Strategy. Innovation. Brand.
Innovation: Ideas That Generate Ideas
It’s not a reef. It’s a platform.
I’ve spent the past several days in the Minnesota woods at a client’s executive retreat. The client is a software company that has made a number of acquisitions over the past few years. A good portion of the discussion at the retreat focused on how to build a platform that can: 1) integrate the various acquisitions; 2) deliver a common interface; 3) simplify the support load; 4) provide a foundation for developing new functionality more quickly.
The discussion got me thinking about platforms — innovations that generate innovations. I’ve written a lot about innovation over the past year and especially the role of serendipity and mashup thinking. I’ve generally focused, however, on innovations as an end result. In other words, we adopt certain behaviors and modes of thinking and the result is an innovation. We then repeat the process and (hopefully) get another innovation. Creating the innovation essentially ends the process.
Platform thinking, on the other hand, can lead us to innovations that spawn innovations. As Steven Johnson points out, platforms abound in the natural world. Johnson builds an extended metaphor around the coral reef — a platform for unimaginably rich plant and animal life. Once the process gets started (in an otherwise barren sea), the reef builds a virtuous circle that attracts and facilitates multiple life forms. Part of the secret is collaboration. The CO2 that one animal gives off as waste becomes the building block for another animal’s home. Similarly, oxygen is a waste product for some reef denizens but the lifeblood of others.
In the human world, the Internet is probably the best recent example of a platform. The Internet creates both serendipity (we get to meet lots of people) and mashup thinking (we can easily find lots of new ideas to mash together). The Internet also takes care of a lot of the dirty work of information sharing. Just as the coral reef makes it easy for many animals to find a home, the Internet makes it easy for people like me to create websites and share information. We often hear the metaphor of researchers standing on the shoulders of giants. My website is standing on the shoulders of a very rich (and essentially free) technology stack.
Platform thinking is innovation taken to the next step. We think about how to create something that creates something. I’m generally a proponent of free markets, but Johnson makes as strong argument that the most fundamental platforms come from public agencies. Certainly, the Internet did not come from market-driven competition. Rather, it resulted from the collaboration of many specialists from many disciplines in an open environment. That’s pretty much like a coral reef.
So, what’s the next platform? I’m guessing that it’s a mashup of: 1) the human body, 2) secure communications, and 3) Internet sensors. We already have millions of Internet sensors monitoring the environment — everything from air pressure, to ocean salinity, to volcanic pressures. The next frontier could well be sensing human health conditions. We already have wearable condition monitors. For instance, friends of mine run a small company in Denver called Alcohol Monitoring. They provide a wearable device, with secure communications, that alerts probation officers when one of their wards has been drinking. Within a decade, I’d guess that health condition monitors will migrate from outside the body to inside the body. They’ll provide critical data that can help us foresee — and forestall — health crises. They’ll also provide a platform for a huge wave of new ideas, services, and fortunes. Sounds like a coral reef.
Want to Be More Innovative? Move to Boulder. Or Sweden.
In an earlier post, I pointed out that cities generate much more than their “fair” share of innovations. The reason is simple: there’s more opportunity to run into new ideas, concepts, and people. It turns out that innovation is even more concentrated than I thought. Just 20 of the America’s 370 metropolitan statistical areas — accounting for 34% of the population — produce 63% of the nation’s patents. The top five patent-producing metropolises in the U.S. (in order) are: San Jose, CA, Burlington, VT, Rochester, MN, Corvallis, OR, and Boulder, CO. These areas account for 12% of the U.S. population but 30% of American patents.
The finding comes from a new Brooking’s Institute report on patents. Some other highlights:
- The pace of patenting in the U.S. continues to climb. The growth of patent applications slowed after the IT bubble burst but is now at an all time high.
- Though the pace has increased, the U.S. ranks ninth in the world in terms of patents per capita. The countries ahead of the U.S are (in order): Sweden, Finland, Switzerland, Israel, the Netherlands, Denmark, Germany, and Japan. (Those pesky Scandinavians are at the top again).
- The average patent is worth about $500,000 in direct market value — and much more as it diffuses through the economy.
- The last period of great patent growth in the United States fell between the Civil War and the early 20th century. We “democratized” invention during that period — with many patents coming from blue-collar workers who were not professional researchers. Today, patents are more complicated, more difficult and expensive to obtain, and require more education. The ability to create patents is concentrated in fewer organizations in fewer places.
- The price per patent is rising in the U.S.. From 1953 to 1974, $1.8 million in R&D spending generated one patent. Since 1975, the cost has been $3.5 million (in inflation adjusted dollars).
- Almost half (48%) of the patents granted in the U.S. from 2006 through 2010 could be grouped into the Big Ten categories: Communications, Computer Software, Semiconductors, Computer Hardware, Power Systems, Electrical Systems, Biotech, Measuring & Testing, Information Storage, Transportation. The top five categories account for slightly more than 30% of all patents.
- Patent ownership has become broader and more competitive. Of the top ten patent producing companies from 1976 to 1980, only four were in the top 10 in 2011-2012: IBM, GE, GM, and AT&T.
- The federal government dominated R&D spending up to approximately 1970. By the late 1970s, the federal government share fell below half. In 2009, the government share of R&D spending was about one-third. Roughly 60% of federal R&D spending goes to private companies, 30% goes to universities (including university-administered national labs).
- Metropolitan areas that lead in patent production also lead the nation in terms of of productivity growth. They also enhance local employment opportunities and generate a disproportionate number of initial public offerings (IPOs).
