In this Lesson, we will be spending our time learning some practical and tactical means by which we can understand "space." Understanding space and where peers and competitors function is a bedrock concept in terms of understanding opportunity and potential differentiation.
In my experience and observation, much time and effort is wasted in trying to create "synthetic innovation," whether a product, service, or campaign. What I specifically mean by "synthetic innovation" is a syndrome of which people struggle to create something in the ether, without meaningful stimuli or underlying rationale, attempting to alloy raw creativity and mental horsepower into something new. Ironically, it is the type of innovation on display when you ask a child to "invent something," and they mash together a few nearby concepts to create something new to the world. Perhaps "Unicorn toothpaste" or "Corgi saddles."
If you consider real, successful innovation in the sustainability space (or any space), they very commonly take the form of a stepwise and logical improvement on an existing concept. Even if that improvement is 'new to the world,' I would argue it is many times still anchored in some existing function or translating function from another domain. I challenge you to take the most innovative new service or product and reverse engineer it: The magical success of Uber becomes a 'decentralized taxi service with driver ratings,' and there were actually quite a few smaller iterations of that concept long before Uber. Airbnb is basically 'decentralized hotel service with host ratings' a la Uber for hotels, and so on.
So, with the goal of improving our 'tool set of innovation' during our time together in this course, this week we will spend time understanding the building blocks of differentiation. By understanding those building blocks and how they are combined, we can then rearrange the blocks and add meaningful innovation, as opposed to failing around to create differentiation around an effort of questionable value.
We could spend millions in advertising and marketing to cement your reputation as 'the world's foremost Corgi saddlery,' but you might be less than satisfied with the financial performance of that endeavor.
By the end of this lesson, you should be able to:
To Read | Chapters 9 and 10 (Keeley, et al.) Documents and assets as noted/linked in the Lesson (optional) |
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To Do | Case Assignment: Sketching WGB spaces
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If you have any questions, please send them to my axj153@psu.edu [1] Faculty email. I will check daily to respond. If your question is one that is relevant to the entire class, I may respond to the entire class rather than individually.
From the most logical product line extensions to the most out there innovation, one should be able to connect it directly back to the overall Mission of the organization, its core competencies, and what it stands for... the organization's center, if you will.
In practice, organizations, especially those with strong brands and connections with customers, tend to underestimate how much license customers will give to these more out there innovations and extensions of offerings. Why? Because many organizations aren't actually well acquainted with how customers perceive their brand and what they do for the customer, both at the functional and emotional levels.
This disconnection from center can happen in a few different ways within an organization:
Over time, a company may touch with how they are perceived, a construct which can shift significantly over relatively short periods of time. In fact, those organizations may have never had a clear understanding of what their center was to begin with. This has everything to do with innovation and sustainability for us, as understanding the space in which your organizations and others operate in an unbiased way can be a tremendous starting point and anchor for innovation.
Think of the center of what your organization and brand represents in the minds of customers as a fixed pin attached to a heavy brick. Every innovation and new offering adds a rubber band and a new pin. Chances are that your company has an array of products and services close to your center pin. Forays further away from that center require strong pins, otherwise the tension is simply too much, and the pins simply break or pull out. Those far out pins may, in time, sprout their own supporting pins, and so on.
If you have enough pins and bands pulling in one direction, over time, the brick will move along in the same direction and re-find center. John Deere is one example: the man was originally a blacksmith who found a new way to make plows... which then became a tractor company... which then became an agricultural (and merchandising) giant. If the product creates enough tension, the company will come along with it.
Our goal is to gain an understanding of where the pins and bands are located, and to understand current boundaries. This will give us some feel for the landscape within which we will be working, and some feel for where the current boundaries lie. We won't consider these limits, per se, because a very significant innovation can instantly break the current boundaries of any organization. For example, if Lockheed Martin has indeed found a way to create compact fusion, [5] they will instantly transcend any current association people may have with their organization. 'Unlimited energy for the world' is a pretty strong band and pin for any organization.
If you've ever seen a cognitive map, they look a lot like an overhead view of these pins and bands, and work much in the same way. If you haven't worked with cognitive maps in a rigorous way before, we will be doing exactly this in a few Lessons.
