The case for innovation 

Today I will be a speaker at the UNSW Innovation summit, sharing some of the insights of a 10 year innovation journey. 

In today’s market, the need for breakthrough innovation, particularly in business model is acute. 

A range of the old truths regarding innovation are no longer truths:

  1. To get breakthrough innovation you need lots of ideas – in fact focused innovation is the key to creating business model change
  2. Fail fast, fail quickly – absolutely you have to be prepared for ideas and investments that don’t succeed. But this statement has become an excuse for indiscriminate and unfocused idea generation 
  3. Process kills innovation- regulation can create a lack of agility but the right processes – processes that create a disciplined approach to take ideas to implementation is what is needed to bring innovation to life. 

For Australian businesses, Innovation is not an option. 

Last year Australian businesses spent $30bn on innovation- sounds a lot but places us 19 on the innovation list (comparative to market size) and we are a poor 76 on innovation efficiency. 

In my view business needs to do more. 

How we approach innovation, how we lead our organisations to embrace business model change and how we drive to make our businesses ‘future ready’ will determine the long term sustainability of our organisation. 

Innovate or copyvate? 

Innovation is now essential for all organisations. 

The rapid changes occuring in business model, driven primarily by new technologies, means if you are not innovating your business model, service and product you are unlikely to be sustainable in the medium term. 

I believe innovation can come from internal innovation (innovate), acquiring externally developed ideas or products (acquivate) or innovations developed in conjunction with customers, alliance partners and your ecosystem (ecovate). All forms are important as you need a portfolio to be effective. 

A traditional school of thought has been to pay attention to competitors and be a fast follower – letting a competitor spend the R&D and rapidly copy any new feature or release (copyvate).  This is a legitimate modus operandi for all organisations- having strong competitive intelligence is essential. 

But if this is your only or primary focus, it comes with significant perils. Why? 

1. Certain of the new models are largely winner takes all. Network or platform models ( think Uber, Airbnb and Amazon) are incredibly difficult to compete with as a fast follower once they have established their base. 

2. Innovation is as much cultural as it is programmatic. Being a fast follower only, does not build the spirit within your people that I believe is needed to keep driving the company forward with new ideas and improvement. 

3. Being a fast follower only means the company is often fixated with the one competitor and fails to recognise disruption coming from other organisations or the opportunities from adjacencies. 

Having a portfolio of innovation, including all sources of innovate, acquivate, ecovate and yes, copyvate, is essential and increasing in importance in today’s fast changing world. 

Have we got the acronym AI wrong? 

Is the term artificial intelligence (AI) the right term? 

If you think about it, what is artificial about the intelligence created by machines?  

Using cognitive technology or machine learning to create insights that seem to be pretty real to me. 

The term artificial obviously refers to non- human intelligence; but again I believe this is taking the wrong position. 

It is referring to a world of ‘man against machine’. We should be thinking of ‘man with machine’ and the huge opportunity that human intellect and creativity and machine intelligence can bring together. 

Surely the right term for AI is augmented intelligence – and the thoughts of how we can harness all for a much better world. 

AR is much more than Pokemon Go

We’ve all seen the impact of Pokemon Go – how Augmented Reality (AR) has taken a game global and changed the gaming experience for so many. 

It’s easy to dismiss AR as something for games. But it is so much more than this. Companies such as Vuforia are using it in factories across the US. 

Examples of use are viewing a machine or seeing key statistics such as temperature and pressure or viewing a machine part to see diagrams of how the part links with others or should be assembled. So huge opportunities in terms of safety and efficiency. 

More simple use cases include being able to walk through store, Factory or house layout or viewing furniture, carpet or household items in your house before you buy. 

Today Google launched Tango, a smart phone AR system that shows they see it as a big opportunity (see link below). 

I haven’t played Pokemon Go but I am certainly not underestimating its impact. We have just scratched the surface on AR but I believe that it will have significant impact on our work and home lives. 

Google launches Tango AR smartphone system

Innovate or aquivate? 

