Friday, August 19, 2011

Trade-off of the Day: Creativity vs Self-Control

A few years ago there was a research article showing that simple walks in a park, sleeping, gardening, and meditation restore people's thinking and self-control abilities, while a walk on a busy street does not. The key to restorative brain activities is low requirements for attention.

Today’s world presents numerous challenges to maintaining one’s focus. It offers a plentiful supply of interesting but unimportant stimulation, whereas many important stimuli lack interest.

Thus, people must ignore much of what surrounds them. This act seems to require frontal and parietal brain mechanisms that mediate cognitive control and are susceptible to fatigue.

In order to replenish these resources, a person should engage in activities high in soft fascination that will activate involuntary attention in non-conflicting ways.

...what makes an environment restorative is the combination of attracting involuntary attention softly while at the same time limiting the need for directing attention.

Watching TV or browsing the web are not restorative activities because the media is designed to draw our attention.

Along the same lines, two days ago, NYT published a general interest article: Do You Suffer From Decision Fatigue? Among other things, it talks about how our brain resources are depleted by attention-demanding tasks, with self-control being one of the more important ones.

Since problem-solving and willpower draw on the same resource, it probably makes sense that people come up with creative ideas, i.e. experience an aha moment, in soft fascination environments. How can we break the trade-off and improve our creativity? One way would be to routinize creative efforts, so that they require minimal involvement of will power. Another, would be to intersperse information acquisition (learning) or focused thinking/writing with low-attention activities, e.g. walking in a park, etc. One more, engage in free-form, divergent thinking "what if" exercises, e.g. "if we could solve any problem, which problem would be worth our blood, sweat, and tears?"

tags: creativity, psychology, trade-off, dilemma, separation, reverse brainstorm, brainstorming, control

Thursday, August 18, 2011

Radical Innovation vs Dismal Science

Economics is often called the Dismal Science not because its track record in predicting major recessions is dismal, but because it rightly predicts depressing economic outcomes. Here's the latest installment from

- Imagine a farmer whose farm produces 100 bushels of wheat. He hires 10 workers to bring in the wheat, paying each of them 9 bushels. Thus, each worker carries 10 bushels, the wage is 9, the wage bill is 90, and the farmer earns 10.

- Now suppose that due to climate change or a swarm of locusts the farm only produces 90 bushels of wheat. The farmer doesn’t want to reduce everyone’s wages, however, because that will reduce morale so he fires one worker leaving nine.

- Each worker now brings in 10 bushels, as before, and is paid a wage of 9, for a total wage bill of 81 leaving the farmer with 9 bushels. The unemployment rate is 10%.

- The unemployed worker doesn’t want to be unemployed and offers to work for less, a lot less, say 5 bushels. The best the farmer can do in response to the lower wage offer by the unemployed worker is to fire an employed worker and hire the unemployed worker at the lower wage.

Pretty dismal, huh? One solution to the problem, besides a long-drawn march toward equilibrium, would be for the fired worker

Wednesday, August 17, 2011

Google's secret weapon discovered: Copy-Paste.

Here's the latest from the social networking battlefield.

In an attempt to find the difference between Google+ and Facebook, a consumer tracking study discovered that Google+ innovators did an excellent copy-paste job:

During their research, EyeTrackShop found that both social networking sites work almost exactly the same.

The pictures below show how user eyes scan the page. Looks like one of those "Find the difference" puzzles in children books.


Tuesday, August 16, 2011

Invention of the Day: Air Conditioning.

Invention of air conditioning can be claimed by several people. But one person in particular, inventor and entrepreneur, Willis H. Carrier turned the technology into a highly successful business.
 ( this 6 min video clip is from a NOVA documentary)

You can trace the evolution of his thoughts and business models through his patents: from A Method for Heating and Humidifying Air (US Patent 854270 filed in 1906), to air conditioning of movie theaters in 1934 (see below).

