Albert Einstein once said, “if I had 20 days to solve a problem, I would spend 19 days to define it.” Good advice.
Innovation is a particularly sticky problem because it so often remains undefined. We treat it as a monolith, as if every innovation is the same and one approach fits all. That’s why efforts tend to be fraught with buzzwords and rarely lead anywhere.
With all the confusion, how should we go about innovation? Should it be handed over to guys with white coats in labs, an external partner, a specialist in the field, crowdsource or what? Defining the innovation problem is often overlooked, but it’s absolutely essential if we are to choose the right path. Here’s a framework that will help.
In Oliver Stone’s classic movie Wall Street, the financier Gordon Gecko schooled his protégé in the aphorisms of Sun Tzu, the ancient Chinese military philosopher.
The point was clear. Business is war, an ancient game with eternal truths and the essence of strategy is a methodical, time-tested approach. Superior planning, matched with flawless execution, is the key to domination of the competitive environment.
It sounds good, but we’ve long known that strategic planning has serious limitations. The notion of managers as generals, guiding action from high on the hill, is an outdated concept at best. While that doesn’t always register with us grownups, the often-maligned Millennials know it intuitively and a lot of that has to do with the games they play.
What a difference ten years can make! Merely decade ago, we were just getting used to the idea that Apple would survive as an independent company. Now it’s the most valuable business in the world.
Microsoft, on the other hand, went from being the dominant player with monopoly power to the gang that couldn’t shoot straight. They’ve seemed to miss every major trend, stumbling, bumbling and putting out inferior products.
The funny thing is, among all the failures and screw-ups, Balmer and team seem to have finally put all the pieces together to gear up for a major resurgence. Over the next few years, it looks like Apple and Google will be the ones playing catch up. Right under our noses, Microsoft might just be pulling of one of the great turnarounds in history.
What happens when technology cycles become shorter than corporate decision cycles? That’s the question I posed in an earlier post about Facebook’s acquisition of Instagram
Saul Kaplan takes it even further in his new book The Business Model Innovation Factory, when he points out that the concept doesn’t just apply to technology, but business models as well. That, if anything, is a much more difficult problem.
Whereas a firm used to keep the same business model for a generation or more, now the way in which a particular industry creates, delivers and captures value can be disrupted every few years. What’s more, the process is accelerating and business models will become even less stable. So we’re going to have to rethink much that we thought we knew.
Rishad Tobaccowala likes to say that “The future will not fit into the containers of the past,” and he’s right. Past mindsets and tactics seem clumsy and contrived, remnants of a lost era.
Old distinctions, like broadcast and non-broadcast, traditional and digital, media and creative don’t apply the way they used to. Moreover, skills sets that were once sequestered in one discipline or another must now be integrated.
The result is much confusion. Traditionalists think that the old ways just need some tweaking, while digital natives insist that those days are gone, never to return. Both betray a misunderstanding of paradigm shifts, which do not nullify hard won truths, but give new perspectives on old fact patterns. Here’s a guide to what’s changed and what’s not.
There’s an old story about an economist who walks by a $20 bill on the street. When asked why he didn’t pick it up, he replies, “it can’t really be there, if it was, someone would have already taken it.”
That, in a nutshell, is the theory of rational expectations, which proposes that a market of rational actors will value things correctly. The price, therefore, represents the proper value for everything at any given time.
However, the overwhelming evidence shows that we have lots of reasons for believing things, many of them decidedly irrational. We were wired by evolution to survive, not to make economic transactions. The result is that price and value often become uncoupled by fashion and zeitgeist, leaving much more than $20 on the ground.
“What’s that word again that you used for stealing content” my newspaper editor friend asked me? “Curation” I said, “and it’s not stealing content.”
I had that conversation a few years ago, but the debate is still raging. SOPA was killed, but is now reborn as CISPA. Rupert Murdoch has called Google a piracy leader, while Neil Young has said that piracy is the new radio. What’s going on?
It seems to me that at the heart of the controversy is a fundamental shift in the value of information. It used to be scarce, but now we’re drowning in it. That’s creating a fundamental shift in the economics of media. Therefore, the the answer lies not only in product innovation, but business model innovation, which is even harder.
Cornelius Vanderbilt and Andrew Carnegie. Henry Ford and Alfred Sloan. David Ogilvy and Leo Burnett. These men, each in their own way, heralded a new age and recreated society in their image.
In fact, they so personified their era it’s difficult to separate them from it. Vanderbilt and Carnegie brought us the age of corporations; Ford and Sloan, mass production; Ogilvy and Burnett, mass marketing. After them, the world was never quite the same.
Their enormous success drove and was driven by a transformation in the fabric of society by technologies like the steam engine, the automobile and television. We are now going through a transition which is perhaps even more profound – that of atoms to bits – which is already proving to be even more disruptive and is changing how businesses compete.
Everybody was surprised by Facebook’s acquisition of Instagram, apparently, even Facebook. Merely one week before Instagram closed a round of funding that valued them at $500 billion (and diluted their shares), so it’s clear that they were not in serious talks by that point.
Why would Mark Zuckerberg drop $1 billion on a company less than two years old with no revenues to speak of and no apparent business model?
There has been an avalanche of pundits giving all sorts of reasons why the deal makes perfect sense: The user base, a foothold in mobile, their technology, development team, etc, yet I haven’t found any of those explanations comelling. I think they bought Instagram because they were scared of the singularity and with good cause.
Einstein was a low-level clerk when he dreamed up relativity. Mendel was a monk when he discovered genetics. The structure of DNA was cracked not by the acclaimed minds of the day, but by two young, underachieving post-grads working in relative obscurity.
Breakthrough innovations tend to pop up in funny places. Some like penicillin and teflon were accidents. Others, like the Internet, world wide web and the graphical user interface, originated in big labs, but flourished elsewhere.
What do we make of that? Why do really big ideas tend to come from small places? How do we push our organizations to innovate when it seems like organization itself often squelches innovation? The answer lies, strangely enough, not so much in organizational structure, but in organizational purpose, outlook and philosophy.
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. The notion of managers as generals, guiding action from high on the hill, is an outdated concept at best. While that doesn’t always register with us grownups, the often-maligned 
, when he points out that the concept doesn’t just apply to technology, but business models as well. That, if anything, is a much more difficult problem.
