Post Scriptum

After finishing the draft of Danger: Demolition area I found this:

'Haier became a leader in China's white-goods market, despite heavy competition, mainly because of its expert knowledge of the nuances of the Chinese consumer and its ability to develop products tailored for those needs. For example, Chinese consumers in rural markets used the company's washing machines to clean vegetables such as sweet potatoes. Haier modified its product so that vegetable peel would not clog the machine's pipes. The company then affixed large stickers on the modified washers with instructions on how to wash vegetables safely using the machine. The next generation of washing machines can even produce goat's milk cheese.'

I swear I did not make it up: it's from a paper prepared by Accenture -The Rise of the Emerging-Market Multinational-, and they got it from an article published by Financial Times in September 2004.

What surprised me the most is that Haier did not create a new line of products designed for the specific purpose of washing vegetables. Apparently they are market leaders, so they could have perfectly done that, and this way they would have made people buy a yet another device. Instead, they adapted their design... and if it did work, people would still buy more products from them!

I don't mean to take back what I said in my previous post, but changing the definition of a product from 'something that washes clothes' to 'something that washes clothes but can also wash vegetables and produce goat cheese' (!) sounds a little too risky, doesn't it?

Limits to Growth

Some years ago, in my Systems Dynamics class, I came across archetypes, which are models that explain how certain systems operate as the time goes by, and how they respond to changes in their main variables. Please keep reading, I promess it's not rocket science! :)

One of these archetypes is called Limits to Growth, and it was presented by Donella Meadows, Dennis Meadows, Jørgen Randers and William Behrens in 1972 in a book that has the same name as the archetype. What this model states is, basically, that there is no such thing as an unlimited positive reinforcing behavior, because there are always limits pushing growth back.

I'll translate into an example what I've been saying so far. Let's take the planet as our system of study, and the extraction of natural resources as a behavior. A reinforcing behavior would be to extract resources without waiting for them to regenerate. As we all know, most of the resources our planet has are limited, and since human kind has exploited them for centuries according to the requirements imposed by development... well, we are where we are now.

If you have a while, I strongly recommend a video called The story of stuff, that explores further into the different stages a product goes through since raw materials are obtained until it becomes trash (plus, it's really entertaining and easy to understand!). You can check it out by going to

http://www.storyofstuff.com/index.html

And one last thing: for those of you who survived my explanation and want to find out a little more about the Limits to Growth model, just let me know and I'll send you some info!

Congratulations! You've made it to the next label

We're all familiar with the Made in China label, we've seen it many products we use in our everyday life for a long time. If we say it in a more appropriate language, China is the world's most powerful manufacturer, and has achieved and maintained that position for at least two decades. This implies that the products were designed somewhere else, and the production was outsourced to China.

Well ladies and gentlemen, this is changing. China has started to move from Made in China to Invented in China. The country's National Science and Technology Development Plan -covering from 2006 to 2020- aims to increase R&D expenditures to 2.5% of the GDP by 2020 to reduce China's reliance on foreign technology. The ultimate goal is to become an innovation-oriented society by 2020, and a world leader in science and technology by 2050.

First thing we think when we read this is that the Chinese Government will implement some sort of policies so that companies feel encouraged and make of innovation their modus operandi... but that's just part of the picture.

Since the 1990s China has made higher education a priority, and as a result the proportion of graduates from senior secondary schools who go on to pursue higher education has risen from nearly 50% in 1995 to 75% by 2006. More than half of Chinese students graduate in Natural Sciences and Engineering, compared with a world average of 27% and only 17% in the US.

The investment in R&D is not new to China: from 1993 to 2003, the country's R&D expenditures grew faster than any other nation's, pushing its share of world R&D investment from 3.6% to 9.5%. During that same period, the European Union's share of world R&D investment declined from 28.5% to 25%, and the US's share dropped from 37.6% to 36.1%.

In my country, most of the people that decide to go to University major in Human Sciences (Law, Politics, Psychology), and a smaller proportion of Majors are related to Business and Administration. At the same time the Government insists that national industry should grow, that companies should be more competitive for achieving leading positions is the international markets... still, I haven't heard of any mid or long-term plans that will encourage students to pursue a science-oriented education. I don't mean we don't need professionals in Business and Human Sciences, but if any nation is interested in turning innovation into a way of living, policies should not only support companies investing in R&D, but also help building a work force that is suitable for such tasks. And China just gets it.

Danger: Demolition area

I have this personal problem with the idea that most people have when they think of innovation... let's make a little experiment: what do you think innovation implies? Does any of these options come to your mind?

The creative genius Your vision can come either in a modern or a traditional flavor. It doesn't matter if you see characters from the cartoons in a sophisticated lab or Leonardo drawing flying machines, the point is that you think that there are only a few fortunate individuals that can create magnificent inventions out of nothing... and let's face it, most of us are not part of that very exclusive group.

Cutting edge technology You see nanomaterials that react with solar light, complicated manufacuring processes with robots all around, futuristic cars, microchips, devices for producing clean energy... And then you realize that unless you are part of Nokia or the NASA and have unlimited R&D budget, you have pretty much no chance of bringing something new to the table.

The next billion dollar idea You look around and you see your iPhone, your iPod, or both. Maybe you bought them online... let's say through e-bay. And if in fact you did, you probably used your credit card or PayPal. Further more, it was mailed to your door by DHL or FedEx or UPS. Even if you don't have an iSomething (I don't!), you check the webpages you visited recently and there's a huge chance YouTube and Google are among the first. All of these things are so natural in our lives that we just can't tell how we lived before, and most of all: how did the people that created them see the opportunity to innovate.

The whole idea of this post was to tear these paradigms down. Last year, futurethink -an innovation consulting firm- asked 50 top excecutives what did innovation mean to them. One of the most common answers was "to address customer needs and generating valuable products or services".

Of course I'm not saying I wouldn't love to wake up in the middle of the night with a brilliant business concept... but in the meantime it's relieving to feel that we can all innovate somehow.

What is this about?

Hi, and first of all: welcome! I created this blog as a part of my application process for the World Business Dialoge, an international conference for students that will be held in Köln next April. The event will revolve around a main topic, which is The Integrated Challenge: Resources, China & Customer Revolution.

The idea of my blog is to share some thoughts related to this topic, and to receive your feedback. Agree, disagree, ask, discuss, recommend, give your point of view: it will make this space much richer!

And last but not least: if you hadn't heard about this conference before, visit their website:

http://www.ofw.de/

There you can learn more about the event, the team of students in charge of the organization, and the main topic as well. I attended the conference in 2007 and had the best time, I got the chance to listen to great speakers and made a lot of friends from all over the world...

That being said, welcome again! I hope you enjoy and visit often!