Tag Archives: Innovation

All posts that talk about innovation theory and technological innovations

Continual improvement, Innovation and Modularity

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I’ve been reading Internet Architecture and Innovation which has gotten me to think a great deal about system’s architecture and innovation (shocking I know), but it has also gotten me to think about continual improvement as well. The perspective that Schewick takes for innovation in a system is actually based off of stock options. If you aren’t aware there are two types of options. Each is used in a different circumstance to sell at a certain price or to buy at a certain price. This has been used in some innovation theories for a while it’s called real options, or taking financial options and using them in a similar situation in real life. The differences is that it’s a go/no go choice instead of buy/sell. In terms of innovation it would be a choice between pursuing a new innovation in a system or not. For example. Let’s say you have a watch and you are trying to improve the time on the watch. Using the reals option approach you could figure out how much money you’d have to have for a return on your investment in the innovation, per watch, and figure out how many different types of crystals you would test to improve the timing mechanism. Another example could be a car, where you’re trying to reduce the drag on the car, which could dramatically change the full shape of the car. Whereas with a watch you may only be changing the crystal. 

Essentially, what this means is that you have two different ways of innovating within a system. Change the full system (car) or change a single module of the system (watch). Reducing the drag on a car could require a full system overall, because you’ll be changing the size of the front end, which could impact the maximum size of the engine (or shape of the engine), or could impact the maximum headroom of the vehicle. So, you could have a radically different looking vehicle from model to model. In fact we can see this if we look at the evolution of the car (below). This change is extremely expensive and requires a huge amount of work. It’s not likely that a company would pursue multiple designs beyond the drawing board or initial mockups. It would simply be too expensive to build multiple prototypes that are fully functional.
Evolution of Lamborghini
With watches you could have the exact same watch with several different materials to ensure the watch keeps proper time. In terms of watches there have been several radical innovations, including the wristband and digital. However, if the watch is not digital, the changes in some parts of the watch are extremely easy to test and compare on the market. For instance many pocket watches use rubies to protect the metal pieces in a watch from rubbing against each other. In this case it’s possible to test many different gems to protect the components, it’s also extremely cheap and if something fails completely it would never move into production. However, you could test hundreds of types of gems (sizes or whatever), at a significantly lower cost than testing many different full system designs.
So what’s the difference between the two? In this case we’re changing a full system compared to a module within the full system. Of course changing the gear structure of a watch would require a full redesign, but there are many parts that can be changed independently. In many aspects this can happen with a car, but there are limitations as well.
This modularity allows designers to innovate on separate aspects of the product without decreasing the quality of the overall system. This same idea can be applied in other business settings in terms of rapid and continual improvement processes. Many business processes are systems that integrate many different groups and aspects. Splitting the system into modular components allows continual improvement on many different aspects of the system at the same time. This modularity decreases the cost of improving individual aspects of the system as well as allows for more improvement projects throughout the system. 
Why would the costs be lower? Well, as I mentioned with the watch, it’s cheaper to test different components for the gems, time keeping crystal and face glass than to test a change in drag for a car. The change in drag could require changes to the seat heights, new design for the windshields, possibly an entirely new chassis. In the case of reduced drag, if the design works you may have to redesign all these other components. In the case of the watch finding out that the new glass face doesn’t work wouldn’t impact which crystal works best. This reduces the costs for testing the improved system.

Are we talking past each other with the net neutrality debate?

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I started reading (yes another book) “Internet Architecture and Innovation” on my flight to Portland Tuesday night. It’s going to be a really interesting read, if you like the internet, economics and innovation of course. One of the first parts discusses the history of the internet and a design principle called end to end. This means that when something is transmitted certain events must happen. There are two meanings to the same principle though, which complicates things. In one version only peers can “talk” to each other and share the information. This isn’t exactly literal, because if I’m skyping the data isn’t just between skype on my pc and yours, it goes through many, but the idea is that only your pc and mine know we are skyping. In the second method, some intermediaries might know that we are skyping, through something called deep packet inspection where a router is able to read the information it processes. Both ways are still called end-to-end. Which is obviously a problem.

Another easy example. One version would require equal up and download speeds, the other doesn’t. Let’s say you have a picture and want to upload it, in the one version it would take you the same time to upload as to download it the next day back to your pc. We know this doesn’t happen.

Until reading this book I really thought that the internet was truly designed in an equal and neutral manner. However, this isn’t the case. Using these two design principles results in an internet that looks very different and we would expect it to evolve differently based on which understanding was applied.

It’s obvious that for consumers the first option is better. Where the network behind the internet is neutral and a “dumb” pipe. Why is it better? Because no one would be able to intercept your data or change the speeds you get your information or even cap your data downloads. This is bad for network owners because they can’t charge or filter as easily for specific content. They simply become a pipe that information flows through.

The differences in incentives and contexts which the design rules are applied drives this discussion. Since the participants believe they are talking about the same thing there is confusion over the disconnect. This leads to an obvious other problem, our clueless elected officials. They don’t understand how the internet works at the simplest level, let alone the esoterics of the minute differences in this argument. It is no wonder they have tried to do back door deals to get this topic to go away.

This also has led to confusion within the internet community of how the telcoms can say that the internet wasn’t developed as a neutral platform. In a way they are correct, in other ways they are wrong. It was just a matter of what was being discriminated. Before it was up vs down speeds, now it could be content. Which to them is no different. For us, it matters a whole lot more.

Book Review: Idea Factory, the history of Bell Labs

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Yea, I know I’ve just been doing book reviews.

This book was amazing. I had no idea of all the different things that Bell Labs produced from the mid 1920’s until the 1970’s and later. The book focused on the high point of Bell Labs innovation run. It followed the career of several, at the time, famous and prominent scientists that were employed at Bell Labs. Please such as Mervin Kelley (vastly improve the vacuum tube and was a long running director, VP and President of the Labs), William Shockley (inventor of the transistor) Brattian (inventor of a different kind of transistor), Claude Shannon (inventor of the field of Information Science), John Pierce (inventor of passive and active satellite). These there were many others, however, they each had significant impacts on how our modern society works.

The book does an excellent job in explaining some of the basics of how the research was conducted, what work needed to be done to make it work on an experimental level, the method of transferring the invention into innovation or a full product and the goal of each of these inventions. Mervin Kelley was famous for saying that to implement a change in AT&T’s network the new technology must be “better or cheaper or both.” This prevented a great deal of frivolous technologies from being implemented into the telephone network. Additionally, this was required to ensure that AT&T was always able to work towards reducing rates for subscribers as they were a “natural” monopoly.

This was a time when research was done to ensure that the network would be operational for 30 years without malfunction. This required huge investments in quality control and required that additional costs were built into the network for redundancies and protection. In fact Statistical Process Control was invented at Bell Labs to ensure proper quality.

How did all of this work? Well, there were two factors going on here. First, Bell Labs was able to hire the best and brightest to work on interesting problems. Second, the scientists had a continually evolving project that always needed more innovation. These two combined with a freedom to explore allowed the scientists to delve into basic and applied research. In some cases they did not know how or why something would work, but felt that it would improve the quality of the telephone network.

One of the goals of AT&T was to create a coast to coast network with universal service. This required the company to figure out how to address signal decay due to distances over several miles. To address this the company developed the vacuum tube repeater, which significantly increased the distance a voice call could travel. The manufacturing of a tube was extremely difficult and expensive. Bell Labs felt that there had to be a different way to create a repeater. Over the next 20 years they investigated off and on (with a break for WWII) how to make semiconductors work as a repeater. Bell Labs was capable of making this sort of investment because it had a guaranteed revenue stream and a mandate to continually improve the network. These two together allowed the Labs to do work that they otherwise would not have been able to investigate.

This is a very different model for innovation than we currently have in any organization. Universities come close, but they fall short in the fact that the professors are continually required to apply for more money and seek permission from someone to pursue their work. Bell Labs was much more relaxed about this.

This innovation method is also very different than some of the historic events in the US, such as the Manhattan Project or the Moon Landing. Those were single goals which allowed the focus of a great group of minds.There was never any intention of keeping those minds together for the next big project. Bell Labs had the ability to do this.

There are some organizations that should be able to do something like this. The National Labs are one, but there’s no direct business need so even this doesn’t exactly work. An organization like TNO in the Netherlands, which focuses more on practical matters could increase the amount of basic research they conduct in various different areas. TNO is structured differently than the National Labs in the US, because they are expected to work closely with both industry and universities. This gives each of the groups a strong business focus and could serve as a pipeline from basic research into business activities for the companies that work with TNO. However, at this point TNO does not perform these activities.

I give this book a 4.5/5. It was extremely well written, well organized and dealt with some amazing subject matters.

Entitlement for copyright owners

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Business Insider had an article today about Reddit’s FIA. In my article in the Urban Times last week I addressed some of these issues before he wrote this article. However, he raises points that I don’t mention there and I feel that it’s extremely important to discuss them.

First he says that the law would make the internet “Hugely Difficult to monitor.” This raises a few questions. What does he mean by the internet? I helped define that in FIA, which I defined it as any data network including the web, social networks, FTP, peer to peer, email and a slew of other things. If he means this; then do we want the web to be easy to monitor? He trots out the case against it as child pornography of course, which I addressed in my Urban Times article. It’s a powerful argument because it hits upon two competing sets of social norms, rights of privacy and abhorrence to child abuse.

The use of child porn is a technique that is designed to end the conversation and shut down dissent. It places supporters of privacy in a position that is not congruent with their belief system. Additionally, the connection between copyright and child porn mixes different issues and seriously different belief systems. This difference is extremely important as there have become two different competing sets of norms. The incumbent belief that copyright is stealing, and the one new that has been developed by Web Kids.I strongly suggest reading the previous link as it provides powerful arguments for the changing sets of norms that my generation and younger entail. (I’d be on the rather old side of that generation).

Using a somewhat bad analogy, we’re using the “internet superhighway” and like the real highway people don’t want everyone driving by to know what you have in your car. Even if you aren’t doing anything illegal, do you want the cops to know that you have 5 cases of beer in the back and are going to be floating down a river all day? Probably not, cause they have no reason to know what you’re doing. Now, our data is similar to those cases of beer. Using encryption puts that into the back of the trunk where a cop is required to have justifiable cause (in the US) to inspect it’s contents. The person looking at the data would know the general direction your going and some of the ways you’re getting there, but nothing more. Yes, it makes it more difficult to identify bad stuff, but it’s difficult to do that on a real highway too. Just ask boarder patrol, and they have the right to inspect whatever they want.

Second, he essentially argues that copyright owners should have their content monitored by others. This is a huge subsidy for the copyright industry that will be paid for by other services. I’m going to use a physical world comparison, it doesn’t work perfectly but it works reasonably well. Let’s say that YouTube is similar to a Wal-Mart, or even Amazon.com. The author is arguing that YouTube needs to monitor as soon as the video is put on the web to ensure it is not infringing on copyrighted material. This would be similar to requiring Wal-Mart or Amazon.com to search for patent infringing technologies.

Why does this analogy work? In both cases these rights are state sanctioned monopolies. In both cases they are protecting a manifestation of an idea. Something that needs protection because it is extremely easy to protect. However, in Patent suits things are extremely different. The owners of the patent are required to sue companies that infringe on the patent. Wal-Mart and Amazon.com are both protected from the suit.

If Apple was allowed to sue Wal-Mart for the fact that an infringing technology is being sold there, Wal-Mart would have to bear the cost of policing their inventories for infringing material. In addition it would be in their benefit to be overly caution and remove potentially infringing products before anyone can see them. Part of the cost of owning a patent is the cost of policing products that may be infringing. By removing that burden from the copyright industry we are reducing the cost of the ownership of copyright and placing it on services like YouTube. This stifles innovation in services like YouTube because they have to include the extra cost of policy copyrighted material. A competitor to YouTube has a huge hurdle to overcome before they can even open.

Finally, he argues that the bill supports file sharing. I don’t think that it does other than being based off of a different set of norms. I’d argue that the bill supports innovation over old business models. You can disagree with me on this, however it’s been shown in several studies and some anecdotal evidence that increasing legal access to copyrighted content reduces pirating. If it is easier for a company to create interesting ways to provide access to content while paying the copyright industry then everyone wins. However, as Falkvinge puts it, “I don’t care about industry profits.” Realistically, I don’t care about most companies profits, because I’m only dealing with the company to buy a product or service I want at a price that I believe is reasonable. If all the legal sources that are available to me to watch a show or listen to a song when a person wants to, it is not unreasonable for them to look for it elsewhere and then try to find it legally later if they liked it.

If the company is making bad choices for their business, why should the law change to improve their business model’s chances of surviving? Anyone that supports free market capitalism should be horrified by this sort of industrial policy making. Essentially, these companies are being faced with disruptive technologies and working to push the government to protect them. It’s similar to what has happened with the auto industry in the US.

In closing, FIA represents a dramatic change from the current norms and aligns more directly with a younger generation. This generation does not understand why companies prevent them from viewing content that they want to see. While being an open generation on Facebook, they also understand the importance of protecting the data that has been given to companies. They choose what information they share and with whom. They want an open internet so they have the ability to innovate like their parents generation. They believe that it should be a fundamental human right to have access to data and communicate with whoever they want. An industry that is not innovating should not have the ability to destroy the internet.

Did yesterday’s internet black out save the internet?

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I’ve seen a lot of commentary about how the web may have been saved because of the internet’s “abuse of power.” How parts of the internet shut down for a day. I’m sure this impacted a great deal of people, may have actually hurt our economy a little bit. However, one day of action won’t save the internet.

I’ll agree it made a huge impact as support for SOPA/PIPA has plummeted. Yes, this round of attack by the MPAA and RIAA may have been twarted, but this is just the beginning of the fight for the internet. Ars Technica, has an excellent write up for a plan for how to address some of the concerns of copyright holders in a much better fashion. A manner which would not destroy the internet like SOPA/PIPA.

However, I think that this is a case of industrial policy legislation that is picking winners. In several blogs and posts at the Urban Times, I have written in favor of using some policies to enact changes of behavior. However, in these cases it’s because a novel technology isn’t being adopted that leads to benefits for the social good. In the case of copyright holders, these policies aren’t for the common good, but are being put into place to protect an aging business model that is not innovative. The policies I recommend are to help innovators compete against the status quo.

Data has shown that increasing the availability or decreasing the availability impacts the rate of piracy for television shows. Which indicates to me, policies should be striving to push companies to increase access to copyrighted material, not to go after pirating website. The responsibility for dealing with pirates should be with the copyright holder. They have the means to actually reduce piracy through reducing the amount of licensing fees and increasing accessibility.

We should be pushing our government leaders to put initiatives in places that require massive concessions from copyright holders, if they abuse their copyright position, including losing that copyright. Subscription services like Spotify and Pandora allow users to get access to content either free, with ads, or for a small price. However, these services don’t allow users to access everything. This leads to frustration. If I was able to listen to whatever on Spotify, there’d be no reason to pirate.

What does this mean? Well, we can celebrate the change in positions of congressional members, however this isn’t over yet. OPEN act may be the next step in this battle. Free internet should be our goal, free as in speech not beer. However, people are willing to pay and I think in this case, business models need to catch up with technology.