Tuesday, August 31, 2010

Evolution of the Hamburger.

I just finished reading The Hamburger, by Josh Ozersky, and wanted to capture key inventions and innovations in the evolution of this remarkable food item, which in many ways rhymes with the evolution of the Personal Computer.

- Ground meat on a bun instead of bread (fast food) - Walter Anderson, White Castle. p. 29
- Cooking process standardized across tens of restaurants to guarantee quality and sanitation of the food - Billy Ingram, White Castle. p. 30.

- Double-size burger ("Big Boy") - Bob Wian. p.46.
"...a bass player came in one night and asked for something different. Taking up the challenge, Wian took a sesame seed bun, sliced it in thirds, and proceeded to make the first designed double-decker hamburger. (This could never happen today, when all buns are presliced.)"
- Big Boy franchise - Bob Wian. p.48.

- US government gets into the burger picture, p. 91.

The U.S. Department of Agriculture in 1946 did an inestimable service to the beef industry, and its tireless lobby, by decreeing that hamburger could contain only beef and beef fat—that even the slightest bit of pork or pork fat disqualified it from the dignity of being called hamburger. This was a decisive blow for the beef men in the eternal war against the pork men, since it meant that they had an effective monopoly on the most popular meat product in America.

- Large-scale, limited menu, continuous high-speed burger cooking and service operation; drive-in restaurant (social networking) - McDonald brothers. p.53.
- McDonald's franchise, with uniform cooking and service process - Ray Croc. p.58.
: a combination of conformity and enterprise:
"...it was a franchisee who invented the Big Mac, a fran- chisee who invented the Egg McMuffin, a franchisee who invented the point-of-sale protocol (“May I have your order, please?”). A franchisee invented Ronald McDonald! Franchisees have conceived and developed most of the marketing and product innovations that have propelled McDonald’s to fast-food supremacy." p. 64.
- McDonald's financial model: lease restaurant from a real estate owner, sub-lease to the franchisee at 40% markup, use as a financial leverage to enforce process conformity - Harry Sonnenborn. p.78.

"McDonald’s became what it is for two reasons. One, because it was the first and the best hamburger franchise restaurant, with the most far-sighted senior management. And two, because Harry Sonneborn figured out a way to finance a multibillion-dollar empire without cash, collateral, or even a significant show of profitability.
Sonneborn would frequently go so far as to tell investors that McDonald’s was a real estate company, not a hamburger company."

- Hamburger University, rigorous training for McDonald's franchise managers - Ray Croc. p. 78.

"...the system was invaluable. It made McDonald’s predictable and productive, and a veritable moneymaking machine in the best franchises."

- Fully automated broiled burger cooking ("insta-burger") - Burger King, p.98.
- "Whopper" - a large burger - Burger King, p. 99.

- Meal combo of soda, fries, and burger for one price - Burger Chief. p. 100.
- Automated conveyor-belt broiled hamburgers - Burger Chief. p. 101.
- Giveaway toy with a meal; movie tie-in (Star Wars in 1977) - Burger Chief. p.101.

- Global expansion of the franchise - McDonald's, p. 118.

- Drive-through window - Wendy's, p. 121.
- Half-pounder, three-quarters pounder, salads, and baked potatoes - Wendy's, p. 121

- The gourmet burger - various NY restaurants. p. 130.
To add the most recent developments,
- McCafe - "gourmet" coffee to compete with Starbucks - McDonalds
- a "social networking" burger recipe restaurant - 4food.com

tags: health, payload, finance, evolution, system, infrastructure, brainstorming, social, control, 10x

Monday, August 30, 2010

Creativity Quote of the Day: Anti-Creativity.

In his humor piece "The anti-creativity letters", cognitive psychologist Richard E. Nisbett, implies that the best way to destroy your creativity is to get you worried about creativity:

But worries about creativity are the best. Regardless of your patient's real or ascribed intelligence, he is bound to have doubts about his creativity. It is hard to believe, but humans actually think there is a properly of creativity that one can either "have" or "not have," as opposed to a talent for some field -- a love of its content that keeps them thinking about it all the time--organization, and a willingness to work. Because your patient hasn't the foggiest idea what the property of creativity might be or how he would know whether or not he has it, you can keep him constantly searching for signs and flinching at chimeras. And, of course, worries about his creativity will have the same salubrious effect on his work output that worries about his potency will have on his love life.

