Internet Innovation and Optimizing the Status Quo

Minnesota is a great place to live and raise kids. Yes, the winters are brutal but the benefits outweigh the troubles. So much so that most of my 600+ high school graduating class members still live hereafter several decades.

There are A LOT of smart people in the Land of 10,000 Lakes — both home grown and those transplanted here. Successful businesses abound like Target, Best Buy, Medtronic, General Mills, 3M, UnitedHealth Group and many, many more. World class businesses and leadership in their respective industries. But as the world of business gets increasingly mapped on to the Internet, it’s highly unlikely that these organizations will lead us to the promised land of Internet innovation. They’ll just wait and see who is successful and leverage capital to buy-in strategically. Sadly this is often a too-little-too-late move.

Frequently I complain about my conversations with leaders in Minnesota and how I first need to educate them on Web 2.0 and Internet-as-a-platform before we can have a productive conversation about the paradigm shifts and disruption occurring. The next challenge is how to work on driving forward strategically and embracing the changes. “Why aren’t you already innovating on the rapidly accelerating Internet platform?“, I’ll ask. The answers range from “Not sure what to do” to “it’s not a big deal for my business yet“. The former we can work on…the latter closes the door.

Closing the door isn’t an option in a time of accelerating change. Every client I have and every industry I analyze is being disrupted in some fashion by the Internet. Fortunately there are thought leaders guiding us.

A Harvard Business School Press author and professor is Clayton Christensen who wrote the successful book The Innovator’s Solution about disruption and it’s one of my favorite business books of all time. He discusses how disruptive innovation occurs and I’ve also heard him speak about it twice in contexts like an open source conference and what it’s doing to disrupt commercial software.

Christensen brings forth example after example and he doesn’t rip apart the senior leadership of the vacuum tube companies, Digital Equipment Corporation or others for flying their companies into the side of a mountain. He actually points out how they did exactly the right stuff to optimize their businesses. Unfortunately, they didn’t see that they were, in fact, optimizing while being disrupted out of existence.

He once said that disruption goes through three stages:

1) It’s crappy. No one pays much attention.

2) It’s less crappy. Early adopters begin to play with it and try it out.

3) It’s good enough. THAT is when the tipping point of disruption occurs and it’s usually too late to reverse by the status quo companies.

This article in Wikipedia about disruptive innovation is a quick read and provides an excellent snapshot of disruptive innovation and some concrete examples.

One of my client’s is looking at telephony products like Skype, Gizmo, Asterisk and other VoIP solutions that are either crappy or just getting to less crappy (Skype and Asterisk). If they wait to embrace any of these solutions to incorporate in their offering, others will beat them to it. Especially if they wait until they’re good enough since their business will evaporate quickly.

My school District is unlikely to be disrupted soon, but there are several online educational models that support home schoolers with courses, social events, and online curricula that is making it easier and easier to school your own children. Is it crappy, less crappy or is it good enough yet?

My own business’ publishing model is slowly eroding and we’re innovating faster and faster to stay abreast of the shifts in our customer’s attention — which is increasingly online. We know that if we don’t continue with our strategic Web asset creation, it’s only a matter of time until we’re downtrended out of that business.

A MODEL: I’m about halfway through a new book by the HBS Press entitled, Hidden in Plain Sight by Erich Joachimsthaler (and will have a full review soon). At the beginning of this book he is asking questions about innovation in an organization which I find is typical of the attitude of ignoring disruption and indecision I see in many leaders as though it will simply go away.

Most organizations focus on adding features, responding to customer demands, delivering competitive advantage, shoring up gross margins through cost cutting and, in short, doing all the right things for the business. In the book Joachimsthaler asks a question that’s the essence of the problem of doing all the right stuff but is one I found to be the most chilling and profound question for any leader in this time of accelerating change:

“Are you, in fact, optimizing the status quo?

Joachimsthaler goes on to build out a model for immersive innovation that is worth many times the cost of the book that could and should shift the perspective of how to approach innovation in this time of change. He does a fine job of pointing out what in hindsight are obvious blinders to the truth of innovation and what to do about it.

One key theme to his book and the model is shifting perspective to what the customer is experiencing and the conditions (economic or otherwise) they’re living within since often disruption occurs because the customer is seeking solutions (or they appear) and there are suddenly alternatives.

I’m often hired by clients in the hope I’ll show them how to buy a flipper, flapper or dweebezarb and it will automagically fix their problems and get them headed strategically toward warding off the disruptors. Unfortunately, I don’t have any silver bullets. No one does. But for the same reason that I don’t have to go to Weather.com to see that the sun is shining and it’s 80 degrees outside right now, is the same reason I see that the Internet is changing almost every business, the way we learn and access knowledge, and how we socialize. What I do in my business is akin to accessing satellite imagery, putting it together with other data so now I can see that coming out of Canada is a low pressure system with rain across the top part of North Dakota and Minnesota which will bring that rain to the Twin Cities by Saturday.

My biggest value to you in this blog and to my clients is this: to point out the obvious; to shift attitudes and perspective; to discover possible disruptions; analyze the value chain; and come up with idea after idea after idea and then execute.

Stop and consider whether you’re holding on to your personal status quo and how you’ll stay current in your career or whether your product or service is status quo and others are already entering and disrupting you from beneath.