Bringing Tech to Market: The Rules of Innovation

Everyone knows that best-quality plus first-to-market doesn't always equal success. A Harvard prof who specializes in this stuff has a great article in Technology Review that digs a lot deeper, called The Rules of Innovation. It's a look at why some technologies are marketplace success stories and some are forgotten failures -- and more, an attempt at rules which predict which will be which. There are lessons here for the entrenched companies (e.g. Sony) as well as for the disruptive upstarts (e.g. Sony 50 years ago). You have to understand the battlefield to win the war.

Comments

What about the SoundBlaster principle?

[Anonymous Coward]

In computers, it's the SoundBlaster principle. If you're first, you win. Even if your technology sucks. Creative Labs was putting out the crappiest soundcards out there for a LONG time - and took the market. Same with Microsoft, and 3dfx... 3dfx managed to blow it, but for the most part, in the computer market, if you don't blow your lead... first wins.

That's why all the VC's went nuts trying to stake out .COM

Innovator's Dilemma

[geoffsmith]

This is the concept Christensen is famous for (and there is a book titled after it which you should all read) Here's my 10 second synopsis of Innovator's Dilemma:

Your old customers are demanding you spend all your resources on your old technology (eg. 5 1/4 inch disk drives) But there are new potential customers who want to buy new technology you haven't developed yet (eg. 3 1/2 inch disk drives) There are more potential new customers than old customers, and thus more profits in devoting your resources to new technology. But you already have your old customers, and you're supposed to *listen to your customers* So there's the dilemma.

Solution to the dilemma? Sometimes it doesn't pay to listen to your customers. And that's a tough pill for an established company to swallow, since that's how they made money in the first place.

Websurfing done right! StumbleUpon

Re:Dvorak Keyboard A Good Example

[outlier]

Let me provide a preemptive response to the inevitable post that will disagree with the parent post:

Whenever someone claims that the Dvorak layout is superior, there is usually a response that relies on the article The Fable of the Keys by Liebowitz and Margolis.

The Fable is written by two economists. They rebut the claim that the failure of the Dvorak keyboard to replace the QWERTY layout represents a market failure. Essentially, they say that Dvorak isn't much better than QWERTY so there was no real advantage to it, and it added costs.

I have no doubt that Liebowitz and Margolis are first rate economists, and that they know all sorts of things about nework effects and market externalities. What I do strongly oppose is their misreading of the cognitive psychology literature, and their unsubstantiated and overblown attacks on August Dvorak.

I am a cognitive psychologist. I've read the literature. I understand my field, and it is apparent that the bias that Liebowitz and Margolis bring to their evaluation of the literature taints their paper. I make no claims about their economic arguments, but they have done their readers a great disservice by unfairly treating their subject (whether out of malice, bias, or incompetance).

For a decent layman's response to The Fable, check out this page

</rant>

The bottom line is that Dvorak is about 10% faster than QWERTY, given the same training. This is substantial, but one must consider that most of the time it takes to compose a document is not typing time, but rather content generation (e.g., thinking about what to say). Therefore, someone like a transcriptionist would benefit from a superior layout more than a typical knowledge worker. In addition, there's pretty good evidence that Dvorak error rates are significantly lower than QWERTY rates. This isn't as much an issue with computers as it was with old typewriters (it takes more time use use whiteout than it does to hit the Backspace key). There have been claims that Dvorak layouts reduce the likelihood of RSIs. There haven't been any really good studies, and it is unlikely that there will be (given the small number of Dvorak users)

I use a Dvorak layout, and I enjoy it for a number of reasons:

* I type a bit faster, but it is probably due to the fact that I engaged in dedicated practice when I learned to type Dvorak.
* People don't ask to use my computer
* I gained a lot of insight about the process of skill acquisition when I learned the new layout.

Oh, and I can still type pretty decently on QWERTY keyboards.

Early with great technology doen't always help

[eyegor]

A few years back, I worked for a small company that was developing a cell phone localization technology. We had a patent on one of the primary means of locating an unmodified phone (worked rather well too). The problem was that while we were developing the technology, we had to beat people over the head at the same time to make them see how valuable the idea was.

Nowdays, the FCC and all the carriers are still trudging towards the goal of fully implementing E911 and we ended up having to sell out to a competitor having spent too many resources building the market. sigh. :)

Sound like ... Punctuated Equilibrium

[AsOldAsFortran]

One element of this article sounds just like Stephen Jay Gould's evolutionary theory of Punctuated Equilibrium.

IANAET (evolutionary theorist) so take these comments with care.

One element of the theory of punctuated evolution says that new species arise not by direct competition against their parent species, but by finding an isolated and protected niche where they can develop.

Say a new species of horse is to develop. A subpopulation becomes isolated and has a chance to develop new characteristics and to become reproductively distinct (no longer interbreeds with the parent species).

Then, when the geographical isolation ends, the new and parent species come into contact and competition. The new species spreads rapidly, having had a chance to strengthen in isolation.

This theory is designed in part to explain gaps in the fossil record. The small, original populaiton of the new species leaves few fossils - we only see them after explosive growth - so some intermediate forms are lost.

That sounds like the article's model of innovation succeeding by finding a niche market before improving the product to compete head on head in the general marketplace.

Wonder what other analogies exist with evolutionary theory and this article.

Art v. Science

[mallo]

After reading the article, the one thing I want to do is hear from Akio Morita about why his intuitions were so often correct at Sony. Doesn't that put a lot of MBAs out of jobs?

Re:Sony

[shrikel]

I think the "intuition" he was referring to is Morita's dreams that people would buy things -- but those innovations were based on a real understanding of how people live and what people do. Like the walkman -- people jog, and people travel -- wouldn't it be great if they could listen to music while they do it?

VC's nowadays who use just their intuition probably don't succeed as much because they don't know what makes an innovative company succeed and what makes it fail. To overcome this problem, they use statistics and keep a large portfolio so they can make a profit even if a lot of their companies fail.

The point of the article, at least in my mind, is to show the VCs what they need to know to make more intelligent bets. In short, this study tried to figure out the attributes of innovative companies that really succeed.

I think the analysis and prediction on the part of the investors could (and should) more closely resemble the intuitive product selection and development by Morita and his group.

Just my thoughts.

What I find the most disturbing....

[feloneous cat]

disrupting competitors, not customers

Okay, so what is the best way to disrupt your competitor? What, you say, build a better product? NO!!! Dammit! Hire lawyers! Lots of 'em for frivolous lawsuits. Why? It slows down the competition so a) you can keep a weak product on the market longer b) if you are damn lucky, you can kill their product.

I have worked for a lot of companies and have been surprised at the number of frivolous lawsuits that do PRECISELY that. I really don't consider that "competing" (which is what "competition" is about, right?). Isn't the point to build better products? Last I looked, lawyers really weren't considered to be a part of economic theory (but, hey, economic theory says monopolies provide the lowest priced goods - guess there are flaws in everything, eh?).

So, if we look at Microsoft, in essence they did EXACTLY what this guy says is successful. The question is, was it ethical or moral? And my grandfather could have made children work in coal mines for slave wages while he got rich, but noooooo, he had this damn ethical streak!!! So now instead of a billionaire, I'm a working stiff. Doesn't seem fair in the end does it?

Expect more folks to be following the Microsoft model [sigh]...

C's rule #4

[wytcld]

He says to disrupt your competitors, not your customers. If we consider this gem against the wisdom of Douglas Adams, we can guess that Christensen believes your customers are over 35:

I've come up with a set of rules that describe our reactions to technologies:

1. Anything that is in the world when you're born is normal and ordinary and is just a natural part of the way the world works.
2. Anything that's invented between when you're fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it.
3. Anything invented after you're thirty-five is against the natural order of things. (The Salmon of Doubt)

Isn't it safe to say, and to bet your business, that some people (ever over 35) want to be disrupted? And does Christensen actually know any of the students at MIT?
___

Relation to open source - in particular Ant.

[ajm]

Previously I've attempted a description of the success of an Open Source product, Ant, in terms of the Innovator's Dilemma. I think the fit is very good, provided you recognize how the rewards and costs should be measured in the OSS environment. If you are interested it can be found at Ant as an Example of the Innovator's Dilemma. Now I'll have to go back and see how Ant matches against the guidelines in the article, so far it's looking pretty good.