in their creative work, and it's a
mistake to think they're motivated by financial
incentives.

When I wrote The Rise of the Creative Class, we
looked in detail at the Information Week surveys
of 20,000 workers over two years. When people
were asked what motivates them in their work, salary ranked fourth. Things like tough challenges and
having flexibility and stability ranked higher. Bonuses and stock options weren't even in the top 25. That
was true before and after the dot-com crash.
GMJ : Then what's the single greatest motivator for creative workers?



Florida: Creative people respond to challenge, but that challenge is different for different people. A
software developer wants to work with other great developers and with really cool technology on cutting-
edge projects. A salesperson wants to make quota, but creative salespeople are not necessarily
motivated just by the money -- doing better than other salespeople motivates them. Landscapers want to
make really elegant and beautiful gardens. Each of these creative people has an intrinsic reward
structure, but each is different. Organizations must keep them challenged, then keep hassles away from
them. This is just so important. Most companies say it's the worker's responsibility to deal with all this
stuff. But what do you want them to focus on, the annoying paperwork or the creative work you hired
them to do?
GMJ : It sounds like managing creative people takes a very creative manager.
Florida: The real art is understanding individual psychology. A concern for structure and organizational
charts and programs and policies is far less important than getting the individual psychology right. The
structure will take care of itself; the real challenge of the creative age is figuring out how to deal with all of
these different intrinsic needs and reward structures while consistently motivating people with the rewards
that matter to them. The manager's task is to create a structure that enables creativity to occur. This
requires a complete and total break with the industrial organization structure, the hierarchical model.
GMJ : You're talking about rebuilding most companies' management structures, their entire psychology,
from the ground up. How's that supposed to work?
Florida: What's going to happen is the Darwinian process. This is exactly the way Toyota beat General
Motors and Ford. Sooner or later, companies in other fields will figure this out, and they will move to the
head of the pack; the rest will be swallowed by the competition. I think you already see this happening.
For managers, CEOs, or political leaders, the challenge is "How do I motivate? I see that the old, top-
down, hierarchical, follow-me, my-way-or-the-highway style of leadership doesn't cut it anymore." The
leaders who will be successful today, in business or politics, will be those who can stimulate and harness
the creative capabilities of the greatest number of people.
I know it's not easy. I think a lot of people got used to working in large hierarchical bureaucracies, but they
know the world is changing. They react against it because they don't see how they fit in that environment.
Management has to make it possible for those folks to see how they fit, how their role fits.
One of the great things I learned in my studies -- not just of creative organizations, but also of high-
performing, high-quality business management practices -- is that the biggest impediment to real
motivation is middle management. The biggest task for top management is to say, "This is the right thing
to do." They must mitigate the fear and reaction of the middle managers.


GMJ : Come clean. Are creative workers job-hoppers?
Florida: Well, it's important to realize that companies are no longer hiring an employee for life. I criticize
those who complain about "those big, bad companies downsizing and rightsizing, and letting people go."
In one of the most important studies of downsizing and rightsizing that has ever been done, Stephen
Barley and his colleagues at Stanford found that people didn't leave because they were fired. People
were much more likely to leave because they wanted to take more control of their lives. So the whole idea
of the downsizing, rightsizing, oppressive corporation is a myth.
Managers must realize that their employees increasingly see themselves as free agents; they want
security, they want a great job, and they want challenge, but they also want the opportunity to move
around. So great management means harnessing the creativity and productivity of employees for the
period of time you have them. Develop a great relationship with your employees, and try to retain them for
as long as you can, but understand that an inward and outward flow of people is a reality.
GMJ : So what's the biggest challenge for creative workers, and by extension, their companies?
Florida: It's the always-on, 24/7, stressed-out, burned-out worker. The great addiction of our time is e-
mail. It's the classic psychological need for immediate response. They call Blackberries "crackberries" for
a reason. In the United States, we believe that this attitude gives us a productivity advantage. Bubkus! It
doesn't give us a productivity advantage. It gives us people who have been hollowed out. Creative people
need downtime, need moments to recharge. Being creative is not a sprint, it's a marathon. Again, the best
example is the Toyota method: At Toyota, they aren't necessarily the first to invent something, but they
excel at developing systems that institutionalize best practices in a stable and sustainable way.
-- Interviewed by Jennifer Robison
In the first part of this two-part interview, Dr. Florida explained what the creative class really does, why it
matters to the economy, and why -- unless the United States ramps up the cultivation of creative workers
-- the future of business may not lay in America at all. To read part 1, see "Is the U.S. Losing Its Creative
Edge?"

Creativity Inducing Managers



7 Characteristics of Highly
Creative People BY JESSICA STILLMAN
Looking to hire for creativity? Research says you should
look for these traits (but, be warned, not all of them make
someone easy to work with).
Sure, it's possible for everyone to nurture his or her creative side, but honest observation shows that
fresh ideas come more easily to some people than to others. If you're in the market for individuals
to drive innovation at your business, how can you hire these naturally creative folks?
A new Norwegian study has some suggestions. Forget the Myers Briggs, says the research from
Professor yvind L. Martinsen of BI Norwegian Business School. What you really need to look
for is a handful of traits that tend to be associated with highly creative individuals.
To identify these characteristics, Martinsen gathered a group of artists, musicians, and marketing
creatives and compared them with a control group of managers and others in professions less
associated with creativity. Which personality traits stood out among the artistically inclined?
Martinsen found seven:
Associative orientation: Imaginative, playful, have a wealth of ideas, ability to be committed,
sliding transitions between fact and fiction.
Need for originality: Resists rules and conventions. Have a rebellious attitude because of a need
to do things no one else does.
Motivation: Have a need to perform, goal oriented, innovative attitude, stamina to tackle difficult
issues.
Ambition: Have a need to be influential, attract attention and recognition.
Flexibility: Have the ability to see different aspects of issues and come up with optimal solutions.
Low emotional stability: Have a tendency to experience negative emotions, greater fluctuations
in moods and emotional state, failing self-confidence.
Low sociability: Have a tendency not to be very considerate, are obstinate and find faults and
flaws in ideas and people.
Although some of these traits sound positive (motivation) or neutral (associative orientation),
others, you may notice, sound less appealing. Would you want the desk next to yours to be
occupied by someone with low emotional stability and sociability? Probably not.


Martinsen acknowledges these tradeoffs, noting that "creative people are not always equally
practical and performance oriented" and advising that an employer looking to bring creativity into
her organization "would be wise to conduct a position analysis to weigh the requirements for the
ability to cooperate against the need for creativity." Or, in other words, think carefully about
whether being a bit of a jerk is an acceptable tradeoff for being a fount of ideas. Many experts warn
it's often not (here are three just on Inc.com alone), suggesting that your best bet may be to walk a
middle way, accepting slightly less creativity in exchange for being more of a team player.

Creative people make more use of their mental raw material and practice less intellectual
regulation.

There are a surprising number of blog posts about the characteristics of creative people.
However, most of these seem to focus either on an idealized vision of an artist or the
blog-writers idealized self-image! Here is my take on the characteristics of highly
creative people. However, what I have done is looked at how creative people think --
based on my understanding of the latest research -- and applied it to behavior.
It is also worth bearing in mind that creativity is not all positive. There are good and bad
creative people. Moreover, there seem to be some characteristics of creative people,
such as dishonesty, that are not very nice. More controversially, some research has
shown a correlation between creativity and mental illness. (The validity of this is
contested, though.)
The characteristics of highly creative people are, I believe, the result of two specific
behaviors of such people. Let's look at those behaviors and how they affect broader
behavior.
Behavior One: Make More Use of Their Mental Raw Material
It seems that when highly creative people try to solve a problem or achieve a goal,
particularly when the goal is related to their area of creative strength, they use much
more of their brains than do ordinary people or, indeed, than even themselves when
they are not focused on a creative task. If the average person is asked to draw a picture
of a cat, she will most likely think about the physical appearance of a cat and replicate it


as best she can with pen and paper. The creative artist, on the other hand, will think in
much more depth. She'll think not only about the cat, but the placement of the cat; what
the cat is doing; the lighting; the kind of lines to use and much more. She may decide to
humanize the cat and give it emotions. Perhaps she'll decide to draw a sexy cat with a
human body wearing an evening gown. Maybe she'll simply draw a blur representing a
cat in motion.
By using much more of her brain to achieve her goal, the highly creative person, in
effect, provides herself with more raw material from which to construct ideas than the
average person. The average person thinks only about drawings of cats and the basic
characteristics of cats. This limits the level of creativity she can achieve. The highly
creative person thinks about much more -- all the while retaining some connection to
cats. It is not surprising that, with so much raw material, she is able to be more creative
in the realization of her ideas.
They Think Before They Act
It takes time to run through all that raw material in the brain. This is why creative people
tend to think before they act. They play with the issue in their minds for a time, looking
at a range of possibilities before choosing a direction. I see this when I work with
creative people. When you give an average person a creative challenge, she tends
immediately to try and come up with ideas. But because her mind is too focused on the
issues of the challenge, her ideas are limited in scope as well. They are conventional,
obvious ideas. The highly creative person, on the other hand, tends to turn the problem
around in her head. She asks questions, thinks about it in various scenarios and brings
seemingly unrelated information into her problem solving.
For example, if you ask an averagely creative person to come up with ideas for things
you could do with a big box (for example, the kind of box a new washing machine might
be packaged in), she will immediately think of boxes and their usual uses: storage,
children's toys, perhaps protection against the elements.
A highly creative person would go further. She might think about using a box as a
children's toy (as would most people), but she would also think about the kind of games
children might play in a box. She might imagine climbing into the box and then wonder


what it would be like. She might think about tearing apart the box and what to do with
the pieces - perhaps use them for kindling for a fire or raw material for a sculpture. She
might invert the box in her mind and climb on top of it. What would happen if she did
that, she might wonder. All of these thoughts enable her to come up with many more
ideas than the averagely creative person. But these thoughts all come from her mind.
She is simply using more of her mind and its memories, thoughts and notions in order to
construct ideas.
Incidentally, the highly creative person does not focus on her left brain or right brain for
a simple reason: it's a myth. Creative people use a lot of their brains, not one
hemisphere or the other!
Curiosity Is Creative Play
Highly creative people are often cited as being very curious. This fits with the way their
brains work. Rather than simply collect information, their brains play with it. One person
might see a horse standing in a field and think it is a magnificent looking animal.
Another more curiously creative person might wonder what the horse thinks about all
day in the field. She might wonder how the horse can cope for long hours of inactivity
without a book to read. Or she might notice that the horse tends to hang out by the
fence that borders another field where another horse resides. The creative person might
wonder how two animals that do not have spoken or written language might bond and
what kinds of friendships horses might have.
Spontaneous Ideas
It is by often asking these questions, wondering and being curious that creative people
come up with spontaneous ideas. For instance, it is by asking what use could be made
of not-very-sticky glue that some people discovered Post-Its. Pablo Picasso wondered
how he could depict three-dimensional reality, as viewed from different perspectives,
and came up with surrealism.
Behavior Two: Less Intellectual Regulation
The dorsolateral prefrontal region of the brain is responsible for, among other
things,intellectual regulation. It includes the brain's censorship bureau: the bit of the
brain that prevents us from saying or doing inappropriate things. It allows us to control


impulses and to choose appropriate courses of behavior according to our
circumstances. It seems that in highly creative people, this part of the brain becomes
much less active during times of creation. This makes sense. If you can reduce the level
of thought regulation when generating creative work (whether ideas, music, or artwork),
then fewer ideas will be filtered out as inappropriate and more will be developed and
shared.
In averagely creative people, on the other hand, the dorsolateral prefrontal region
remains more active all the time. It filters out crazy thoughts; it prevents the person from
saying, doing or even thinking too much about outrageous ideas. It ensures that
averagely creative people think and behave conventionally. And for many people, this is
preferred. Most people desire to fit into society and succeed according to existing rules.
It is only creative misfits who want to succeed by doing things their own wayby
ignoring convention, by having the audacity to believe they know better than convention.
For many people, this is a good thing. Sharing stupid ideas is embarrassing. People
might laugh at the individual who shares seemingly stupid ideas. People might question
her competence. Moreover, the averagely creative individual may wonder why she
should bother with creative ideas when more conventional solutions work well enough.
No one is going to be laughed at or reprimanded for coming up with a conventional idea
that is in keeping with the norms of the local culture (whether it is society, a school or a
workplace). On the other hand, sharing a radical idea that might be stupid could well
result in ridicule. Acting on an idea that could fail miserably could get you in trouble.
In short, it is safer to be conventional and incremental in your creativity than it is to be
unconventional and radical in your creativity for most people. Highly creative people
are different. Their brains are programmed to worry less about fitting in with conventions
and staying within norms. It is not that highly creative people are not afraid of ridicule or
criticism (indeed, many artists are highly sensitive). Rather, it never occurs to them that
others might ridicule their ideas.
Creative People Are Not as Rebellious as You Think
This leads to the myth that creative people are rebellious. I do not believe this is entirely
true. But whereas most people, thanks to their active dorsolateral prefrontal cortexes,


regulate their thinking and behavior to fit with conventional behavior, creative people are
not so handicapped. Instead, they follow their own rules or systems for evaluating ideas
and deciding whether to move forward with those ideas. These rule systems are often
logical, at least to the creative thinker. But, because they are not about conforming to
social norms, it makes the creative thinker seem rebellious. An artist, for example, will
not make a name for herself by studiously copying current trends. Rather, she will
become famous by being unique. So, if she makes decisions based on what is
commonplace, ordinary and conforming in the art world, she will never make a name for
herself. However, if she purposely veers from what is popular in order to carve out her
own, unique style she may become famous. She may make a name for herself.
Creative People Are Logical
Another common fallacy about creative people is that they are not logical, that they are
driven purely by feeling and emotion. I do not believe this is true. Rather, as noted,
creative people are not handicapped by a need to conform to social norms. They are
not compelled to be a part of popular culture. Rather, they are driven by a logic that
suits their needs and is logical to them. That logic may be based in part on emotions
and feelings -- especially in some artists. But it is a form of logic nevertheless. All
people need to make decisions and decisions are based on some kind of logic. The
creative artist is no exception. If anything, by not feeling compelled to fit the demands of
popular culture, the creative artist needs to be even more logical than the average
person who assumes that if everyone wears and buys a particular style jacket, then it is
safe to buy and wear such a jacket.
Creative People Tend to Be Less Honest
Another apparent consequence of having a relaxed dorsolateral prefrontal region,
combined with a brain that is adept at building ideas, appears to be a reduced need to
be honest. Research by Francesca Gino and Dan Ariely confirms that, in general, highly
creative people are less honest than averagely creative people. The reason for this
seems to be that creative people can use their creativity to justify their actions in ways
that less creative people cannot do. A lot of people, highly creative people as well as
self-proclaimed creative people, will balk at this and claim that they are very honest.