Nisbett, R. E. (1990). The anti-creativity letters: Advice from a senior tempter to a junior tempter. American Psychologist, 45, 1078-1082.

tags: creativity, psychology, quote

Invention of the Day: Hamburger Sandwich

Walt Anderson is generally credited with the invention of the modern hamburger, produced today in billions by major global corporations. There's even a "Big Mac Index published by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies." And it all started in Wichita, on November 16, 1916, when Walt Anderson, armed with "a flat metal griddle, a counter, three stools, and a spatula" opened his first burger stand.

"The key to Anderson’s masterpiece was the bun. It was the bun that gave the hamburger its mobility; that allowed a person to eat it while walking or (more important) while driving; it was the bun that made it spe- cial, that separated it from all other sandwiches and gave it a brandable identity. The essence of a picture is the frame, as G. K. Chesterton once observed, and so the essence of the hamburger is the bun."
The Hamburger, by Josh Ozersky. p.29.

According to Ozersky, the business and marketing genius behind the success of the burger chain was Edgar Waldo “Billy” Ingram, a realtor who understood the potential of fast food for industrial workers in the age of Ford car factories:

“A revelation in the eating business has come. Instead of having to go to a restaurant and waste half an hour of the noon lunch, one may step into a nearby hamburger establishment and partake of the hot, juicy hamburger, prepared instantaneously.” p.31.

In later years, industrial refrigeration, an extensive network of roads, and American car-loving culture made hamburger restaurant a fixture in every town and every highway rest stop.

tags: invention, distribution, infrastructure, innovation, diffusion, 10x, history, 4q diagram, health

Sunday, August 29, 2010

RIP: Blockbuster, Inc. (1985-2010)

CNET reports:

Blockbuster reportedly plans to file something called a "pre-planned bankruptcy" and will continue to pay the studios and other most other major creditors. This development shouldn't surprise anyone. For years, Blockbuster has closed stores, laid off thousands, and generally been tumbling towards extinction. Driving to a video store to rent a movie is rapidly becoming as unnecessary as hiring a travel agent, developing film, or listening to music on compact discs.

In a new content distribution environment, a recipe for success turned into a recipe for disaster. Now, even Google wants to be a video-on-demand provider. I wonder, how long this business model will last and what will come to replace it?

tags: entertainment, payload, distribution, control, information, business, model, destruction

Saturday, August 28, 2010

A billionair sues billionairs over patents

WSJ reports:

They're the everyday fixtures of the Internet experience: pop-up stock quotes on a website, suggestions for related reading near a news article, videos along the side of your screen.

Now, Microsoft Corp. co-founder Paul Allen says he owns the technology behind all these ideas, and he's demanding that some of the world's top Web companies pay up to use them.

The patents in question are:

- United States Patent No. 6,263,507
- United States Patent No. 6,034,652
- United States Patent No. 6,788,314
- United States Patent No. 6,757,682


tags: patents, example, commerce, licensing

Friday, August 27, 2010

How many inventors does it take to pull the US out of recession?

Several tech sites, including CNet, reported Paul Otellini's remarks about the future of the hi-tech in the US:

Intel Chief Executive Officer Paul Otellini offered a depressing set of observations about the economy ..., coupled with a dark commentary on the future of the technology industry if nothing changes.
...he predicted, "the next big thing will not be invented here. Jobs will not be created here."

Well, over the last 300 years, with a very few exceptions, "the next big things" were not invented in China, nevertheless, we don't hear her CEOs complain about the decline of hi-tech employment in their native country. So the problem is not the impending drop in US inventions, but rather a lack of business opportunities for scaling them up using local workforce. The article lists several common reasons: high taxes, high medical costs, hostile business environment, etc.

But forget about taxes for a minute. One way to get around this problem would be for the US to become a nation of pure inventors. That is, everybody's job would be to genate lots of big ideas, while letting other countries implement them for a reasonable licensing fee. Of course, we would have to hire an army of lawyers to bomb sue those countries should they refuse to pay up. Much the same as the Hollywood does today.

