Is Innovation Risky?

A common perception is that innovation is risky.  The bolder the innovation the greater the risk.  Ask 100 people whether the previous statement is true and most would agree.  But is that really true?  I’m going to argue no.

Behaviour Space

To make that argument I’m going to suggest, that at its core, all innovation is about the creation of behaviour space. Perhaps it’s an internally focused innovation, like the value disruption project I’m currently blogging about where they want a new system to collaborate.  Or it’s an external innovation like the iPad.  But in all cases it’s about creating new behaviour space.  And, if you understand behaviour space you can reduce your risk.

What exactly is Behaviour Space?

Here’s what I mean by behaviour space. Take pens and pencils for example.

Imagine for a moment that pencils had never been invented and all we had to write with was pens.  Everything was written in ink.  Now, imagine introducing pencils to that situation.

Once the pencil becomes available you can perform (behave) new tasks you couldn’t do before.  Tasks such as writing upside down, erasing, writing on surfaces you previously could not because the ink would blot.  You see, the advent of pencils allows you to perform new behaviors.

Note though, that the pencil itself is useless until you use it.  It’s the behaviour that the pencil enables that provides us value, not the pencil.  In reality, the innovation is not the pencil.  The innovation is the new behaviour space.  The pencil is simply the disruptor that enables the behavior to emerge.  It’s role is to disrupt how we normally do things to allow new behaviours to emerge.

Granted the size of the behaviour space is limited, especially if we compare it to something like the iPad.  Which leads us to our second conclusion; the value of an innovation is the size of the new behaviour space it enables times the size of the population that desires that new behavior space.

The same holds true for internal innovation like the collaboration example above.  Why does a company look to acquire new technology (to collaborate)?  Simple.  They are looking for their people to behave differently: to perform new collaborative and communication  tasks that they are not able to do.  Technology, new business models, new services, by themselves are useless.  It’s the behaviour that they enable that creates the value.

Why Understanding Behavior Space Reduces Risk

So, how exactly does understanding behaviour space help us reduce risk?  There are lots of ways.  In this blog post I’m going to talk about just one – Assessing potential innovation success.  In subsequent posts I’ll explore other ways understanding behaviour space reduces risk.

Measuring Innovation Success

One of the challenges in innovation is deciding which idea has the better potential (e.g.  market potential or productivity potential).

Does idea #1 have the best potential or idea #2.  Into which one should we invest scare resources in exploring?

Here’s how understanding behaviour space reduces risk.

Upon grasping the concept of behaviour space you are quickly able to compare the value potential of  one idea to another.

Try this test.

Take a few moments and think about the behaviour space the Kindle provides as a B/W screen to download books and magazines.   Jot down all the times and places you’d want to do that (Use the pencil we talked about).  Okay, finished ?

Now compare that to the potential behaviour space of the colour iPad connected to the iTunes stores and 10s of thousands of app developers.   Jot down all the behaviors the iPad could bring to fruition, along with the times and places you’d want to do that.  Okay, finished?  (BTW You can find additional ideas here.)

After 5 seconds of behaviour space analysis it becomes self-evident that the behavior space potential for the iPad far surpasses that of Kindle.  That’s why I predicted in this post that the iPad will soar where the Kindle did not.  Just in as I’m writing this post; in this article they talk about how Barnes and Noble are adding an app to the iPad to download books.  Already, the size of the iPad behaviour space footprint is growing.

What does this analysis mean to you?

Well, when you compare two ideas competing for resources on their ability to create behavioral space you start to measure which has the greater potential.  In addition, behaviour space analysis allows you to tweak the design of your product or service to enlarge its behavior space footprint.   So your ideas have better value potential before you spend precious resources in implementing them.

Summary of how behaviour space reduces risk

1. Innovation is the creation of new behaviour space.
2. The product or service is simply the disruptor that enables new behaviour space to emerge.
3. The size of the behavior space footprint represents the size of the potential value your are offering.
4. The greater your value potential the greater your monetization potential.
5. Using behaviour space to analyze innovation ideas lets you compare two competing ideas for their value potential.
6. Also, using behaviour space analysis lets you tweak ideas to enlarge their behavior space footprint and hence their value potential.

Thank you for visiting http://ennova.ca

There has been a lot of  negative press about Apple’s launch of the iPad.  Some commentators have focused on the name choice.  Others have lamented the lack of features: no multitasking, no video, no touch keyboard, to name just a few.

Missing the point

They’re missing the point about creating new market spaces.  Creating a new market space occurs when you enable new behaviors to emerge in a target population.  Specifically, if your offering (the disruptor) allows people to do something they couldn’t do previously, and many people want to do that, then it takes off.  The new behavior disrupts the norm of how people interact with each other and with space and in so doing, creates new value.

The power of new behavior space

For example, the Blackberry brought us push email.  That allowed us to stay connected everywhere.  New behaviors emerged, not all of them desirable mind you (emailing during a meeting).  This new behavior enabled by the Blackberry disrupted other phones and organizers (the Palm).

iPhone utilized the programmable touch screen.  That allowed more intuitive interfaces and a whole slew of new behaviors to emerge.  Face-Book, Twitter, Traffic alerts, conversion calculators, games, games and more games, etc.  Over 100,000 apps have been created in all sorts of areas with a corresponding increase in new mobile behaviors.

What they, and others (the telephone, steam engines to name a few oldies) did was create new behavior space.  As new behavior space grows, so too new market space grows.

(Behavior space = the number of people x the frequency at which they demonstrate a behavior.)

The iPad’s new behavior space

So what new behavior will the iPad allow to emerge?  When you inspect the core functionality of the iPad through the lens of behavior space you see that it was built primarily for two purposes, both of which do not currently have large “mobile” behavior spaces.

1. Playing games
2. Viewing media content (books, movies, magazines, newspapers, etc.)

Let’s just explore the latter.

Yes, the Kindle and Sony Reader already exist.  However, their adoption rates are small.  They haven’t swept the market.  I suggest two reasons for this lack of explosive growth.

1. Their offering is mostly one dimensional.  They only offer reading.  More critically, there is no obvious path for a potential consumer for new behavior growth. Consequently, potential buyers only have one reason to buy.  Do I want to be able to read in a mobile environment?  If yes they buy.  If no they don’t.  They’ve hung their hat (mostly) on one behavior.
2. Their business model does not include the potential for rapid evolution of content experience.  You can buy a book from Amazon, or you can download it.  In either case the book is largely the same.  Where is the capability to change the nature of the book, or magazine to take advantage of the new technology (disruptor)?

Look at how the iPad value-disrupts

1. iPad offers room for growth.  It has both games and media content (including movies) so it is multi-purposed to begin with.  Combine that with iphone apps and the device has more room to grow.  People will buy the iPad because there is more behavior capability there, and there is an expectation that those capabilities will grow even further.  This is especially true given Apple’s reputation.
2. With the app capabilities expect to see all kinds of new media content.
   • Self book-publishers will now publish their books through the iPad.  I worked with a self-publisher (Dr. Alex Osterwalder) on his recent book Business Model Generation.  Now he can publish on the iPad and make the experience far more interactive and rich.
   • Apps will allow successful bloggers to monetize their blogs.
   • The newspaper industry, which is in death throes, will do what the music industry did – migrate their offering to the iPad.  Some have calculated that printing The NYT costs twice as much as sending every subscriber a free Kindle.  With a multipurpose iPad it will make sense for them to build their own apps for their newspaper.
   • Creative magazines and newspapers will use color, 3G connections, GPS locators, video-play and gaming capabilities to develop an incredibly rich multi-media, multi-connected, location-specific experience to the user.  Think about that for a moment from a behavioral perspective.  What will the world be like when you can be at the corner of Main and Water street in your home town and point to a building and be presented with a multi-media array of games, news, background information, promotions, etc. all relevant to the entities you are pointing at?  Or, imagine what a “NYT experience” could be.  Even better, imagine what a small town paper could do (the Saskatoon Phoenix experience).  How exactly does Kindle compete against that?

The secret to market space is in creating new behavior space through a value disruptor.  The iPad, like the iPhone before it, and the iPod before that, is their next value-disruptor.

Watch the publishing industry be value-disrupted

So, no the iPad is not a replacement for the laptop.  No, it doesn’t do multitasking, or have video, nor phone capabilities.  It doesn’t need to.  It’s going after a much larger market.

100′s of thousands of  iPhone app developers combined with a mobile multi-media device creates the potential for a massive increase in behavior space in the publishing industry.  Apple will do to the publishing industry what they did to the music industry.  They will value-disrupt it.

What new behaviors can you imagine emerging?  In gaming?  In publishing?  How will the business models of publishers change?

You can learn more about value-disruption from the following posts.

1. How to differentiate - a story about a small janitorial firm
2. How LinkedIn is disrupting the recruiting industry
3. Pepsi uses crowdsourcing. Commoditizes Superbowl advertising
4. Will Google’s Nexus disrupt the smart phone industry.  Not yet
5. Companies value-disrupting their markets; a dialogue

Thank you for visiting http://ennova.ca