Makinginnovationmore

I've been giving a lot of thought to the concept of waves of history, or periods of change.  For example, not all that long ago a group of workers in England decided to try to stymie change, by destroying the looms that they felt were replacing their jobs.  The "Luddites" as they were called, were afraid of looming (sorry, couldn't pass it up) change and the incumbent shift in jobs and roles as automation replaced manual labor.  I'm oversimplifying here - there were many other factors that led to the Luddite revolt, but a lot of the anger that was displayed was focused on change, and the loss of status and skill.  In that day, people made things.  They prided themselves on their skills and knowledge about how to make things.

From makers of things to providers of services

Over time, we've accepted to some degree industrialization and even automation.  Increasingly we see factory workers here in the US rapidly replaced by machines, robots and artificial intelligence.  Why?  Because the machines and AI can do things repetitively, with so little variance and with so few safety concerns that even though machines cost far more than people initially, they are much less expensive in the long run, and don't need bathroom breaks or time off.   As our markets and capabilities have shifted, so too our focus.  Fifty years ago everyone wanted to be an engineer - to build stuff.   Today most college graduates want to be in finance or service industries.  Today we pride ourselves on making software, providing services, and moving money.  These are the winning attributes in the US economy.  But what happens when computers and AI do these jobs better than we do?  Certainly software and AI can write software, and the new craze in the financial world is using software and AI to manage money and make investments.  Will there be a Luddite-like revolution in the next decade as programmers and financial analysts suddenly rage against the machine?  And why not?  These are important, valuable and meaningful jobs that you can expect to be replaced in the next decade.

The next big wave

What will be left?  If we aren't makers of things or makers of services or developers of software or movers of money, what are the important, irreplaceable jobs that humans can fill and gain satisfaction from?  I should note here that there will always be jobs for makers (see Etsy if you don't believe that) but those jobs will rarely scale.  There will always be jobs for people willing to provide services, after all you can't outsource a haircut or get a robot to mow your grass - yet.  But as we look to the future we can see a significant amount of automation, increasing use of robots, the use of artificial intelligence and much more.  What happens to Uber drivers when autonomous cars drive us around?  And who is exploring this if not Uber themselves?

What's left for humans in this rather dire scenario, where jobs are outsourced not to other countries but to automation, AI, robots and machines?

Toffler and others predicted the future in books like Future Shock and Third Wave.  I think we are in a third wave, moving from makers of things to makers of services and experiences to makers of ideas.  The future belongs to those who can create and translate new insights and ideas into concepts that AI or machines can create and package as products or services.

We need to be doing these things now

If this view of the future holds any water, then it has some interesting implications.

First, it suggests that we need to completely rethink our educational system.  Our educational system was created to place reasonably competent workers with a broad but not necessarily deep set of skills on a production line or as middle managers.  What's going to be required in a third wave world of making and creating insights and ideas is less rigid conformance to the right answers and much more diversity and creativity of thought.  We are generating plenty of graduates with exactly the worse preparation for the emerging work world.  We need to be encouraging creativity, exploration and divergent thinking.  Instead we are muting creativity for conformity when we need to empower everyone to build creative skills.

Second, creative businesses don't need to scale as far or as rapidly as industrial companies, so we may need to rethink what it means to "build a business" as we become makers of ideas that are then scaled by AI, robots or machines.  In an idea maker world, we might have thousands of small boutique organizations surrounding fixed infrastructure that actually makes and scales creativity and ideas.  Humans can do what we were actually always primed to do - think and create - rather than lift and toil.  In a sense we are almost already there in some industries.  Entertainment has already entered this model, where almost anyone with a good idea and access to the internet can become an overnight sensation.  With a relatively simple camera, the ability to post to Youtube and the power of social media to connect to thousands or millions of viewers, it's easy for an entertainer or idea to spread quickly, at least where entertainment is concerned. What happens when we have other platforms that can quickly scale other types of ideas?

