Host: Charlie Goodyear
Discussion Leader: Art Baron
DISCUSSION OUTLINE ON INNOVATION
Current Affairs, June 18, 2020
AGENDA:
- The Science of Innovation
- The Digital Age . . . a Multi-Decade Transformation
- Winners and Losers . . . Lessons Learned . . . Market Considerations
- COVID . . . a Present Day Catalyst
- Potential Future Industry Disruptions
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- The Science of Innovation
Innovation: The process of translating an idea or invention into a product, service, or business model that creates value for which customers will pay.
Peter Drucker: “The Discipline of Innovation” HBR, August 2002 https://hbr.org/2002/08/the-discipline-of-innovation Areas of Opportunity: Unexpected Occurrences, Incongruities, Process Needs, Industry & Market Changes, Demographic Changes, Changes in Perception, New Knowledge
Clayton Christensen: theory of “disruptive innovation”, first introduced in his 1997 book The Innovator’s Dilemma. Key insights: S-curve, market-creating innovations drive growth, (vs sustaining or efficiency innovations), innovations often come from outside the established incumbents.
Henry Ford: “If I had asked people what they wanted, they would have said faster horses.” Steve Jobs: “You can’t just ask customers what they want and then try to give that to them.
“Inspiring Innovation”, HBR August 2002 https://hbr.org/2002/08/inspiring-innovation
Other Key Enablers: Simplicity, Focus, Diversity, Cross-discipline, Innovation Culture, Risk Acceptance . . . overcoming resistance to change
- The Digital Age . . . a Multi-Decade Transformation
- Dramatic transformation fueled by, (among other things), Moore’s Law, Metcalfe’s Law
- “The Consumerization of IT”
○ Increasingly, employees had more capabilities at home than at work
○ Trickle down from consumer market to enterprise market, (much like prior generation trickle down from Military and NASA to private sector)
- Adoption rates of digital products accelerating virally. Many digital products have near zero marginal cost.
○ Time to reach 50 million users
■ Automobiles, 62 years
■ Telephone, 50 years
■ Credit Card, 28 years
■ Mobile Phones, 12 years
■ Facebook, 3 years
■ PokemonGo, 19 days
- Brand new product categories, e.g. Streaming content, Smart phones, Virtual Assistants, AI, Social Media
- Increasingly Mobile First as the Innovation platform
- New Business Models are Transforming Industries
○ SaaS, Cloud . . . new players, e.g. SalesForce.com, Workday
○ Sharing Economy . . . Uber, Lyft, Airbnb
- Crisis driven change and leadership, e.g. Estonia, cyberattacks, 2007
- Winners and Losers . . . Lessons Learned . . . Market Considerations
- Top valued companies as of 3/31/20: Microsoft, Apple, Amazon, Alphabet, Facebook.
○ Leadership with brand new product & services categories
- Why did Microsoft miss the Internet in the mid-90’s, but recover and thrive, while Digital Equipment missed the microcomputer in the 80’s and didn’t
- Blackberry vs iPhone . . . dynamics in the marketplace
- Industry evolution:. Visacalc and the PC, then Lotus 123, and then Microsoft Excel
- Early internet successes, (AOL and Yahoo), superseded by newer ones, (Google and Facebook).
○ As consumers became more proficient with the Internet, the access advantages of AOL and Yahoo gave way to the continuous innovation of companies like Google and Facebook.
- Xerox Parc, (GUI and Mouse), vs Apple
- A 19th Century Example: Steel industry leadership shift from U.K. to U.S. with Carnegie Steel’s adoption of Bessemer Steel Process.
- Fast Company: The World’s Most Innovative Companies, 2020 and 2019
https://www.fastcompany.com/most-innovative-companies/2020
https://www.fastcompany.com/most-innovative-companies/2019
- COVID . . . a Present Day Catalyst
- Medical: Vaccines, Therapies, Ventilators, PPE,…
- Telehealth: technology available for years, but limited adoption due to business model, (insurance, provider fees) —> current urgency now driving coverage and deployment. Many post-COVID benefits.
- Online services
○ Collaboration and Work from Home
■ Zoom Video, simplicity vs competition, 20 million to 200m users, fierce competition: Microsoft Teams, Google Meet, Facebook, Apple,…
■ Consumer apps, e.g. Caribu
○ eCommerce Delivery, e.g. Amazon, Walmart
○ Food delivery services, Restaurant services, Supermarket delivery, Instacart
○ Location services enabling individual tracking, social distancing compliance, temperatures, etc.
○ Behavior change, e.g. increase in digital banking across populations, Gucci, reducing runway fashion shows
- Potential Future Industry Disruptions
- Healthcare
- Education, new cost dynamics, pathway for greater equality and opportunity
- CyberSecurity
- Food Supply, risks, (global hunger, climate change, drought, income security), reduce waste, (e.g. Apeel Sciences), new sources, (e.g. Beyond Meat, milk substitutes), new processes, (e.g. precision agriculture, restaurants delivery, kits, home cooking)
- Environment, Efficiency, Energy Transition, Pollution, Advanced Manufacturing, Circular Economy, Hydrogen, EVs
- Social/News Trust and Accountability, beginning to see some take action, (Twitter, Zoom), but others resist. Much more is needed given the harmful power of digital media.
- Resilience, Markets, Supply Chain, Transportation, Financial Systems, Global/Deglobalization Balance, . . . .
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