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:
In 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.
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.
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.
On Thursday, November 5, I attended the AT&T Technology Showcase in San Francisco. The Tech Showcase presents some of the latest cool inventions coming from AT&T Labs. Imagine a highly professional, well-resourced Maker Faire. AT&T calls the showcase, “The Art of the Possible”, stressing the experimental nature of this stuff.
While I’m not actually a geek, there were some cool things there. And notice the iPhone usage in these inventions.
For easy reference, I’ve included some anchor links below:
This was really cool. It’s a device that lets you broadcast video and images on any surface. You insert your iPhone into the microprojector and point it where you want to display. It uses three-color lasers to display images. With lasers, the image is always in focus, regardless of distance from the display surface.
The inventor stressed the medical uses of it. He showed how a brain scan would look. Doctors can view results on-the-fly, on any surface. This gives them the ability to react much more quickly to medical conditions.
But another guy watching this and I both had the same thought: this would be great for business. Sales presentations held on your iPhone. It also seems like something that work at trade shows.
And how about watching videos through your iPhone? Not on the small iPhone screen, but broadcast on a nearby wall or a screen in the back of a car seat? That would be pretty slick.
Under the research initiative, “Just in Time Mobile Services”, is this wild concept.You ask total strangers to provide you with information about some location in which you’re interested. Here’s a process flow:
Say there’s some place you want to go to, but it can be hit-or-miss there. Maybe too crowded, not enough people, delay in some event, etc. You reach out this Ad Hoc Social Network. The Network system finds people who are in that location. They agree to answer a question. You check out the ratings for those people, select the one with a sufficient rating. You then ask them about the location. After they give you an answer, you determine whether the answer was good, and rate them.
All of this done anonymously.
Key here are the ratings. Your rely on those with better online reputations. As for incentives to participate, maybe there’s some lessons in foursquare (points, badges, mayors).
AT&T offers a digital TV content delivery service called U-verse. It uses Internet Protocol to deliver signals, and competes with Comcast and other cable providers, as well as satellite TV providers. There are some cool experiments developed for U-verse, including a few they aren’t ready to make public.
Here are some of the cool things they’ve done in the Lab for IPTV:
Use iPhone pictures to find programs: The monthly U-verse guide provides information on upcoming programs, including photos from those programs. Use the iPhone to snap a picture of a program. Send it to the application in the IPTV. The TV matches the picture from the iPhone to a program, and shows a list of upcoming episodes. Record the ones you want.
Twitter: Add a scrolling ticker to the bottom of your screen. You when this would be good? When BIG stories break that capture the nation’s attention. They invariably have # hashtags. Have a running ticker of hashtags across the bottom of your screen while watching live coverage from a new station.
Throw media objects from phone to TV: Say you have a video on your iPhone 3GS. With this app, you simply “throw” it to the IPTV. The video will be loaded to the TV, and begins to play. If you had an IP stereo, this would work for music.
FamilyMap: Want to know where your kids are? This app tracks the signals for your family’s phones, and plots their locations on a map. A FamilyMap. I’m going to remember this for my kids in about a decade.
At the World Innovation Forum, futurist Paul Saffo said that sensors are the BIG next technology wave. The telehealth remote monitoring project shows one way this will be true.
At the Technology Showcase, one Labs researcher showed off a sensor that tracks the foot signature of people (“smart slippers”). With four sensors in a slipper, it tracks the unique foot signature of an individual. The sensors will measure the footstrike, and provide data that can identify if something is off. If something is off, family and care providers can be alerted.
AT&T has a vision to develop sensors that can track a number of health related conditions. I took a picture of a poster that gives a high level view of their direction. Notice the age demographic of the couple under “You” to the left of the picture:
This is an area of growth, not just for AT&T, but for the technology industry overall. The New York Times just ran a story about this topic, Watch the Walk and Prevent a Fall. The article noted:
Researchers are beginning to apply the digital tools of low-cost wireless sensors in carpets, clothing and rooms to monitor an older person’s walking and activity. The continuous measurement and greater precision afforded by simple computing devices, researchers say, promise to deliver new insights on risk factors and tailored prevention measures.
If The Graduate were remade today, the man at the graduation party would whisper “sensors” in Dustin Hoffman’s ear.
Finally, I took in the GeoCast demo. What is GeoCasting? It allows you to communicate between mobile handsets without the need for a cell or data network.
This is essentially a very localized peer-to-peer way of communicating. It relies on sensing nearby phones. The use case demo I saw related to public safety. Imagine there is a disturbance of some type on a college campus. School authorities would have access to a broadcast application, which would localize instructions to students on the campus. If you were inside a building where the disturbance was occurring, you’d get one set of instructions, perhaps telling you the safe way out. If you were on a different part of campus, away from the problem, you’d get instrucitons to stay in your room and lock it down.
GeoCasting is an innovative way to localize information out to mobile handset holders. One could see interesting commercial applications for this, such as retailers sending messages to consumers nearby.
Good stuff coming from the AT&T Labs guys. Look forward to some of this becoming commercial. I may seriously have to get U-verse TV when it becomes available in my neighborhood.
This was really cool. It’s a device that lets you broadcast video and images on any surface. You insert your iPhone into the microprojector and point it where you want to display. It uses three-color lasers to display images. With lasers, the image is always in focus, regardless of distance from the display surface.
I'm Not Actually a Geek 
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