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The Howard Hughes Medical Institute made news last week by announcing a $600 million grant to a fund a new pipeline of biomedical research. What makes this newsworthy is not the size of the grant, but how these hundreds of millions are being spent to fund an extremely ambitious, even risky portfolio of research.

The Hughes Institute follows the principle of investing in “people, not projects” — a significant difference from the way research philanthropies and businesses usually allocate innovation resources. At the National Institutes of Health (NIH), for example, grants are earmarked to tackle fairly narrowly defined disease categories such as colorectal cancer or osteoporosis. HHMI in contrast has apportioned their $600 million to 56 scientists from around the world who have been selected through a competitive application process as “investigators."

Here’s how Hughes describes the relationship they create with their investigators through their grants: Hughes Insitute investigators have the freedom to explore and, if necessary, to change direction in their research. Moreover, they have support to follow their ideas through to fruition — even if that process takes many years.

The investigator program is designed to attract and fund the most innovative researchers in the world without placing constraints on their research agenda.  For the $600 million announcement, Hughes Institute further loosened the rules of its competition to allow scientists to directly apply without the usual required sponsorship of a research institution. Their goal: encourage an even more divergent and diverse array of research interests to compete for an award.

Through its investigator program, Hughes is creating an innovation portfolio by investing in a portfolio of researchers. Past investigator competitions have focused on physician scientists. A future competition will target younger researches who are in the “angel” phase of their research careers. Hughes' investigator relationships currently number 300 researchers affiliated with 24 universities, and include 124 members of the National Academy of Sciences, and 12 Nobel Prize winners. Three hundred of the brightest and most innovative scientists in the world, well-funded to pursue their own interests and unconstrained by time limits or research boundaries … Has the Hughes Institute optimized their odds of a game-changing breakthrough? We think so, because their approach encourages an approach to innovation we describe as emergent strategy.

“People, not projects” is a great way to think about funding the furthest-reaching part of your innovation portfolio to target the boldest, most potentially disruptive solutions. Knowing that 90 percent of new ventures start off following the wrong strategy, it is important to make sure that your innovation resources are not operating under constraints that punish failure, learning, adaptation, and reorientation of the research agenda. Supporting an emergent strategy in your innovation portfolio means that you are able to deploy your innovation resources to encourage rapid iteration, maximize learning and re-direct the plan to pursue the right strategy as it becomes clearer. An emergent strategy is one where your innovators are actually rewarded for failing as long as they fail relatively cheaply and generate useful learning from that failure.

By placing unconstrained bets on people who are proven divergent thinkers, nimble performers, and highly risk-tolerant, you encourage a test-and-learn mentality that is critical to supporting emergent strategy. A Hughes investigator might begin investigating a question like, “Which genetic changes alter behavior throughout evolution?” Along the way, they may unlock a clue to preventing the common cold. Supporting an emergent innovation strategy means that investigator has the freedom and incentive to follow the new lead and potentially develop a very different, but high-impact solution. This is precisely what Hughes Medical Institute is banking will happen with its 56 newly minted investigators.

The Innovator's Guide to Growth: Putting Disruptive Innovation to Work, which will be published July 1 by Harvard Business Press, is now available through online booksellers such as Amazon.com. This book is the latest in the series exploring disruptive innovation that was started by Clayton Christensen’s The Innovator’s Dilemma in 1997 and continued in Christensen’s The Innovator’s Solution in 2003. The Innovator's Guide to Growth was written by Innosight's president Scott D. Anthony, co-founder and chairman Mark W. Johnson, and partner Joseph V. Sinfield, along with Elizabeth J. Altman, vice president of strategy and business development in Motorola’s Mobile Devices business. Thebook has a foreword by Clayton Christensen that can be downloaded free here. That's just one of many tools and resources available at the book's newly launched website. Check it out, as well as the reviews, which are starting to show up on blogs and on Amazon.com.

In an Atlanta Journal Constitution article last week, Marty Nemko, an education consultant, career counselor, and author, argues that traditional colleges are over-promising and under-performing for a large group of students in the United States. The students he has in mind are those who graduate in the bottom 40% of their classes and then attend traditional 4-year colleges. After 8 ½ years, two-thirds of this group have not yet earned their diplomas.

