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  • The Role of Policy in Innovation

    Mariana Mazzucato studies the relationship between innovation and economic growth. She looks closely at all the actors involved: entrepreneurs, consumers, companies, policy makers. And she wants us to reconsider the way we frame discussions about innovation and policy. Namely, she sees the "market vs state" sensibility as a bit out of touch with what is going on when companies innovate. In this Ted Talk , she makes the case that the state matters--and that part of the reason that the Apples and the Googles became the global powers they are is because of policy and not government "getting out of the way."
  • What Makes a Company a Global Growth Leader

    Wharton marketing professor George Day has been studying growth leaders like IBM and GE for 25 years. His goal: to find the secret formula for scale, or, to answer a key question: "how do companies become growth leaders? Day has put his findings into a new book: Innovation Prowess: A Leadership Strategy to Accelerate Growth . In this Knowledge@Wharton video, Days speaks with his Wharton colleague David Heckman about innovation, management strategies, and finding the right balance of organic and inorganic growth.
  • Derek Thompson on Home and Away U.S. Economies

    If you are trying to make sense of declining business investment in the U.S., The Atlantic 's Derek Thompson suggests you consider the U.S. economy as really two economies: the home economy and the away economy. And things look relatively good at home. But on the road... Meanwhile, in the Away Economy, there is a world of precarious, scary, and outright depressing news, which is weighing on large corporations that tend to make more than half of their income from customers outside the U.S. GE and Pfizer, for example, are listed in U.S. stock indices. When their prices fall, it looks like a reflection of the U.S. economy. But both companies make more than 50% of their revenue abroad, and Apple makes more than 60% outside the Americas. When the world catches a cold, multinationals sneeze ... even if the typical U.S. household is feeling alright. Today's bad news in the away economy fits mostly, but not entirely, into three buckets: (1) Demand from Europe, which is a continent-wide recession that could turn into a continental depression; (2) Demand from China, which could slow as it re-balances its economy toward household spending and away from government investment; (3) The fall in commodity/energy prices, which is a combination of secular trends, like plentiful natural gas, and a perceived slowdown in energy-intensive economies (namely Europe and China). Read The Other Economic Cliff: Why Business Investment Is Really Nosediving here .
  • Daniel Gross on Economic Stimulus and the new iPhone

    The iPhone 5 was a big seller this weekend. Some 5 million phones were sold (maybe not as high as some expected, but still, 5 million...). Some top business minds have suggested that this is more than just a product release for Apple. As we noted earlier this month, some analysts argued that iPhone sales could have an important stimulus effect for the U.S. economy . Daniel Gross may be buying the phone, but he isn't buying the economic impact hype. At Daily Beast , Gross writes: Of course, it has been a huge financial hit. And Apple—one of the most valuable companies in the world and a commercial ecosystem unto itself—is a huge and vital economic force. In fact, some iFans have been touting the iPhone as a form of stimulus on the scale of the Tennessee Valley Authority. It’s poised to sell 10 million units in the next few months. Let’s say the average consumer buys a $299 iPhone 5, that’s about $3 billion in sales. The utility of stimulus is that it gets capital that would otherwise lie fallow, resting in a bank somewhere, and puts it to work in the economy. And by that measure, the iPhone 5 is stimulative. The billions of dollars in sales that the iPhone generates will translate into more hours for Apple’s employees, more work for the people who ship and deliver the goods, and more work for the already overworked, underpaid employees at Apple contractors in China. Since the iPhone5 is slightly bigger than the iPhone 4 and requires a different adapter, it also will bring about a flood of sales for accessory makers. But as stimulus goes, the I-stimulus strikes me as a pretty narcissistic and ephemeral one. It would be one thing if the iPhone 5 allowed people to work or communicate in a fundamentally different way. But as all the reviewers have noted, the iPhone 5 represents incremental change rather than a revolutionary one. Will all the people who have them be more productive now that they’ve upgraded? It’s doubtful. Read The Annoying iPhone 5 Frenzy: Don’t Believe the Economic Stimulus Hype here .
  • The iPhone's Potential Impact on GDP

