Fortune sides with those who dare
I did something this year I never thought I would: travel to Las Vegas. I went because a business interest required my attendance at the Consumer Electronics Show. Above all else, this is a platform for innovation. Acre upon acre of displays from very small companies to industry behemoths like Cisco showcase their latest innovations, some still in the concept stage. So what did I take away from all this?
Innovation is an oft-misused and even misunderstood term. In most cases it is used to describe productivity improvements by business. As the corporate sector struggles with a slow growth economy, the focus is on cost-cutting and efficiencies. Understandable, yes, but ponder for a minute on how most established businesses think. They are concerned about their reputation with existing customers, about the reliability and quality of their products. Almost no established company, particularly one so concerned, would dream of introducing a product or service that hadn’t been thoroughly tested, vetted, turned upside down and inside out. And none would even consider the idea of a launch absent a compelling business case as to its ROI or any combination of various financial metrics which a product or service must achieve before reaching the launch stage.
This is why those entrusted with R&D focus on incremental improvements. New packaging, new variations of a successful theme, new value-added concepts, extensions to the product line, on and on the list goes for attempts to come to market with something new, but something with little or manageable risk associated with it’s likely reception. The organizational focus is on reducing risk exposure to the lowest level.
Now compare this approach with the real innovators. And I’m not just talking about Larry Page and Sergey Brin’s brilliant use of algorithms to create the world’s number one search engine. Nor Steve Job’s clairvoyance around the opportunity for whole new product categories for devices like the iPod or the iPad. I am talking about the tens of thousands, probably hundreds of thousands of start-ups round the world who fit into this category, bound by the oft-used contemporary adage, “It has never been less expensive or easier to start a business.”
The thinking associated with this approach is the exact opposite of that described above. It starts with an idea, a sense of opportunity, an intuition that a market exists for the product or service. This is then followed by an attempt to launch the idea as fast as possible, to get it out there so it can be vetted by those to whom it would be directed. This process is designed to help the entrepreneur or innovator play with the idea, to refine it, to assess the opportunity with the benefit of market feedback, to change direction as instructed by consumer reaction and to use that reaction to raise more money to assist in the scaling exercise. Note the lack of gating issues around pre-determined financial metrics. They aren’t part of the criteria. The goal is to get the product out there and get scale as quickly as possible. With scale comes the prospect of a revenuegenerating model. The only risk is in not moving quickly enough, in not seizing the opportunity, or in being too timid about the prospects for success.
There is a world of difference in these two approaches. Ask yourself which is the most likely to produce real innovation, not improvements to an existing product line, not a costreduction in the delivery mechanism, but new stuff. Stuff which can render existing stuff obsolete or redundant. This is real innovation and real wealth creation. Now ask yourself which side of the line your company falls on. If many of you answer this question honestly, it will be the incremental approach, the safe route to innovation, or what you are calling innovation.
You should worry about how you do can do both. To feel comfortable in pursuing the safe side of the line is to relegate the chance of making big money to those who sit on the other side of the line. Doing both inside a single corporate entity is incredibly difficult but it can and is being done. There are lots of good examples and ideas. More on this in a subsequent issue.