About these ads

Three Enterprise 2.0 Themes You Should Be Watching in 2010

Enterprise 2.0 continued its growth and maturation in 2009. We saw the rise of the Enterprise 2.0 consultancies, including Dachis Group, Altimeter Group and Pragmatic Enterprise 2.0. Andrew McAfee published his book about Enterprise 2.0. We saw the rise of the 2.0 Adoption Council. And based on what can be gleaned from vendors, more enterprises are deploying social software.

For 2010, three themes will impact the sector. These aren’t the only ones, but I expect to see plenty of news, features and industry mental energy covering these.

#1: Impact of SharePoint 2010

It’s coming. SharePoint 2010. Microsoft’s upcoming release for the enterprise received good attention during the SharePoint Conference in Las Vegas. Features include:

  • Social profiles
  • An actual wiki
  • Blogs
  • Activity streams
  • Status updates
  • Presence status
  • Social bookmarking
  • Tags
  • Ratings

As a list of capabilities, this certainly is impressive and quite a departure from SharePoint 2007′s social software efforts. The devil is in the details, of course.

But generally, customers who have been “making do” with 2007 will suddenly have an attractive option from Microsoft. SharePoint 2010 will likely be a big catalyst for Enterprise 2.0 growth.

The coming release of SharePoint 2010 is forcing many vendors to evaluate their positions in the market. Going head-to-head with the same or fewer features is going to be tough. What differentiates your offering? My Jaws picture refers to this dynamic facing Enterprise 2.0 vendors.

There will be articles reviewing 2010. There will be blog posts dismissing its capabilities or lack thereof. But there will be impact in the corporate world.

#2: Enterprise 2.0 Becomes “Like Air”

At Defrag 2008, I caught Charlene Li’s presentation, where she said, “social networks will be like air“. The premise of her talk is that social network aspects will become less a destination URL and more an integrated part of experience throughout the web and mobile.

We’re seeing signs of a similar shift in the enterprise. Enterprise 2.0 is becoming less a destination and many of its concepts are being integrated into non-social software apps. Salesforce’s Chatter and Tibco’s Tibbr were end-of-year examples of this. As Dana Gardner writes on Seeking Alpha:

This is a clear sign that the enterprise software and social software worlds are munging. Get ready to see a lot more.

Salesforce and Tibco won’t be the last. Expect more announcements in this vein for 2010. Mike Gotta noted that this concept was called “contextual collaboration”, and was promoted by Matt Cain in the late 1990s. The web 2.0 tools of today are better, more diverse, more scalable and better adapted to human behaviors than whatever was available a decade ago.

Putting these tools in-the-flow will be a powerful basis for expanding Enterprise 2.0’s reach. A challenge for standalone general tools of today is that they require employees to toggle between different apps. This can make it tough to get traction. For example, Intellipedia has been making a difference, but it’s still just “a marginal revolution“. Not all agencies have made it part of daily work.

In the European Oracle Enterprise 2.0 Group on LinkedIn, Oracle’s VP of Enterprise 2.0 for EMEA asked this question:

What the article doesn’t cover and where I would be interested in your views is how the use of E2.0 tools would enable the Business Processes themselves to be changed. Or innovated completely. eg how do you bring Crowdsourcing, Idea Engines, Prediction Markets etc and integrate those into ERP systems?

Yes, even Oracle is discussing this concept. Watch how this theme unfolds in 2010.

#3: Enterprise 2.0 Market Stratifies

I see the Enterprise 2.0 market splitting into these two models:

  1. General collaboration suites that replace intranets and portals
  2. Specialized applications that deliver tangible value around a specific activity

Watching the progression of general collaboration suite vendors, I’ve always believed their ultimate goal is to replace existing 1.0 intranets and portals. After all, once an Enterprise 2.0 vendor’s solution…

  • has the ability to store and organize files,
  • provides pages for company-wide and team-specific communications,
  • offers powerful search capabilities,
  • includes APIs for third party integration,
  • can be organized into multiple spaces, and
  • has a superset of the elements of the corporate directory,

…why would a company maintain both the intranet and the social software suite. Pick one. The Enterprise 2.0 vendors still need to mature their product further to become the company intranet/portal. But I see that as their destination.

