tending other meetings or working on anything else. The support of the entlre organizatlon was critical tO success. Perhaps 1 れ OSt important, under the extreme conditions Of the } { ・、 project we tried tO be sure that all Of the spouses and families under- StOOd our VISIOn and the exciting mission for WhiCh their loved ones were sacrificing. Whenever a spouse or family member called an engl- neer on the HDTV project, we would ask to speak with them—to say thank you for their sacrifice, support, and understanding. The message sometimes wore a bit thin, but we never stopped saying thank you. On one occasion, we arranged tO have a Wife fly in tO spend a weekend With her "estranged" husband. That expense wasn t in our budget, and it was against official company policy, but our terrific CEO at the time, Jim Carnes, agreed, and we did the right thing. The project fared far better than if our engineer had traveled home. The couple remained happily married, and when we finally shipped our HDTV system, we ordered SiXty dozen red roses for all the spouses. INNOVatION 199

customer needs that can be addressed. Each higher level opens up fami- lies Of possible products and services in each market segment, such as fOOd, commumcatlon, transportatlon, and entertamment. ln each cate- gory, there are alSO endless ways [ 0 balance benefits agalnst COSts tO create umque products and servlces. Consider, for example, the possibilities created by different combi- nat10ns Of quality versus convemence for consumer entertamment and commumcation products, as suggested in Figure 4.1.5 lt illustrates that whenever a product iS significantly improved in either its quality or its convenience, it can spawn a new industry. For example, consider the journey from radio, to black-and-white TV, to color TV, [ 0 HDTV. These product innovatlons significantly increased quality through bet- ter sound and images for the customer. Alternatively, the journey 伝 0n1 the LP record to the CD player [ 0 the iPod represents major innova- tions in the dimensl()n Of customer convemence, ln terms Of bOth ChOice and portability. A colleague once asked us, "DO you think the success Steve Jobs is having with the Apple iP0ds is a fluke?" We suggested that it was highly unlikely. For example, the iPod Nano was as far to the right ⅲ Figure 4.1 you could make it. This doesn't happen by accident. ln Japan, by con- trast, the instlnct is tO add on every product feature imaginable, tO go up the chart. JObS tOOk all features out but t 、 vo—audio and ChOice ・—ln order tO mlmmlze SIZe and maxllmze convemence SO he could move tO this "white space" without competition. The new video iPOd iS in keep- lng with that theme. He iS retaining the simple, convenient format and now moving vertically. That doesn't happen by accident either. MOSt innovatlons are combinations Of improved quality and conve- nience features, such as compact disks (CDs) versus long-play (LP) records. Video on demand will soon extend HDTV by adding more convemence tO create another industry. Eventually we Will have n10 ー bile, speech-controlled, head-mounted HDTV video receivers, iHDTM The products shown in Figure 4.1 are all major, disruptive innova- t10ns. MOSt innovatlons are improvements tO already-identified products and servlces. But these smaller innovations can still distinguish a prod- uct. Consider, for example, the addition of nonslip rubber pads on 72 CURtIS に caRLSON aND WILLIam 、 h,/. WILmot

single connectlon and replaced it. 5 Miraculously, the system started tO work, but not perfectly—itstill had many periodic hiccups that had to be cured. The remaining few weeks had the entire team literally hunt- ing for needles in a haystack—looking for a single digital bit that was wrong out of hundreds of millions that were fine. The debugging was SO intense that planning was an hour-by-hour exercise. Glenn meticu- lously kept track of the debugging efforts on a huge whiteboard where the entlre team could see it. 、 6 one ever needed t0 ask, "How are we doing?" lt only took a glance at the board [ 0 know the answer. The problems were fixed one by one, and eventually the system was good enough" to ship to the testing lab in Washington, D. C. The pro- tOtype system continued tO work over the next few months during the FCC tests, and it achieved the best picture quality among the competing systems. The team had achieved an amazlng result. Without Norm, GIenn, and Terry, this project would have been a failure. They were all champions for their parts and they made sure that everyone was in the proper jOb, that the right connectlons were made between the team members, and that there was a clear plan for every- one tO see. At all times, they were respectful Of their teammates. Norm could have come in with a plan that made the schedule. He did not. He depended on the genius 0f the team to help make the right decisions by having them be fully involved. Norm, Glenn, Terry, and many others6 formed a high-performance innovation team and succeeded. Eventu- ally, key parts of the system were included in the final HDTV system for the United States and the team won an Emmy Award, the highest award in the nation for broadcasting excellence. ln developing a successful innovation, there are several phases that teams must go through tO achieve success. The first phase iS tO develop the value propositions for bOth the customer and enterprise and then the detailed innovation plan. The second phase is often to build a work- lng prototype, as described above for HDTV. The third is t0 create the final product and deliver it into the marketplace. These different phases may involve different teams with different skills, but the fundamental human lngredients at each phase are always the same. ーⅣⅣ ova リ 0 Ⅳ 187

