REI sells a new model for the future of retail

"Retail is moving toward capital-E environments," explains REI President and CEO Wally Smith. "For some people, that means Entertainment. For us, it means Education." This educational mission is behind almost every feature in the store: One of the basic filters that we ran each of our ideas through was, Does it teach customers something?

The REI superstore is enthusiastically interactive. But you won't find flashy video screens, high-speed Internet connections, or any of the other all-too-familiar trappings of entertainment retailing. Here, interactivity takes the form of testing stations, where customers can use the products before committing to them. The store's climbing rock and bike track are its two most high-profile stations. There's also a Rain Room, where hikers test weather-resistant outerwear; a pool filled with brackish water, where campers test water purifiers; and an Illumination Station, where cyclists test lights.

Such work-life integration makes for energized salespeople -- and a better store. "The buyers don't just say, 'Here's the gear,' " Edquist explains. "They see us as a resource: 'This guy has used every ice tool we sell. Is our selection where it needs to be?' " Diane Levy, 32, a sales specialist in the snowsport and paddling specialty shops, shares Edquist's perspective. "We've chased bad products out of here," she says. "That helps make us feel that this is our store."

This clever mix of customer experience and organizational development has supercharged REI's growth. Value through innovation and employee engagement makes the firm cutting edge in setting the tone for the future of retail. No World Borders organizational development and process innovation consulting teams can help you unlock the value in your firm.

FDA Unveils Database of Drug Side Effects, Procedural Changes

It could be argued that the pharmaceutical and medical products industry—with its high-value, high-regulation product lines—could have the most at stake for achieving operational excellence. Regulatory requirements have risen for this industry struggling to hold down cost.

Today, the Food and Drug Administration unveiled a new effort to bolster its oversight of drugs after they're on the market, in the agency's latest response to years of criticism about its handling of medication safety issues. Ultimately, the FDA is supposed to implement a second phase to the plan, called Safe Use, that will focus on ensuring that drugs are used safely in the real world. But the agency official said there were few details available yet about the plan.

Among other changes, the plan, dubbed "Safety First," involves creating a new database listing possible side effects of drugs, along with clear schedules for following up on questions about them. Also, the FDA plans to make changes to its procedures for making certain regulatory decisions, particularly those based on emerging safety worries, though the new moves don't go as far as some critics have advocated. The FDA plans to grant some new powers to the office that focuses largely on the safety of marketed drugs, known as the Office of Surveillance and Epidemiology. Republican Sen. Chuck Grassley of Iowa, among others, has raised concerns about the agency's current decision-making process, because regulatory power over drugs once they are approved rests primarily with the same drug-review divisions that decided to approve them for marketing in the first place. The plan was announced to FDA staff in an email today, and the agency is expected to testify about it tomorrow on Capitol Hill.

The new moves stop short of divorcing the two functions. The safety office will not get the ultimate power to sign off on label changes or recommendations to remove a drug from the market.

The agency will have multidisciplinary groups, including the pre-market review division and the safety office, come together to make decisions. If one office disagrees, it can appeal to higher-level officials. Currently, while this may often occur, it is more ad-hoc. Also, the pre-market drug-review divisions will each get their own new, dedicated officials whose responsibilities focus on safety.

The drug safety office will get primary authority over decisions to approve drug brand names and packaging, though this change will not occur immediately. Eventually, the safety office is supposed to formally get another power as well: the ability to commission certain kinds of research, the epidemiological studies often drawn from patient databases. This could involve requiring drug makers to do such studies -- a power the FDA gained under a new law passed last year -- or contracting with outside sources.

We help your organization keep compliance standards at their highest, while holding costs in check. Our services help companies achieve world-class regulatory compliance and drive operational excellence throughout their organizations.

No World Borders has developed several service offerings by combining our deep industry experience with pioneering technology and capabilities. We work with our clients to achieve sustainable, long-term, integrated solutions at lower cost aligning strategy with people, processes and technology. We aim for speed to value through extensive experience, pre-packaged materials and fast implementation. Our Health & Life Sciences industry group works with clients to ensure that patient need is at the center of everything they do. Within pharmaceutical and medical products, providers, payers and public service health we are transforming global health care by connecting information, insights and technology to improve the quality of the patient experience. Process improvement is at the forefront of No World Border's competencies, which are critical in highly regulated industries.

