Everybody wants innovation. Well, maybe not everybody, but I’m guessing that most people, and certainly most businesses, want new and better things and new and better ways of doing things. I think it’s safe to say that there are some of people and businesses who are interested in going beyond the creation of the merely new or improved product or service to the creation of new markets. Yet, oddly, most people and businesses and governments continue to dismiss, ridicule, or legislate against the activities of innovative subcultures. The most recent such examples come from digital media. The music lovers in the computing subculture were quietly sharing music among themselves until Napster came along. Napster was proof positive that there was a large market for digital music distribution. How did the music industry respond? Not with their own services and low prices and easy to use systems, but with legal challenges, lawsuits, and lobbying for new legislation and enforcement. There was literally nothing stopping the recording industry associations and companies from creating an iTunes-like product that would have made Napster (and maybe Apple!) irrelevant.
Did the movie and television industries learn anything from what happened with music? Of course not. We are still in the throes of a mighty battle to keep programming out of the hands of the consumer. The consumer is winning. The people in charge still haven’t figured out that the longer they fight the changes, the easier it will get for the consumer to get what they want for free. All they need to do is make the content available at a reasonable price. No geographical restrictions based on old distribution models. No anti-piracy messages or ads to tempt people into the pirate market for pure content. A variety of qualities available so that each consumer can get what’s right for their system without having to go to the pirate market for what they need. All of those things are possible today and have been possible for years, but the industry keeps fighting a battle that all before have lost.
The Internet has made it possible for subcultures to pop up almost overnight in response to some cool new thing (i.e. innovation). The Internet has made it possible for subcultures to go mainstream almost as quickly as they appear. Those are key innovations that are rarely recognized as such. Anyone who does not acknowledge those innovations and the associated rise in subcultures is destined for the dust heap. That applies to individuals who fail to adjust their skills, companies who fail to adopt new ways of doing things, and it will also apply to governments who fail to follow their constituents into the future.
What is innovation and why should we care? Depending on your objectives or how you are affected, innovation could be something as simple as letting people pump their own gas or as complex as designing and building a personal computer. We should care because all progress, all advance, all improvement comes from doing something new or at least doing something old in a new way. If you are a business owner, you need to be at least paying attention to innovative products, services, and processes so that you can judge how your business will be affected. If you are not running a business, you are probably working for one and being unaware of innovations in your field means that you risk becoming obsolete along with the skills you now have. Between 1970 and 2010, 40 years, computers, especially home computers, went from deep in fringedom to as common as televisions. Despite this unprecedented shift, home, and small business computing were still fringe activities and generally ridiculed for about 20 years.
Here is my favorite story of how innovation has affected an extremely large market segment: mail order shopping. In Canada, Eaton’s was once the market leader of mail order shopping. The catalogue at the beginning of the 20th Century described products from socks and wedding dresses to tools and houses. Yes, houses. You could order a house which would then be delivered as a kind of kit containing all the necessary lumber, doors, windows, etc. along with the plans. I don’t know how many actually did the building themselves, but that’s not really the point. Think about it: you got the Eaton’s Catalogue delivered by mail, you picked out a house and maybe some socks, you sent that order to Eaton’s by mail, and some time later your socks and house were delivered. Then Sears stepped in and added a distribution network. Roads and trucks were both much improved over the decades. In addition to the same kind of catalogue sales that Eaton’s was doing (maybe not houses), they set up little depots in almost every town and a great many villages. A depot might have been something as simple as a corner in an existing business, but there were catalogues, you could place your order without the cost of an envelope and stamp, and shipping was either free or greatly reduced in price. On top of that, there would be a few items on display so that you could actually inspect what you were ordering. As if that wasn’t enough, returns were as easy as if the depot was a â€˜real’ store, making it possible to order a few items of clothing, try them on at home, and return what you didn’t want to the depot. Some depots even had fitting rooms to save the trip home. Needless to say, Sears eventually pushed Eaton’s out of the mail order business and Eaton’s ultimately closed their doors. The Sears depot fed by a fleet of trucks was not just an innovation; it was a disruptive innovation that ultimately forced