Solving the Innovator’s Other Dilemma
In his best-selling book The Innovator’s Dilemma, Harvard Business School Professor Clayton Christensen demonstrated how successful companies can be doing everything “right” and yet still lose their market leadership as new, unforeseen competitors grow and take over the market.
One of our clients was facing a different dilemma: All the evidence about what they needed to do to deliver a more competitive, industry-leading solution was brilliantly clear. It pointed to the precise application of technology and people that would drive down cost-to-serve ratios while increasing market share. The framework of innovation for what could be a potential game changer was right in front of them.
Their dilemma wasn’t what to do—it was simply how to do it.
The core business had its hands full. A hodgepodge of acquisitions in a regulated industry had left the IT team with a tall stack of non-integrated applications and literally months of backlog enhancements that would intimidate even the most experienced of CIOs. But the market wasn’t waiting. Despite being ranked number two in their industry, competitive forces were heating up with the looming threat of further industry consolidation.
The good news to be found in this milieu of menace is that technology is on the side of the brave. More and more companies facing similar odds are deciding to launch new businesses using readily available technology to bring new innovations to market faster, more cost effectively, and unhindered by the obstacles faced by their legacy organizations. Ten years ago, this would have been considered a novel approach, but the price/performance curve and scalability of new technology means it is now the lower risk option over building from inside.
Although not a complete list, I would argue that five technologies in particular have contributed to the adoption of this strategy as a reasonable approach in achieving measurable growth:
- Conversational Artificial Intelligence-based (AI) User Interfaces
- Cloud-based Computing and Infrastructure
- “Low” and “No” Code Development Tools
- Proliferation of Application Programming Interfaces (API)
- Ubiquity of the LTE-M Network
Let’s briefly review each of these and discuss how all five can work together to create a centrifuge of capability, making it feasible to bring a new business to market in months instead of years.
1. Conversational AI-based User Interfaces
In a recent HBR.org article entitled What Does Whole Foods Get from Amazon? Alexa, for Starters, author Benjamin Gomes-Casseres states:
“If you are Whole Foods, you want to own Alexa. Buying groceries sight unseen from Alexa might not sound immediately appealing—but Whole Food’s brand engenders trust in the products it sells. I’d order pretty much any kind of food from Alexa sight unseen if I knew it was coming from Whole Foods.”
There are two points in this statement that are noteworthy. The first is the increased emphasis on trust on the supplier side of the transaction that accompanies ordering through a new, frictionless channel like Alexa. But the second—and to me more interesting—point he makes derives from his personal perspective. He didn’t say “I’d order pretty much anything over an interactive voice response system if I knew it was coming from Whole Foods”; rather, he said “I’d order pretty much anything from Alexa …” as if she were a real person—a small but mighty nuance that I believe is proof positive that the world of user interface has taken a giant leap. Because let’s face it—wouldn’t we all order from Alexa if the product was coming from a trusted brand like Whole Foods?
This takes us to the crux of the matter. Author George Anders drives home the point that what makes conversational AI the “game changer” of digital interfaces is “… its promise to conform to us, to respond to the way we speak—and think—without requiring us to type on a keyboard or screen.” In another widely-read blog post, Microsoft product manager Darren Austin attributed Alexa’s broader success to “… its ability to alleviate the stresses of an overbooked life. It’s the companion that is always ready to engage.”
What’s the headline? The progression of digital interface technology from “channel” to “conversation” signifies that, beyond being frictionless, it has become a trusted, convenient and natural part of our day-to-day behaviors. When AI “learns” to calibrate to our individual idiosyncrasies, this technology becomes much more than just transparent—it becomes a member of the family.
2. Cloud-Based Computing and Infrastructure
The second branch of technology that must be considered is the storage and accessibility of data and data processing. As Professor David Rogers of Columbia Business School points out in his book, The Digital Transformation Playbook:
“There is a reason Siri doesn’t work when our iPhones are offline: the computations required to understand spoken language and respond to it are too intensive to be managed with the processors on a current smartphone. Yet Siri works perfectly fine when able to access the cloud. All our device needs is a steady connection so that it can send our voice to a remote server with all the power necessary to process that unstructured data and respond in real time. Increasingly, more and more computing applications and services are delivered seamlessly over the Internet, with the real processing power residing in the cloud rather than on our devices and computers.”
Cloud computing hosted through data centers managed by companies like Equinix and Digital Realty provides any company with the ability to stand up a full stack technology platform or cloud-based call center in weeks, not months. Services like Watson are available “on-demand” just like cloud-based storage and customer databases. This means that big data is no longer the proprietary terrain of large companies with well-staffed IT teams. Any business can tap into best-in-class analytics tools today from cloud providers like SAP and IBM—paying only for the data and the processing used.
3. “Low” and “No” Code Development Tools
If you are new to this technology, don’t fret. The description says it all, but it is worth pausing on a definition of each of these tools as described by G2 Crowd, a research think-tank that gathers unbiased user reviews to help their clients assess products in current and emerging technologies:
- No-code development platforms provide drag-and-drop tools that allow businesses to develop software quickly, without coding.
- Low-code development platforms provide environments for businesses to develop software quickly and with minimum coding, minimizing the need for extensive coding experience.
The latter tends to live in the large enterprise space while the former, requiring little if any customization, meets the needs of non-programmers or “citizen developers”. Even though this concept is not new to software development, Forbes contributor Jason Bloomberg rightly predicts that the category is ripe for creating significant disruption because of two factors:
- Innovations at the core of Software-Defined Everything (SDX) that are bringing unprecedented levels of usability and power to these platforms; and
- The incorporation of artificial intelligence for a variety of purposes, including the integration of semi-structured and unstructured data sources.
For a primer on the latter, visit low-code provider Bizagi’s product demo on their website (www.bizagi.com) and watch how their AI-engine is incorporated into a risk score by simply dragging and dropping data fields via system connectors. Firms like Bizagi and OutSystems are able to produce enterprise level, scalable and mobile-ready applications in a fraction of the time and cost of standard software development firms. Certainly there is a lot of resistance from all of the parties you would expect and, as with any innovation, I am sure at least some of these cautions and protests are justified. However, watching the explosive pace of their assimilation, I’m inclined to agree with Zudy Software’s COO, Trish Kennedy, who said, “This ain’t no Case Tool—this is the future of AppDev.”
4. Proliferation of APIs
There is a reason why Salesforce recently paid $6.5 Billion to acquire MuleSoft, a global leader in this area. As reported on their website, MuleSoft’s Anypoint Platform “is a hybrid integration platform that enables organizations to easily build and rapidly scale an application network of apps, data, and devices through APIs and integrations.” Salesforce CEO Marc Benioff said, “Together, Salesforce and MuleSoft will enable customers to connect all of the information throughout their enterprise across all public and private clouds and data sources—radically enhancing innovation.” In fact, in the recently released book, Ahead in the Cloud, AWS CEO Andy Jassy suggests that one of the key factors in AWS’s staggering growth was decoupling their technology components to make them accessible via Application Programming Interfaces (APIs) . And if you’re still not convinced of the primary role of this service-oriented architecture in powering enterprise digital transformation, take a gander at Domino’s Anyware web page and—while you are waiting for your pizza to be delivered—consider the trajectory of their stock performance over the past 10 years.
5. Ubiquity of the LTE-M Network
LTE-M is the industry term for the low power, wide area technology standard that relies on existing features of the LTE network and is specifically suitable for Internet of Things (IoT) applications. It derives benefits from all the security and privacy features of mobile networks, including support for user identity confidentiality, entity authentication, data integrity, and mobile equipment identification. It also allows for device battery life as long as 10 years with a reduction in modem costs of 20-25%. But its real value lies in the fact that that everything just works—automatically. For example, one of our clients has piloted a “smart socks” product for a connected health application. To start using it, a patient needs to do only one thing: Put on the socks.
Putting It All Together
I know there is a lot to take in here, so let me put a ribbon around it:
- First: Conversational AI not only reacts to us, but over time will be able to predict and adapt to our behavior.
- Second: Cloud computing puts the power of the most sophisticated analytical engines in the palm of anyone’s hand.
- Third: Software tools dramatically reduce the cost and speed traditionally required to develop software applications.
- Fourth: APIs connect everything to everything else.
- Last but not least, the icing on the cake (or the stack): A low power, broad range LTE-M network provides pathways for all of these devices to connect with embedded security and authentication.
Coming Full Circle
Thinking about these five technologies separately should probably lead us all to pause and reflect on the impact they can have, not just for our organizations, but for the world at large. A few minutes spent meditating on the implications of their eventual convergence will soon have you realizing just how important it really is for you to take stock of your digital transformation plan.
Getting back to the beginning of this article, you would think the appropriate punchline from all of this would be the news that our client received the funding needed to launch their new business model by leveraging this brave new world of accessible, low-cost technology. In reality, as of the release of this article, the answer is … not yet—but we haven’t given up hope. Perhaps a better punchline—and more important point—is this one made by our collaboration partner and author of The Digital Transformation Playbook, Professor David Rogers: “Digital transformation is not about technology—it is about strategy and new ways of thinking.”
The only certain thing about technology is change. A year from now, I’ll probably be talking about five different technologies—block chain, neural networks, deep learning—who knows? I just hope we can get past the organizational and leadership inertia that prevents these ideas from giving rise to the robust business models needed to fuel the next generation of job growth and business success.
 Gomes-Casseres, Benjamin – What Does Whole Foods Get from Amazon? Alexa, for Starters, HBR.org June 17, 2017
 Anders, George, “Alexa, Understand Me” MIT Technology Review, August 9, 2017
 Bloomberg, Jason, The Low-Code/No-Code Movement: More Disruptive Than You Realize, Forbes Magazine, July 20, 2017
 Orban, Stephen, Ahead in the Cloud, Best Practices for Navigating the Future of Enterprise IT. Page xi, CreateSpace Independent Publishing Platform, 2017