And it is true that they believe that. That is because their creativity is successful in
convincing them that their behavior is justified.
Creative People Are Introverts, Extroverts, Collaborators, Independent, Big,
Small, Fat, Skinny...
I have seen some bloggers claim that creative people are introverts; others that creative
people are extroverts. I have heard that creative work better in groups and that they
work better individually. However, I have never seen these assumptions supported in
any way. The truth is, creativity seems to have little to do with how well one functions
socially, one's weight (though I would assume that being in good health would help the
brain function better) or other personal characteristics. The truth is, creative people
come in all kinds of shapes, sizes, colors and personalities. What truly distinguishes
them from others is that they use more of their brains to generate ideas -- which
provides them with more raw material for building unique ideas -- and less of their
brains to regulate the development and sharing of those unusual ideas.
Group Creativity

The need for creativity is inversely related to the level of our understanding of
the problem. The less well understood the problem, the greater the need for
creativity. For example, the problem of constructing a warehouse is
reasonably well understood, and the degree of creativity required to carry out
the construction project is relatively low. The problems involved in developing
a long-term habitat for moon dwellers are not well understood, and therefore
would require a great deal of creativity.

It has been repeatedly shown [22] that groups are more effective in generating
creative solutions to unstructured (poorly understood) problems than
individuals. It is also clear that if the problem is structured (well understood),
then individuals do a better job of problem solving than groups. (if you doubt
this generality, consider the case of using a committee to add a column of
numbers-a well-structured problem.) Thus, the fundamental reason for
seeking creativity through a group process is that the problem structure is
ambiguous.

The discussion on group creativity in the remainder of this section is largely
adapted from [5, 8, 33, 35]. (The latter is a particularly valuable reference on
techniques to foster group creativity.) It is generally accepted that there are
five major advantages associated with using group creativity processes:


1. Groups bring together knowledge and skills not possessed by any
individual member of the group.
2. Groups are more effective than individuals in eliminating errors and
avoiding mistakes.
3. A group solution is more likely to be accepted by those who must
implement it than is the solution of an individual.
4. If the members of a group must act on evidence, it is likely that they will
be more productive and effective if they have played a role in
developing that evidence,
5. Group members learn from one another, stimulate one another, and add
to each other's knowledge and skills-that is, synergism occurs.
The effectiveness of creativity groups can be enhanced if a few simple
guidelines [17, 22] are followed. Diversity is a highly desirable quality of such
groups. Within the bounds of reason, group members should be as diverse as
possible across such dimensions as:

Role Engineers, managers, technicians, blue- and white-collar production
workers, and so on, all represent special viewpoints and may be the source
of unique contributions to problem solving.
Specialty Different areas of study have their individual ways of thinking about and
analyzing problems.
Age Contrary to popular mythology, there appears to be no demonstrable
relationship between age and creativity except, possibly, in the held of
mathematics. A mix of ages cannot hurt, and probably helps.
Experience Experience with a problem tends to produce insight, but it also tends to
foster overconcern with real or imagined constraints. Inexperienced but
intelligent people may develop fresh approaches.
Education One must never confuse education with wisdom; but, like experience, more
is generally better than less.
When a problem arises that requires the use of a creativity group, it should be
treated as a project, and the rules of good project management apply. There
should be an objective, a leader, a time schedule, a budget, a plan, and an
evaluation process. Basic work group tenets should also be observed: hold
meetings away from the bustle of business; allow no interruptions; insist that
all participants be present; and have a good supply of working materials such
as flip charts, blackboards, coffee, paper, pencils, and the rest of the
paraphernalia necessary for a successful meeting.

In the initial creativity sessions, the focus should be on the methods of
creativity, investigating various methods and technologies used to foster
creativity, and forming a good working relationship among the group


members. Following these orientation sessions, the groups should be ready to
apply its power to the tasks for which it was formed.

Problem recognition and understanding is a critical first step in all problem-
solving procedures. A problem not understood cannot be solved. The problem
should be stated as precisely and concisely as possible, consistent with its
real-world complexity. As noted above, the problem statement should be
constructed in terms of the capabilities sought, not in terms of desired
hardware. it is difficult but necessary to think of a "land-based people mover,"
not a "car" or "bus," or of a "container for the foot," not a "shoe."

If the problem is large or complex, it may be advantageous to break it down
into sub-problems that can be attacked and handled separately. The results
may then be combined to secure the overall solution. But it is well to
remember that this procedure can result in sub-optimization. it should be
avoided unless absolutely necessary.

Procedural devices are sometimes helpful in achieving good problem
statements. Be concise, but do not arbitrarily limit the length of the statement.
It is often useful to require the problem to be restated some minimum number
of times, say, four or five. in addition to obtaining a suitable statement of the
problem, these reworking techniques also help to familiarize the problem
solvers with the various aspects of the problem and its environment. They
may even aid in establishing the validity and significance of the problem.

The most commonly used group creativity problem-solving techniques are
described below.

Brainstorming
This is probably the best known and most widely used of all the group
creativity techniques. It was developed by Alex Osborn [26] in 1953, and has
been widely publicized and used since then. The use of brainstorming
mushroomed in the middle 1950s, but declined somewhat in the 1960s
following some reports alleging the superiority of individual creativity.

A single brainstorming session should probably not last much longer than an
hour. All ideas should be recorded. An experienced secretary or recording
machine is useful to capture the initial onrush of ideas. Two basic rules should
be observed during brainstorming sessions:


1. Criticism, judgment, or analysis of the generated ideas is absolutely
prohibited during the session- Critiques can be conducted after the idea-
generation sessions have been completed.
2. Quantity is encouraged. Variations, extensions, and combinations of
previously generated ideas are often more valuable than the originals.
Seemingly wild ideas are welcomed without comment, just as
conservative ideas are.
A number of variants of brainstorming have been developed over the years,
such as brainwriting, where nominal groups are used. The ideas are written
down first, then read aloud and developed.

Synectics
This approach, developed by William Gordon [16] in 1944, is most appropriate
for very unclear, abstract situations-that is, where the problem has little or no
apparent structure. Synectics requires the formation of a tailor-made team that
uses analogy and metaphor to approach two tasks: (1) making the strange
familiar and (2) making the familiar strange. In the process, participants are
urged to leave the mental confines of the everyday world and escape into the
bizarre, even the absurd. Some of the types of analogy used are personal,
where the members see themselves as pieces or parts of the solution; direct,
where biological and natural analogous elements are employed; symbolic,
where objective or impersonal images are used to describe the problems;
and fantasy, where science fiction-type ideas are used as solutions. The
synectic approach to creativity requires considerably more training and
practice than most other methods. A consultant or facilitator who is expert in
leadership of synectic groups is necessary.

Morphology
Invented by F. Zwicky in 1947, this method was not publicized until the 1960s.
The problem is defined in terms of the various capabilities most likely to be
involved in a solution. Highly generalized methods of achieving these
capabilities are defined. All possible combinations of these methods are then
arrayed in a so-called "morphological box" and examined for technical
feasibility. The following five-step process is used.
1. Describe, define, and generalize the problem.
2. Define all factors that influence the solution.
3. Structure these factors into distinctive categories.
4. Analyze the cells at the intersection of each category with each other
category.


5. Evaluate each of these cells in terms of solution criteria.
As can be imagined, an examination of "all possible combinations" of even a
small problem is a serious undertaking. A set of six capabilities, each of which
might be achieved by five methods, would require examination of more than
15,000 alternatives.

Bionics
Sometimes referred to as nature analysis, this is an analogy approach that
relies on imitation of nature. The group seeks ways in which animals or plants
have solved similar or analogous problems. The use of this technique is
limited, but when utilized to handle appropriate problems, it appears to be
effective.

Storyboarding
The Walt Disney Studios faced a serious creativity problem: how to produce a
large number of different short subject cartoon plots. Storyboarding was their
answer to the challenge. As usual, a list is made of all problem attributes (all
elements in cartoon plot), and of the possible variations each attribute might
take (e.g., location: U.S., Egypt, desert isle, etc.). These are printed on cards
backed with a self-sticking material such as Velcro. A wall of a conference
room is covered with felt and the attribute cards are arranged and rearranged
to form different potential solutions to the problem (plot elements for the
cartoon).

This method has much in common with Zwicky's morphological box. Of
course, no attempt is made when storyboarding to evaluate all possible
combinations. In this manner, a different, feasible combination is being
sought, not the best combination.

Delphi
This approach has been most widely used for technological forecasting and
for the determination of numeric measures of importance (weights), but it also
may be used to aid creativity. Delphi focuses the collective knowledge of the
group on identifying, forecasting, and solving problems. It adds a formal
structure to the group process and avoids the bias usually associated with the
presence of strong individual personalities in the group. The Delphi process
begins with group selection. Ground rules and procedures for the particular
process must be clearly stated, and sufficient time allowed for the exercise.
(The specifics of the Delphi technique are discussed in detail in Appendix B.)
While it is a popular tool for technological forecasting and parameter


estimation, it is not often used for creativity exercises.

Nominal Group Techniques
The nominal group technique is a structured group process that combines
both group and individual activities. A coordinator administers the following
five-step process:
1. Silent idea generation.
2. Round-robin presentation.
3. Idea clarification.
4. Voting and ranking.
5. Discussion of results.
During silent idea generation, each participant is asked to think of and write
down ideas about the specific task. This step is followed by a round-robin
presentation wherein participants take turns reading ideas to the group. The
coordinator or an assistant records each idea. Any participant may pass on
any given round. This process continues until all the ideas of the group have
been read and recorded. While this may seem almost identical to
brainstorming, the idea flow from nominal groups is not usually as free and
uninhibited.

The next step is clarification. The coordinator proceeds through the idea list
asking if any clarification is needed. Anyone in the group may clarify any idea,
although some courage is usually required to modify someone else's idea.

The participants are then asked to select eight ideas they consider to be the
best or most important. These are ranked by the group. The coordinator then
tabulates the results, and the group discusses them. A second, abbreviated
session may be held to expand on the eight best ideas.

Other Methods
In addition to the approaches noted above, there are several less well-known,
seldom-used creative problem-solving techniques. Among them are buzz
sessions, modified buzz sessions, slipwriting, and reverse brainstorming. All
of these methods have one common element: They attempt to utilize the
creative potential of groups. (Again, the reader is referred to [35] for an
extended discussion of the techniques.)



These techniques work. They increase the output of ideas by individuals and
groups. Which techniques work best depends on several factors. Among
these are the extent to which people are willing to expose their ideas to their
colleagues, penalties for error, schemes for stimulating unusual associations
of known ideas, the skill with which the problem is identified and stated, and
the stimulation of idea production by each member of the group through the
contributions of other group members.

It is now appropriate to mention a matter of crucial importance to the success
of any group creativity technique. Research on multidisciplinary projects has
shown that problem-oriented individuals are more effective in multidisciplinary
problem solving than are discipline-oriented individuals [28]. The distinction is
simple. Problem-oriented people give the problem primary consideration.
Each views his/her individual area of knowledge only in terms of its potential
contribution to solving the problem. Discipline-oriented people view the
problem as an opportunity to ply their knowledge or extend it. To the former,
knowledge is a means to an end. To the latter, the problem is a vehicle for the
demonstration or extension of knowledge. A problem orientation is generally
more effective because problem-oriented people welcome any input they see
as helpful in problem solving, while discipline-oriented people view as
irrelevant (or uninteresting) ideas and discussions not related to their area of
expertise. To increase the chance of success, several, if not all, members of
the creativity group should be problem-oriented.

Skill in creative problem solving can be acquired and developed. It requires
training and the application of effort, but it does not require special mental
endowments or "gifts of nature." Almost anyone can be creative by using the
principles and methods described in this section and known collectively
as creative problem-solving techniques.





Creativity techniques
From Wikipedia, the free encyclopedia

This article may require cleanup to meet Wikipedia's quality standards. No cleanup
reason has been specified. Please help improve this article if you can. (November 2008)
Creativity techniques are methods that encourage creative actions, whether in the arts or sciences. They
focus on a variety of aspects of creativity, including techniques for idea generation anddivergent thinking,
methods of re-framing problems, changes in the affective environment and so on. They can be used as part of
problem solving, artistic expression, or therapy.
Some techniques require groups of two or more people while other techniques can be accomplished alone.
These methods include word games, written exercises and different types of improvisation, or algorithms for
approaching problems. Aleatory techniques exploiting randomness are also common.
Contents
[hide]
1 Aleatory techniques
2 Improvisation
3 Problem solving
4 See also
5 References
6 External links
Aleatory techniques[edit]
Main article: Aleatoricism
Aleatoricism is the incorporation of chance (random elements) into the process of creation, especially the
creation of art or media. Aleatoricism is commonly found in music, art, and literature, particularly in poetry. In
film, Andy Voda made a movie in 1979 called "Chance Chants", which he produced by a flip of a coin or roll of
a dice. In music, John Cage, an avant-garde musician, composed music by superimposing star maps on blank
sheet music, by rolling dice and preparing open ended scores that depended on the spontaneous decisions of
the performers. (1) Other ways of practicing randomness include coin tossing, picking something out of a hat,
or selecting random words from a dictionary.
In short, aleatoricism is a way to introduce new thoughts or ideas into a creative process.


