Untouched
Despite not really knowing the lyrics, I’ve had a song playing on and off in the back my head since I got back from training. It was played in the background of the closing slideshow, and upon getting back, I must’ve spent at least one (frustrating) hour searching on Google combinations of words “I just can’t reach you” and “I need you” to no avail.
Thankfully, I had the email contact of one of the training coordinators and she pointed me to this little gem. I was pretty surprised to find out it was from the Veronicas, as I haven’t really liked any of their other songs. Probably the strings and the ridiculously fast beats (176 beats per minute!)?
“Alalalala alalalala”
Schering-Plough says goodbye via analyst call
If you follow the biopharma sector at all, then you’ll know one of the most noteworthy deals to be announced in recent months is the $41 billion deal where Merck will buy former rival Schering-Plough.
With the deal closing soon, Schering-Plough’s execs had to deliver one last earnings call with the analyst community which cover Schering-Plough stock.
Generally, these are very dry affairs full of corporate speak with many empty promises, excuses, and boasting (although, occasionally, if you have an interesting enough CEO like NVIDIA’s Jen-Hsun Huang, you get some very interesting commentary). But, this most recent analyst call had a bit of poignancy you don’t usually get in an analyst call, as covered by the Wall Street Journal Healthcare blog:
The earnings call’s invariable bleating about operational sales growth and foreign exchange impact came with notes of nostalgia… Analysts offered kind good byes and good lucks. Executives waxed about the company, and its pipeline of new drugs, that they had built. It will all go to Merck now, Chief Executive Fred Hassan said in closing.
Awwww. Adios, Schering-Plough.
Innovator’s Business Model
A few weeks back, I wrote a quick overview of Clayton Christensen’s explanation for how new technologies/products can “disrupt” existing products and technologies. In a nutshell, Christensen explains that new “disruptive innovations” succeed not because they win in a head-to-head comparison with existing products (i.e. laptops versus desktops), but because they have three things:
- Good enough performance in one area for a certain segment of users (i.e. laptops were generally good enough to run simple productivity applications)
- Very strong performance on an unrelated feature which eventually will become very important for more than one small niche (i.e. laptops were portable, desktops were not, and that became very important as consumers everywhere started demanding laptops)
- Have the potential to improve by leveraging their industry learning curve to the point where they can compete head-to-head with an existing product (i.e. laptops now can be as fast if not faster than most desktops)
But, while most people think of Christensen’s findings as applied to product and technology shifts, this model of how innovations overtake one another can be just as easily applied to business models.
A great example of this lies in the semiconductor industry. For years, the dominant business model for semiconductor companies was the Integrated Device Manufacturer (IDM) model – a business model whereby semiconductor companies both designed and manufactured their own product. The primary benefit of this was tighter integration of design and manufacturing. Semiconductor manufacturing is highly sophisticated, requiring all sorts of specialized processes and chemicals and equipment, and there are a great deal of intricacies between one’s designs and one’s manufacturing process. Having both design and manufacturing under one roof allowed IDMs to create better products more quickly as they were able to exploit the interplays between design and manufacturing and more readily correct problems as they arose. IDMs were also able to tweak their manufacturing processes to push specific features, letting IDMs differentiate their products from their peers.
But, a new semiconductor model emerged in the early 1990s – the fabless model. Unlike the IDM model, fabless companies don’t own their own semiconductor factories (called fabs – hence the name “fabless”) and outsource their manufacturing to either IDMs with spare manufacturing capacity or dedicated contract manufacturers called foundries (the two largest of which are based in Taiwan).
At first, the industry scoffed at the fabless model. After all, these companies could not tightly link their designs to manufacturing, had to rely on the spare capacity of IDMs (who would readily take it away if they needed it) or on foundries in Taiwan, China, and Singapore which lagged the leading IDMs in manufacturing capability by several years.