Nemko argues that dropping out of college devastates self-esteem while generating burdensome debt, all just to land an income and a job the student would have been qualified to earn with a high school diploma. Even when these kids beat the odds to earn their degree, they are more likely to be among the bottom-performing college graduates competing for jobs upon graduation, a recipe for disappointment. Colleges are selling the promise of bigger salaries and fast-trajectory careers, but failing to deliver a better post-high-school career outlook to the bottom 40 percent.

Colleges should do a better job of preparing students to compete in the global economy for high-skill careers by investing less in research, campus beautification, or sports, and more in providing quality teaching and mentorship Nemko suggests. Another alternative -- why not encourage the least academically prepared high school graduates to set their sights more realistically and just avoid college? The service sector is the fastest-growing job segment in the US and there is absolutely no shame in pursuing a trade.

Nemko proposes a solution for colleges: Through government mandates, create standardized and transparent performance data on every accredited institution of higher learning. He cites several examples of the type of data that might colleges might be required to report.  These include:

• Standardized testing. Administer an exam that measures skills important for career success, such as the ability to draft a persuasive memo, analyze a financial report or use online research tools to develop content for a report. A school's results would be public information.
• Retention data. Institutions should reveal the percentage of students returning for a second year, broken out by SAT score, race, and gender.
• Graduation rates. The four-, five-, and six-year graduation rates, broken out by SAT score, race and gender.
• Employment data. Show the percentage of graduates who, within six months of graduation, are in graduate school, unemployed or employed in a job requiring college-level skills, along with salary data.

However, this solution assumes that the primary goal of graduating high school students is to optimize their future financial position. Assuming that's correct, one way students could achieve this goal is to develop a high level of skill through an advanced degree. Another way is to simply avoid the high probability and high cost of failure and avoid college altogether.

Nemko’s recommendation for more data transparency addresses both options. Low-performing colleges would come under public and embarrassing scrutiny…the kind of pressure that might shame them into reforming their own business model so they can show better outcomes. Low-performing high school graduates would have compelling and dissuasive data on their true odds of acquiring an education and achieving their career goals.

Although Nemko makes a classic case for low-end disruptive innovation, his proposed solution would stifle innovation. Mandates would force all accredited institutions into a sustaining competitive battle on exactly the same career-oriented performance dimensions. While a few institutions might change their game, it seems more likely that this approach would simply thin the ranks of traditional colleges and college students in the US.

For example, what might such scrutiny do to disruptive business models like that of the University of Phoenix, which has removed barriers such as access and wealth to make education available conveniently at home to those who otherwise might be nonconsumers? Does it matter that the University of Phoenix's four-year graduation rate is below 10 percent? Not to its students, who happily make the trade off between a time-structured physical classroom curriculum and the opportunity to study at very low cost, on-demand through the Web.

In the US, there are more than 2 million students pursuing occupational curricula at career colleges that specialize in preparing students for careers ranging from culinary arts to automotive technology.  Enrollment has grown by 17 percent in these programs over the last 2 years, in line with the 19 percent growth in jobs requiring two-year degrees.  But these students number far fewer than the 17 million enrolled in four-year colleges estimated by the census in 2006. Why aren’t more of the “bottom 40” who go to college choosing these programs, which demonstrate very compelling graduation rates and career metrics?

The plausible reason is that students have a whole slew of other jobs-to-be-done that have nothing to do with landing a high-paying career:

• Mature as an adult in a relatively controlled environment for a few years before being released into the wild
• Find out what they enjoy doing
• Discover strengths and weaknesses
• Have some fun for a few years before buckling down
• Develop a new skill
• Meet a new and diverse set of people who broaden their network and perspective on the world

We expect that the most innovative and disruptive approaches to preparing the “bottom 40” for the work world will come from outside the traditional university system, and even from outside the education sector. While the traditional four-year institutions are locked in a sustaining battle to compete for the best pool of applicants they can attract, disruptors like University of Phoenix and others can hone their business models on nonconsumers and the lowest-performing students.

