Wednesday, September 22, 2010

Innovations Examined

Dr. Phil Samuel

In my last blog, we examined a definition for “innovation” that is increasingly adopted by companies around the world. This definition involves three themes - bringing a new idea to life, generating new value for customers and generating new value for the business (provider). We also defined value as the ratio of desired outcome expectations (benefits) to undesired outcome expectations (cost and harm). The objective of every innovation is to bring about a new solution to life that generates more (new) value to customer and provider.

Let us examine some historical inventions through the lens of the three themes behind innovations. Consider Incandescent Light bulb, and Motorola’s Iridium satellite phones. Did they contain new ideas, did they come to life, did they generate new value to customers and did they bring about new value to the provider?

A new era in illumination started in 1802 when Humphry Davy created the first incandescent light by passing the current through a thin strip of platinum with high melting point. Although the illumination was not very bright or lasted long enough to be practical, it provided the starting point for the next 75 years of research and experimentation to improve the idea behind light bulb. Most of the effort focused on making the filament last long. In 1878 Edison filed his first patent application titled "Improvement in Electric Lights", followed by the demonstration of a successful light bulb in 1879 using carbon filament that lasted 13.5 hours of burning. Persistent experimentation and hard work led to the discovery of carbonized bamboo filament that lasted over 1200 hours. Edison’s genius lay not in just the product invention of light bulb but the business model innovation of bringing electricity to people’s homes.

Looking back, we can see that the invention, improvement and commercialization of light bulb brought lots of new ideas to light! The introduction of light bulb coupled with electricity transmission changed our lives forever. The era of candles and oil/kerosene lamps was transformed into a more convenient, safe, predictable and easy to use method of illumination.

In 1998, Motorola lunched the services of Iridium phones 11 years after engineers developed the concept and accumulating 1000 patents on the technologies behind them. The phone system offered reliable communications from anywhere in the world via a network of 66 low-Earth-orbiting satellites. The Iridium system allowed worldwide voice and data communications using handheld satellite phones. The Iridium network boasted coverage for the whole earth, including poles, oceans and airways. Before the launch, Iridium apparently screened over 200,000 people, interviewed more than 23,000 people from 42 countries, and surveyed over 3,000 corporations and identified an attractive group of customers interested in the satellite phone solution. Finally, many analysts forecasted a very bright future for Iridium satellite business owing to the company’s experienced top management team. Unfortunately, after spending over $5 Billion and a year later Iridium filed for bankruptcy.

It goes without saying that Iridium Satellite phone system brought many new ideas to life. Unfortunately, it failed to generate value for large set of potential customers and hence value for Motorola. While the satellite phone provided the benefit of placing calls conveniently from any location on our planet, it came with much cost and harm including heavy and bulky phone, high initial cost of the phone, high cost per call and difficulty with communications when line of sight to satellite was poor. The arrival of mobile phones and spread of GSM enabled customers to find alternate ways to make calls when not having access to a land line. The iridium project serves as an example of poor execution of the three themes behind innovation.

Dr. Phil Samuel is the Chief Innovation Officer (CIO) for BMGI, a management-consulting firm specializing in performance excellence and innovation. An integral part of BMGI’s management team since 2005, Phil brings more than a decade of experience to his role as CIO, helping clients in-source creativity and increase organic growth potential. Phil is a dynamic speaker and published author, whose most recent credits include the books, “Design for Lean Six Sigma: A Holistic Approach to Design and Innovation” and “The Innovator’s Toolkit: 50+ Techniques for Predictable and Sustainable Organic Growth.”

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