I’ve shared thoughts about technology’s global future on The Huffington Post this week. This topic is always fascinating. We’re in such a unique and exciting time for technology and innovation. You can read the post here.
It is an exciting time in innovation. Technology has helped redefine, reinvent and even create new categories, products and markets. Companies like Amazon, which traditionally sold books online, now have retail products, media and content as well as their own hardware devices such as Kindle and the Fire smartphone,. It’s not just limited to the technology industry, but dozens of others. Medicine, research, investing, transportation, design, the home, you name it. We are truly in a new and impelling world.
It brings up an interesting element for companies in the web business. It goes beyond the traditional players like Google and Facebook, to the startup you may own or work at as well as in some cases, major legacy companies and corporations. Innovation, in itself can be rather disruptive within these environments themselves, and charting where and what innovation needs to look like to your company regardless of size is a critical (and often overlooked) first step. While the internet enables every company regardless of legacy market to expand into new frontiers, where and how to innovate can be nearly as important to the picture as the innovation and effort itself. Many companies (including major, successful players) make these mistakes.
For web companies, avoiding missteps in innovation within your organization begins with a solid sense of what you do. This sounds simple enough, but many often misunderstand this element in the business online. In consumer space and for that matter in business-to-business , it can be broken down to two areas: products or service/utility — or in some instances (as with Google or Amazon), it can be both. How this can best be identified or defined is by asking yourself what exactly do you provide to the market? Is it a product that consumers can purchase? Or a service/utility they use? In the example of Google, it has a consumer product (Android smartphone) and it has a service/utility (Google Search).
Determining if your company falls into the consumer product or service/utility category doesn’t just help identify where and how to innovate. It can also enable a sense of the best route to take. For example, Amazon enables people to purchase books (service). A device for reading digital books was an obvious, potentially viable path (product). Then, Amazon recognized that it could go beyond books to sell content of all kinds, including music and television shows (service). It realized it could offer more than just one device as well — the Fire smartphone introduced this year (product).
By understanding where its core/legacy position resided, Amazon was able to identify multiple, organic routes to expand its business. The company then equally went beyond the consumer category to understanding where it might fit into the business-to-business (B-to-B) market — tools for authors to create and publish digital books, and ultimately pioneered a business utility in the form of cloud storage and computing. It’s a great example of how knowing your inherent, core position within a market can be expanded.
While it can be possible to expand into something with less of a natural, organic path with your company, taking this type of leap doesn’t just present challenges for an organization but moving a customer base to that offering will likely be the same. For example, Facebook provides a means for people to communicate with family and friends. But Facebook enabling retailers to set up stores on its platform has been widely reported to be unsuccessful. That’s because though Facebook has millions of users on its site daily, most would not easily make the correlation to also do their shopping there. Having to put in the work to marry Facebook users to also use Facebook in this way turned out to be a larger job for most retailers, and many shuttered their Facebook storefronts in the end to focus attention on other, more fundamental ways of using Facebook to drive sales.
When it comes to where and how your company can innovate, there truly is no ‘wrong’ answer, just the one that best fits. It all begins with identifying what side of the market you fit into (consumer product or service/utility). Your course for innovation, including whether or not you can expand beyond the consumer market, should unfold much more easily from there.