When most people think about innovation, they imagine inventors in their basements or coders in their dorm rooms creating the future of technology out of thin air. However, new products and technologies are only part of the innovation game. Every aspect of a business is open to innovation, and many industry leaders and entrepreneurs started by finding areas for creative improvement that their larger competitors ignored.
Look beyond the core assumptions of the industry to find disruptive opportunities. Look beyond where every other entrepreneur is pouring their resources. Instead, outflank your competition by finding creative and efficient new advancements from the side.
In an emerging personal computer industry focused on techies, Apple carved a place for itself by focusing on design, marketing, and customer experience instead. In a taxi industry focused on delivering an old service with new vehicles, startup Uber crushed many traditional players by focusing on delivery channels in the new world of apps. In a space industry barely changed since the 1960s, Elon Musk is busy trying to change the world by questioning the unquestioned, and this process is open for everyone with the right attitude.
Apple’s Innovative Breakout into the Personal Computer World
“A lot of people in our industry haven’t had very diverse experiences. So they don’t have enough dots to connect, and they end up with very linear solutions without a broad perspective on the problem.” —Steve Jobs, in a 1996 interview with Wired[i]
Silicon Valley, defined by its technology, is even more so since it emerged in the 1980s. The design was secondary. Technical stats and efficient software were what everyone was after. Everyone was innovating in the same area and the same direction.
Instead of just focusing on making a faster computer, Steve Jobs and Apple decided to focus on design and usability. He questioned the unquestioned industry assumptions, and the Apple II, with its sleek design and a full set of usable features, defined the 1980s personal computer market. To top it off, Apple’s Lisa and Macintosh computers paved the way for the graphical user interfaces that still dominate computing today.
For a decade, Apple was the computer company to beat, and Apple’s competitors were forced to compete with Apple on Apple’s terms. But after kicking Jobs out, Apple forgot its innovative skills. Microsoft and its manufacturing partners improved while keeping a lower price, and they crushed Apple’s market share in the 1990s. Innovation must be a constant process.
How to Find Holes in Industry Innovation
“Attack where he is unprepared. Appear where you are unexpected.” —Sun Tzu, Ancient Chinese strategist[ii]
The most cost-effective innovation often comes from a place where no-one is looking for a change. Entrepreneurs that want to change a quiet industry can avoid fighting head to head with competitors. Apple focused on design, usability, and marketing while everyone else concentrated on pure technology, and that outside approach created a new space for Apple in the market.
Innovation consultants at the Doblin Group began in the 1990s to map innovation across industries.[iii] They found ten areas of business innovation, including product performance, business models, sales, customer engagement, and delivery channels. They found that many industries focus their innovative resources on just a few of these areas, leaving many industry practices unquestioned and open to flanking innovations.
“To find open opportunities in your industry, brainstorm and map the various aspects of your industry, all the way from development to sales. Find where no one else is investing,” advises Chart Westcott, COO of Ikarian Capital.
Create a flowchart of your production process and see if there are parts of it where no one is innovating. Question areas of customer engagement no one is questioning, just to be sure. Question methods that have been unchanged for years or decades. The taxi industry was ripe for disruption by Uber and Lyft because it hadn’t bothered to question its business model in decades even as the world changed around it.
How Ford Pioneered an Industry and Lost to General Motors
“Any customer can have a car painted any color that he wants, so long as its black.” —Henry Ford[iv]
Even the most innovative entrepreneurs can become stuck behind flanking actions from sideways innovating competitors. In the personal computer world, Apple fell behind by focusing too much on design and usability while sacrificing an effective sales and business structure. Microsoft, the victor of the PC wars, faced in turn new competition from internet powerhouses. The popularity of the internet caught Founder Bill Gates off guard; he was quoted as an internet skeptic by the New York Times as late as 1997.[v]
Even Henry Ford, who catapulted the entire automotive industry into the modern age of assembly-line production, could not keep up with sideways innovators. Ford believed that a practical, quality product with an accessible price could remain the industry leader for years. He managed this with the Model T, which sold over 15 million cars to the masses, but never again found one magic car that everyone wanted.
Despite his head start, Ford let his main rival Alfred Sloan at General Motors, with its many brands and models for many different types of people, outflank Ford’s simple one-model approach.[vi] GM innovated to the side, introducing new designs, gimmicks, and perhaps most importantly, in-house financing to open the market to more customers.
A new innovative product, service, technology, or production process cannot sustain a business by itself. Every part of a company has room for innovation. Get there before your competitors do.
Don’t Get Lost in the Confusion of Change
“Change and flux constantly remake the world, just as the incessant progression of time remakes eternity.”
— Marcus Aurelius, Second century Roman emperor.[vii]
The Roman Stoics believed the only way to deal with the constant flux of the universe was to accept it and work with it, keeping a clear picture of the whole situation in mind. Business leaders could learn a lot from this philosophy. Do what you can within the limits of your case. There’s no way to know for sure what the next industry-disrupting innovation will be, but it often comes from unexpected corners.
Though kicked out of Apple in the 1980s, Steve Jobs came back to triumphantly save the company in the late 1990s by once again finding an innovation gap at the side. Jobs diverted his resources to find a new audience of consumer customers that the rest of the PC market, still primarily focused on businesses and institutions, had once again ignored.
Don’t find yourself boxed in because you weren’t watching your sides because you didn’t defend your flanks. Always look for that piece of cost-effective change. Every part of a business has room for investment and innovation. Find that process that no one questions, that seems stuck in a previous decade, and rip it into something new.
If you’re lucky, you might be the one to find an entire industry ready for innovation in marketing, process, and customer experience. But even if you only see one minor innovation in your business model one year, and one slight change in production the next, that could compound into a year-over-year advantage that keeps you moving forward while your competitors grind behind.