But, the key to Christensen’s disruptive innovation model is not that the “new” is necessarily better than the “old,” but that it is good enough on one dimension and great on other, more important dimensions. So, while fabless companies were at first unable to keep up in terms of bleeding edge manufacturing technology with the dominant IDMs, the fabless model had a significant cost advantage (due to fabless companies not needing to build and operate expensive fabs) and strategic advantage, as their management could focus their resources and attention on building the best designs rather than also worrying about running a smooth manufacturing setup.
The result? Fabless companies like Xilinx, NVIDIA, Qualcomm, and Broadcom took the semiconductor industry by storm, growing rapidly and bringing their allies, the foundries, along with them to achieve technological parity with the leading IDMs. This model has been so successful that, today, much of the semiconductor space is either fabless or pursuing a fab-lite model (where they outsource significant volumes to foundries, while holding on to a few fabs only for certain products), and TSMC, the world’s largest foundry, is considered to be on par in manufacturing technology with the last few leading IDMs (i.e. Intel and Samsung). This gap has been closed so impressively, in fact, that former IDM-technology leaders like Texas Instruments and Fujitsu have now decided to rely on TSMC for their most advanced manufacturing technology.
To use Christensen’s logic: the fabless model was “good enough” on manufacturing technology for a niche of semiconductor companies, but great in terms of cost. This cost advantage helped the fabless companies and their allies, the foundries, to quickly move up the learning curve and advance in technological capability to the point where they disrupted the old IDM business model.
This type of disruptive business model innovation is not limited to 
the semiconductor industry. A couple of weeks ago The Economist ran a great series of articles on the mobile phone “ecosystem” in emerging markets. The entire time while I was reading it, I was struck by the numerous ways in which the rise of the mobile phone in emerging markets was creating disruptive business models. One in particular caught my eye as something which was very similar to the fabless semiconductor model story: the so-called “Indian model” of managing a mobile phone network.
Traditional Western/Japanese mobile phone carriers like AT&T and Verizon set up very expensive networks using equipment that they purchase from telecommunications equipment providers like Nokia-Siemens, Alcatel-Lucent, and Ericsson. (In theory,) the carriers are able to invest heavily in their own networks to roll out new services and new coverage because they own their own networks and because they are able to charge customers, on average, ~$50/month. These investments (in theory) produce better networks and services which reinforce their ability to charge premium dollar on a per customer basis.
In emerging markets, this is much harder to pull off since customers don’t have enough money to pay $50/month. The “Indian model”, which began in emerging countries like India, is a way for carriers in low-cost countries to adapt to the cost constraints imposed by the inability of customers to pay high $50/month bills, and is generally thought to consist of two pieces. The first involves having multiple carriers share large swaths of network infrastructure, something which many Western carriers shied away from due to intellectual property fears and questions of who would pay for maintenance/traffic/etc. Another plank of the “Indian model” is to outsource network management to equipment providers (Ericsson helped to pioneer this model, in much the same way that the foundries helped the first fabless companies take off) — again, something traditional carrier shied away from given the lack of control a firm would have over its own infrastructure and services.
Just as in the fabless semiconductor company case, this low-cost network management business model has many risks, but it has enabled carriers in India, Africa, and Latin America to focus on getting and retaining customers, rather than building expensive networks. The result? We’re starting to see some Western carriers adopt “Indian model” style innovations. One of the most prominent examples of this is Sprint’s deal to outsource its day-to-day network operations to Ericsson! Is this a sign that the “Indian model” might disrupt the traditional carrier model? Only time will tell, but I wouldn’t be surprised.
(Image credit) (Image credit – Foundry market share) (Image credit – mobile users via Economist)
USB H4x0rz
Back when I was still posting on Xhibiting, I was especially fond of interesting USB gadgets. Well, my good friend Anthony pointed me to this interesting gadget that he found out about through Engadget which takes my USB fascination to a whole new level:
The product is from Thumbs Up! and apparently, after plugging it into someone’s computer, will erratically turn on and off the caps lock, type out random text, and make random mouse movement. Better, still:
“Handily, the Prankster features a time delay setting, so that after installing it, you can make your getaway safely before it starts misbehaving.”
