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by Mike Cane
In the innovation world there is always a lot of interest in breakthrough and disruptive innovation projects. It’s an exciting goal to maximise your profitability by making the competition obsolete when you dominate a product or service category. We all know the ‘poster children’ of this strategy – Apple, Google, Nespresso, need I go on?
Breakthrough innovation is what we do for our clients, and our experience over hundreds of projects tells us it is certainly not easy. It is about finding opportunities where you can create a step change in the value you deliver to your customers. Different companies adopt different strategies to achieve this. But we believe the most effective way is to first analyse consumers and stakeholders for valuable, unmet needs and then to create new products with the technologies to meet those needs.
So I was interested to see recently that Hyperloop One – the US-based innovative high-speed transport system – has announced its first “system-level” test. Hyperloop presents itself to us as archetypical disruptive innovation – a transport system that provides a step change in journey times and is cheap to use. I don’t think anyone can doubt that there is a market for this proposition. On top of this, Hyperloop One president of engineering Josh Giegel – when recently interviewed by the Bloomberg Technology TV channel – announced they had learned from their test that they “could make Hyperloop One work”. He said the next stage was commercialisation to make it reliable, and that this can be achieved by 2021. Surely this project meets all the criteria for disruptive innovation?
When considering potential innovations, rational investors balance the potential discounted revenues with the cost of getting the new service to market. In an optimised investment portfolio, you need a range of investment profiles so potentially very ‘high-return/high-risk’ opportunities like this one have a place. The impact of Hyperloop on the transport market would be so ubiquitous that potential revenues will be so big that it becomes almost unnecessary to calculate them. Certainly they must swamp the development costs, mustn’t they?
As an innovator, when I am faced with an exciting new product concept to review I prefer to judge using whatever fundamentals and evidence I have – in this case, the principles of engineering and my experience of the challenges of bringing complex new technologies to market. Having said that, I make a point of being an optimist when it comes to innovation because without that trait you won’t ever get started on the journey. I have great respect for those with the courage to break new ground and follow a project through when the odds stack up against them.
I then try to be objective, avoid cognitive bias and treat innovation as a learning process. There is the stuff you have shown you can do. That’s ‘banked’, so to speak, and can be reviewed. Then there is stuff you don’t know how to do yet – but you have a theory that stacks up against known engineering and market data, backed up with a realistic and feasible experimental plan to prove it (and you have a couple of back-ups if the first solution doesn’t work). But that’s not the whole story – you will always find stuff you didn’t know that you didn’t know, and you have to fix these issues too. This is where expert project management comes in, looking carefully ahead and resolving these uncertainties in a systematic manner, therefore minimising the ‘unknown unknowns’ and dealing with them when they do come along.
To me, it is these three categories that help me define the difference between a disruptive innovation and science fiction. In science fiction the author asks the reader to ignore some ‘known unknowns’ so you can sit back and enjoy the story. So I get uneasy when ‘known unknowns’ are downplayed in innovation projects, and even more nervous when the possibility of ‘unknown unknowns’ is ignored. If engineering planning is made on this basis, then these plans are certainly flawed.
The relationship between innovators and their business sponsors has to be one of mutual trust for the innovation ecosystem to flourish in the long term. Uncertainty is inherent in innovation and all participants must realise this and what they are getting into. An open discussion of uncertainty is the only way forward – and bluffing and too much marketing hype at an early stage can only give our discipline a bad name.
I think, so far, Hyperloop’s communications are bold, confident and lacking in detail. This is ironically a self-defeating strategy for knowledgeable onlookers. As a bystander to this project, their communications approach leads me to regard it as a bit of a curiosity. But if they start to ask our governments for public money to fund their plans, then I hope someone does get some real answers before parting with a penny!
Mike, Matt and George try to predict emerging challenges, innovation opportunities and technologies that will shape our work at CDP over the next ten years.
17 January 2020
Chris Houghton, CDP’s Brand Innovation Leader reviews the world’s largest consumer product expo, CES 2020 in Las Vegas.
10 January 2020
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