Meanwhile, a new crop of vendors have dispensed with the pursuit of all-everything suite approach. Rather, they build applications that integrate social in solving specific problems (e.g. Spigit for innovation management). Gartner analyst Anthony Bradley tabs these vendors’ offerings as “activity-specific social applications”. These vendors build in functionality that solves specific problems for companies, usually with definable ROI.

I expect the general collaboration suite vendors will offer their own specialized modules as well, in order to offer tangible ROI solutions to their customers.

Watch how this stratification dynamic plays out in 2010.

Those are my thoughts – what do you think?

What the article doesn’t cover and where I would be interested in your views is how the use of E2.0 tools would enable the Business Processes themselves to be changed. Or innovated completely. eg how do you bring Crowdsourcing, Idea Engines, Prediction Markets etc and integrate those into ERP systems?

About these ads

My Ten Favorite Tweets – Week Ending 122509

From the home office in the North Pole, where I’m packing up a for a couple months relaxing in Hawaii…

#1: RT @nenshad No spoilers but I agree! rt @twailgum “The Business Application of the Decade: And the Winner Is…” http://bit.ly/53BdZ2 my blog on CIO.com

#2: The Benefits of Pissing People Off http://ow.ly/OHEA #innovation

#3: Radian6 Sentiment Analysis Review – Does Natural Language Processing Work? http://bit.ly/5ckKPa > Sentiment analysis still work in progress

#4: Accept Defeat: The Neuroscience of Screwing Up | Magazine #innovation (via @jorgebarba) http://post.ly/Ftqa

#5: The Consumerization of Enterprise VC http://ow.ly/Osck by VC Bill Burnham | what works in consumer web doesn’t inside orgs #vc #e20

#6: What motivates external innovators? (MIT Sloan) #innovation http://post.ly/FfKm

#7: RT @jhagel: Drafting an entire workforce into the company’s brain trust – lessons from Toyota http://tinyurl.com/yfnh87d

#8: RT @brucenussbaum Ingenius use of space.Train goes through Thai market! Unbelieveable! http://bit.ly/4TEva9 /via @brucemaudesign (via @Rishadt)

#9: RT @marylynn3 How NORAD keeps track of Santa- A behind the scenes peek from @CNET News http://bit.ly/6Py9BY

#10: Wrapping paper, Two Buck Chuck, It’s a Wonderful Life > Christmas Eve 2009

My Ten Favorite Tweets – Week Ending 121809

From the home office in Washington D.C., where I’m racing home from the global warming summit in Copenhagen to beat the icy cold snow storm…

#1: I’m on @paidcontent this week, discussing the ranking & presentation of tweets in search engines: http://bit.ly/6vcIGj

#2: If You Can’t Innovate Across Silos, Don’t Expect To Succeed w/ Open Innovation http://bit.ly/8GPtIp by @lindegaard #e20 #innovation

#3: RT @sengseng Must read by @CliveThompson in @Wired about the power & benefits of daydreaming & the idle mind: http://j.mp/1cz6n4

#4: RT @dhinchcliffe: Collaborative Innovation through Social Competition: http://bit.ly/57tUdi #innovation #e20 #communities

#5: . @tdavidson Some people just have a knack for “seeing” the good/bad and potential of ideas. Quite valuable. #innovation

#6: How Communities Support Innovative Activities (MIT Sloan) http://post.ly/FBiq

#7: RT @webtechman Enterprise 2.0: The Top Five Faces of 2009 http://bit.ly/7a2dlK #e20 > thanks Daniel, I’m a bush among redwoods there

#8: Thanks @tristanwalker – glad you like the #foursquare as social CRM post. Small business payments/CRM market is ripe for disruption.

#9: RT @Armano: 50 beautiful (and free) icon sets for your next web design http://om.ly/dDED /via @GuyKawasaki

#10: When you’re ready for some holiday cheer, Last.fm music tagged ‘Christmas’ http://bit.ly/5RJSwY

Foursquare + Square = Killer Small Business Social CRM

Parker Smith wrote a piece that got me thinking. In Foursquare: Democratizing the Loyalty Program, he posits that Foursquare could be the loyalty program provider to small businesses. I think he’s right.

Then I noticed these identical product benefits touted by the companies themselves, Foursquare and Jack Dorsey’s Square:

For example, foursquare can tell you how many times a customer has been to your venue or the frequency of their visits. Many venues are now using this data to reward their most loyal customers with freebies or discounts.