Improvisation[edit]
Main article: improvisation
Improvisation is a creative process which can be spoken, written, or composed without prior
preparation.
[1]
Improvisation, also called extemporization, can lead to the discovery of new ways to act, new
patterns of thought and practices, or new structures. Improvisation is used in the creation of music, theater, and
other various forms. Many artists also use improvisational techniques to help their creative flow.
The following are two significant methods:
Improvisational theater is a form of theater in which actors use improvisational acting techniques to
perform spontaneously. Many improvisational (improv) techniques are taught in standard drama classes.
The basic skills of listening, clarity, confidence, and performing instinctively and spontaneously are
considered important skills for actors to develop.
[2]

Free improvisation is real-time composition. Musicians of all kinds improvise (improv) music; such
improvised music is not limited to a particular genre. Two contemporary musicians that use free
improvisation are Anthony Braxton and Cecil Taylor. Through free improvisation, musicians can develop
increased spontaneity and fluency.
[3]

Each type of improvisation improves the thinking and acting skills of the actor, and this is done by using no
practice. A similar set of techniques is called alienation since one of its many techniques uses actors that
haven't rehearsed or even read the play. Improvisation is an acting technique during which actors make up a
storyline, start and end on the spot, and try their best to keep in character.
Problem solving[edit]
In problem-solving contexts, the random-word creativity technique is perhaps the simplest method. A person
confronted with a problem is presented with a randomly generated word, in the hopes of a solution arising from
any associations between the word and the problem. A random image, sound, or article can be used instead of
a random word as a kind of creativity goad orprovocation.
[4][5]

Tools and methodologies to support creativity.
[6]

TRIZ (theory which are derived from tools such as ARIZ or TRIZ contradiction matrix)
Creative Problem Solving Process (CPS) (complex strategy, also known as Osborn-Parnes-process)
Lateral thinking process, of Edward de Bono
Six Thinking Hats, of Edward de Bono
Method Herrmann - right brain / left brain


Brainstorming and Brainwriting
Think outside the box
Business war games, for the resolution of competitive problems
SWOT analysis
The method SVTI or USIT of convergent creativity
Thought experiment
Five Ws
Coaching
See also[edit]
Association
Problem solving
Creative problem solving
Decision tree
Ideas banks
Imagination
Intuition
Invention
Lateral thinking
Metaphor


Training for creativity
Fascinated by how brains and creativity work, we frequently
share new research on the 99U twitter feed, showing how
everything from drinking alcohol, to taking vacations,
to moving your eyes from side to side can make you more
creative. Whats particularly interesting, however, is that most
of these studies rely on just a small group of core creativity
tests and you dont need any special lab equipment to take
them.


Below, weve collected five of the most commonly used creativity challenges for your
self-testing pleasure. While creativity testing is far from an exact science, trying your
mettle at these challenges could yield insight into when, where, and how youre most
creative. Or maybe itll just be fun.
1. Alternative Uses
Developed by J.P. Guilford in 1967, the Alternative Uses Test stretches your creativity by
giving you two minutes to think of as many uses as possible for an everyday object like a
chair, coffee mug, or brick. Heres a sample brainstorm for paper clip uses:
Hold papers together
Cufflinks
Earrings
Imitation mini-trombone
Thing you use to push that emergency restart button on your router
Keeping headphones from getting tangled up
Bookmark
The test measures divergent thinking across four sub-categories:
Fluency - how many uses you can come up with
Originality how uncommon those uses are (e.g. router restarter is more uncommon
than holding papers together)
Flexibility how many areas your answers cover (e.g. cufflinks and earrings are both
accessories, aka one area)
Elaboration level of detail in responses; keeping headphones from getting tangled up
would be worth more than bookmark
Try it yourself:

How many uses can you think of for a spoon? You have two minutes Go!


Think of as many uses as possible for an
everyday object like a chair, coffee mug, or
brick.
2. Incomplete Figure
Developed in the 60s by psychologist Ellis Paul Torrance, the Torrance Test of Creative
Thinking (TTCT) sought to identify a creativity-oriented alternative to IQ testing. One of
the most iconic elements of the TTCT was the Incomplete Figure test, a drawing
challenge thats like a game of exquisite corpse.
Youre given a shape like the below, and then asked to complete the image.

Here are a few completed images from a great Daily Beast piece:



Try it yourself:

Print out these figures, and give yourself five minutes to see what you can turn them in


to. Uncommon subject matter, implied stories, humor, and original perspective all earn
high marks.
The Incomplete Figure test is a drawing
challenge thats like a game of exquisite
corpse.
3. Riddles
A box without hinges, key, or lid, yet golden treasure inside is hid. What is it? asks
Bilbo Baggins in Tolkeins The Hobbit. Riddles pose a question to which initially there
seems to be no answer until, suddenly, the answer arrives in a flash of insight: Aha! Its
an egg!
Psychologists use riddles to measure creative problem solving potential, orconvergent
thinking. Unlike the Alternative Uses Test, the goal here is to arrive at a single correct
answer (rather than as many answers as possible).
Try it yourself:
Heres a riddle used in a recent study showing that people are more creative when
theyre tired:
A man has married 20 women in a small town. All of the women are still alive and
none of them are divorced. The man has broken no laws. Who is the man?
For the solution, look at the footer of this piece. Download a full list of riddles that
psychologists use here.
Psychologists use riddles to measure
creative problem solving potential,
or convergent thinking.


4. Remote Associates
The Remote Associates Test takes three unrelated words, such as Falling Actor
Dust, and asks you to come up with a fourth word that connects all three words. In this
case, the answer is star, as in falling star, movie star and stardust.
You wont have much luck solving this type of problem by methodically going through
all the compound words and synonyms for falling actor and dust and comparing
them to each other. As with riddles, the solutions typically arise as a flash of insight.
(Apparently being drunk also helps.)
Try it yourself:
Time Hair Stretch
Manners Round Tennis
Ache Hunter Cabbage
Answers to the above are in the footer. For more sample problems, click here.
With Remote Association problems,
solutions typically arise as a flash of
insight.
5. The Candle Problem
The Candle Problem is a classic test of creative problem solving developed by
psychologist Karl Duncker in 1945. Subjects are given a candle, a box of thumbtacks,
and a book of matches, and asked to affix the lit candle to the wall so that it will not drip
wax onto the table below.The test challenges functional fixedness, a cognitive bias that
makes it difficult to use familiar objects in abnormal ways. It was recently used to
prove that living abroad makes you more creative.



Try it yourself:

Have you figured it out yet? Heres a hint: On the table there is a candle, a box of tacks,
and a book of matches
For the solution, click here.

Over To You

Take one or two of the tests above under two different conditions (e.g. morning and
evening, at home and at work) to find out when youre most creative. Let us know your
results!
4.Tools for Innovation

Thinking Processes



Introduction to Thinking Processes
Our world and the world of the future demand that all students are supported to become effective
and skilful thinkers. Thinking validates existing knowledge and enables individuals to create new
knowledge and to build ideas and make connections between them. It entails reasoning and inquiry
together with processing and evaluating information. It enables the exploration of perceptions and
possibilities. It also involves the capacity to plan, monitor and evaluate ones own thinking, and refine
and transform ideas and beliefs.
The Thinking Processes domain encompasses a range of cognitive, affective and metacognitive
knowledge, skills and behaviours which are essential for students to function effectively in society,
both within and beyond school.
An explicit focus on thinking and the teaching of thinking skills aims to develop students thinking to a
qualitatively higher level. Students need to be supported to move beyond the lower-order cognitive
skills of recall and comprehension to the development of higher-order processes required for
creative problem solving, decision making and conceptualising. In addition, they need to develop the
capacity for metacognition the capacity to reflect on and manage their own thinking. This can only
happen if the school and classroom culture values and promotes thinking and if students are
provided with sufficient time to think, reflect, and engage in sustained discussion, deliberation and
inquiry. Students need challenging tasks which stimulate, encourage and support skilful and
effective thinking.
A focus on the development of thinking competencies within specific areas of the curriculum and
across it not only serves as a core integrative function, it also has the potential to provide continuity
in approaches to learning from Foundation to Level 10 and to emphasise the view that such
knowledge, skills and behaviours are important to lifelong learning. To emphasise this, teachers
model skilful and effective thinking and make their own thinking explicit as part of their everyday
practice.
Thinking skills can be defined in a variety of ways. Many different taxonomies and models for
teaching thinking have been developed. Each classification scheme has its strengths and
weaknesses. However, whatever the system or systems being used, all seek to improve the quality
of student thinking.
An Introduction to the TOC Thinking Processes
AN INTRODUCTION TO THE TOC THINKING PROCESSES
by Dongxiao Qiu
for the Ross Clouston Scholarship, 2001
Do you want to find out the core problem of a complex situation in business or life? Do you want to
come up with innovative solutions to the core problem? Do you want to communicate your thinking
effectively with others? The TOC Thinking Processes are designed to just do these. The purpose of
this note is to introduce to business students the basics about the TOC Thinking Processes, which
were originated by Dr. Eliyahu Goldratt as an indivisible part of the Theory of Constraints (TOC). The
TOC Thinking Processes were illustrated in Dr. Goldratt's business novel It's Not Luck to address
policy and paradigm constraints rather than physical constraints described in his another business
novel The Goal. For those who are not familiar with TOC, please see appendix A for a brief
introduction. This note can better serve its purpose when used as a companion to the novel It's Not
Luck.


How to think when you want to improve a system?
There are always situations where data are overwhelming or confusing. To avoid paralysis by
analysis, we should ask questions that sift through the complexity. The three basic questions we
should ask are as follows.
- What to change?
- To what to change?
- How to cause the change?
The TOC Thinking Processes are designed to answer the three questions in a systematic way by
exploring and communicating information and assumptions about the current reality, future reality
and how to get there, respectively.
So, what are the TOC Thinking Processes?
There are really only two TOC Thinking Processes: Sufficient Cause and Necessary Condition.
Sufficient cause is the thought pattern of effect-cause-effect. When we assume that something,
simply because it exists, causes something else to exist, we are using sufficient thinking. For
example, we often hear that if we lower our prices, then more customers will buy our products.
Figure I illustrate this sufficient cause thinking. The lower box is the cause and the upper box is the
effect. The arrow shows the cause-effect relation and is where the assumption resides. To visualize
the cause-effect relationship and the assumptions, we can point out our reservations to any of the
components so as to facilitate our thinking or communicate with other people.

Figure 1 Sufficient Cause Thinking

Necessary thinking is the thought pattern we use when we are thinking in terms of requirements.
When we are thinking that something must exist before we are able to achieve something else, we
are using necessary condition thinking. Necessary conditions are rules, policies or laws that provide
limitations or boundaries within which we believe we are allowed to pursue goals. For example, we
often hear that we must reduce costs to increase profits. Figure 2 illustrate this necessary condition
thinking. When the assumptions are visible, we can test both their validity and necessity.



Figure 2 Necessary Condition Thinking

To use the two thinking processes with the visualization techniques that will be discussed further in
the following sections, we can start to answer the three basic questions by five TOC Thinking
Processes tools that are currently available. Figure 3 is the summary of these tools.

Figure 3 TOC Thinking Process Tools

Give me a touch of these tools!
To help master the TOC Thinking Processes, here we would introduce the nomenclatures of the
TOC Thinking Processes and two frequently used tools, the dilemma tree and the transition tree, as
the basis for readers' further exploration.
1. Nomenclatures of TOC Thinking Processes
Figure 4 illustrates sufficient cause thinking process and figure 5 illustrates necessary condition
thinking process. The definitions of the components of both thinking processes are shown in the
figures.
1) Entity (boxes of A, B, C, and D): a single element of the system and expressed as a complete
sentence
2) Arrow: an indicator of a relationship between two entities


3) Cause: an entity at the base of an arrow
4) Effect: an entity at the tip of an arrow
5) And-connector: an ellipse that groups entities to represent the logical "and"
6) Assumption: the reason for the existence of the cause-effect relationship and "underneath" arrows
7) Entry Point: any entity that does not have an arrow pointing to it. Entry points that are stated in
round-cornered boxes are assumed to exist in the current reality; square-cornered entry points are
entities that do not yet exist, which are called injections.

Figure 4 Nomenclatures for Sufficient Cause Thinking Process

1) Entity (boxes of A, B, C, and D): a single element of the system and not necessarily expressed as
a complete sentence
2) Arrow: an indicator of a relationship between two entities
3) Necessary condition: an entity at the base of an arrow
4) Objective: an entity at the tip of an arrow
5) Assumption: the reason for the existence of the necessary condition relationship and "underneath"
arrows

Figure 5 Nomenclatures for Necessary Condition Thinking Process

2. Dilemma Tree


Every problem that exists can be described as a conflict, in the form of a dilemma tree. The dilemma
tree, also called the evaporating cloud, has only five entities and is the easiest and by far the most
often used of the thinking processes. It is a necessary condition thinking process. Figure 6 shows
the relationships of the five entities.

