November 2009 – Page 2 – artdiamondblog.com

Breakthrough Innovations Require Judgment, Not Surveys

Source of book image: http://press.harvardbusiness.org/on/wp-content/uploads/2009/03/verganti_300dpi.jpg.

(p. W8) In “Design-Driven Innovation” (Harvard Business Press, 272 pages, $35), Roberto Verganti holds that product development should be grounded not in the data of survey-takers or the observations of anthropologists but in the judgment of executives. “We have experienced years of hype about user-centered design,” he says. But breakthrough innovations, in Mr. Verganti’s view, do not represent what customers knew they wanted. Rather, the most profitable innovations are those that create a radically new meaning for a product.

Nintendo’s Wii video-game console and its motion-sensing controllers “transformed what a console meant: from an immersion in a virtual world approachable only by niche experts into an active workout, in the real world, for everyone.” The Swatch in 1983 introduced a new meaning to the watch: neither an article of fine jewelry nor a utilitarian timekeeping tool but a fashion accessory. Starbucks, he says, changed the meaning of a coffee shop from a place to buy coffee to a home away from home.

For the full review, see:
DAVID A. PRICE. “The Shape of Things to Come; Design is more than aesthetics and ease of use. It’s a way of doing business.” The Wall Street Journal (Fri., OCTOBER 9, 2009): W8.

Reference for book under review:
Brown, Tim. Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation. New York: HarperBusiness Publishers, 2009.

Legitimacy of Capitalism Rests on Rich Earning their Wealth

Luigi Zingales, Robert C. McCormack Professor of Entrepreneurship and Finance at the University of Chicago. Source of photo and information in caption: http://faculty.chicagobooth.edu/luigi.zingales/research/date.html.

(p. A21) Luigi Zingales points out that the legitimacy of American capitalism has rested on the fact that many people, like Warren Buffett and Bill Gates, got rich on the basis of what they did, not on the basis of government connections. But over the years, business and government have become more intertwined. The results have been bad for both capitalism and government. The banks’ growing political clout led to the rule changes that helped create the financial crisis.

For the full commentary, see:
DAVID BROOKS. “The Bloody Crossroads.” The New York Times (Tues., September 8, 2009): A21.
(Note: the online version of the commentary is dated Sept. 7.)

The reference for the Zingales article is:
Zingales, Luigi. “Capitalism after the Crisis.” National Affairs, no. 1 (Fall 2009): 22-35.

Government to Decide Who Lives and Who Dies

“The Reaper Curve: Ezekiel Emanuel used the above chart in a Lancet article to illustrate the ages on which health spending should be focused.” Source of caption and graph: online version of the WSJ article quoted and cited below.

(p. A15) Dr. Ezekiel Emanuel, health adviser to President Barack Obama, is under scrutiny. As a bioethicist, he has written extensively about who should get medical care, who should decide, and whose life is worth saving. Dr. Emanuel is part of a school of thought that redefines a physician’s duty, insisting that it includes working for the greater good of society instead of focusing only on a patient’s needs. Many physicians find that view dangerous, and most Americans are likely to agree.

The health bills being pushed through Congress put important decisions in the hands of presidential appointees like Dr. Emanuel. They will decide what insurance plans cover, how much leeway your doctor will have, and what seniors get under Medicare. Dr. Emanuel, brother of White House Chief of Staff Rahm Emanuel, has already been appointed to two key positions: health-policy adviser at the Office of Management and Budget and a member of the Federal Council on Comparative Effectiveness Research. He clearly will play a role guiding the White House’s health initiative.
. . .
In the Lancet, Jan. 31, 2009, Dr. Emanuel and co-authors presented a “complete lives system” for the allocation of very scarce resources, such as kidneys, vaccines, dialysis machines, intensive care beds, and others. “One maximizing strategy involves saving the most individual lives, and it has motivated policies on allocation of influenza vaccines and responses to bioterrorism. . . . Other things being equal, we should always save five lives rather than one.
“However, other things are rarely equal–whether to save one 20-year-old, who might live another 60 years, if saved, or three 70-year-olds, who could only live for another 10 years each–is unclear.” In fact, Dr. Emanuel makes a clear choice: “When implemented, the complete lives system produces a priority curve on which individuals aged roughly 15 and 40 years get the most substantial chance, whereas the youngest and oldest people get changes that are attenuated (see Dr. Emanuel’s chart nearby).
Dr. Emanuel concedes that his plan appears to discriminate against older people, but he explains: “Unlike allocation by sex or race, allocation by age is not invidious discrimination. . . . Treating 65 year olds differently because of stereotypes or falsehoods would be ageist; treating them differently because they have already had more life-years is not.”

For the full commentary, see:
BETSY MCCAUGHEY. “Obama’s Health Rationer-in-Chief; White House health-care adviser Ezekiel Emanuel blames the Hippocratic Oath for the ‘overuse’ of medical care.” The Wall Street Journal (Thurs., August 27, 2009): A15.
(Note: first ellipsis added; second and third ellipses in original.)

