by Roy Luebke
Much has been written about what constitutes an innovation culture. Defining what that means may seem relatively simple, but is much more difficult to both define and achieve than one might think.
To begin the definition for an individual organization, start by understanding how the senior management team deals with ambiguity and risk. If an organization is extremely risk averse, it is unlikely to be very innovative. All companies deal with risk, there is risk in doing something, and there is risk in doing nothing. Risk is a part of being in business, and how the organization is prepared to manage risk is a leading factor in its ability to move into new competitive arenas.
The need to be innovative is derived from market pressures. The leadership team must feel a degree of angst about the future, or some paranoia about outside forces that makes them uncomfortable. Innovation is driven by the belief that a firm’s competitive advantage is fleeting and that it must always be reinventing itself in order to survive. Hubris is anathema to innovation.
An innovation culture requires advances in processes for discovery, experimentation, and developing portfolios of options. These new processes will, in fact help mitigate risk exposure as opportunities and solutions are better defined. Better definitions will reduce ambiguity and uncertainty.
Organizations require new process to research their customers and discover new patterns in customer attitudes, and market and technology evolutions. Firms need to create ways to recognize new, emerging patterns in key areas and develop new business concepts to meet these new realities. Business leaders need to allow their people to experiment more and develop prototypes that fail before going to market so that new innovations are more likely to succeed in the long term. Ultimately, new processes need to be developed to create deeper understanding about customers and deliver more of what customers want, even though customers are not likely to articulate these needs precisely.
Blogging Innovation » What is an Innovation Culture?.
# Search engines do not consistently apply the rules. You may see your competitors doing something and getting away with it. You try it a few weeks later and bam: Penalty.
# The rules change. What’s safe one week might not be safe the next. That’s life.
# Your competitors are going to report you. If they’re search-savvy, they’re watching for anything they think might be a bad practice, and they’ll report you at the drop of a hat.
Link building is all about risk management.
There are lots of ways to build links. But search engines do not like to be manipulated. They work constantly, with lots of really smart people, to find ways to filter out links secured purely for SEO purposes.
That makes many forms of link building risky, because:
- Search engines do not consistently apply the rules. You may see your competitors doing something and getting away with it. You try it a few weeks later and bam: Penalty.
- The rules change. What’s safe one week might not be safe the next. That’s life.
- Your competitors are going to report you. If they’re search-savvy, they’re watching for anything they think might be a bad practice, and they’ll report you at the drop of a hat. Leer más “Link building techniques: Risk vs. reward”
The master has spoken in his freshly released letter to shareholders and as usual, it is filled with brilliance, hypocrisy and more brilliance. You can read the full letter here. I will keep my personal thoughts on the letter short and sweet, but a few things stood out to me:
Buffett appears to attempt to distance himself from the notion of “too big to fail” and implies that the firm is not dependent on the “kindness of strangers”:
“We will never become dependent on the kindness of strangers. Too-big-to-fail is not a fallback
position at Berkshire. Instead, we will always arrange our affairs so that any requirements for cash we may conceivably have will be dwarfed by our own liquidity.”
These are interesting comments now that we know Buffett in fact played a role in orchestrating the bank bailouts (see here for his letter to Hank Paulson). Of course, Buffett had a substantial amount at stake if the banks were allowed to implode. As Barry Ritholtz has previously shown, Buffett did indeed rely on the kindness of strangers. He claims to have been a supplier of capital, but this was nothing more than doubling down on bad bets that he had made with the hope that the government would ultimately step in. Of course, we all know they did. I don’t know how he can make such comments when it is so obvious that he directly benefited from the bank bailouts and played an instrumental role in orchestrating them? It’s disingenuous at best.
A few other things that jumped out:
- His discussion on risk management (p. 16) should be required reading for every CEO and money manager in America.
- He is still extraordinarily funny.
- He sounds very optimistic about the state of the housing market.
- He sells his company and the idea behind Berkshire better than any CEO on the planet.
For more reading please see his annual letters from the Buffett Partnership days.
© 2009 pragcap.com