Connected Innovation and business models

I recently attended the World Innovation Forum ’09 at the Nokia Theater in New York (May 2009) and three speakers from that conference spoke about three themes that converged to provide a backdrop for a discussion on the essential capabilities a company needs to have in order to emerge from the current economy ahead of its peers.

First, Paul Saffo advises “never mistake a clear view for a short distance”. He explains that the classic S-Curve of adoption intersects with the straight line of expectation.


He explains that companies overestimate the level of technology adoption by the market, and therefore don’t plan for the distance, time and investment it takes for new innovations to take hold. He states that it takes on average 20 years from the initial idea for technological innovations to take hold, and many game changing innovations had their unsuccessful predecessors.  He advises innovators to look back over those years and find great ideas that havent taken off — yet.

Clayton Christensen showed how tradional B-School training teaches corporate leaders to streamline costs, maximize profit, and this teaching actually biases them against innovation.  He shows through the example of the steel industry and others how the incumbents over time “liquidated” their business models to the new entrants and in some cases went out of business, by doing all the right things they were taught by traditional finance.  He offers advice for the entrenched incumbents to enable them to bring about disruptive innovation without cannibalizing the sustaining innovation that pays the bills in the short term.


Finally CK Prahalad shared examples of how technologies that havent changed much over the years, like tires and pacemakers, can actually be part of a unique, personalized, customer co-created experience (N=1) by leveraging a global pool of resources (R=G).  The space between the push of technology and the pull of the customer is where the business model lies.

After listening to these three presentations, I boiled down some basic observations:

People have been trying to solve some of the same problems unsuccessfully for over 20 years, and many great ideas and technological innovations failed by underestimating the runway of and overestimating the speed of adoption.  Traditional finance training pre-disposes companies against innovation and to quit trying.  It is often not the technology that needs to be transformed, but it is the business model.

In the recent Vertical*i white paper “Best Practices for Networked Innovation” we outline the 4 critical capabilities that companies need to have to become good Networked Innovators.  In order for companies to leverage a global pool of resources, from suppliers, experts, researchers, marketers, communities of practice, etc, to deliver a unique, customer co-created experience, they need to build an innovation ecosystem that is built on a strong alignment with strategy, fluid and dynamic connections to networks of innovators, consistent execution that supports core values, and effective partnering skills that keeps the ecosystem grounded in trust.

Rather than expound upon the principles in our white paper, I’d rather open it up for comment. Feel free to contribute your thoughs on either the works of Saffo, Christensen, & Prahalad, or the 4 capabilities in the white paper.  Where do you see the “next frontier” of innovation for your business?

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