How to make millions in the new economy

How to make millions in the new economy

Face it. Today everything is so connected and time to market so short, that the only real competitive advantage that has slowly crept up on us, is innovation. The surge of interconnected ICT has also fuelled the fire. [1] Although one might qualify innovation as ‘radical’ or ‘incremental’, it’s a very slippery bar of soap to get a handle on. But get it right and you get to clean up.

Although there are companies where innovation sits comfortably with their core capabilities, when Steve Jobs was asked how to systemise innovation his answer was “you don’t”. [2] So there goes the theory of a unified equation for innovation.

However, there are common challenges that, when overcome, will increase the propensity for innovation. (Adapted from Scott Burken’s The myth of innovation) (1)

1. Finding Ideas

We all know what it’s like to sit around the boardroom table trying to come up with innovative ideas. At best you come out with an ‘acceptable’ answer that is an incremental improvement at best. The idea that gets the most ‘noddies’ gets the green light. Is that really the best way to be innovative?

2. Finding solutions

An idea is one thing; getting it to work is another. Leonardo da Vinci designed a helicopter in the 1500’s. It could only be implemented when technology caught up.

3. Scaling up

You’ve made a prototype; now can you make 50,000? The digital world has been highly attractive, because a virtual presence is easy to produce. But then scaling up becomes a challenge with all the noise from other developers who have been attracted by the same low barriers to entry.

4. Bringing it to market

The wheel, the steam engine and, believe it or not – freeze-dried foods – were all invented before 100BC. There are numerous examples of innovations lost to civilisations due to something as basic as marketing. There’s a lovely scene in Dr. Strangelove where the USA had developed a doomsday machine which would wipe out all mankind if the country was attacked by a nuclear weapon from Russia. Unfortunately it would only work if the Russians knew about it. A US plane carrying an atomic bomb had mistaken an exercise for the real thing and was heading towards Russia to drop the bomb. There would obviously be a nuclear retaliation setting off the doomsday machine. Peter Sellers’ character (of which there are many in the movie) points out the omission: “Of course, the whole point of a Doomsday Machine is lost, if you keep it a secret! Why didn’t you tell the world. Eh?”

5. Competition

Even I was developing a YouTube-like site before YouTube existed. And I was probably not alone. Of the thousands who had the idea, there was only one winner. If you went into YouTube’s history I wouldn’t be surprised if they overcame these challenges faster and better than the rest of us. Bill Gates did not have the only operating system; Jeff Bezos of Amazon did not have the first online store.

6. Timing

Cars are rated in horsepower and electric lights in candlepower. That should give you some idea of how people adopt to new ways of doing things – they base it on what they already know. The iPod wasn’t that much of a revolution – we had the Walkman years before. As great as your innovation is – is the market ready?

7. Keeping the lights on

It’s fun to innovate. However, you either have to explain to the board why the ROI has been delayed (and you need more funds), or if you’re an independent entrepreneur you will need to explain to your family why the power has been cut. As distasteful as this may sound, and contrary to the myths of famous inventions being rejected outright, sometimes you need to act like an astute boxer who wants to fight another day: throw in the towel. Government would be advised to heed this with things like the pebble bed reactor that was closed, but not before nearly R10bn of mostly taxpayer’s money had been spent. [3]

8. Resources

The concept of Strategic Intent promulgated by Hamel and Prahalad states that companies that had risen to global prominence in the preceding 20 years did so because their ambitions were out of all proportion to their resources. They did what they had to do, not what they could do. [4]

References
1. Peter Nielsen. The human side of innovation. Aalberg University Press, 2006.
2. Adapted from Scott Berkun. The Myths of Innovation. O’Reilly Media, 2010.
3. SA mothballs pebble bed reactor
4. Gary Hamel, C.K. Prahalad. Strategic Intent. Harvard Business Review, Jul – Aug 2005.