- COO and a Founding Partner for Final Surge LLC developers of the FinalSurge.com coaching and training platform and apps that empower some of the world's best coaches and athletes to reach fitness and performance excellence like never before.
- CEO and Founder of Best Thinking, Inc., independent digital publishing. Mashable.com rated it as one of the top five best websites for publishers.
- COO and GM for practice management at the LexisNexis Group of Reed Elsevier, one of the world’s largest online publishers of scientific, medical, legal and business journals and websites.
- CEO and Founder of Time Matters Software, one of the most widely used information and document management systems in the U.S. legal market.
- 20-plus years in virtually every leadership position in high-tech innovation from startups to global companies, including building and successfully exiting his own startup, nurturing startups in his accelerator, venture investing, and driving strategy and numerous acquisitions for a major innovation initiative at a large global company.
- Testified before Congress on alternative energy, participated in White House meetings with the VP on economic development, and quoted in the Wall Street Journal on Internet taxation.
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Commercializing Innovation to Drive Growth
- Increasingly, companies acquire innovation rather than undertake it internally.
There is a bias for innovating through mergers and acquisitions rather than internally in today's business environment. Partly, this is because companies like Cisco made it look easy to grow and acquire markets and technology through acquisition. It wasn't easy; they were just very good at it, using many of the insights discussed here. A primary reason M&A is preferred is because M&A has been seen as a career-protecting approach. It's a little like the old adage that no one ever lost their job choosing IBM. People rarely suffer career setbacks through a disappointing M&A, but career limiting consequences are common when an executive is high profile in a failed internal innovation project.As an executive, when you buy a company, regardless of what goes wrong, the acquisition still shows up as an asset. Barring fraud or epic misinformation – that will be blamed on the M&A team anyway – it also can take a long time for the disappointment to become apparent in an acquisition. But a failed internal innovation project can be a very near-term and highly visible financial loss.
- Companies need mechanisms to mitigate career risk when innovating and not be biased regarding internal innovation projects and external acquisitions. Being equally adept at internal and external innovation will maximize the company's opportunities to use innovation to drive growth.
- Market power is increasingly concentrated.
In society, we have an increasing disparity in income among social classes. The same thing is happening in business. The big are getting bigger. The small are not getting bigger, and the bigger are pushing around the small. Increasingly, the small are fighting back with agility and aggressive innovation.The conventional wisdom in innovation is that one should not wake a sleeping giant. But these giants actually create opportunity for others because as they get increasingly large, they increasingly are unable to innovate. This surfaces unmet customer needs, leaving innovation-driven opportunities for smaller companies.
Said another way, the new age goal of the small-cap and mid-cap company is to learn to live comfortably in a cage with the 800-pound gorilla large-cap company. Many big companies will not get too excited over the loss of smaller innovation opportunities because they recognize their limited abilities to innovate. Still, some big companies, particularly ones that were recently high growth innovative companies themselves, will want to dominate and destroy any and all threats to their own growth. Increasingly, since big companies with market power often have difficulty innovating, your innovation will put you at odds with their market power.
- A smaller company cannot afford to assume that its innovation will get government or legal relief in the face of a move against them by the 800-pound gorilla.
For example, the only railroad in the town pretty much can set its ticket prices for train travel at whatever it wants (subject to monopoly regulation if there is any). But it can't buy a hotel in town – a different business where it has not "earned" its monopoly – and then offer free hotel rooms with train travel. They would be using their monopoly in train travel to give them an unfair competitive advantage in another market.
Therefore, it is important to recognize whether the innovation is poaching on a big company's monopoly market or entering a new market where no one yet has substantial market power. While government and legal countermeasures are likely not to be very protective in either case, to the extent they are part of an innovation initiative strategy, they work better in new markets that don't yet have a big player with substantial market power.
- The salient trend is that while government and legal recourse is waning overall, there increasingly are new markets available for innovation where big companies don't have earned-monopoly immunity.
- Intellectual property abuse has become a huge problem – particularly by patent and copyright trolls.
