Innovation and Marketing

Last week I talked about innovation and how knowing your target market is an important element in doing innovation successfully.  Thus, while science and engineering are often what people think about when they think about innovation, marketing is how creations become profitable.

For example, the operating system that carved out a profitable niche for the Apple Macintosh wasn’t invented by Jobs or the Apple team. The operating system was developed at PARC labs (then Xarox Palo Alto Research Center) where Jobs discovered it and recognized the potential for the system.  Yet, Xerox was never able to make money from their own invention.  Charles Gesschke tells a similar story from his time at Xerox, which resulted in frustration and led him to use his ideas to create Adobe.  Again, his company made money from the technology, but Xerox didn’t.

Lesson: Creative ideas are valuable, but its monetizing them that pays the bills.

Sometimes, like in the cases above, its a matter of vision — seeing something and knowing it will be valuable to some group of consumers.  There is a long history of people who lack this vision.  For instance, when the Wright brothers took off from Kitty Hawk, everyone said that air travel would be a novelty, but never become commercially viable.  Well, despite current economic constraints and intense competition, USAir, Delta, Continental and other major airlines are testament to the lack of vision on the part of the earlier naysayers.  The same thing happened earlier when the automobile was first invented.

Other times, there is vision, but a failure to understand the market.  The firm might not understand what consumers want, thus the innovations they develop are valuable only in the minds of the company.  This is simply sloppy and a waste of resources.  It comes from a lack of respect for marketing.  Unfortunately, firms that don’t appreciate marketing often end up failing.  Alternatively, the firm has a good product, but doesn’t have the know-how to market the product effectively.  This is just a shame because everyone suffers– the firm and its stakeholders (shareholders and suppliers) and consumers.

Firms might also fail to capitalize on their innovations when they fail to understand how the market operates.  If you are old enough, you’ve seen multiple examples of firms who had a great product (maybe even a technologically superior product), but failed.  The BETAMAX is a good example.  It was superior, but when was the last time you saw one, except in a museum?  The same is true of an older technology –  8 track players.

In both cases, technologically superior products lost out to products with lower performance.  How did this happen?  Part of the reason is that neither company did a good job of communicating is superiority to the marketplace.  Another part of the rationale is due to the complementarity of the products — 8 tracks  and BETA need tapes.  But, manufacturers of audio and visual media need a reason for putting music and movies on these media.  However, since the players weren’t selling well, this motivation dwindled to the point where it became a downward spiral for the media players.

This ignores the huge problem of getting a monolith like modern organizations to think and behave rationally to create and bring innovations to market.  This will be our next topic.