Thursday, August 26, 2010

Invention of the Day: Jigsaw Puzzle

Year 1766, London, England. The British Empire is now a major sea power. John Spilsbury, formerly the apprentice to the Royal Geographer, designs and successfully commercializes first jigsaw puzzles.

For a good 20 years during the mid 1700s, all manufactured jigsaws were in the form of dissected maps like Spilsbury's.
The maps were designed as teaching aids for geography classes. As pupils put the pieces together, they would learn how different countries connected to one another.
In the space of two years he[John Spilsbury] marketed the eight map subjects most likely to appeal to upper class English parents: the world, the four continents then known (Africa, America, Asia and Europe), England and Wales, Ireland and Scotland.

It is remarkable that the jigsaw puzzle outlived the steam engine designed by James Watt approximately at the same time and considered to be a major driver behind the first Industrial Revolution. As always, fun and games win over work and industry.

tags: invention, innovation, diffusion, book, education

Friday, August 13, 2010

Girlscout cookies burgers, 21st century style.

A very interesting idea from a food startup:

Then there is the marketing strategy. Rather than spend money on traditional marketing, 4food encourages customers to save their favorite burger combinations in the 4food system, give them catchy names, and use the likes of Twitter and Facebook (and even YouTube video ads) to convince their friends to buy them. Every time a custom burger is ordered, the creator receives 25 cents in 4food store credit.

tags: invention, innovation, social, networking, startup, information, licensing

Thursday, August 12, 2010

Догнать и перегнать Facebook!

Yesterday, after several years of using Gmail to satisfy most of my e-mailing needs, I finally clicked on one of those in-line ads that regularly run just above the Gmail toolbar. To remind you, the ads, superbly matched to customer interests and efficiently delivered at the proper time, were thought to become a money-making machine for Google. Until yesterday, the original intent worked neither for Google, nor for me. Finally, the spell broke. I don't know how much PennState University paid for the e-mail display ad, but the article linked to it was well worth reading. There, professor Hambrick described four major factors that bring about extreme risk-taking by CEOs:
1) recent [good] performance;
2) lavish media praise;
3) CEO's narcissism;
4) incentives with large upside payoffs but small downside penalties.

According to Dr.Hambrick, these factors often lead to unjustified acquisitions because CEOs think that the acquired companies will perform better under new management.

I parked this information somewhere in my brain and switched to reading Bloomberg technology news, which mentioned among other things Google's recent acquisitions: Slide, ITA Software, and etc. Google CEO Eric Schmidt justified the acquisitions by the large amount of cash the company had in its bank account and a long-term need to get into social networking.

Hmm... What's the difference between Google's old acquisitions that lead to the development of many excellent products, such as Google Maps, Google Earth, Docs, Gmail, etc., and the new ones? To me, the difference can be summarized by one word: "platform". With old acquisitions Google could fairly easy move them onto its existing, highly efficient storage-and-retrieval computing platform developed for search.
But now, Google doesn't have a consumer social networking platform to accommodate the acquisitions. Wave didn't work out, Buzz is not doing that great either. Rather than acknowledging a missed opportunity and concentrating on something more promising, Google continues imitating Nikita Khrushchev's strategy for Soviet Union circa 1957 to catch up and overtake America. Well, it didn't work out for tovarisch Khrushchev, and, I'm willing to bet, it won't work for Mr.Schmidt.

tags: 4q diagram, innovation, business, strategy, social, networking, information, platform

Tuesday, August 10, 2010

Today, my Ambature colleagues and I had a series of meetings at JPL (Jet Propulsion Lab) and CalTech, where we discussed a wide range of topics, from quantum computing to invention disclosure ratios at major universities. Somewhat predictably, quantum computing is amazing, but I was surprised to learn that CalTech, which files on average only half a patent application per faculty per year, is one of the best in the US. Another related statistic: one million dollars of research money produces one patent application, which, probably, results in no more than half patent. That is, for $2M spent on research one of the best universities in the world gets one US patent. MIT has similar numbers, while public universities, like University of California, file at least 4 times less.

Assuming, generously, that one US patent application costs $50K over its life time, the amount of grant money universities spend on IP is less than 0.5%. In contrast, administrative costs are around 40%, which is 80 times higher. I wonder why this is the case.

