Disruptive Innovation, Not Here
Innovation is the big buzz word these days. Christensen’s “Disruptive Innovation” books
Let’s look at an example. My first paid programming job was creating software to apply statistical quality control. Our software was the first time a US automotive manufacturer used statistical process control. Our software was good; it saved work and provided answers that weren’t possible doing things by hand. But they weren’t doing it by hand. They weren’t doing it at all. The big impact wasn’t the technology being used; it was that they were using it. This was the first time the US auto industry consistently measured quality and applied the results toward improving.
Today it might seem obvious to measure quality. We constantly hear about quality surveys, crash tests and measurements of all kinds and all sorts. But in the early 1980’s that was basically unheard of. Only lab coat scientists took samples and used statistical models.
Affordable computers and the software I and others created made it possible to measure like never before but the biggest step was in seeing the value and doing it. As obvious as it seems today the US auto industry simply saw no value in measuring quality. But in the 1980’s the Japanese were starting to take over and it was all because of statistical process control.
The statistical process control movement was started by Deming. Oddly enough he had gone to the US Auto Makers first. He showed them this great new technique.
Deming showed that if you measure every part you make you can learn how your process works. Once you understand your process you can predict quality problems before they happen, thus avoiding the problem and produce higher quality more reliably and efficiently. For example if you’re drilling holes your drill bit wears down. After a while it stops making the holes to the proper size and shape. But if you know how long it takes for the bit to wear out you can replace it before it starts making bad parts. So you always make good parts. There is a lot more to it than that but that is the basic concept.
When the US auto makers heard Deming’s technique they rejected it outright. They said, “Measuring everything will cost too much. Your idea sounds great but we don’t need it. We don”t have a problem with quality. We could slap chrome on a turd and customers would buy it.” The truth was they had huge problems with quality but they weren’t yet feeling the effects. Maybe in the 1950’s and 1960’s a chromed turd would sell but that would change. A huge disruptive innovation was about to take place, and they chose to ignore it.
See after World War II Japan was destroyed. They were starting from scratch. By the 1960’s Japan’s industry was functioning again but they were thought of as the low cost low quality manufacturer of “cheap” things. Today in 2006 we often apply that label to Chinese products, remember that. China is now considered the same way that we once considered Japan. So how did Japan come from being the maker of cheap junk to being the recognized leader in hi-tech and hi-quality? It was through an attitude.
After being laughed at in the US, Deming went to Japan. The Japanese realized they needed something to help them, so they were open to change. That is the first most important element of innovation. All innovation starts and ends with people. Technology is a tool; innovation is the tool in action.
The Japanese took Deming’s statistical process control and turned it into a lifestyle. So in the 1980’s when I was implementing the first SPC system at a US auto plant, the Japanese had grown past it. They weren’t just 1 step ahead they were now 2 steps ahead and starting to capture the automotive market and building new markets they owned.
The Japanese accepted that they could do better. They used this new technique then they applied technology to maximize the effectiveness.
I’ve only scratched the surface of innovation. I’ll cover more about this in future articles. I’ll explore this more when I cover the following: Google, Copyrights, Democracy and Terrorism.
Action Items:
- Make a list of tasks you regularly perform.
- List 5 ways you can improve each of those tasks. Ex.: faster, cheaper, easier, more options, for more people.
- Estimate a value of having those improvements.
- Estimate the potential loss if your competitor made that improvement and you didn’t.
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Google’s Innovation
Most people think that Google’s big innovation is their search engine. Its fabulous technology and has drastically changed the world for the better; but, the bigger innovation is more subtle. It’s just a concept. It isn’t a technological innovation it is a business innovation. Google’s Innovation is their business model.
What Google realized was finding stuff on the ever-increasing World Wide Web was time consuming. Finding the stuff you really wanted was hard and going to get harder. Their solution was a sort of popularity contest. By looking at the links to content they could categorize it and rank it. The Google search engine is a popularity index.
Pretty cool idea. You could let real users categorize and rank content for you. Build an automated tool called a spider that cataloged this information and you can save people time and give them better search results. And by offering this cool new tool for free Google became popular.
Now I’m going to point something out. Google’s popularity was growing exponentially but their own search engine probably wouldn’t have ranked them very high. The reason is that when Google started out people didn’t post that many links about Google. What people did was tell their friends in person, on the phone or in e-mail. I remember the first time I used Google and I remember deciding to make it my home page. Google had gotten the most valuable links on the real world wide web of human opinion.
So how could a free online tool make money? Google made money and is still making lots of money by selling the thing their search engine operated on, popularity.
Google sells targeted advertising. What is advertising if not lending your popularity to someone else for a fee? And Google was now the worlds leading popularity broker so they could start cashing in.
Think about this. Google is at the center of popularity. They report which pages are the most popular for the criteria selected. This in turn increases the popularity of the pages. Then Google sells advertising on their search engine using their AdWords service. And they expanded AdWords to millions of pages all over the world through AdSense where publishers get paid to share a bit of their popularity in the form of some space on their pages for Google AdSense ads. And of course Google gains in popularity every step of the way.
