We'll use this site to share our insights and understandings as the course moves along. Please keep in mind that this is a public forum (for reasons I explain in class).To ease your entry into the blogosphere, you can simply "reply" to this post with your insights from the Week 1 Blog assignment.
Assignment: Go to this - LINK - on BusinessWeek.com and carefully examine the list of "25 Innovators, 6 Industries." Once you have a good sense of the list, please identify one (1) company in an industry in which you are familiar or interested that SHOULD NOT be ranked (or ranked as highly) on the list. Next, identify one (1) company in that industry that SHOULD be ranked (or ranked more highly) on the list. Please post a reply (by clicking "COMMENTS" below) with your insights along with a very brief explanation of your position. LINK
In my humble opinion, I feel that United Healthcare should not be on the list of innovative companies April 16, 2006 issue of Business Week. http://www.businessweek.com/innovate/content/apr2006/id20060413_268232.htm There are a list of reasons why but I will focus on the ethical aspect. Here is an article quoted from the Wallstreet Journal "The Securities and Exchange Commission (SEC) placed a call to the headquarters of UnitedHealth in Minnesota and it possible that the call was a part of broad based investigation that the SEC is conducting into the practices of awarding employee stock options at a number of companies." This company was investigated for backdating their stock options and their CEO, Dr. McGuire was “Awarded options on dates with very favorable strike prices and the chances of these dates being picked out randomly is about one in 200 million.”
ReplyDeleteIs this an innovative company through incentives process? Possibly. Are they unethical? Yes! UNH is notorious for terrible customer service and is the worst enemy of the hospital because of their aggressive tactics. Insurance companies have driven up the cost of care drastically in the last 10 years. Has anyone seen Sicko? There needs to be an ethical assessment to the innovative ideas/processes. Does it better the customer?
I would add Revolution Health to the list of Innovative companies because of the ground breaking work by former AOL CEO, Steve Case. With the trend of consumer driven healthcare, Revolution Health was started 2005 with the hopes of becoming a disruptive technology by addressing the issue of information asymmetry in healthcare. Revolution provides the tools, information and support to Americans to manage their health and wellness activity. They use open source web application framework for their design work which encourages collaboration—always a good thing. Their recent merger with Waterfront Media, an operator of health websites would combine their collective efforts of 14.7 million visitors and 11.3 million visitors each month to take on the likes of WebMD, the largest operator of health websites at 17.3 million. Use of innovation that empowers the user and promotes ethical practices is my definition of bettering the customer. Innovate but remember that we should strive to give the customer what they need not what we think they need.
I'm going to have to knock SAP down as being overrated. In partnering with them on previous client engagements, I found their products to be overburdensome. They've become overly-complex to the point of an inability to successfully, cost-efficiently, and timely deploy.
ReplyDeleteMissing from the IT list (or "other" for services), I'm going to have to brag on my old employer, Manhattan Associates. www.manh.com . MA can claim many on the top 25 list as partners and/or clients; but that's not what makes them innovative. For the past decade I've been involved in growing the company from warehouse-management-only solutions, to products that effect the entire supply chain. They pushed the foray into RFID, but at the same time developed and delivered optimal barcode and scanner solutions that are practical. They constantly innovate their software to integrate with conveyors, robots, hand held devices, voice-enabled tech, and new computing platforms. Moreover, they develop practical solutions for business problems that cut costs for their clients.
Nike is actually considered an Innovator? Why, because they put "air' springs in shoes and have them made for less than $10 a pair in Asia? NIke hasn't innovated so much as they picked the right celebrity sponsor, Michael Jordan, at the perfect time. The only innovation shown by Nike is their uncanny ability to pick the next "it" spokesperson. Great skill but not worthy of the list.
ReplyDeleteSo who to bump up... Zara, even though I am not a user of their clothes products (a little too racy for me), they have created a process that allows them to bring clothes from the runway to the retail store in before unimaginable speeds. This process continues to provide them with a first to market approach that their competition has not been able to compete with. Go ZARA!!!
This is very similar to deciding who should be number 1 in the BCS by the way.. Go Bama!!!
I would say that Whole Foods could be ranked higher because they have found a way to market organic items (that used to be niche items) in a mainstream way.
ReplyDeleteI would rank Wachovia lower. This one seems obvious to me. They failed to survive. Whatever they did, whether it was over innovate or under innovate, their system wasn't working.