Figure 6 Diagram of a Dilemma Tree

The major steps of the dilemma tree process are:
1. Articulate the problem and diagram the tree.
2. For each arrow, uncover assumptions and identify potential solutions, using the necessary
thinking process.
3. Choose an injection to implement.
We will see what the third step means in the transition tree process in the next section. Here let's
focus on the first and second steps.
We would use an example to show how to use a dilemma tree to solve problems.
An example: A manufacturer of temperature-control equipment for the injection molding industry was
plagued by parts
shortage in manufacturing. Manufacturing was blaming Purchasing for poor vendor management.
Purchasing
was blaming Manufacturing and Sales for taking too long to provide the information they needed to
purchase products within their vendors' quoted lead time; and, of course, Purchasing and
Manufacturing


were under the pressure to keep inventories as low as possible. The company was poised for
tremendous
growth, but unless it got the parts situation under control, it was going to have a tough time
competitively
fulfilling additional demand.
Figure 7 illustrates the dilemma. The conflict is that Manufacturing wants to order later while
Purchasing wants to order earlier. Both have their reasons as stated in the diagram. We can surface
the assumptions, which are the reasons for the persistent conflict.

Figure 7 An Example of Dilemma Tree

What are the assumptions underneath the arrows?
Arrow 1: In order to have the right materials when we need them, we must wait until we have all of
the correct information
because (assumption 1) we manufacture to order and because (assumption 2) it is too risky,
financially, to
stock components.
Arrow 2: In order to have the right materials when we need them, we must give vendors enough lead
timebecause the
vendors' lead time is longer than zero.
Arrow 3: In order to wait until we have all the correct information, we must order later, because it
takes a long time for
engineering and /or customers to determine all the details of the product's final design.
Arrow 4: In order to give vendors enough time, we must order earlier, because the lead time our
customers want is longer


than the lead times our vendors offer for purchased components.
Arrow 5: It is impossible to order later and order earlier, because all parts carry equal weight in cost
and risk.
Three of the assumptions (two underneath arrow one and one underneath arrow five) jumped out as
erroneous. Although this company's products are customer goods, they are assembled to order and
the vast majority of components are standard and fairly low cost. This means that holding a little bit
more inventory in the stockroom (and a lot less inventory in work-in-process) would pose little risk for
the company and would result in the ability to shorten lead time for customer orders. Therefore, the
assumptions underneath arrow one are invalid. When it becomes clear that arrow one is invalid, let's
take a look at arrow five. Once the company has the inventory replenishment policies in place for
standard components, purchasing would have the capacity to respond more effectively to the few
specialty items. Direction could also be provided to sales and engineering on the crucial design
elements that might require longer lead times, so that when possible, those elements could be
addressed earlier. Assumption underneath arrow five is invalid too.
By looking at the issues in this way, a simple and practical solution shows up, which is simply to
stock standard parts and focus on the special parts. The company is able to identify their paradigm
constraints that hold firm the policies that both sides tried to enforce, which just kept the fuel of the
conflict raging.
3. Transition Tree
The transition tree is a sufficient cause diagram used for creating action plans. The transition tree
contains four types of entities, as illustrated in figure 8.



Figure 8 Illustration of a transition tree

A: The injections are actions.
B: Entities that exist in the present reality tree are always entries to the tree.
C: Entities that will exist in the future are the results of the combination of implementing the actions
and the presence of the current and future conditions that are captured wit hit by and-connectors.
D: The objectives of the action plan are achieved as a result of the conditions created by
implementing the actions.
Take the analogy of a manufacturing process. Every manufacturing starts with at least one material
from an outside source. Every step of the way, that material goes through transitions- a resource
(person and/or machine) does something specific to that material, changing it to a state that is closer
to its finished form. From that state, the next resource performs a specific step in the process that
will change it a bit more, moving it still closer to its finished form. And so on until the company has a
finished, salable product. You will use the transition tree to design the process that will create the
necessary transitions from the conditions present in the current reality to the different conditions you
desire at some point in the future. With the transition tree, you will define the specific steps (actions)
that will transform your current reality (raw materials) into a specific future reality (objectives). You
will also verbalize what the transitions themselves will be - the intermediate states that will be
created along the way.


Like in the analogy, the transition tree is the tool to use when you need to create an action plan and
you already have some ideas in mind relative to what you're actually going to do.
The general steps of the transition tree process are:
1. Establish the scope of the transition tree.
2. Using sufficient cause thinking, link the initial action to the objectives.
3. Seek and block undesirable consequences.
4. Implement the plan.
Figure 9 is a simple example to illustrate the transition tree process. Supposed you are sitting at your
kitchen table, looking at a wall in your family room. The picture hanging on that wall is crooked, and
you have just decided to straighten it. The wall is about 15 feet from where you sit. In reality, of
course you are not about to spend time preparing a transition tree for a task as simple as that.
However, when a transition tree is called for, the transition tree you prepare should show the same
type of detail as in the example.



Figure 9 An Example of a Transition Tree

Summary of the TOC Thinking Processes
The basic thinking processes are presented here and we have also demonstrated how to use the
dilemma tree and the transition tree. For our purpose to introduce the basics of the TOC Thinking
Processes, we did not elaborate in functional details about how to construct the processes. For
readers who have general interests in the Thinking Processes, we encourage you to read the


business novel It's Not Luck by Eliyahu Goldratt for more vivid examples. For zealous readers who
want to master the Thinking Processes in a professional way, we encourage you to read the
book Thinking for a Change - Putting the TOC Thinking Processes to Use by Lisa J. Scheinkopf,
from which book much of the contents of this note are adapted.
Appendix A
What is TOC in a nutshell and what are policy and paradigm constraints?
Simply put, TOC treats any organization as a system in order to come up with unique solutions for
better system performance. An organization, as a system, consumes inputs (material, money,
human efforts so on) and transforms them into output (products, services so on) through processes
that are linked to system resources. To improve the performance of an organization, we need to
clarify the purpose of the organization (the goal), determine the measures that are aligned with the
purpose, and manage those few things (constraints) that limit the organization's higher performance
relative to that purpose.
Constraints can be physical constraints which are those resources that are physically limiting the
system from increasing its performance. Some examples are machines, people's skills, and external
market situations. Physical constraints were discussed in the novel The Goal.
Constraints can also be policy and paradigm constraints. Policy constraints are those rules and
measures that inhibit the system's ability to continue to improve. Policies (both written and unwritten)
are developed and followed through people's belief systems. Paradigm constraints are those beliefs
or assumptions that cause us to develop or follow policy constraints. Policy and paradigm
constraints are discussed in the novelIt's Not Luck.
A simple example for illustration. Your company provides printing services to other businesses and
the industry is believed to reward orders to the lowest bidders for printing jobs. However, your
machines are out-of-date compared to your competitors' and cannot print large volume for lower
price (a physical constraint). Then how can you compete? After using TOC Thinking Processes, you
may discover that the marketing policy of competing on price (a policy constraint) is based on the
assumption that customers want only lowest price (a paradigm constraint). When you check the
assumption with your salespeople, you realize that the assumption does not always hold. There are
customers who are more interested in fast delivery of products. You then change the marketing
strategy to focus on those customers and your company's performance improves significantly.




Thinking processes (theory of constraints)
From Wikipedia, the free encyclopedia
Thinking processes in Eliyahu M. Goldratt's theory of constraints, are the five methods to enable the focused
improvement of any system (especially business system).
Contents
[hide]
1 Purpose
2 Processes
3 Software
4 Books
5 References
Purpose[edit]
The purpose of the thinking processes is to help one answer questions essential to achieving focused
improvement:
1. What to change?
2. What to change it into?


3. How to cause the change?
Sometimes two other questions are considered as well:
4. Why Change?
and:
5. How to maintain the process of ongoing improvement (POOGI)?
A more thorough rationale is presented in What is this thing called Theory of Constraints and how should it be
implemented.
[1]

A more thorough work mapping the use and evolution of the Thinking Processes was conducted by Mabin et
al.
[2]

Processes[edit]
The primary thinking processes, as codified by Goldratt and others:
Current reality tree (CRT, similar to the current state map used by many organizations) evaluates the
network of cause-effect relations between the undesirable effects (UDE's, also known as gap elements)
and helps to pinpoint the root cause(s) of most of the undesirable effects.
Evaporating Cloud (conflict resolution diagram or CRD) - solves conflicts that usually perpetuate the
causes for an undesirable situation.
Core Conflict Cloud (CCC) - A combination of conflict clouds based several UDE's. Looking for deeper
conflicts that create the undesirable effects.
Future Reality Tree (FRT, similar to a future state map) - Once some actions (injections) are chosen (not
necessarily detailed) to solve the root cause(s) uncovered in the CRT and to resolve the conflict in the
CRD the FRT shows the future states of the system and helps to identify possible negative outcomes of
the changes (Negative Branches) and to prune them before implementing the changes.
Negative Branch Reservations (NBR) - Identify potential negative ramifications of any action (such as an
injection, or a half-baked idea). The goal of the NBR is to understand the causal path between the action
and negative ramifications so that the negative effect can be "trimmed."
Positive Reinforcement Loop (PRL) - Desired effect (DE) presented in FRT amplifies intermediate
objective (IO) that is earlier (lower) in the tree. While intermediate objective is strengthened it positively
affects this DE. Finding out PRLs makes FRT more sustaining.
Prerequisite Tree (PRT) - states that all of the intermediate objectives necessary to carry out an action
chosen and the obstacles that will be overcome in the process.


Transition Tree (TT) - describes in great detail the action that will lead to the fulfillment of a plan to
implement changes (outlined on a PRT or not).
Strategy & Tactics (S&T) - the overall project plan and metrics that will lead to a successful
implementation and the ongoing loop through POOGI. Goldratt adapted three operating level performance
measuresthroughput, inventory and operating expenseand adopted three strategic performance
measuresnet income, return on investment, and cash flowto maintain the change.
List of thought processes

Forward thinking,
Expectation
Experimental,Holistic thinking, Adaptive
reasoning,Anal;ogy,Argument,Brainstorming,Critical thinking,Decision making,
deductive thinking,
4 proposed stages of creativity: preparation, incubation, illumination, and verification
Incubation (psychology)
From Wikipedia, the free encyclopedia
Incubation is one of the 4 proposed stages of creativity: preparation, incubation, illumination, and
verification.
[1]
Incubation is defined as a process of unconscious recombination of thought elements that were
stimulated through conscious work at one point in time, resulting in novel ideas at some later point in
time.
[2]
incubation is related to intuition and insight in that it is the unconscious part of a process whereby an
intuition may become validated as an insight.
[3]

The experience of leaving a problem for a period of time, then finding the difficulty evaporates on returning to
the problem, or even more striking, that the solution "comes out of the blue", when thinking about something
else, is widespread. Many guides to effective thinking and problem solving advise the reader to set problems
aside for a time.
Contents
[hide]
1 Paradigm for Investigating Incubation
2 Incubation effect and Emotions & Creativity


3 The Cases For and Against Dreams Being Useful In Problem-Solving
4 See also
5 References Cited
Paradigm for Investigating Incubation[edit]
The most widely adopted paradigm for investigating incubation involves comparing problems on which
participants take a break during solving with problems on which participants work for a continuous period. The
total time spent on each problem is equated across the conditions and the incubation period is usually filled
with unrelated activity to prevent further conscious work on the problem. Superior performance on problems for
which work is split over two sessions is taken as evidence for the incubation effect, which is thus operationally
defined as any benefit of a break during problem solving.
Incubation effect and Emotions & Creativity[edit]
When discussing the relation between incubation effect emotions and creativity, researchers found that
positive mood enhances creativity at work. That means that we would expect a given days creativity to follow
reliably from the previous days mood, above and beyond any carry-over of that previous days mood. Theory
and research on incubation, long recognized as a part of the creative process, suggest such cross-day effects.
Thus, if positive mood on a particular day increases the number and scope of available thoughts, those
additional thoughts may incubate overnight, increasing the probability of creative thoughts the following day.
[4]

Recent advances in neuroscience provide intriguing evidence of the mechanisms underlying incubation effects,
particularly those that occur during sleep. This research reveals that peoples experiences while awake can be
consolidated into memory and result in enhanced performance the next day without any additional practice or
engagement in the task. Moreover, there is mounting evidence that sleep can facilitate the types of memory
and learning processes, such as associative memory, that contribute to creative problem solving. In one
relevant experiment, researchers demonstrated that problem-solving insight can be dramatically enhanced by a
period of sleep following initial work on a problem.
The Cases For and Against Dreams Being Useful In Problem-
Solving[edit]
In the 1970s, Stanford Sleep Lab Director William Dement gave 500 undergraduate students three "brain-
teaser" problems to read over before going to sleep and to note whether they had solutions in their dreams that
night; seven students had a dream containing the solution. Two decades later, 1993, Harvard
psychologist Deirdre Barrett conducted research asking college students to incubate answers to real-life
homework and other objective problems on which they were working, finding that in one weeks time, had
dreamed about their topic and had a dream which provided an answer.
[5]
Barrett also interviewed modern
artists and scientists about their use of their dreams, documenting dramatic anecdotes including Nobel Prizes


and MacArthur 'genius grants' whose ideas originated in dreams.
[6]
Her research concludes that while
anythingmath, musical composition, business dilemmasmay get solved during dreaming, the two areas
dreams are especially likely to help are 1) anything where vivid visualization contributes to the solution, whether
in artistic design or invention of 3-D technological devices and 2) any problem where the solution lies in thinking
outside the boxi.e. where the person is stuck because the conventional wisdom on how to approach the
problem is wrong.
Not everybody agrees about the usefulness of dreams in solving problems. In an August 2004 article, "Dreams:
The Case Against Problem-Solving," G. William Domhoff concluded : "When all is said and done, there is only
occasional anecdotal evidence for the idea that recalled dreams have any role in solving or detecting problems.
This evidence is not impressive when it is arrayed against the small percentage of dreams that are recalled and
the even smaller percentage of recalled dreams that might be construed as having a solution to a problem.
Dreams may on occasion be useful to waking consciousness as a basis for thinking about problems in a new
way, or as a basis for discussing personal problems, as some clinical research shows (Fiss, 1991; Greenberg
et al., 1992). And dreams that have a dramatic emotional impact create a strong subjective sense that they
must have a useful message. However, it does not follow from clinical usefulness or a waking impression of
importance that dreaming has an adaptive function (Antrobus, 1993)."
[7]