Can you imagine Facebook U.? 

The New York Times had a great article on Sunday about the success of Pure Digital Technologies “Flip Video” camcorder. The article’s basic message: Pure Digital has created a big market by embracing the principle of “good enough.”

The Flip Video won’t win any awards for its breathtaking design, or the quality of images it captures. The camera is simple, easy to use, and relatively inexpensive. It costs $100 for a camera with 30 minutes of capacity and $150 for a camera with 60 minutes of capacity. The device connects easily with a home computer, allowing seamless video transfer.

Pure Digital has sold a million Flip Videos over the past year. Clearly, users that are uploading videos to YouTube or emailing short video clips to friends and family are willing to trade off picture quality for an unobtrusive, affordable device.

In a perfect world, companies would introduce pitch-perfect products that were easy to use and affordable. The reality is that there often is a tradeoff between basic performance, ease of use, and price.

Established companies typically favor sacrificing ease of use and price in the name of performance. They fear the very term “good enough,” because they think sacrificing raw performance will render their products inferior.

Remember, though, that quality is relative. It is always worth asking: What would happen if you intentionally lowered raw performance in the name of simplicity, convenience, accessibility, or affordability? What new markets could you serve? What new consumption could you enable?

Read the rest at Scott's Harvard Management blog, Innovation Insights.

Attendees of the Mobile World Congress in Barcelona earlier this year might have easily overlooked what could become a huge success. Modu, an ultracompact cell phone launched by the Israeli technology start-up modu mobile, might be the first truly modular phone – a technology with significant disruptive potential in the mobile communication devices category. However, highly relevant questions on consumers’ jobs-to-be-done and the business model need to be thoroughly considered for modu mobile to be successful in the marketplace.

The technology

In essence, the 1.41 oz., 2.8 x 1.4 x 0.3 inch device is a no-frills cell phone with a small screen and just a few buttons that can be wrapped in one of multiple “jackets” to become a more advanced cellphone (e.g. with a full QWERTY keyboard, a bigger screen, or individualized design). When merged with a “mate,” the modu becomes the core of an entirely different compound device with different performance dimensions such as a portable music player, a car radio, a GPS-system, a bike computer, a camera, or an alarm clock with a docking station that displays incoming text messages. The modularity of modu’s hardware and software allows its processor, memory, and wireless technology to run the compounded devices. 

The job

The modu is set for success only if it precisely targets consumers’ jobs-to-be-done and does not get distracted by the technological possibilities. Instead it should focus on specific circumstances consumers face during their day where the modu could be a winning solution: “Help me enjoy my commute” when getting to work and back, “help me access my emails while on the go” during the work day, and “help me become available for communication” when going out at night might be examples. Now, each of these jobs is already addressed separately by illustrious products such as Apple iPod, RIM Blackberry, and small form-factor cell phones by Nokia, Motorola, Samsung and others. 

At the moment, modu mobile’s answer to these competitors seems to be a lower price. The anticipated price of $200 for a modu bundled with two jackets that range in price from $20 to $60 each might differentiate modu from its respective nonmodular competitors. Yet, competitors could simply decide to sell for less, cutting their margins to outcompete modu.

The true power of modu’s technology lies in its modular architecture. Modu mobile can create a competitive edge by translating the device’s customizability into two distinct performance dimensions. First, modu's modularity can facilitate the individualization of consumer electronics -- a trend that predates its most common and unfortunately popular example, the personal ringtone. The second performance dimension follows the broad job “help me make my daily life easier.” This might sound more straightforward than it actually is, but figuring out how precisely to align communication technology with cross-architectural usefulness will be key for modu to challenge the iPods, Blackberrys and Nokias of this world. In this context, swapping the modu between multiple jackets and mates per day needs to be as quick and easy as its teaser suggests.

The business model

Modu mobile plans to launch its device with support from major cellphone carriers in Italy, Israel and Russia this October, followed by the U.S. and other European countries in 2009. Modu's business model focuses on selling the phone while licensing the technology to third-party manufacturers, who will build jackets and mates on their own. Manufacturers could profit from licensing modu’s technology by launching their products without a slow and relatively expensive licensing process with the Federal Communications Commission, because the modu is already a phone.

