Work & Business

They teach you in business school that any venture worth doing needs to be scalable. You must at some point be able to get exponential returns from an existing set of assets in order to be successful. Rebelling against the so-called head-count model (additional sales require additional manpower), new design firms and marketing consultancies like MNML and Fuseproject are now increasingly doing equity-based deals that Anomaly made famous. Deals like these give agencies a financial stake in projects they undertake, allowing them to make real money throughout the life of a co-created product or service rather than just at the pre-launch. In this month’s issue of I.D., Mitch Pergola, Fuseproject’s business strategist (more firms may need one of these in the future), describes the process:

There’s a lot of due diligence required. It’s very similar to a venture fund. Some clients will come to us with an idea and say there’s an opportunity now, and so we’ll load that in terms of royalties, for short-term ROI. But another project might require a lot of R&D, in which case we’d focus more on equity, for long-term ROI.

One interesting implication of this trend is that it democratizes accessibility to top tier design talent. Since most of the compensation for these firms will not be up-front and will be percentage based (and thus can be baked into the retail price), small businesses or even young entrepreneurs will be able to afford them. Expect to see more pretty things at competitive prices all over the world because of this.

This week’s New Yorker includes an interesting analysis of the success of Toyota, the car manufacturer that recently surprised many by selling 160,000 more automobiles in this year’s first quarter than GM, the world’s leader in automobile sales for 77 years running. These first quarter results may mean the end of GM’s run as annual sales leader, a significant event in the history of the automobile industry. New Yorker’s James Surowiecki discusses how this shift reflects Toyota’s quiet domination as the industry’s most profitable and innovative firm, despite many people’s perception of the company as being less of a leader and more of an astute follower, often being attacked “for being better at imitation than at invention.” But Surowiecki argues that Toyota, while not the sexiest name in the business, may be the most consistently, and successfully, innovative:

If Toyota doesn’t look like an innovative company it’s only because our definition of innovation—cool new products and technological breakthroughs, by Steve Jobs-like visionaries—is far too narrow. Toyota’s innovations, by contrast, have focussed on process rather than on product, on the factory floor rather than on the showroom. That has made those innovations hard to see. But it hasn’t made them any less powerful… Most innovation focusses on what gets made. Toyota reinvented how things got made, which enabled it to build cars faster and with less labor than American companies.

But there’s an enigma to the Toyota Production System: although the system has been widely copied, Toyota has kept its edge over its competitors… Over the years, more than three thousand books and articles have analyzed how the company works… The diffusion of Toyota’s concepts has had a real effect; the auto industry as a whole is far more productive than it used to be. So how has Toyota stayed ahead of the pack?

The answer has a lot to do with another distinctive element of Toyota’s approach: defining innovation as an incremental process, in which the goal is not to make huge, sudden leaps but, rather, to make things better on a daily basis. (The principle is often known by its Japanese name, kaizen—continuous improvement.)… It rejects the idea that innovation is the province of an elect few; instead, it’s taken to be an everyday task for which everyone is responsible.

The New Yorker: The Open Secret to Success

While we’ve seen tool lending libraries before (the Berkeley one a particularly shining example), we like TechShop for offering more than just the supplies needed for becoming your own handyman. The Menlo Park-based one-stop tool lending center and fabrication shop is membership-based, and for $100/month, its members have access to all the tools in inventory (we’re talking serious tools like hot-wire foam cutters and plasma cutters) that they’ve received training on (classes are $30, taught at TechShop). Members can also pay $30/day for unlimited shop time, sharing the workshop space with other members there for the day or working on longterm projects. A range of advanced classes with tool experts are also on offer for $30/class. The extensive list of equipment means newbies can try their hands at a range of tools without making the hefty investment of purchasing them. According to Cool Tools blogger John Todd, one of the biggest benefits of TechShop is its members: “At any one time, there are a half-dozen people working on fantastic and innovative things, either as hobby projects or as budding startups who have found an inexpensive way to bootstrap themselves into prototyping a better mousetrap.” Several additional locations are scheduled to open up throughout the West Coast - we’re hoping they make their way to NYC soon. We’ve got some soldering we’ve been meaning to do!

[via KK Blog]

What really fosters creativity in a ‘creative’ workspace? Anil Dash asked his readers as well as several innovators in the tech industry, including Ray Ozzie, Chief Software Architect of Microsoft (and the father of Lotus Notes), Jeff Bezos of Amazon, and Pierre Omidyar of eBay to reveal some of the workplace inspiration that helped get them where they are now. From the music they played to the (generally crappy) furniture they bought, the tech giants offer a glimpse into their creative environments before and amidst their big breakthroughs, including Ray Ozzie’s soundtrack of Stevie Ray Vaughan, Texas Flood, and Soul to Soul, and Jeff Bezos’ “Costco swivel chairs.”

Anil Dash: Jeff Bezos, Ray Ozzie, and Pierre Omidyar on Workspace

Kiva.org, as we’ve mentioned before, is the world’s first peer-to-peer lending platform giving people the opportunity to help small businesses and entrepreneurs in developing companies through microfinancing loans. Now Advanta, the largest credit cart issuer in the small business market, has gotten in the game, partnering with Kiva to create the KivaB2B business credit card. For every loan a KivaB2B card-holder makes to the non-profit lending organization, Advanta will match the amount dollar-for-dollar (up to $200/month). In effect, small business owners using Advanta have the opportunity to help entreprenuers like themselves with double the impact. The move reflects well on Advanta, while building public awareness of the simplicity and benefits of microfinance lending.

[via Constant Beta]

In this weekend’s NYT Magazine, Rob Walker has an interesting piece on ‘hypothetical products’ and their value to innovation. Using Green Cell as an example, one of the winning designs from this year’s Greener Gadgets Design Competition, Walker asks “what is the point of a product proposed by three guys who aren’t remotely in a position to make it a reality?”

According to the competition’s host, Core77’s Allan Chochinov, conceptual products have some very legitimate functions. Walker recounts Chochinov’s sentiment in regards to the hypothetical vending machine that pops out standardized batteries:

Actually, purely conceptual or “fictional” products are commonplace in the design world and, as Chochinov has argued, can have value that’s very real. Green Cell, he told me, is one example of “a graphic gesture” that shows the power of design to reveal an idea, a problem and maybe even a solution with unique clarity.

Commenting on his own article, Walker adds:

The non-marketplace context of hypothetical products frees the designer to leapfrog practical-minded meetings about market share and profit margins and the like and to land at the bigger questions: is this something companies should do — or must do?

Consumed: Dreaming in Green

The outsourcing of customer service and information-based jobs to the Philippines has created a new upper middle class. Broadly classified as business process outsourcing (BPO) workers, these young (19-30) and educated Filipinos have enjoyed a sharp rise in spending power thanks to the combination of relatively high foreign country wages and relatively low domestic standard of living costs. They also tend to start working late at night because of time zone differences with the overseas markets they are serving. This is creating a lucrative opportunity for businesses willing to work the graveyard shift (22:00 - 6:00) and is transforming life in Manila after hours.

Midnight rush hour-like traffic is becoming frequent on the city’s major roads. Fast food chains such as Jollibee and McDonald’s are now open 24 hours. Convenience stores near BPO centers have been reporting a significant increase in late night condom sales. Major local real estate firms have not only adjusted to later operating hours for their shopping malls, but they are also beginning to merge retail, residential and commercial office spaces into singular mixed use community properties. In the future, more Filipinos may live, shop and work in the same multi-purpose mall.

In an article on the rapid consumption of oil by Americans in the New York Times, they produce this rather interesting info-graphic. Probably the most striking point is that for every American who bikes to work, five commuters walk to work, nine take public transit, twenty one ride in car pools and one hundred and fifty four drive to work alone.

NY Times

Apparently, while the economy has been putting pressure on office property prices, broadband and mobile communications have been altering the very identity of office property as we know it. This past weeks Economist asserts that separating work and living spaces is a historically unnatural practice born out of the industrial age’s need to clump people together to work in factories efficiently. Now that wireless technology allows anyone to work anywhere, the cubicle grid is now giving way to hybrid community spaces. Spaces are now being defined on the fly:

Debra Moritz, a director at Jones Lang LaSalle, a firm that helps companies to manage their office buildings and consults on property investments, says that the total area devoted to traditional office space has begun to decline, although slowly. This is because “inefficiency is more obvious as workers become mobile,” she says. According to Jones Lang LaSalle’s research, workers are at their desks, on average, less than 40% of their time (Ms Moritz ditched her own desk long ago). This does not mean that office space will drop by 60%. But it does mean that office designers are thinking about using space better.

There will be more “on-demand spaces” and “drop-in centres”, says Ms Moritz, with flexible layouts that facilitate collaboration. Within a typical office building, the area devoted to solitary work, such as the cubicles immortalised in Dilbert cartoons, will shrink. Internal walls and furniture are becoming movable. More space is given to communal areas, some of which are distinguished not by their function but by their etiquette—loud or quiet, say—as in libraries.

In other related developments, some call center operators in Manila are asking their employees to work outside the office to offset the unexpected loss in competitiveness caused by the appreciation of the Philippine peso with rent savings.

[via The Economist]