Strategy. Innovation. Brand.
Developing a Habit of Innovation
Last week, we learned that there are least ten ways to build a corporate culture that stimulates innovation. But what about you personally? Are there habits you can develop that will help you develop innovative products and services? According to Clayton Christensen et. al. in The Innovator’s DNA, you can become more innovative by cultivating five specific habits and modes of thinking. Learn the basics in the video and then read the book – it’s worth it.
The Stack is Back
When I was getting my first taste of the computing industry back in the ’70s, most corporate customers bought “technology stacks” from a single vendor. I remember the DEC stack. You started at the bottom with the VAX — the machine itself. Then you added the operating system, VMS. On top of VMS — more or less in order — you added a file system (Files-11), a database (rdb), a network (DECnet), and maybe some applications (All-In-One). It all fit together rather nicely. Unfortunately, you also paid through the nose. Once you started building the stack, you could only buy the next layer from one vendor: DEC. You were locked in and ultimately paid whatever DEC wanted you to pay. All the vendors did it – IBM, Burroughs, UNIVAC, NCR, Control Data, Honeywell — so the only real competition was when you initially chose the stack.
Buyers ultimately revolted and the industry shifted to “horizontal layers”. You bought a machine from one vendor, an operating system (often UNIX) from another, a database (Oracle, Informix, Ingres) from another, and applications (J.D. Edwards, Lawson) from still others. Competition existed at every layer of the stack and prices declined dramatically. Margins did too. Of all the vendors mentioned in the previous paragraph, only the strongest, IBM, survived.
The downside, of course, was a huge integration problem. The layers didn’t fit together neatly and they weren’t tuned for each other. Software services companies grew rapidly and every application vendor had its own service business as well. Implementing software was lucrative and complicated. I once worked for an applications company that required nine working days just to load the software!
Recent announcements from IBM and Oracle suggest that the stack is back. Both companies are offering systems that are pre-packaged with layers of software and utilities. The machines arrive on your premises almost ready to run. (It still takes a few hours — but not days or weeks or months). You can still choose which applications to run on the top of the stack — though I suspect Oracle will soon package its applications as the “solution” layer as well. IBM has fewer applications to put at the top of the stack which suggests that it may be in the market for additional third-party application vendors. IBM and Oracle may be the only two vendors currently capable of offering complete bottom-to-top stacks. HP doesn’t have the applications. SAP doesn’t have the hardware. Amazon doesn’t have either. So what does all this mean? Less business for software implementation/integration companies. Fewer independent enterprise application vendors. And a titanic battle between IBM and Oracle to control the next phase of the computing industry.
KISS Your Brand
Many of my clients are small to medium-sized software companies. They love to talk about their technology and features in very serious tones. Unfortunately, all their competitors are doing the same. The result is a mishmash of jargon, acronyms, and general confusion.
Business executives — the ones who actually make purchase decisions — don’t really understand it all. So they opt for safety — a large company with a known brand. Generally, the safe choice is not my client. I tell my clients that they need to make a very simple, very clear statement of why they’re the better choice than the safe choice. Technical arguments don’t work well. Rather, the brand statement should revolve around a cluster of easily understood benefits, like flexibility, simplicity, or cost. Keep it simple and use a little humor to attract attention. Here’s how Lawson used simplicity and humor to project their brand argument: simpler is better.
Creating a Culture of Innovation
Can you create a corporate culture that stimulates innovation? Of course you can. In fact, according to the business writers Anthony Warren and Mark Turrell, there are at least ten attributes that will help you weave innovation into the very structure of your organization. This week’s video summarizes the ten attributes or you can read the entire article by looking up:
Anthony C. Warren & Mark Turrell, “Innovation Management in an Agile Enterprise,” Chapter 5 in The Agile Enterprise, edited by Nirmal Pal & Daniel C. Pantaleo, Springer, 2005.
RIM’s new ads say, “We’re dead”
When an established vendor dismisses an upstart’s product as a “toy”, it’s time to run for the exits. So I was surprised to see RIM’s new Blackberry ads in New York City. Earnest looking young men stare out from billboards under the headline, “We need tools, not toys”. Similarly, a business woman says, “I’m about action. Not distraction”. The ads deliver a clear message, “Our Blackberries are hard to use and completely out of touch with what consumers want today.” RIM to NY: “We’ve dropped dead”.
Clayton Christensen laid out the dynamic of the disruptive innovation more than a dozen years ago. A company establishes itself as a market leader by delivering more and more of what customers have always wanted. (Let’s call this WCHAW). For wireline phone companies, for instance, the WCHAW was voice quality. Customers had always wanted it and wireline companies assumed that they would always want more. Sooner or later, however, customers decide that they have enough WCHAW. It’s good enough, thank you very much. Customers don’t need more and they won’t pay for it either.
When customers reach this point, they start searching for something else — what customers want now (WCWN). This often involves products that are more convenient, easier to use, and less costly. When mobile phones challenged the wireline vendors, they were dismissed as “toys”. After all mobile phones delivered worse voice quality and voice quality was WCHAW. What the wireline vendors didn’t detect was that voice quality was good enough and that mobile phones delivered a new WCWN — mobility and general ease-of-use. When customer sentiment shifted, it did so quickly and forever.
RIM is now dismissing the new breed of smart phones as toys. It’s a self-defeating strategy. They’re saying, quite bluntly, that they can’t deliver what customers want now but they can happily deliver what customers have always wanted. They’re shooting themselves in both feet and doing it quite efficiently.
The odd thing is that RIM has an ace in the hole and they’re not playing it. RIM’s private network is much more secure than the public Internet. And customers have always wanted — and still want — more security. RIM should be talking about what makes them different rather than what makes them old and out-of-touch.
You can learn more about disruptive innovations in the video.
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