Modu mobile, in turn, keeps full control over the core component of what they hope will become as standard as flash data storage devices, the last undertaking of modu founder and CEO Dov Moran, who was formerly CEO of msystems inventor of flash data storage devices that was acquired by SanDisk Corp for $1.6 billion in late 2006). The two main advantages of licensing technology to other manufacturers for modu mobile are that with an increasing number of jacket and mate manufacturers the modu would be more and more cemented as a standard, and as other companies also strive for success, modu mobile hedges its risk of failure by potentially not getting the job quite done for consumers.

The future

Modu mobile has the potential to disrupt the mobile communication devices category. It can target overshot and/or nonconsumers (an interesting occurrence of a potential low-end and new market disruptive innovation), if it is able keep the low-price promise along with increased ease of use, or by introducing a new performance dimension around the device’s modularity and striving for increased customizability. The business model appears promising, if the self-reinforcing mechanism of initial success results in a large base of third-party manufacturers.

These are all big ifs, and I am really curious to see what the future will bring for modu. 

Being a Bostonian and a big sports fan, I found myself with the Ticketmaster website loaded in my web browser at exactly 10:59 am this morning. While I had a sense that my quest for Celtics playoff tickets would shortly present me with a challenge, I had no idea that surmounting that challenge would contribute to a multipurpose innovation making an important contribution to society.

After a tough loss last night, our beloved Celtics are locked in a 1-1 struggle with the Detroit Pistons. With home-court advantage now gone, the Celtics head to Detroit for two games. Were either the Celtics or the Pistons to win the next two games, at a minimum, a decisive fifth game would take place back in Boston on Wednesday evening, May 28. As a result, the Celtics announced that they would put tickets to that decisive fifth game on sale at 11:00 am this morning.

Refreshing my web browser quickly, I hoped to be one of the first fans to reach the Ticketmaster page through which I would submit my ticket request. 10:58 am. 10:59 am. The page had yet to load. 11:00 am. Suddenly, the page was visible! I entered in the number of tickets I hoped to purchase, along with my desired arena section and price level. I clicked Submit.

After a brief delay, I was presented with a CAPTCHA. Developed at Carnegie Mellon University and standing for “Completely Automated Public Turing test to tell Computers and Humans Apart," a CAPTCHA is a challenge measure that websites implement to protect themselves from automated software programs. Often a distorted set of words or numbers and letters, modern CAPTCHAs are very hard for software programs to read while humans can identify the characters fairly easily.

After the CAPTCHA is presented, the website requests that the user type the exact set of characters into a text field. While humans are able to complete the task, software programs nearly always fail. As a result, requests from humans are allowed into the system — often services such as email account registration or ticket brokering — while automated requests are denied. Since spammers and ticket resellers often try to use brute-force, automated request programs, CAPTCHAs have become a sometimes bothersome, but necessary verification measure.

In my particular case, I encountered a CAPTCHA provided by the reCAPTCHA system, a program also created at Carengie Mellon and used by Ticketmaster. While completing the verification exercise, I noticed the following text on the right side of the page:

Digitize Books One Word at a Time
By entering the words in the box, you are also

helping to digitize books from the Internet Archive

and preserve literature that was written before

the computer age.

While tickets for the fifth playoff game sold out almost immediately and I was stymied there, I did some research into the reCAPTCHA system. As it turns out, reCAPTCHA was developed to help digitize books while also protecting systems from automated requests. The reCAPTCHA system presents two words to the website visitor — one word that an optical character recognition (OCR) program has been unable to read, and another word that several humans have correctly identified. If the visitor identifies both words correctly, the system passes the initially unknown word to additional visitors. If those visitors enter the same text response as the first, the system accepts the translation.

                According to a recent article, the use of reCAPTCHA by Ticketmaster, Facebook, Twitter, StumbleUpon, and other sites is helping Carnegie Mellon’s book archiving project successfully identify approximately one million words every day. Despite such a pace, Carnegie Mellon reported in late 2007 that approximately 100 million books remained to be digitized, a task that will still take 400 years to complete, despite the contribution of reCAPTCHA.