From a theory perspective, note how the system "flips", from grafting the new technology onto old solutions, to accommodating and making it incredibly successful through building it right into the infrastructure.

tags: niche construction, invention, evolution, innovation, business, youtube, history, technology, problem, s-curve

Monday, August 15, 2011

2025 business headlines: Wal-Mart files for bankruptcy protection

WSJ reports:

...surveys by retail consultants, analysts and brand experts now find that Wal-Mart's aura of price leadership has faded since the recession, because customers who searched for better deals sometimes found them at competitors such as Dollar General Corp., Aldi Inc. and Inc.

As I wrote two years ago, Amazon had become Wal-Mart on steroids because it can aggregate consumer demand in real time. Probably, they can even optimize delivery costs, since their model does not involve inefficient consumer driving to and from the store. Add to the battle new shopping technologies and brick-and-mortar model looks increasingly vulnerable, unless the government steps in and prolongs the agony by imposing online sales taxes. Fundamentally, Amazon shop is open 24x7 and it can deliver in the most convenient form, physically or digitally.

P.S. it is also interesting that, for example, Google can rip off Apple, but Wal-Mart cannot rip off Amazon. 

tags: innovation, information, commerce, business, model, control, s-curve, efficiency, aggregation

@ $730K per patent, Google buys Motorola.

Whatever the business wisdom behind buying one of the worst mobile handset manufacturers in the world, Google's acquisition of Motorola is great for patents. Assuming, generously, the value of Motorola hardware division is $0, Google paid about $730K per patent in the deal. On the per patent basis, this is 50% more, than in the Nortel auction won by Apple, Microsoft, and others. Now Google will have a free hand at ripping off Apple design and business strategies, hiring Apple's designers, and so on. Add to it Google's cloud capabilities, with Youtube, Docs, gaming, etc., and you get a very strong challenger, both in the consumer and enterprise segments. It might be a bit too early to sell Apple stock short, but the competition in the mobile world has be come a lot less lopsided. Unless, of course, Google suffers from the Not Invented Here syndrome, and tries to create its own brand of smartphones.

From an innovation theory perspective, this event is also significant because it confirms that Open Innovation does not have a working IP model, except costly patent acquisitions. Free software and open technology is great, as long as it does not involve a major commercial success.

tags: innovation, patents, growth, software, business, model, mobile, control, battle, theory

Sunday, August 14, 2011

A simple test to discover your inner mathematician.

A new study from the John Hopkins University shows that performance on Approximate Number System (ANS) test is a good predictor for people's math abilities at school. ANS is not a uniquely human trait; it is also present in other mammals including rats. Click on the link ( leading to a NYT page) to test your own primordial number sense. You'll see something like this:

Saturday, August 13, 2011

Trade-off of the Day: Ease of access vs Security.

From MIT Tech Review:

Employees using such gadgets to connect remotely to company servers and e-mail accounts can boost efficiency; but the practice also creates security challenges. Companies will have to learn how to overcome those challenges for the distributed office of the future to succeed.

Breaking this trade-off will enable the next wave of internet (for the lack of a better word) innovation. tags: mobile, internet, control, trade-off, information, cloud, breakthrough, growth

VCs pull out of clean tech

More bad news for "green":

Now many venture-capital firms are going back to their roots. Dozens recently stopped making initial investments in clean technology companies, according to Dow Jones Venture Source. Many that continue to invest in clean technology are shifting to areas such as energy efficiency, which includes low-capital projects such as software for monitoring and reducing energy consumption, according to an analysis by the Cleantech Group. The money that still goes to the solar industry is now directed to companies with small capital requirements. Globally, nearly seven-eighths of clean-energy funding—including financing for wind farms—goes to established technologies, says David Victor, director of the Laboratory on International Law and Regulation at the University of California, San Diego. "We're on the cusp of a severe challenge for energy innovation," he says.

One just can't build a new business model and a new technology relying on government subsidies. The scale of commercial introduction is the key difference between governments' involvement in early Internet development in the 1970-80s and the 2000-10 attempts to deploy green energy across the US and Europe. That is, the Internet was developed on the scale of an extended R&D proeject and did not compete with any mature large-scale existing commercial offering. In contrast, green energy had to compete with very mature, highly efficient commercial technologies. Internet was a new Betting Ground while green energy was positioned as a Better Mousetrap, prone to a failure even with huge subsidies (see the 4-Q diagram below).

tags: energy, business, trade-off, efficiency, synthesis, 4q diagram

Thursday, August 11, 2011

Technology glitches in famous movies. Take 1.