The article that was the original source for the graph above, is:
Persad, Govind, Alan Wertheimer, and Ezekiel J. Emanuel. “Principles for Allocation of Scarce Medical Interventions.” The Lancet 373, no. 9661 (Jan. 31, 2009): 423-31.

Project Entrepreneurs Want to Keep Control

(p. 152) As late as January 1940, Disney still resisted selling stock–“I wanted to build this in a different way,” he told sonic of his artists–but by then his need for money was such that going public had become the lesser of evils. Preferred stock in Walt Disney Productions was offered to the public on April 2, 1940. The money raised helped pay for the Burbank studio ($1.6 million) and retired other debts (more than $2 million). The common stock remained in the Disneys’ hands. The company took out a $1.5 million insurance policy on Walt’s life.

Disney remembered having lunch with Ford Motor Company executives a few days after the stock issue, when he passed through Detroit on his way back from New York. Henry Ford himself joined the group after lunch, and when Disney told the old autocrat about selling preferred stock, Ford said. “If you sell any of it, you should sell it all.” That remark, Disney said, “kind of left me thinking and wondering for a while.” Ford “wanted that control,” Disney said. “That’s what he meant by that.” Disney shared the sentiment, even in relatively small matters. On July 1, 1940, he told the studio’s publicity department: “From now on all publicity going out of this studio must have my O.K. before it is released. There shall be no exceptions to this rule.”

Source:
Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.

Third Generation Nuclear Reactors Are Simpler and Even Safer

Source of graphic: online version of the WSJ article quoted and cited below.

(p. R1) Researchers are working on reactors that they claim are simpler, cheaper in certain respects, and more efficient than the last generation of plants.

Some designs try to reduce the chance of accidents by automating safety features and minimizing the amount of hardware needed to shut down the reactor in an emergency. Others cut costs by using standardized parts that can be built in big chunks and then shipped to the site. Some squeeze more power out of uranium, reducing the amount of waste produced, while others wring even more energy out of spent fuel.
“Times are exciting for nuclear,” says Ronaldo Szilard, director of nuclear science and engineering at the Idaho National Lab, a part of the U.S. Energy Department. “There are lots of options being explored.”
. . .
(p. R3) As a whole, . . . , the U.S. nuclear industry has a solid safety record, and the productivity of plants has grown dramatically in the past decade. The next generation of reactors so-called Generation III units is intended to take everything that’s been learned about safe operations and do it even better. Generation III units are the reactors of choice for most of the 34 nations that already have nuclear plants in operation. (China still is building a few Gen II units.)
“A common theme of future reactors is to make them simpler so there are fewer systems to monitor and fewer systems that could fail,” says Revis James, director of the Energy Technology Assessment Center at the Electric Power Research Institute, an independent power-industry research organization.
The current generation of nuclear plants requires a complex maze of redundant motors, pumps, valves and control systems to deal with emergency conditions. Generation III plants cut down on some of that infrastructure and rely more heavily on passive systems that don’t need human intervention to keep the reactor in a safe condition reducing the chance of an accident caused by operator error or equipment failure.
For example, the Westinghouse AP1000 boasts half as many safety-related valves, one-third fewer pumps and only one-fifth as much safety-related piping as earlier plants from Westinghouse, majority owned by Toshiba Corp. In an emergency, the reactor, which has been selected for use at Southern Co.’s Vogtle site in Georgia and at six other U.S. locations, is designed to shut down automatically and stay within a safe temperature range.

For the full story, see:
REBECCA SMITH. “The New Nukes; The next generation of nuclear reactors is on its way, and supporters say they will be safer, cheaper and more efficient than current plants. Here’s a look at what’s coming — and when.” The Wall Street Journal (Tues., SEPTEMBER 8, 2009): R1 & R3.
(Note: ellipses added.)

Massachusetts Dems Are “Gigantic Hypocrites”

(p. A3) BOSTON — The Democrat-controlled legislature in Massachusetts is poised to pass a bill in coming days giving Democratic Gov. Deval Patrick authority to appoint an interim senator to succeed the late Edward M. Kennedy, strengthening the party’s U.S. Senate majority and bolstering prospects for passage of a health-care overhaul.

The interim-appointment issue is contentious in part because five years ago, the Democrat-dominated legislature voted to take appointment power away from Republican Gov. Mitt Romney, changing rules so a seat remains vacant until a special election. The shift came as Sen. John Kerry campaigned as the Democratic nominee for president, and a Kerry victory would have given the governor the chance to name a Republican senator.
Some Democrats have expressed discomfort over the about-face, and Republicans are irate. State Republican party Chairman Jennifer Nassour called the Democrats “gigantic hypocrites.”

For the full story, see:
WILLIAM M. BULKELEY and JENNIFER LEVITZ. “Vacant Senate Seat Triggers Flip-Flop.” The Wall Street Journal (Thurs., SEPTEMBER 17, 2009): A3.
(Note: ellipsis added.)

