Wednesday, March 3, 2010
By Dr Uday Phadke, Chief Executive, Cartezia.
There are those who would argue today that there is an over-supply of technology innovation in the marketplace but a yawning gap in the delivery of profitable products and services. That the successes of a very small number of companies, such as Google, Apple, and Microsoft, (less than 2% of listed companies by most estimates) account for the bulk of new revenues created by technological innovation (about 98% of total revenues according to the same sources). And they would largely be right.
So why this gross mis-match?
In our view this is primarily down to a failure to match technology capability versus market need. Even allowing for the fact that some technologies can generate new market needs, the problem arises because most companies fail to see that technological innovation needs to be matched by innovation in business models and distribution channels.
A classic example that illustrates this issue is Xerox and its experience of introducing the photocopier into the office environment. But for the innovative business model of charging customers for the copies they made rather than the copiers themselves, Xerox would not have been able to transform this market. The best-known recent example, of course, is Google, which had great search engine technology but could only succeed through its innovative AdSense programme based on the pay-per-click advertising model.
And in the volatile conditions we now see, speed of execution is often the key to success: trying things out quickly and learning from it, the so-called ‘fast-fail’ approach, can allow businesses to fine tune or even radically revise their strategies.
Part of the problem may be cultural, where those from a scientific or technological background are well-trained in analytical skills, but their synthesis skills are less well-developed.
Technology businesses need to think harder about how they acquire these scarcer resources.