Foursquare

If you frequent a place that accepts Square, we’ll let them know you’re a repeat customer. That 10th cappuccino may be on the house, no paper coffee card required.

Square

Would you look at that? Are these guys going to end up competing with one another?

A few years back, I was the personalized marketing product manager at Pay By Touch, which offered the ability to pay for items with biometrics (i.e. your finger). Once you could identify the customer and her spending, interesting loyalty program solutions became available.

Which brings me to what Foursquare and Square are doing. Square is still in beta mode, so it’s hard to predict fully its uptake in the market. But let’s assume Twitter co-founder Jack Dorsey and his backer, Khosla Ventures, are on top of this opportunity. And Foursquare is growing quickly.

Each provides pieces of what would be needed for a small business CRM. The companies are independent, but I can see new value created if they were to work together.

There is no CRM for offline small businesses

At least, not for businesses that operate in the physical world. Dry cleaners, restaurateurs, retailers and other small businesses. They may have loyalty punch cards, but generally don’t have any programmatic way to track and engage customers.

But they could use CRM as much as a large business does. I like this customer lifecycle framework by Gary Hawkins in Customer Intelligence:

It shows the stages of a business’s customers: new, existing, declining, lapsing. And the ability to tier active customers also is valuable. Each tier has its own dynamics. There is much more to CRM than a simple frequency loyalty program. It’s a deeper level understanding of the customer base. Understanding the statuses of customers from this point of view is powerful marketing information.

Modern CRM is more than the analytics and outbound campaigns. The social CRM movement is gaining strength, and it’s incorporating many social network principles into the customer engagement process.

And it’s not readily available for small businesses that operate primarily in the “offline” world. Unlike the digital platforms of e-commerce, offline transactions are not measured. At least not beyond the credit card transaction for consumer transactions.

This is an area of enormous opportunity. The company that solves the CRM issue for the 4.3 million small businesses in the U.S. has an enormous opportunity in front of it.

Complementary CRM strengths of  Foursquare and Square

The two services each bring unique strengths to a small business CRM solution. Take a look:

Start with the commonality Diagram. Foursquare and Square both provide:

  • Customer identity = who are your customers?
  • Visit frequency = Foursquare check-ins, or Square credit card swipes

When you see them both tout free products for repeat customers, this is how they’d do it. Identity + frequency = loyalty punch card.

But what about the services’ other features?

Foursquare provides the social fuel:

  • Social incentives: It’s fun to build up points relative to your friends, show off your Foursquare badges. And who doesn’t want to be Mayor of some local business?
  • Social interactions: People use Foursquare to to broadcast their location. This lets other meet up with them. Or in the case of crowded venues, find someone else there.
  • Game dynamics: This reporting in on your locations is an addictive game for many. It’s cool to get your first check-in daily bonus, to unlock a new location (hooray!) and oust someone as the Mayor of a place.
  • Social media word of mouth: By following people on Foursquare or Twitter, you can see where your network hangs out. This raise awareness for businesses, an incredibly important benefit.

Here’s an example on that last point. Socialtext CEO Eugene Lee often tweets this:

I’m at Coupa Cafe (538 Ramona St, at University Ave, Palo Alto). http://4sq.com/IITeJ

I don’t spend much time in Palo Alto, and I’d never heard of Coupa Cafe. But you know what? If I find myself in Palo Alto needing lunch or a coffee, guess which place I’d specifically look for?

Square provides the transaction processing power:

  • Dollar spend: Incredibly valuable information to track. Does someone come in a couple times a week, but spend heavily on food? Or do they frequent the cafe more often, but only buy coffee? Dollars spent is an important complement to simple visit frequency.
  • In-the-flow process: Square captures it’s information in-the-flow. That is, you don’t have to do anything extra. You’re have to pay, it’s part of the normal process. Foursquare requires a check-in, which is outside-the-flow of regular small business-customer interactions.
  • Transaction handling: By owning the transaction handling, Square can implement low-maintenance marketing programs. Businesses can create promotions tied to specific accounts, and execute them at the point-of-sale via Square.
  • Merchant account process: The process of getting businesses signed up for these programs isn”t trivial. It is standardized, but there’s a lot to tackle to provide good service. Some early reports indicate that Square has a superior merchant account set-up process, which may be its best innovation.

