Innovation: The Next New Thing
A look at recent software successes underscores the importance of both technological and business model innovation.
By Erik Keller, Wapiti
Oct. 28, 2005
One of the sad states of today's enterprise-application market is its assumed general malaise: growth is tracking toward GDP and rampant M&A activity makes certain entrepreneurial types muse, why bother? This defeatist attitude is counterbalanced by a seemingly Electric Kool-Aid-spiked enthusiasm toward the Web 2.0 and how this community will take over the world.
Both extremes unfortunately are under and over the top as they miss the central business secret of creating value: Innovation. Regardless of whether you reuse 30-year-old approaches or have an epiphany when you are out with your dog for a walk, innovation is really what our market is all about. And I'm not writing about some hot technology.
Everyone got spoiled in the last decade as much of the growth of enterprise software was driven not as much by innovation as it was by a technical refreshing of corporate America as it moved to embrace PCs and replace proprietary mainframes with Unix-based servers. Y2K wasn't bad for business either. In many ways, the largest innovation in enterprise software was conditioning the market to buy your stuff even if it didn't work. But as the recent SEC filing against former i2 Technologies executives illustrate, too much innovation can be a bad thing. A very bad thing.
Thus we have hit the part of the technology inflection curve that Carlota Perez in her book, "Technological Revolutions and Financial Capital," calls the third phase where technology is best used and shines in many corporations. But this phase will come not from unbridled end-user spending growth but from a balance of cost-cutting and revenue-generating products that facilitate better operational margins for buyers.
To do both will require innovation from the technology community in two forms: product and business model.
The first aspect for innovation in the corporate technology market is that it must address a well-defined and existing need. This is unlike consumer-oriented buying where an unknown need like customized a ring tones or instant messaging can create fast-growing multi-billion dollar markets. For technology targeted to corporate buyers, if the ideas are not too far out and difficult to grasp, they will probably be well received.
For example, one of the greatest innovators of the 20th century was R. Buckminster Fuller. Perhaps the most well known of his inventions is the geodesic dome, which is built by connecting groupings of equilateral triangles to form a structure. It is the most efficient and strongest type of dwelling you can build costing the least amount of money. The largest such dome today is over 700 feet in diameter. Yet where is the dome today in general construction?
Fuller also designed a three-wheeled car in 1933 that was 20 feet long, could hold 11 passengers, was incredibly maneuverable and got 30 miles to the gallon. Yet where are three-wheeled cars today?
Both of these inventions never took off as they were too far removed from common experience and wisdom. Intellectually they were elegant and addressed real issues. Unfortunately they were too abstract for many buyers, an important lesson that many of today's technology sellers should take to heart. (Ironically, Fuller's geodesic designs are getting yet another try in nanotechnology via what are being called "buckyballs" - a good example of finding an innovative use of an old idea.)
Both extremes unfortunately are under and over the top as they miss the central business secret of creating value: Innovation. Regardless of whether you reuse 30-year-old approaches or have an epiphany when you are out with your dog for a walk, innovation is really what our market is all about. And I'm not writing about some hot technology.
Everyone got spoiled in the last decade as much of the growth of enterprise software was driven not as much by innovation as it was by a technical refreshing of corporate America as it moved to embrace PCs and replace proprietary mainframes with Unix-based servers. Y2K wasn't bad for business either. In many ways, the largest innovation in enterprise software was conditioning the market to buy your stuff even if it didn't work. But as the recent SEC filing against former i2 Technologies executives illustrate, too much innovation can be a bad thing. A very bad thing.
Thus we have hit the part of the technology inflection curve that Carlota Perez in her book, "Technological Revolutions and Financial Capital," calls the third phase where technology is best used and shines in many corporations. But this phase will come not from unbridled end-user spending growth but from a balance of cost-cutting and revenue-generating products that facilitate better operational margins for buyers.
To do both will require innovation from the technology community in two forms: product and business model.
The first aspect for innovation in the corporate technology market is that it must address a well-defined and existing need. This is unlike consumer-oriented buying where an unknown need like customized a ring tones or instant messaging can create fast-growing multi-billion dollar markets. For technology targeted to corporate buyers, if the ideas are not too far out and difficult to grasp, they will probably be well received.
For example, one of the greatest innovators of the 20th century was R. Buckminster Fuller. Perhaps the most well known of his inventions is the geodesic dome, which is built by connecting groupings of equilateral triangles to form a structure. It is the most efficient and strongest type of dwelling you can build costing the least amount of money. The largest such dome today is over 700 feet in diameter. Yet where is the dome today in general construction?
Fuller also designed a three-wheeled car in 1933 that was 20 feet long, could hold 11 passengers, was incredibly maneuverable and got 30 miles to the gallon. Yet where are three-wheeled cars today?
Both of these inventions never took off as they were too far removed from common experience and wisdom. Intellectually they were elegant and addressed real issues. Unfortunately they were too abstract for many buyers, an important lesson that many of today's technology sellers should take to heart. (Ironically, Fuller's geodesic designs are getting yet another try in nanotechnology via what are being called "buckyballs" - a good example of finding an innovative use of an old idea.)
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