    How much of a difference can one product make? If that product is a new iPhone, it can make a significant difference for the U.S. economy, according to J.P. Morgan 's chief U.S. economist Michael Feroli . At Real Time Economics , Sudeep Reddy passes along what Feroli wrote to J.P. Morgan clients about the pending release of the iPhone 5. In short, Reddy writes, sales of the phone "could add between a quarter and half a percentage point to annualized economic growth in the fourth quarter." In a note to clients today (titled “Can one little phone impact GDP?”), Feroli walks through the math: J.P. Morgan’s equity analysts expect Apple to sell about 8 million iPhone 5 units in the final three months of the year. If the phone sells for around $600, with about $200 of it counted as imported components, then $400 per phone would figure into the government’s measure of gross domestic product. (Even though consumers may not pay that much for the phone, because of subsidies from wireless carriers, Feroli explains that phone-selling companies often report the sales based on the price of the standalone product.) The bottom line: The new iPhone sales could boost GDP by $3.2 billion in the fourth quarter, or $12.8 billion at an annual rate. That is an increase of 0.33 percentage point in the annualized rate of GDP growth. It could be even higher, he says. Even a third of a percentage point would limit the downside risk to J.P. Morgan’s fourth-quarter growth projection of 2%. Read IPhone 5 Sales Could Offer Big Boost to GDP here .
  • A Call to Rein in the High-Tech Hype-Machine

    Farhad Manjoo is worried that the tech industry has gone Hollywood. Everyone is looking for the next Facebook or iPod, but they seem less willing to wait for the next-big-thing to develop before they lavish hype on it. Writing at Fast Company , Manjoo cautions us against putting stock in a model that doesn't give products time to develop before grading them as successes or failures: As digital culture has become mainstream culture--pushed along by, yes, Apple and its now masterfully calibrated launch events--the iPod's slow start would make it a dud today, the TouchPad of music players (remember HP's ill-fated tablet? Me neither). Tech has now become about hits, not unlike Hollywood movies. And the numbers for what defines a smash are only growing: In 2010, Microsoft's Kinect motion-gaming add-on sold 8 million units in 60 days , earning it a Guinness world record. A year later, Apple sold 33 million iPhone 4S's in its first 78 days. The Instagram photo-sharing app attracted 7 million users in its first nine months; this spring, the Draw Something app wooed 35 million people in its first six weeks, prompting Zynga to buy it for a reported $180 million. On the flip side, slow starters are being kicked to the curb. The recommendation app Oink, backed by a Silicon Valley Who's Who, didn't pop and shut down after a few months, the John Carter of the App Store. These megahits present a danger for the tech business. The iPod's early years suggest that the industry will lose something in the rush to kill off products that don't catch fire immediately. "There's a subsection of people in the Valley who think the only way to be successful is to create a viral overnight hit," says Dave Morin, CEO of the social-networking app Path, which attracted nearly a million registered users in its first year. That's a more modest start than, say, Pinterest, but Morin points out that Facebook, Flickr, LinkedIn, and Twitter all took years to gain millions of users. He's right: New technology isn't like a movie, a finished product that you either like or you don't. High-quality tech products take time--after they're released. It's relatively easy to get a lot of people to check out your new thing: see MySpace, Chatroulette, or any number of Zynga games. But it takes more determined work, more trial and error, to keep them using your product. Look at all of Facebook's redesigns, missteps, and reorganizations on the path to winning big. Read Why Tech's Hunger For Overnight Hits Is Bad For Business here .
  • The Economist: The Curious Case of Apple's High Climbing Stock