The in-the-flow nature of Square should not be underestimated. Getting adoption for any service is tough, and removing whatever friction to participation that exists is a critical element. This commenter on a post about Foursquare makes a good point:

The sort of people who will stop and record their restaurant visits and who have friends who also stop and record their restaurant visits and then write reviews of same. And while that’s a prime demographic, I’m thinking it’s not nearly as large as you’d hope. Most people just don’t have the time or inclination to “play” FourSquare.

This is why putting the process of playing Foursquare in-the-flow would be valuable.

Making it happen

The challenge is in connecting a credit card transaction to a person’s Foursquare account. Then I realized Square’s intentions are much bigger than a simple transaction swipe. The company lets people set up their personal accounts on Square. I assume you will enter your credit card number online, and when that number comes through in a transaction, it’s associated to your Square account. Thus Square can manage loyalty punch card programs.

Well, why not associate your Foursquare account to your Square account? When you swipe your credit card at the local business, Square processes the transaction the way it normally does. But it also does something else. It prompts an update to your Foursquare account.

I’m not talking a Blippy-style broadcast of your credit card purchase amount. Rather, your location status is updated automatically on Foursquare. Just as if you’d updated from your iPhone.

The small business then gets the social part of the CRM program.

What do you think? Two great tastes that taste great together? Small business could use the combined elements of Foursquare and Square.

I’m @bhc3 on Twitter

My Ten Favorite Tweets – Week Ending 121109

From the home office in San Francisco where I’ll be taking an indefinite break from golf…

#1: On top of Chatter, Salesforce buys GroupSwim http://bit.ly/8KxLGe (by @benkepes) Ever, ever deeper into #e20

#2: Check out: Enterprise 2.0 – Someone Has To Sell This Shit http://bit.ly/5XypZV #e2conf > funniest title so far #e20

#3: So very interesting: Let’s talk about chickens and e2.0 http://bit.ly/7xyDNj by @merigruber “Teams” of star performers are less productive

#4: Intellipedia suffers midlife crisis — Government Computer News > Still “just a marginal revolution” #e20 http://post.ly/EDLK

#5: Social networking is the creation of relationships, collaboration and knowledge around social objects. [credit to @gapingvoid here]

#6: What will power next-generation businesses? http://bit.ly/8TAGkI by @dhinchcliffe #community #crowdsourcing #e20 #innovation

#7: Three Secret Weapons Of Innovation: Sensemaking, Weak Signals Reading And Futuretyping. Which One Of Them Do You Cur… http://post.ly/EfDV

#8: Organizations’ Innovation Dark Energy – Employee Motivations (via Spigit blog) http://bit.ly/7XAwk6 #innovation

#9: RT @johntodor Here’s my take on Hutch Carpenter’s Four Quadrants of Innovation. http://bit.ly/BUX8u #innovation

#10: Thanks @guykawasaki for picking up my Four Quadrants of Innovation blog post: http://bit.ly/6HsXE1 @innovate #innovation

ComMetrics on Crowdsourcing Innovation: You’re Doing It Wrong

ComMetrics is a social media analytics company, a division of CyTRAP Labs GmbH. ComMetrics is well-known in the industry, including its FT ComMetrics Blog Index.

The company published a useful piece, Crowd-wisdom fails businesses. The basic premise is that crowds do not innovate. It’s useful, because it contains both truths and misconceptions about the role of communities in the innovation process.

Let’s break it down.

Innovation via a stadium crowd?

Photo credit: Ian Ransley

The initial point of the post is that “Crowds Innovate – NOT”. And it’s true in its literal sense.

This may be one of my favorite misconceptions about the role of communities in innovation. That crowdsourcing is some sort of mind meld where innovations spring from a collective brain wave.

This quote by ComMetrics both sums up the truth, and the common misconception:

It seems a bit naive to think that going to Dodger Stadium or the LA Coliseum in the hope that crowdsourcing will show people exhibiting the above [innovation] behaviors, and therefore help us innovate faster…

Really now…

Actually, it wouldn’t be naïve if you were soliciting the stadium’s feedback on ways to improve the sport event experience. Understand the different “jobs” the sport event is supposed to do:

  • Outlet for aging or non-practicing athletes
  • Family adventure
  • Business social events and networking

You mean you wouldn’t solicit the stadium crowd for ideas related to what they’d like to see on those fronts? How about their feedback on the stadium management’s and others’ ideas?