their main competitor in the field out of business. Sears did not invent the road or the truck, but they did notice that the roads were getting better, road networks were expanding, and trucking was becoming a booming business. That story is not over yet. The Internet came along. At least initially, farmers and villagers had the same level of Internet access as city dwellers because everyone was just using acoustic modems. Note that those farmers and villagers were very important, because they were the heart of the mail order business. Along with the rise of the Internet, people started conducting business online in what can only be called an updated mail order system where the catalogue and orders moved across wires instead of through the mail. What Sears did next was, in my opinion, nothing short of amazing. They ignored the Internet and not just out of ignorance. There were any number of fringe players suggesting that they set up Internet-based catalogue shopping, and I’m willing to bet that some of those people were Sears employees. It was a deliberate dismissal of the technology and potential. They could have had computers in their little depots to accommodate those not quite ready to join the Internet revolution. They already had the distribution network in place, something that Amazon is only just getting around to dealing with and which anyone smaller than Amazon can’t even dream of. I can see how Amazon may have still managed to take over books, but I can’t imagine that they would be the retail powerhouse they are now if Sears had bothered to look into what the Internet had to offer. I’m convinced that we’d all be shopping at Sears instead of Amazon and shipping costs would not be such a major factor in purchase decisions.
Contrast that with Glen-L and Lee Valley. They are both relatively small businesses that did a lot of mail order business. In the case of Glen-L, that was their only business. If you wanted to buy plans to build your own boat, Glen-L was one of the major players and you had no choice but to deal with them through mail or phone orders. Lee Valley had storefronts, but mostly as a way for people to handle the tools they were interested in and for people to get advice from relevant professionals. Both were quick to embrace the Internet and both are still counted among the leaders in their markets.
Step back a bit and think about that. Mail order used to be something that virtually everyone needed to do in order to get products unavailable locally. Then it was something used only by people outside major centres, and even that was dwindling along with the rise in cheap, fast personal transportation. Then along comes online shopping and now the modern equivalent to mail order threatens the very existence of regular stores.
Amazingly, businesses still generally ignore, often willfully, the innovations that are happening around them and suffer accordingly. From those stories, we should have learned that we don’t actually need to be innovators in the sense of creating completely new things like the Internet in order to benefit from innovation. However, if we pay attention, we might be able to completely disrupt our markets while not even really changing much about how we do business. If, like Lee Valley, Sears had embraced the Internet as an alternative way to put out their catalogue and take orders, almost nothing about their actual business would have changed, but it’s likely that Amazon would not be the powerhouse they are today and Sears would not be closing stores, trying to reposition themselves in the market, and just generally sliding off into irrelevance.
In short, and this is my real thesis, you don’t need to be the Steves doing whatever they were doing that led to Apple being the company we see today. No, you don’t need to be one of the Steves, you just need to pay attention to what the Steves are up to and see how that might affect you. Better, you should be talking to them to see if they have any idea how what they’re doing might affect you.
IBM had already transformed themselves from an office equipment manufacturer and supplier to one of the leading technology companies of the era, so they knew more than a little bit about innovation and how to foster it. They employed people like theoretical mathematician Benoit Mandelbrot, he of the Mandelbrot Set and formaliser of fractal geometry, to do whatever it was he was doing. It’s a safe bet that approximately nobody at IBM including C-level executives understood his work, but you can be sure that they were aware of what he was doing and trying to find ways to profit from it. They knew from experience that if they hired enough smart people and gave them the freedom to do strange and unusual things, enough of it would eventually more than pay for itself. When IBM saw what Apple and other upstarts were doing, they recognised an important new market. In very short order, they had their engineers on the case and created the IBM-PC. PC stood for personal computer and it was marketed to homes and small businesses. They didn’t invent the personal computer, they just paid attention to those who did.
Some large businesses already had computerised systems, probably just in accounting, but a few people were actually crazy enough to bring in their own PCs or spend their own money on PCs for their departments or their jobs. Most of that was shut down quickly and forcefully, but a few companies allowed it as long as the job still got done and a rare few actually supported those initiatives by allowing the use of department funds for the purchase of PCs.