    If your neck is feeling stiff lately, we suggest you stop following the path of Apple stock. The price of one share hit a new record high of $605.96 last week, and according to The Economist , Apple stock is now strong enough to have a lifting effect on the markets overall. Take a look at the impact on the S&P 500: The question now seems to be how high it can climb before buyers get truly nervous. As The Economist points out, the announcement last week that Apple will use some of its cash holdings to pay a dividend and buy back some stock, only keeps investors interested: Most analysts remain committed fans of the shares. Some claim that a $1 trillion valuation could soon be possible. The bullish case runs as follows. Apple has low penetration in the personal-computer and smartphone markets, and can hook millions more customers in emerging markets like China and Brazil. Although questions remain over how much of Apple’s innovation was due to its magician-in-chief, Steve Jobs, who died last October, the launch of the new iPad has calmed nerves somewhat. Apple is poised to enter new arenas like television and mobile payments. The firm still has a ton of cash to invest in new products and ward off emerging threats. Horace Dediu of Asymco, a data-analysis firm, has estimated that even after the dividend payout and any buy-back activity this year, Apple could still end 2012 with over $35 billion more in the bank than it had at the end of the previous year. With an historic price-earnings (p/e) ratio of 22, shares are not as dear as you might expect, and look even more attractive when the p/e is calculated based on forward earnings. Apple’s revenues are forecast to grow by at least 51% in fiscal-year 2012 and by 23% in 2013, according to Morgan Stanley. Others reckon that the outlook for its business is not the only thing that has been driving the steep ascent of Apple’s shares. The stock has seen such heavy gains in recent weeks that many investors can’t afford not to have Apple in their portfolio. Fund managers that are judged against a benchmark where Apple is heavily weighted, like the NASDAQ 100 or the S&P 500 technology index, have to scramble to keep a heavy exposure to Apple. “The speed of the move and the size of the company scare people who haven’t got it,” says Andy Ash of Monument Securities. “The danger is that you end up with everyone buying it because they have to rather than because they want to.” So what should we be looking for in the unique case study that is Apple? What signs that Apple stock's climb will level off, or even dip down? Read the full article here .
  • Consumer Loyalty and Apple's Success

    Forbes contributor Robert Passikoff says Apple has become The Most Valuable Company in the World thanks in large part to chart-topping customer loyalty. "So it’s axiomatic: more consumers behave well toward a brand, a brand sells more, a brand makes more money, its stock goes up," Passikoff writes. And in Apple's case, the stock goes up past $500 a share. So how does Apple do it? Bain & Company 's Fred Reichfeld says it all about loyalty. And, Reichfeld explains in this Harvard Business Review video, other companies would do well to follow Apple's example. It probably won't lead to the same stock valuation, but it might be a path toward sustainable growth:
  • Nilofer Merchant Calls Out Yahoo Leadership

    At Harvard Business Review , Nilofer Merchant has strong words for Yahoo's new leadership . It is time, Merchant says, to be "fearless." The first step is to figure out how the company got to where it is today, and she uses this graph to illustrate the point: Merchant: After working with dozens of complex companies and observing hundreds more, what I've learned is that the companies that create the next big thing are the ones who go beyond talking about doing things differently; they work through the denial, resistance and inaction, and truly shift and adapt. After all of the struggle, they finally both decide that they must, and they actually do. This appears to be where Yahoo has just arrived. A shift. Some movement in saying that what's worked in the past isn't working anymore, and it's time for a change. Bravo. Finally. This shift could be called "feckless to fearless." Feckless is when a company doesn't know its mission, is weak in its decision-making, and thus ineffective in its output. Fearless is seen in bold moves, created by people who trust one another, and backed up by accountability. This shift is the difference between freaking out at the possibility of an imperfect bold bet and making the worst of all choices: zero bold bets. In actually bringing in new talent and letting them lead you to new edges, instead of just saying it's time for a new approach. It's deciding to stop talking about the competitive threat, and instead asking what it will take to leapfrog those competitors. It is worrying less about getting it right, and more about getting started — now. Merchant's advice is directed simultaneously at Yahoo and at other companies that have lost their momentum. Read Yahoo's Shakeup Demands Fearlessness here .
  • Roger McNamee on the Internet's Big Shift