The Brooking Report provides ample evidence that the research and innovation that lead to patents has a dramatic impact on local economies, employment, and growth. Bottom line: if you want your city to grow, don’t build a football stadium. Build a research university. Or move to Boulder.
Innovation and Memory
What was the other half of my idea?
Do you forget stuff? Yeah, me too. It makes it harder to be innovative.
The trouble is that innovative ideas don’t come all polished up and wrapped in a pretty bundle. When a creative person describes her process, it may seem that innovative new ideas arrive in a flash of insight. That’s a nice way to tell a story but it’s not really the way it happens.
In truth, innovation is more like building a puzzle — when you don’t know what the finished piece is supposed to look like. You collect a piece here and a piece there. Perhaps, by putting them together, you create another piece. Then, a random interaction with a colleague supplies another piece — which is why random interactions are so important.
Each piece of the puzzle is a “slow hunch” in Steven Johnson’s phrase. You create a piece of an idea and it hangs around for a while. Some time later — perhaps many years later — you find another idea that just happens to complete the original idea. It works great if, and only if, you remember the original idea.
In previous posts on mashup thinking, I may have implied that you simply take two ideas that occur more or simultaneously and stick them together. But look a little closer. One of my favorite mashup examples is DJ Danger Mouse, who took the Beatle’s White Album and mashed it up with Jay Z’s Black Album to create the Grey Album, one of the big hits of 2004. But how long was it between the White Album and the Black Album? Well, at least a generation. I remember the White Album but not the Black Album. I think our son is probably the reverse. Neither one of us could complete the idea. DJ Danger Mouse’s originality comes from his memory. He remembered a “slow hunch” — the White Album — and mashed it into something contemporary.
So, how do you remember slow hunches? By writing them down. In fact, that’s one of the reasons I started this blog — so I won’t forget good ideas. I can now go back and search for ideas that I thought were important several years ago. I can recall them, put them together with new hunches, and perhaps create new ideas.
I like to read widely. I’m hoping that ideas — both old and new — will collide more or less randomly to create new ideas. Unfortunately, I often forget what I read. With this blog, I now have a place store slow hunches. And, since it’s public, I’m hoping that you’ll help me complete the cycle. Let’s get your random ideas colliding with my random ideas. That will help us both remember, put our hunches together, and come up with bright new ideas. Sounds like a plan. Now we just need to remember to stick with it.
Sunday Shorts – 5
The next mobile app platform?
Some interesting things I spotted this week, whether they were published this week or not.
The Economist asks, will we ever again invent anything that’s as useful as the flush toilet? Is the pace of innovation accelerating or decelerating? And what should we do about it, if anything?
When we think about innovation, we often focus on ideas and creativity. How can we generate more good ideas? But what about the emotional component of innovation? For innovative companies, emotional intelligence may trump technical intelligence. Norbert Alter answers your questions from Paris.
We’re familiar with the platform wars for mobile applications. Will Apple’s iOS become the dominant platform? Or maybe it will be Android from Google? Perhaps it’s some version of Windows? But what if the next great mobile app platform is a Ford or a Chevy? (Click here).
For my friends in Sweden, here’s McKinsey’s take on the future of the Swedish economy. Things are looking up — just don’t rest on your laurels.
Where does America’s R&D money go? Here’s an infographic that shows how the Federal government has invested in research over the past 50 years.
The Greeks had lots of tricks for memorizing things. They could hold huge volumes of information in their heads. But does memory matter anymore? After all, you can always Google it, no? William Klemm writes that there are five reasons why tuning up your memory is still important. And he’s a Texas Aggie so he must be right.
Innovation and the Installed Base
How could God create the entire universe in only six days? He didn’t have to worry about an installed base.
Need to upgrade to Universe 2.0?
It’s fairly easy to innovate technically when you don’t have customers. You can adapt new technologies or new ideas without fear of alienating current users. Once you have customers, you have to pay attention to their needs. That includes the ability to upgrade seamlessly from one generation to another. Your customers feel that they’ve paid you money for a long time so their needs should dominate your planning. That may mean that you have to slow down new releases of your product to help your installed base tag along.
Think about it this way: which company is more innovative: Apple or Microsoft? Most people would say that Apple is far more innovative. But which company takes better care of its installed base? By and large, Microsoft has. When Microsoft releases a new operating system, they actually test to determine if old applications will run on the new platform. Apple is much quicker to dump the old stuff to keep the new stuff coming. The latest example is the new plug for the iPhone 5. If and when I upgrade to the iPhone 5, I’ll obsolete half a dozen perfectly good cables that no longer fit. That’s irritating but it may well get me into new technologies that work better than the old.
So do innovation and good customer care always conflict with each other? Not necessarily. Your fundamental commitment to customers is not that you’ll help them to move from release to release. Your promise is actually simpler — that you’ll stay in business to continue to serve your customers. I’m a veteran of a number of companies that no longer exist. Our customers were totally out of luck — they got nothing. Much better to give your customers something new — even if it entails ripping out the old — than it is to give them nothing at all.
When is it acceptable to ship an innovation that disrupts your installed base? I think there are two answers: 1) When a new technology emerges that allows you to provide much better solutions at a lower cost. You need to hop to a new platform to take advantage of the change. I saw this happen in the transition from host-centric to client/server software. It’s happening again today with cloud computing and mobile platforms. 2) When a competitor is shipping a solution that will disrupt your relationship with your installed base. Better to disrupt your own base than to let someone else do it for you.
And, how do build innovative new solutions while also maintaining and developing your traditional, bread-and-butter products? It’s not easy. The best answer I’ve seen is the ambidextrous organization which you can read about here.
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