It’s all about timing, isn’t it? Purchase your stocks at the right time and you’re all set. Poor timing you end up with a margin call. It’s the same with corporate innovation. The timing of a product launch is crucial. More so than execution. The stars have to be roughly aligned. Problems and pain points the product addresses has to be significant enough to encourage conversion. Relevant supporting services need to be ready otherwise there will not be any traction.
Kodak and the digital camera
Take for example, Kodak and photographic film. Although the digital camera was precisely what ousted Kodak from the consumer film business, Steven Sasson from Kodak was the one who invented the digital camera.
So how can a company invent a product that would subsequently push them into filing chapter 11? There are two parts to it. The first was timing. Kodak’s engineer developed the digital camera in 1975, a long time before personal computers were common place. Photos were taken for memory sake. People take photos with the intention of reviewing them later to relieve past memories. Without the means to review digital photos conveniently, the digital camera failed to meet the needs of consumers. Also, the absence of storage devices like memory cards that had huge memory meant that the problem of changing film frequently was not solved. The lack of the relevant complementary goods/technology played a huge part in the failure of the digital camera.
Other than timing, Kodak’s management was unsupportive of the digital camera. They felt that they were cannibalising their own business. Digital cameras would have a direct impact on photographic film sales. The short-term pain of decreased sales in the pursuit of new disruptive technology was counter intuitive. Besides, no one would risk missing their short term “obvious” KPI and try to sell the longer-term picture; Especially when you might not be able to stick around to achieve the bigger goal you were trying to sell. But even if the management was receptive, the timing would have been wrong.
Why some cannot innovate at the right time
Some companies face difficulties in innovating. Why is that so? In my opinion, it is all about the corporate structure. Most of the times, corporates of size are focused on operating their existing business. They have already identified their target market and have built a stable customer base. KPIs include increasing efficiency to reduce costs, and maybe some level of expansion is involved. These KPIs are mostly quantitative and that is what middle management is in charge of and interested in. Short-term goals to meet benchmark metrics. This discourages innovation, as most, myself included would rather work on the short-term goal to earn whatever monetary incentive available. Separating innovation from operations is a how some choose to deal with this problem. But be careful not to give the innovation department targets like having “X” number of ideas per year. You’ll get ideas, but not necessary the right timing.
Consider this. Instead of setting up an innovation department, why not spend money on an ad-hoc basis to do market research and identify innovation opportunities and their optimal timing. Once you have done so, set up a team to execute it if it’s good. Build a team only when needed and you don’t run the risk of having to justify a fixed cost. You also won’t find yourself with the right idea at the wrong time just because someone was pressured to deliver something before performance review.
The future of corporate innovation
Corporates, while they have all the resources, such as customer base and money have it difficult to innovate. It takes much more beyond resources. Fortunately for them, there is a solution.
Start-ups are more prevalent that in the past. Recognised for their success and their ability to adapt explore new markets rapidly; They will be of great interest to corporates in the near future. They have the necessary culture, skillset and cost structure. Start-ups that have got some traction have got their timing right and already validated their target market. Corporates are starting to realise is easier to just cooperate with instead of attempting to build things themselves. Gone are the days of in-house innovation. Instead, I expect corporates to have a change in mindset, and be willing to collaborate and invest in start-ups. Such partnerships will benefit both parties become commonplace.
So, is blockchain going to be like the digital camera at some point in the future? What’s the right time?
Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at [email protected] and let us know how we can help.