When past experience doesn't matter anymore
Jim touched on a few reasonably well-known trends and their implications. For example, he talked about the fact that most industries don't understand the power of transformation, or where new disrupters will come from. For example, disruption in the automotive industry is much more likely to come from Tesla or Google than from GM or Ford. He also talked about the increasing pace of change. Again, for automotive manufacturers the disrupters will come increasingly from Silicon Valley, where they are used to really rapid change and short product cycles. How will relatively stodgy companies compete when customer demands shift to expectations of interesting new products and experiences that are more like consumer goods expectations than automotive industry product development cycles?
Jim talked about meeting a senior executive of a camera manufacturer, who claimed to be measuring product life cycles in months or quarters. That is, the vast majority of the life cycle of some of the products could be measured in a handful of months. For gaming systems, he claimed, some games garner 60-70% of their total revenue in just the first few weeks after launch. Finally, Jim mentioned a stat he had heard that suggested that of the scientific information that a college student learns as a freshman, half of it will be obsolete by the time that individual reaches their senior year. I didn't catch the reference for that statistic, but it's definitely possible in the scientific community.
So, if product cycles are shrinking to months, and the science you know is obsoleted every four to six years, who do you turn to or where do you turn when you have to create a new product? For most corporations, creating something new has traditionally meant staffing a team that has deep experience, built around people who've "been there, done that" and have the t-shirts and scars to prove it. What happens when the facts are moving so quickly, when change is occurring so rapidly, that no one on your team has enough experience to qualify to be on the innovation team?
There's a sports analogy that's applicable here. In the old days, traditional football coaches believed you should run the ball a majority of the plays. Passing, they felt, was risky because too much could go wrong. You could have a quarterback sacked for a loss, or an incomplete pass, or an interception. The only good outcome was a forward completion, but to many of those coaches it seemed like a 1 out of 4 proposition, so they favored the run. Likewise, many executives look at innovation as a risky proposition, and increasingly they are aware that no one on their team has the experience or skills to lead an innovation activity, so they resort to one of a handful of alternatives, most of which are bad:
- Focus more on the "core", cutting costs and improving efficiency, growing the "bottom line" while the top line shrinks
- Waiting to "buy" innovation from smaller startups where there is more creativity and energy rather than risk doing innovation internally
- Outsourcing innovation to consultants rather than gaining the skills themselves. This is outsourcing what should be one of the few sustainable competitive advantages
- Realizing that virtually no one has any experience, so the people who experiment the most, the fastest will have an advantage.
In the past we didn't expect employees to learn much, we expected them to apply their past education, training and experience to problems as they arose. In the future, we'll hire people who are blank slates (metaphorically speaking) who are fast learners, experimenters and willing to try new stuff and able to gather the learning in any situation and apply it. These are the people you need on your team, they'll drive innovation in the absence of experience.