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November 14, 2012

No Patents. No Inventions. No New Products. Yet Innovative.

Posted by Simon Towers (View Profile | View All Posts) at 4:58 AM

How so, you ask? Well, I've been looking at some idea champs in China. The first - Haier: The largest home appliances company in China. Their innovation model is all about tailoring products, invented elsewhere, specially for the Chinese consumer. For example, they added an anti-mud clogging feature to the regular washing machine. And here's why. Chinese farmers use washing machines to clean their veggies! And with 50% of China's population concentrated in its rural areas, this is big business.

Then there's Wahaha the beverages giant. They make up to three to four more launches than their competitors. No research, no data analysis and no formulations based on such insight for this maverick that simply prefers the trial-and-error approach. (Consumer tastes change much too rapidly to stay apace is their belief). So, where does Wahaha find all those product ideas anyway? Employees. Any employee who contributes a winning product idea is rewarded with a generous cash prize. Little wonder, they are a great wellspring of ideas.

A third example. China traditionally has a huge challenge delivering coal from its mines to its power plants. Long distances separating the mines from the plants, rail systems operating in silos at the province level, a very fragmented supply chain and a system that's mostly cash-dependent (Very few Chinese banks have financial options for coal transcations) have created this situation. Enter Tader Coal Net. They've transformed the business and in just 10 years of setting shop, are now the largest privately run coal supply chain company in China. They did this by integrating logistics, trading and finance management. They can be a buyer, seller, financier of transactions or any combination of these roles, on demand.  

So, are these ideas adding any value at all? Are variations on already existing themes real innovations? Well, I think, there's place for both revolutionary and evolutionary ideas. If ideas are born to create and nurture "good enough", no-frills,  pragmatic solutions, that also make money for the ideator, why not? And if this means, looking beyond fancy, eye-catching and dramatic inventions...then again, why not?  

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