right now. You sign it, I'II take it to your supervisor, and we'll have it posted today. PAT R ICK: み ow , what should I do? H R : l'll take care of the p 叩 erwork but you need [ 0 check references, document those, and make sure thiS iS the person you want. PAT R に K: Okay, but time is of the essence. H R : We have to post the job: that will happen today. But we can move forward while it is posted and get this person on board ASAP. Have the applicant get in touch with me and I will make sure all the paperwork is in order and make sure she gets all the informa- t10n She needs tO make her decision. There's no reason we can t make this happen in a few days or so. PAT R に K: Thanks! lt's obvious which HR person responded to Patrick's concern, thereby creating bOth customer and enterprise value. ThiS iS a simple example, but many people working internally in organizations are not thought- ful about ways that they can provide maximum customer value.When they are not focused on important needs / 0 / の C 〃りな , they under- achieve. Not only are these folks a potential nuisance, like the first HR person PatriCk consulted, they diminish their value tO the organization and itS customers. OtherConsiderations forlmportant Customerand Market Needs ・ When developing a new market-based opportunity, im. portance" in- cludes tWO Other criteria: it should not be overwhelmed by Other exponential developments, and it should be feasible. 1. The 0 〃の / / 〃ん紘ルん / ノり 0 砿怩〃な . An inno- vation that does not anticipate external changes may 儀 il. ln the INNOVatION 59

Kelly and his SRI colleagues had this idea for a revolutionary radar system back in 1988. He assembled his team and they put together their first sketch of what it would 100k like and do. Even though there was initial excitement about the idea, it was going tO be an expenslve project, costing more than $ 50 million [ 0 build something as big as two football fields. His customers for this new radar would be fellow atmo- spheric sclentists at the National science Foundation (べ・ (F) and around the world who are working t0 understand atmospheric effects on the envlronment. Kelly had many meetings with them t0 understand their needs and tO learn hOW tO design a system that would collect the 1 第 .os [ valuable data. ln 1989 , Kelly put together a detailed proposal and submitted it to NSF. lt was not prepared to fund such a project, but it asked Kelly's team tO submit another proposal for a study tO prove that the concept could work. Kelly submitted the proposal, the team won the study, and they showed that the concept was feasible. Then there was a long ia- tus. Kelly and the team kept on working hard, but the project always missed being funded. Finally, in 1996 , a solicitation was issued by NSF, and Kelly submitted a detailed proposa in 1997. The proposal , on. Unfortunately, for political reasons, congress intervened and re- moved funding for the project. Then, after another long delay, NSF asked KeIIy to completely redesign the radar system. To anyone else this would have been a fatal blow, but in retrospect KeIIy acknowl- edges that this review in 1998 greatly improved the system. But again, in response t0 Congress and just before funding the latest proposal, NSF restructured the funding process. This caused still another delay. Work- ing with hiS partners he came up with yet another proposal tO satisfy both NSF and Congress. FinaIIy, in 200 ろ , the system was funded and part of the system has now been built. lt works superbly. John KeIIy is a champion in every sense of the word. He selected an lmportant need, built a great team, and iterated his value proposition hundreds of times. He worked through incredible obstacles and perse- vered for fifteen years tO make hiS innovation come tO fruition. When we 100k back, it is hard to believe this proJect could have suc- ceeded had it not been for KeIIy. FortunateIy, most innovations don't take fifteen years tO come t0 fruition. But some d0. ・ Whether it IS an レ . 切 INNOVatION I タ 9

CffCL11tS and eqtllpment. lt was a monster composed Of miles Of Wire and thousands 0f chips. L00king at it, you wouldn't believe it ever could work. lt didn't. Figure 12.1 : Some 0fthe members Ofthe HDTV team at Sarnoff, SRl's subsidiary, in front Ofthe equipment comprisingthe prototype HDTV innovation. Engineers from eventually nine different companies forged an effective team tO help c 「 eate the finalHDTV system forthe United States. 4 The system had three major parts: an encoder, a transmltter, and a recelver. The encoder and transmltter would ultimately be at a tele- VISIOn station. The function Of the Stat10n encoder was tO compress the high-definition video image by making billions 0f calculations each second tO reduce the video's data rate by 6 丘 y times SO it could be sent as a signal by the transmitter over the air tO homes. At the home, an antenna would pick up the signal and then the HDTV receiver would decompress the signal and reconstitute it SO it could be displayed on a high-definition TV screen. A unique attribute 0f digital equipment is that if anything failS' the entire system may fail. That was our problem. We would put a signal intO the transmltter, send it over the air, and then the receiver would display the signal on the screen. But the screen only showed scrambled lines and edges—no images. The team worked feverishly t0 find what in the system was broken. But it stayed broken. Our schedule slipped, but fortunately so did our deadline—the competing teams and the testing labs were having their problems t00. But even with the delayed deadline, the system stayed broken untilthe final few weeks. We were beside ourselves. Finally, someone checked a 186 CURtIS に caRLSON aND WILLIam Ⅵを WILmot

We started with tWO overarching principles: The first was a commit- ment tO creating and delivering the highest customer value in the short- est time. The marketplace demands this. The second was tO achieve this goal through the use Of innovation best practices. Our test was tO al- ways determme whether our practices would move the enterprise in the direction Of creating greater customer value. If they didn't work out, 嶬℃ tried Others. The process was one Of 〃〃〃〃 0 〃 lmprovement Of our innovation best practices through discover and create, apply and mea- sure, and learn and iterate. These tWO overarching principles are the most significant acts Of com- mitment toward achieving CVC. 、宅 see hesitancy and procrastlnation about making these commitments all the time in Other enterpnses, perhaps because the ramifications Of these decisions are unfamiliar. But we sometlmes paraphrase a well-known quote by asking, "lf not this, what? If not now, when? If not you, who?" 1 1 み e often get blank looks. We conclude that these commitments take great courage by the CEO and the semor management team. But What iS the alternatlve tO being explicit about creating the highest customer value LIS1ng innovation best practices? SRI Card One of our first deliverables in our work at aligning SRI around cus- tomer value and innovation best practices was the SRI Card, WhiCh we developed with our staff. The card would articulate SRl's vision and strategy along with our values and key innovation practices. Working groups began developing the card. periodically, versions 0f the card were placed on the internal SRI website t0 get a company-wide response. ln the beginning, some Of the e-mail responses were argumentative, sus- picious, and even antagonistic. But all the responses were helpful• They indicated that we still did not have the right messages and we needed tO dO 1 ore , ork. lterations continued. The goal was 〃 tO produce a card in record time, but rather tO involve all the employees in a JOint ViSion that " 256 CURtIS R. caRLSON aND WILLIam W. 、 MI い Ot

lt's as sImpLe as NaBC: HO 曜 LIZ SO 亡 HeR BIS ノ OB lF YOU CAN'T STATE YOUR VALUE PROPOSITION, YOU DON'T UNDERSTAND YOUR JOB. An Opportunity Liz was the editor of nonfiction books at a t 叩 publishing house when the job of editorial director opened up. She saw it as a great opportu- nity, but She was worried. LiZ iS smart, savvy, and energetic, but nor- mally the jOb would go tO someone in hiS or her thirties or forties with ten or 1 れ ore years Of experience. LiZ was twenty-seven and lOOked SiX years younger. She thought she had the intelligence and skills [ 0 do the job, if those making the ultimate decision could 100k beyond her youthful appearance. But would her application be taken seriously? Liz called her father, Art, t0 get some advice about what she might do. Art asked her for her value proposition.'My what?" she asked. He explained that every business transaction has at least tWO value propo- sitions. ln this case, one would be 伝 01 れ the hiring manager at the orga- nization t0 the j0b candidates, explaining why they should take the job. Another would be from her to the company, explaining why she was the best person for the job. Each side needs to persuade the other. Remarkably, many people go into interviews without thinking of how they can add value. Some sit there expecting to be "sold," while INNOVatION 85