                While I was unable to secure a pair of Celtics playoff tickets, I was somewhat heartened by the fact that I had contributed to a worthwhile effort without knowing it.   

As mentioned, this morning I did the "Q" part of a 75-minute Q&A session with P&G CEO A.G. Lafley. The discussion was wide-ranging, covering everything from the need to re-think marketing and advertising to the benefits of a liberal arts education. At the end of the session, I told the audience that my six takeaways were:

1. In an age of disruption, growth is getting increasingly difficult.
2. Companies need to take the long view. Lafley said he finds it hard to watch CNBC for more than 7 minutes because the focus is so short-term.
3. The customer needs to be the center of the innovation equation. When Lafley took over as CEO in 2000, he said he saw too many managers on their cellphones, or buried in spreadsheets, in essence "showing customers their behind."
4. Experimentation is key. Lafley talked about the value of giving customers even crude prototypes to test an idea. He also described how different parts of his organization approach innovation differently, and that's a good thing.
5. Complex organizations need to simplify to successfully innovate. Lafley said he seeks Sesame Street simplicity.
6. The CEO has to be the "Chief External Officer" to manage external pressure and the "Chief Innovation Officer" to push the innovation agenda forward.

Read the rest at Scott's Harvard Management blog, Innovation Insights.

Our own Scott Anthony was featured in the HBR IdeaCast podcast series, talking about Disruptive Innovation. We've just now added the link to our Innovation Resources section. Enjoy!

If any of you are going to be at the Front End of Innovation conference this week, stop by the Innosight booth on Tuesday. I'll be there, and would love to meet any of my readers!

Also, on Wednesday morning I'll be doing the "Q" part of a Q&A with Procter & Gamble CEO A.G. Lafley about "The Art and Science of Game-Changing Innovation." The discussion will focus on some of the key messages in his recently released book. I'd love to have one of the questions come from you, so suggest a question, and I'll try to pick one or two of the best ones (and of course let you know what A.G. has to say).

Feel free to add a question in the comments here or on my Harvard Management blog (link below).

Thanks!

Cross-posted from Scott's Harvard Management blog, Innovation Insights

Lillian Zhao

When I first was told that Mocospace was getting VC backing in early 2007, I skeptically thought: “Who’s going to use another social networking site?!”

Eighteen months later Mocospace has grown to become the leading mobile social networking site in North America. With more than one billion mobile page views per month, it’s holding its own against incumbents like Facebook (which has more than 300,000 mobile page views per month).How did Mocospace become so popular?

What I didn’t realize when I first heard about Mocospace was that it has a powerful, disruptive business model that has successfully targeted a new distribution channel (the mobile phone) and a new customer base (non-consumers of existing social networking sites). This disruptive business model has propelled it to a leadership position in mobile social networking.

New Channel

Mocospace was one of the first to create a social networking site specifically designed the mobile phone. There is a subtle though distinct difference in how people use social networks on the PC vs. the mobile phone that stems from the basic differences between the PC and the mobile phone –- the PC is a static, multi-function device, whereas the mobile phone is an always-on, always-connected, communication device.

Mocospace realized this early on, and optimized its features for the jobs-to-be-done of a mobile phone user: instant communication, quick entertainment, killing time, and staying socially connected. Mocospace offers every type of communication (chat, IM, mail, messaging, micro-blogging and even voice-messaging) in one place. Other entertainment options include games, rating other people’s photos, watching videos, contributing to forums (my personal favorite are the ‘yo mama jokes’ in the jokes forum). Mocospace’s “friend finder” application also serves members’ job-to-be-done of meeting new friends and staying connected with existing friends.

Mocospace’s strategy is different from the incumbents, Facebook and MySpace, which emphasize content rich user pages and graphic-intensive applications –- all awesome features that work great on a PC’s screen, but are too cumbersome to navigate on the phone. As such, they’ve naturally chosen to use the mobile to extend a subset of their online features. However, MySpace’s initial strategy was to charge users an annual monthly subscription, shared with the carriers, to use their mobile site. That strategy was not overly successful and has now been de-emphasized.