The 10 Stages of the Creative Process
by Maria Popova
Listen to your hunches, sponge up ideas, let
them marinate, and know when youre done.
The question of what creativity is and how it works will perhaps remain
humanitys most unanswerable but that hasnt stopped us from
trying. On the heels of Neil Gaimans recent reflection on the subject
comes one from filmmaker Tiffany Shlain, founder of the Webby
Awards and daughter of the great Leonard Shlain of Art &
Physics fame. In this short installment from AOLs The Future Starts
Here series, Shlain offers ten steps to the creative process based on her
own experience in film and art, expanding, perhaps inadvertently, on
Graham Wallaces famous 1926 model of the four stages of the creative
process and incorporating other notable theories of yore, like John


Deweys emphasis on hunches and T.S. Eliots insistence on idea-incubation.
1. The Hunch
Any project starts with a hunch, and you have to act on it. Its a total risk because youre just about to jump off a cliff, and
you have to go for it if you believe in it.
2. Talk About It
Tell your family, tell your friends, tell your community theyre the ones who are going to support you on this whole
treacherous journey of the creative process, so involve them, engage them.
3. The Sponge
Im going to tons of art shows, Im watching a lot of movies, Im reading voraciously and Im just sponging up ideas and
trying to formulate my own idea about the subject.
4. Build
I love the world filmmaker because it has maker in it. My team and I are building an armature the architecture for
the project.
5. Confusion
Dread. Heart of Darkness. Forest of fire, doubt, fear [But] as hard as it is and it is really hard any project gets
infinitely better after Ive rumbled with all of my fears.
6. Just Step Away
Take a breather literally just step away from the project Let it marinate dont look at it or think about it.
7. The Love Sandwich
To give constructive feedback, always snuggle it in love because were only human, and were vulnerable Set
expectations for where you are in the project, then ask questions in a way that allows for the love sandwich: First, What
works for you? Then, What doesnt work for you? Then, What works for you? again. If you just ask people for
feedback, theyll go straight for the jugular.
8. The Premature Breakthroughlation
Youll find in a project that youll have many small breakthroughs and you have to celebrate those breakthroughs,
because theyre ultimately going to lead to the Big Breakthrough.
9. Revisit Your Notes


I always do this throughout the project, but especially during that last home stretch I revisit all my notes and think back,
and always find a clue that missing link that brings it all home.
10. Know When Youre Done
Complement with a five-step technique for producing ideas from 1939 and Arthur Koestlers
famous bisociation theory of how creativity works.
See more of Shlains films here.
Donating =Loving

Individual creativity techniques
Group Creativity Techniques for the PMP
Certification Exam
By Cynthia Stackpole Snyder from PMP Certification All-in-One For Dummies, 2nd
Edition
Group creativity techniques is a catch-all phrase for working with a group of people
to generate information. For PMP Certification purposes, these activities might come
in handy. There are a number of group creativity techniques, many of which you will
no doubt recognize:
Brainstorming
Nominal group technique
Delphi technique
Idea/mind mapping
Affinity diagram
Multicriteria decision analysis
By the way, these arent presented in any particular order. No technique is better or
more common than another technique.


Brainstorming
When you employ brainstorming to identify requirements, make sure you have
representation from all the various stakeholder groups. This helps ensure you have
input from everyone impacted by the product and project.
Nominal group technique
The nominal group technique is often used in conjunction with brainstorming. When
all the requirements have been generated (or as many as can be generated at the time),
the group ranks them. This can be as simple as members listing their top five
requirements. The requirements are then prioritized for development, based upon the
stakeholder ranking.
Delphi technique
The Delphi technique was designed to bring a group of experts to consensus. The
thought process is that a group of experts reaching a conclusion is better than any one
experts conclusion.
Some benefits to using the Delphi technique are that it allows you to get information
from a wide group of people that are geographically disbursed, and you can do it
easily by using an automated survey tool.
Here are the steps for the Delphi technique:
1. A group of stakeholders or experts are identified, depending on the needs of the
project.
2. Each stakeholder is sent a list of high-level requirements and asked to expand
that list and send it back to the facilitator.
3. The facilitator compiles a comprehensive list of requirements and sends it back
to the stakeholders for prioritization.
4. Each stakeholder prioritizes the requirements and sends it back to the
facilitator.
5. Several rounds of this take place until you can reach a reasonable amount of
consensus on the requirements and their priority.
One of the important things to know about the Delphi technique is that stakeholders
must remain anonymous to each other, at least for the first couple of rounds. This
allows free and unbiased participation by participants. Being anonymous also frees
stakeholders from being intimidated by people with more knowledge, or a bigger title,
or more experience.


If you were using this technique to gather requirements for a childcare center, here are
some example questions you could send to the parents:
What type of outdoor activities would you like at the center?
What type of indoor activities would you like at the center?
What topics would you like to see taught?
What types of food do you think should be available?
After you generate options, you could then ask the parents to rank all the possible
requirements.
Idea/mind mapping
A mind map is a technique that starts with the idea (or in this case, the project) in the
middle, and then stakeholders branch out from the central idea and generate more
ideas (or in this case, requirements).
A mind map can give you an overview of the project. This overview allows you to
determine whether there is an imbalance in requirements or whether one set of needs
was weighted more heavily than others.

Affinity diagram
An affinity diagram takes ideas and groups them into categories with similar ideas or
requirements. Thus, they are grouped with ideas that they have an affinity with.


Affinity diagrams can be used alone or in conjunction with brainstorming and the
nominal group technique.

Multicriteria decision analysis
When gathering requirements, you often need to balance several criteria to determine
the best set or requirements for a product, service, or result. Multicriteria decision
analysis identifies the various criteria that you will use to evaluate requirements and
then assigns a weighted value to each criteria. Then solutions are rated against the
criteria.
For the childcare center, assume that requirements for the cafeteria vendor were
Healthy meals
Locally sourced ingredients
Experience in a preschool environment
Price
Three vendors were evaluated against all criteria, which were weighted differently and
then ranked on a scale of 1 to 5 (1 being low, and 5 being high). You could set up a
table to show how each vendor scored to establish a quantitative method for selecting
the best vendor based on the requirements.
Combine group creativity techniques
You arent limited to using just one group creativity technique. Using the running
childcare center example, you can see how a specific technique is well suited for one
phase and then easily flows into using another technique.
Start by having a meeting with 20 or so parents. Then, see how your requirement
gathering evolves:
Brainstorming: You lead a session to collect parents needs, wants, and
expectations, all of which are written on sticky notes and put on the wall.


Affinity diagram: You ask the parents to come up to the wall and start putting
the sticky note ideas into groups. Youll probably see some negotiating about
how to arrange and group the sticky notes, but eventually, people will settle on
something they can live with.
Nominal group technique: Finally, you prioritize the sticky notes into your
list of requirements.


5. Managing Innovations


Product Innovation

Product innovation is the creation and subsequent introduction of a good or service that is either new, or
improved on previous goods or services. This is broader than the normally accepted definition
of innovation to include invention of new products which, in this context, are still considered innovative.

Product innovation is defined as:
the development of new products, changes in design of established products, or use of new materials or
components in the manufacture of established products
[1]

Thus product innovation can be divided into two categories of innovation: development of new products,
and improvement of existing products.

New products and services are the lifeblood of successful businesses and
yet over 80 percent of new products fail.
Even successful launches do not always result in top-line growth.
New product development[edit]
Main article: New product development
New product development describes the complete process of bringing a new product or service to
market. There are two parallel paths involved in the process: one involves the idea generation, product
design and detail engineering; the other involves market research and marketing analysis.


Improvement of existing products[edit]
This includes, but is not limited to, improvements in functional characteristics, technical abilities, or ease
of use. Product innovation often takes place when a product's sales are in decline. This is an obvious and
commonly used method to extend the life of a product.

Product innovation
Product innovation refers to the process of developing and releasing a new or intrinsically altered
version of a product or service into a market. While the term may seem to imply new physical
products, this term can also be used to refer to new or expanded services. Product innovation is of
major importance for many companies, especially those involved with electronics, computers, or
software.
While the term innovation typically refers to advancements in an existing product to produce a new
or revised salable item, product innovation can refer to both new products and improvements upon
existing products. When a wholly new product or service is made available for sale to consumers or
businesses, it is not necessarily a form of product innovation. For such innovation to truly occur, the
product must be unique, at least at the time of release, in some way so that it stands out among
competing products or services. This is often the purpose of such innovation: the release of a new
product that seemingly stands alone in a particular field.
Product innovation can also occur with reference to an existing product, however, or a product that is
similar to others available in the market. This type of innovation can include anything from how the
product is manufactured, including both methods and materials used, to theactual product or service.
When a company introduces a new mobile phone, for example, it is releasing a product that is, to
some extent, already available to the public and consumers. Product innovation in such a field,
therefore, requires that a business develop new ways to produce such phones or to release a phone
with features and technology not otherwise available.
Consumers are often interested in product innovation to see what new features or products are
available, but businesses often see such innovation as opportunities for new revenue. Innovation
that leads to a cheaper manufacturing process, or one that uses renewable resources and energy
that may be less expensive in the long run, can help reduce operating costs. New products, or major
innovations in existing products, can bring new customers and increase revenue for a company. In
highly competitive fields, such as consumer electronics and computer software, product innovation
often allows a company to establish itself in the market and develop a new business identity.



Diffusion of innovation[edit]


Main article: Diffusion of innovations
Diffusion of innovation research was first started in 1903 by seminal researcher Gabriel Tarde, who first
plotted the S-shaped diffusion curve. Tarde (1903) defined the innovation-decision process as a series of
steps that includes:
[23]

1. First knowledge
2. Forming an attitude
3. A decision to adopt or reject
4. Implementation and use
5. Confirmation of the decision
Once innovation occurs, innovations may be spread from the innovator to other individuals and groups.
This process has been proposed that the life cycle of innovations can be described using the 's-curve'
or diffusion curve. The s-curve maps growth of revenue or productivity against time. In the early stage of
a particular innovation, growth is relatively slow as the new product establishes itself. At some point
customers begin to demand and the product growth increases more rapidly. New incremental innovations
or changes to the product allow growth to continue. Towards the end of its lifecycle, growth slows and
may even begin to decline. In the later stages, no amount of new investment in that product will yield a
normal rate of return
The s-curve derives from an assumption that new products are likely to have "product life"i.e., a start-up
phase, a rapid increase in revenue and eventual decline. In fact the great majority of innovations never
get off the bottom of the curve, and never produce normal returns.
Innovative companies will typically be working on new innovations that will eventually replace older ones.
Successive s-curves will come along to replace older ones and continue to drive growth upwards. In the
figure above the first curve shows a current technology. The second shows an emerging technology that
currently yields lower growth but will eventually overtake current technology and lead to even greater
levels of growth. The length of life will depend on many factors

process innovation


PROCESS INNOVATION: THE CRUCIAL FACILITATOR OF
PRODUCT INNOVATION

In stealth-like fashion, outsourcing can erode a manufacturers competitive advantage. Believing that profits will rise if
it starts to outsource, a company can lose sight of the fact that it is gradually and unwittingly losing the capabilities
that have differentiated it. But turning inward, specifically to employees, and enabling them to re-capture the
companys reputation for process innovation will help re-build a sound platform for success.
Not so long ago, innovative products could be made using processes that were developed in earlier generations. But
this is no longer true for many manufacturing sectors, especially in a global economy in which demand is driven by
product performance and value. For companies in these sectors, it is imperative that product innovation excellence
be backed up by process innovation excellence.
Sadly, and almost unknowingly, many manufacturers surrender the possibility that their operations will ever represent
a competitive advantage. It happens gradually, as internal functions such as the design, manufacture and repair of
tooling, the overhaul of equipment, the fabrication of parts, and finally, the assembly of the products themselves are
progressively out-sourced. This is not to say that external vendors necessarily do an inferior job. In fact, on average,
they may do a superior job, and at a lower cost. The problem lies in the phrase on average. Instead of retaining the
best-in class-capabilities exemplified by certain of its internal operations, the firm ends up having the same
capabilities as its competitors. In this me-too environment even the largest firms increasingly come to rely on fewer
and fewer distinctive competencies to drive sales and define their firm. In such situations, a supplier can vault from
being a subservient partner to one that dominates a relationship, as it acquires most of the product and process
technology. An analogy can be found in the world of investing, where the wisdom of maintaining a diversified portfolio
is universally accepted. While the principle and wisdom of diversification applies to manufacturers, many of them
respond to financial pressure by divesting themselves of more and more of their human and physical resources,
thereby reducing a diverse portfolio of processes to only one or two. They thus expose themselves to the same risks
as an investor with a portfolio that is not diversified.
THE WITHERING OF COMPETITIVE ADVANTAGE
Manufacturing is not as separable from the rest of the organization as outsourcers would believe. Effective in-house
manufacturing provides the best opportunity to harmonize product design specifications with process capabilities, as
well as retain and protect intellectual property. It offers additional barriers of entry to potential competitors. The
electronics manufacturing industry will be used to demonstrate the negative long-term impacts of outsourcing. The
high labour cost of in-house manufacturing in North America relative to those of global competitors needs to be
addressed through the creative deployment of the firms human resources. It will be suggested that many benefits
accrue from a flexible job-design policy that encourages the transfer of routine equipment maintenance from
technicians to operators. These benefits include the prospect of happier, more engaged employees. The key is to
provide employees the same job security while offering alternative work challenges that are intrinsically rewarding
and contribute to the companys competitiveness. Several examples of such activities are provided below. For
example, every employee can have good ideas, and a successful suggestion program allows everyone in the
organization to contribute to safety, the environment and competitiveness. The reasons why such programs have not
been successful in North America are discussed.
The evolution of the electronics contract manufacturing (ECM) industry provides a noteworthy object lesson in the
loss of competitive advantage. In their early years, major original equipment manufacturers (OEMs) such as Apple,
Dell, HP, IBM, Motorola, Nokia and Nortel performed most of their work in-house. Production of unpopulated circuit