In the health care world, I would knock Pfizer down. This is because they aren't really doing anything new and different. Sure, Pfizer is the world's largest research-based pharmaceutical company and are experts on new drug production and marketing. But what are they doing to change the way that healthcare is delivered and medicine is practiced in the world? In my mind, this would constitute real healthcare innovation. Take Genentech--this is a company that has taken human genome mapping beyond gene discovery to a practical application of drug discovery. This has opened a whole new realm of biological science and medical possibility beyond what is available in a pill--changing how medicine is delivered--true innovation.
ReplyDeleteDrugs are not the only way to be innovative in healthcare. Companies such as NextGen who are innovative in healthcare informatics will change the way consumers interact with the healthcare system. Organizations such as Virginia Mason who have applied Toyota's lean manufacturing principles to health care delivery systems are also innovators.
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ReplyDeleteSince I am still not quite sure what the "general definition" of innovation or being innovative is, it is hard to validate this list. Taking my personal understanding of innovation, I am surprised to see McKinsey ranked #2 right behind IDEO. McKinsey should definately not be on this list, as they are hardly ever using innovative ideas, but much more their old, generic frameworks (as most consulting companies). Again it is a question of what you consider "innovative" or an innovation.
ReplyDeleteIn addition, I would like to make a stand for NIKE (ok, I worked for them for quite a bit in Europe)! NIKE had and still has great innovations in the Fitness & Aerobics world. They are usually the first to come up with new equipments and are also the first to capture new trends in these industries. I agree with my classmates, that their shoes might not be the most innnovative (anymore), but NIKE does more than producing overpriced tennis shoes in China.
In regards to ZARA, a Spanish company : I am again stunned by their ranking. H&M, Mango (which was bought by ZARA in the late 90s) and several other retailers are doing exactly the same things. H&M started to sell runway clothes in Sweden at the beginning of the 90s.
Who should be higher ranked or on there : Pixar Studios or whoever the people are that come up with those crazy, new animated movies.
As many of you know, Ikea builds large home furnishing stores in major metropolitan areas. These stores are hundreds of thousands of square feet and occupy costly real estate. So when Ikea spent millions to open a store in Brooklyn, they wanted to ensure would-be customers could reach it. For this reason, Ikea took on a $100 million project to run a ferry to transport customers from lower Manhattan to Brooklyn. Every 40 minutes customers can board the ferry and travel to Red Hook, a popular area in Brooklyn and site of the new Ikea. Additionally, Ikea is offering 1,400 parking spaces and running hourly shuttles from bus and subway stations. Actually chauffeuring customers to your store - that's innovative.
ReplyDeleteI do not feel Pfizer should be ranked as high on the list. While Pfizer has long been revered as an innovator in R&D, it is now shifting its focus away from risky research projects, choosing to instead acquire new compounds from smaller companies. For this reason, I would rank them lower.
While Google has made some great strides in technological innovation, I think they should not be as high on the list for their inability to innovate new business models in their organization. Google's reliance on advertising revenue (99% of Google's revenue last year came from advertising) exposes them to substantial risk in an economic downturn where advertising budgets are likely to be cut. That said, they have made efforts to push Google apps into the corporate world which could be a great source of revenue in the future. Also, sources say that gmail will be out of beta soon.
ReplyDeleteI would also like to bump up PayPal, which has continued to make their service easier to use as well as easier to integrate into other web applications. Their platform is incredibly robust, scalable, and can meet the demands of internationalization for small businesses.
As far as undervalued innovation, I think that Starwood should probably be higher on the list. Starwood was the first hotel brand to introduce retail beds/sheets. Before they started selling the Heavenly Bed, hotels were only in one industry. Starwood introduced a whole new product line. In addition, when Westin introduced the W hotels, they were pursuing a lifestyle group as much as making a design decision. Though very high-end groups had hotels (think Ritz), there was not a "hip" hotel chain before the W. Starwood was looking more to lifestyle and surroundings, understanding that those things are as important to a guest's comfort as beds and upholstery.
ReplyDeleteFor overvalued companies, I choose Whole Foods. Whole Foods was neither the first large "organic" grocery chain nor has it done much past that. The fish counters, butchers, and produce sections are all fancier than the average grocer, but they are not different. I don't think that adding lights and changing the product is as innovative as some of the other companies on the list. Likewise, Whole Foods doesn't seem to be adapting or innovating, they're just expanding. As they change SKUs to match consumer demand, I would call them more of a follower than an innovator.
Does Size Matter?
ReplyDeleteWho would’ve thought that one day consumers would willingly take their money from their trustworthy primary financial institution and deposit it into a faceless bank with an 800 number? ING thought it and the firm permanently changed the landscape of consumer banking. This branchless bank crushed its competition’s operating margins and hence offered the Orange Savings Account with an interest rate that beat everyone’s rates, including mammoth banks with economies of scale. That’s why I am an ING customer and also why they should (and are) ranked as #1 on the list. Size doesn’t always matter. But innovation does.