In contrast, Mocospace’s site is extremely mobile-phone user-friendly, as all functions have been optimized for the small screen and numeric keypad input. For example, it leverages icon-based navigation and limits the amount of words and excess visual distractions per page. The results are clean, easy-to-navigate pages.

Meeting the needs of nonconsumers

Mocospace’s functionality serves the jobs-to-be-done of a previously untapped market: nonconsumers of existing social networking sites designed to be accessed on the PC. A large portion of the US population doesn’t have constant, private access to a PC with a broadband connection, for a variety of reasons that could include on-the-go lifestyles, economic limitations, and/or remote locations. However, most of these users have a mobile phone. Some use unlimited data plans from carriers like Leap Wireless and MetroPCS, in lieu of a PC. This eclectic group of urban youth and mobile workers were the early adopters of Mocospace. They didn’t have PC access 24/7; but they had mobile access 24/7.

While Mocospace has clearly done extremely well to date as a mobile social networking site, I still wonder if it can sustain its leadership position. Despite impressive monthly growth, will it be able to continuously grow its user base to solidify its dominance in the mobile social networking sector? Or will incumbents Facebook and MySpace, or even a new start-up, take the mobile lead away from Mocospace? If so, how will Mocospace’s strategy’s change?

Time will tell. And, I am scheduling an interview with the founders of Mocospace soon, and I'll be sure to ask about these issues.

Watch for the “Voices of Disruption” interview with Mocospace co-founder, Justin Siegel, in the July/August edition of Strategy & Innovation. 

The Fortune 500 issue had a fascinating story about Amazon.com. “It’s easy to believe that Jeff Bezos is one of the great innovators,” the story noted. “But that’s not exactly the case. His rise into Fortune 500-dom actually has little to do with innovation and more to do with iteration.”

It pains me when I see innovation and iteration painted as opposed in some way. In fact, the only way to successfully innovate is to be prepared to iterate like crazy.

There is a misbegotten belief that new growth businesses arise fully formed out of an innovator’s head. That couldn’t be further from the truth. Carefully look at the history of just about any innovation success and you’ll find a course correction, if not an outright failure.

There are many classic examples of innovation through iteration. Google was just another search engine until it iterated its way to AdWords and AdSense. About three months before the public launch of the iPhone, Apple CEO Steve Jobs sent the design team back to the drawing board because of flaws in the product’s design. James Dyson created more than 5,000 failed prototypes of his wildly successful vacuum cleaner. And so on. ...

Read the rest at Scott's Harvard Management blog, Innovation Insights

It’s rare that we see an advertising campaign embrace a jobs-to-be-done approach as clearly as the one recently executed by Yellowbook and its partner, ad agency Gotham.

Printed Yellow Pages directories, such as those published by Yellowbook, were once the dominant source of local business contact information. The Internet, a constantly updated, interactive source of information, is now forcing Yellow Pages publishers to rethink their positioning and indeed, their relevance. Many consumers, it seems, continue to think of its iconic yellow-paper directory, for example, when they think of Yellowbook.

Desiring to change the way consumers think of its product, Yellowbook launched a new ad campaign last week. The first two television ads, which can be viewed here, show two individuals using a Yellowbook online site to seek basic solutions to superficial problems. The ads then reveal the true concern (job) that each individual is really seeking to address.

In the first ad, a kid searching for martial arts is really seeking self-confidence. In the second ad, a bride searching for help removing an old tattoo is really seeking a fresh start.

It seems possible that this window into the true inner concerns of the participants may elicit an emotional response from viewers who may, in turn, use yellowbook.com to find solutions to their own inner concerns. Despite this use of jobs in its advertising campaign, however, the yellowbook.com directory remains organized as a printed Yellow Pages directory, searchable by basic vertical category. Perhaps an opportunity exists for the site to implement a jobs-based search feature in the future — I wonder what price businesses would pay to be the first result returned by a search for "self-confidence"? 

If you work in a large company and you want to become humble quickly, check out Stall Points, a fascinating stream of research by the Corporate Executive Board that was recently a cover story for the Harvard Business Review. The research shows that almost all companies hit a point where historical growth rates decelerate. Once the corporate growth engine stalls, it is very hard to restart.

