Tuesday, December 12, 2017

The Fallacy of The Next Big Thing

I thought this was pretty interesting.

Just want to announce that our next Org Growth class at Kellogg is scheduled for April 2 to the 6th. In case you were unaware, the class was extended for a full day which enabled us to add two additional, critical discussions-- how to most effectively build the new Capability Platform from acquisitions to alliances AND a more in depth discussion on on decision biases that are critical to understand in any process or endeavor. The ratings are through the roof for the program.
Every company is continually looking for the next big thing. I can’t count the number of times I have heard executives say something along the lines of “I want to know what’s going to be the next iPhone before it becomes the next iPhone.” Corporations are looking for someone to tell them what trends and products are going to be the big hits. Once they know what the next big thing is (ideally, before everyone else knows about it), they can invest early, create a dominant presence, and reap the rewards. Simple.
Unfortunately, it does not work that way. While my research on innovation has revealed some distinct factors necessary to create breakthrough offerings, it also highlighted some of the misconceptions and fallacies that impede corporations as they try to become more innovative. One of the prime misconceptions in the corporate world today is that companies must continually quest for the next big thing.
There are three problems with looking for the next big thing. They are, in order, (1) next, (2) big, and (3) thing.
NextRarely do innovations and trends take the world by surprise. One of the consistent themes in the history of innovation is the concept of slow burn, or a slow evolution. Most industry trends are visible and provide clues about the next breakthrough. …Most innovations in history have had a slow evolution process. Things move slowly, but not because they have to; rather, it is because people often don’t see the value in what is being developed and don’t adopt the innovations…..In the technology industry, where I spent the majority of my career, the trends have always been clear. They were the PC, the Internet, mobile devices, the smartphone, and the cloud. Today the trends include AI, machine learning, and other developments. The innovators were the ones who rode these trends to create fantastic products that customers embraced. They created business models that produced gravity-defying profits, and ecosystems that built a generation of entry barriers. Microsoft did not create the first computer operating system. Google did not create the first search engine. Facebook did not create the first social platform. Apple did not create the first portable music player or the first smartphone. None of these trends were a secret; they were available to everyone to build societal value. None of these companies were first to market; instead they did it better or engaged their users in better ways..BigThe second fallacy of the continual search for the next big thing is “big.” Looking at the history of innovations, rarely does something become big right from the start, and rarely does the innovator know that what they are developing is going to change the world. Few world-changing innovations started with a view to change the world. Few billion-dollar businesses started with a view to earn a billion dollars. The one thing they had in common was that they altered customer experience through a unique approach and, in the process, created an immense amount of value for their users.As we know now, Google became big — very big. The “big” happened not by executing a plan to build a world-changing company but by providing a big improvement to the experience of users — a large experience delta, the difference between the current experience and the new one. The business model (based on advertising revenues) that created over half a trillion dollars of market value was not part of a grand plan, but as the company increased its value to society, society figured out a way to reward the company…..…In looking for the next billion-dollar opportunity, corporations spend countless hours doing strategic planning and modeling how their new initiatives will generate massive financial returns... .l. These plans rarely focus on customer experiences, because these are nebulous, or on products that inspire customers on a small scale, because although these small changes might add up to enormous changes for society as a whole, they don’t visibly move the corporate needle…..Worse yet, inspiring ideas and innovations that could be breakthroughs often get shoved aside (like the first digital camera developed at Kodak) because they don’t fit with the existing business model or have a billion-dollar plan…...So keep in mind that the big opportunity you are chasing may actually appear as something quite small. The key is to learn to recognize the opportunities that alter experiences and to understand and articulate how these customer experiences are transformed. Once you can do this, even at a small scale, the chances are high you’ll find the right opportunities that will evolve into the big game changers we are all looking for.ThingThe third flaw in the relentless search for the next big thing is the “thing.” My research has shown that there are two main problems with this. The first is that an innovation is often not a physical thing — a product. The second misleading aspect of “thing” is that the value of the innovation is often not in the thing that is being developed; the real value is in how an invention is supported — something I call the “thing behind the thing.” Let me explain both of these misconceptions.The thing is not a thing..…..companies have always enjoyed unparalleled success not by selling things but by providing value in other ways. Innovation can come in many forms, and even if you are a product company, it would be wise not to think about innovation as solely the creation of new products.
The thing behind the thingThe second issue with focusing on the thing is that the invention we think of as being the innovation is often not the main creation — it is something else. Sometimes, the key to the success of an innovation is an entire system of supporting developments. These supporting developments are the thing behind the thing, essential elements without which there wouldn’t be an innovation. For example, everybody thinks of the wheel as one of the greatest inventions of all time, enabling the first information and commerce highway in history. When you study the invention of the wheel, you learn that creating the wheel was the easy part; the hard part was connecting it to a stable platform. The true innovation was in the development of the axle, and it was the combination of the wheel and the axle that allowed the wheel to have a transformative effect on society. The axle was the thing behind the thing…..How to think about innovation in light of the next-big-thing fallacy…..Given the fallacies about the next big thing, your company should take a new approach when thinking about innovation. To start with, you need to have a deep-seated understanding of the trends in your business and of new developments that are being worked on within your own organization, other companies in your sector, and other sectors.. .…You will also need to experiment more and increase the number of new bets you make. Your rate of success will increase once you have a culture of innovation — when launching new offerings to customers is part of your company’s DNA. Not all the new bets will have breakthrough success, but if you get in the habit of launching offerings geared toward transforming customer experiences, the rate of innovation will increase.Finally, don’t think about new product introduction as the only way to innovate. Think about all the other forces that can make your product more successful. Think of the things behind the thing. Think of ancillary benefits that can provide insanely high customer value and make an existing product irresistible. .