Glad to see they were thinking ahead. Thankfully, this is meant more to be a nuisance than a security risk, as its designed not to hit “Enter” or open/close files:
“The Prankster is highly annoying, but it’ll never activate the ‘enter’ key or close or save documents, so it’s mostly mischievous, not super-dangerous.”
Even so, to cover themselves morally (and possibly legally?), they note:
“However, it probably shouldn’t be used on computers that control nuclear reactors, security systems for genetically recreated dinosaur parks and/or zombie experimentation units, captured alien spacecraft or freezers packed with delicious ice cream.”
And all only for 20 British pounds!
Fro-yo
My current manager loves Fro-yo (frozen yogurt) to an almost absurd degree. Having had some type of frozen yogurt for four years in college, my enthusiasm, while still there (as it still tastes good), is not quite as strong as his.
The result? I get a lot of amusement out of some of our case team’s ridiculous fro-yo antics. Here are three:
Example 1: Philosophy
One day, the team was trying to get back to the airport to make a flight after having spent a long day at the client site. Around the time that certain members of the team were uneasy about how soon the flight would board compared with how far away we were from the airport, my manager suddenly drives off the highway that is taking us to the airport.
Someone: “What’s going on? What are we doing?”
Manager: “We’re going to get Fro-yo.”
Someone: “Are you serious? We’re going to be late!”
Manager (dead serious): “I never joke around when it comes to Fro-yo”
Example 2: Never Lost
For some reason, the car that our team rented lacked a GPS device. The result? Some of us had no idea how to get back to the hotel. Of course, my manager picks this time to have a fro-yo craving. And immediately starts driving very quickly down the road.
Ben: “Do you know where are we going?”
Manager: “Please, Ben, I have a Fro-yo radar. I can sense we’re heading to a Fro-yo place right now.”
(Sure enough, he found his way to his favorite Fro-yo shop, and we wound up back in the hotel safe and sound afterwards)
Example 3: Priorities
We’re sitting at dinner just passing the time as we eat our meals. I joke that instead of grabbing dessert in the restaurant, we should grab Fro-Yo. Of course, my manager jumps on that and adds…
Manager: “It’s double-stamp day!” (a day when we get two stamps per serving on a rewards card, rather than the usual one per serving)
Teammate (laughing): “What do you memorize their schedule?”
Manager: “When it comes to unimportant stuff, (turns to me) like Ben’s analysis, I don’t bother remembering. But when it’s the important stuff, like double stamp day, I remember.”
Sure enough – it was double stamp day.
(Image credit)
Resume/cover letter pet peeves
This may come a little late for those of you who are already in the middle of recruiting season, but having gone over in excess of 100 applications, I felt it’s my duty to at least try to make a few things clear about what I absolutely hate when I’m doing resume reads (apologies if the tone is a bit aggressive, but I’m really tired of running into applications with these problems):
- Not following the directions – This is top of the list for me, and it almost warrants a complete disqualification of an applicant from my perspective. This is your one chance to prove to the company you’re applying to that you’re a great choice – and you can’t even follow the clearly stated directions? If the instructions say, “submit two applications through two different websites” – I don’t care if one website is poorly designed, if you want the job you’re going to submit it twice. If the instructions say “include your SAT score”, and you don’t because of some sort of moral objection – I don’t care, because apparently you don’t want this job enough to overcome that objection. Please, people. Most companies aren’t trying to make this difficult.
- Cover letters that make you sound like someone I’d rather throw darts at than work with – Don’t get me wrong. To get hired you’ll probably have to do some gloating. And, there’s nothing wrong with using your cover letter to try to explain away a deficiency or two in your application. But, when your cover letter does nothing but convey either how you are someone who thinks you’re better than all the people around you, I find myself asking, “do I really want to work with someone like you?” and answering “No, I’m going to pass on this one.” It may be a little petty, but remember, its more important for a business to not hire bad people than it is for them to make sure every good candidate gets his/her fair chance.
