Outside Innovation

FINDING Our Way to Profits in a Recession

The gloomy economic news has everyone on edge. Some pundits were hoping that Oracle’s earnings report would give the stock market a boost yesterday by proving that at least the technology sector is firing on all cylinders. But yesterday Oracle reported lower than expected revenues and lowered its expectations for the year. So it appears that the high-tech sector isn’t immune to the global economic downturn after all.
       
However, after checking in with many of our largest clients, we don’t see people putting a hold on technology spending. We do see clients gravitating towards SaaS suppliers with “pay as you consume” business models and lower perceived IT overhead. We see them taking advantage of the professional services being offered by smaller, boutique firms, rather than large body shops.
       
What are companies spending money on? Here’s a list based on our customer-centric clients’ activity and interests:

How to Design Your Products (and Business) to Be Customer-Adaptive

        Here’s an update on one of the companies featured in Outside Innovation. CohesiveFT is a software company. Their products are digital. But I believe that some of the patterns we’re seeing as customers create their own digital products hold up well for physical products or for hybrid physical/service products.
       
         In fact, I’m writing this post from St. Louis, the center of the Bio-Belt, where the products that are sold—seed for growing corn, soybeans, fruits, and vegetables—are designed and packaged in ways that are surprisingly similar to today’s hardware and software. As Monsanto's CIO, Mark Showers, explained to me, what’s going on in bio-agriculture is that there’s an increasing split between the hardware (the seed or germ plasm) and the software (the traits) of a plant. Advanced bio-technology has made it possible to optimize the traits at each layer of the seed stack (below ground/roots; ground-level/weeds and pests; above ground/leaves, flowers, fruit). In fact, today’s hybrids come in triple-stacks—soon there will be 4 to 6 stacks—of optimized traits. Farmers select the traits they need in their seeds based on the soil conditions, pest patterns, weather patterns, and their expectations of what the growing season will hold. (Then they hedge their bets through commodities trading where they make their real money!) While farmers don’t CONFIGURE the optimal seed traits at each layer today (that’s done in the lab and on the manufacturing farms), they do SELECT seeds with optimal traits at each layer for different sections of their farmland. It’s a very sophisticated and complex set of choices. Much of the value of the seed resides in the intellectual property involved in optimizing each layer of the stack for the precise conditions required and in the ability to mix and match these traits to meet the particular requirements of a particular strip of farmland in a given micro-climate. Companies license the intellectual property—the traits—to one another.