Third, we need to completely rethink and reform how we capture, manage and protect intellectual property.  The ideas these makers create need to be managed and protected.  In the future we'll need to extract more value from our ideas than from selling products and services.  Our current Patent and Trademark office is already overwhelmed by the number and diversity of ideas, and we can expect it to get worse.  Plus, the model is biased toward companies with deeper pockets that can afford to patent a lot of ideas and then sit on those patents, warding off competition.  Developing and obtaining a patent or trademark as a smaller company is difficult, and growing more time consuming and frustrating as the number of ideas and intellectual property grows.  A significant reset is in order - one that encourages more ideas and provides good protection at a fair price and is accessible to more inventors.

Fourth, larger companies will have to change corporate culture to identify and recognize the best ideas regardless of their origin.  The real test will selecting and implementing ideas that are the most valuable regardless of their origin.  Currently few companies are aggressively identifying and evaluating ideas and intellectual property that originate outside their four walls.  As more and more people become idea makers as opposed to thing makers, the wealth of ideas and intellectual property externally will be almost impossible to ignore.

What should the next generation do?

Whether you decide your best role is within a large company or as a contributor to a small company or the best alternative is simply to go it alone, the most valuable roles in the future will not be found in routine, day to day work that can be automated, or in pattern recognition or matching.  As Dan Pink has said, anything that can be automated or reduced to a consistent pattern will be automated.  The real question is: what roles are left for people to fill?  What can we do that machines and AI can't do well today?  We've got to become better at creating ideas, spotting the best ones and rapidly converting them into new products.  Speed, insight, innovation and agility are what will win in the future.

Find a company that incorporates and encourages creative thinking, is agile and can quickly adapt to rapidly changing market needs and expectations, that is in a business that values people and where the work can't be reduced to an algorithm.  Or, better yet, create your own company that is really good at discovering needs, creating solutions and defining and protecting intellectual property.  This is the third wave of human value creation.  Become a maker of ideas.

Thank the good folks at PWC for their latest survey of executives about innovation.  The new article, optimistically entitled "Unleashing the power of Innovation" was recently published and surveyed approximately 250 senior executives about innovation.  While interesting, there's not a lot "new" in the survey, and the authors give away the biggest challenge in the overview, by stating that:

the problem is that while the eyes of the CEO are fixed on innovation, the body of the organisation may not be following. The ‘antibodies’ that inhibit innovation include a culture that sees it as separate from the mainstream operations of the business and is slow to commercialise new ideas. 

And, the survey proves the authors are correct - or that the authors actually cared about what the executives said.  Over 57% of the executives referred to culture as one of the top three barriers for innovation. That's more than 13 percentage points over the second barrier, which is strangely "strong visionary business leadership".  You'd think that in the second case the executives would be pointing the finger at themselves.  But let's focus on culture.

The critical question
The authors state several times that innovation is moving up on the CEO's agenda.  If innovation is important to CEOs (which I believe) and if culture is the biggest impediment (which, by the way, is also almost always true), then there's a simple method for discerning if innovation is important to your company. It's the answer to this question:

Is the CEO and his or her senior staff working furiously on reducing
cultural barriers to innovation?  

If you see that the CEO and senior leaders are working on reducing uncertainty and risk, realigning compensation and rewards schemes, focusing their time and commitments around innovation, encouraging new ideas, balancing the need for efficiency with the need for creativity, then there's a good chance that innovation will flourish.  If the CEO and others talk about innovation but don't do much to mitigate a culture based on efficiency, repeatability and reducing risk and uncertainty, then either they don't understand the impact that culture has on innovation (best case) or do understand and simply don't have the time or energy to change the culture (worst case).

What's changing?  What's staying the same?
If innovation matters to your CEO, if 57% of the respondents recognize culture is a barrier, then you know what to look for.  Evidence that senior leaders are doing everything they can to create a balance between efficiency and innovation.  These two don't have to be mutually exclusive, or even competitors. They can co-exist, but it takes a special culture to encourage co-existence.  What changes have been rolled out in your culture lately?  Do they reinforce innovation or efficiency?

