Monday, September 14, 2015

Why Musk and Branson are the vanguard of new innovation

I was thinking over the weekend about cavemen.  Recently, archaeologists discovered a cache of bones in a cave in South Africa that could represent an entirely new hominid.  While the discovery itself is interesting, what I'd like to think about is how cavemen innovated, and what that may tell us about how we innovate today, both in terms of the nature of innovation and the pace of innovation.

Think about our first ancestors.  At some point they were without tools, using their hands or fists to defend themselves. Then one day a long time ago one of them picks up a bone or a tree branch to defend itself, and the club was created, probably one of the first tools ever invented.  But here's where it gets interesting:  how long did it take to invent the club, and how long before another invention was created?  I'd like to argue that the nature and pace of innovation is always accelerating, and is evolving more rapidly as we have more and more information around us.  But there's another point to consider:  the nature of incremental versus disruptive innovation.

Take this last point for example.  If all our ancestors pursued was incremental innovation, then we'd have constant small improvements in clubs, and no other tool or weapon.  Today we'd go to war with highly evolved clubs.  Innovation happened when the first ancestor created a club, but it didn't stop there.  Eventually another ancestor decided to sharpen one end of the club, which made it better for poking rather than swinging, which led to a handheld spear and eventually a throwing spear.  Each of these are discontinuities in the existing technology, to offer more benefits or fill an unmet need.  With a simple club our ancestors improved their odds against large mammals, but probably lost a lot more fights than they won.  With spears they increased their odds of success while decreasing their own odds of injury.

Yet the club and the spear were dominant technologies for eons, until someone came up with the idea of the bow and arrow.  Why did so much time pass before the bow and arrow come into existence?  Probably because experimentation was difficult and expensive, and there was little need to develop new technologies quickly.  Yet once the bow and arrow, and other technologies like metallurgy were created, innovation accelerated.  Further, it accelerated as distant people and cultures interacted through trade.  Gunpowder is introduced in Europe from China, and what we think of as Italian food is created by the introduction of the tomato to Italy.  With this in mind it's easy to see that innovation is accelerated by interactions with disparate groups with different cultures or technologies. 

What happens next is the rapid acceleration of innovation, due to first global markets and global trade through the 1960s and 1970s, and then global information exchange and instantaneous information access due to the web.  At no time in history have we had the potential to connect as many disparate information sources, cultures and technologies, or to examine the results of rapid experiments in less time. Everything we need from an innovation point of view regarding information or interaction is in place and fully connected, yet valuable innovation output seems to be slowing.  Some component of this is based on diversity of outputs.  In the past, when innovation was focused on a few things, like better weapons or more food production, more great minds were focused on fewer things.  Now, innovation is harnessed to pursue a plethora of outcomes, rightly so, but that risks watering down the output or solving problems for smaller populations.

Another significant factor inhibiting innovation is less experimentation and less risk tolerance.  When you live your life in the open, subject to the elements and to predators, experimenting and learning to defend yourself is paramount.  Innovation was all about risk reduction.  Now, however, since we've climbed Maslow's hierarchy, innovation is often discordant, uncertain and runs the risk of toppling the environments and features we enjoy.  The more established the offering, the less risky the innovation efforts are likely to be, and innovation will arise only from new entrants with nothing to lose.

Which takes us full circle back to the original point:  why did early man innovate the club, then the spear, then the bow?  It was probably because each provided a solution to a need that was unfilled.  Today so many of our needs are filled that it can be hard to imagine what the next innovation should be, and I think we overlook innovations that are based on factor like experience.  Too often we worry about improving a product, innovating to add new features, when what's really needed is innovating the experience, thinking about the whole product and the use of the product in context of its setting and environment, where it interacts with our lives and the other products and services we acquire.  No longer do our products exist in a vacuum, they interact with us and increasingly with each other and the web.  This means innovation isn't just about the features of the discrete product or service, but about the product's ability to interact with its surroundings, context and the expected customer experience.  For example, I recently bought a new Honda Pilot Touring, a very nice new SUV.  The technology embedded in the car is amazing.  Honda offers technology to help the car stay in its lane, identify blind spot hazards, offer voice commands and a host of other really amazing technologies.  Imagine my disappointment when I placed the owner's manual CD in my home PC and I saw a flat file PDF, basically porting the old user's manual into a PDF document.  No interactivity, no videos, few links to the web.  It's as if Honda placed all its technology in the car, but forgot that most of us expect interactivity and information about our cars to be as easy to use and ubiquitous as an Amazon experience (or hopefully better).  What's increasingly missing in innovation today is the context in which the new product or service will be used, the other technologies or products that surround a new offering and the customer's expectation that the technologies will all work together and provide a high level of interactivity and easily accessed information in a format people want to use, and be entertained by. Honda, like it or not, is in the information business, both in the car and out of the car, as much as it is in the transportation business. 

So, what are we to say?  Innovation pace and capability have accelerated over the eons, bringing us to the point where information and interactivity should create thousands of opportunities for new innovation.  Yet in some cases it seems that innovation isn't nearly as productive as we think it should be.  Some of this lack of productivity is simply the diversity of innovation and the number of solutions and markets to be served. But I think a lot of it is market rigidity, comfort in long product cycles, concerns about introducing new products and the risks that entails.

What does this all mean?  Well, for one thing we should prepare ourselves for more people like Branson and Musk, who are fully capable of synthesizing information and interactivity to discover new innovations, and who have little vested interest in the status quo.  The best innovators now and in the future will be people who capitalize on the vast availability of information, human capital and interactivity, to disrupt or upset existing markets or industries, innovating where incumbents can't or won't.  Branson, Musk, Jobs and a few others are merely the vanguard of a new wave of innovators who could ultimately rework our economies if they fully grasp the opportunities in front of them.  These individuals will be boundary spanners, not content to innovate or disrupt one industry or market, but constantly seeking to win in multiple markets or industries simultaeneously.  Since they have little investment in existing markets, it's in their favor to disrupt existing conventions.  Further, these innovators will focus more on profit share in a market or industry rather than market share. They will skim the best portion of the market in terms of profit, without worrying about the total number of customers they acquire.
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posted by Jeffrey Phillips at 7:47 AM


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