Category: Leapfrog

“Become Pioneers of Leapfrog Technology”

Here is the latest entry in my continuing effort to document uses of the “leapfrog” concept in business and innovation. The entry below appears in a table entitled “Strategy Milestones” and is under the third of three column headings, which is entitled “Long Term (5+ Years).”

(p. 149) Become pioneers of leapfrog technology

Source:
Bossidy, Larry, Ram Charan, and Charles Burck. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002.
(Note: the quotation is presented as being Bossidy’s.)

Greenspan on Leapfrogging in India


(p. 316) India is fast becoming two entities: a rising kernal of world-class modernity within a historic culture that has been for the most part stagnating for generations.
This kernal of modernity appears to have largely leapfrogged the twentieth-century labor-intensive manuafacturing-for-export model embraced by China and the rest of East Asia.



Source:
Greenspan, Alan. The Age of Turbulence: Adventures in a New World Economic Flexibility. New York: Penguin Press, 2007.

Motorola Hurt By Failing to Leapfrog Itself

 

MotorolaStockRazrBurn.gif   Source of graph:  online version of the WSJ article cited below.

 

Clayton Christensen, in a series of books, has highlighted why it is difficult for a successful incumbent to prepare a successor for its own winning product.  The Motorola case below is another example.

Note, though, that Motorola’s failure is not the understandable one of failing to prepare what Christensen calls a "disruptive innovation."  If the story below is right, it is a case of the less understandable failure to continue to deliver with what Christensen calls "sustaining innovation."

 

(p. A1)  A year ago, Motorola Inc. appeared headed for a third straight year of rich profits under Chief Executive Ed Zander, driven by its hit cellphone the Razr. "A lot of you are always asking what is after the Razr," Mr. Zander said in an April 2006 conference call after another quarter of 30%-plus growth. "I say more Razrs."

But behind the scenes, Motorola was working furiously to get a successor phone to market by the second half of 2006, according to people familiar with the matter. When it failed to do so, profit margins on handsets narrowed and the company swung to a loss. Key executives left. And as the stock slid, activist investor Carl Icahn built up a position and began campaigning for a board seat to address what he called Motorola’s "operational problems."

Motorola’s travails illustrate the risks for a company that rides high with a big consumer hit. Amid its success with the Razr, it fell behind on developing a phone with the next generation of technology. Missing a beat is especially hazardous in cellphones, where it can take two to three years to develop a new line.

. . .

(p. A14)  As the Razr grew hot, some former designers and engineers say Motorola repeated mistakes it had made a decade earlier with another big hit, the compact flip-top phone known as the StarTAC. That phone was a huge seller, but it also was an analog phone, and its popularity blinded the company to an industry shift to digital technology. Similarly, while Motorola was selling countless Razrs, competitors were hard at work on more sophisticated products for 3G networks.

Motorola put engineers and designers who could have been working on new products on the Razr and its derivatives, some former executives say. "All resources went to feeding the beast," says a former Motorola designer. "Suddenly, you created this thing that requires a lot of energy and attention." Other former executives dispute that the focus on the Razr diverted work from other products and contend Motorola was right to ride the still-popular Razr as long as possible.

 

For the full story, see: 

CHRISTOPHER RHOADS and LI YUAN.  "DROPPED CALL; How Motorola Fell A Giant Step Behind; As It Milked Thin Phone, Rivals Sneaked Ahead On the Next Generation."   The Wall Street Journal  (Fri., April 27, 2007):  A1  & A14. 

(Note:  ellipsis added.)

 

The most complete source of Christensen’s theory and examples is:  

Christensen, Clayton M., and Michael E. Raynor. The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

 

ZanderEdMotorolaCEO.gif  Motorola CEO.  Source of image:  online version of the WSJ article cited above.

 

“The Companies Are Leapfrogging One Another”

 

. . .  More than 17 million travel insurance policies are sold each year, according to the United States Travel Insurance Association, whose members have seen a surge in interest since Sept. 11, 2001. Policies typically cost between 4 percent and 7 percent of the price of the trip, with fees based on the traveler’s age and on the cost and length of the trip.

As the market matures, “the companies are leapfrogging one another” to expand coverage, said Chris Harvey, chief executive of Squaremouth.com, an online travel insurance agency. “One will come out with $50,000 medical, the next $100,000.”

More traditional travel insurance policies reimburse travelers who are forced to cancel because of weather, airline strikes, acts of terrorism that affect their destinations, serious illness or the death of the traveler or a close family member. Typical policies also provide coverage for medical emergencies, lost or damaged luggage, and major travel delays. But until recently travelers weren’t reimbursed if they simply changed their minds and decided not to go. AIG Travel Guard’s new Cancel for Any Reason add-on coverage, offered on two different package plans, reimburses 75 percent of the trip expenses if a traveler cancels a covered trip up to two days before departure — no questions asked. It follows a similar policy introduced by TravelSafe Insurance in 2005.

This flexibility comes at a price — 30 percent to 40 percent more than for standard coverage. But the option may be worth considering if you want the flexibility of changing your travel plans at any time without losing the bulk of what you paid.

 

For the full story, see: 

MICHELLE HIGGINS.  "PRACTICAL TRAVELER | TRIP INSURANCE; Protecting Against the Dread ‘What If?’"  The New York Times, Section 5  (Sun., May 6, 2007):  6. 

(Note:  the ellipsis and the bold were added.)

 

Should Netscape Be Viewed as a Failed Company, or as a Successful Project?

 

(p. 53)  Recall the story of Netscape, once the darling of the New Economy.  Netscape was formed in 1994.  It went public in 1995.  And by 1999, it was gone, purchased by America Online and subsumed into AOL’s operation.  Life span:  four years.  Half-life:  two years.  Was Netscape a company—or was it really a project?  Does the distinction even matter?  What matters most is that this short-lived entity put several products on the market, prompted established companies (notably Microsoft) to shift strategies, and (p. 54) equipped a few thousand individuals with experience, wealth, and connections that they could bring to their next project.