There are several real challenges inherent in this issue.  The first is that culture, while powerful, is intangible and omnipresent.  You don't change culture by engaging in a few training exercises.  It has to start from the top and roll out through the organization.  Which leads to the second issue:  cultural change takes time, and it's easier to recover a once innovative culture than to switch the thinking on a culture that hasn't ever been innovative.  A third challenge is a corollary to these:  if innovation is considered an activity or an occasional project, there shouldn't be a need to invest the time and energy to change the culture.  This skeptical response to cultural change demonstrates the lack of understanding about the power of culture as it relates to innovation.

What can you do?


If your teams want to innovate, the organization must change the culture to at a minimum accept innovation activities and at best embrace innovation and its ingredients: risk, uncertainty, variability, discovery and exploration.  The way to start is to communicate from the top, reinforce the communication with investments and activities, sustain the commitment to change over time, have senior leadership actively engaged in innovation successes and failures, and change the rewards and recognition systems.   But, again, if innovation is a "one and done" activity, why would you go through all of that effort?  And does anyone last long enough in a senior role to commit to all of this change with at best uncertain outcomes?

I've written before, both on this blog and on the blog I share with Paul Hobcraft about platforms and ecosystems about the need for seamless experiences.  Innovators often create technologies or products, which have interesting capabilities or features, but rarely do they think through the actual use of the products and understand how they fit in with other products, services, infrastructure, channels and data that exist in a customer's life.  These new products are often interesting but not "seamless" - customers encounter challenges when attempting to use these new solutions in their everyday settings.

It's our stipulation that the future is about seamless experiences.  Will you be willing to adopt a flashy new technology or product if it causes you to have to figure out how to make it work with your other products and services?  If history is any guide, this description - willing to make a new technology work when it is possibly incomplete or ignores the existing infrastructure - is the definition of an early adopter.  Geoffrey Moore and others noted that less than 5% of the market are early adopters, so the vast majority of us will wait until products and services are more seamless.  As we gather more and more technologies and products around us, with many different capabilities and standards, the likelihood of new products and technologies working together seamlessly approaches zero.  That's a huge problem and an opportunity for innovators.

Enter Amazon

It should come as no surprise that Amazon has identified this issue and is working on potential solutions.  Amazon's approach is to "reduce friction" to make products more seamless.

Amazon describes this as:

• Removing friction due to unfamiliarity
• Removing friction due to design 
• Removing friction due to misalignment with human behavior

Amazon gets the issue of seamless experience but is primarily responding to the need in the virtual world - online, through Alexa and other Amazon online services.

These issues are just as real and just as important in the physical world, where tangible products must integrate with a user's life and experiences.  Reducing hassles and improving seamless experience requires a deep understanding of customer context.

A real world example
For example, for a medical products company we worked with, we discovered that while the product itself worked very well, people struggled with the packaging.  The packaging was difficult to open, for a number of reasons, and was bulky and difficult to dispose of.  Engineers believed they'd done their jobs well because the product did its job well.  Marketers and salespeople recognized a problem when there weren't a lot of follow on purchases and only learned about the friction caused by the packaging much later.

The most important role - Experience Manager

While most companies are very familiar with the idea of a product manager or service manager who defines the features and benefits of key deliverables, few companies are really adept at understanding the use of those new products and services in the larger customer context.  Increasingly, what will be important and will drive adoption of new products and services are the insights of what I'll call experience managers - people who truly understand the customer's context, the existing products and services that surround the new solution and the vibrant ecosystem of products, services and channels in which the new solution must exist.  Understanding this, removing friction and solving for a seamless experience is what will make a winning solution.

And, if you are wondering if anyone is writing or thinking about this topic, you can see some brilliant commentary on experience managers here.

