TechSavvy: How “Smart” Is Your R&D Spending?

MIT Sloan Management Review, November 3, 2016

by Theodore Kinni

Strategy&’s annual Global Innovation 1000 study, which examines the 1,000 public companies that spend the most on R&D (collectively 40% of the world’s total R&D spending), is always insightful. The most dismaying finding: In every one of the past 12 years, the study has found no statistically significant relationship between the financial performance of the Innovation 1000 companies and their R&D spending.

Assuming that fact doesn’t cause you to throw up your hands and use your company’s R&D budget for a massive beer bash, this year’s study, published in strategy+business, provided another insight that is well worth considering: A transformation in R&D spending is occurring.

“R&D is shifting more and more toward developing software and services,” write Strategy& principals Barry Jaruzelski, Volker Staack, and Aritomo Shinozaki. “Software increasingly carries the burden of enabling product differentiation and adaptability, and enhancing customer experiences and outcomes. Services, offered along with or separately from physical products, now focus more on new customer needs, providing enhanced value and improved usability.”

This shift, explain the authors, is driven by the ever-increasing capabilities of software, the embedding of software and sensors in products, the ability to connect products via IoT and the cloud, and, as always, customer demand. It’s manifesting in every kind of “smart” product and service.

Since 2010, the Global Innovation 1000 companies have increased their R&D spending on software offerings by 65% — to $142 billion. In addition, report the authors, “companies currently allocating 25% or more of their R&D budgets to software offerings reported that their revenues were growing significantly faster than those of key competitors with lower allocations.”

What does your company spend its R&D budget on? Read the rest here.

Tech Savvy: Hacking Your Work-Life Balance

MIT Sloan Management Review, October 6, 2016

by Theodore Kinni


When I read CEO memoirs, I always keep an eye out for insights into how people in demanding positions maintain a healthy work-life balance. But when the topic is addressed at all, it’s usually in a dismal admission that life — mainly family life — got the short end of the stick. Happily, Michal Lev-Ram’s Fortune profile of Qualtrics CEO Ryan Smith suggests there might be a better way.

Smith has his hands full. The Provo, Utah-based online survey company he helped co-found in 2002 has 1,200 employees and a valuation of more than $1 billion. He and wife Ashley, who has a business of her own, have five kids ranging from 4 months to 8 years old. But he says he keeps it all together by “hacking the integration” of life and work. That means tracking both work and family time.

“Smith continually uses data to inform and guide the way he allocates his time,” explains Lev-Ram. “With the aid of an executive assistant who’s a former statistician, Smith tracks everything from the number of hours he devotes to interviews to how much one-on-one time he spends with each of his children. Ask him how many nights he spent away from home last year, and all he has to do is consult a spreadsheet.” Quarterly, the CEO reviews a colored-coded spreadsheet that summarizes how he spent his time, and then sets new goals and rules for work and life.

Who knows? If Smith keeps it up for another 20 years or so, maybe his CEO memoir won’t be quite as dismal as all the others. Read the rest here.

TechSavvy: Monitoring Your Employees’ Every Emotion

MIT Sloan Management Review, September 15, 2016

by Theodore Kinni

Have you heard about the Cowlar? It’s a smart collar that dairy farmers can strap around the necks of cows to monitor their herds. It promises improved milk production, early disease detection, heat detection, and real-time monitoring and alerts. How would you feel about wearing one? I ask because it seems like it’s a question that more and more employers are asking their employees.

“Companies including JPMorgan Chase and Bank of America have had discussions with tech companies about systems that monitor worker emotions to boost performance and compliance, according to executives at the banks,” reports Hugh Son in Bloomberg Businessweek. They got the idea from MIT Sloan School prof Andrew Lo, who strapped wristwatch sensors that measure pulse and perspiration on 57 stock and bond traders to monitor their reactions in a simulated trading environment. “Imagine if all your traders were required to wear wristwatches that monitor their physiology, and you had a dashboard that tells you in real time who is freaking out,” Lo said to Son. “The technology exists, as does the motivation—one bad trade can cost $100 million.”

If this suggests that employee monitoring devices will be limited to high-risk occupations, you should read Thomas Heath’s Washington Post article on Boston-based Humanyze. Humanyze makes and monitors employee ID badges that hang around your neck. “Each has two microphones doing real-time voice analysis, and each comes with sensors that follow where you are in the office, with motion detectors to record how much you move,” writes Heath. “The beacons tracking your movements are omitted from bathroom locations, to give you some privacy.” The company’s CEO Ben Waber predicts that “every single” ID badge will be so equipped within three to four years.

As with other means of digitally monitoring and measuring employee activity, companies probably should expect some pushback, including legal challenges relating to privacy and discrimination. But Waber says that you can tell employees that their new IDs are “exactly like a Fitbit for your career.” I think it’s going to be a little harder to explain away their unflattering similarity to Cowlars. Read the rest here.

TechSavvy: Four Lessons from IoT Early Adopters

MIT Sloan Management Review, August 12, 2017

by Theodore Kinni

To paraphrase the late Roy Scheider in one of the greatest of all summer movies, you’re gonna need a bigger router. In 2025, Machina Research predicts, the Internet of Things is going to be a $3 trillion market of 27 billion devices generating more than 2 zettabytes of data. Two zettabytes of data is something like twice the total global IP traffic we’ll generate this year, according to Cisco.

The IoT data deluge is, by the way, the first of four lessons drawn from early IoT adopters by contributing writer Howard Baldwin for his article in Computerworld. IoT initiatives at ARI Fleet Management, for instance, generate the same amount of data every two weeks as the company previously collected in two decades. “Understand where data is coming from, and determine how you’re going to analyze it,” writes Baldwin.

The second lesson is that IoT will require cross-functional collaboration. Because IoT is deployed and used in factories and fleets and products, the IT department is going to need to partner with other functions and business units. “Determine how and when to combine operations and information technologies for maximum data insight,” writes Baldwin.

Baldwin’s third lesson for early adopters is that IoT is likely to require working with and coordinating across multiple vendors. The new Kansas City streetcar line, for instance, required collaboration with Sprint, Cisco and other vendors. “In orchestrating the many moving pieces of an IoT rollout, make sure you know who plays what part,” writes Baldwin.

Fourth and finally, as applies to forays into any young, fast-emerging technology, watch out that you don’t get caught out too far on the IoT growth curve. “Some early IoT adopters have reported reliability issues with either sensors or vendors or both, and others have struggled to reconcile competing protocols,” writes Baldwin. “Be prepared for setbacks in an immature market, and try to select a protocol that has long-term industry support and a sound security footprint.” Read the rest here