There are a few ways organizations can lose center over time. This may sound like a branding problem, and it certainly is... but it is also a foundational concern in developing new offerings. Unless you are a startup company, you will have existing thoughts and frames held by customers and the public at large about your organization. For better or worse, these existing thoughts and frames will affect perception of the new offering, just as your existing thoughts and frames about a person will affect how you perceive their new endeavors.
We will be diving into consumer research methodologies next week and cognitive mapping the week after, so we will indeed have tools to be able to find center for any organization in significant detail. But for the rest of this Lesson, we want to understand a concept related to an organization's center, one which defines much of how it will view and approach new offerings: White, Gray and Black Spaces.
There is a certain facet or theme of innovation that seems to dominate all others, and this is innovation as a new to the world, disruptive, revolutionary achievement.
Here is a representative sample of the types of endeavors typically associated with innovation, from a Washington Post year in review [8]:
This is certainly part of innovation, but in practice, innovation tends to be far more quiet, incremental, and purposeful. Where the persona attached to the revolutionary and disruptive innovation may be rockstar, the majority of innovation may be far closer to engineer or scientist. Innovation in practice is a rigorous and methodical endeavor.
So where there is a misuse, or at least popular misappropriation of the term innovation, pairing sustainability with it tends to have a multiplying effect... not only must your innovation be revolutionary and completely new to the world, it must also save the world at the same time. Tidal power generation and residential solar cogeneration and the like. While these are certainly important projects, what is important to us is that there are far more opportunities to innovate than those massive undertakings. Incremental progress is progress nonetheless, and many organizations large and small have the opportunity to participate.
In our efforts to understand sustainability-driven innovation of others in order to create our own, it is important that we create an understanding of the incumbent offerings and organizations already occupying the spaces we seek to explore. These organizations may be existing competitors well known to us in the core business, we may be exploring new ventures into other competitive spaces, or we may be creating completely new spaces. In each case, there may be a compelling strategy for us to create and frame our sustainability-driven offerings, but it is important that we understand the space in which we will be working.
In the following pages, we will discuss the three types of spaces and examine the strengths, weaknesses, and strategies of each.
White spaces are exactly as they sound. These are indeed those new-to-the-world offerings that have the potential to truly disrupt the category, and potentially, an industry. While these may be the prototypical "innovations," there is one slight problem: incredibly smart people and organizations go decades without creating a single truly white space innovation, if ever. Consider that while there were 615,243 patents issued in the US in 2014 [9], the vast majority of those patents do not come to commercial fruition, let alone become truly viable white space innovations.
These innovations are defined by the fact that they are often radical departures from the established, and may indeed signal a revolutionary change, even if in a small niche. While this revolutionary development may be in a category already established (e.g., biodiesel, computing), the means of creation may be a significant departure from any successful venture before it (e.g., biodiesel from algae in under an hour, quantum processors).
These innovations also have a tendency to have three things in common: long development times, elevated costs, and specialized knowledge. I purposely use the word "tendency" here because there will always be those white space innovations driven by a chance occurrence, or a single genius in a garage somewhere. There will always be those people and organizations that can capture lightning in a jar.
Any organization that can craft a true white space innovation should utilize it to the fullest, but some organizations are better positioned to create them in the first place. Organizations with a significant in-house braintrust, ample resources, and the financial wherewithal to invest in long-term, potentially fruitless research tend to have the edge in creating these types of sustainability-driven innovations. In many cases, we are talking about large corporations, universities, labs, and the like as being the hotbeds of whitespace innovation, although many small "spin offs" are incubated by these larger enterprises every year.
The PNNL is doing some astounding stuff around biofuels. In one case, seemingly overnight, they produced research about WWII stories of canvas tents being digested in order to find an aggressive fungus to digest rough biomass for efficient use in biofuel creation. [10]
In a 2013 study, the U.N. found that 6 billion people worldwide have access to mobile phones, a full 1.5 billion more than have access to toilets. [11] Craig Jacobson, Co-Founder of Point Source Power, recognized that many in the world have the need to charge a cell phone, but may be without accessible means to do so. To fill this need, he went about creating a thermal fuel cell with a probe that can be placed into a cooking fire, and which charges either a spare battery or a cell phone directly. It is not only a fascinating development, but one which is built at a bare minimum cost in order to be affordable to those in third world countries.
