The Innovation Imperative
Why do so many software-based companies fail? Why do even market leading companies become also rans? The software industry is rife with examples of companies who fell from market domination to also rans because they failed to innovate. Whether it is Lotus failing to move Lotus 123 to a GUI based interface; AltaVista, who web-based search was surpassed by Google with its superior page ranking algorithm; or Myspace being supplanted by Facebook in the social network arena, the software market requires continuous innovation for long term success.
The Innovation Challenge
For a company with a software-based product or service, this rapid introduction of disruptive technologies provides a difficult challenge. If the company does not invest in understanding and implementing these technologies, they risk losing their market in the mid to long term. On the other hand, if they do not continue to enhance their current product, they will lose their market share in the short term.
To make this even more challenging, the skills required to enhance the current product and the skills required to innovate using new disruptive technologies are different. This skills difference requires companies to either train existing software engineers in the required new skills or hire additional engineers with the required skills. This requires investment to pursue the innovative development path. The issue comes as the company evaluates the return on investment (ROI) of the two choices, invest in enhancing the current product or invest in the innovation. Because of the long-term ROI for innovation, and the immediate ROI for enhancement, the continued development of the current product almost always provides a better ROI than the innovation option.
The lack of correctly skilled resources, and the better ROI both lead companies to investing in their current product enhancement and not tackling the harder innovation path. Unfortunately, this leads to failure in the future. Given the time it takes to successful innovate, companies often have sealed their fate even as they lead the market.
The Innovation Solution
To solve the innovation challenge, the solution must meet some challenging criteria:
- Provide new skills needed to implement the disruptive technology
- Require a minimal investment until ROI breakeven is achieved
- Allow current sustaining engineering efforts to proceed at existing pace
- Provide implementation group that can think outside of the company box
A solution that meets these criteria is to select an independent group, skilled in the disruptive technologies and the process of innovation. This leaves the current team in place to continue the incremental improvement and enhancement of the existing product or service.
An independent group will not be caught up in the mindset of the current team which will see everything through the lens of the current product/service requirements and market. An independent group focused on innovation has the provides the most efficient path to implementing an innovative product/service.
The final key is to minimize the required investment. An independent group will not have the overhead of the existing company team, and the lower the investment, the easier it will be to maintain the investment until the innovative development can move the out of the challenge zone and pass the break-even ROI. Outsourcing to an independent innovation group located in a low-cost global location is a proven effective approach.
There are numerous global low-cost locations including Central and South America, Eastern Europe, and select Southeast Asian and South Asia countries, but few of them can offer the needed focus on disruptive technologies and innovation, which require the rigorous software engineering provided by a university education and a company focused on disruptive technologies and the innovation process
BitsKraft is a company focused on innovation and disruptive technologies such as Big Data, Machine Learning & AI, and the Internet of Things (IoT). Located in Nepal, BitsKraft provides a cadre of software engineers educated in an English language British University system, trained in the latest technologies and veterans of successful innovation projects. This proven software engineering team is able to provide 3x-4x the value per dollar of a US based team or even other global outsourcing alternatives.
A key factor in BitsKraft innovation successes is the BitsKraft Innovation Development Methodology (iIDM) which was developed assisting clients in implementing innovative technologies.
The Innovation Culture
While innovation is often presented in an isolated context, a long-term view shows that companies who succeed treat innovation as a continuous process. Today’s disruptive technology become tomorrow’s baseline sustaining technology. Rapid change is the nature of technology, especially in the software industry. This makes the industry uniquely vulnerable to disruptive technologies and make the cycle of innovation and sustaining development more visible. While cycles of innovation in manufacturing, like the steel industry, may take decades, in the tech industry those cycles can may occur in a few short years.
Apple is a company that has been successful for decades. Looking at Apple’s history, you can see multiple disruptions from the original Apple II personal computer, to the Macintosh, to the iPod, and then to the iPhone. Apple was able to successfully navigate these disruptive technologies by investing and adopting new technologies as they occurred. It is important remember that this was not a clean record of serial successes. Along the way Apple had significant setbacks. The Lisa computer, the Newton Personal Digital Assistant (PDA), years of MacIntosh’s produced during John Sculley’s reign as CEO.
The key to Apple’s success is a culture of innovation that embraced disruptive technologies and figured out how to turn them into groundbreaking products. Part of this culture of innovation is failure. Because of the nature of disruptive technologies, it is not possible to predict exactly how they will affect the market. To minimize this risk, an important part of the innovative process is to cycle through product ideas quickly looking for what works and what does not work. Steve Jobs was famous for his search for perfection in new products, often pushing engineers to make seemly minor changes that, in fact, often had outsized impact on the user experience.
Another notorious aspect of Apple innovation process was the skunkworks nature of the teams that created disruptive products. Often, totally isolated from the rest of the company in their own building and outside of the normal chain of command. These teams had independence to innovate without constraint.
This culture of innovation is the key to Apple’s long-term success. Creating this culture is important to the long-term success of any company based on technology especially software. Finding a partner to help companies innovate as they continue to drive their core business and improve and enhance their sustaining technology is one successful strategy to meeting this challenge.
Driving Innovation Success
To be more than a flash in the pan, companies need to embrace the culture of Innovation. Most companies start based on an innovation, whether it is an innovative product, process or business model. Once that initial innovation launches the company, the challenge becomes sustaining engineering to mainstream the company’s products or services and grow the company from startup to maturity
The two reasons most new companies fail within the first 5 years is that they either fail to execute the failing engineering to enable the company to grow or they grow but never embrace the next cycle of innovation needed for long term success and further growth.
Creating a culture of innovation is a difficult task while managing a growth company. Growing companies typically require 100% of their leader’s attention. Starting the next cycle of innovation is a full-time job in itself. This is why working with an experienced outside partner such as BitsKraft can be a great idea to drive your company to long term success.
About BitsKraft, Inc.
BitsKraft helps clients grow their business with using innovation-based engineering services delivered from a high quality, high productivity and low-cost development center. This is achieved using the BitsKraft innovation Development Methodology (iIDM), a unique approach blending deep innovation expertise, process consulting and empowered agile teams to create solutions that drive business forward at unparalleled velocity enabled by a culture of innovation and disruptive technology implementation.