The stadium example is a good one, because it offers a chance to parse out the role of crowdsourcing into three dynamics:

  1. Crowdsourcing involves collecting ideas in aggregate
  2. Community feedback brings a diversity of viewpoints to the ideas
  3. Crowdsourcing does not mean 100% of the world’s population

Collecting ideas in aggregate. Stop for a moment and consider that. I’m contrasting that view of crowdsourcing from the hivemind singularity that operates off a single brain wave. While the employees of a business have more of a vested in its success, the actual users of a product or service have a pretty good sense of what they want to accomplish.

Diversity of feedback. Research demonstrates the power of information diversity in increasing the quality of ideas. And crowdsourcing is a marvelous way to capture a broad spectrum of opinion and understanding. If you’re going to get a range of opinions, including wild cards that weren’t expecting, soliciting a community’s feedback is a powerful approach.

Crowdsourcing doesn’t mean the whole world. When I read the stadium crowd quote, I get a subtle ‘dis’ in it. Namely, that there some serious nimrods in the crowd, and what the hell would they know about your business? But that’s a stereotype. For instance, look at the open source operating system Linux. Linux is a great example of crowdsourcing. But you’re not going to find me contributing anything there. I have no knowledge, opinion or interest in it. Crowdsourcing attracts parties interested in the product/service being examined. It’d be too demanding to participate otherwise.

The problems with popularity

The ComMetrics post has two separate points around the problems with popularity. First, is the issue of superusers having too much control over crowd opinion:

The notion that a book might be a must-read because it is highly ranked by many on Amazon does not make it Nobel prize material. The earth did not stand still just because Galileo fell out of favor, nor has evolution been shown to be false due to the faith of believers.

Hence, product reviews driven by superusers and crowds who follow just means that the wisdom of crowds can only be conventional. Volume against quality.

The second point is that simple votes don’t provide enough input on an idea’s value:

Thumbs Up or Down works but fails to explain why: Crowds do not drive and bring innovation to successful fruition in the form of a marketable product. Nor are they the best source for assessing quality – the one that shouts the loudest is heard the most.

Nevertheless, crowds can tell you if they like or dislike something.

There are truths in both of these observations. Amazon superusers are the modern equivalent of tastemakers in pre-Internet society. The people the crowd followed to find the best of things, often read in the newspapers. There are cases where the opinion of an A-Lister can have too much sway.

One key difference is this: today, people have to re-earn their influence over time. If over a sustained period someone falls down and no longer looks forward to the fresh, to the new, they lose their influence. The crowd moves on to someone else who is at the leading edge. Humans have a natural affinity for the new.

Perhaps more importantly, one cannot argue that no one has solid authority over a particular innovation domain. We don’t all wake up as blank slates every morning, having to relearn expertise during that day’s work cycle. There are bona fide, honest-to-goodness authorities on subjects who are motivated for improvement.

Which brings me to the second point about simple up-down votes. These votes do provide valuable feedback. You get an early read on what is resonating with the crowd, which is a valuable filter. But they lack nuances that can help identify the best among ideas that are resonating.

Microsoft’s Wilson Haddow’s observation is spot-on. Companies ought to be able to leverage both the wisdom of the crowd in getting feedback, but also leverage the opinion of authorities as well. Going back to what I wrote earlier…

  • The crowd can provide ideas in aggregate
  • The crowd can collectively weigh in on ideas’ merits
  • Individual authorities are generally needed at later stages of evaluation

And the role of these authorities should include finding valuable ideas the crowd overlooks.

In the blog post Corporate Innovation Is Not a Popularity Contest, I argue that binary feedback mechanisms – up-down votes – fall short. They are valuable, but not enough. And this is something Spigit does with its integration of reputation scores into the innovation process.

ComMetrics makes good points here. And kudos to ComMetrics for taking the time to weigh in on this topic. Their post provides a good framework for considering both the problems and opportunities of working with communities in the innovation process.

Open Innovators Outperform the Market by 16.9%

At the Open Innovation Summit last week in Orlando, there were a number of companies there discussing their various initiatives for open innovation. What is open innovation? UC Berkeley professor Henry Chesbrough, perhaps the father of the movement, formulated this definition several years ago:

Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.