boards was often the first step to be out-sourced, since the photo-chemical and mechanical processes polluted the
atmosphere and could potentially contaminate downstream operations. Over time, this move was followed by the
outsourcing of circuit board layout design, which in turn was followed by the outsourcing of component assembly and
testing, component procurement, in-bound logistics, electronic circuit design, product assembly, product design and
out-bound logistics. At each step, manufacturers reduced their costs. But the biggest and the best of the OEMs also
reduced their competitive position, as even the smallest of the OEMs competitors gained equal footing by taking
advantage of world class ECM manufacturing capabilities and scale economies that the ECMs offered to all. Step by
step, the increasingly hollowed-out firms lost one more capability that differentiated their products on the basis of
process innovation, removed one more barrier to entry for new competitors, and helped increase their suppliers
strength and volume.
If this was the end of the process, it could be (and frequently has been) argued that the savings from out-sourced
production are still the best way to maximize shareholder value. But those obliging suppliers who add most of the
tangible value, yet often receive a small fraction of the revenues, tend not to remain satisfied forever. Along the way
the hollowed-out companies begin to lose the link between product and process innovation. Even the biggest mobile
phone and computer companies have become mostly marketers and distributors of products designed and
manufactured by others. And, in the process, ECMs morph into original design manufacturers (ODM) who, in addition
to all of the previously listed ECM activities, start to identify market needs, design products to their own specifications
and offer them either to their traditional customers (e.g., Motorola) or their customers customers (e.g., Bell). These
are the last steps before they emerge as full-fledged marketers of their own brands. Now, an increasing number of
advanced mobile phones world-wide bear the names of an ODM (e.g., HTC). This has also happened in the
computer business, where traditional third-party suppliers (e.g., Acer) offer their own branded products in addition to
producing for others.
A related but earlier trend in many industries is many manufacturers increasing reliance on equipment and tool
suppliers for competitive manufacturing technologies. The trouble is that suppliers rarely have an incentive for giving
one customer an edge over others. In fact, it is in the equipment and tool suppliers interests to promote competition
among their customers for the latest and greatest equipment.
A good example is the American Connector Company (ACC) case of the early 1990s
1
. ACC worked with an
equipment manufacturer to develop a new state-of-the-art assembly machine to produce its electronic connector
products. ACC might have hoped that the new machine would have provided a sustainable competitive advantage.
Perhaps not surprisingly, the supplier offered the machine to ACCs competitors. Revealingly, a strong potential
competitor declined the offer because it preferred to purchase proven, standard equipment and customize it in-house
for its unique applications. Moreover, unlike ACC, who relied on contractors for most of its tool design and
manufacture, the competitor designed and built all but the simplest tools in-house, allowing its engineers and
technicians to constantly and concurrently innovate its processes and products. This resulted in significantly higher
product quality at lower costs.
Equipment that is developed in house, or purchased in standard form and modified in house, allows its owner to
obtain sustainable competitive advantages. Behind a factorys closed doors and hidden from competitors, the
intellectual property embodied in the equipment remains secure. Products that exploit in-house innovative process
technology can blind-side the competition when the products attributes cannot be replicated without the hidden
intellectual property. On the other hand, new products produced by processes that are known can be duplicated and
refined by any competitor who purchases and reverse engineers them.
PROCESS INNOVATION IS THE CRUCIAL FACILITATOR OF PRODUCT
INNOVATION
There is no doubt that product innovation can occur when manufacturing is outsourced. However, when certain
processes are not under the control of the product innovator, there is little protection against the rapid entry of me-


too products. Even worse, product developers lose touch with their outsourced suppliers newer capabilities. This is
unfortunate, since suppliers can be expected to enhance their processes constantly. The result is sub-optimal product
designs that fail to take full advantage of suppliers process innovations. On the other hand, one can be quite certain
that ODMs will fully exploit their latest process innovations in the design and manufacture of their own branded or
private label designs.
Samsung Electronics is one of the worlds largest and highest-rated manufacturers of electronic products. Its in-
house manufacturing excellence is one reason for its rise to global dominance. Ji Oh Song, Executive Vice President
of Samsung, speaking at a conference in Italy
2
said, If we got out of manufacturing, we lose. He also indicated that
keeping research and development in the same location as manufacturing is very important and leads to faster
market domination.
NURTURE EQUIPMENT AND TOOLS
Much is made in the media of flexible plants, but there is little mention of the flexibility of the employees who work in
them, including the flexibility of maintenance techniciansparticularly how that flexibility promotes process
innovation. Numerous job-protecting labour contract clauses and workplace practices do not allow manufacturers to
benefit fully from the skills in their workforces. Firms can enhance both operator and technician flexibility by
addressing the job security issue directly, namely by committing to no lay-offs unless there is a specifically defined
decline in sales. In return for job security, firms ask for relaxed job classifications. They proceed by asking technicians
to identify a few of the simplest, most routine maintenance tasks and teach the equipment operators how to do these
tasks. Both technicians and operators jobs will be enriched in the teaching/learning process. Once operators are
trained they can relieve technicians of these routine maintenance tasks. Maintenance technicians can then use their
freed-up time to perform the more psychically rewarding tasks of enhancing equipment under their care. Here are
seven possibilities.
1. Modify equipment so that it is quicker and easier to inspect and repair. For example, fit quick access panels, add
quick disconnects, or reduce the need to share scarce resources like cranes and forklifts.
2. Modify procedures, equipment or tooling to take advantage of the small, finite number of jobs each machine is
required to perform, as opposed to the full variety of tasks and settings for which the equipment or tool was originally
designed. This initiative, which has been well developed in the just-in-time literature, can reduce losses of time and
material during changeovers or cleaning. Although many published examples involve stamping and injection-
moulding machines, the techniques are broadly applicable. Order-of-magnitude improvements are routinely
accomplished, with dramatic savings in capacity, space, lead times and inventory investment.
3. Modify equipment so that operators can perform their own changeovers. The key step is to analyse the reasons why
operators are not able to perform the task on their own and then eliminate those reasons. When shop rules ban
operators from doing work that requires tools such as wrenches, it may be acceptable to attach the tools to the
machine permanently.
4. Modify equipment to increase its operating speed or improve its precision. A well-known grocery products
manufacturer demonstrated the efficacy of this approach in one of its European plants. Its engineers and technicians
had customized an older packaging machine so that it operated significantly faster than even the newest machines
that the equipment manufacturer offered to others. It illustrated the common truth that skilled in-house personnel can
come to know more about their equipment than the manufacturer of the equipment.
5. Identify the root causes of continuing defects and develop devices that prevent these mistakes from re-occurring. In
this regard it is helpful to be philosophical and adopt the position that all defects are the result of human error. Of
course, if the defect is produced by a machine, it is easy to blame the machine. But machines are rarely the root
cause. Either the design specification is stretching the machines capabilities or the machine is not being properly
maintained. There should be a bias to view defects as learning opportunities for all concerned and not a reason for


disciplinary action. If employees expect to be punished they will hide the errors or their resultsregardless of who
was at fault.
6. Add deeper, more thorough inspections. By probing into equipment more deeply it may be possible to detect certain
components imminent failures and to replace them before their malfunction results in greater equipment damage, as
well as lost scheduled operating time and associated delivery delays.
7. Replace or augment scheduled inspections with condition monitoring. Measure and analyse the foreign-material
content in equipment lubricant reservoirs, and track changes in equipment operating temperatures and vibration
levels to identify component wear, so that degraded parts can be replaced before they fail or result in equipment
failure.
In addition to being the key building blocks of continuous process innovation, all of these activities have the potential
to satisfy employees needs for self-actualization and increase their feelings of self-worth. The result is a terrific
synergy between operators and maintenance technicians. The more satisfied technicians become with their new
challenges, the more engaged they will become, and the more they will want to teach operators routine tasks. The
more maintenance work that operators master, the more their job satisfaction will increase. In fact, with an effective
apprenticeship training program, it may be possible to assist operators to become full-fledged technicians, something
which can increase their income and job satisfaction. Their employer also gains by creating a new source of
technicians who are already familiar with the firms products, processes and procedures.
CULTIVATE SUGGESTIONS FOR CONTINUOUS PROCESS INNOVATION
Employee suggestion programs can be a key component of process innovation. Sadly, such programs are rare.
Some managers believe, mistakenly, that their employees are unlikely to suggest anything useful. Therefore, they
dont even ask for suggestions. Many other managers view suggestion submissions as transactions requiring
payment according to their value. The trouble is that most suggestions, regardless of their validity, do not save
enough to pay the people making the suggestions meaningful monetary rewards. For the small number of
suggestions whose value is truly significant, there remains the thorny issue of ownership. One sure way of deflating
morale is to pay the author for a suggestion that was actually someone elses idea. The problem can be further
compounded in three ways. The first is by not providing sufficient guidance on the types of suggestions needed.
Management needs to be clear that it is looking for suggestions to improve safety, the environment, quality, cost and
customer responsivenessnot the length of the breaks or food selection in the cafeteria. If most suggestions are
aimed at the former areas, the fraction accepted and implemented will be higher, with positive impact on employee
buy-in, since it avoids having to reject well-meaning, but unwanted suggestions. Second, failing to empower lower-
level managers to acknowledge, approve and implement suggestions will create unacceptable delays. Suggestions
that do not adversely affect any of the above issues, while improving one or more of them, need to be approved at
the lowest level in the organization that has the budget authority to approve the expenditure for the change. In many
cases, this means that suggestions could and should be approved quickly and implemented by first-line supervision.
It should be noted that changing supervision and management mindsets from one of business as usual to one that
embraces continuous process innovation will be the greatest challenge in some organizations. Finally, staff members
can quickly discourage employees from making suggestions if they attempt to minimize their value. Under these
conditions, the stream of suggestions will dry up.
The failure of many previous suggestion programs in North America needs to be compared to the success of the
minority of employers who routinely receive many suggestions per employee per year and pay little for them. For
example, as early as the 1980s, Toyota received more than one suggestion per employee every month. And it
implemented almost all of them! Effective suggestion programs downplay monetary rewards. Instead, recognition is
given by senior management in the form of posted displays, photographs, presentations, etc., opportunities to travel
to company-sponsored events where they present their ideas, and small gifts whose value is not linked to the value of


the suggestion. Teams, as well as individuals, are encouraged to submit suggestions and their contributions are
recognized as such.
In summary, manufacturers wanting to compete with innovative products that will be produced by distant partners
would do well to review the history of such partnerships. All too often the short-term increases in profits that are
obtained by outsourcing are followed by long-term declines in product competitiveness. This decline results from poor
communications between product and process designers, and the loss of intellectual property. To offset the
undeniably higher wages of Canadian employees, management needs to work hard on increasing employee
flexibility. Adapting the respective roles of equipment operators and maintenance staff and encouraging suggestions
are fundamental to success.


Laws pertaining to Innovation- IPR, Patents, Trademarks, Copyrights


6. Introduction What is Sustainability?

What is Sustainability?

Photo courtesy of Bigfoto
Sustainability means different things to different people. The word sustainable,
according to the Encarta World English Dictionary, means able to be maintained. This
definition can be applied to various subject matters, including society as a whole,
industry, agriculture, or family values. The concept of sustainability can be over-
whelming because of the comprehensive nature of the word, but the root meaning is
actually a simple concept that is nearly intuitive to most people.
What does an ant colony need to sustain itself? It needs access to fresh water, clean air
to breathe, healthy food, and a suitable location for the colony. The natural world has
supplied these necessities to the ants and the only waste produced is a fertilizer for the
soil. Therefore, the ant colony is an example of a sustainable society. Rather intuitive,
right? The way we live our lives today, the way our products are manufactured,
transported, and disposed of, the energy systems we employ, and even the way our
food is grown is threatening our future. However, there is some good news!! Principles
of sustainability can be used to restore and nourish these environments, while
maintaining or improving our current standard of living.