Now, for your amusement, here's a picture of a test bed for Mars Rover. This is where JPL researchers investigate ways to rescue their remote machines when they get stuck on the Red Planet. This time, it's  the rocks, which you can see in the middle of the whitish surface, that cause the trouble.

Sunday, August 08, 2010

10 thousand monkeys with 10 thousand VCRs

A good example for explaining the 4Q diagram: a new technology was created to address a totally new market. Even people who had no clue how devices worked bought and used VCRs.

In the early 1980s, an apocryphal story made the rounds among video storeowners concerning a hapless customer who brought his VCR back to the store where he’d purchased it a year earlier, complaining that it had stopped working. The storeowner looked it over, wondering if there had been some mechanical failure, but found none. Upon ejecting the videocassette currently in the deck, the storeowner found that it had been played and recorded over so many times that the magnetic tape had worn to the point of snapping. Handing the customer the tape, the storeowner asked if all of his tapes were this worn, to which the customer responded, “I didn’t even know that piece came out!”

Greenberg, Joshua. From Betamax to Blockbuster : Video Stores and the Invention of Movies on Video. Cambridge, MA, USA: MIT Press, 2008. p 41.

Another story from the same book shows the deep roots of IP TV:

Saturday, August 07, 2010

Creativity Quote of the Day.

Psychologist M.Csíkszentmihályi on the meaning of creativity:

In his [A.Maslow's] opinion it is not the outcome of the process that counts, but the process itself. According to this perspective a person who reinvents Einstein’s formula for relativity is as creative as Einstein was. A child who sees the world with fresh eyes is creative; it is the quality of the subjective experience that determines whether a person is creative, not the judgment of the world. While I believe that the quality of subjective experience is the most important dimension of personal life, I do not believe that creativity can be assessed with reference to it. If creativity is to retain a useful meaning, it must refer to a process that results in an idea or product that is recognized and adopted by others. Originality, freshness of perspective, divergent-thinking ability are all well and good in their own right, as desirable personal traits. But without some form of public recognition the do not constitute creativity. In fact, one might argue that such traits are not even necessary for creative accomplishment.

Source: Implications of a Systems Perspective for the Study of Creativity, in Robert J. Sternberg (Eds.) Handbook of Creativity (p313-335). Cambridge University Press

The view emphasized above is particularly important when we consider invention (a novel idea) in relation to innovation (scalable implementation of the idea). For example, subjectively we might experience a "spark of genius" while inventing a solution, but it's no guarantee that the idea we came up with has any value. Creativity, along with money and other fixtures of the modern society, can be considered a status function. That is, somebody is creative because we think she is creative. Creativity itself is probably one of the greatest human inventions.

tags: creativity, invention, innovation, quote, psychology, system, status function

Friday, August 06, 2010

Creativity Quote of the Day.

...autonomy, complexity, and a connection between effort and reward are ... the three qualities that work has to have if it is to be satisfying.

If I offered you a choice between being an architect for $75,000 a year and work­ing in a tollbooth every day for the rest of your life for $100,000 a year, which would you take? I'm guessing the former, because there is complexity, autonomy, and a relationship between effort and reward in doing creative work, and that's worth more to most of us than money.

Malcolm Gladwell. Outliers, The Story of Success. 2008. HC ISBN 978-0-316-01792-3.

tags: creativity, quote, technology, control, social, networking

Thursday, August 05, 2010

Reportedly, Facebook spent $40M on a social-networking patent porfolio:

A set of documents from the United States Patent and Trademark Office (USPTO) reveal that Facebook acquired the 18 patents earlier this summer from MOL Global, the Malaysia-based payments company that purchased Friendster last year.

Most likely, it's a defensive move and has nothing to do with the intensifying Google-Facebook rivalry, as the CNET article alleges. Had the patents fell into the hands of an experienced IP litigation firm, Facebook would face massive legal costs and huge potential financial damages claims. I'd say they got away fairly cheaply. Especially, in view of a Bloomberg report that "Facebook Inc.’s biggest advertisers have boosted spending by at least 10-fold in the past year as the social network crossed the half-billion user mark."