At the Summit, several companies expressed their growth related to and/or impact of open innovation:

Cisco: Cisco’s internally generated growth is at 5%. Its partner-based growth is 10%. #ois09

Clorox: Clorox target for growth from innovation is 4%. Last few years around 2.5% to 3.5% = significant portion of growth. #ois09

Royal Dutch Shell: Conser: About 40% of projects in Shell’s R&D program come from GameChanger. #ois09 [GameChanger is its open innovation program]

Rockwell Collins: Aggarwal: 75% of firms expect 40% of innovation to come from external sources by 2012. #ois09

Hewlett Packard: McKinney: 60% of ideas generated internally. Via HP Garage. Use employee crowdsourcing to filter and refine these. #ois09

Given the way these companies described their open innovation efforts, I decided to check out their stock performance. Hat tip to Jackie Hutter for suggesting this idea.

The table below compares the 5-year performance of the companies presenting at the Open Innovation Summit against the S&P 500:

It’s not a clean sweep, but most of the companies have outperformed the S&P 500 handily the past five years. While it’s not all due to initiating open innovation, it appears that you can’t rule out its influence on company performance.

Here’s how industry consultant Stefan Lindegaard describes the open innovation landscape:

I also argued that only about 10% of all companies are adept enough at open innovation to get significant benefits today. Another 30% have seen the light and are scrambling to make open innovation work and provide results that are worth the bother. I call them contenders.

The other 60% are pretenders—companies that don’t really know what open innovation is and why or how it could be relevant for them.

Looking for growth ideas? See what the firms in this open innovators stock index are doing right.

My Ten Favorite Tweets – Week Ending 120409

From the home office in the middle of the road by my smashed up SUV with a nine-iron imprint on my face…

#1: RT @parkerlsmith Foursquare: Democratizing the Loyalty Program http://post.ly/Dpfx > SMBs can use @fourquare as a loyalty program

#2: FT.com – We’re all selling now: the evolution of online reputations http://ow.ly/Izba #socialmedia #e20 #reputation

#3: What can email interfaces learn from Twitter clients (e.g. Tweetdeck) to manage the overload? http://post.ly/Dlww

#4: Collaboration Is Hot: Why Now? > Forrester survey shows idea mgt tools are a top 2 #e20 priority http://post.ly/DuBB

#5: IT@Intel Blog: All I Want For Christmas is my #E20 > ideation was the one measurable ROI #innovation http://post.ly/E8Nt

#6: Fox: Cisco has a product ideas wiki for employees. Dedicated VC funding for ideas. Similar to what AT&T is doing w/ Spigit. #ois09

#7: Lasher: Innovation lever = do small thing w/ big result. Avoid going right for big bang. Otherwise corp antibodies kill you #ois09

#8: McKinney: 60% of ideas generated internally. Via HP Garage. Use employee crowdsourcing to filter and refine these. #ois09

#9: RT @AndreaMeyer: HP Labs saved $2 bln $ from its supply chain through internal innovations #ois09

#10: Just started a posterous account: http://bhc3.posterous.com/ Collect stuff I find along the way. FriendFeed meets Evernote meets blogging.

The Four Quadrants of Innovation: Disruptive vs Incremental

I recently wrote up a post, Most Dangerous Innovation Misperception – The Silver Bullet Approach. In it, I discussed the issue of organizations myopically focusing on only disruptive innovations to the exclusion of more incremental or sustaining innovations.

In doing more research on the subject, I began thinking about the dynamics that apply when a firm pursues different kinds of innovation. A post by Venkatesh Rao, Disruptive versus Radical Innovations, was very useful for distinguishing between disruptive and radical innovations.

Building on that, I wanted a framework for delineating innovations based on their technology and business impacts. Because they’re not necessarily the same. The four quadrants below describe the dynamics for innovations according to their technology and market impacts:

technology vs market innovations - disruptive or incrementalIn each quadrant, there are different rationales and issues that apply. Let’s take a look.

Existing Tech, Manage Existing Market

The lower left quadrant represent innovations that leverage existing technology, and service existing customers. This is every day innovation. The block-n-tackle innovation that keeps companies nimble and operating at rates above industry averages.

Example? See how Walmart improved the fuel efficiency of its vehicle fleet:

Wal-Mart has taken a number of steps, including the installation of diesel Auxiliary Power Units on all its trucks, and applying aerodynamic skirting. On the tire side, Wal-Mart is working with super single tires. and is testing nitrogen-filled tires and an automatic filling process to maintain constant tire air pressure.

Improving the customer experience is also a critical opportunity. In an era of social-media empowered customers impacting your brand, the consequences of failing to improve the customer experience are higher than ever.