Microsoft & Yahoo Stalled but not Over – News Corp Enters the Fray: What it Means for Software, Advertising, & Innovation

With Yahoo shares down nearly 50%, Microsoft decided to prove the rumors true and make an unsolicited offer for Yahoo. The incredible $45 billion offer for Yahoo was designed to blunt Google's advertising momentum, and stall Google with its recent entry in to core Microsoft businesses such as word processing.

At last year's Wall Street Journal "All Things Digital" conference, Steve Ballmer said, "The world-wide advertising market is a $520 Billion industry, yet only a small fraction of it is online." Their acquisition of an ad server / ad network form last year was telling, but now Microsoft wants to expand its distribution channels. But that's not all. No World Borders believes Microsoft's dominance of Windows platform based applications won't be enough to sustain the growth of the company going forward. Software as a service (Saas) is the new opportunity Microsoft sees, and Google has the lead.

News Corp would have a different angle - expanding the search channel with social networking in MySpace, and leveraging its well-respected newspaper brands such as The Wall Street Journal.

• Global spending on Internet advertising rose to nearly $20 billion in 2007, according to PriceWaterhouseCoopers and eMarketer.

• Open source "free" software (nothing is free - you pay at least for support) means that more and more companies will innovate and move toward the relatively open playing field of Saas.   The distribution channels are harder to control.  Just as song artists who may have been unknowns have used MySpace for visibility and iTunes for distribution, a new "Ubiquitous Web" linked by Semantics (see our posts on the Semantic web and applications of semantics) will enable a renaissance of Saas innovation.

• Saas promises to cut licensing cost and make use of software universal, rather than tying it to a particular PC or server. No World Borders believes that as Saas permeates web sites, this development will help improve collaboration, collective intelligence, empowerful sharing of information tools with global populations. Even traditional enterprise software will have to compete with Saas, with new market entrants such as Coghead, providing asset management and other tools via Saas. This will mean more competition for Oracle, SAP and other firms who will either innovate toward more Saas or acquire companies such as Coghead in the future. Big companies like SAP have launched DNA, and Oracle is pushing OnDemand. For big companies, they have to move carefully so as not to blow up their multi-billion traditional software businesses.
  

• Those economies and demographics that have not had access to expensive Windows based systems will increasingly have access to faster internet connectivity, thus giving them access to Saas. It will lower the barriers to new products and services being viable. Analytical tools, communication techniques, and the ability to publish blogs and web sites reach more people, it will further the proliferation of empowerful individuals and small groups publishing information to the web. A renaissance of creativity and innovation will emerge with the best ideas coming from the best minds, rather than the largest corporations.
  

  
  

• Social networking usage has recently dropped. News Corp, fundamentally driven by an advertising model, would be challenged with the combination which assumes even more advertising revenue. The amount of time the average person spends on a social-networking site has dropped 14% over the last four months, according to Internet research company comScore. The reason: they're turned off by too much advertising on social-networking sites.
  

Microsoft's attempted acquisition of Yahoo, a key gateway to finding new ideas on the web, is a mixed development for innovation and advertising. As a gateway to innovation, Yahoo will be molded into something to protect Microsoft's core business, rather than be a free-thinking destination for innovation. Fortunately, Google has enough market share that Microsoft and Yahoo plus MSN do not pose a complete monopoly for the marketplace.
As a fierce competitor to Google, Microsoft and Yahoo's competition will likely cause price erosion in paid search advertising and ad placement.

News Corp (also parent of the Wall Street Journal) may actually have a more innovative plan between its well-known content assets in news, and the social network momentum of MySpace, but it will have to be careful in the rapidly maturing market about how advertising Is presented to users.

McCain Wins Florida - What it Means to Tech Companies

I met Senator John McCain last May at the Wall Street Journal's "All Things Digital 'D' Conference." He was surrounded by some of Silicon Valley's best and brightest including Cisco's leader John Chambers. My prediction is that high tech firms such as Cisco will benefit from McCain's victory, and my perception from observation is that there has long been a partnership between McCain and some of the leading tech firms in both the valley and the beltway. Despite the liberal democrat stereotype of northern California voters, McCain's pro-business, pro-technology stance is bound to win votes in Silicon Valley. Fully six times more venture capital flows into Silicon Valley than any other region in the U.S. New England and Orange County, CA follow but are a distant second and third. Giuliani spoke at the Churchill Club in San Jose a few months ago. Now I think it is McCain's turn. No World Borders' team visits conferences and accesses research reports regularly, examining technology, political, human and investment capital issues across industries. Feel free to contact us for a consultation on your next change management project.

