As promised, I asked Ron what he thought about A Better Place, a company that I'm very struck with that has the potential to transform our relationship with energy. Turns out he'd given them a lot of thought already - here's what he said:
To date, the electric car has been a poster child for ecosystem mismanagement. We’ve seen a lot of great innovation in the individual pieces: improved batteries, cars, charge spot deployments, etc. But what has been desperately lacking is a strategy for pulling them together on terms that make sense to mainstream buyers.
Better Place breaks the mold in this regard. They are doing something so interesting that I dedicated an entire chapter (chapter 7) of my book, The Wide Lens (www.TheWideLensBook.com) to exploring their strategy.
The power of the Better Place model is that that they are not trying to innovate the electric car, but rather to innovate the ecosystem around the car.
Two broad elements stand out. First is the way in which they have completely reconfigured the e-car ecosystem to overcome the six key problems that undermine the traditional approach to the electric car in the mass market. (see http://articles.businessinsider.com/2012-03-23/news/31227987_1_electric-cars-blind-spot-nissan-leaf) By applying what is essentially a mobile telephone operator model to the context of automobiles, selling multi year contracts based on Note, however, that this entails controlling the urge to grow – first achieving commercial success in the early markets, and only then moving forward to pursue the bigger fish. That takes a lot of discipline.
In the language of ecosystems, Israel and Denmark offer Better Place the opportunity to establish their minimum viable footprint. And from this position, they can leverage ecosystem carryover to accelerate their success in adjacent markets.
Their success is not guaranteed. But they have a better shot than any other player on the field.
- Posted Rita McGrath on April 03, 2012
My good friend (and sometime intellectual sparring partner), Ron Adner, has just released a new book, the Wide Lens, which highlights a major problem for companies seeking to innovate: The essence is that they focus too narrowly on the admittedly difficult job of getting their own innovations up to speed, while ignoring two other ecosystem based challenges that have to be overcome if an innovation is to truly take off.
The first is what Ron calls Co-innovation Risk, meaning the extent to which the success of a partiuclar innovation depends on other innovations being successfully commercialized. The trouble is that when you are depending on someone else to do their part, and that someone is not under your own control, you can find yourself with a really expensive launch budget that is slowly getting spent before a 'complete' product can be ready. Why did MP3 players not really take off until Apple invented the iPod? Because there was no easy (and legal) way to get digital music for the mainstream.
The second kind of risk Ron highlights is what he calls Adoption Chain Risk. This is the risk to which you are exposed if you have to first sell the idea to some third party before your ultimate customers can judge how good your offer really is. Many stalled innovations have struggled with this dilemma. One that I'm following closely at the moment is alternative energy ecosystem company A Better Place. If you meet, as I have, with their senior leaders, you'll be utterly convinced that they have cracked a workable, sustainable solution to the electric-car problem, suitable for mass adoption and ready to shift our habits forever. One small problem is that they are having trouble getting the other value chain partners in a row. Powerful, entrenched interests such as those of existing energy companies are proving a powerful force of inertia.
Maybe I should ask Ron what they should do - will keep you posted on what he says!
- Posted Rita McGrath on March 28, 2012
I am diving with great delight into my good friend Scott Anthony's latest book, The Little Black Book of Innovation. It's a great book which distills a huge amount of what we know works into an approachable format that is direct, action-oriented and very sound. Here is some advice from me. If you are trying to launch an innovation program in a large corporation, run, do not walk, to your provider of choice and get this book.
A particular "aha" for me takes place on pages 207-245 in which Scott addresses the most common problems I see innovations running smack into in large organizations. How do I find the resources? How do I integrate (or not) with the parent company's core competences? How do I avoid the "sucking sound" of the core business? And, how do I generate some early validating results to protect myself from the ticking clock of some corporate problem somewhere that threatens the existence of our group?
I am so taken with this material that I plan to use it myself in a workshop next week.
- Posted Rita McGrath on February 22, 2012
This evening, I will be a discussant at an event sponsored by the Columbia Center on Japanese Economy and Business. Entitled Video Games and the Shaping of Industrial Transformation, the event will feature a keynote speech by Yoichi Wada, the CEO of Square Enix, a global videogaming company with titles such as "Final Fantasy" to its credit. In his talk, Mr. Wada will trace the evolution of the game business as it moves from hardware and software running on dedicated systems, to consoles running more sophisticated games and software, to today's environments when games are increasingly running in the cloud, people play against other people, and the goal is to create a complete user experience that is unmatched by others. One of the more fascinating aspects of his experience is seeing how the industry has navigated - and in some cases missed - these technological and user experience transitions.
In my discussant role, I'm going to speak about the dynamics of business model innovation as well. I'll be describing the early warnings that a business model may be in trouble - namely, that new innovations stop increasing competitive differentiation; or new technologies make desirable new functionality possible or of course when the issues start turning up in the numbers. I've written about this before in an article (and live interview) over at my Harvard Business blog. Those interested in the topic can hear the actual interview, or of course, read the article.
If any of my readers would like slides or further references, drop me an email.
- Posted Rita McGrath on February 21, 2012
This blog post offers a nice description of Tata's awards for intelligent failure. Under the rubric "Dare To Try" the company encourages people to be willing to take intelligent risks. It's one of many company practices that seek to make the most of failure!
- Posted Rita McGrath on June 10, 2011
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