The study involved close to 500 companies that have appeared on the Fortune 100 or international equivalents over the past 50 years. Close to 90 percent of those companies experienced a stall, or “secular reversals in company growth fortunes.” Only 50 percent of companies that stalled were able to grow even moderately over the next decade.

There are many reasons why growth becomes increasingly difficult as a company grows. One challenge is that the hurdle for new initiatives becomes so high that many potential game-changing initiatives never see the light of day.

A few weeks ago I was with a group of senior executives at a Fortune 100 company. We were talking about the strategic objectives of that company’s innovation efforts. One executive said that $1 billion felt like a reasonable target for a generic new growth initiative. Another said, “A billion is nice, but at our size we really need to set the target at $10 billion.”

Mathematically, of course, the executive is right. It got me thinking, though. Only 261 public U.S. companies had $10 billion in revenues last year. How many of the high-flying start-up companies over the last decade reached $10 billion in revenue in 10 years? Well, Google hit $10 billion in its eighth year (2006) and … I think that’s it.  …

Read the rest at Scott's Harvard Management blog, Innovation Insights

As summer approaches, soon you will no longer have to venture off to the ice cream store for a treat. Taunton, MA-based MooBella offers a vending machine that creates a fresh scoop of ice cream for under $3 in under one minute.  Moo-bella is essentially “competing against non-consumption” as they expand the opportunities for consumers to enjoy fresh ice cream, and enable restaurateurs and cafeteria operators to expand their sales with a new offering without sacrificing the floor space or labor that is traditionally needed.

As MooBella has delayed its roll-out, I suspect the company is struggling with its launch plans for this new product. We would urge them to initially launch an offering that is “good-enough” by focusing their launch on bringing a tasty offering with limited flavor selection to market in a controlled environment. Their current plan to launch within existing food-service locations fits such a strategy; the operators can perform minor maintenance and collect payments while providing MooBella with feedback on how to adjust their future vending machines and product offerings. Armed with the knowledge from these market tests, MooBella can then look to improve its product on other dimensions by launching new flavors or developing a truly self-service machine that requires no maintenance and can accept payments.

There's also an important lesson here for traditional ice-cream retailers who may not initially view MooBella as a competitor. To find new opportunities for market growth, you need to continually go beyond new product introductions and look at the circumstances in which consumers can consume your product. While ice cream shops offer a unique family experience, MooBella can become a more potent disruptive force by partnering with restaurateurs and foodservice operators to offer different experiences in various circumstances.

With the Eee Surf, ASUS wisely trades power and functionality for simplicity and a low price, a disruptive play that should find its way into many homes as a second computer.

I learned about the ASUS Eee PC 2G Surf laptop on a recent flight. The passenger next to me opened up the airline magazine and pointed out to me a small, really sharp looking laptop that sells for under $300. The computer was designed by ASUS and Intel and is known for its combination of light weight, Linux-based operating system, Wi-Fi capability, solid-state drive (like an iPod Nano) and relatively low cost. He said he wished he had known about the ASUS Surf before because it would have made for a great second home computer for his wife and young children.

We applaud ASUS for developing a product that is targeted at a clear job to be done – provide easy access to the web and prevent household fights over the primary PC (and Internet connection).

This product breaks down two key barriers that currently prevent more people from using laptops – complexity and cost. According to Laptop magazine, the laptop is “ten times simpler to use than any Windows machine, starts up twice as fast and is about one fifth the cost of other systems in its weight class”. The interface offers only six easy-to-understand options: Internet, Work, Learn, Play, Settings and Favorite.  Since the computer runs on Linux (which is free) it keeps the price of the product down (no Microsoft licenses).

Of course, breaking down the barriers of complexity and cost requires trade-offs that won’t satisfy everybody. It is hard to load new applications, skimps on internal memory (only 300 MB of the 2GB solid-state drive is free) and won’t impress tech savvy folks with its specs, but like many disruptive innovations, it meets an important and unsatisfied job to be done. Need a low-cost, easy to use computer to prevent your kids from fighting for Internet time? ASUS has the right PC for you.