- Purpose statements – Your purpose is self-obvious. Its to get a job at the firm you’re applying to. If your resume doesn’t establish that you have the qualifications and passion to do the job, either change your resume so that the “purpose statement” becomes a waste of time/space or don’t apply for the job.
- Skill: I’m great at Microsoft Office – Really? Unless you are super-super-kickass at using Word and PowerPoint and Excel (and I mean, you could teach the hardcore investment bankers and consultants a thing or two), don’t mention this. Nobody really cares (when’s the last time you heard a company hire a banker/consultant/analyst because of their Office skills?), and everybody knows you’re just pretending to have more computer skills than you actually have.
We now return you to your regularly scheduled blogging.
Off to training
I’m sitting in an airport waiting for my flight to a training program that my firm holds for third year associates. That’s good — because two years of not knowing what I’m doing really needs to end 
.
Looking forward to returning to the blogosphere when I return (next week)! Albeit, I’ll be out of the country (so no Blackberry :-X), and have limited access to the internet and Google Reader (my Google friends will experience a sudden decline in shared items to read and the Google Wave collaboration I just started with Eric, Anthony, and Kevin will have to take a back seat for a few days), and I will just happen to miss out on helping my lovely girlfriend move in to her new place (I swear, it was a coincidence!).
Until next time… (and if you miss me, there’s a list of my favorite/popular posts on the right!)
An electric eel’s version of Energy Star
It never ceases to amaze me the extent to which nature beats man to the punch when it comes to coming up with innovative solutions. There’s a reason, after all, that so much of engineering is biomimicry.
One cool example of nature coming up with a solution to a problem humans rea dealing with is something I recently encountered is from a journal article from the open access journal PLoS Biology (meaning that you don’t need to pay to read the article) on electric fish. While most people think of electric eels which are known to stun prey with electrical discharges when they think of electric fish, but there are many species of electric fish which use weaker types of electrical discharges for navigating (“electroclocation” – like echolocation, but with electricity) or communication.
Just like humans eventually did, electric fish have discovered that … electricity is costly to produce. These electric fish might not pay dollars and cents for said electricity, but they pay for it in terms of calories (they need to consume extra food to sustain their electrical abilities) and, for some species, in terms of being easily detected by electroreceptive predators (predators who can detect electrical fields).
A team of researchers at UT Austin and Florida International University studied a particular species of electric fish – the longtail knifefish (Sternopygus macrurus) and found that they was able to lower the strength of their emitted electrical fields by ~40%! This lowering of “power consumption” (to misuse the term) was triggered to changes in the day (these electric fish are more active at night, so they turn it up when the sun goes down and turn it down when the sun comes up) and when they were being social.
This, in turn, was all found to be controlled by a hormonal system that is analogous to the biological clock that controls when you or I feel like we need to sleep or wake up. These hormones triggered a change in the sodium channel proteins (like the ones that transmit our brain signals through our nerves) which moved them from their active position to an inactive position, increasing or lowering the knifefish’s electrical output.
I’ll leave those more interested in the biological details to check out the paper (which is very readable, even for novices), but I only hope that it takes humans less than the millions of years evolution that the longtail knifefish needed to solve its energy problems. After all, all we need is some sort of hormonal system (Higher prices at different times of the day? Smart grid signals?) that pushes our power consumption (Electronics which have different levels of power consumption, kind of like what some of today’s chips have? Maybe adaptive lighting/cooling/heating? Smart grid technology?) to different levels…
Paper: Markham MR, McAnelly ML, Stoddard PK, Zakon HH (2009) Circadian and Social Cues Regulate Ion Channel Trafficking. PLoS Biol 7(9): e1000203. doi:10.1371/journal.pbio.1000203
Layers upon layers
… upon layers… upon layers… of bureaucracy (HT: Dilbert)
It’d be even funnier if it weren’t such an accurate depiction of many companies today.