Eating the seed corn is an old saying that at one time meant quite a lot, but probably has little import anymore.  When farming was about simply surviving from season to season, eating the seed corn literally meant eating the seeds of the future planting.  Each year farmers would save some seeds, or potatoes, or whatever they needed to plant for the coming spring.  If the winter was harsh enough, they might have to eat those plants or seed in order to survive.  Of course this left them weakened but alive, but when spring arrived they didn't have seeds to plant, and would have to either leave the land or borrow to buy seeds to plant a crop, simply driving an already weakened family further into debt, with the hope of a bumper crop to provide sustenance for the coming year, leaving enough aside to plan for future planting and the ability to pay off the borrowed seeds.  Eating the seed corn should be a last resort.

Did Target eat its seed corn?

I'm writing about "eating the seed corn" because of recent news stories concerning the sudden end of innovation projects at Target.  Other than what I read on the web, I have no further insight about what happened to these projects.  It could be that management decided the investment wasn't worth the cost, or that promised deliverables or outcomes weren't going to appear.  We'll never know, but from the outside looking in this looks like an attempt to cut costs and deliver a good profit margin in an otherwise flat revenue year.  One can either grow revenue or cut costs (or both) to create better margins:  it seems like Target management chose to cut costs.  But instead of cutting costs across the board, it seems to have simply hacked two rather large innovation projects where there was reasonably large investments.

Now I'm fairly sure that these projects don't represent all the innovation underway at Target.  At least I hope that's the case.  But reading between the lines it appears that both of these concepts were ready for release and scaling, so most if not all of the investment had been made.  Those costs were in the past - the ideas should start to generate revenue at this point.  Cutting them means that there will be little incremental organic or new growth from new ideas.  Even the management team admits that Target is going to "focus on the core".  When you hear that it means going back to the basics, back to best operating principles, cutting fat and inefficiency.  Can Target right the ship and remain competitive as Amazon starts to open brick and mortar stores?  Can Target shut down interesting, perhaps promising innovation projects at a time when competition seems very stiff, and Target's differentiation with Amazon and Wal-Mart seems to grow smaller every passing day?

What's perhaps even more interesting about this news

What's also odd about this news is that interesting, innovative ideas get killed all the time in large corporations, for a variety of reasons.  Sometimes the ideas simply don't play out.  Sometimes the ideas threaten to cannibalize existing revenue streams. Sometimes another senior executive stands to lose when another one backing the new idea wins.  Yet you rarely hear so much about the ideas and their promise, or find examples of a company forced to respond so publicly to the termination of innovative ideas that weren't launched.  Is this because the people behind the ideas felt that Target management was out of step with the demands in the marketplace for new ideas?  We don't know for sure, but this signals a very interesting new possibility:  that after hearing about the importance of innovation, people within companies start to believe that management is serious about innovating, and the innovators become convinced that their ideas will become products or services, and become far more frustrated and angry when they don't.  In the past, terminating these ideas wouldn't make news, because people would go back to their day jobs, a little sadder and wiser.  Increasingly, we may find that people don't go quietly into that good night, and challenge a management team they think is making the wrong decisions, openly and even publicly.  This new openness could create interesting signals to investors about who is serious about innovation, and who will follow through on the promises of innovation.

R&D as a metaphor for seed corn

The retail industry is a bit unusual, since it doesn't typically have an "R&D" component the way say a software company or semiconductor company would.  In these research oriented companies there's a constant battle to create new research and bring completely new products and services into the world.  Yet many industries lack a consistent team or purpose to generate really new solutions or ideas - they don't have a true "R&D" function, so innovation often is used as a stop gap measure to provide new ideas in the lack of a research capability.  But it's difficult to compare a true R&D team, which has processes and staffing and budgets that are relatively consistent, year in and year out, to pop up innovation teams that can be quickly started, and in the Target case rapidly extinguished.  Increasingly it's difficult to compete with a notion of research, of new development, of innovation, in any industry, and Target and others like it are missing an opportunity.  Whether they label it as "innovation" or R&D or some other label, companies and industries that for years or even decades have avoided these consistent investments can't compete effectively without them anymore.  Whether you call it R&D or consistent innovation or something else, every industry must be creating new products, services and business models on a consistent, predictable basis.  The pace of change and the emerging global competition is simply too fierce to wait.


We'll see about Target. Did they hunker down at exactly the moment they should reinforce innovation?  Can they sustain relevance and growth as Amazon enters the brick and mortar space, and as Alibaba casts a envious eye on the US market?  Time will tell, and it will be worth watching.

I've been pondering for several weeks, at least since the start of the new year, the state of play of innovation in large corporations. I think I can speak with some knowledge about this, having conducted innovation activities and projects in a wide array of Fortune 500 companies, having talked and been in sales processes with far more, and having conducted innovation programs, training and presentations in Europe, Africa, the Middle East, Southeast Asia and Central and South America, as well as North America.  Thus, I've got a few bona fides where innovation is concerned, a lot of successes and a few scars as well.

After more than a decade of doing innovation work, there are some simple truths I'd like to impart.  None of them are especially shocking, but for some reason they need constant reinforcement.  Almost every new innovation activity seems destined to experience some, if not all, of the same challenges and traps that previous innovation programs encountered, so it behooves us to document and illustrate these simple roadblocks if possible, to improve innovation outcomes and help companies just starting out to avoid some pitfalls.

Where to begin

The problem with identifying common innovation roadblocks or pitfalls is to consider or define where to begin and what scope to explore.  For those who know us, we'll always start with the most divergent, expansive scope possible, if for no other reason than you never get to explore such a broad scope in any other business activity.  And this is the first lesson:

Never miss a chance to expand the scope, conduct more discovery or exploration than is anticipated or expected.

The vast majority of business activity seeks effectiveness and efficiency, which by definition requires past experience, knowledge and expertise.   This in turn leads to rapid convergent thinking and discourages or squelches creativity, exploration and discovery.  But these last three ideas - creativity, exploration and discovery - are where the really interesting and potentially disruptive ideas occur.  If you want innovation, teach people and encourage them to explore and experiment.  Encourage divergent thinking.  Start your activity with the broadest possible scope, the most interesting challenges.  Because our natural inclination is convergence, reducing variability and risk, every decision, every investment, every inclination will be to reduce scope, limit thinking, limit risk thereafter.  It is in your best interest to start as broadly as possible, because you will surely find the scope and activity increasingly limited and resisted thereafter.

Ignore the promises

In many organizations, innovation teams are assigned and directed to do something interesting long after the executives have promised Wall Street, investors and others that innovation is just around the corner.  Many innovation teams feel hemmed in by promises of new products and services, and often seek to tailor innovation activities to past corporate communications, rather than to what the company can do and its customers' needs.  If at all possible, the second lesson is:

Do the innovation that is right, in the timing that is right, based on the needs that customers have, rather than configure innovation activities to meet corporate communications.

Often it's not realistic or even possible to achieve what has been promised, and trying to do so will simply result in unimportant and uninteresting innovation at best.  Rather, create a meaningful success and build on it by focusing on innovation that matters to customers, than you can create, and that you can use as a successful illustration of the capability of the company.  I've found that executives are willing to listen to teams and revise expectations, which leads to more success, rather than simply trying to accommodate years of talk about innovation that were just that - talk.

Innovation is different

When we work with companies to conduct innovation activities, it's not unusual to find that an innovation team has already been chosen.  Typically this team is made up of people who've been very successful in the existing products and processes, and who are often doubly or triply loaded with additional work.  The lesson here is that:

People who are really good at "business as usual", efficient and effective, aren't the best people for innovation.  The thinking must change, expectations must change and different tools must be introduced.

Here again it can be difficult to say to a management team "thanks, but can we have a different team?"  But the difference between a successful outcome, and a well managed failure is the difference between people who are truly innovative, and those that understand how to manage an efficient internal project.

Innovation is innate

Many companies and people believe that "everyone can innovate".  This simply isn't true.  Everyone can have ideas and can imagine new products or services, but few are good at identifying customer needs, generating meaningful ideas and eventually realizing those ideas as new products and services.  This leads to another lesson:

Good innovation requires new tools and skills, and people who are ready to think differently, together

You wouldn't take a handful of your corporate execs and expect them to compete effectively against an NBA team without training and skill development, but we continually gather executives and staff and ask them to do important work with little or no training, no new tools and little teaming.  Even if you can find the most innovative people, they still need time to gain skills and experience.  After all, the next innovation project most people do will be the first innovation project most of them have ever done.

Passion versus Culture

No matter how good or how passionate people are about customer needs, new revenues or good ideas, passionate people cannot win over a resistant corporate culture.  Here comes the next lesson:

Innovative companies have cultures that encourage and sustain innovation.  Most likely, your culture doesn't.  Executives must get busy ensure that it does.

 Every time I write this, or something like it, I'm reminded of the old wisdom:  give a man a fish, he eats today.  Teach a man to fish, he eats forever.  The same is true of innovation and culture.  Any company can push an idea through to realization once, against the corporate culture.  However, the people who experience that trauma will never want to do it again.  If you want sustained innovation, you must examine your culture and make important and lasting change so that it encourages and sustains innovation.  In fact it's often better to focus first on changing the culture, then trying to innovate, than attempting innovation without addressing the culture.

More of these in latter posts as I have the energy and time...

The post today frames a classic issue in communications:  how to improve a signal and hopefully eliminate or at least mitigate noise.  The noisier the communication is, the more difficult it is for the sender and the receiver to communicate.  Thus, we try to eliminate noise from the communication, so only the signal is received.

That sounds easy, but it is actually difficult, because there are no pure communication media.  Noise always creeps in, and conflicts or masks the signal.  This is true in electronics - the noise on your cell phone or fuzziness on your TV screen - as well as in business and life.  Our verbal communications, whether face to face or over a communication infrastructure, are full of noise.

The attempt to eliminate noise from an operating system or a business process is an interesting and perhaps worthwhile challenge, until one considers the question:  what is the real signal?  What is creating the noise?  In many businesses today, there are several signal: noise conflicts. These include:

1. What management says it wants versus what it reinforces
2. What the operating systems support versus what is needed
3. The amount of risk that is encouraged versus that which is tolerated

It begins to raise the question:  is innovation noise, or signal?

Strategic need and communication

Let's start with a classic issue:  sending a signal that isn't meant to be received or implemented, or worse failing to understand that a signal isn't correctly received.  Many executives have concluded that innovation is important and must become a cornerstone of their business strategies.  However, they have little understanding of how innovation works.  To them, innovation must seem like magic pixie dust:  sprinkle it around, encourage it and new innovative products will spring to life.  So, they take to the lecterns and advocate for innovation, but don't change deliverables or goals or investments.  So people hear about innovation but don't see the requisite change in risk attitudes or investments, so they become conflicted.  In this case, innovation is NOISE introduced to a consistent SIGNAL that is business as usual.

What actually gets done

What's worse, perhaps, is that some new, good ideas may get created by resilient innovation teams or individuals. But those new ideas will encounter all of the existing measures (ROI) and decision making gates that expect fully formed, fully proven products rather than nascent, unproven and risky ideas.  Processes that have been honed to perfection, where randomness, variability and risk have been eliminated, treat innovation as NOISE, while consistency, efficiency and predictability are the SIGNAL.  We place filters in these communication programs to eliminate NOISE (innovation) and improve business as usual (SIGNAL).

What the market signals

However, at the same time the market and customers are signalling needs for new products and services. They do this by preferring new products that meet unmet needs, expecting lower prices for products and services that become commoditized, and shifting alliances to solutions that understand their journey and expectations.  The markets and customers are constantly signalling their needs and expectations, but too often we listen through filters of 1) past experience, 2) the investment we have in existing products and 3) the risk and change associated with creating new products.

In this case there are actual signals, clear signals of the need for new products and services that are ignored or filtered out by the way corporations listen (if they listen) or respond to customer requests and market trends.  In this case clear signals are either ignored, filtered out or overcome by the NOISE of business as usual.

Many people would like you to believe that innovation is difficult.  Nothing could be further from the truth.  Innovation, creating new ideas that become new products and services is easy.  It happens all the time, across the globe, every day.  The real challenge to innovation is cultural, both on the corporate side and the consumer side.  And a real underlying issue within those cultural challenges is the inability to distinguish signal from noise - in other words, to communicate. This occurs both internally (as we've seen:  what management wants versus what it supports) in the operations (what we reinforce - efficiency and what we resist - creativity) and what we hear from customers and markets.

To succeed at innovation, there are some very simple rules:  What executives say, matters.  They must both say they want innovation and then reinforce the desire with new investments and priorities.  What business as usual dictates and expects, matters.  If efficiency matters more than innovation, you are communicating a value proposition.  What customers and markets say, matters.  Are you listening?  Or are you filtering to hear what you'd like to hear?  Can you separate signal from noise?


Perhaps the most important first step of any innovation activity is to ask:  what signals are important?  How are they received?  How can we amplify and clarify the important signals? What do we filter?  How can we listen, hear and respond more effectively?

First, a slight diatribe.  Why is it that companies think their people can do successful innovation when they don't share a common language?  In the title I've used the word "disruptive", and by this I mean innovation in the "third horizon" - incremental, breakthrough and disruptive.  I'm defining disruptive innovation as new products, services or business models that "disrupt" existing products or markets.  For example, Apple and iTunes disrupted Tower Records.  Netflix and its rental model disrupted Blockbuster's retail store model.  But I've been in plenty of places and talked with plenty of customers who don't have a consistent language.  They toss around "breakthrough", transformative, disruptive and other language without defining it, and then are dismayed when they get at best incremental innovation.  But this is just a language problem, you'll say.  And I'll say you are correct, but if we depend on language to communicate, and to direct assets, people and risk tolerances, if our language isn't right, then nothing will be right.

Ok, diatribe over.  Thanks for letting me get that off my chest.

Now, on to the real topic:  Disruptive innovation is a where question, not a "what" question.

Again, I'm defining disruptive innovation as a structural change to a product offering, a business model or a market.  Clearly, you have to have a new and compelling offering to have that kind of impact.  That means the "what" - the outcome of the innovation activity, must be fairly interesting, compelling, valuable for customers and so on.  And you'd be surprised to learn that many companies generate viable, disruptive ideas on a fairly regular basis.  It's not as hard as it seems.

It's the "where" that matters
The difficulty is in the "where".  Too often existing business models and knowledge are very attuned to existing markets, customers and segments.  Existing products generate the revenues and profits that innovation teams depend on, and that drive wealth and bonuses for product teams.  Who wants to mess with that?  Existing firms, living in their existing markets, serving customers, can't afford to disrupt their own markets, customers or segments.  They'd put their own revenue streams out of business.  That's a no brainer.  Everyone recognizes this.

But risk enters the picture when you create a disruptive idea, then recognize that you can't afford to implement it in your existing market. Clearly it needs to be implemented and launched in an adjacent or new market, where it will impact other companies and customers, but not your own.  This becomes far more risky, however, because the existing corporate assets and knowledge don't know much about that adjacent or new market, don't think they have the rights to play in that market and don't have partners or channels to access that market.  Thus, there will be a heavy investment to enter that new segment or market, and is the idea worth the cost?

Generating is easy, implementing is hard
You see, GENERATING a disruptive idea is easy.  Implementing a disruptive idea in your own market is next to impossible, so the idea, if it will see the light of day as a product, must be implemented somewhere else.  This is when the "WHERE" question comes in.  Too often, the WHERE question is asked too late in the game.  You have an interesting idea that seems to have some market validity, but no one bothered to think about where the idea should have impact before it was developed.


If you want to do "disruptive" innovation, first, make sure that everyone shares the same definition and has the same risk tolerances.  Then, define the market, customer or segment that you want to disrupt, then create ideas, recognizing that disruptive ideas will disrupt your revenue streams if you deploy the idea within your own market or segment.  Generating disruptive ideas is easy, deploying disruptive ideas, especially in markets or segments you don't understand, is difficult.