Please watch the following 3:05 video.
There are a few interesting innovations at play here, but it will remain to be seen if the technology, design, and taste is truly up to the rigors of the supermarket, or if this product will live and die as some sort of novelty. Please review the article titled "Stonyfield tests package-less froyo [13]."
Gray space innovations are those where there may be some incumbent product or service, but it may be an unestablished or immature market. This is where meaningful improvements to the offering or a small handful of differentiators can be enough for an organization to enter the competitive fray and explore.
These innovations are defined by the fact that they many times represent incremental innovation. This may be manifested by the organization developing a new set of attributes, a new delivery method, new cost structure, or other innovations. We will explore these in more detail when we cover the ten types of innovation in a few lessons, but the key for gray space innovation is remembering that they are built on incremental innovation.
One misconception, perhaps driven by the interpretation of white space innovation as the "true" innovation, is that gray space innovation is not really "innovation." What is ironic about this is that many of the most famous innovations in any realm, were not white space innovation, but in fact, gray space innovation. Some examples? From Henry Ford's assembly line (actually Samuel Colt's [14]) to Apple's computer mouse (actually Xerox [15]), these innovations may be refined and popularized by one organization, but have their roots in the white space innovations of others. Much of technology, including smartphones, tend to exhibit gray space innovation. A new system or way of operation here, a new sensor there, a revised interface.
Many organizations. This is perhaps the most common and versatile space for innovation, as it allows any organization to leverage its specific strengths while evolving a concept. An organization with an especially strong brand can elect to leverage this fact by popularizing its take on an offering, while an organization with especially efficient organization may elect to come into the market as the low-cost player by leveraging its strengths.
Sometimes, gray space innovation comes down to seeing potential in the offerings of others that even they can't. A pure example of what this can look like is Steve Jobs' visit to Xerox PARC. Xerox saw the GUI and mouse, at best, as an overpriced curiosity, Jobs saw it as a potential revolution in computing. (The most important segment begins at 6:26)
While there had been thermostats, touchscreen thermostats, even smart thermostats before it, Nest brought the most intelligent features and best design into one product. Central to the Nest concept is its ability to learn from the habits of those in the home, as well as the ability to leverage "the internet of things" to become even more efficient and seamless (for example, relying on the motion sensors in Nest smoke alarms to know when the home is occupied or not, or looking at the weather forecast and adjusting behavior).
While the Nest modus operandi for gray space innovation is to take very boring, "dumb" things and make them smart and sustainable, we can only imagine the developments now that Nest Labs is owned by Google. Please watch the following 2:11 video.
This is an example of a fairly straightforward concept, packaged elegantly, sold brilliantly, and benefiting from tremendous efficiencies of scale. Battery backups for homes, and even home-built power cells to capture solar energy, have been around for years, but, like Nest, Tesla is making it interesting and feasible for the common homeowner. If you wonder about Tesla's ability to make battery backup interesting, consider that they booked $800 million of preorders [18] in the first week, on track to surpass the iPhone for one of the most successful new product launches in recent history. Please watch the following 4:00 video.
Think of black space innovation perhaps as a continuation of gray space innovation, just more intense (thus, our stroll further down the color spectrum). Black space innovation is when the space is already crowded with incumbents, but your organization has the ability to innovate and differentiate the offering by leveraging multiple organizational strengths: efficiencies of scale and manufacturing, logistics, distribution, brand, vertical integration, and more. In many cases, this happens when a large player enters the space, but can also be when a smaller organization is able to outmaneuver the competition or otherwise bring its unique strengths to bear.
Regardless of the mechanism or organization, black space innovation is all about the application of significant amounts of leverage; not just a handful of innovations, but entire constellations of innovation.
These innovations are typically defined by the fact that they are already crowded spaces, and the attempt for one company to bring enough leverage to bear that the market aligns behind them. In order to do this, it requires a significant effort on a variety of fronts, as an incremental innovation would likely not justify the organization entering the competitive fray.
Typically larger or more established organizations, or those organizations which elect to consciously and actively sit on the sidelines of innovation until the time for entry is appropriate. While "actively sitting on the sidelines" may sound like an oxymoron, it is important to realize that an insights or market intelligence team at a large organization could be performing more consumer and competitive research than those actually actively participating in the market at the time.
While there are quite a few established players in the LED market, namely Cree and Philips, IKEA has consciously committed to use its size, scale, efficiency, and brand to take LED to the next level. While it could have struck a supply agreement, it instead elected to start from scratch and commit to taking on the manufacturing of its bulbs. We will be covering the IKEA LED case in a bit more detail later in this course, but it is an example of a large company consciously electing to enter a fairly mature and crowded market. Please watch the following 1:27 silent video.
As related in this compelling talk by Chef Dan Barber, Veta la Palma has taken a drastically different approach to aquaculture by making it sustainable, and its fish some of the world's best. In this case, Veta la Palma is not just taking on a group of tangible competitors, but instead, it is challenging an entire method of farming and going to market with fish. Veta la Palma is doing things drastically different in service of a drastically different product and in a drastically more beneficial way.
Please watch the following 18:55 Ted Talk "How I fell in love with a fish" by Dan Barber.
I once guest judged an Entrepreneurship capstone course at a major university, a multidisciplinary effort between business, engineering, and design schools. The intent of the course was for these teams to work together to create an innovative product release from start to finish, including financials, marketing sizing, working prototypes using 3D printing, etc. It was an impressive program with impressive students.
While they spent the day trotting out their presentations like proud parents, I began to see a microcosm of an issue I have seen for years, over and over again, in both the private and public sector. Simply put, in the scope of innovation, new product development, or campaign development, research is seen as somewhere between a speedbump and a roadblock.
The teams that day were no different in composition than many you might see on a lean innovation team: a couple of marketers/researchers, a finance guy, engineers, and designers. Because the teams were "on the clock," there was usually a brainstorming session to develop an idea, followed by the marketing people doing some superficial research while the designers and engineers started on "the real work." In any organization, this is played out in similar ways: budgets and time are constrained, so there is a push to get to the prototype as quickly as possible. Getting to Beta quickly will be a significant goal, but this speed should by no means be because initial research was under resourced or ignored.
So, what is the pattern? That the first step the teams took were to revert to something a member was passionate about, then back filling the research to confirm the chosen direction. This is no different than a creative director executing concepts and animatics based on "gut" or any team looking to use the research to "confirm" instead of "explore." I can absolutely tell you that this syndrome is in no way limited to college students. It is everywhere.
I can also tell you that when research is an afterthought used to confirm pre-Beta offerings, it typically ends up in one of three ways:
Why do I share this story?
In our studies thus far, we have worked from the coarse analysis of examining areas of opportunity and merged into increasingly fine-grained analysis. We have also worked on understanding the foundations of sustainability, to the strategies and tactics organizations use in sustainability, to the critical analysis of public filings, to understanding the overall opportunities in those filings and the competitive context of those opportunities. We are now analyzing the early phases of how organizations may be able to leverage those opportunities.
Let's follow this flow for the earlier example of the opportunity Tesla's growth presents in regard to training and licensing technicians on all-electric drivetrains. At this point, we have roughly scoped the opportunity and it is of interest to us. Now, we want to understand the context within the opportunity exists, specifically how it is a White, Gray, or Black space, and how the organization may be equipped (or not) to move the idea to the next step.
While tactics to understand WGB spaces can be wildly different–from ethnography to forensic accounting–here are the types of questions that would further narrow the scope to understand the space. Let's imagine we are an independent automotive training institute curious about the opportunity of training techs to service Teslas.
What organizations currently operate in this space? We may be surrounded by other highly-competent automotive training institutes, as well as the potential that others have entered the electric technician training space from other vectors. Perhaps Tesla itself is training all technicians, or another training institute has a well-rounded offering of courses on servicing all-electric drivetrains. We would want to explore all other organizations in the space, regardless of if we would consider them a competitor or not.
How dedicated are these organizations to the space? Are they investing, divesting? In understanding the other organizations functioning in the electric technician training space, we would want to gain some initial understanding of their commitment to the initiative. Do they have 85 courses dedicated to conventional drivetrains and only one for electric drivetrains... or did they just complete the construction of a new hybrid and electric training building on their campus? Many initiatives are taken on and abandoned, or proven not viable for another organization... we would want to understand those organizations and what those trajectories may have looked like.
What organizations would we expect to operate in this space? While not as widely embraced by the market, Nissan has the all-electric Leaf... how were those technicians trained? By Nissan? By a contractor in the US or abroad? Did a training institute create a course specifically for the Leaf? Furthermore, if we were to imagine those organizations that might be interested in this opportunity, who would we expect to see?
Are there any indications of other organizations seeking to enter the space? Part of the answer to this question might be revealed in critical analysis, but are there signs that any organizations–large or small–are interested in the space? Are any organizations having success in related spaces (i.e., training technicians on hybrid drivetrains) that could set the framework for an entry?
Patent and trademark search. Are there any recent patents, trademarks, or other intellectual property filings showing that an organization might be interested in the space? If a trademark search showed "The electric drivetrain experts" as being filed by another training institute three months ago, that would be something to follow up on and understand at greater depth.
Are there any indications of resource movement into the space? An interesting one here can be looking into any changes in title or any postings to LinkedIn, for example. While official organizational communication channels may be tight-lipped, someone may decide to give an interview that perhaps they shouldn't have or post something to their profile page that can signal organizational moves behind a new offering. In this case, if the Director of Training Curriculum posted that his current work includes exploring electric drivetrain technology, we would want to know that.
Are there any failed past initiatives in the space? Much can be learned from false starts and failures. Experts in a given field (covered by a non-disclosure agreement, of course) who have been around and connected in all the right places could probably advise as to some of the challenges and failed initiatives of the past.
Known pitfalls or limits to technology that have hindered other efforts in the space? Perhaps organizations have attempted to train technicians on electric drivetrain systems, but were unable to secure drivetrains to allow students to work hands on. Perhaps the electric drivetrains present potentially lethal voltage that could kill an untrained technician, therefore making the training of these technicians a liability minefield. Again, consulting with subject matter experts can help to understand the overall story quickly.
Any other general knowledge on the space? Are there similar models for technician training that just don't apply in this case? Perhaps, to avoid investing in training on short-lived technologies, a rule of thumb is that training institutes require 3 million units of a technology to be on the road before considering adding a course. At this point, we are trying to quickly and effectively reduce the number of assumptions we hold about the space and the opportunity, and speaking with subject matter experts can be an excellent way to do this.
How do the organization's strengths and relationships map onto this space? Consider this a 'back of the napkin' analysis, but think about the leverage your organization can bring into the space. Perhaps your training institute is well-positioned to add electric drivetrain courses, but is lacking any relationships or expertise in the electric drivetrain space. Perhaps your training institute is slow to respond but has the scale and connections to enter the space quickly and significantly.
How quickly can the organization add needed competencies, and at what cost? In looking at this initial map of strengths, we would seek to consider if the needed competencies could be gained with a consultant or subcontractor, for example. Marketing and reaching potential customers in new spaces may not be a strength, but is a competency that can be easily added, while finding the full-time trainers who know the intricacies of all-electric drivetrains may be a far greater challenge requiring full-time employees.
"I now consider myself to be at the beginning of the beginning of making something serious."
In this Lesson, we begin to merge from researching the techniques and decisions of others, to beginning to frame what our own work may look like. It is still very early, the "beginning of the beginning," as van Gogh stated it, but we are starting to make decisions at this point, even if we do not necessarily realize it.
As we go through the process of understanding the WGB space and doing base research, we are already beginning to understand how our innovation may be composed, and the spaces available to us. We will understand if the space in which we will focus is entirely new and a blank canvas, or if it already has elements in place. In this early process of understanding the space, we are already beginning to think about the innovation.
There are two descriptors that I remember from earlier in life, which seemed odd at the time, but, in later life, I realized are stunningly accurate. The first is that a basketball coach once remarked that, while effective, I had "a wrestler's jumpshot." He wasn't far off, as I was a shotputter and therefore had an arm motion more suited to throwing a 16lb iron ball than a 2lb leather one.
The second descriptor is that my sister, an outstanding artist, once remarked that my sketches looked like they had been drawn by "an overcaffeinated engineer on a deadline." When I had the occasion to ask her what this meant, she remarked that I was incredibly tight, that my sketches were far too formal, I was overly focused, and that physically, all of my movement was coming from the fingers instead of the wrist and arm. "You're trying to draw one perfect line instead of drawing multiple lines to find the overall composition... you need to loosen up your hand, your eyes, and your head."
We need to remember that we are sketching at this point. We can't become invested in our ideas, and we need to stay loose and sketch out spaces that interest us, then quickly evaluate what we see. Any attempts at perfection are wasted at this point, and, more importantly, make us more resistant to throwing something away and starting new if we have to.
Similar to loose sketches and composition, this is a phase of the work which can benefit from the occasional break. In its full form, critical analysis and WGB space research tends to be quite exhaustive, so make sure to take breaks and perhaps take on some small, one- or two-day projects to allow you to refresh yourself a bit. For example, if I have a very tight, detail-oriented project, I will take on something iterative and loose... and vice versa.
To refresh ourselves, our goals specifically for this Lesson are to:
To this end, this week's Case is designed to accomplish two things: 1) to allow us to identify and research WGB spaces for ourselves, and 2) to encourage us to keep ourselves loose while we are in the sketching phases of our work.
Links
[1] mailto:axj153@psu.edu
[2] https://www.flickr.com/photos/sudhamshu/3231937964
[3] https://www.flickr.com/photos/sudhamshu/
[4] https://creativecommons.org/licenses/by/2.0/
[5] http://www.lockheedmartin.com/us/products/compact-fusion.html
[6] https://www.flickr.com/photos/cedwardbrice/6057805735/in/photolist-ae6vZ5-aeiQAt-qAM3aA-2xhVnS-5yFG4R-6hWFgZ-vowyqu
[7] https://www.flickr.com/photos/cedwardbrice/
[8] http://www.washingtonpost.com/blogs/innovations/wp/2014/12/22/the-best-innovations-of-2014/
[9] http://www.uspto.gov/web/offices/ac/ido/oeip/taf/us_stat.htm
[10] https://www.topcropmanager.com/other-renewables/using-fungus-to-improve-biofuel-production-20523
[11] http://www.un.org/apps/news/story.asp?NewsID=44452&Cr=sanitation&Cr1=#.VVAUWPlVhBf
[12] https://vimeo.com/33841074
[13] https://www.packworld.com/sustainable-packaging/article/13365195/stonyfield-tests-packageless-froyo#:~:text=In%20March%2C%20Hirshberg%20took%20what%20he%20feels,business%2C%20and%20ever%20since%2C%20we've%20led%20the
[14] https://www.asme.org/engineering-topics/articles/aerospace-defense/samuel-colt
[15] http://www.newyorker.com/magazine/2011/05/16/creation-myth
[16] https://www.youtube.com/watch?v=J33pVRdxWbw
[17] https://www.youtube.com/watch?v=5thQRIX3Rio
[18] http://www.bloomberg.com/news/articles/2015-05-08/tesla-s-battery-grabbed-800-million-in-its-first-week
[19] https://www.youtube.com/watch?v=FHswxauDGVg
[20] https://www.youtube.com/watch?v=L3BBANG-t2g
[21] https://www.ted.com/talks/dan_barber_how_i_fell_in_love_with_a_fish
[22] https://depositphotos.com/photo/freshly-painted-speed-bump-for-slowing-traffic-near-school-54111119.html
[23] https://depositphotos.com/portfolio-2454953.html
[24] https://depositphotos.com/content-license.html
[25] https://www.vangoghmuseum.nl/en/collection/d0414-083V1962
[26] http://vangoghletters.org/vg/letters/let193/letter.html