Innovation

Exhibit 9.1   Google’s self-driving car. (Photo courtesy of Google).

“Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. But the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do”. Apple Inc.

Innovation is invention in commercial use. For example, while others may have previously invented incandescent bulbs, Thomas Edison and his team were the ones who made the light bulb a practical and usable product. They were the innovators who transformed the invention into a commercially viable solution.

Reflecting on the past decades highlights the profound impact that innovation has had on our lives. Today, in the midst of the digital age, we see how every industry, from agriculture and manufacturing to transportation, retail, education, and finance, is being transformed by digital technology. As the human race relentlessly moves forward, business leaders appreciate the importance of innovation and make deliberate efforts to embrace it.

Innovation can be categorized based on its scale of impact. Incremental Innovation leads to minor upgrades in the existing design of a product, while Radical Innovation results in substantial improvements in its performance and functionality. When an innovation is so radical that it creates new and unique value, such as self-driven cars (Exhibit 9.1), it is referred to as a Breakthrough Innovation.

Another approach to categorization is based on of the impact that an innovation has on existing technologies. Disruptive Innovation, as defined by Clayton Christensen, refers to a product or service that begins in simple applications and gradually moves up the market, eventually replacing established competitors. On the other hand, Sustaining Innovation enhances the existing dominant technology to better serve the needs of existing customers. It can be incremental or radical, yet it remains within the same technology vector.

The computer industry is an apt example of a sector that has undergone successive waves of disruption, starting with mainframes and progressing to mini-computers, desktop computers, laptops, and smartphones. In just half a century, the world moved from a virtually computer-free environment to the “one computer, many people” phase, followed by “one computer, one person”, before heading to the age of ubiquitous computing “many computers, one person” (as shown in Exhibit 9.2).

While popularly perceived in terms of the product dimension, innovation in reality is broad based and cuts across all elements of the mix. Experiences are transformed not only by products or services, but also by the way they are delivered and communicated. These other elements of the mix become important means of differentiation particularly when the product category matures.

Take books for instance, while we continue to read them in the form of hard copies, increasingly now, we also read them in soft versions on iPads, iPhones, Kindles and laptops. We procure them from bookstores as well as from the net, and increasingly we are discovering new titles from friends on social media, or authors/publishers who reach us on the net or by email, or from recommendations from platforms such as Amazon. And, when it comes to disposing of books we no longer need, we can sell them online or simply delete the digital versions.

For businesses that face disruption, the challenge is how to pursue disruptive technology. As history bears witness technological waves can dislodge existing market leaders. According to Christensen entrenched players find it difficult to pursue disruptive technologies since their infrastructure and operations are geared toward pursuit and support of the established, mature technology. This can be seen in the computer industry, where market leadership has shifted from IBM mainframes to Digital’s minis, then to companies like HP, Dell, Lenovo, and others now to Apple and Samsung in smartphones.