    Roger McNamee has been a leading investor in science and technology for thirty years. Lately, he has been telling people we are on the verge of a new tech cycle--one that will change the way that we interact with technology, with businesses, and with each other. And while he can't put his finger on exactly what is happening, he has six "hypotheses" that he says we should be watching and testing. McNamee discussed these hypotheses in a talk at TEDxSantaCruz :
  • Walter Isaacson on Steve Jobs

    Walter Isaacson has been hard at work finishing his biography of Steve Jobs . The book, out today, is the result of 40 interviews that Isaacson conducted with Jobs, and many more with Jobs's friends family and colleagues, over the last seven years. Isaacson spoke about Jobs on 60 Minutes . Here is an excerpt, in which Isaacson discusses Jobs's personal life, his early days as a complicated colleague at Atari, and how he and Steve Wozniak founded Apple computer from his parents' garage. We find the second half of this segment particularly interesting, as Isaacson discusses what some Apple employees refer to as Jobs's "reality distortion field," which seems to have made him a very difficult friend and colleague, but perhaps also explains some of his more surprising successes as a business leader. Watch the full interview here .
  • AdAge: Top 10 Apple Ads

    One more Apple/Steve Jobs story to highlight. This one is about Apple's success in mass marketing during the Jobs era. Advertising Age has a collection of the most effective ad campaigns during the era. Like the Mac vs PC series. This example is an online version of the ads that John Hodgman and Justin Long made popular: Check out The 10 Best Ads to Come out of Steve Jobs' Reign at Apple here .
  • Steve Jobs: 'Stay hungry. Stay foolish.'

    We went on the hunt for some of Steve Jobs 's top public moments, and we have selected two. First, this grainy old video from when he introduced the Macintosh personal computer to the world: Steve Jobs demos Apple Macintosh, 1984 from Vincent on Vimeo . And this is Jobs's speech at Stanford University's 2005 commencement. The message here is very personal. Jobs was speaking one year after he was diagnosed with pancreatic cancer. His closing line to the graduates: "stay hungry, stay foolish":
  • David Pogue: Three Reasons Apple Might Still be Apple Without Steve Jobs, One Reason it Might Not

    Steve Jobs stepped down as CEO of Apple yesterday . From his resignation letter : I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come. I hereby resign as CEO of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director and Apple employee. While Jobs had been on medical leave, and it seems clear that his ongoing battle with pancreatic cancer and the effects of that battle (this was Jobs's third medical leave from Apple, according to the New York Times), is not going well. So our first thoughts are focused on the health of one of the most innovative leaders in American business. As for the future of Apple, the company now has a significant challenge: remaining an industry leader without its leading visionary. David Pogue presents three reasons to expect Apple will continue to be Apple: The good news: First, Mr. Jobs isn’t leaving Apple. He’ll remain as chairman of the Apple board. Tim Cook, who’s been Apple’s director of operations for seven years, will take over as chief executive. (He’s been acting C.E.O. since January.) You can bet that as chairman, Mr. Jobs will still be the godfather. He’ll still be pulling plenty of strings, feeding his vision to his carefully built team, and weighing in on the company’s compass headings. Second, the tech world doesn’t turn on a dime. Apple’s pipeline is already stuffed with at least a couple of years’ worth of Jobs-directed products. In the short term, you won’t see any difference in Apple’s output of cool, popular inventions. Third, even if Mr. Jobs isn’t sitting at every design meeting, ripping apart or heartily embracing each idea presented to him, his tastes, methods and philosophies are deeply entrenched in the company’s blood. But Pogue says that these reasons may not trump the potential damaging affect of Apple losing Jobs's "personality." Read Steve Jobs Reshaped Industries here .
  • Thinking Like an Innovator

    Jeff Dyer , professor at Brigham Young University's Marriott School of Business , studies "disruptive innovators." And he says other business leaders can learn a lot by studying the ways in which these innovators come up with disruptive ideas through experimentation. In this Harvard Business Review IdeaCast , Dyer discusses techniques to introduce more innovative thinking in the workplace: