Last week I spent some time at the University of Algarve in Faro (Portugal). It was a Conference on Sustainable Innovation, and the presentations were most interesting. It was my first visit to Portugal in over five years, and I was most interested in two aspects – the current economic situation; and the Innovation atmosphere in the country.
One of the presentation dealt with the spin-off activity of the university research results. It was most interesting to compare the roles of the Technology Transfer unit in Portugal with that of a Technology Transfer Company in Israel. The unit in Portugal has to run a competition in order to stimulate ideas and to find ideas or technologies to be commercialized. It than trains the entrepreneurs and helps them raise the funds, hosts them (for a fee) and when ready lunches them into the world. The unit does not hold equity in the firms. Of course such close mentoring means that the number of firms that can be taken care off is limited.
The Israeli TTC gets the ideas reported by the scientists in the university, it has to filter them, if ready for spinning, than it recruits a team leader, let him raise the funds or helps the team get into a technology incubator. The TTC will hold equity, an if possible also license the technology to the firm it span-off. Theoretically the TTC can Spin-off as many firms as there are ideas.
Why do the two entities follow different models? The obvious answer has two parts: on the one hand the natural tendency to seek commercialization of research results or of ideas is probably higher in Israel; on the other hand the infrastructure is more diversified, the technology incubators, the VC sector and other assisting tools are more prevalent in Israel allowing the TTC to focus on its main function.
The natural tendency is misleading, it is only partly natural. A major part of it lies in the local culture and education. Encouraging individualism, free thinking and non conservative solutions has been dominant in Israeli culture. Admiring the ability to improvise rather than plan, to give all you have to reach a goal is a basic characteristic of the culture. Portugal has stressed conformism and order, accuracy and planning.
If one goes back in time to the late 1980's, Israel was not much different. Small number of entrepreneurs, little supportive infrastructure etc., that means that the transformation of the Portuguese current situation to one more resembling Israel's can be achieved. How?
I would suggest the following:
It is important to recall that creating an infrastructure requires enough potential projects in the pipeline otherwise a sense of misfit is felt, which could lead to negative results. If you create a 100 venture capital funds that will not have enough projects, the failure to return the investment would assure that it would take a long time for the venture capital market to recover. Therefore there is no need to copy entire systems but rather let them evolve. First create the demand, educate for innovation, encourage project creation, than invite the assistive "tools" or build them according to demand.
What type of education? How can it be done?
For that in the next post…….
Showing posts with label innovation. Show all posts
Showing posts with label innovation. Show all posts
Thursday, January 27, 2011
Monday, September 13, 2010
Regional Development - inter region cooperation
Yesterday I had the honor to participate in the signatory ceremony of twin regions between the region of Emeq-Hefer (where I am a council member) and the Heilongjiang province in China. The agreement is the first step towards increased cooperation between the two regions.
All that is very nice, and creates a lot of good will - especially if there are mission exchanged between the regions and people get to travel. But in the practical world we live in what does it really mean?
In the regional level there is little significance, there are donations, links between institutes and some missions, political, educational and others. But what more can you expect when the regional level of government is limited in scope of action, budget and legal powers to act?
Can there really be a significant advantage created by cooperation between regions?
The EU seems to think so, but seems to think that such cooperation needs encouragement - and it does so financially. The EU concept is based on the fact that beyond trading between regions, there are practical lessons regions can learn from each other and that the cooperation can lead to improvement, economically in both participating regions.
The basis is to find the means for cooperation that will allow the relatively small and entrepreneurial region on one side to learn and teach from the larger bigger region, which operates on a different scale. The key would seem to be intensive and continuous communication between the two regions - a committee to identify the areas for cooperation, allocate the means and plan ahead. Topics for cooperation change with time therefore only lasting communication can provide for real cooperation with time.Although distance may seem as a problem - once personal acquaintance has been established the daily communication can be done electronically.
All that is very nice, and creates a lot of good will - especially if there are mission exchanged between the regions and people get to travel. But in the practical world we live in what does it really mean?
In the regional level there is little significance, there are donations, links between institutes and some missions, political, educational and others. But what more can you expect when the regional level of government is limited in scope of action, budget and legal powers to act?
Can there really be a significant advantage created by cooperation between regions?
The EU seems to think so, but seems to think that such cooperation needs encouragement - and it does so financially. The EU concept is based on the fact that beyond trading between regions, there are practical lessons regions can learn from each other and that the cooperation can lead to improvement, economically in both participating regions.
The basis is to find the means for cooperation that will allow the relatively small and entrepreneurial region on one side to learn and teach from the larger bigger region, which operates on a different scale. The key would seem to be intensive and continuous communication between the two regions - a committee to identify the areas for cooperation, allocate the means and plan ahead. Topics for cooperation change with time therefore only lasting communication can provide for real cooperation with time.Although distance may seem as a problem - once personal acquaintance has been established the daily communication can be done electronically.
Saturday, August 28, 2010
After the age of VC
Recent developments in the VC sector in general and in Israel in particular are not encouraging. The sector in Israel that once boasted its ability to raise funds and to have enough start-up companies in Israel to invest the funds in is suffering from difficulties in both areas.
The slow-down and other factors have contributed to reducing IPOs and mergers, or otherwise capitalizing on the investments for VCs, and in most cases required longer to reach the capitalizing moment. That in time reduce the rate of return on investment for the VC investors.
The lack of success in showing high enough returns on investments combined with reduced numbers of start-ups, and at the same time, global slowdown in economy, reducing available funds, have hurt the VC sector in the US some and in Israel much more. And Israel is the focus here in this blog.
The open questions is: What will happen to start-ups next?
Some funds will probably survive and continue to invest and raise funds. These will probably be the more successful funds with an impressive track record. For the most start-ups the options will probably be one of the following two:
1- Start-ups requiring small investments to reach the market would continue to find such investments locally, and would probably find the government aid tools very supportive.
2 - Start-ups requiring large investments would face greater problems. Angels would find it difficult to invest in such firms knowing they would be ousted and could probably show very little for their investment. It is probable that ideas requiring large investments would emigrate to places where they could find such investment, resulting in lost employment opportunities for the Israeli market, as well as brain drain to such places.
Another potential solution would be the re-occurrence or raise in fame of the Bootstrap. That option, of a new firm living of its revenues and growing slower than start-ups, but better fitted for the market, would probably become more popular. These firms could probably raise funds for growth based on debt and market performance and show good return on investment. They would be able to substantiate their presence in the local market and increase employment possibilities locally.
When will all that happen? As we say here, after the holidays.. but which holidays?
The slow-down and other factors have contributed to reducing IPOs and mergers, or otherwise capitalizing on the investments for VCs, and in most cases required longer to reach the capitalizing moment. That in time reduce the rate of return on investment for the VC investors.
The lack of success in showing high enough returns on investments combined with reduced numbers of start-ups, and at the same time, global slowdown in economy, reducing available funds, have hurt the VC sector in the US some and in Israel much more. And Israel is the focus here in this blog.
The open questions is: What will happen to start-ups next?
Some funds will probably survive and continue to invest and raise funds. These will probably be the more successful funds with an impressive track record. For the most start-ups the options will probably be one of the following two:
1- Start-ups requiring small investments to reach the market would continue to find such investments locally, and would probably find the government aid tools very supportive.
2 - Start-ups requiring large investments would face greater problems. Angels would find it difficult to invest in such firms knowing they would be ousted and could probably show very little for their investment. It is probable that ideas requiring large investments would emigrate to places where they could find such investment, resulting in lost employment opportunities for the Israeli market, as well as brain drain to such places.
Another potential solution would be the re-occurrence or raise in fame of the Bootstrap. That option, of a new firm living of its revenues and growing slower than start-ups, but better fitted for the market, would probably become more popular. These firms could probably raise funds for growth based on debt and market performance and show good return on investment. They would be able to substantiate their presence in the local market and increase employment possibilities locally.
When will all that happen? As we say here, after the holidays.. but which holidays?
Friday, July 30, 2010
Which came first Technology or market demand?
Before you rush forward with the answer, or get annoyed, this is more than just a philosophical question. When you start learning marketing or economics you learn about demand and supply, you learn to draw the curves and to fix a price. Of course for marketing, once there is a demand in the market, the rest is a long solved problem on how to respond. So if your answer if that the demand came before the supply, than at least in the classical world of marketing, you know how to proceed.
But, I can hear some of you asking, about those few cases in which the technology preceded the demand, the internet and its environment are such cases, there were many services / products that did not exist before and demand did not exist.
So it would seem that the right answer to the question above would be "YES". While you think about that I would like to mention a small joke that anyone learning marketing in Israel must have heard at one point at least (could be just an Urban legend): in the 1950's a shoe factory in a kibbutz sent two salesmen to Africa one to east Africa and one to the western parts, to assess the marketing potential of the factory. The first evening the first salesman calls the factory and says:"There is nothing here for us, everybody is walking barefoot, I return tomorrow". Before they can get their balance back, the other one calls and says:" start working in three shifts, the market is enormous, everyone here is barefoot". The story as I know it stops here.
The first salesman is the case of missing demand, even if the technology / product exists. It requires educating the market into creating the demand. This can often be lengthy and expensive, and as a result of that - risky.
While the risk may be acceptable to a large firm, for an SME, or a start-up it could be dangerous. The firm may spend its limited resources and die before the market is created, or may create the market just to have a larger firm exploit it.
In Israel where many of the start-ups are technology based, this is a very risky point. There are many firms starting with a wonderful technology, but with little market demand, and what is "obviously a great idea" to the technology people is often not so clear to the customers in the market. These are the great technologies that fail, not due to lack of ideas, or capabilities, but due to better understanding the technology than the market.
If one recalls the High-Tech crisis that occurred when the 3rd generation of communication failed to be accepted by customers, not because it was not good, or not impressive, it was just that the market was not used to such rapid technology changes. It was necessary to make people understand that they wanted / needed the new capabilities before they were ready to make the change.
Great technology is not all - a great market can be.
But, I can hear some of you asking, about those few cases in which the technology preceded the demand, the internet and its environment are such cases, there were many services / products that did not exist before and demand did not exist.
So it would seem that the right answer to the question above would be "YES". While you think about that I would like to mention a small joke that anyone learning marketing in Israel must have heard at one point at least (could be just an Urban legend): in the 1950's a shoe factory in a kibbutz sent two salesmen to Africa one to east Africa and one to the western parts, to assess the marketing potential of the factory. The first evening the first salesman calls the factory and says:"There is nothing here for us, everybody is walking barefoot, I return tomorrow". Before they can get their balance back, the other one calls and says:" start working in three shifts, the market is enormous, everyone here is barefoot". The story as I know it stops here.
The first salesman is the case of missing demand, even if the technology / product exists. It requires educating the market into creating the demand. This can often be lengthy and expensive, and as a result of that - risky.
While the risk may be acceptable to a large firm, for an SME, or a start-up it could be dangerous. The firm may spend its limited resources and die before the market is created, or may create the market just to have a larger firm exploit it.
In Israel where many of the start-ups are technology based, this is a very risky point. There are many firms starting with a wonderful technology, but with little market demand, and what is "obviously a great idea" to the technology people is often not so clear to the customers in the market. These are the great technologies that fail, not due to lack of ideas, or capabilities, but due to better understanding the technology than the market.
If one recalls the High-Tech crisis that occurred when the 3rd generation of communication failed to be accepted by customers, not because it was not good, or not impressive, it was just that the market was not used to such rapid technology changes. It was necessary to make people understand that they wanted / needed the new capabilities before they were ready to make the change.
Great technology is not all - a great market can be.
Thursday, July 15, 2010
Taking your kids to work - The great Summer Opportunity
The Summer is here - a point very difficult to ignore in Israel, and many parents are facing the problem of what to do with their kids during the Summer. There are Summer schools and other possibilities such as vacation with the family, but they rarely cover the entire vacation period.
So at some point the bright idea - "why not take them to work ?" pops up.
Some places do not allow children, they claim that it is due to the fact that having the children come to work reduces productivity and may be disruptive. Unless it is a question of safety, I think the real reason is the wish to avoid being embarrassed by having them see something like that::
By the way, do not be surprised if in today's world when you come home and tell at dinner that you had a real big fight at work that they think it went something like this:
Getting back to our discussion, the big question is:"can you get something out of their visit?" that is in addition to spending time with the younger members of the family - that is to say that this post is just as rlevant for grandparents as to parents.
In a recent post Prof. Shlomo Maital mentioned that the point of view, innocent outlook and lack of filters regarding asking questions that children have can help innovators with promoting their innovations. I claim here that not only entrepreneurs, or grand innovators can benefit from that but rather every business with open enough attitude.
In many veteran organizations, routines have developed, and due to embedded inertia have not been reviewed and updated according to needs and new technology. Many of the currently employed routines are no longer efficient, but we are used to them and do not review them daily. It is at that specific point, that when you explain to a child what you do, that their questions may help you see that some things need and can be changed / improved. If they see that A sends a request to B for something that C has to do, they will ask why not just ask C? In the past that routine had a reason, but that reason is long gone - the cycle can be made more efficient. The maximum risk is that you just practice explaining what you do (always good), and might get some funny insights regarding your work, the best scenario is to you learn something that can be improved.