In any case, Friendster's patents turned out to be worth a lot more than the business itself.

tags: patents, licensing, 10x,  high value, social,  network

Wednesday, August 04, 2010

Dead on arrival

A good example of how NOT to innovate:

Jolicloud, the netbook and web services-focused operating system by Netvibes founder Tariq Krim, has finally launched with an official version 1.0 release.

With Netvibes, Krim managed to create a personalized startup page site with a massive widget (or web application) ecosystem. In many ways, Netvibes acted as an online operating system — bringing access to services like Twitter and Facebook into one convenient location.

There are three strikes against the company.

First strike: the startup enters an extremely competitive existing market - ultra–portable web devices, e.g. netbooks, tablets, and, potentially, phones.

Second strike: the market is dominated by deep–pocketed players like Apple, Google, and Microsoft, willing to play a "war of attrition" game.

Third strike: the product that the startup offers doesn't bring to the market a significant (10X) change in user experience and/or performance.

In short, it's a classical "better mousetrap" innovation that has very low chances to succeed. Really unfortunate.

tags: moustrap, innovation, 4q diagram, example, startup

Tuesday, August 03, 2010

More on Amazon from VentureBeat:

Amazon Web Services has become a huge business, with revenues of $500 million in 2010, according to UBS Investment Research. And that success is due in no small part to the rapid rise of social games such as FarmVille on Facebook.

...Amazon hosts six to eight of the top 10 games on Facebook at any given time. That includes top Zynga and EA Playfish games, meaning that hundreds of millions of players are playing games on Amazon’s servers, without even knowing it. Overall, Amazon has hundreds of thousands of customers in 190 countries for its web services. It also powers big operations such as Netflix, NASA, Autodesk, NASDAQ and the New York Times.

Cloud services is only about 2% of Amazon's revenue. But still it's a good, and growing, chunk of change. I wish I bought their stock around July 1, this year.

tags: cloud, information, service, source, games, virtualization, commerce

Monday, August 02, 2010

What's good for shopping is good for Amazon.

Ian Freed, Amazon's VP in charge of Kindle:

First of all, with regard to the iPad, it's a totally different product. I mean, the product is a general-purpose tablet. We love that product because people use their iPads to buy a lot of products on Amazon. It's a tailwind for our e-commerce business.

But for book reading it's substantially heavier than a Kindle; the battery life is 10 hours versus 4 weeks on the new Kindle, and you can't read it outside in the sun. The Kindle is absolutely purpose-built for reading and it's a product that people consider a tool for reading. It's not something that's more of a gadget.

Amazon is the Wal-Mart of the Internet age. Within its shopping empire Kindle is just another gadget and book is just another piece of sellable content. Until a new format of the book, as a content wrapper emerges, Kindle ( device & app) will stay competitive with iPad and other tablets. It's the recommendations and reader reviews that matter.

tags: control, payload, control point, distribution, market, commerce, information, tool

Sunday, August 01, 2010

Electronic gold

I just finished re-reading A History of Money, by Glyn Davies. It's a very competent book on evolution of money from cowrie shells to electronic transactions. Since I believe that money is one of the greatest innovations of all time, I'm going through this and other books on history of finance searching for recurring invention patterns that can be re-used in various technology domains. After all, transaction money is just a control signal that the buyer sends to the seller in order to obtain the goods. Capital is another interesting function of money that follows innovation patterns in storage technologies. The days of the gold standard are long gone, but even today all central banks hold tons of this precious metal in their secure vaults. Just in case, people will trust useless metal more than useless paper or useless electronic signals.
It is interesting though that something very similar to the gold standard is being developed in the virtual world today. Here's an excerpt from an article on Facebook Credits:

How do I set up my own currency?
You permit the user to purchase only one thing with Facebook Credits: your currency. Once the users have exchanged Facebook Credits for your currency, they can participate in the broader game economy. There should be no direct purchase of any items or anything other than your currency with Facebook Credits.

Once the exchange is made, you’ve locked up the value of those Credits in your own currency, ensuring it won’t move off to another application.

Replace "Facebook Credits" with "Gold Coins" and you get the good old gold standard. In Facebook we trust! Funny, how history runs in circles.

tags: control, money, business, signal, commerce, games, virtual, market, payload