It is a fact of life that the minimum cost to defend against a patent or copyright infringement claim is going to be at least $50,000 to $250,000. Patent and copyright "trolls" will threaten legal action and then offer: "For $10,000, we'll go away." Even established image providers are suspected of seeding public domain websites with their copyrighted images, then using bots to discover where they are being used, such as in an article or blog. Then they send a bill to the user saying even if you remove the image you now owe them $3,500 or you face legal action. If you try to contact them you just get a call center that can only say, "Pay or we'll see you in court."
Something very similar is even more common with patents. In one case that almost derailed an important new software innovation that absolutely didn't even have the feature the troll was threatening about – linking an autodialer to a contact list, but the software had no autodialer. These litigation threats have become routine practices and will eventually become just the cost of business like malpractice litigation is to doctors, liability litigation is to manufacturers, and so on.
- Nevertheless, these threats of litigation can have a very disruptive impact on an innovation initiative. Management and investors, already nervous about innovating, often are pushed over the edge by the prospect of chewing up resources and scarce leadership cognitive resources through litigation triggered by the innovation initiative. It is for this very reason trolls often target innovation initiatives hoping for a quick overreaction. The innovation initiative should be ready for such grief and aggravation right from the beginning, plus have resources in the plan and budget.
- Reconciling transparency and stealth is harder and more important than ever.
There is a broad understanding in today's business world of how the trend toward transparency and toward customer advocacy is reshaping business. This is adding more moving parts to a company's innovation strategy. Companies must be able to respond to increased public scrutiny and they must be sure they understand and can serve customer needs.An innovation strategy must take into account such transparency and customer advocacy as an early part of innovation planning and execution. This is not necessarily a drag on innovation, as some might assume. After all, innovation is aimed at solving customer needs. However, this runs into direct conflict with the needs to innovate privately as to not alert the competition. Then again, innovation done in a black box usually doesn’t end well.
Many innovations by small-cap and mid-cap sized companies, in particular, can be stopped or hindered by a mere announcement from a larger or better known party. When a market leader, for instance, announces it will be coming out soon with the same product, it can freeze the innovator out of the market. It does not matter if the product actually exists, or if it even is on the drawing board. The action of announcing the product or service makes it difficult for the smaller firm to take orders as the market waits on the action of the market leader. There are laws and regulations against freezing the market, but they are rarely enforced. Often the larger firm will announce a soon-to-come launch date, and then let the date slip. Your innovation initiative must have a plan for these tactics.
Unfortunately, transparency and customer involvement in innovation is often thought to be mutually exclusive of stealth and secrecy lest the competition hijack your innovation. It also is in conflict with another fundamental tenet of successful product and service development: Develop in the real world, with real customers in real markets. Developing in the real world also undermines stealth and secrecy.
- A fundamental aspect of a successful innovation initiative is developing tactics to create products and services transparently and in the real world while maintaining stealth and secrecy. Current trends are only making reconciling these apparently mutually exclusive goals both harder, and at the same time, more important. The result is a conundrum that takes great innovation tradecraft to reconcile.
- We are reaching the growth limits of organizational theory and practice.
There is a tendency in innovation to overreact to failure, setbacks, and problems. The main reason that happens is because we tend to look at those failures as a personal failure of individual leadership and talent. The following are the typical bullet points of failure forensics regarding a disappointing result from an innovation initiative:
- “[insert name] didn’t do their job or work hard enough.”
- "[insert name] didn’t know what he/she was doing.”
- “[insert name]'s financial planning was naive.”
- "[insert name]'s scheduling was unrealistic."
- "[insert name] kept us in the dark about problems so we could not respond soon enough."
“Let’s understand and improve our systems” is far preferable to “let’s throw the bums out who let us down.” A lot of times that bum has incredibly valuable knowledge of what didn’t work and why it didn’t work, which is critical to the organizational change required to support innovation.
- Failure forensics is essential to determining what murdered your innovation.
What the superstar likely knew at the time he or she negotiated his or her hefty severance package up front is that successful innovation requires organization-wide engagement and support. And if he or she didn't bring much of that organization with him or her (because then it's called an acquisition), or if you haven't also put in place comparable organization-wide engagement and support, you will not likely get the same results.
- Prepositioning scapegoats by "throwing the bums out" or using the "superstar" model may give leadership some career cover, but it typically makes innovation failure a self-fulfilling prophecy.
- “[insert name] didn’t do their job or work hard enough.”