While this is general, and might have always been true, there is a more current benefit to consider. Most of us are not computer native (e.g. me), that is to say, have been borne into a computerized environment, but rather have learnt to work in a computerized environment as these evolved in the 1990's and 2000's. I would dare say that none of the workers at your place are web natives (these are too young to be workers - if you do have any of those please check your employment policy). Our kids are web native, for them processes that can be done by computer, or better by web and are not being done seem strange and they will ask you why? This could be your opportunity to see how your work is seen by a web native - you many never see it the same again.
Many organizations spend a lot of money on organization consultants, where some preliminary checks can actually be done by having the kids over to work and explaining to them what it is we do. At minimum they will understand us better (a great value just by itself), but at maximum we could get a free consultant (not really free I know - have kids of my own) over view our workplace.
Going back to the point above regarding safety at work, if you think we cannot learn from them there please see the small movie below:
One interesting point that I noticed bringing my kids to work a few years ago, is that they analyze the "chain of command" very astutely, ignoring completely titles on the door. They see who tells what to do, who needs to ask permission and for what, they look at the real "chain of command" and not the official one.
Wishing you a happy warm Summer
So at some point the bright idea - "why not take them to work ?" pops up.
Some places do not allow children, they claim that it is due to the fact that having the children come to work reduces productivity and may be disruptive. Unless it is a question of safety, I think the real reason is the wish to avoid being embarrassed by having them see something like that::
By the way, do not be surprised if in today's world when you come home and tell at dinner that you had a real big fight at work that they think it went something like this:
Getting back to our discussion, the big question is:"can you get something out of their visit?" that is in addition to spending time with the younger members of the family - that is to say that this post is just as rlevant for grandparents as to parents.
In a recent post Prof. Shlomo Maital mentioned that the point of view, innocent outlook and lack of filters regarding asking questions that children have can help innovators with promoting their innovations. I claim here that not only entrepreneurs, or grand innovators can benefit from that but rather every business with open enough attitude.
In many veteran organizations, routines have developed, and due to embedded inertia have not been reviewed and updated according to needs and new technology. Many of the currently employed routines are no longer efficient, but we are used to them and do not review them daily. It is at that specific point, that when you explain to a child what you do, that their questions may help you see that some things need and can be changed / improved. If they see that A sends a request to B for something that C has to do, they will ask why not just ask C? In the past that routine had a reason, but that reason is long gone - the cycle can be made more efficient. The maximum risk is that you just practice explaining what you do (always good), and might get some funny insights regarding your work, the best scenario is to you learn something that can be improved.
While this is general, and might have always been true, there is a more current benefit to consider. Most of us are not computer native (e.g. me), that is to say, have been borne into a computerized environment, but rather have learnt to work in a computerized environment as these evolved in the 1990's and 2000's. I would dare say that none of the workers at your place are web natives (these are too young to be workers - if you do have any of those please check your employment policy). Our kids are web native, for them processes that can be done by computer, or better by web and are not being done seem strange and they will ask you why? This could be your opportunity to see how your work is seen by a web native - you many never see it the same again.
Many organizations spend a lot of money on organization consultants, where some preliminary checks can actually be done by having the kids over to work and explaining to them what it is we do. At minimum they will understand us better (a great value just by itself), but at maximum we could get a free consultant (not really free I know - have kids of my own) over view our workplace.
Going back to the point above regarding safety at work, if you think we cannot learn from them there please see the small movie below:
One interesting point that I noticed bringing my kids to work a few years ago, is that they analyze the "chain of command" very astutely, ignoring completely titles on the door. They see who tells what to do, who needs to ask permission and for what, they look at the real "chain of command" and not the official one.
Wishing you a happy warm Summer
Sunday, July 4, 2010
Technology Incubators - a Sad Story
The Israeli Technology Incubator program which started in the early 1990 (first one was owned by the Technion - started in 1989) as a program initially intended to assist in absorbing the new immigrants from the former USSR, is considered a raw model, worthy of study and copying attempts by different countries. As mentioned in an earlier post there was a Finnish delegation here last month which was interested in checking and adapting the model for their needs. Together with the development of the VC market here the two formed two of the founding stones of the myth of Israel the entrepreneurial state, the homeland of innovation.
Recent set-backs to the VC market in Israel have exposed that founding stone of the myth, as a myth by itself. The fact that the VC in Israel could find investment was true enough, that they could make these investments pay-back enough to sustain the industry was not. More than that, it would seem that the damage the VC's and their strategy have done to the Israel economy could be fully understood only at a much later date. Their policy of sale to large multi-nationals that moved the core out side the country and negated the formation of an employment center has had a negative impact on the employment rate and growth, that only with time could be accurately estimated. The damage from VC and their capitalization or return on investment strategy can be seen in Prof. Maital's Lecture.
Recent publication regarding the Technology Incubators and their loan from the Ministry of Finance in 2003, seem to start peeling the myth from that founding stone as well.
In 2003, as it was decided that the incubators should be set to be financially independent. New agreements were made, the incubators' ownership changed hands in many cases and a new era began. Based on the change and a part of the agreement, was that Ministry of Finance fronted as a loan to the incubators over 80 million NIS. They were supposed to return the loan from the proceeds on the sales of their shares in the firms. These shares were the collateral for the loans. Now as according to publication less than 15 Million NIS have been returned so far, MoF which according to the agreement owns the shares, is considering its next move.
The original concept was, that in the post high-tech crisis the incubators would be set on a footing similar to that of VC's and that they could sustain their own operations based on the sale of their holdings. The market was estimated to be ready for such action. If the program worked, the government would be free from supporting the incubators, and could focus on supporting just the firms, and later on release more funds due to their income for investment in firms and projects.
While some may say that the market is at fault as it could not allow the sale of the firms held by the incubators generate enough income to sustain the incubators and more than that make them profitable enough to return the loans and become independent. My personal view is that the model is at fault. If the government is no longer looking at Technology Incubators as a means for absorbing technologically enhance immigration, but as a growth engine than the out look should change completely.
When I was CEO of a company in a Technology Incubator in the 1990's we managed to complete the development of a first generation of products and do some sample sales. While the sales were commencing only, we received from the Incubator's authority in the Chief Scientist a caution that if we start sales they would reduce our loan by the amount we raise by sales. So we labeled the sales we did as experimental sales and stopped, moving instead to the development of the second generation of products.
In the current state of affairs I think that firms in incubators should be encouraged to become economically independent asap, this should differentiate them from firms outside the incubator. It would allow them to generate income for the incubator, and perhaps also if sales are expected allow them to get better prices. It would also increase the chances of sustaining here the employment center.
While is seems that other countries envy us for our "achievements" in innovation, which seem to vanish with time, we could learn from our experience and try and make the legend come true.
Recent set-backs to the VC market in Israel have exposed that founding stone of the myth, as a myth by itself. The fact that the VC in Israel could find investment was true enough, that they could make these investments pay-back enough to sustain the industry was not. More than that, it would seem that the damage the VC's and their strategy have done to the Israel economy could be fully understood only at a much later date. Their policy of sale to large multi-nationals that moved the core out side the country and negated the formation of an employment center has had a negative impact on the employment rate and growth, that only with time could be accurately estimated. The damage from VC and their capitalization or return on investment strategy can be seen in Prof. Maital's Lecture.
Recent publication regarding the Technology Incubators and their loan from the Ministry of Finance in 2003, seem to start peeling the myth from that founding stone as well.
In 2003, as it was decided that the incubators should be set to be financially independent. New agreements were made, the incubators' ownership changed hands in many cases and a new era began. Based on the change and a part of the agreement, was that Ministry of Finance fronted as a loan to the incubators over 80 million NIS. They were supposed to return the loan from the proceeds on the sales of their shares in the firms. These shares were the collateral for the loans. Now as according to publication less than 15 Million NIS have been returned so far, MoF which according to the agreement owns the shares, is considering its next move.
The original concept was, that in the post high-tech crisis the incubators would be set on a footing similar to that of VC's and that they could sustain their own operations based on the sale of their holdings. The market was estimated to be ready for such action. If the program worked, the government would be free from supporting the incubators, and could focus on supporting just the firms, and later on release more funds due to their income for investment in firms and projects.
While some may say that the market is at fault as it could not allow the sale of the firms held by the incubators generate enough income to sustain the incubators and more than that make them profitable enough to return the loans and become independent. My personal view is that the model is at fault. If the government is no longer looking at Technology Incubators as a means for absorbing technologically enhance immigration, but as a growth engine than the out look should change completely.
