The word “innovation” has become such a cliche that we tend to forget how powerful the reality of innovation can be. But this weekend we had an example we couldn’t ignore, particularly those of us who spent some time in a shopping mall and noticed long, long lines of people where no lines usually exist.
These would be customers lining up to buy the new iPhone.
The new iPhone by itself has plenty of impressive features. It’s almost twice as fast as the previous model, for starters. But much of the wow! factor for the iPhone comes from features that Apple Computer didn’t create. I’m talking about the software programs you can download, which range in price from free to around $10.00, and were primarily created by quite small businesses Some examples:
“Where” links you to maps, websites such as Starbucks, Yelp (the restaurant review site) and GasBuddy to help you find the nearest source of caffeine, food, or gas (increasingly a problem these days).
“Pandora,” adapted from the website of the same name, turns your iPhone into an “intelligent radio.” You enter the name of an artist you like and it seeks out similar music which you can approve or disapprove. In a short time, it will seek out music that you like with no effort on your part.
“Meal Splitter” helps you split the check after a meal, even taking into account those who had wine and those who didn’t.
“Loopt,” primarily attractive to the younger side of the buyer spectrum, tells you where your iPhone-equipped friends are, and informs them of your location as well.
“iZoho,” lets you create spreadsheets and text documents using your iPhone.
The list goes on and on. And the reason it does is because Apple made it really easy for software developers to create new programs.
This innovation model isn’t new to the information technology sector. It’s been around for years. But it’s gaining ground in many other sectors. For example, Proctor & Gamble has announced that its goal is to acquire 50 percent of its innovations from outside sources via a formal program known as “open innovation.”
To some extent, this model is already at work in, of all places, the automotive sector. Many suppliers are independently working to develop parts where material or touch labor costs are lower, rather than simply manufacturing based on rigid specs.
The bottom line is that “open innovation,” by whatever name you call it, is becoming a trend. In manufacturing, at least to date, it seems to be limited to innovation within a narrow band of expectation: ways to make a part that performs better or can be manufactured at lower cost. But, theoretically, this could change.
Here’s a potential model for the automotive sector. What if dealers became the locus for a much-expanded after market, to the point where it became a “before market?” In other words, you would buy a basic ready-to-drive vehicle, but you would have the option to buy all sorts of add-ons made by third parties prior to delivery. This business model would be attractive to the small manufacturers that made these items, because sell prices would be determined by the market, not an OEM. focused on reducing costs.
Crazy? maybe. But maybe not. I certainly can’t say what add-ons dealers would sell. But that would be up to the small company innovators.