Let me repeat that.
Some people were actually crazy enough to bring in their own PCs or spend their own money on PCs for their departments or their jobs. Most of that was shut down quickly and forcefully, but a few companies allowed it as long as the job still got done and a rare few actually supported those initiatives by allowing the use of department funds for the purchase of PCs. If that is not a fringe activity, nothing is. Those are probably the two most important sentences in this essay. Remember them, because I’ll be coming back to them.
Smartphones. A lot of people have them. What is the one place where smartphones are frowned upon and frequently prohibited? Work. Yes, some industries and some companies have been making limited use of them, but in general, bringing a smartphone to work is like bringing a football. It’s not really a problem, but it better stay in your locker during work hours. One of the most common complaints I hear from employers and managers is how difficult it is to find a young worker who isn’t glued to their phone.
Remember these sentences?
Some people were actually crazy enough to bring in their own PCs or spend their own money on PCs for their departments or their jobs. Most of that was shut down quickly and forcefully, but a few companies allowed it as long as the job still got done and a rare few actually supported those initiatives by allowing the use of department funds for the purchase of PCs. Instead of reading â€œpersonal computerâ€ everywhere you see â€œPCâ€, try reading â€œpocket computerâ€. To a very good approximation, everyone under 30 is carrying an Internet-connected pocket computer everywhere they go and most businesses so severely curtail their use that they might as well be left at home. How about this instead: everybody with a pocket computerâ€”okay, smartphoneâ€”is allowed to use it as they see fit as long as two conditions are met: The employee submits to productivity monitoring of some kind. Most successful businesses are already pretty good at monitoring productivity, so â€˜submitting’ to it is already a given if you want a job at all.
The employee has to sit down once a month to explain how they are using the smartphone to improve efficiency, effectiveness, or just simply make the job more pleasant. It’s time for a couple of thought experiments. First, imagine that you own a restaurant and that you are choosing to allow unrestricted use of smartphones under those conditions. If you are having trouble imagining the outcome, try answering the following questions:
How long will it take for the wait-staff to use their smartphones instead of the little order pads and pens so that they can text the orders to the kitchen? How will that affect costs? How will that affect efficiency, given that the only time they go to the kitchen is to check on and pick up orders?
How long until the kitchen staff starts texting the wait-staff for clarification and orders ready to be picked up? Again, how will that affect efficiency and effectiveness? How long until regular customers start texting their favourite wait-staff to book a reservation? How long until wait-staff start texting regulars when a favourite meal is selected as the daily special?
How long until the customers start placing their own orders instead of waiting for someone to come to their table? How does that merger of take-out and in-house orders affect your business? Does that even work at all? If it just causes pandemonium, can you find a way through the mess? How long until one of the staff or a friend creates a simple app to streamline the system that evolves?
What happens if you are the only restaurant in town doing that? Will you drive customers away? Will you attract new customers? Assuming it attracts more customers than it drives away, is it more profitable to keep it to yourself or to market the system to other restaurants, including competitors? What happens if everyone starts doing it? Can you create or maintain a successful restaurant business by catering to those who value the personal service of a waiter or waitress?
San Francisco was basically ground-zero for Google Glass. The general public either ridiculed or feared the technology. People wearing Google Glasses were called â€˜glassholes’. They were routinely banned from restaurants, bars, and other private places where the public mingled. Critically, they were also banned by most employers. Imagine your restaurant in San Francisco. What would have happened to business if you had welcomed that subculture? What would have happened to business if you had gone beyond merely welcoming them, but actually did things that took advantage of the fact that your customers were wearing Google Glasses? What would happen if you gave your staff Google Glasses and then had them spend time with those early adopters learning how to apply the technology to their jobs?
