Tuesday, December 06, 2016

Innovation ain't what it used to be

I'm a big fan of Geoffrey Moore's work on Crossing the Chasm, which is the idea that every market can be divided into segments: very early technology adopters, the early majority, the late majority and laggards.   It's clear from history that there are always people who will adopt a new idea or technology even while others think it is unfinished or even risky.  The vast majority will wait until the technology becomes a "whole product" and "crosses the chasm" according to Moore.  This means that instead of just a technology, the offering is now complete, with supporting services, information and support.

As a new technology matures and people become familiar with its uses, and the technology is simplified and becomes part of a solution, more and more people adopt the technology.  Any student of history can tell you this, and we believe it is a natural order - almost a requirement:
  • first a technology or capability is discovered
  • Adventuresome people use it in experiments
  • The technology is incorporated into products
  • More and more people adopt it
  • The technology or capability becomes mainstream
  • The majority adopt it
  • The technology is eventually superseded by another technology
This is the reason many larger corporations will wait to see about emerging ideas and technologies.  They need to see that enough people will adopt it to minimize the risk of placing a new technology or capability in their products, and want enough of the unknowns to be removed in order to adopt it quickly.

That was then

From a historical perspective, this "wait and see" approach is best practice.  But what's happening right now in the innovation world is going to turn this approach on its ear, because there are multiple technologies and capabilities emerging and evolving, and waiting until they sort themselves out may leave a company so far behind that it will not be able to adopt the capabilities and solutions once they become "mainstream", assuming of course that they solidify long enough for the mainstream to catch up.

The complacent "wait and see" response to new technologies or capabilities relies on three assumptions:
  1. The technology will eventually become mainstream and once it becomes mainstream has a long shelf life
  2. Any company can adopt the technology or capability once it becomes mainstream and implement it effectively
  3. Once a technology or capability becomes mainstream, there are still competitive positions available - companies aren't "crowded out" if they didn't adopt early.
But what if there are capabilities or technologies where this thinking isn't true?  What if the lifetime of a technology or capability is relatively short, or instead of reaching a "steady state" the technology or capability constantly changes?

Platforms and Ecosystems

Paul Hobcraft and I have been writing extensively about the impact that emerging platforms and ecosystems are having, and will have, on innovation.  As I wrote previously, we are in the same position with platforms that we were with "dot coms" and ecommerce in 1999.  Then there were thousands of alternatives and experiments to try to figure out what would work.  Now, much the same thing is going to happen at the platform level.  There's a reason Amazon, Facebook, Google, GE and others are trying to test out their platforms, and why other industries  like financial services want so desperately for their own platforms to prevail.

Many companies will be tempted to follow the wait and see approach I've outlined above, thinking that once the technologies and capabilities are selected and implemented, they'll adopt the chosen solutions and find ways to compete or scale.  Where innovation, ecosystems and platforms are concerned, that is a very risky proposition.

The only constant is change

Platforms are going to rework the way companies and industry partners integrate to provide seamless experiences for customers.  As they are formed, new, tighter relationships to customers are created, and companies that participate in the platform or as part of the ecosystem will solidify relationships.  Those that wait may find the opportunities to participate as part of a platform or as an ecosystem provider much more limited if they weren't involved early on.

Further, the pace of change in capability and technology, as well as integration and inter-operability is accelerating.  Companies that experiment and learn will be able to improve their pace of innovation and change.  Those that wait and see will fall further behind, unable to catch up with the speed and the increasing requirements to participate in the ecosystems that are emerging. Platforms and ecosystems will not reach a "Steady State" but will constantly morph, extend and grow.  Thinking that you can wait until the platform or ecosystem resolves is a fallacy.  By the time a platform or ecosystem slows or becomes "stable", it will be decaying.  Waiting to join is like showing up dressed for a wedding but arriving for the funeral.

As these platforms and ecosystems emerge and assert themselves, it is vital to start experimenting now and to keep experimenting.  Some platforms and ecosystems will succeed and grow organically, some will fail.  Innovators must hedge their bets across a range of platforms and ecosystems.  Waiting to see which ones win out may mean that there are no remaining slots in the ecosystem and that the platform has different protocols or standards than what the company developed.

Are you ready to innovate beyond the product?

Paul asks a similar question in his most recent post:  Are you ready to thrive in a world of innovation ecosystems?  Currently, many companies would be happy to generate a handful of discrete innovation activities leading to a few new products or services each year.  These innovation activities are still too inward looking, not really grasping the importance of engaging with emerging platforms and the ecosystems that will flourish around the platforms.  To be a successful innovator, you've got to fully engage your internal capabilities and insights, and mesh those with the emerging platforms and ecosystems that can provide a total, cohesive seamless experience.

As the fine print in many financial services firms reminds us, past performance does not guarantee future performance.  What was true in the past - the opportunity to wait for innovations or technologies to prove themselves and then adopt them - isn't as true anymore.  There are several reasons for this:  constant change, shorter product and even industry life cycles, fickle customers. The real take away is that you need to be discovering needs, experimenting with potential platforms and innovating constantly.  You can't afford to wait, because by the time a new technology or capability is proven, and customers have adopted it, the next iteration is already well on its way to commercial viability.  Meanwhile, waiting leaves you without any of the learning that companies fully engaged in experimenting with platforms and ecosystems are gaining, and in the end your company has its opportunities and profit potential dictated to it by the firms that have experience, and by the remaining opportunities in the platforms and ecosystems.  You will be robbed of strategic choice.

The new imperative

Call it what you want, if innovation has become a pariah within your organization, but you must be discovering needs and experimenting constantly with new technologies, platforms and ecosystems.  You must understand these capabilities and integrate them in a way that provides seamless customer experience.  If your corporate strategies don't address this urgent need, tear them up and start again.  Operating models of the past are not valid in a market where the old rules no longer apply.  Lean, fast, nimble, innovative companies who understand the totality of customer need and experience and are willing to learn and experiment will win.  This is what innovators must know about the very near future of innovation in corporations.
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posted by Jeffrey Phillips at 6:21 AM


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