Why You Should Never Stop Innovating
That’s what they tell you in school, at work, really everywhere. While
continuing to learn and innovate is important, it might be even more
important to understand why it’s so critical. To help us get there let’s
look at the story of Windows mobile in the mid 2000’s.
The Windows Mobile Case
When Palm fell on hard times in the early-mid 2000’s Windows mobile was
really the only mobile OS left. There are benefits to being the last man
standing. For a good stretch of time they had a de facto monopoly on
mobile. This dominance caused overconfidence. The group that had done a
rock solid job began to focus on maintenance rather than improvements. This
“just get by” mentality seemed to work for a while.
I think we know how this story ends. It’s June 29th 2007 and the Apple
iPhone goes on sale for the very 1st day. Walt Mossberg at the Wall Street
journal calls it “a beautiful and breakthrough handheld computer.” To the
Windows mobile team it was more than that. The iOS team at Apple hadn’t
stopped improving their mobile capabilities. They had a drastic
functionality advantage and Microsoft would need to scramble to catch up.
To this date they haven’t (Windows phone is 2.9% of the market in well
behind Android’s 84.4 % and Apple’s 11.7%)
There’s nothing wrong with Windows (excluding Vista)
Or Microsoft for that matter. It’s easy to rest on what you’ve done and
stop getting better, or look at a drastic improvement and not execute on
it. Kodak invented the digital camera in 80’s but didn’t act on it for fear
of cannibalizing its main product line, film. What phenomena could cause
these big players to make the same mistake? Nobel Prize Winner Kenneth
Arrow calls it the replacement effect.
Here’s what it means: Through innovation it’s possible for a small player
to replace a large one. However, if a large player made that same
innovation it would only really be replacing itself. This gives incumbent
leaders a lower willingness to innovate than new entrants in a market.
There’s a reason accomplished companies or people rest on their laurels.
Their upside for drastic innovation isn’t as high as it is for a new
candidate or entrant. Now you’re probably thinking, “Well I don’t want to
be a Kodak or Microsoft mobile where I work.”
So what can you do?
Think Big: When some venture capitalists make an investment in a company
they look for companies with the potential to return more than the rest of
their fund combined. If a win is too small (e.g. only returns 1/5 of the
portfolio) it isn’t pursued.
Use this strategy on the job. When you’re looking at ways of doing things
better think bigger. If an improvement is only marginal don’t necessarily
go for it. Completely changing everything because it’s 2x better isn’t
helpful when a 10x improvement might be right around the corner.
Focus on the future not the past: You are not a combination of past
accomplishments/work experiences, that’s your resume. Rather than dwell on
how well that last project turned out stay hungry for the next opportunity
to make it even better.
Remember past performance is not indicative of future results. Too much
staring in the rearview mirror might cause you to miss your exit.