When should you strive for radical innovation?

Innovation is a word that gets thrown around so much in the technology world I feel it has become misinterpreted. CEO’s like to tout their innovative teams in public while they push their employees into maximizing their short-term profits. This inevitably leads to failure because while they are using their engineers to A/B test colors in order to increase profits 1%, a startup spent their engineer’s time on a radical new product ten times better than theirs.

How did this happen? Well, the startup most likely found out some crucial piece of information that when extended from an existing product, fulfills some market needs that the company initially missed out on. These extreme jumps in product value are where true leaps in innovation come from, just like when Apple released the first iPhone and Google introduced the PageRank algorithm. The reason these products were not created by anyone else was because their innovative features were not common knowledge before then. Google took the search engine concept and found that one of the most statistically significant determinants of page quality were the links to that page. Apple realized that phones were just lightweight internet connected computers contained in ones pockets, and then created a phone that exemplified their inherit versatility more than the current solutions. Both of these companies took previously existing products and creating their own versions of them that provided way more value to the consumer.

The problem with radical innovation in some companies is that they tend to give up resources on it once a good enough solution is found. This is bad due to the ever-increasing pool of knowledge our society is creating that can be used to formulate better solutions. Not only is societies total knowledge pool increasing, but as the company’s solution is used and becomes more publicized, more potential competitors are enlightened about their solution and thus even grounded in their attempt to find radically more valuable solutions. Therefore, the longer a company has remained stagnant on their current solution to a problem, the more likely it is that someone else will find a much better solution.

The answer lies in balancing ones company's short term goals, with the long term risk that someone else will blow them away. Another key point is to be sure one is solving the correct problem. Phone companies pre-iPhone were creating slightly different versions each other's products when Apple re-imagined the phone as a tool to connect a person constantly with the internet. They designed their phone around this concept with a fully functional web browser, unlimited data, and a massive screen to view it through. This stagnation and poor problem identification is pretty easy to see in many products today and I have recently blogged about how I think review sites, which have been around for a decade, are currently missing out on much more potential value.