might el these statements are extreme, but big changes are certainly under way. There iS no easy excuse for the poor educational performance in the United States. Consider California, WhiCh iS the world's current exem- plar for innovation and entrepreneurship. If it were a country, Califor- nia would be the eighth-largest economy in the world, after the United States, Japan, Germany, the U. K. , France, ltaly, and China. 15 But K— 12 educatlon in California ranks fourth from the bOttOI れ Of the う 0 states. 14 For decades, California has made up for this abysmal educational per- formance by attracting brilliant students from around the world tO its great research universities, such Stanford, I-JC Berkeley, I-JC Los Angeles, UC San Diego, Caltech, and UC San Francisco. These are among the top twenty universities in the world. 15 But according tO the president of Stanford, John Hennessy, "ln the past, three out of four of our Chinese students would stay in the United States But this iS no longer true, be- cause students lncreasingly have great opportumties back home. " 16 Nations around the world are turning out large numbers Of well- educated graduates qualified for work in the exponential economy. China will produce about タ 5 million college graduates in 2005 , lndia about タ 1 million English-speaking graduates, and the United States about 13 million. ln science and engineering, China will graduate more than 600 , 000 students ( 18 percent of China's total graduates), lndia ろ 50 , 000 ( 11 percent), and America only about 70 , 000 ( 5 percent). TO make things worse, the number 0f U. S. science and engineering Ph. D. gradu- ates has started declining. over the past ten years, the Of computer-science Ph. D. graduates has declined by more than 25 per- cent. 17 At the same time, China has a goal Of producing a million SCi- ence, math, and engineering graduates a year by 2010.18 These skills are essential in the exponential economy. 行Ⅱ the United States be the dominant technology nation thirty years from now? lt iS absurd tO think that IJ. S. graduates are ten times smarter and more productive than their Chinese counterparts. Further- more, in the exponential economy China and lndia dO not have tO start their research programs at the bottom and slowly work up. China and lndia are teaming with the best partners around the world tO develop 268 CURtIS R. caRLSON aND WILLIam 、 v. WILmot

・ Keep the VOice ofcustomer value and continuous improvement 0 〃 ve. ・ Document and S わ 0 肥 lessons learned and Ot わ e 「 / nnova on best p ractices. 〃 gn 肥Ⅳ 0 「 ds and recognition programs with the vision. CVC, like all organizational approaches, must be continually rein- forced. lt iS a journey that takes time. Look for opportunities [ 0 make headway, and come back at it again and again. 宅 all think it will hap- pen sooner than it does. lt takes time for even a positive virus tO infect the entlre enterprise. Jim CoIIins has a wonderful metaphor for organizations that move 伝 om good t0 great" : 14 An enterprise is like a huge flywheel. When you first push on it, it barely moves. But every little push builds mo- mentum and eventually the wheel will spin. Great companies are the ones that align the enterprise and keep the "little pushes" golng in the right direction. Failure comes 伝 01 れ thinking that one or tWO big pushes will get the flywheel moving fast enough and keep it going ・ み e use another met 叩 hor that helps us measure progress: "brick by brick. " If your aim is to build a solid wall, you do that brick by brick. 宅 constantly ask whether we are adding more bricks each week, each month, and each year. At first you don't see much progress, but eventu- ally everyone can see the progress that has been made. And once you get going, you will start adding bigger bricks. 嶬み e are often asked, "What percentage of SRI lnternational's staff fully understands these principles We say, "About 10 percent understand deeply, 20 percent have a good working understanding, and another 3() percent are conversant with the ideas. The remaining 40 percent are familiar with some 0 「 the ideas, like NABC. " lt's like TQM that way; it took Toyota 6 丘 y years t0 get where they are. But you don't need 1 ()() percent understanding Of these ideas [ 0 make a significant impact and improve the success Of your enterprise. You can never achieve 1 ()() percent, but as the parts C01 e together, they amplify one another and the impact increases. Steady INNOVatION progress brings accelerating rewards.