Some key concepts within sustainability come directly from the natural world. Nature
uses sunlight as an energy source for all species. All waste is foodfor other species.
Ant waste provides food for the microorganisms that enhance soil productivity. Natural
systems also respect diversity. If a natural disaster eliminates a particular food
source, the ants simply shift to another food source. Nature does not put all her eggs
in one basket so why should we? The natural world already has 3.8 billion years of
design experience, so why not look to nature when designing products, businesses, or
communities? That is the premise behind a new movement started by Janine Benyus
called "Biomimicry".
Not only can sustainability be applied to ant colonies, but it can also be applied to
human societies. A sustainable society will be able to continue indefinitely into the
future. The mayor of Grand Rapids, Michigan vowed in 2004 to make Grand Rapids
a sustainable city. While these efforts signal good intentions and regional
improvements to the quality of life and natural environment, a sustainable city requires
a sustainable nation, and a sustainable nation requires a sustainable world. We must
begin to approach problems from a whole systems perspective.
"Sustainable Business" is a non-traditional strategy that strives to maximize
effectiveness. Sustainable business practices restore environmental quality and build
social equity, while increasing long-term profitability. Throughout history, industry has
intensified its degradation of the environment through the exploitation of natural
resources and the release of hazardous pollution. At the same time, business has spent
billions of dollars complying with governmental regulations aimed at decreasing the
amount of toxic substances entering the landfills, air, and water. An adversarial
relationship has developed between business people and environmentalists with each
seeing the other as the main source of the worlds problems.
Starting less than 2 decades ago, a movement began inside business to change the way
companies operate. Some changes include the elimination of hazardous chemicals as
well as the entire concept of waste, and treating employees and the community
favorably. The same business practices that increase social and environmental capital
also improve the long-term profitability of companies. These win-win situations for the
natural world, the community, and business have given traction to the next industrial
revolution.
Today, there are no truly sustainable companies. Thankfully, however, many companies
are on the path to sustainability. This web site offers an assortment of resources that
we hope will aid in the transformation to a sustainable world.

Sustainable Business



Photo courtesy of Bigfoto
Sustainable Business is a non-traditional strategy that strives to maximize efficiency
and effectiveness while restoring environmental quality, building social equity and
increasing long-term profitability. Since the dawn of the industrial revolution, industry
has intensified environmental degradation by "efficiently" exploiting natural resources
and releasing unfathomable quantities of hazardous pollutants into the biosphere. On
the other hand, business has spent billions of dollars to comply with governmental
regulations aimed at minimizing contamination by prescribing the amount of toxic
substances that can enter the air, water and landfills. An adversarial relationship has
developed between business people and environmentalists, each seeing the other as a
main source of the worlds problems.
Emerging just under two decades ago, a movement began within the business sector to
change the way companies operate. People began to recognize that environmental
degradation and commerce do not have to go hand in hand. Some of the changes have
included:
The reduction and, in some cases, elimination of hazardous materials from
industrial processes
The adoption of the concept that waste equals food
Equitable treatment of employees, which in turn increases productivity and
worker retention
Operating as a responsible member of the community
The same business practices that improve social and environmental capital have been
shown to also improve long-term profitability. When implemented, sustainable business
practices provide an avenue to achieve mutual benefits in the natural world, the
community, and the economy. This movement has given traction to the next industrial
revolution, where business people and environmentalists are sharing the common goal
of improving the global community, environment and economy for present and future
generations.
As of yet, no truly sustainable companies exist. Sustainability is and will continue to be
a very difficult goal to achieve as we all exist and operate within the foundations of
unconscious commerce. However, many companies are working toward sustainability
today.


Our website, offers an assortment of resources that we hope will aid students,
consumers, and business people in the transition to a sustainable world. "This is going
to take us all, and it is going to take forever. But then, that's the point" (William
McDonough and Michael Braungart, Cradle to Cradle

Sustainability: The Five Core Principles
A New Framework
By Michael Ben-Eli

"If you wish to fly and want to successfully construct an aircraft in order to do so, you need
to understand the basic principles of aerodynamics. Similarly, if we are serious about
ensuring a sustainable future, we need to be guided by a set of principles which underlie
sustainability as an enduring state."

Michael Ben-Eli
Testing the Gossamer Albatross by Paul MacCready- NASA Photo Dryden Flight Research Center ECN 12604 1980

Introduction

The concept of sustainable development, as coined by the World Commission on
Environment and Development and with it, the term sustainability itself, have been
gaining increasing recognition in recent years all around the world. Wide-spread use,
however, has been followed by growing ambiguity so that today both terms are employed
within a very broad spectrum of meaning often, to the point of trivialization.

The set of five Sustainability Principles proposed below is offered in order to advance and
restore some rigor to the underlying ideas. Its development was informed by a number of
existing frameworks and was inspired, in particular, by the work of R.Buckminster Fuller.

The principles are articulated in a general fashion but can receive a specific operational


meaning in relation to particular sectors of the economy, development issues, business
strategies, investment guidelines, or initiatives taken by individuals.They are expressed in
relation to five fundamental domains:
The Material Domain: Constitutes the basis for regulating the flow of materials and energy
that underlie existence.
The Economic Domain: Provides a guiding framework for creating and managing wealth.
The Domain of Life: Provides the basis for appropriate behavior in the biosphere.
The Social Domain: Provides the basis for social interactions.
The Spiritual Domain: Identifies the necessary attitudinal orientation and provides the
basis for a universal code of ethics.
The result is a set of five core principles, each with its own derived policy and operational
implications. The set is fundamentally systemic in nature, meaning, that each domain
affects all the others and is affected by each in return.

This systemic aspect is fundamental. It reflects the interdependent nature of reality itself. It
has far reaching implications for policy and for any competent attempt at strategy for
change. It implies that in seeking a transition to sustainability as a predominant planetary
state, no piece-meal approach -- emphasizing some aspects while neglecting others -- is
likely to yield effective, lasting results.

Definition of Sustainability

Transforming society and the worlds economy to a sustainable basis presents the most
significant challenge to the 21st century. This challenge is unprecedented in scope. Its
context is the planet as a whole.It requires a fundamental shift in consciousness as well as
in action. It calls for a fresh vision, a new dream and new approaches for shaping an
evolving new reality.

Earth is exquisitely configured to accommodate life abundantly. We have consistently
compromised, however, every vital component of its intricate fabric. This trend must be
reversed and a lasting balance restored.

The ultimate objective of establishing the concept of sustainability as an organizing principle
is to foster a well-functioning alignment between individuals, society, the economy and the
regenerative capacity of the planets life-supporting ecosystems. This alignment represents
a particular type of balance in the interaction between a population and the carrying
capacity of its environment. It is this specific balance which must be the focus of a
meaningful definition of sustainability.

The currently prevailing definition of sustainability emphasizes cross generational equity,
clearly an important concept but one which poses difficulties since it is not always easy to
determine future generations needs. Anchoring an alternative definition to the relationship
between a population and the carrying capacity of its environment offers superior
operational leverage since it contains a number of key variables, all potentially measurable.


For example: population numbers, rate of consumption of resources, impacts on absorption
capacity of sinks, a measure of well-being, and the like.
Hence, in general, but more importantly in the specific context of human activity on the
planet, the following is offered:
Sustainability: A dynamic equilibrium in the processes of interaction
between a population and the carrying capacity of an environment
such, that the population develops to express its full potential
without adversely and irreversibly affecting the carrying capacity of
the environment upon which it depends.




The principles which follow are grounded in this definition, and the five domains in relation
to which they are expressed represent key dimensions of the underlying interaction.

The Five Core Principles






I. The Material Domain

Underlying Premise:
All the physical processes which provide the basis for human existence are subject to the
primary laws of thermodynamics -- the First Law, which addresses the fundamental
conservation of energy in universe and the Second Law, which stipulates the direction of
energy events.These laws prescribe the ultimate limits of possibilities in physical systems
and, therefore, underlie the productive potential in the use of resources.

The Second Law underscores the ultimate increase of entropy and disorderliness in all
physical systems. At the same time, even inorganic, but in particular life processes and
consciousness, are able to create, maintain and increase order, seemingly, at least
temporarily. Such order is manifest in both individual and complex networks of specific
embodiments: molecules, organisms or eco-systems.

Consciously disciplined intelligence, applied to the design of universally advantageous
configurations of energy and matter -- arranging and rearranging components of the
physical domain -- provides the essential tool for creating the wealth infrastructure required
to ensure lasting abundance. Contrary to the potential immanent in aware, superior design
for creating order and delaying the proliferation of entropy, our current industrial
infrastructure is wasteful, destructive, fragmented and grossly inefficient. With the
appropriate intention, it could be reinvented, redesigned and reconfigured to deliver and
enhance an enduring, regenerative advantage for all.




Policy and Operational Implications:
Strive for highest resource productivity
Amplify performance with each cycle of use
Employ income rather than capital sources and continuously recycle non-regenerative
resources
Affect an unbroken, closed-loop flow of matter and energy in a planetary productive
infrastructure conceived as a whole
Control leakages and avoid stagnation, misplaced concentrations or random diffusion of
chemical elements during cycles of use
Establish a service, performance leasing orientation for managing durable goods




II. The Economic Domain

Underlying Premise:
Economies consist of markets where transactions occur and guiding frameworks by which
transactions are evaluated and decisions about commitments are made. Often treated as
though they reflect an independent, objective reality, such frameworks ultimately represent
human constructs, rooted in values, biases and dominant interests and concerns. These
latter factors determine adoption of the underlying economic perspective: short term,
narrow, linear focus, or long term, comprehensive, eco-sensitive cycles of return.



The accounting framework used at present to guide our economy grossly distorts values. It
systematically ignores important cost-components, for example, depletion and pollution.
Economists are beginning to reflect on the inadequacies inherent in the narrow concept of
growth that dominates measurement of national economies, and some even highlight the
basic absurdity of counting consumption as if it were income, a common practice in the way
we treat natural resources.

Inadequate measurements, with regulations and subsidies which often accompany them,
drive markets and continue to fuel the destructive effects of the economy as a whole. The
prevailing conventions of our accounting framework exacerbate such effects and limit the
scope of individual initiatives seeking better practices. This self-reinforcing pattern is clearly
one key dimension requiring radical change.



Policy and Operational Implications:
Employ a comprehensive concept of wealth related to the simultaneous enhancement of five
key forms of capital: Natural, Human, Social, Manufactured and Financial
Align the worlds economy with natures regeneration capacity and incorporate critical
externalities in all cost and benefit accounts
Embody a measure of well-being and human development in economic calculations
Design regulation and taxation policies to accentuate desirable and eliminate adverse
outcomes, optimizing the whole
Rely on transparent market mechanisms, calibrated to reflect true costs, for allocation of
capital assets






III. The Domain of Life

Underlying Premise:
The adaptive success of the human species and its quick propagation almost everywhere on
planet earth comes at the continuous expense of many other forms of life. The destruction
of individual animals, species, habitats and whole ecosystems, a trend now reaching
ominous proportions, is a deep cause for concern.

Complex, self-organizing, living systems: brains, societies, ecosystems -- rainforests, coral
reef communities, and industrial economies alike --depend on their very complexity, their
internal variety, for long term viability. Lasting stability in all such systems is in fact,
science tells us, a direct function of complexity, of inherent redundancy which allows for
emergence and re-emergence of different configurations in response to changing underlying
events. Monocultures are brittle in principle, the antithesis, in this context, of vibrant life.

On this point contemporary science seems to be joining with many of the worlds ancient
traditions which insist on the uniqueness and fundamental sacredness of all forms of life.

Policy and Operational Implications:
Assume a responsible stewardship for our planets web of biological diversity
Harvest species only to regeneration capacity
Conserve the variety of existing gene pool
Shape land use patterns to reduce human encroachment on other forms of life and enhance
biological diversity in areas of human habitat





IV. The Social Domain

Underlying Premise:
Work of early 20th century scientists, mathematicians, and philosophers of science brought
to the fore the fundamental fallibility of human knowledge. This suggests that, in a true
ecological fashion,myriad expressions and species of truth should be allowed to coexist
without any particular one seeking to aggressively dominate others.

Societies, like ecologies, depend on diversity and internal redundancy for robustness, long
term viability and health. This alone underscores the importance of encouraging variety and
plurality in social forms. At the same time, modern genetics and the sequencing of the
human genome indicate that the underlying genetic differences between the many ethnic
groups on the planet are insignificantly small, rendering arguments for an inherent
superiority, of any group, baseless.

All these thoughts reinforce the still fragile idea that open processes, responsive structures,
plurality of expression, and the equality of all individuals ought to constitute the corner-
stones of social life. As we enter the twenty first century, however, society continues to
operate predominantly by the worn-out assumptions, concepts and structures of yesterday.


Policy and Operational Implications:
Foster Tolerance as a cornerstone of social interactions


Enshrine Universal Rights within a framework of planetary citizenship
Provide for Inclusion and effective Democracy in governance
Ensure Equitable Access to life nurturing resources
Establish Cooperation as a basis for managing global issues and planetary commons
Outlaw War and Trade in weapon technologies
Promote sustainability literacy through education at all levels
Embody Sustainability Enhancing Concepts in an effective planetary framework of legislation



V. The Spiritual Domain

Underlying Premise:
The human spirit has consistently sought to transcend material, biological, physiological,
psychological, and technology limitations. This constant drive for touching a beyond, for
taking progressively more into the field of vision and integrating an increasingly broader
reality has a huge practical significance. With its intuitive reach for wholeness and
completion, it fuels the development and evolution of individuals and societies alike.

The extent to which this deeply rooted drive is actually allowed to manifest in the daily
affairs of society, affects the choices we make and the quality of our actions in the world.
Ultimately, it underscores the difference between a greedy, ego-centric, predatory
orientation and a nurturing, self-restrained, inclusive approach which honors the larger
system of which we are a part and on which we depend for our very existence.

The essential quality of the spiritual domain, recognized, as it is, by all known wisdom
traditions, is not easy to pin down. In the English language, the term spiritual carries
opposing connotations: sacred, exalted, virtuous, divine, but also, insubstantial and occult.
It is meant here to evoke a sense of a deep, underlying essence -- a combination of
inspiration, meaning, purpose, and a motivating, all encompassing value. The fundamental


imprecision which is involved is manifest in the more elaborate way in which the fifth
principle is expressed.



