28/09/2015
A large part of success comes from innovative ideas.
Movies would have us believe that these ideas can only come directly from the mind of geniuses, and that to truly innovate, we need to wait for them to have a ‘Eureka’ moment. Unfortunately, movies sometimes play fast and loose with the truth. This is one of those cases.
Important ideas – the truly remarkable innovations in our world – do not often spring into existence all by themselves. Yes, they have a starting point as an idea, but they are the end result of discussions and considerations between people with different backgrounds, knowledge and experiences. The internet is a truly fantastic tool for this reason – it makes this kind of conversation easy by removing barriers such as cultural differences and geographical distance.
Inventions or new ways of thinking very often require complimentary technologies or advances in other fields to make them popular. The bicycle is a good example – prior to Pneumatic tires and ‘wire wheels’ (with high tension spokes) bicycles were cumbersome, uncomfortable and very unpopular. Within the space of a year or two, once these new innovations were included in the design, the bicycle became one of the most important forms of transport in the world.
The internet can give insights into timing by showing the other technologies and academic findings that can complement any solution, especially digital solutions. The only downside is that this process is extremely effective – even stable markets become volatile arenas overnight if they scratch a long-time itch or change the route to market. A company or idea can gain huge ground, and swallow (or sink) profits from other areas. Examples of this include the music industry, news media and the publishing. In these markets where drastic change occurs, the big players – those with the most to lose – are constantly trying to integrate their services with complimentary businesses (such as a bus tour integrates with a cousin’s local café) in order to reduce costs, secure tangible income and improve benefits. All in order to fight back against innovative competitors.
“We live in a society where technology is a very important force in business, in our daily lives. And all technology starts as a spark in someone’s brain. An idea of something that didn’t exist before, that once they have invented it —brought it into existence — could change everything.” – Nathan Myhrvold, CEO, Intellectual Ventures
This idea, that technology has the power to change ‘everything’ is perhaps why we are becoming so brave and bold in pushing these technologies into new undiscovered places – challenge is important for creating a competitive environment where quality and integration increases. This may well be why we, as consumers, are so hungry for the next step along the path.
Peter Drucker, who is often described as the founder of modern management, once famously said: “Because its purpose is to create a customer, the business has two – and only two – functions: marketing and innovation. Marketing and innovation create value, all the rest are costs.”
He was pointing out that the development of products and services, including their delivery and manufacture, directly impact the way a business operates and the success they can achieve. Those who do not recognise innovation will at some point go out of business because they cannot keep costs low enough, or the inherent advantages high enough, to compete. This is especially true in manufacturing industries, but with the steep rise in the capabilities offered by web development and the demand generated by the internet today, new businesses in every sector rely more and more on innovation to compete and marketing to underline their unique advantages (otherwise known as unique selling points or USP’s).
Unfortunately, in both of these areas, big established businesses do not often recognise the potential of technological or ground-breaking methods (at least not very quickly) unless they have been proven in smaller markets by ‘disruptors’. Instead, the majority of large profitable business entities follow a more gradual path, similar to evolution or the process of maturity, adapting to meet emergent demands and reacting to competition. Many businesses are aware of the potential new ideas have, but for a wide array of reasons are unable or unwilling to bear the risk of being wrong (even considering the potential benefits).
The main causes are: an inability to fully recognise / communicate the scope of commercial benefits from new technology; the inflated cost of ‘jumps’ in technological change when compared to minor tweaks; and not wanting to jeopardise the livelihoods of employees by taking unnecessary risks. Similarly, the idea of beginning from scratch – abandoning years of cognitive investment and starting over, is an impossible choice to make without enough cause. No one wants to rebuild a loyal following they have worked hard to grow and nurture.
A survey from MIT Sloan Management Review and Capgemini Consulting in 2013, which garnered responses from 1,559 executives and managers in a wide range of industries, showed that:
The largest and most important factor in this equation though, is fear of failure. This fact is quite apparent because once the method has been proven, companies are quick to crowd into the same marketplace and make use of the innovations.
“In the beginning of a change the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot.”– Mark Twain
Nir Eyal, writer for TechCrunch, Forbes and Psychology Today believes the requirement for significant change through innovation is not simply a case of a product or service being ‘better’. To stick, and to continue being successful, an innovation must form a habit.
“A company can begin to determine its product’s habit-forming potential by plotting two factors: frequency (how often the behaviour occurs) and perceived utility (how useful and rewarding the behaviour is in the user’s mind over alternative solutions). Googling occurs multiple times per day, but any particular search is negligibly better than rival services like Bing. Conversely, using Amazon may be a less frequent occurrence, but users receive great value knowing they’ll find whatever they need at the one and only “everything store.” – Nir Eyal, Hooked: How to Build Habit-Forming Products
This framing effect, where we compare something new against something we understand, is the reason some new technologies fail, even when introduced by major companies. In these cases the perceived utility, with the same of frequency in use, was simply not enough to warrant the investment. Examples of this include the Mini-Disk and Blu-Ray players – while significant advances by themselves, neither was considered a significant enough update to warrant the necessary widespread change.
Many readers will, i’m sure, have seen a curve like this:
This kind of graph is supposed to represent the inherent advantages of innovation, by considering the lifecycle and the expected returns one can gain.
Personally, i’m always suspicious of graphs that make something very complicated into something very simple. I tend to find that this oversimplification fails to consider the differences in data and instead opts for the perfect scenario, usually in order to sell something. This is one of the core problems with economic theory, but can also be very misleading for business owners weighting up the available options.
Following a strategy which considers this curve as a likely outcome is a risky move. Doing so would require becoming blind to a range of factors that influence trends. These factors include the likelihood that some innovations really are better than others, and indeed that many potential innovations simply do not succeed. Often, a new product or service will not become a commercial success in its own right. This could be because of a wide array of reasons, but typically because a business has not fully considered the range of factors associated with success.
In these cases the graph looks more like this:
Compared to the perfect curve, this is quite different. The innovation has not seen the expected traction. It may have potential in the market but does not fulfil a specific need. It may not have some of the inherent advantages of existing solutions. It may be difficult to use. From this curve alone, as with the perfect curve, it is hard to define anything meaningful that can change it in the desired direction.
The question then, is how can one come to understand and predict the future success of specific innovative ideas? Following that, how can one avoid this prediction if it isn’t good and take the steps to ensure an innovation succeeds?
For these answers and more, you will have to read part 2.
Testing the potential for new ideas is a complex and multi-faceted process, but it becomes simple when a business has a knowledgeable digital team behind them.
We offer a fast-turnaround service for existing companies to create brands and test innovative products and services. Using our Business Setup package, we are able to fast-track the creation of a business website, logo, branding, social media, advertising and a wide array of additional services including videos and professional photography.
We created this process specifically for those who hold the entrepreneurial spirit and have an innovative idea that they fully believe in. We offer this service because we love bringing ideas, especially important ideas, to life.