When I was CEO of a company in a Technology Incubator in the 1990's we managed to complete the development of a first generation of products and do some sample sales. While the sales were commencing only, we received from the Incubator's authority in the Chief Scientist a caution that if we start sales they would reduce our loan by the amount we raise by sales. So we labeled the sales we did as experimental sales and stopped, moving instead to the development of the second generation of products.
In the current state of affairs I think that firms in incubators should be encouraged to become economically independent asap, this should differentiate them from firms outside the incubator. It would allow them to generate income for the incubator, and perhaps also if sales are expected allow them to get better prices. It would also increase the chances of sustaining here the employment center.
While is seems that other countries envy us for our "achievements" in innovation, which seem to vanish with time, we could learn from our experience and try and make the legend come true.
Friday, June 25, 2010
The Internet as a Marketing Tool - do we realy understand it?
The internet and especially the social networks in it, such as Facebook an others interest the commercial community. The use of social networks interests as a marketing tool for specified target market segments, with identified opinion leaders - the pipe dream of a marketing manager.
Consider a Facebook page of teenagers from a specific school living in a specific area demonstrating a cohesive market segment with similar socio-economic status, similar tastes and preferences and opinion leaders. By using the Facebook community and the opinion leaders, marketing of specially selected products can be done with amazing accuracy and higher efficiency than classical advertizing ever could before - a case of accelerated "word to mouth" combined with an expert opinion.
The situation mentioned above would make it seem as if this was a world of marketing managers. Acting wisely has its rewards. The social networks respond quickly, accurately and efficiently, and reaching the entire target population is fast and relatively easy. Spreading the news may be compared to a flash bulb going off - short and very bright.
But the success stories and big sales are mingled with ethical problems and even commercial problems and heavy damages. The social networks are as dangerous as they are promising success.
Nestle and Social Networks
If you want the story behind Nestle recent trouble in public relations you can find one version in the Guardian. The story is (according to CNET for example) that Nestle was attacked by Greenpeace for using oil from environmentally mismanaged plantations which resulted in the killing of orangutans. Greenpeace published a video to that effect. In an attempt to block it Nestle used its Facebook fans support page to assmbl enough support for u-tube to remove the video, under the claim that it violated copyrights. The fans were responding and some of them used modified logos of Nestle as their pictures in Facebook which the firms asked them to removed as it violated the firm's trademark rights.
That move started a negative response avalanche which the firm's responses, treating the issue as a legal problem while the fans regarded it a freedom of speech issue. According to the Guardian over 90,000 responders have signed in, most of them arguing with the firm.
The company Nestle made several mistakes, at first it supplied a stage among its supporters for Greenpeace to present its own case. Thus Nestle made sure that more people saw the video that Greenpeace could hope for. The company increased the damage the attack could do. The bigger mistake it made was of course to get into a direct, public fight in which Nestle seemed to be in the wrong with its own followers. Nestle came out from both claims as an anti free speech organization, inflexible and unfriendly.
It is easy to analyze the mistake in hindsight, but where did the firm actually go wrong?
It would seem that if 15 years ago a video was being aired (TV, Video, cinema etc.) and it approached the authorities with the claim that it infringed copyrights, it would probably have succeeded, and be held a serious firm standing for its rights. If at the time it found out that people were using the modified fir logo on stationary it would probably also find support for requesting that this be stopped. But we are in a new and different place today. In the world of social networks the rules are different, everything you say is seen by the whole world (potentially) and therefore must be reasonable or at least explained. Moreover, the world of social networks on the internet, does not like censorship of any kind, and is different than the business world. Nestle could have announced a contest regarding its logo to present the firms new commitment to the environment and harnessed the social networks public's creativity to its benefit, generate positive feeling towards the firm and move the focus away from the film. After all if no one is fighting the internet audiences move their attention to other topics. At least it would have forced Greenpeace to produce something new and work to earn the attention they wanted - not do their work for them.
What can be done?
One option of course is to ignore the social networks, but that option would leave the field to the competition which would be a big mistake. Could result in the firm ignoring the social networks, loosing huge market shares. Another option, which many firms seem to select as their course of action, is to enter the world of social networks, while assuming that it is similar to the world they know, only with a faster technology and better results. As the Nestle case shows this would be just as huge a mistake. Another option, requiring a lot of work, would be to enter the world of social networks on the internet, while learning the rules of the new world, employing people who understand it to operate the activity for the firm. One must bear in mind that this is not just a new technology this is a world with new rules.
