Innovation Group - CNS UCSB

Randy Komisar is a legendary Venture Capitalist in Silicon Valley. His 2000 bestselling book, “The Monk and the Riddle,” is part autobiography (detailing his former lives as a business lawyer and and executive), part didactic novel (chronicling a series of exchanges between himself and a fictional entrepreneur trying to procure venture capital funding for an online casket business. Written during the venture capital “boom years,” the book is addressed to entrepreneurs (and perhaps business people of all stripes) and promises to reveal to them “the art of creating a life while making a living.” Komisar opens the book with the titular monk, who he once gave a ride to on a motorcycle. It turns out, not surprisingly, that the monk wasn’t trying to get anywhere in particular: he was just in it for the ride. This provides Komisar with the basic premise of the book: the journey is the reward. You have to make business about following your passion and not just harnessing your drive to make money. He assumes, graciously, that most business people do have something they care about, something that would be a meaningful pursuit in their lives, but then defer that (he calls this the “Deferred Life Plan”) until they have made enough money to enable such a pursuit. This is the case for Lenny, the entrepreneur seeking Komisar’s help. In a series of meetings and email exchanges, Komisar exhorts Lenny to examine himself and discover what it is about his funeral business that initially interested him instead of focusing on a practical but soulless casket e-tailing business. Interspersed with these episodes are Komisar’s reflections on his stints at various innovative companies before he became a venture capitalist. Each reminiscence contains a neat lesson learned (e.g., the difference between management and leadership, the importance of people in business, the difference between passion and drive, etc.). In the end, Lenny sees the light, and reconnects with the personal, emotional reasons he conceived of the business in the first place. Komisar’s book, then, serves several purposes: It positions him as a business guru, a Wise Man in the Zen tradition. He has gone through the process as an initiate and has come out above the fray, and is now attempting to pass his wisdom down to others (Lenny is a proxy for his readers). It is also an implicit argument for humanism in business: Komisar believes that the pursuit of massive financial payoffs are not incompatible with “helping people,” and that it’s possible (and indeed essential) to integrate passion and drive, one’s business plan and one’s life plan.

See the book at Amazon.

-ZH

Solar News 5-29-12

Innovation Group Administrator — Wed, 30 May 2012 02:21:57 +0000

U.S. Slaps High Tariffs on Chinese Solar Panels – New York Times

PG&E Seeks Approval to Invest in Solar Manufacturing – REW

Chart: The death spiral of solar bankruptcies (& counting) – Gigaom

Calls For Germany’s Near-Bankrupt Solar Industry To Be Nationalised – Global Warming Policy Foundation

Future of Renewables Overshadowed by Shale Gas – Suite 101

German Solar Industry Could Soon Collapse – Technology Review

World’s biggest CIS (CIGS) power plant completed – PV Mag

Clayton Christensen: “The Innovator’s Dilemma”

Innovation Group Administrator — Tue, 22 May 2012 02:47:43 +0000

book

Christensen’s classic book, probably the study of innovation most read and revered by the business community itself, seeks to answer a simple question: Why do big, well-managed firms at the tops of their games, with commanding market leadership positions, consistently fail to innovate the revolutionary products that ultimately reformulate industries and lead to their downfall? Before Christensen’s study, most people assumed that it was short sightedness, or process lock-in, or failure to properly gauge the market. Christensen’s answer, however, was a shocker at the time: none of these things accounts for innovation failure. The companies who have lost the most due to this failure were not short sighted, were not constrained by inflexible processes, and were actually quite adept at evaluating the market by maintaining strong communicative links with their customers. In fact, it was doing everything right that caused these companies to fail.

Much of the time, large firms devote a great deal of resources to research and development (though this has decreased since the 1990s, when Christensen was writing his book), and are often forerunners in the development of new technologies. The problem, according to Christensen, happens in the marketing departments. New prototype inventions are brought to marketing departments, who approach a sampling of the core customers of the firm to determine whether or not there is a market for these potential products. Most of the time, the answer comes back “yes” to products that offer incremental improvements over those already being used, and comes back “no” to products that are significantly different with regard to capabilities. This is because demand often progresses at a slower rate than supply. Current customers only need so much in the way of improvement. Thus many innovative ideas for significantly different (i.e., new) products end up getting killed by marketing departments based upon very sound reasons.

Accordingly, Christensen differentiates between “sustaining innovation” and “disruptive innovation.” Sustaining innovation, the kind that large firms do well, involves improving products along existing metrics. Hard drives yet larger in capacity and faster in access, for instance. Disruptive innovation, however, involves the introduction of entirely new product categories. For instance, the release of 3.5” hard disks. At a time when most computer manufacturers were selling large workstation computers that traditionally used 8” hard disks, the innovative 3.5” drive was disruptive. But the top manufacturers of 8” hard disks failed to introduce 3.5” drives until long after startup companies and gobbled up a huge chunk of the market. This is because the workstation manufacturers who were the customers of these hard disk companies didn’t have any need for the smaller 3.5” drives, which were significantly slower and smaller in capacity than the 8” drives that were the industry standard. As a result, the dominant hard disk manufacturers saw no market for the new technology and, though it was well within their technical means to produce, made the rational decision not to. The startup companies that did produce and market 3.5” drives helped create a new market: the desktop PC. Their drives were slower and had a smaller capacity, but their smaller physical size and lesser cost made them perfect for inexpensive and much smaller home machines. When this market took off, the companies that had bet on 3.5” drives grew exponentially. And, as their drives improved over time, becoming faster and denser, they eventually overtook the demand curve of the workstation computers. At that point, though 8” drives were still faster and more dense, they were much more so than their customers needed, and the cheaper 3.5” drives cannibalized their market.

The basic lessons, according to Christensen, are that (a) technical improvements on the supply side tend to outpace technical needs on the demand side, leading to all products moving consistently upmarket, and (b) that existing markets are always significantly larger than new markets, and thus it doesn’t make sense for an established firm to expend disproportionate resources on not-yet-existing markets. This only makes sense in small firms that can afford to think small and are looking to grow. For a small firm, an emerging market can lead to significant growth. To a huge, established firm, introducing new products for a new market is likely to add very insignificantly to their bottom line; far bigger returns can be had from moving upmarket with incrementally improved products, or sustaining technological change. Because this makes sound rational sense, most large firms continue to follow this strategy until they are bottomed out by their competitors from below.

Christensen’s revolutionary conclusion, then, is that innovation presents an intractable dilemma to established companies. Disruptive innovation is a structural problem, not a managerial failure.

What should we conclude from this? Christensen notes that disruptive innovation always favors entrants. We should not expect well entrenched players to innovate as radically or creatively as new players. If one is an established player, this is pretty bad news. Christen’s advice is to spin off separate divisions or units to concentrate on disruptive innovation; only groups small enough to pursue uncertain and currently negligible markets will have a good chance at creating disruptive change.

Get the book from Amazon here.

-ZH

Solar News 5-17-12

Innovation Group Administrator — Fri, 18 May 2012 01:07:18 +0000

America’s failing powerhouse – Salon

Solar optimists strategize to survive austerity and future-proof industry – PV Tech

Global Woes Continue with LDK Solar’s Quarterly Earnings – REW

China Dims ‘Golden Sun’ Solar Subsidy – REW

Subsidy Reform to Power U.S. Clean Tech – WRI

Italy Jumped To First Place In PV Installations Last Year – Solar Industry Mag

Hollande Victory Signals Shift in France’s Renewable Energy Policy – REW

US military takes solar to the frontline – PV Tech

First Solar and SunPower sales fall in first quarter – PV Tech

German Solar Module Manufacturer Soltecture Files For Insolvency – Solar Industry Mag

China Reduces Solar Subsidy on Declining Costs of Components – Bloomberg

Trade Tensions Rise: Chinese Solar Modules Hit With Major Tariffs – Solar Industry Mag

Apple’s Attack on the Knowledge Economy

Innovation Group Administrator — Tue, 01 May 2012 07:51:14 +0000

Article by Christopher Newfield. Read it at the Huffington Post.