So you can see that Google’s Innovation was turning popularity into a commodity. Their technology made this possible but the concept could exist and has existed since the beginning of time. Anyone at any point in time could have theorized of a global system to buy and sell popularity. And there are probably many ways to have built such a popularity market. As we say in the research and development business, the concept is proven, the rest is just engineering.
Just to make this perfectly clear, I’ll tell you about my friend Catherine Thomas, casting and locations director. She has done dozens of movies, hundreds of commercials and TV shows working with stars including Bruce Willis, Eminem, 50 Cent and Billy Crystal. And she has worked on hundreds of TV shows and commercials. What she does is very interesting. I modeled (see articles on NLP) her techniques and drastically improved my own life. If she likes you she will say this phrase in every conversation, “let’s get together and have a drink.” Her entire life is built on popularity. Her stock and trade is socializing.
If you meet Catherine for cocktails it will be at a club where she knows the owner and probably several other people as well. If she goes off to the bathroom expect a long wait. No it’s not the call of nature from all the white wine, she will have run into or met someone and started a conversation with them. As she puts it everyone has a story and she just loves to hear everyone’s story. She remembers them and they remember her.
So when a producer needs a location for a film and interesting real people for extras and minor roles they call Catherine Thomas. She calls up one of her “good friends” and everything is set. Of course lots of people strive to be one of Cathy’s “good friends”. In her head is a database of contacts, she never writes down phone numbers preferring to memorize them. She always knows a fabulous party, cool person and hot spot and she is probably on the VIP list.
Now think about how closely Cathy’s social network mirrors Google. She is immensely popular and helps others be popular. She keeps a huge list of people and places. People go to her to find the right person or place based on their requested criteria. Cathy does the introductions and collects a fee.
The only difference between Cathy and Google is the level of automation used by Google. If you can boil down a process to its essential elements you are poised to find world changing innovations. That is one part of what the OutCompete process does.
Action Items:
- Think of the steps needed to perform one of your key business processes.
- Make a list of other businesses that perform the same task.
- Make a list of tools and techniques those businesses use to perform the tasks you have in common.
Schedule an OutCompete assessment of your business.
I’m a Sci-Fi Character
Some times I forget how unusual my life is. My friend and business partner, The Shad0w, creator of BitTornado, and I were recently talking about copyrights, the RIAA, abuses of the legal system and methods for fixing the problem. Mind you I have only seen Shad0w face to face once when we happened to be traveling through the same city at the same time. Anyways we were talking about a way for small down trodden people to do a little legal judo to stop the abusive lawsuits of the RIAA. The solution I came up with was an automated system of filing legal proceedings to tie up the RIAA and cause them to loose a bunch of money attacking unemployed people, grandmothers and 12 year old girls. We could make the whole thing free to access by anyone that needed it and create the legal equivalent of a distributed denial of service attack. Yes, that is the type of stuff we idly chat about.
Anyways, Shad0w said that the idea wasn’t new and that science fiction author Charles Stross invented the concept in his book Accelerando. You can buy the book on Amazon.com or just download a copy because it is published under a Creative Commons license. Shad0w Instant Messaged me a link, I download a copy and start listening to it using a text to speech program then tap the keystrokes to switch to a different computer to continue writing software for one of my clients, again who is in another state and for whom I do all my work remotely.
As I bounce between online chats, software I’m writing on one computer and 25 different browser windows and checking the movie I downloaded because it was out of print and none of the rental places had a copy when I realized this book could have been written about me. This book is suppose to be science fiction and the character is suppose to be fanciful yet I am doing much of what the character in the book is doing. Wow, I didn’t realize my life could be the basis for a science fiction novel. But maybe the “truth is stranger than fiction” adage is true.
I live in a house that I basically got for free by using my credit cards to buy it in a repossession auction and renting out the other two apartments of the triplex. I exist in a virtual world having several Instant Messenger accounts, blogs, websites and a cell phone. My physical mail goes to one of 3 addresses and is forwarded to where I happen to be at the time. I create at least one new business model or invention everyday and file them away because I don’t have time to pursue them. I hang out with models, movie stars and talk with technology luminaries such as Eric S. Raymond and Bruce Schnerier on a daily basis. A lot of this happens because I structured my life so that I didn’t have to be in one particular place at a particular time. If someone invited me to do something I would say yes and do it.
What I have done is escape the limits of time and space. That is very sci-fi.
I don’t exactly recommend my life style for everyone. There are lots of advantages and disadvantages, but that is the nature of beta software. Pick and choose elements that work for you. The big concept to grasp is there are lots of other ways of doing things. Even what you might believe is out of the realm of possibility could be normal for someone else, and for you if you choose.
Action Items:
- Download a podcast of an NPR program and while listening to the show Google for topics mentioned and read about details not covered.
- Try pausing the audio while reading, or rewinding if you miss something, and try just keeping up.
- Make a list of things you have done or could do that benefit the world as a whole and you can’t easily sell.
Predictive Innovation Training
Predictive Innovation: Core Skills Book
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