“The Animated Man” is a Useful Account of the Life of an Important Entrepreneur

Source of book image: http://www.michaelspornanimation.com/splog/wp-content/e/a336.jpg

I have always believed, and recently increasingly believe, that Walt Disney was one of the most important entrepreneurs of our time.
One of the most favorably reviewed biographies of Disney is Michael Barrier’s The Animated Man. (At some point in the future, I will briefly discuss an alternative biography of Disney by Gabler.)
I have not thoroughly read The Animated Man, but have thoroughly skimmed it. It appears to be a very useful account of Walt Disney’s life.
I did not want to wait until I had fully read it, in order to highlight a few passages that I think may be of special interest. I will do so in the next few weeks.

Reference to the book discussed:
Barrier, Michael. The Animated Man: A Life of Walt Disney. 1 ed. Berkeley, CA: University of California Press, 2007.

Global Warming Is Least Worry of Vanuatu Island’s Poor

(p. A19) In a warning often repeated by environmental campaigners, the Vanuatuan president told the United Nations that entire island nations could be submerged. “If such a tragedy does happen,” he said, “then the United Nations and its members would have failed in their first and most basic duty to a member nation and its innocent people.”

Torethy Frank, a 39-year-old woman carving out a subsistence lifestyle on Vanuatu’s Nguna Island, is one of those “innocent people.” Yet, she has never heard of the problem that her government rates as a top priority. “What is global warming?” she asks a researcher for the Copenhagen Consensus Center.
. . .
Torethy and her family of six live in a small house made of concrete and brick with no running water. As a toilet, they use a hole dug in the ground. They have no shower and there is no fixed electricity supply. Torethy’s family was given a battery-powered DVD player but cannot afford to use it.
. . .
What would change her life? Having a boat in the village to use for fishing, transporting goods to sell, and to get to hospital in emergencies. She doesn’t want more aid money because, “there is too much corruption in the government and it goes in people’s pockets,” but she would like microfinance schemes instead. “Give the money directly to the people for businesses so we can support ourselves without having to rely on the government.”
Vanuatu’s politicians speak with a loud voice on the world stage. But the inhabitants of Vanuatu, like Torethy Frank, tell a very different story.

For the full commentary, see:

BJøRN LOMBORG. “The View from Vanuatu on Climate Change; Torethy Frank had never heard of global warming. She is worried about power and running water.” The Wall Street Journal (Fri., OCTOBER 23, 2009): A19.
(Note: ellipses added.)
(Note: the online version is dated Thurs., Oct. 22.)

Videos of Routines Are Better than Focus Groups and Surveys

Source of book image: http://bobsutton.typepad.com/.a/6a00d83451b75569e20120a5fa1e26970c-800wi.

(p. W8) Mr. Brown argues . . . emphatically for the close observation of users in their natural habitats. Traditional market-research tools–focus groups, surveys–rarely produce breakthrough findings, he claims. IDEO and others follow users around–making video recordings of them as they go about their routines, recording conversations with them–to build an understanding of what they really need. An IDEO employee in the health-care area, for instance, pretended to have a foot injury and checked himself into an emergency room with a hidden video camera to get a better view of the patient experience. This anthropological form of market research, Mr. Brown notes, has been adopted by companies such as Intel and Nokia.

Reference the book being reviewed:
Brown, Tim. Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation. New York: HarperBusiness Publishers, 2009.

“A Foolish Faith in Authority Is the Worst Enemy of Truth”

(p. A21) Several years ago I grew concerned about my postmenopausal mother’s risk of osteoporosis. I tried to convince her to initiate hormone replacement therapy. She didn’t listen to me. Instead, she spoke with her gynecologist, who–contrary to best medical evidence at the time–recommended against such treatment. I would eventually be thankful my mother listened to the gynecologist who had known her for decades instead of me and the published medical reviews I was relying on. Some years later my mother was diagnosed with early breast cancer. Had she been on estrogen replacement, it is likely that her tumor would have progressed more rapidly. The gynecologist likely saved my mother’s life.

Studies published in the medical literature are mostly produced by academics who face an imperative to publish or watch their careers perish. These academics aren’t basing their careers on their clinical skills and experiences. Paradoxically, if we allow the academic literature to set guidelines for accepted practices, we are allowing those who are often academics first and clinicians second to determine what clinical care is appropriate.
Consciously or not, those who provide the peer review for medical journals are influenced by whether the work they are reviewing will impact their standing in the medical community. This is a dilemma. The experts who serve as reviewers compete with the work they are reviewing. Leaders in every community, therefore, exert disproportional influence on what gets published. We expect reviewers to be objective and free of conflicts, but in truth, only rarely is that the case.
Albert Einstein once noted that “a foolish faith in authority is the worst enemy of truth.”

For the full commentary, see:

NORBERT GLEICHER. “‘Expert Panels’ Won’t Improve Health Care; Government reliance on medical studies will make it harder to discard false prophecies and dogmas.” The Wall Street Journal (Mon., October 19, 2009): A21.
(Note: the online version of the commentary is dated Sun., Oct. 18.)