Policy and Operational Implications:
Acknowledge the transcendent mystery that underlies existence
Seek to understand and fulfill humanitys unique function in the Universe
Honor the Earth with its intricate ecology of which humans are an integral part
Foster compassion and an inclusive, comprehensive perspective in the underlying intention,
motivation and actual implementation of human endeavors
Link inner transformation of individuals to transformations in the social collective, laying
foundations for emergence of a new planetary consciousness

The Five Principles as an Integrated Whole

Deeper reflection on the concept of sustainability and the five core principles which together
prescribe it reveals that the spiritual dimension, the spiritual principle, is fundamental to the
quality and coherence of the whole. It is rarely incorporated, however, in the conventional
calculus of practical affairs.

As a guiding principle, the spiritual dimension does not carry the connotation of
conventional religion. Rather, it evokes the soul-focused integration of mind and heart in
realization of the essential oneness at the center of being.
By anchoring the essence of human motivation and intention, the spiritual principle acts as
the causal root which sets the tone for the whole. It drives the integration of the other four
principles, those related to the material, economic, life, and social domains. If integrated in
a balanced way, it can infuse a common purpose, provide a common foundation, and
stimulate common resolve. Lacking the ethical commitment implied by the spiritual
principle, considerations of questions related to the four other domains, no matter how


elaborately expressed, are reduced to mere technicalities.

By their very nature language, logic and action force separation, discrimination and choice.
A balanced and full integration of all five principles is essential, however, for conceptualizing
and realizing sustainability as a state. The whole set has to be integrated into a single unity
in which the five principles come together as one.

The five domains underlying the principles interact and co-define one another and, as in a
holographic image, each embodies the whole general scheme in its own sphere. When the
principles are thus integrated and seamlessly inform choices and actions, a state of
sustainability, which otherwise appears as a difficult, distant goal, can be realized
spontaneously and completely.

7. Sustainabilitys Three Responsibilities

Environmental Responsibility
explore environment
sustainable living
sustainable products
smart development
efficient operations
Environmental sustainability involves making decisions and taking action that are in the interests of
protecting the natural world, with particular emphasis on preserving the capability of the environment
to support human life. It is an important topic at the present time, as people are realising the full
impact that businesses and individuals can have on the environment.

Environmental sustainability is about making responsible decisions that will reduce your business'
negative impact on the environment. It is not simply about reducing the amount of waste you produce
or using less energy, but is concerned with developing processes that will lead to businesses becoming
completely sustainable in the future.
Currently, environmental sustainability is a topical issue that receives plenty of attention from the
media and from different governmental departments. This is a result of the amount of research going
into assessing the impact that human activity can have on the environment. Although the long term
implications of this serious issue are not yet fully understood, it is generally agreed that the risk is
high enough to merit an immediate response. Businesses are expected to lead in the area of
environmental sustainability as they are considered to be the biggest contributors and are also in a
position where they can make a significant difference.
Businesses can potentially cause damage to all areas of the environment. Some of the common
environmental concerns include:


damaging rainforests and woodlands through logging and agricultural clearing
polluting and over-fishing of oceans, rivers and lakes
polluting the atmosphere through the burning of fossil fuels
damaging prime agricultural and cultivated land through the use of unsustainable farming practices
For much of the past, most businesses have acted with little regard or concern for the negative impact
they have on the environment. Many large and small organisations are guilty of significantly polluting
the environment and engaging in practices that are simply not sustainable. However, there are now an
increasing number of businesses that are committed to reducing their damaging impact and even
working towards having a positive influence on environmental sustainability.
Environmental sustainability forces businesses to look beyond making short term gains and look at the
long term impact they are having on the natural world. You need to consider not only the immediate
impact your actions have on the environment, but the long term implications as well. For example,
when manufacturing a product, you need to look at the environmental impact of the products entire
lifecycle, from development to disposal before finalising your designs.
Establishing a business case is an important step in assessing the viability of environmentally
sustainable practices. If there was no business case behind operating an organisation in an
environmentally sustainable way, then it simply would not be practical to expect businesses to
consider it as an option.
Fortunately, there are a number of points that strongly support the business case for environmental
sustainability. The first point to consider is the fact that moving towards environmentally sustainable
practices presents few or no risks to business operations. If a business acts now and environmental
sustainability continues to become an increasingly important and heavily regulated issue (as it is likely
to do), you will have a head start over many of your competitors. Besides some initial outlay involved
in moving towards environmental sustainability, there are not likely to be any long term negative
impacts or expenses incurred.
However, if you fail to act now and environmental sustainability
becomes more heavily regulated by governments, there could be significant costs involved. For
example, regulators may begin charging businesses based on their negative impact on the
environment, leaving you to play catch up and incurring expenses in the process. There may also be
incentives schemes introduced that will benefit businesses that operate at better than the minimum
standards in relation to environmental sustainability, providing businesses that are sustainable with a
clear advantage.
Another key point in the business case for environmental sustainability is the potential to reduce your
expenses in the medium to long term. For example, making your business more energy efficient will
save you a significant amount on energy costs and help you to improve your bottom line. Performing a
cost-benefit analysis will allow you to compare the benefits of environmentally sustainable practices
with the total cost of implementation.
Environmentally sustainable businesses may also have a competitive edge when it comes to attracting
customers and investors. Modern consumers are aware of social and environmental issues and keep
themselves informed about which businesses are acting responsibly in the community. Investors are
equally aware of these issues and there is a trend developing towards investing in environmentally
sustainable companies.
Most importantly in considering the business case for environmental sustainability is the point that it
doesn't negatively impact on a business' ability to generate a profit. In fact, in the long term it is
considered to actually improve profitability through the reduction of expenses and increased
competitiveness.
All of these factors suggest that there is a business case for environmental sustainability. Each point
can be capitalised on to generate returns and improve the bottom line in your organisation. As more


and more businesses implement environmentally sustainable processes into their operations, you put
yourself at risk of being left behind if you don't actively get involved wherever you can.

Environmental Sustainability
"Microsoft is working with our partners, customers, governments, and
leading environmental organizations to bring the power of information
technology and cloud computing to address the world's environmental
challenges." - Rob Bernard, Chief Environmental Strategist
Technology can help create a more sustainable future. Microsoft is pioneering new ways technology can
help us make our own operations leaner and more energy efficient. Were also working with customers,
governments and others around the world to help them apply our products and services to solving some
of the worlds toughest environmental challenges.
Recognizing that environmental leadership begins at home, weve instituted a carbon fee to help us
achieve our carbon neutrality commitment by making environmental sustainability part of everyday
business decisions. We also continue to work to reduce the environmental impact of our products and
services.
Please visit Microsoft Environment for comprehensive information on our environmental efforts including
the environmental profile of our products, how we're addressing our carbon footprint and other
environmental aspects of our operations, and ways we're working with partners and customers to apply
technology solutions to environmental challenges.
Microsoft environmental principles
Microsoft follows strict policies to ensure that the company remains in full compliance with international
environmental regulations and the specific environmental requirements of each country/region where we
do business. Microsoft actively works to protect our natural resources by doing the following:
Conserving, reusing, and recycling. When it is feasible, Microsoft conserves natural resources by using
recycled materials and supplies, efficiently using energy, and participating in recycling programs for
Microsoft products after they have served their useful life. Microsoft encourages and supports the
sustainable use of renewable natural resources.
Reducing and disposing of waste. Microsoft reduces and where possible eliminates waste through source
reduction and recycling at company facilities. All waste is safely and responsibly handled and disposed of.
Developing safe and sustainable products. Microsoft develops, manufactures, and markets products that
are safe for their intended use. Our environmental policies and practices aim to protect, conserve, and
sustain the world's natural resources and also protect Microsoft customers and the communities where we
live and operate.
Making environmental stewardship part of our business relationships. At Microsoft, we strive to
incorporate our environmental principles into our business relationships. We seek similar commitments to
the environment from our major suppliers. We participate in industry groups to set industry standards on


environmental practices. We strive to keep our customers informed about our efforts, and we welcome
their feedback.
Continually improving our performance. We set objectives and targets to ensure continuous improvement
in our environmental performance. Microsoft values employee contributions to our environmental
initiatives. We regularly review our business activity and assess our environmental programs, practices,
and goals to evaluate progress and identify areas in which we can make further improvement.
Demonstrating responsibility to our stakeholders. We engage our stakeholders about our objectives and
targets, and we periodically communicate our progress to the board of directors, shareholders, customers,
and members of the public.



Economic & Social Responsibility 4 sustainability

The economic responsibility of a business is to create value.Employment generation is incidental to
the process of creating value. A firm creates value by ensuring sustainability of business.
Sustainability of firm cannot be the economic responsibility of a firm. In a free market, sustainability
of firm benefits only the managers, if it is achieved through unrelated diversification, which is a type
of entrenchment.
Managers use the cash flows from existing business to invest in new businesses, which might not
have synergy with the existing business. The closure of a firm might result in a loss to a group of
stakeholders, but at the macro level no loss is caused to the society. However, in practice, managers
pursue the objective of sustainability of the firm.
Take the example of ITC. It is investing in businesses that do not have close synergy with the
traditional tobacco business. Had it returned the cash to shareholders, they could have invested the
same in businesses in which ITC has diversified. Therefore, the strategy to diversify has not made
shareholders better off than the strategy to return the excess cash to them. It might have made
them worse off because some of new businesses are yet to build the strength to compete with
leaders in those segments. But, it has definitely benefited the managers. The silver lining is that ITC
is a very well-managed company.
Sustainability of business is essential for creating value. A business creates value only when it is
sustainable and generates cash flows over a long period of time. Competition disciplines firms and
compels them to provide goods and services skillfully and cheaply. In a competitive environment,
sustainability of business requires continuous renewal and innovation. Renewal and innovation
benefit the consumers with better and cheaper products and services. A firm that focuses too much
on profitability often loses sight of the core economic responsibility of creating value.
The value that business creates is shared between those who participate in creating value based on
their relative bargaining powers.


For example, customers, suppliers of inputs and employees share the value based on their relative
bargaining powers. The value that remains goes to investors. Regulations protect the interest of
those who have weak bargaining power. Minimum wages to workers and regulation of tariff in an
oligopolistic competitive environment, where the market is dominated by a small number of players,
are examples of government intervention in enhancing the bargaining power of employees and
customers.
How the value should be distributed to those groups that do not participate directly in creating
value? For example, families which get displaced due to transfer of land to firms, contribute,
although indirectly, in creating value.
Therefore, logically, they should have a share in the value that the firm expects to create in future.
How much of the estimated value that the business will create should be allocated to them? This is a
tricky question and depends on judgement and it cannot be firm-specific.
The current market value of the land reflects the cost of investment. Therefore, their share in the
value that the firm will create in future should be built in the compensation payable to land losers.
Issue of firms shares might not help because the gestation period is usually long and also because
they do not have the risk-taking capacity. Their share in value is determined by their bargaining
power.
Resettlement and Rehabilitation policy of the government and voluntary organisations provide
bargaining power to displaced families. A firm should never invest in a project that is unviable even
if it is due to reasonable compensation under R&R policy. Only if social benefits are expected to be
significant, a part of the cost of compensation should be borne by the government. Low
compensation should be seen as expropriation of wealth.
Should those who do not participate in value creation get a share in the value? Here comes the
social responsibility. No firm will share the value with them unless it makes a business case. As a
social responsibility, firms invest in building a healthy society and in providing skills under the
banner of CSR. CSR is a business case as it makes the inequality, which is concomitant of high
economic growth, tolerable. Moreover, it develops the healthy and skilled manpower that are
necessary for the growth of the business. Firms that focus on short-term profit making do not see
benefits from CSR. Perhaps, for this reason, the government felt the need to incorporate CSR
provisions in the Companies Bill 2012.Another social responsibility of business is not to adversely
affect the quality of living of marginalised groups of the society or to deprive any individual from
core human rights.
Indian firms have moved forward a few steps to fulfill environmental responsibilities but are yet to
internalise social responsibilities. Let us hope that scenario will change fast.




IntIntegrating corporate responsibility and sustainable
development:
egrating Sustainability And Corporate
Social Responsibility Into Strategy
Addressing Sustainability and Corporate Social Responsibility (CSR) challenges and transforming them into
opportunities for value creation is part of the DNA of tomorrows successful companies.
The Institute of Ethics experts have contributed to the drafting of the new ISO 26000 standard for Social Responsibility.
The Institute promotes the development of an integrated management framework. Its goal is to assist in the process
of integrating CSR and sustainability in traditional business management systems and processes (de Colle &
Gonella, International Journal of Business Performance Management, 2003). This integrated management framework seeks
to create a balance between the different elements of internally focused CSR approaches (based on business
ethics initiatives, such as codes of ethics, ethical training etc.) and the elements of externally focused CSR
approaches (based on social accountability initiatives, e.g. social reporting, stakeholder engagement, etc.).
To adopt a balanced approach, companies should consider introducing the following actions into their management
systems:
Defining the mission and values of their company
Identifying key stakeholders
Defining responsibilities towards stakeholders (code of ethics)
Engaging with various stakeholders
Analysing social, ethical and environmental risks
Introducing awareness-raising ethics training
Communicating with employees
Designing an ethics infrastructure (policies and standards of conduct)
Monitoring the compliance with this infrastructure
Publishing a report (accountability)
Seeking assurance (internal and external)
Reviewing the process
Learning and innovating.
The Institute of Ethics offers advice to managers on how to integrate core CSR and sustainability values e.g.
respect for human dignity, fair cooperation, stakeholder responsibility, accountability to future generations, etc. into
their companys strategy and management systems to create socially, ethically and financially successful companies.
We call this enrichment of mainstream business models Stakeholder Capitalism (Freeman et al., 2010), as it guides
managers to focus their attention on the real source of value creation: coordinating the jointness of stakeholder
interests.