DEMO 08 - The Power of the Individual - Personal Scheduling

Palm Desert - Enterprise scheduling company Time Trade demoed their new application TimeDriver today at Chris Shipley's DEMO 08 conference. TimeDriver is a new kind of sales tool that lets users pro actively invite customers and clients to schedule an appointment. By embedding a �schedule now� button in email messages and on Web pages, users can provide a compelling call-to-action for scheduling a demo, support call, consulting session, interview, briefing and other interactions. TimeDriver borrows rules based scheduling technology from TimeTrade's Enterprise Scheduling Application used by organizations such as Charles Schwab, Sears, PETCO, Quest Diagnostics and Harvard. Their pitch at DEMO was very straightforward and went off without a hitch. DEMO should be proud to have such as pragmatic team with a cool application as part of their lineup this year. DEMO is one of those great, though provoking conferences that you should put on your list for September 08 when they come to San Diego.

This was one of the most practical, useful technologies demonstrated at the DEMO conference so far.

Below is a video of the demo at DEMO.

Was the Fed Tricked?

Today in the Wall Street Journal:

"When the Federal Reserve surprised markets with a 0.75 percentage-point cut in the federal-funds target Tuesday morning, the thinking was that concerns about a U.S. recession had so fully enveloped the markets that just about anything could happen. Sure, the thinking went, the Fed was in danger of looking like it had responded to market action rather than an economic report, but if markets were reacting to economic reports, well, it's all the same in this world these days.

The revelation that Societe Generale is taking a $7 billion write-down due to the activities of one rogue trader — and additional reports that the French bank may have been unwinding those positions on Monday, a thinly traded, volatile day when Asian and European markets were rocked with losses, puts the Fed's move in a new light. Namely, that they were taken in."

That's right – a single French rogue trader is believe to have caused the Fed to make an emergency move to adjust rates in reaction to the market sell off.

This highlights the highly deterministic methods used in computer based selling and analytics in the markets today. It spells out a need for more sophisticated methods to monitor market fluctuations. See our earlier post in this Blog regarding Semantic Webs. Collective intelligence helps when you are making big decisions.

The Street Reacts to Fed's Rate Cut

Today's Wall Street Journal video summarizes the downward reaction AND the market rally after the adjustment. Look to healthcare and tech stocks to be the least affected overall by the ongoing issues in the financial markets.

Ten Tips for the Innovative Leader

I recently read and enjoyed Paul Sloane’s latest book, The Innovative Leader. Here are a list of just some of the gems from this book. It's available at Amazon.com (click the title of the link above and go directly to the page on the Amazon web site).

1. Have a vision for change
You cannot expect your team to be innovative if they do not know the direction in which they are heading. Innovation has to have a purpose. It is up to the leader to set the course and give a bearing for the future.
You need one overarching statement that defines the direction for the business and that people will readily understand and remember.
Great leaders spend time illustrating the vision, goals and challenges. They explain to people how their role is crucial in fulfilling the vision and meeting the challenges. They inspire men and women to become passionate entrepreneurs, finding innovative routes to success.

2. Fight the fear of change
Innovative leaders constantly evangelise the need for change. They replace the comfort of complacency with the hunger of ambition. They'll say, "we are doing well but we cannot rest on our laurels, we need to do even better." They explain that while trying new ventures is risky, standing still is even riskier. They must paint a picture that shows an appealing future that is worth taking risks to achieve. The prospect involves perils and opportunities. The only way to get there is by embracing change.

3. Think like a venture capitalist
VCs use a portfolio approach and balance the risk of losing with the upside of winning. They like to consider lots of proposals. They are comfortable with the knowledge that many of the ideas they back will fail. These are all important lessons for corporate executives who typically consider only a handful of proposals and who abhor failure.

