Meaning most people using the term don’t understand what it means in terms of being relevant to whatever they are doing, but know that right now you have to claim to be using ‘innovation’ in your role, project, business unit, etc. Amazingly I saw an article that reported 75% of people claimed to be ‘innovating’ currently, which if you define innovation as doing something you have not done before is possibly understandable, but is unlikely to be true to the original use of the term that started the current hype cycle.
Nearly two years ago it became possible to discern that some companies were using the new generation of technology, loosely SOA and Web 2.0, to create very different ways of doing business. The ability to use technology to engage with the ‘long tail’ part of the market was allowing them to increase market share, find new profitable business areas, and build revenues. A few companies had gone even further creating completely separate business units to trade using a different business model to the main company. Just as Amazon was the most popular example to demonstrate this with Web 1.0, Toyota and Scion became the example for Web 2.0/SOA. Put simply Toyota created Scion as a ‘shadow brand’ meaning that the Toyota brand was separate, so the ‘experiment’ could not contaminate the main brand, nor would the values of the main brand deter a different section of the market from being a customer. i.e. People who would not normally consider buying a Toyota due to its brand image and values being wrong for their life style.
Recognising how effective this approach could be in gaining new markets and revenues often at very good margins, leading Business Schools began to publish work proposing the need to ‘Innovate’ your business model. The argument was that incremental improvement to your existing business model in its existing market would not produce the level of results that innovating into a different model could produce. More than ever this kind of innovation is looking attractive in terms of results, and becoming more necessary, as the early leaders prove the capability to out-perform existing competitors. Toyota has seized the lead as the number one car manufacturer over General Motors with the success of Scion contributing to their growth in the crucial North American market. Particularly interesting is the speed in which Scion grew in comparison with the time it took to establish Lexus in a conventional manner.
Most important Scion allowed Toyota to sell to a sector of the market that they could not reach – the ‘on line’ generation Y. The innovation came by doing this in a manner to suit their culture – Web 2.0; and using a new manufacturing approach – Internet connected ecosystem using SOA orchestration of business tasks to obtain extreme flexibility. And what does this whole innovation depend upon? A business capability to recognise that a new group of technologies coupled with its acceptance and up take by a wide range of consumers is creating new markets.
Why am I drawing attention to this in a CTO’s blog? Because it has always been the case that good technology is technology that has a business driver. Doing a ‘Business as usual’ project and using SOA may be innovative for those involved, meaning that it is new and different from what you have experienced before. Unfortunately it’s unlikely to ‘Change the Game’ for your company, and therefore its not ‘innovation’ in respect of the original definition that introduced the term.
However business model innovation is alive and well, even thriving, amongst business leaders, so it’s time for us technologists to knock politely on the door of the boardroom suite, say ‘we can help you’, and then listen carefully to what they have to say. Can we help by showing them new exciting products? Yes, but only if they can stimulate the thinking towards innovating the business model by showing how customers and markets can be accessed. A collection of random products is just that, where as a focussed set of capabilities possibly with a MashUp to show what the customer experience of the resulting new business would be, is likely to be of great value. Easy? No, but there are enough winners who have done this already to prove it’s necessary, and it is all based on technology, so it’s time for us to play our part in a serious way.
How do we do this? Use the same sources as our business colleagues are using to learn, and as good technologists we should be able to use Web 2.0 to out perform them in this respect. Here is one place to start.