How to distinguish disruptive innovations from trendy fads

How to distinguish disruptive innovations from trendy fads

 

Every day when I read or post about new technologies products and ideas I’m always prompted with the same question: is it going to work? Sometimes it goes under the form of “will it ever go mainstream?”, but the point is the same, how we can distinguish disruptive innovations from trendy fads. There’s no unique recipe and every new technology, start-up and gadget can be seen from different points of view. I describe my individual approach below, with no claim being correct or universal, but I see that this type of thinking, coupled with analysis of the topic and / or conversations with experts, has been a good compass to me along the way.

How to distinguish disruptive innovations from trendy fadsFirst of all I evaluate if the new item fits with ancestral human needs. It’s a sort of consumer marketing reality check. I understand this might look like starting from the end, but the evolution “coded” human beings around survival and reproduction, so every single behavior from recognizing a face to living in a group, from eating together to smiling to a person of the opposite sex, has an anthropological meaning. Survival and reproduction are at the basis of the pyramid of needs, before physical needs, security, belonging, esteem, learning, aesthetic, self-actualization and transcendence. Every technology helps people to satisfy one or more needs; the more basic the need, the more the potential of the technology. The more a product fits with an ancestral scope, the more is likely going to work (our brain will recognize it as useful).

For example electricity, one of the most disruptive innovations gone mainstream in the previous century, was really about survival, shelter and security; it has something to do with light and fire, so it reminds the times where humans had, for the first time, the ability to drive away beasts from the caverns, then live safe and in a dry place. It’s such important now, we don’t even see it anymore in action, but it’s simply behind any wall. No surprise then if access to electricity is considered by the Worldbank as a crucial item explaining the wealth of a country and we are happy that the world average has increased from 83,2% of the population in 2010 to 84,7% in 2014 with about 6 bn people having electricity. We don’t think about it as a disrputive technology now, but it was last century!

Another example, social networks, are mainly about sense of belonging; the ancient apes used to live in groups because it simplified the hunting and improved the possibility of survival as, those excluded from the group were destined to die quickly. Once again, it should not be a shock if in less than 20 years, a relevant 2 bn people gained access to social networks.

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Second, I try to understand the physics behind the product. This is a sort a technology check. My principle is simple, when a technology is in reality a complex mix of different technologies and / or it requires a huge computational power to work, then it will spread slowly or won’t go mainstream at all.

The point about the complexity I believe is self-explanatory; for example driverless cars are a fantastic innovation, but they need several technologies to work together: the standard car features (engine, electronic, fuel combustion etc…), the new driverless items (GPS, cameras, radars and sensors, dimensional mapping etc…) and finally all the road infrastructure which has to communicate with all the rest (so it has to be enhanced). I bet putting everything in synch will require more time than the current expectations, so relax, in 2020 the vast majority of cars around our streets won’t be unmanned yet.

31december2099The consideration about the computational power has something to do with the future of the Moore’s law, the observation that the number of transistors in a dense integrated circuit has doubled approximately every two years. This is not going to last forever, because of physical limits; we are now approaching to the end of this evolution, which can last, according to some estimates, less than ten years. So I go quite basic, a technology that works with a computational power similar to what we have now, has more possibilities to get ready soon and spread fast, while if it needs resources that are planned to come in the future… they might never come or come later when a new technology will have replaced the silicon wafers. That’s why I think virtual reality development can be at risk; if it reaches an acceptable level of quality and reality thanks to the next growth of calculus power happening before 2020, it will be a huge innovation investing many different fields, otherwise it will remain penned to gaming and a few other applications.

My third and last consideration is about profitability. We like it or not, from accumulation of food for the tribe to commerce of spices around the globe, from the dark ages of feudalism to current extraordinary bank profits, our history is based upon the accumulation and defense of individual wealth. Today there’s a clear correlation between the number of patents registered (they are an indirect indicator of innovation) and the wealth concentrated in the hands of the richest 1% of the population, so if we put apart the romantic view around technology and progress, it’s fair to say that innovation works when there is a champion (a person or a corporation) aiming for profit. It was Gutenberg with the paper and the books, Edison with the electricity, IBM with the mainframes, Bill Gates with his idea of one computer on every desk, Steve Jobs with the tablets, Tesla with electrical cars etc… When I see that there’s a leader putting money, resources and intelligence in a project, the possibility of success are usually higher than when there’s just a fragmented bunch of entrepreneurs or scholars.

31december2099This player leading the way is usually interested in profits. Profits come when you can sell huge quantities and the highest price compared to the lowest cost. That’s simple, when a technology can meet the needs of than entire humankind rather than those of a small localized niche, with people happy to spend money on something which guarantee a good margin, somebody is going to create or expand the market. For example, I think it’s logic that wearables have been positioned as a product for health and safety (basic needs), adopt a relatively simple technology (mainly GPS and wireless plus oscilloscopes, altimeters or similar mature devices) and are positioned at an average acceptable price (roughly half of the market was below 100 USD in 2014). And who are the champions? Fitbit with a remarkable 34,2% at the beginning of 2015 with 3,9 million units shipped and the Apple watch launched recently. Is the market going to grow or implode soon? The relatively low importance or absence of Samsung, Sony, Philips and other big guys simply tells us, the market is going to grow. And probably a late player will purchase Fitbit soon (a movie already seen no?). Then, when in a second phase wearables will become really intelligent and maybe measure and control your heart, your blood and even prevent you a cancer for a few dollars, well we might see a phase 2 when health&care corporations will enter the market and wearables will be as popular as the simple watch was just a few decades in the past. And this is not mentioning the obvious wearable: your clothes; which will be probably represent a phase 3 when people will become real control units of the environment around them (check pollution? analyze traffic? count people in an area? inform friends around? Etc…).

 

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