And Netscape is not alone.  A University of Texas study found that between 1970 and 1992, the half-life of Texas businesses shrank by 50 percent.  Likewise, a Federal Reserve analysis of New York companies found that the type of firm that created the most new jobs (microbusineses with fewer than ten employees) often had the shortest life span.  The life cycle of companies has been that jobs, too, have diminishing half-lives.  Ten years ago, nobody ever heard of a Web developer.  Ten years from now, nobody may remember Web developers.

Most important, at the very moment the longevity of companies is shrinking, the longevity of individuals is expanding.  Unlike Americans in the twentieth century, most of us today can expect to outlive just about any organization for which we work.  It’s hard to imagine a lifelong job at an organization whose lifetime will be shorter–often much shorter–than your own.

 

Source:

Pink, Daniel H. Free Agent Nation: How America’s New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

 

Leapfrog the Elevator Competition into a Blue Ocean

 

(p. 178)  They wanted to cut waste, freeing people to produce higher-quality elevators faster at lower cost to leapfrog the competition.  But plant employees could not have known that.

 

Source: 

Kim, W. Chan, and Renée Mauborgne. Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. Boston: Harvard Business School Press, 2005.

 

Kodak Tries to Survive Creative Destruction

   A Kodak digital production printer.  Source of photo:  online version of the NYT article cited below. 

 

Digital photography replacing film technology is an example of Schumpeter’s process of creative destruction, and maybe also of the gradual growth of a disruptive technology.  Leading incumbent firms frequently have trouble prospering, or even surviving, during such a change.  Both the Wall Street Journal and the New York Times had articles on the latest news from Kodak.  Here is an excerpt from the New York Times version:  

 

On Tuesday, as the Eastman Kodak Company unveiled its long-anticipated consumer inkjet printer in New York, the mood at the company’s Rochester headquarters could not have been more positive.

“People know we are back on the offensive,” said Frank Sklarsky, Kodak’s chief financial officer.  “And that’s making them a lot more charged up about coming to work.”

But yesterday, Kodak gave them reason again to feel depressed.  The company said it would cut 3,000 more jobs this year, on top of the 25,000 to 27,000 it had already said would be gone by the end of 2007.  At that rate, Kodak will end the year with about 30,000 employees, half the number of just three years ago and a fraction of the 145,000 people it employed in 1988, when its brand was synonymous with photography.

Kodak executives insist that the new cuts do not indicate any snags in the continuing struggle to transform itself from a film-based company into a major competitor in digital imagery.  And analysts, too, say the cuts are inevitable, and probably healthy.

 

For the full NYT story, see: 

CLAUDIA H. DEUTSCH.  "Shrinking Pains at Kodak."  The New York Times   (Fri., February 9, 2007): C1 & C4.

 

For the related WSJ story, see: 

WILLIAM M. BULKELEY and ANGELA PRUITT.  "Kodak Sees More Job Cuts, Higher Restructuring Costs."  The Wall Street Journal  (Fri., February 9, 2007):  B4.

 

 

 KodakJobsBarGraph.gif KodakJobsGraph.gif PrinterMarketSharePieChart.gif   Source of the first and third graphic:  the WSJ article cited above.  Source of the second graphic:  the NYT article cited above.

 

Jim Collins on How Boeing Leapfrogged McDonnell Douglas

(p. 202)  Wisely, through the 1940s, Boeing had stayed away from the commercial sphere, an arena in which McDonnell Douglas had vastly superior abilities in the smaller, propeller-driven planes that composed the commercial fleet.  In the early 1950s, however, Boeing saw an opportunity to leapfrog McDonnell Douglas by marrying its experience with large air-(p. 203)craft to its understanding of jet engines. 

 

Source:

Collins, Jim. Good to Great: Why Some Companies Make the Leap. And Others Don’t. New York: HarperCollins Publishers, Inc., 2001.

 

Playstation 3 Fails to Leapfrog Xbox 360

  If Schiesel’s review is on-target, these shoppers, waiting to buy Playstation 3, may regret having camped-out at the store to be among the first to buy the new game platform.  Source of photo:  http://graphics8.nytimes.com/images/2006/11/17/business/15game1.650.jpg

 

(p. B1)  Howard Stringer, you have a problem.  Your company’s new video game system just isn’t that great.

Ever since Mr. Stringer took the helm last year at Sony, the struggling if still formidable electronics giant, the world has been hearing about how the coming PlayStation 3 would save the company, or at least revitalize it.  Even after Microsoft took the lead in the video-game wars a year ago with its innovative and powerful Xbox 360, Sony blithely insisted that the PS3 would leapfrog all competition to deliver an unsurpassed level of fun.

Put bluntly, Sony has failed to deliver on that promise.

Measured in megaflops, gigabytes and other technical benchmarks, the PlayStation 3 is certainly the world’s most powerful game console.  It falls far short, however, of providing the world’s most engaging overall entertainment experience.  There is a big difference, and Sony seems to have confused one for the other.

The PS3, which was introduced in North America on Friday with a hefty $599 price tag for the top version, certainly delivers gorgeous graphics.  But they are not discernibly prettier than the Xbox 360’s.  More important, the whole PlayStation 3 system is surprisingly clunky to use and simply does not provide many basic functions that users have come to expect, especially online.

 

For the full commentary, see:

SETH SCHIESEL.  "VIDEO GAMES; A Weekend Full of Quality Time With PlayStation 3."  The New York Times  (Mon., November 20, 2006):  B1 & B7.

(Note:  the bold has been added to "leapfrog.")