Consider a Facebook page of teenagers from a specific school living in a specific area demonstrating a cohesive market segment with similar socio-economic status, similar tastes and preferences and opinion leaders. By using the Facebook community and the opinion leaders, marketing of specially selected products can be done with amazing accuracy and higher efficiency than classical advertizing ever could before - a case of accelerated "word to mouth" combined with an expert opinion.
The situation mentioned above would make it seem as if this was a world of marketing managers. Acting wisely has its rewards. The social networks respond quickly, accurately and efficiently, and reaching the entire target population is fast and relatively easy. Spreading the news may be compared to a flash bulb going off - short and very bright.
But the success stories and big sales are mingled with ethical problems and even commercial problems and heavy damages. The social networks are as dangerous as they are promising success.
Nestle and Social Networks
If you want the story behind Nestle recent trouble in public relations you can find one version in the Guardian. The story is (according to CNET for example) that Nestle was attacked by Greenpeace for using oil from environmentally mismanaged plantations which resulted in the killing of orangutans. Greenpeace published a video to that effect. In an attempt to block it Nestle used its Facebook fans support page to assmbl enough support for u-tube to remove the video, under the claim that it violated copyrights. The fans were responding and some of them used modified logos of Nestle as their pictures in Facebook which the firms asked them to removed as it violated the firm's trademark rights.
That move started a negative response avalanche which the firm's responses, treating the issue as a legal problem while the fans regarded it a freedom of speech issue. According to the Guardian over 90,000 responders have signed in, most of them arguing with the firm.
The company Nestle made several mistakes, at first it supplied a stage among its supporters for Greenpeace to present its own case. Thus Nestle made sure that more people saw the video that Greenpeace could hope for. The company increased the damage the attack could do. The bigger mistake it made was of course to get into a direct, public fight in which Nestle seemed to be in the wrong with its own followers. Nestle came out from both claims as an anti free speech organization, inflexible and unfriendly.
It is easy to analyze the mistake in hindsight, but where did the firm actually go wrong?
It would seem that if 15 years ago a video was being aired (TV, Video, cinema etc.) and it approached the authorities with the claim that it infringed copyrights, it would probably have succeeded, and be held a serious firm standing for its rights. If at the time it found out that people were using the modified fir logo on stationary it would probably also find support for requesting that this be stopped. But we are in a new and different place today. In the world of social networks the rules are different, everything you say is seen by the whole world (potentially) and therefore must be reasonable or at least explained. Moreover, the world of social networks on the internet, does not like censorship of any kind, and is different than the business world. Nestle could have announced a contest regarding its logo to present the firms new commitment to the environment and harnessed the social networks public's creativity to its benefit, generate positive feeling towards the firm and move the focus away from the film. After all if no one is fighting the internet audiences move their attention to other topics. At least it would have forced Greenpeace to produce something new and work to earn the attention they wanted - not do their work for them.
What can be done?
One option of course is to ignore the social networks, but that option would leave the field to the competition which would be a big mistake. Could result in the firm ignoring the social networks, loosing huge market shares. Another option, which many firms seem to select as their course of action, is to enter the world of social networks, while assuming that it is similar to the world they know, only with a faster technology and better results. As the Nestle case shows this would be just as huge a mistake. Another option, requiring a lot of work, would be to enter the world of social networks on the internet, while learning the rules of the new world, employing people who understand it to operate the activity for the firm. One must bear in mind that this is not just a new technology this is a world with new rules.
Saturday, June 19, 2010
Business Development and Clean Tech
Business Development and Clean-Tech would at first look seem to be just as relevant As Business Development and Communications for example. But it seems that those dealing with Business Development, the Clean Tech sector holds a special interest.
The drive towards more and more awareness regarding environmental issues has increased the interest of firms in Clean-Technologies. Whether these are technologies for better energy management and decreased usage of energy sources, recycling, usage of less waste producing manufacturing, the production of renewable energies and more, firms in different sectors have been looking at these technologies.
In many cases firms, after being pushed into a first look due to market pressure, that is, in order to better sell their products, or maintain their market share, get acknowledged as "Green" etc., realize that the Clean-Tech they were looking into, could directy influence their cost structure and help theri profitability.
While we will not discuss here how exactly each firm may benefit from absrbing environmentaly friendly technologies, the search and increased interest has led to widespread activity in the field. From the point of view of the technology or knowledge providers, the issue of technology transfer and Business Development in that sector are important parameters.
While there is an article of mine soon to be published ( a link will be provided from my site at: www. amiramporath.co.il) on the topic, here I would like to present some points for your onsideration:
The drive towards more and more awareness regarding environmental issues has increased the interest of firms in Clean-Technologies. Whether these are technologies for better energy management and decreased usage of energy sources, recycling, usage of less waste producing manufacturing, the production of renewable energies and more, firms in different sectors have been looking at these technologies.
In many cases firms, after being pushed into a first look due to market pressure, that is, in order to better sell their products, or maintain their market share, get acknowledged as "Green" etc., realize that the Clean-Tech they were looking into, could directy influence their cost structure and help theri profitability.
While we will not discuss here how exactly each firm may benefit from absrbing environmentaly friendly technologies, the search and increased interest has led to widespread activity in the field. From the point of view of the technology or knowledge providers, the issue of technology transfer and Business Development in that sector are important parameters.
While there is an article of mine soon to be published ( a link will be provided from my site at: www. amiramporath.co.il) on the topic, here I would like to present some points for your onsideration:
- Is the Clean-Tech really one sector? Are the developers of water treatment infrastructure size plants in the same market, as the developers of home water filtration systems?
- If we are dealing with different secors, how would that influence the parameters of Business development and Technology Tranfer?
- Regarding the role of the IP managers in firms, and Technology Transfer officers in research organizations, how would these roles change as a result of the activity in the Clean-Tech sector?
- Which would be the best way for governments to encourage activities in Clean-Tech based on the above?
In order to demonstrate the level of importance that discussion has receeved and to give preliminary answers to the questions above please see the films in the links below, recently published on the web by the European Patent Office (EPO). some of the recent films were fillmed during an internal conference on the topic held recently.
Enjoy,
Amiram Porath
Links for this post:
- http://www.epo.org/topics/issues/clean-energy/films/renewable.html
- http://www.epo.org/topics/issues/clean-energy/films/films.html
- http://www.epo.org/topics/issues/clean-energy/films.html?update
Saturday, June 12, 2010
By writing this blog I intend to express my opinions, research results and general ideas regarding business development, business opportunities and innovation. the blog is not intended to serve as a scientific publication, but rather as a practitioners' basic discussion platform.
My main occupation is innovation and especially Open Innovation. The term Open Innovation relates to innovation that comes to the firm from outside; from other firms, research organizations, consultants and others. That is in contrast to internal innovation which stems from within the firm.
While Israel may appear as a good source for best practices in innovation, as it is important to remember that Israel is very different in its industrial sectors structure than EU member states. When referring to and SME in Israel one would normally refer to a high-tech company, a start-up company. In which case the size and performance would relate to its life length and success. In the EU as there are far more traditional sector SMEs than high-tech SMEs, the same assumption as in Israel cannot be made.
Based on the assumption that SMEs are start-up companies, the Israeli system of innovation was based on assuming that the SMEs perform research and need only be supported. It assumes that the SMEs know an want to manage R&D and need the parters or financial support.
Therefore the tools developed in Israel cannot be coppied as such to other countries such as the EU member states that see SMEs as mostly traditional sector firms, which have no idea how to manage R&D and how to introduce its results to their internal routines.
Last week a mission from Finland of high-tech firms visited Israel. They came to see the Israeli model meet firms here and make contacts and search for partnerships.
How can the model be coppied?
We may deal with that next post. In the meantime have a look at the links......
My main occupation is innovation and especially Open Innovation. The term Open Innovation relates to innovation that comes to the firm from outside; from other firms, research organizations, consultants and others. That is in contrast to internal innovation which stems from within the firm.
While Israel may appear as a good source for best practices in innovation, as it is important to remember that Israel is very different in its industrial sectors structure than EU member states. When referring to and SME in Israel one would normally refer to a high-tech company, a start-up company. In which case the size and performance would relate to its life length and success. In the EU as there are far more traditional sector SMEs than high-tech SMEs, the same assumption as in Israel cannot be made.
Based on the assumption that SMEs are start-up companies, the Israeli system of innovation was based on assuming that the SMEs perform research and need only be supported. It assumes that the SMEs know an want to manage R&D and need the parters or financial support.
Therefore the tools developed in Israel cannot be coppied as such to other countries such as the EU member states that see SMEs as mostly traditional sector firms, which have no idea how to manage R&D and how to introduce its results to their internal routines.
Last week a mission from Finland of high-tech firms visited Israel. They came to see the Israeli model meet firms here and make contacts and search for partnerships.
How can the model be coppied?
We may deal with that next post. In the meantime have a look at the links......
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