DISQUS

Rob Eleveld · 1 year ago

For a fairly simple way to systematically look at innovating in established markets and the products/companies that are "inertially bound from obsoleting themselves", I think of innovating in at least one of four key business areas:
1. Business model - for instance recurring monthly pricing instead of an upfront license fee model.
2. Product - some technology driven innovation or something as simple as really focusing on ease of use, which is Apple's strength in so many areas.
3. Channel - cost of sales can be radically reduced today by selling over the internet, using web-based demos instead of sending sales people on planes, etc.
4. Distribution mechanism - the difference in simplicity between downloading photos or music as opposed to picking up a CD or photos at RiteAid.

Mark Lamb · 1 year ago

The newest innovations tend to find the United States (and more specifically often California) to be their fertile ground, while the older markets are more diversified both in terms of countries and currencies.

This matters in 2008 because the U. S. is suffering a systemic crisis of confidence in financial markets. The dollar has been sliding against other currencies, and I expect this will continue. Moreover, recessionary circumstances do not bode well for domestic absorbtion of "cutting-edge" innovation in near term.

The U. S. corporate earnings story in 2008 will be best for companies with significant sales into non-domestic markets that grant them both growth and currency advantages. Because the addressable markets for retro-innovation are globally diversified, include faster growing economies, and focus on countries whose currencies are strengthening against the US dollar -- this could make retro-innovation the hottest U. S. export since derivative securities.

Darren Peterson · 1 year ago

Brent points out key characteristics of old markets that are primed for innovation. One of them warrants further exploration: Generalized pain in the status quo.

We all get used to doing things a certain way. And whether or not there are new or better ways, the familiarity of the old way puts up significant resistance to change. Worse yet, if the habit is pervasive within an enterprise, the points of resistance are numerous.

A great example is the different ways people use spreadsheets. If there ever were an application that fit the saying “If you’ve got a hammer…”, this is the one. In fact, the condition is so well recognized that this pain has earned its own name: Spreadsheet Hell. But try and take away the spreadsheet and you’re in for a battle.

Like Brent’s company, ours addresses a segment of the old market that struggles with spreadsheets. In our case it’s financial reporting. However, both offer a lesson in overcoming the resistance to change that’s important to companies innovating in the old market.

The term “change” is not binary. It’s a continuum that directly affects “resistance”. The more change you require of the user or company, the higher will be their resistance. However, the opposite is also true.

Successful innovations in the old market often are the ones that embrace aspects of the status quo that people are most attached to and extend them in ways that diminish the pain of doing that way.

Sales force automation is a great example. While many SFA software vendors built solutions to re-engineer the sales force, the ones who were most successful simply embraced basic contact management and extended it in subtle ways to give the company some visibility into the pipeline.

We are finding the same holds true in the area of financial reporting. Embrace Excel as the application of choice for financial professionals and extend it with capabilities that address its deficiencies as an enterprise and compliance reporting tool.

If you’re looking to become a catalyst for seismic shifts in an old market, consider innovating through technologies the old market holds dear. This kind of flanking move can be much more effective for entrepreneurs than a frontal assault and all the resistance that goes with it.

Pete Strom · 1 year ago

A metaphor: Discovering the New World vs. innovating in the Old. Waves of explorers threw themselves into the quest for the New World, seeking fame and wealth. We hear about the successful ones (Erikson, Columbus, Magellean, De Gama, etc.) who returned great wealth for their benefactors. However, the majority were failures, returning (if at all) empty handed. In the mean time, many, many more stayed home and became very successful and gained tremendous wealth through innovating in the Old World.

Now this metaphor cannot be taken too far, but the point is that the quest for the New World, while exciting and tantalizing, can also have a disproportionately high ratio of risk to reward. To Brent’s point, the key to success in the Known is to find the pain point in an existing process and successfully innovate a significant resolution. With the point about diapers, I grew up in an era when my mother always had a bucket of my younger siblings “used” diapers in the washroom, awaiting the laundry cycle or the diaper service. Everyone accepted the unpleasant situation until the disposable diaper appeared. It eased a parent’s burden and mostly eliminated an entire industry!

Dave Walsh · 1 year ago

Brent is spot on and this type of innovation has become an axiom courtesy of his neighbors in Redmond. Microsoft galvanized this path to gold years ago. Consider the following: Excel - VisiCalc; Word - WordPerfect; SQL Server - Sybase; Internet Explorer - Netscape. Need I say more? For Smartsheet.com the additional dimension will be delivery as a SaaS application. This twist of innovation puts it on an uneven playing field against the competition.