In a departure from conventional thinking, Professor Barry Shoop says that staying close to customers can blind cmpanies to disruptive innovations and leads increasingly to failure for technology leaders.
Prof Shoop, head of the department of electrical engineering and computer science at the West Point US Military Academy, and 2016 global IEEE president, was discussing disruptive innovation durig a lecture series arranged by the faculty of engineering and the built environment at the University of Johannesburg’s Kingsway campus.
The rate of disruption is accelerating and established industry leaders are failing and disappearing faster than ever. The average lifespan of a Fortune 500 company was 61 years in 1958. By 1980 it had decreased to 25 years. By 2011 it was 18 years, Prof Shoop says.
“One of the reasons big technology firms have such short lifespans now is that they miss innovations. Other corporations pick those up and take their market share away.
“Companies that stay close to their customers are more susceptible to failure, because they’re listening to their customer. It’s counter intuitive. You go to your customer and say ‘what do you want?’ and they say X and you give them X. The problem is, your customer won’t see the next big thing and so you miss it.
“In 1995, the Harvard Business School researcher Clayton Christensen identified this weakness of leading technology companies in his article ‘Disrupting Technologies: Catching the Wave’,” Prof Shoop adds.
“This problem of customers leading companies astray is not new. Someone else said the same thing a long time ago. Henry Ford said ‘If I’d asked people what they wanted, they would have said faster horses’.”
The gallery of fallen global technology giants include mobile phone makers Blackberry and Nokia, as well as photography company Kodak, he adds.
Ironically, a disruptive new technology usually can’t compare in terms of performance with its established cousins and has to be evaluated with new measures. Those new measures won’t make existing, demanding customers happy. As an example, the first mobile phones could not offer the same quality of service or geographical reach as fixed telephone services. These were brick-sized and had a battery life of less than an hour, but offered the new performance measure of portability from the start, says Prof Shoop.
However, to spot disruptive innovation in time and develop it successfully demands new kinds of nerves in managing people, culture and structure in a business.
“To get innovation in general, you need to put people together in the workplace, very different people who would not naturally work together to get a true diversity of perspective,” says Prof Shoop. “If you truly want to be innovative, you have to accept risk and failure. You need to develop a culture where people trust you to get their back if they fail.”
On top of this, disruptive innovation demands a culture and willingness to argue at martial-arts levels about ideas, with diverse colleagues from different levels. Shoop saw this in action at a premium technology giant founded a century ago and still in the Fortune 100 in 2016: IBM.
“When I had the opportunity to meet with the vice-president of innovation for IBM at the TJ Watson Research Centre near West Point, he took me around the projects that students were working on. He said ‘if you see people in conference rooms who look ready to punch each other, arguing passionately and vehemently, remember that it is never personal. It is about building the very best solution’.”