Product Success and Innovation

December 23, 2010
I’ve written about innovation a few times and I admit it’s a subject that intrigues me and that I think about quite a bit. We’re in an industry that is driven by innovation, although I suppose that’s true of most industries, I’m just more familiar with tech. Anyway, there are a bunch of dimensions that you can use to look at innovation.

I’ve written about innovation a few times and I admit it’s a subject that intrigues me and that I think about quite a bit. We’re in an industry that is driven by innovation, although I suppose that’s true of most industries, I’m just more familiar with tech. Anyway, there are a bunch of dimensions that you can use to look at innovation. I posted before on one, continuous versus discontinuous or disruptive innovation, a dimension that I think is particularly important in software. I won’t rehash that post today.

Another dimension is first mover versus fast follower. Intuitively first mover seems like a natural advantage but history doesn’t always support that. In fact some software companies have used fast following as an overarching  business strategy, Autodesk with it’s 3D CAD products for example.  Some of the current market leading products are actually results of fast following, although in some cases the follower is arguably the more innovative product. For example,  JumpStation and the World Wide Web Worm were the first search engines and Excite was the first to build a search ranking algorithm but no one would argue that Google is the dominate innovator in the search market. Even having the “best” technology doesn’t guarantee success though, Betamax / VHS is a popular example of that concept.

Innovation can also take the path of business model innovation. A product might not be innovative at all but could capture share purely based on the way the product comes to market. The concept that value creation can be moved around in a business model is a huge innovation that directly fueled Google and many others. Indirect revenue through ads, promoted Tweets, freemium products, etc. are gaining lots of momentum and are seen as “respectable” business models.

Looking at innovation from a competitive angle its arguable which results in the biggest advantage, the first mover or the fast follower. It’s getting to market with the right product (the right feature set) at just the right time, which when written down sounds more like art than science. Some of the more dominate products today are second (or third, forth, etc) generation products that offered a follow on innovation. Specifically I was thinking about the iPod, not the first MP3 player by any means but certainly the market leader. I always felt that Apple’s innovation here was iTunes, not the iPod, at least the first generation iPod. The combination of good design with Apple’s famous ease of use paradigm through iTunes simplified the process and opened it up to non-techies. Now you might argue that later the iPod Touch was it’s own innovation or I actually the iPhone / iPod Touch together. The shift to touch interface for smaller form factor devices is a clear innovation and for me, changed the way and the amount I used the device. I wouldn’t want a device without the touch interface now (I have a company provided Blackberry that I almost never use because of that issue).

Look at touch computing in general. The iPad is the dominate product and for the first time, much like the iPhone, is a main stream acceptable tablet device. Now it’s certainly not a first mover product, although Apple itself was the first mover in the tablet market with the much maligned Newton (at least I think they were first, if not first then loudest). Other vendors tried tablets, there were a bunch of Windows based tablets and convertibles in the early 2000’s which were a horrible failure. In that case the interface, a stylus, and the operating system, Windows, did not create an acceptable user experience (I’m being too nice, the user experience was awful, even worse than the regular Windows experience). The iPad, building on the innovations of the iPhone / iPod Touch, has the optimal user experience available on a tablet, touch interface with an OS that was build for mobile, touch devices.

So successful product innovation can build on previous failure, in fact maybe that’s one of the best ways to get to this magic combo of right product at the right time. Innovation can also be purchased, okay that sounds a little flippant but it’s true. It can also come from outside the mainstream of the company through subsidiaries. Sometimes the culture that stifles innovation is so strong that the innovations must come from outside.  Look at motion video gaming, the Wii had first mover advantage and captured solid share. Although there was no fast follower, this year has seen Sony rollout Move and even try to mimic the Wii party game approach to pull in new user types. Even though it does add in a camera (Playstation Eye), it’s a clear Wii follow and as such is not innovative (nor does it seem to be making much headway in the market). The real innovation in a follower in motion gaming comes from Microsoft with it’s Kinect add on for the Xbox 360. The technology was developed by 2 organizations, Rare, a subsidiary of Microsoft Gaming Studios and PrimeSense, an outside firm. While I’ve stated before that there’s a strong link between company culture and innovation and that in general Microsoft’s culture does not allow innovation to thrive, in this case the use of outside sources to the innovation process resulted in a game changing product (pun intended). And by the way, it’s also an important talent to recognize when to use partner technology as a part of the “right offering at the right time”.

The other source from innovation that gets a lot of coverage lately is innovation through co-innovation relationships. In a world where social is moving into the enterprise and where businesses are learning to live in a hyper-connected economic environment, co-innovation offers some interesting opportunities where the sum of the parts can equal more than the parts themselves. In a new generation networked business innovation could come from any node or combination of nodes in the business network. Leveraging partners, suppliers and customers to help drive innovation into an enterprise is a powerful concept and a logical extension to the social business. In the network each node depends on the success of the whole so is incented to participate in the innovation process, producing the most successful products and services possible…system health is key to the health of each node.

The event that started me thinking about innovation this time was a statement from Microsoft CEO Steve Ballmer recently when talking about bring to market (next year) a tablet / slate computing device that would be an iPad killer. Now I could jump into one of my rants on why this is a ridiculous statement, but I’ll contain that, no one really gives it much credibility anyway. The thing that jumped out to me was, why waste time on being a slow follower into a market that’s already crowded, instead wouldn’t it make more sense to try and compete from strength and go after the “next” innovation? Rather than trying to copy someone else’s innovation with technology that’s not optimized for the contest wouldn’t a strategy of using your own corporate strengths to find a place in the market where you can really differentiate your business give more chance of success? Companies that already have category killer products have a tendency to use their resources to try and get into markets where others have innovated, the fast follow approach. They don’t have the same resource constraints as companies that are trying to break into their first killer product. That’s fine as a strategy but the problem lies in culture and understanding the unique strength of the company. Just because another company has the right product at the right time does not indicate that you can reproduce that event by following, each opportunity and company is unique and should be examined in that light. Does the opportunity play to your strengths, then go for it…if not, find your own innovation (or buy it, partner for it, co-innovate…you get the idea).