But this quadrant is the one often pooh-poohed by many in innovation. I like the way PriceWaterhouseCoopers puts it in this blog post:

An unintended consequence of the Innovators Dilemma has been that companies have begun believing that unless they were pursuing a strategy of seeking disruptive innovations, they were somehow losing out.

Walmart’s efforts have paid off. The retailer has held relatively strong during the Great Recession, as seen in its stock price. And Toyota famously gathered over million ideas a year from its employees to emerge as a global leader in the automotive industry.

Existing Tech, Create New Market

In this quadrant, existing technology is leveraged to create a new revenue streams. This is the quadrant where the following phrase applies:

Good artists borrow. Great artists steal.

The simple application of a technology that serves one purpose toward a different purpose can be disruptive from a market perspective. It’s not a large technological leap. It’s the intelligent application of what’s already at hand.

Twitter is a great example. The technology itself is…simple. Web form. Subscription model. Limit to 140 characters. Yet it’s revolutionized the way people share and find information, causing Techcrunch’s MG Siegler to compare it to a modern day Walter Cronkite. All for a simple little web app. Here’s what WordPress founder Matt Mullenweg says about Twitter:

Whether the Twitter team intended it or not, they’ve built a killer and highly addictive reader platform with dozens of interesting UIs on top of it.

The thing with these innovations is that they are very much a market-determined disruption. This isn’t some sort of EUREKA! the moment the technology is rolled out of the labs. It takes the market to say that it’s disruptive.

Clayton Christensen (Innovator’s Dilemma) types of innovation will often fall in this quadrant. Existing technologies applied in new ways to address the lower end of the market.

Venkatesh Rao has a great perspective on this quadrant:

In fact, in most documented cases of disruption, the disruptive innovation was a minor/incremental change and well within the technical capabilities of the incumbent (and was often taken to market by a renegade spin off from the original company).

This quadrant is the best one for producing organic growth for companies. It has lower risk, but produces meaningful revenue growth.

Radical Tech, Create New Market

If any one quadrant defines the popular view of innovation, it’s this one. And that’s not without good reason. In the previous quadrant, existing technologies are applied to new markets. Well, existing technologies have to come from somewhere. That’s this quadrant.

This is the cool stuff that the press writes about. Check out AT&T’s Technology Showcase for a great example of some of these new technologies.

Amazon’s Jeff Bezos has done well in this quadrant. His latest innovation, the Kindle, is an example. It includes a new “electronic ink“. Ability to read text aloud. It’s incredibly thin profile.

And it’s paying off. Amazon reports that the Kindle set a new sales record this November. Which points to the Kindle as a strong new revenue stream down the road, and a new source of sales for Amazon’s book sales. A home run in this quadrant.

These types of innovations are important for maintaining the long-term growth rates of companies. They provide needed growth, replenishing changes in existing markets.

Which leads us to the final quadrant…

Radical Tech, Manage Existing Market

There are times a company’s business is under attack, and it needs to address changing behaviors in its market. Innovations in this quadrant share the high risk profile of the previous quadrant, but they have a defensive nature to them. They don’t seek to find new opportunities, they seek to address changes in customer behavior.

Hulu strikes me as an example of this. A joint venture of NBC, Fox and ABC, Hulu lets users view shows on computers. This initiative addresses the emerging market shift away from televisions to viewing on all sorts of devices. It’s a better answer for this shift than the music industry initially had for the proliferation of MP3 songs on various P2P sites.

Gary Hamel has noted the increasing volatility of markets across the globe. Customers have better access to information about new options, and are willing to shift their spending more quickly. With this dynamic, expect some increase in activity for innovations in this quadrant.

Companies Need a Portfolio of Innovation Opportunities

In a recent Accenture survey, 58% of executives said their organization is looking for the next silver bullet rather than pursuing a portfolio of opportunities. When I hear that, I think first of the upper right quadrant (radical tech, create new market). These types of innovations are incredibly important, and should be part of a company’s innovation efforts.

But there’s really a good basis for expanding that view to look at the other types of innovation: technology vs. market, disruptive vs incremental.

I’m @bhc3 on Twitter, and I’m a Senior Consultant for HYPE Innovation.

Kindle Breaks Record for Sales in a Single Month During November

Follow

Get every new post delivered to your Inbox.

Join 641 other followers