We’ve seen a large number of acquisitions amongst the major technology companies. Companies such as Oracle, SAP and IBM have long been buying up any rising software companies to fill out their suite of offerings. 

Google, Microsoft, Facebook and Amazon have also been on buying sprees to buy aspiring Social or AI companies that may give them an advantage or are a possible threat. 

People are also talking about Apple looking at acquisitions- as though this is a new event – forgetting that a lot of the technology in the iPods and iPhones was originally acquired. 

Certainly it looks attractive for these majors given their high stock valuations and the incredibly low interest rates. 

What do all these acquisitions say about innovation? 

It certainly says that not all great ideas are generated within a company. 

External innovation or acquiring innovation (acquivate as I call it) has become a smart thing to do – very often adding to internal innovations to create a portfolio that sustains a company. 

Organisations that look at innovation as a portfolio – keeping an open mind to and encouraging both internal and external innovation are likely to be the longer term winners. 

When your printer becomes your enemy

I am a huge fan of the technological world we live in and are moving towards. New technologies and the IoT (internet of things) are changing our business models and creating huge opportunities for companies and great benefits for consumers. 

But cyber security is a huge issue. Over the last couple of days we have seen the concerted cyber attack that brought down a major internet provider that was critical to sites such as Amazon and Twitter. 

It turns out that it was a concentrated and coordinated ‘bot attack’ using what we would now see as everyday connected devices such as your Panasonic, Samsung and Xerox printers. 

While the ‘method of attack’ is now known, the patches haven’t been done yet so companies will be scrambling to provide the fixes to try to reduce the chances of this occurring again. 

It is sad that cyber is a growing part of our world and that criminals, States and nerds are out there trying to break down our world. 

The good news is that organisations are becoming more vigilant and improving cyber protection all the time. The bad news is that it is a never ending battle – but one I believe shouldn’t deter us from creating the benefits that AI and IoT can bring. 

It’s not all about the app! 

So many organisations get excited about an app and believe creating an app ‘makes them digital’. Too often, all they are doing is taking an existing service online and not adjusting the business model to suit a new world. Paving the cow patch as we used to call it. 

Below is a great article from Fortune that describes the failure of Washio, a laundry service start -up that raised $17m but did little to really change the business model.

Getting to the essence of customer needs and understanding how your business model addresses the needs is the most crucial elements in today’s world. Not easy but fundamental for success. 


Turns out that demolishing laundry isn’t all that easy.

Earlier this week, on-demand laundry startup Washio told its customers that it was shutting down its service. Founded in 2013, the Los Angeles-based startup provided laundry and dry cleaning services to customers in six U.S. cities. At first, customers had to schedule the pickup and drop-off ahead of time, but in 2015, Washio added the option of a pickup within 30 minutes.

But all that “innovation” didn’t prove sufficient, despite the nearly $17 million Washio raised from investors like Sherpa Capital, Canaan Partners, and actor Ashton Kutcher.

Washio is far from the first startup in the so-called “on-demand” economy to call it quits. Last year, Homejoy, a service that dispatched house cleaners with the tap of an app shut down after it couldn’t raise additional funds, was slapped with a labor lawsuit, and generally failed to create a sustainable business, as Backchannel detailed in a lengthy report. Valet parking apps Caarbon and Vatler folded last year, and “Uber for kids” startup Shuddle shut down in April.

And we’re only going to see more of them die. Why?

Because despite their fancy mobile apps and funding from technology-focused investors, these startups are in the business of providing a consumer service. They must build complex operations that involve customer interactions and delivery staff while competing in low-margin, labor-intensive businesses.

Ask anyone in the service sector and they’ll surely tell you it’s no walk in the park. Even supposedly “mature” companies like Uber, which now offers rides and food delivery, still struggle with things like customer service, managing drivers, and providing consistent service to customers.

It doesn’t matter how shiny your app is, if you lose my laundry or burrito, make me pay a small fortune, and still can’t deliver it on time, it’s game over.

Kia Kokalitcheva