Understandably, most CEOs want their organizations to proactively innovate instead of finding that innovation has shown up at their doorstep. Forced adaptation is rarely pleasant. But when you look at examples of corporate innovation in the market today, only a select few are successful. How is it that some companies can stay on top of changing technology and market trends and others cannot?
As leaders of West Monroe’s corporate innovation function, this is an issue that keeps us awake at night, but it is especially top-of-mind this week ahead of Innovation Day on February 16. We wonder, is there a way to move quickly and understand the downstream impacts of investing in a disruptive technology? In the five years since we started our formal corporate innovation function, our answer is finally yes.
But we didn’t start that way. When starting out, it can be difficult to separate the hype of technology from the drivers of its commercial promise, leaving companies unsure on the right time to invest. (We’ve heard it, too: Blockchain! AI! Digital!)
Historically, as new technology emerged it would take several decades to become mainstream and deliver on its commercial promise. Take these examples:
Touch Screens – Although the underlying technology behind touchscreens can be traced back to the 1940s, the first finger-driven touchscreen wasn’t invented until 1965. Both Apple and IBM released touch screen personal devices in 1993, but reliable, high-quality touch screens didn't arrive until 12 years ago with the release of the iPhone in 2007 and Microsoft Surface in 2008. Touchscreens are ubiquitous today
Voice Recognition – Voice recognition technology began development in the 1950s with numbers and 16 English words. The U.S. DOD funded a program in the 1970s that increased comprehension to 1011 words, but it wasn’t until 2001 when Google invented ‘Google Voice Search’ that the technology could finally match user queries with actual examples of human speech. It was another 14 years before Amazon introduced the Echo (Alexa) and conversational interfaces rapidly became mainstream
Machine Learning – From the 1950s to 1990s, computer learning programs were being developed and tested. In 1997, IBM’s Deep Blue beats the world champion at chess. In 2006, Geoffrey Hinton coins the term “deep learning” to explain new algorithms that let computers “see” and distinguish objects and text in images and videos. Machine learning is still on its path to reach widespread adoption. Perhaps it will be the next big thing?
There are three important takeaways. First, the lag time to widespread use and adoption is noticeably different in today’s fast-paced market: Apple was recently accused of “selling yesterday’s technology at tomorrow’s prices.” Assuming they would maintain first mover advantage in the market, they underinvested in iPhone innovation and competitors caught up by mimicking and, in cases, exceeding Apple’s success.
Second, it can be challenging to understand the potential impact of innovation. Touch screens completely revolutionized the cell phone market (read: The decline of BlackBerry in one chart from the Washington Post) and if you didn’t notice, sometime last year your iPhone gained the capability to sort pictures and videos by recognizing the faces of who’s in them—and you didn’t even have to tell it to do that.
Third, there is almost always a tipping point when older technology becomes widely adopted. Autonomous vehicles could prove to be an example in the future. Today’s cars are utilized roughly 5% of the time. A 5% increase (to 10%) in the utilization of automobiles could completely transform a city's structure. If this milestone were achieved, the result could rapidly disrupt the $100M market for parking lot and garages by reducing the need for the 800 million surface parking spaces that exist today, covering up to one-third of downtown land in some cities. It isn’t too hard to imagine the impact on seemingly unrelated industries such as commercial real estate.
The reality is, the avid desire to innovate comes from the highest circles in corporate organizations but also needs to take a thoughtful, practical approach. This dichotomy often leaves organizations either under or over investing. In part 2, we cover four important lessons on how to achieve practical methodical innovation that leads to better ROI—and allows you to move quickly.