I'll be giving a guest seminar at UMich, Ann Arbor this fall and it's about time to start working on some thought-provoking questions for students. For example,

1. "In this Charlie Chaplin episode, which technology(-ies) that we take for granted today failed to support a business model successfully implemented in the world of Matrix?"

2. "If successfully implemented, which problem, still highly relevant today, would the invention address?"

The questions are probably on the easy side, but should be a good way to engage people in the discussion about tech and biz models.

tags: video, technology, business, model, failure, example

Invention of the Day: Epidermal Electronics

Science Magazine reports on research that found an invisible way to attach electronics to the skin:

Known as epidermal electronics, they can be applied in a similar way to a temporary tattoo: you simply place it on your skin and rub it on with water (see video). The devices can even be hidden under actual temporary tattoos to keep the electronics concealed. Rogers and his colleagues have separately demonstrated that they can add other useful features to epidermal electronics. Solar cells could one day power the devices without an external source; meanwhile, signals recorded by the devices could be transmitted to a base station wirelessly with antennas. In the long term, Rogers believes the technology could provide an electronic link to the body's most subtle processes, including the movement of enzymes and antibodies, to track the path of disease. "

On one hand it's a more or less traditional patch, though an ultra-thin one. On the other, they have figured out a way to customize electronic circuits according to a particular behavior of body surface:

Place the components and wires too close and they will stiffen the device, making it liable to tear. So Rogers's group uses a computer program to predict all the stresses and strains that arise with different designs and then picks the one that keeps elasticity at a maximum.
All together, should probably help in longitudinal studies by making patches less cumbersome to wear.
tags: trade-off, 10x, control, dynamic, medicine, information, detection

Wednesday, August 10, 2011

Is Google+ or Zynga the new color TV?

Social networking is approaching a characteristic S-curve saturation at the top. E-mail, Search, and online news have already peaked.
The next generation of social networking technologies will probably follow a slower adoption path, maybe similar to Color TV vs Black&White TV. The good news is that the Internet-3 revolution is only starting.
Source of the TV chart: Dr.Henry C. Co, CalPoly. 

tags: information, internet, networking, s-curve, social, system, 

Tuesday, August 09, 2011

Visa as iTunes for credit card phones.

This shows the incredible power of a dominant market player to force innovation upon its customers:

As of October 1, 2015, Visa will shift liability of fraud to merchants instead of card companies. Since dynamic card authentication offers better fraud protection, most merchants will opt to upgrade their terminals instead of having to deal with fraud charges. Fuel merchants will have an extra two years before liability will shift for terminals at self-service gas pumps.
Visa controls risk allocation within the payment system, which allows the company to be very flexible when new business models emerge. For example, to get a foothold in e-commerce, Visa promised web merchants that it will absorb credit card fraud losses. This approach let Visa enter a growing market for internet transactions and accelerate consumer adoption of the technology. Now, that it is in a controlling position, the company can start shifting risks back to merchants. Or at least Visa can make a very credible threat of the action because it knows, due to its access to all information about transactions, where the actual risk is.

With the right application on the wallet-phone, it can easily implement elements of social commerce too, including special deals, coupons, location-specific services, etc. - either directly, or as a backend service to merchants and banks.

tags: business, model, commerce, control, deontic, payload, risk, value, mobile

Monday, August 08, 2011

The secret of income inequality in the US.

This first chart shows the relationship between income inequality and test performance on prose literacy. In the US, people who are bad at written and verbal communication skills are at a huge disadvantage. The second chart shows that in the US and China family plays the most important role in educational achievement and, as a consequence, in future earnings. 
Source: The role of cognitive skills in economic development.

Sunday, August 07, 2011

The Bear and the Gardener. Old tale, new style.

Inception, the movie, is getting closer to being a reality. It's not only the ads, but the whole web experience across multiple sites can be presented to you according to whatever algorithms back-end data analysts can think of. Since they can't really customize it to an individual, the services tend to pigeonhole you into some kind a slot that has marginal relevance to what you actually need. For example, when I'm logged into my Gmail account the "helpful" service determines that I occasionally use Russian in my correspondence and modifies search results accordingly. Did I ask for it? Of course, not!

We almost took on this problem at the last day of BUS 74 this summer, but the class chose a different subject for the invention session. Too bad...

Besides Google, Facebook, and LinkedIn, other companies are getting into the data-scraping game.

Social logins are not only a way to streamline registration processes, but also an opportunity for websites to glean extra data about their users. Social logins are keys to an existing profile, which potentially provides age, sex, location, preferences and more. All of this data can be leveraged in marketing and advertising.

Janrain’s social login works as more than just a registration tool. The company also offers a suite of back-end services for harvesting and utilizing user data.

“Janrain Capture” scrapes and stores profile data in the cloud and allows companies to share social profiles across select web properties and partner sites.

The title of this post refers to "The Bear and the Gardener", a fable by Jean de La Fontaine, which according to Wiki "warns against making foolish friendships."

The moral of the story is expressed in its last two lines:

A foolish friend may cause more woe
Than could, indeed, the wisest foe.

I guess certain negative side effects of social networking were well understood way before Google, Facebook, and Janrain.

Saturday, August 06, 2011

Mobile stalemate: Apple vs Google vs RIM.

Half a year ago I wrote about data on smartphone market share, which looked like that:

Google Android - 43.6%
Apple iOS - 26.2%
RIM - 24.2%
Microsoft - 3%

9 months later, market share distribution didn't change much, except Google lost few points to Microsoft:

Google Android - 40.1%
Apple iOS - 26.6%
RIM - 23.4%
Microsoft - 5.8%

Google's growth of 5.4% over last quarter seems like a seasonal variation caused by different release schedule from hardware OEMs. It would be interesting to see revenue margins for those phones/subscribers. Google is not making any money on the OS itself, only on app sales, ads, and subscriptions. Apple is making money on phones, apps, ads, subscriptions, media - songs & video, and accessory licensing - cables, connectors, car interfaces, etc. In addition to that, Apple sells iPods and iPads, which are not included in the market share data.
Putting it all together, I think in the mobile space Apple is a much more dominant force than Google. I also wonder how the whole enterprise market is going to work out. Microsoft will probably make a big push for it, trying to grab a share from RIM.

tags: mobile, business, information, apple, google, microsoft, evolution, market, control point, software

Friday, August 05, 2011

Creativity quote of the day.

From the Nobel Prize lecture by Andre K. Geim (Physics, 2010).

...poking in directions far away from my immediate area of expertise could lead to interesting results, even if the initial ideas were extremely basic. This in turn influenced my research style, as I started making similar exploratory detours that somehow acquired the name ‘‘Friday night experiments.’’ The term is of course inaccurate. No serious work can be accomplished in just one night. It usually requires many months of lateral thinking and digging through irrelevant literature without any clear idea in sight. Eventually, you get a feeling—rather than an idea—about what could be interesting to explore. Next, you give it a try and, normally, you fail. Then, you may or may not try again.

Thursday, August 04, 2011

The beginning of the real green revolution.

Electric cars and less expensive batteries begin playing the role of dynamic storage that can respond to variations in supply of local solar or intermittent wind energy. It's far from a breakthrough, but it's a good first step.

The system uses the Leaf charging station to draw from the car's lithium ion batteries and feed current into a home's electricity distribution panel. The 24 kilowatt-hours of energy storage in the Leaf is enough to power an average Japanese home, which uses about half the energy of an average U.S. household, for about two days.

If a person pays a higher price for electricity during peak times, it's possible that charging a battery at night and drawing on it during peak times could save consumers money. That's the vision of many battery companies which envision home energy storage as a way to store energy from the grid or solar panels.

The problem with Nissan's proposed setup is that after the car battery is drained, e.g. during a blackout, it becomes useless for transportation too. Not good. They need a source of cheap and/or intermittent energy that would be wasted if not stored in the battery.

In system terms, they have to solve a synthesis problem, not just graft Leaf onto an existent grid. Maybe they should make a deal with Google to build distributed local storage infrastructure.

tags: innovation, synthesis, storage, s-curve, source, control, energy, 4q diagram, environment, trade-off, breakthrough, example

Wednesday, August 03, 2011

9 billion people by 2050.

The July 29 issue of Science magazine is a special issue on population. The charts below show some interesting story lines.
Something incredible happened in the 17th century. Just by looking at the chart on the left you can see that population growth started taking off. By 1800, we reached 1B people, and kept growing ever since. Neither wars, nor epidemics could arrest the trend.

The right chart shows projected numbers for the next 40 years. Seems like India is going to take the lead on population growth among economically developed countries.
Source: Science 29 July 2011:Vol. 333 no. 6042 pp. 540-543. DOI: 10.1126/science.333.6042.540

Another article talks about most prevalent chronic diseases (NCD) today and projections for the future. Based on those pictures, I can guess that somehow in the 17-18th centuries humans managed to develop resistance to infections diseases, either through natural and/or social immunity. The latter we call science and medicine, but it also should include business methods for running large scale public health services and hospitals.

Being poor kills.

Source: Science 29 July 2011: Vol. 333 no. 6042 pp. 558-559. DOI: 10.1126/science.333.6042.558

tags: medicine, history, technology, business, distribution, control

Tuesday, August 02, 2011

Investment in chidren: the earlier, the better.

While looking for data on the effects of standardized testing on human creativity, I found in Science (DOI: 10.1126/science.1128898) an interesting graph showing return on education for disadvantaged children.

The caption below the figure reads:

Rates of return to human capital investment in disadvantaged children. The declining figure plots the payout per year per dollar invested in human capital programs at different stages of the life cycle for the marginal participant at current levels of spending. The opportunity cost of funds (r) is the payout per year if the dollar is invested in financial assets (e.g., passbook savings) instead. An optimal investment program from the point of view of economic efficiency equates returns across all stages of the life cycle to the opportunity cost. The figure shows that, at current levels of funding, we overinvest in most schooling and post-schooling programs and underinvest in preschool programs for disadvantaged persons. Adapted from (3) with permission from MIT Press.

People invented branch grafting in gardening to solve the problem of getting "strong roots" fast. We don't have anything like that to improve the lot of poor kids. Will digital books help solve this problem? Probably not, but it could be an element of the solution.

Another thought: this pattern might work for regular kids too. That is, investing in early stages of development can be very efficient, but not obvious enough for a quick fix - it just takes years and years before the results become visible.

tags: education, problem, information, control, health, system, synthesis 

References: James J. Heckman. Skill Formation and the Economics of Investing in Disadvantaged Children. Science. 2006 Jun 30;312(5782):1900-2.

Technology is better than sex?

The results from rigorous scientific studies in


and The New Yorker

tags: information, social, network, psychology, communications

Monday, August 01, 2011

Facebook Credits, the reserve currency of the future.

Facebook and Zynga are taking great strides in making social commerce a reality:

Because Facebook appears to favor Zynga more than other game developer, including through an unusual growth-target agreement, those two companies seem to be just about joined at the hip.

A year ago, Zynga’s chief executive Mark Pincus told employees that Zynga planned to expand beyond Facebook and start its own Zynga Live web site as a portal for its own social games. That never happened because Facebook cut the deal on Facebook Credits with Zynga.

Zynga already has enormous advantages over other developers on Facebook, with more than 264 million monthly active users on the social network, more than the top 15 other game companies combined.

If this partnership is a long-term cooperation game like the one Intel and Microsoft played in 1980-2000, Google will have a hard time catching up with this freight train. Facebook Credits represents a new transactions technology, which has a chance to become a platform for new commercial applications beyond games, e.g. video conferencing, content sales, etc. You can see Netflix's cooperation with Facebook as an example of a possible Zynga-like play in a different entertainment domain.

Can you finance a Facebook revolution with Facebook Credits? ;)

A couple of diagrams to illustrate the transition from social networking to social commerce.

tags: games, facebook, commerce, virtual, deontic, payload, platform, 4q diagram, social, control point, business model