Toyota Should Be On Top
Toyota should be bumped above BMW for one reason: the hybrid. The Toyota hybrid technology has become the “eco-paragon” for fuel efficient vehicles. It foresaw the need for this vehicle type before any other auto makers and has reaped the benefits of the first mover advantage. The Prius is hailed by the American government as being the most fuel efficient vehicle and it (at least for now) changed the rules of HOV; allowing Prius drivers to ride in the lane with no one else in the car. It will be interesting to see if it maintains its position. BMW is putting up a fight as well as Nissan. I’m interning for them now and they’ve made a bold public commitment: produce a 100% electric vehicle by 2010 and mass market it by 2012. We’ll see what happens.
I would add Grameen Bank to innovative financial services. I learned about this bank in the Bottom of the Pyramid class here at Owen. This bank, founded by Muhammed Yunus in Bangladesh, provides microfinancing / microcredit to the poor based on trust, not personal credit. The innovative model focuses on women who have skills to create wealth for themselves, but need loans to get started. Amazingly, these loans have an extremely high rate of repayment (around 98%), supported by peer pressure associated with solidarity lending groups, and the social empowerment gained by these women. Considering the current state of the “world financial crisis,” which is highly linked to issues with sub-prime lending, the successful business model of Grameen Bank is even more astounding. It will be interesting to follow the progress of this innovative bank as the ripple effects of the financial crisis inevitably bump into Grameen.
ReplyDeleteSo now I have to bump Wachovia down. It’s not clear to me what Wachovia has done that has been truly innovative in finance. Their guiding principle for winning is (was) to “aggressively target ways to reduce risk” – guess that didn’t work. Before the financial crisis, they were trying out some perhaps innovative tools geared at workplace satisfaction, such as the creation of internal social networks, blogs, and wikis to increase communication among employees. Good move to connect with Gen Y’ers, while trying to capture Baby Boomer’s fleeting knowledge. This organizational innovation may have translated into business profits if given the time. It will be interesting to see whether these tools will be utilized during the acquisition by Wells Fargo…
I was surprised to see State Street so highly ranked. I have to admit I am not a finance person, so maybe I am missing something here, but even when I did a little more research, I couldn't find anything that stood out to me as being extremely innovative. My opinion is also influenced by what I've heard about the company from friends who have worked there. When I think of innovative companies, I think about the work culture in addition to the products and services offered. I imagine innovative companies as places where creativity is rewarded, day-to-day tasks are changing, and the environment is dynamic. This is pretty much the opposite of what I've heard about State Street.
ReplyDeleteWhere is eBay on this list? eBay offered people a new and unique way to buy and sell things. Paypal and Skype, both owned by eBay, are on the list, so I'm surprised that eBay is not.
Best Buy should not be on the list. They have done nothing to innovate the shopping experience. I would like to see a more modern approach to how shopper interact with products and then purchase them. Consider Apple’s point of purchase device system.
ReplyDeleteZara should be higher on the list. One way they have been extremely innovative is in dealing with the fickle nature of the fashion industry. One of their simple innovative solutions was to produce small runs of every product they make. This serves two purposes; (1) if they have a bad product their losses are mitigated, and (2) this makes their customers highly engaged in the shopping process (i.e. shoppers want to get particular items before they are sold out).
I am least impressed with Nike being on the list for their industry. I think the only thing innovative aspect about the company in recent years has been their marketing campaigns but even that has greatly waned to me. At this point, I think their survival is solely based on past successes; however, if they continue to overly rely on the past, their future gains are definitely at risk. In my mind, they are complacent and unworthy of even being on the list.
ReplyDeleteI am actually surprised that Bank of America is not even represented on the list!!!! There are two prgrams that I can think of right off hand that to be define innovation at its best. First is the Keep the Change campaign - it allows customers to transfer rounded dollar amounts automatically to their savings account when they make transactions. For instance, if I buy something for $1.53, then $.47 will transfer to my savings account. This enables customers to contribute to their savings when they normally would not. Next, BOA has recently gone on a "green" campaign and have eliminated the need for customers to use a deposit slip or envelope at ATMs. If a customer has a check, the ATM reads it and deposits it; if you have currency, then it is able to count it and credit an account. That's innovation!!! They are the first in the industry to do both programs and I will not be surprised to see it mimicked within the next year (at least the ATM procedure).
I agree with Deckman - Best Buy should not be on the list. I've read several articles about their strategy on changing their employees' work/life balance which sounds like they are heading into uncharted territory. So perhaps they could be considered innovative in that sense, but in the recent years, I haven't seen any major changes in the way they introduce and sell products to consumers. I think they have been over-rated.
ReplyDeleteAs for an under-valued company, I actually think Skype needs to be higher on the Telecom list. This company has truly changed the way we can communicate through computers. The fact that two people can talk for free halfway around the world using their PCs is pretty incredible. It's providing an affordable and sensible way for people to stay in touch. And companies as well - the conferencing abilities that Skype has allows multiple people in multiple locations to communicate for free.
I think ZARA should be much higher in this list. If we can call any firm an "innovator", Zara should definitely be mentioned because of their innovative internal practices that allow the company to post superior margins relative to its competitors. These practices are: 1) A shortened, vertically integrated supply chain – vertical integration helped reduce the bullwhip effect
ReplyDelete2) Significant reductions in advertising and markdown requirements
I believe MICROSOFT should not be ranked as high as it is. When is the last time Microsoft came up with an innovative product that actually worked and made our lives easier? I would like to see more new and creative ideas from them; and not just pushing their "I'm a PC" campaign down our throats.
I would rather remove Vodafone from the list. First, compared with other leading telecom service providers, it is more conservative to adopt new technology.Second, for the mobile service innovation, Vodafone is always a market follower, compared with NTT Docomo and BT.
ReplyDeleteI agree with ashley that Skype can be higher on the list. It significantly improved the quality of voice communication over IP network and eventually made it a viable and affordable mode of communication.
In the Retail category, it surprised me to see Nike above Whole Foods. Nike has been a very innovative machine but as of late (especially in relation to Whole Foods) has lacked in that department. The last Whole Foods I was in had a parking garage below the grocery store/deli/ice skating rink in the winter/indoor and outdoor both very aesthetically pleasing, and I rode my first uphill escalator (there so that customers can have the option of elevator or escalator whether or not they have a cart full of groceries). I know this shouldn't (and doesn't) define my sense of innovation at either company, but the idea that spurred the uphill/downhill escalator seems to be a central theme in Whole Foods establishments.
ReplyDeleteAs for the Other category, I do not know whether to rank Ernst & Young tied for last or overall tied for 7th, but either way, I do not believe they should be on this list (unless this is the entire list and there are no other alternatives that fit the "other" category). As a former employee, I think that it is a fantastic corporation, but the training and informational sessions highlighting their newest technology were not so innovative. The software bugged almost weekly and I felt as if they were not only trying to convince us as employers and prospects but also themselves that their technology was the the most innovative out there.
*Ernst & Young is the only major corporation that I have worked at and therefore do not know if these problems are customary across the industry, but even if they are, come on...it's 2008.
PWC and Ernst & Young should not be in the list. First, the products they sell have almost not changed for years and the only changes that have occurred in the past have occurred because of changes in regulation (IFRS, SOX etc.). Second, the way PWC and Ernst & Young address their customers is archaic: they address them through “pitches” and they mainly rely on their brand image and network. Third, their corporate culture is not based on innovation but on rigor and accuracy: auditors do not need to be innovative, they just have to know the accounting rules and to check if the latter have been correctly implemented by their customers.
ReplyDeleteIf PWC and Ernst & Young were innovative companies, they would have been able to differentiate themselves from Deloitte and KPMG. However, this is not the case: all the big 4 have the same value proposition.
Apple is already well ranked but I think that it should have been the first on the list. Indeed, Apple changed the way we can use a cell phone or a mp3 player (touch screen, GPS, etc.). Moreover, Apple was the first PC / laptop manufacturer really focusing on the design of its products. Finally, its marketing strategy is original: whereas every competitor is proud to announce the development of new products or new technologies, Apple keeps everything secret. This strategy creates a buzz which is less expensive and perhaps more efficient than other marketing strategies for Apple.
L’Oreal should be higher in the list because it’s worth it!!
I have to agree that Pfizer should not be ranked as highly as they are on the innovative list. It's worth noting that these rankings were developed back in 2006, shortly after Pfizer announced $7.7 billion in R&D investment. However, since that time they have cut R&D spending, closed their Ann Arbor facility, reduced PhD staff at their Groton facility, and have significantly transitioned to licensing promising innovations from smaller firms, or acquiring those companies outright.
ReplyDeleteI would argue that IBM is undervalued on the tech list, especially relative to Microsoft. I think IBM's embracing of open-source software (think a wiki-like public community for developing software) was extremely innovative, and allows them to tap in to what is perhaps the greatest pool of creativity and innovation: the public domain. Microsoft, on the other hand, stands in stark contrast as notoriously secretive and protective of their source code.