Disruptive Innovation

Some companies struggle to bring the next thing to market in order to (attempt to) preserve market share and customers.

Why do we want innovations yet fear innovation?

Working as an advisor to early stage tech startups, at various stages of their maturity, while also drawing on over 30 years of experience in small tech companies I am realizing that the resistance to innovation is not just a big company problem.

“…we have met the enemy of innovation and he is us…“

I was surprised that this was a startup issue (or maybe not) as much as a big company problem. It is easy to copy an idea that is already in market, to think you can make it better. To try to build a clone of the successful product. This is a classic engineering trap, identify an issue in a product and assume there is a market in fixing that small issue. Customers don’t want more of the same, if the product is the same why would they change? They will be interested in something new, something that makes their job easier, or addresses their business issues in new ways.

When startups do this well it can still be a struggle to break into the market. But, if the product is truly innovative it will find its way to customers. How many times you have been asked this question by a company executive, or internal marketing rep…

“…I was talking to XXXXX at the trade show, they just released a new product that is going to kick our ass, we need sometime new, what can you build for us?”

Which always seems to come soon after a meeting where your team demonstrated something new, or suggested, for the 100th time, that your product line should be upgraded, overhauled, or thrown out. These suggestion from within are usually met with the response…

“Why would we spend time/effort/money on that, the product is selling just fine.”

Sales and marketing (and executives obviously) love customers, and love the revenue stream and predictability that comes with it. They fear, and rightly so, anything that threatens that predictability.

They invariably find themselves in this self-contradictory position. While recognizing immediate external threats to their products and ongoing revenue they fail to recognize that allowing a product to get mired in it’s existing feature set literally ensures this future situation.

It is very difficult to innovate. It is even harder to innovate with a sword hanging over your head. Companies need to innovate before it is required, so they can be the ones to introduce the next great product and not some faceless competitor.

Don’t fool yourself into thinking no one is coming for you. If you have a customer base, of any size, some other team will be looking at it to determine if they can take some or all of that market. It is a guarantee that someone…someone else…is spending the time and effort to innovate in a market where you and your company are cowering, hoping desperately that your customer will be happy with the current/next version and will upgrade, enabling you to make your sales numbers for the next quarter.

An even more difficult pill to swallow for an in-house development team is the dreaded lunch room conversation with the same team that rejected the last new idea from your R&D team…

“I met these guys at a party/at lunch/on a cold call, they have some really cool technology, we should get a partnership going”

Seriously??? You know you have an internal team that knows the product, the market and the customers better than anyone else.

Are you letting them innovate?

Have you asked them to innovate?

Have you forced them to innovate?

While bringing in external partners can be good, if it is complementary and not overlapping, it is the best way to stifle innovation inside your company. Your internal team will get the sense that their contributions are not valued and they are not being given a chance to produce exciting new tech. They know they designed the current product and are desperate for the chance to build the next one.

Product creation is not magic, innovation is not free. Every product that appears on the market and takes your breath away is a result of months and years of trial and error, customer feedback and re-work. It only looks like magic because you don’t know about it until it was launched.

Innovation can be very disruptive; disruptive to the products already in the market. Don’t fool yourself, there will be disruptive innovation in your market if it is successful in any way. They (the innovators) will come for you and your healthy sales margins. This is one of the things I tell the startups I advise, don’t be afraid to go after the established companies. Look for niches where they don’t sell, of course, but look at their existing products, read their support forums, look for customer dis-satisfaction and target your product there. It is rare these days that customers are truly locked into a platform, they want to be efficient in their business space, if their current tools are not cutting it they will jump.

If you are in a small or medium size company that has been around for more than 2 or 3 years, in all likelihood, your product was developed by a group that is no longer with the company. A group that innovated because they had to, because they had no product to sell, because they were selling into an existing market, against a larger competitor and had to innovate in order to make any sales at all.

Success can ultimately be self-defeating. Your company will become complacent as it gets addicted to it’s sales and profits. Sales are a good thing, and sales, obviously, are necessary for the company to move forward but sales can kill innovations. Sales can make you afraid to innovate, afraid to rock the boat and afraid to upset your customers by potentially getting the next version wrong. Sales will make you chase new features and customer specials. Your product will become a ball of duct tape, instead of creating the next great thing. I worked for a company many years ago that had 25 versions of their product, each one with no more than 2 or 3 customers represented. This ultimately sunk them as they refused to do anything to consolidate the versions while support of these variants consumed more and more of their development resources.

Don’t fool yourself though, those same customers that you are so carefully protecting from disruption by any internal innovation are looking at each new product that comes across their desk and will jump on the one that thrills them, dropping you like a hot potato.

What is the solution? I took a course in startups a long time ago and the one comment that stuck with me was…

“If you have developed a successful product, sell it and start again”.

Which is a radical way of looking at it but it goes to the point. If you are good at innovating new products, do it again, and again. Now maybe this stuck with me because I agreed with it, which is how lemmings fall over cliffs, but the core of the comment leads back to where we started. Don’t become complacent, don’t become addicted to your sales, don’t believe your own sales bullshit, don’t believe you are the best.

A better product will always come along, a different way of solving the problem, a disruptive innovation.

Things to try…

• Challenge your internal resources to innovate, and not just in product development. Don’t ignore product evolution but let your team think up ways to go in different directions.
• Challenge your sales team to find better ways to sell and to sell to new markets.
• Challenge your marketing team to find different ways to generate leads, do not become complacent.
• Challenge you support team to get faster at responding to customers issues.
• Give your development teams time to experiment. Even a day a month, dedicated just to letting the them do whatever they want, to try new ideas.
• Give them a forum to show their ideas. Celebrate the innovations, even the bad ones, show that you are engaged and interested and it will lead to other ideas and other innovations.
• Take a chance on the ideas. If there are good ideas act on them, integrate them into your product, start new product lines, go after new markets.
  
  Innovating from within is a scary concept and claims resources, time and money. Results are not always immediate but you will find that in the long term the result is a company that is successful and more importantly…is still alive.