Innovation to Nowhere

"They're a one-trick pony. It was a great trick for over 10 years, but the rest of us have figured it out … "

--Anonymous tech executive speaking about Dell

So, did you see the Business Week story this week: "Dark Days at Dell"? What about this morning's BW article "Apple vs. HP, Who's Got the Mojo Now?"

Of course, I had no idea these were coming out when I wrote my post last Wednesday on "What Drives Sustainable Innovation." I said that technology innovation is required but not sufficient for sustained market leadership through innovation. You also need what Booz Allen Hamilton called (two years ago) market-based ideation. And both require an innovation value chain with certain baked-in structures and processes that don't exist at Dell.

But Dell's problem goes deeper than just being a "one trick pony" or not having enough clever ideas. Its core mission has always been total PC commoditization -- in other words, to define value itself only as the absence of cost. That road eventually leads nowhere.

HP, as Dell's main PC rival, stands to benefit most from Dell's mistakes. It can prosper even if it does not offer innovation leadership — if it just executes well. What about HP versus Apple? No one is suggesting that Apple's options fiasco, battery recall, or $100 million payout to Creative Technologies reveals strategic flaws. Even Tiger Woods hits one out of the course now and then.

What Drives Sustainable Innovation Advantage?

"You never know where a good idea comes from."

--Cornelius Vanderbilt

August seems like a good time to go back through the archives to see what "oldies but goodies" I might have missed from the strategy consultants I follow in this blog. It's also worthwhile to see how the ideas (and the cases cited to support them) that were presented years ago have actually played out since then.

Here's a really good one from Booz Allen Hamilton's strategy+business dated 5/11/2004 and titled, "Raising Your Return on Innovation Investment". The authors: Alexander Kandybin and Martin Kihn.

The article argues that returns from innovation investment are limited by the structure and process of your innovation value chain, consisting of four stages -- idea creation, project selection, development, and commercialization. If innovation isn't paying off like you want then you should both improve each of these stages individually and also improve how they work together as a unit. Some of that improvement can happen by outsourcing to get best-of-breed competencies in those stages that lend themselves to outsourcing -- i.e, idea creation and development.

I like this approach of "raising the curve" rather than just moving along it. I do however have issues with another idea presented in the piece - that of grouping all innovations into two key categories: "market based ideation" and technology. The former is about coming up with products or services that did not exist before (like Red Bull); the latter with coming up with new ways to produce or deliver existing products or services faster, better, or cheaper (like Dell laptops). The former are vulnerable to copycats; the latter to price cutting. Products that combine both approaches (like the iPod) deliver the highest return for the longest time. That's what the article says.

So, two years later, does this paradigm hold up? Yes and no. The article is right when it says technology leadership is not sufficient. But neither is it a requirement for sustainable innovation advantage.

For example, in 2006 Red Bull is still a category leader and I don't think it has to do with better technology. The same for the iPod, which is built entirely using parts and processes available to any manufacturer. What other player manufacturers don't have is iTunes or iPod's iconic industrial design. Even without Apple's closed digital rights management technology, FairPlay, iTunes would still seal the deal simply on an ease-of-use basis, creating as it does a seamless experience with the player. It's this ownership of the whole experience that really sets Apple apart -- for good or bad - and which is very hard to copy.

I do agree, however, that process innovation by itself is both too narrow and too weak a hook on which to hang sustainable innovation advantage -- because that advantage basically boils down to price. If that advantage ever goes away, what's left?

One Measure of Success

"My life has been the poem I would have writ,
But I could not both live and utter it."

-- Henry David Thoreau

Sorry, I haven't blogged for a while.

I've spent the last two months working nonstop in my "real" job. The client is a leader in quad-play IPTV technology. That's the World Cup on your 60-inch plasma or your mobile -- with live stop action, on-demand player stats, and the power to select your own camera view, or any other aspect of your entertainment experience via your laptop, handheld, or TV remote. (Whose technology? you ask. Hint: Check the fantastic quote on my homepage.)

I mention this engagement because it is why I haven't had time to blog. But it also gave me an idea for an interesting project. Here is the premise:

The most successful people are the busiest people and those are the people with the least amount of time to write their own success stories. (That's probably why Jack Welch is both retired and uses a ghost -- John A. Byrne). In fact, one litmus test of whether you are truly successful is whether you have time to explain why. If you are, you don't.

Among other things, that probably means that some of the best business cases -- the ones that offer the best lessons for others to follow -- are not being written. Yes, it's great to read about Jack Welch's or Lou Gerstner's exploits from years past -- and those are true classics. But wouldn't it be great to read stories told by people who are making their mark now? And are doing it in technologies and industries that require their full-time attention?

That's the idea behind my Heroes Project. I'm looking for today's unsung high-tech hero -- and I will write his or her business case for free. If you are one, or if you know of one, call me at 617-227-0987 and I will fill in the details. Or use this contact form. If I get enough interest, I will publish a collection.