Now imagine that you have a manufacturing plant with an assembly line. How long until the welders are sending the drafting department photos of a design problem? Or letting inventory know of a shortage? Or a scheduled maintenance notice pops up in Google Glass when someone happened to look at a machine that was due for service? Or…
Everything I’ve said comes down to one simple thing. New things come from doing new things and those doing new things are usually part of one subculture or another. They are, in some way, on the fringes. As long as you keep doing things the same way, you will get the same results. You might think that’s just fine and the way things should be, but don’t be surprised if something comes along to destroy it. If you find a way to let people find new ways of doing things at any level, you will have a much better chance of surviving sweeping changes in whatever industry you are in.
For example, if you are a truck driver or own a trucking company, you better be thinking about what happens when the truck itself can drive itself from the outskirts of one city to the outskirts of another. It will look like a slow start because it will be limited to restricted access divided highways in places with no snow, but once it starts, it will transform the industry in a decade or two. Think about where computers were in 1984. Basically governments, very large companies and a few basements and schools had computers and they were used only in limited ways for specific purposes. Importantly, those with a computer at home were routinely ridiculed or at least dismissed. A decade later, almost every shipping and receiving department had a computer, as did virtually every trucking company, big and small. The Internet was just starting to make itself known to the general public, again soliciting ridicule and dismissal. How about adding another decade? By 2004 even grandma was at least thinking about using email and it was basically the end of the road for any employee unwilling to learn how to use a computer. As with computers, truckers will definitely not be the only ones affected by self-driving vehicles, so who in your company is thinking about those things and what are you doing to support them in helping your business survive?
If you’re a manufacturer, there is a pretty good chance that you have at least one employee who is part of a â€˜maker’ club. Can you offer space or equipment? Can you pay the membership fees as a benefit to any employee who is interested in joining? If you got stopped at wondering what a maker is, then I recommend a quick Internet search. In a nutshell, a maker is to manufacturing and robotics what hotrodders were to automobile repair and design. That’s where most of the real talent was. Whether you were an engineer with Ford, a mechanic at a local dealership, or just an accountant, if you had a passion for cars you were souping them up and making them over in ways that ultimately informed the whole industry. Just as automakers eventually learned to pay at least a little attention to what the hotrodders were up to, so should every manufacturer be paying attention to what the makers are up to.
What is the one thing that ties together all of these successes? Most of the innovation comes from the fringes. If you don’t know who Elon Musk is, you better learn, because if there ever was a fringe actor, he is, and he has transformed banking (PayPal), auctions and shopping (eBay), and is about to transform personal transportation (Tesla). The most important thing to realize about Elon Musk is that he is tapping into subcultures as a way to change the world. The electric car subculture is at least 30 years old, consisting primarily of people converting cars to electric and the few small businesses that they created to serve the other members. Musk is taking their success, refining it, and marketing it to other subcultures (environmentalists, performance driving enthusiasts, luxury driving enthusiasts, etc.) and generally forcing everyone to sit up and take notice. It’s fair to say that, along with Google, he is one of the leaders in self-driving technology. Unlike Google, who is primarily doing research, Musk is putting systems into place in cars that people can buy today. So go out there and find the people who are doing things you just don’t get. Talk to them. Find ways to support them. The current craze is Pokemon Go. Is there a way to use that to attract new business? I don’t know, but I bet the avid players know. What does the technology itself (augmented reality) tell you about what the future holds for your business? Given that it’s basically a database used to overlay relevant entries (in this case a cartoon character) onto the camera display and a way to interact with that data (character), I would guess there are a number of possibilities. Maybe pointing the camera at a machine in your shop will display the service history on that machine. Maybe someone will ultimately transform the factory floor by building the cameras and displays into glasses. (Oh, wait, someone already tried that with Google Glass, but the fringe group that experimented with them were just â€˜glassholes’.) Anyway, I’m not the person to ask. The right person to ask is the employee whose job performance is suffering because they’re so engrossed in the game. Yes, you need to address the performance issue, but maybe it’s by getting them to think about what that technology could mean to their job and, by extension, to your company instead of just threatening them with dismissal or imposing an outright ban.
(Credit: This is a guest post by Ron Porter)