4. Have a dynamic suggestion scheme
Great suggestion schemes are focused, easy to use, well resourced, responsive and open to all. They do not need to offer huge rewards. Recognition and response are generally more important. Above all, they have to have the whole-hearted commitment of the senior team to keep them fresh, properly managed and successful.

5. Break the rules
To achieve radical innovation you have to challenge the assumptions that govern how things should look in your environment. Business is not like sport, with its well defined rules and referees. It is more like art and is rife with opportunity for the lateral thinker who can create new ways to provide the goods and services customers want.

6. Give everyone two jobs
Give all your people two key objectives. Ask them to run their current jobs in the most effective way possible and at the same time to find completely new ways to do the job. Encourage your employees to ask themselves—what is the essential purpose of my role? What is the outcome that I deliver that is of real value to my clients (internal and external)? Is there a better way to deliver that value or purpose? The answer is always "yes", but most people never ask the question.

7. Collaborate
Many CEOs see collaboration as key to their success with innovation. They know they cannot do it all using internal resources. So they look outside for other organisations to partner with. A good example is the Mercedes and Swatch collaboration, which produced the Smart car. Each brought different skills and experiences to the team.

8. Welcome failure
The innovative leader encourages a culture of experimentation. You must teach people that each failure is a step along the road to success. To be truly agile, you must give people the freedom to innovate, experiment and to succeed. That means you must give them the freedom to fail, too.

9. Build prototypes
People's Bank has a refreshingly original attitude to new ideas. "Don't debate it, test it," is the motto of this innovative American financial services organisation. Try the new idea at low cost in a section of the market and see what the customers' reactions are. You will learn far more in the real world than you will in the test laboratory or with focus groups.

10. Be passionate
Focus on the things that you want to change, the most important challenges you face and be passionate about overcoming them. Your energy and drive will translate itself into direction and inspiration for your people. It is no good filling your bus with contented, complacent passengers. You want evangelists, passionate supporters. You want people who believe that reaching the destination is really worthwhile. If you want to inspire people to innovate, to change the way they do things and to achieve extraordinary results, then you have to be passionate about what you believe in and you have to communicate that passion every time you speak..

Paul Sloane is an Advisor to No World Borders, and the founder of Destination Innovation (www.destination-innovation.com). He writes and speaks on lateral thinking and innovation. His book, The Innovative Leader, is published by Kogan-Page.

Fed Cuts Rates by Quarter Point, Some ETFs up 12%, 70% on Year. Is it all in the Software?

On the heels of a quarter point cut in the federal funds discount rate, stocks closed lower today. Leading the declines were financial stocks, which had been rising on hopes of strong Fed action to resolve the credit-market crisis, and stocks of companies whose profits are most closely tied to economic growth, such as transportation firms, retailers and industrial companies.

Smaller stocks suffered more than big ones, on the theory that they are less stable in times of economic trouble. Technology stocks closed lower also. The Nasdaq Composite Index dropped 2.5% Tuesday.

However, an Exchange Traded Fund (ETF) that shorts real-estate values was up nearly 12% on the day, and an ETF based on the Brazilian economy is up 70% for the year. International markets and selective investment instruments that are betting on the devaluation of real estate have performed well this year. This compared to an ETF that is tied to an index in selected tech stocks, which is only up approximately 12% for the year.

ETFs, which trade on exchanges like a stock and generally track various stock and bond indexes, already had lower expenses on average than traditional mutual funds. So now investors can find razor-thin expense ratios for some ETFs that track broad-based indexes of market sectors like international stocks, U.S. growth stocks or municipal bonds. But investors' infatuation with ETFs also has prompted several firms to introduce much pricier versions that seek higher returns by following offbeat and narrow indexes, such as ones tracking European drug companies or using computer-based algorithms to pick stocks. Such algorithms might be described visually, in their simple form as a flow chart using a lamp scenario to illustrate (see below):













Essentially, investors are paying for the quality of software, programmed with scenarios (or, as above, algorithms) and the added value of the managers who review the investments indicated by the algorithm that simulate market conditions.

No World Borders can help you assess the value of intellectual property (IP) that is in the form of software.

Here is a video from the WSJ with Chief Investment Officer Bob Doll of BlackRock with his reaction to the rate cut by the Fed today: