Technology and Organizations

Technologies rarely stand on their own.  They may make use of underlying infrastructures, the expertise of the users, the knowledge contained in their component parts.  There can be value in controlling the major assets related to a technology (e.g., sections of the telecommunication spectrum), but there can also be value in controlling small incremental components.  What I found in my morning blog scan highlighted for me how companies have to pay attention to both the big and the small.

The big: Organizational Theory includes a concept called “Complimentary Assets” (Teece, 1986 pdf; Rothaermel, 2001) The idea is that capabilities or assets that a company already has, makes some other capability or asset more valuable.  This is especially important when trying to evaluate the viability of a new business idea.  For example, Hank Chesbrough talks about how Apple’s customers’ belief that Apple provides a superior user experience was an asset when Apple was considering the viability of the iTunes Store (the idea being that users would put up with the proprietary nature of the iTunes products given the superior user experience).

The small: But not all additions are so vastly strategic.  Apple Insider reports that Apple has filed a patent for “Winter Friendly iPhone Gloves” or as formally presented to the USPTO a “High tactility glove system.” This is more of an incremental innovation, focused on “exploiting the possibilities of the dominant design (Henderson).” You don’t have to be an insider to capitalize on the value of incremental innovations.  DOTS (as noted in the Apple Insider article) already has a product on the market.  A prior version of iPod-clickwheel-friendly gloves (the true iGloves) have come, and I think gone, (”We are sorry, but the iGlove Multi is not currently in stock at any of our online retail partners.” though Tavo, with their “PlayPoint” technology seems to have stayed in the game.

Big or small, there is value to be found in innovation.  And the small can be so much more amusing.

Holiday travel, combined with company cutbacks due to the economy, inspires this post. News stories this week were all about the dismal results to expect from the retail sector. Hotels had reduced staff and services. Airline desks were as you imagine them at this time of the year. Many storefronts were boarded up (e.g., Linen ‘n Things, Mervins – more telling than their failure may be that the space hasn’t been taken over by other retailers).

I write while waiting for my delayed flight. Fewer extra planes (cost cutting) means longer delays when there is an unexpected problem. Even the generally helpful gate agents of this generally perky airline were showing the stress of being understaffed. My traveling companion and I discussed our options. The conclusion is we wait, and get used to waiting and other forms of reduced services.

The market will work (I am an optimistic capitalist), and the downturn will engender innovation. Paul J.H. Shoemaker (research director for Wharton’s Mack Center for Technological Innovation) is quoted in Knowledge@Wharton:

The crisis has multiple impacts,… Loss of revenue and profit will at first instill a cost cutting mentality, which is not good for innovation. But if the patient is bleeding you need to stop that first. Then, however, a phase starts where leaders ask which parts of their business model are weak (and perhaps unsustainable) and that, in turn, can lead to restructuring and reinvention…. The investment approach, however, has to emphasize more of an options and portfolio strategy rather than static NPV (Net Present Value valuation method).

The Knowledge@Wharton article provides other interesting points about disruptive innovation and the like. However, my question is more focused on the perspective of the users – and brings us to my reference to Hirschman’s 1970 book, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States.

Exit and voice are our options. Depending on your loyalty to the firm, you can choose to take your business/employment elsewhere, or you can provide feedback (voice) to the firm regarding the issues that have you thinking about exit. Exit has a more subtle effect on innovation as the company has to notice, figure out why exit is happening, then come up with a response. With voice, the signal hopefully includes viable suggestions for innovation. (See Schultze et al., 2006 for a discussion of “Internet-enabled co-production” with customers.)

In order to distract myself from my multiple hour wait (now, I learn, even longer), I have been wondering how changes in technology make us better able to exercise exit and voice. We have a broader market to work from in this downturn than we would have in 1970 – we can get on the Internet and search for a different hotel, examine the reviews and see if we are likely to be better off somewhere else. We also have more direct methods for voice – for example, through on-line reviews, direct emails to customer service, blogging, or Twitter.  Some related info:

• Advice for companies about managing email complaints
• Value of the old fashioned letter
• Discussion and list of complaint websites
• List of 800 Numbers

Increased computational capabilities has played a role in the increase of frequent flier/buyer/affinity programs. These programs are focused on increasing customer loyalty – ideally to then reduce exit – but do the companies then do more on their own to understand customer voice? In Hirschman’s 1970 world companies didn’t have the computational power to data mine, or the ability to get us to give up our demographic information in return for the possibility of discounts and free tickets. How are companies using this loyalty to speed-up innovation in this economic downturn?  Ideally, they will feel economic pain, and look for the most valuable adjustments, based on the data they have from their loyal customers.

How can we as individuals push the market toward innovation through exit and voice? Is it possible that this economic crisis will be more innovative that those of the past given the change in the information landscape?

Randall Stross writes interesting and informative books.  I just finished Planet Google, but I also enjoyed eBoys when I read it during the boom.
Planet Google is more than a history of the company.  It puts the decisions of the execs in perspective with broader Internet realities.  He describes the various steps surrounding the development of Google Earth and Google Maps in a way valuable to all students of Innovation – especially when you have a large bank account.  He also makes clear that many of the problems Google deals with are hard problems – video search (prior discussion of video search), copyright management, etc.  These are problems (and opportunities) for all of us.

Next up: Grown up Digital (Tapscott, author of Wikinomics)
Feel free to add to our reading list. ..or point to a reading list that you’ve found valuable.

John Sawyer and I had the opportunity to flesh-out ideas on how to trigger innovation in today’s relatively abstract world.  Published this week in the Ivey Business Journal “Changing Perceptions – and Triggering Innovation” extends my discussion of physical objects and innovation to include some practical advice:

 

1. STOP: Reflect on what’s new. Is there an opportunity to use what you have in order to do something different?
2. LOOK: Use analysis and experiments to highlight concrete differences in strategies or products.
3. LISTEN: Create concrete opportunities for innovation.

Take a look and feel free to comment here, or on the Ivey site.  We think we’ve provided some interesting examples to stop, look, and listen to.

Internet resources provide us with amazing power for innovation. For example, we have the ability to simulate earthquakes with great precision and thus stimulate new building approaches for greater safety; quality (and sometimes just fun) video production is in the hands of the masses (e.g., YouTube), and there is the broad availability of Internet interfaces that engender “mashups” across major platforms such as GoogleMaps  (here’s one that shows the “walkability” of your neighborhood).

However, these technologies are also relatively abstract.  They are available for our use – but will we think to use them?  A computer is just a dark screened paperweight until it’s turned on.  Does that trigger your thinking for innovation the same way a physical object would? Would the Houston engineers of Apollo 13 “Houston, we’ve had a problem” fame been as likely to find a jury-rig solution to fit a square carbon dioxide filter in a hole for a round one if they’d had to imagine the objects the astronauts had rather than having access to physical duplicates?

People are generally lazy – or perhaps “efficient” — even with just their thinking.  Louis and Sutton called this “habits of mind”.  We have to trigger new understanding if we want to spur on innovation. 

I’m getting to my question of the day.  Think about the Amazon Kindle eBook, recently promo’d by Oprah and so apparently moving into the mainstream.  Electronic presentation of written material has been around for a long time.  Yet only recently are we seeing electronic textbooks in significant use.  We don’t see people reading books on more general use laptops.  The University of Texas is running a pilot project where students get their textbooks via the Amazon Kindle eBook.  Is it the physical nature of the eBook that will make the difference regarding people reading electronically versus on paper?  The outcomes may extreme: smaller backpacks, smaller bookstores, no “used” textbook sales.

The physical existence of the eBook (and certainly the improved quality of the text in the high-end models) may be playing a triggering role.  Sony seems to understand the role of physical objects in changing perspectives.  Their Sony PRS-700 eBook is being introduced by 1000 specially trained sales people in 3000 physical stores.  They say this is important as people changed their minds about being “uninterested” in reading eBooks after physically being exposed to the product.

Do we need physical objects to help along otherwise abstract innovations? What other examples do we have?