The Innovation Cycle: Where Are We?
Invention extension? Functional substitution? Find out what these concepts mean and how they apply to the screen-printing industry.
In the past I really looked forward to SGIA. It was the biggest show of the year—the place where all the latest technology was unveiled. It also hosted the best printing-awards program in the industry. There was always plenty of buzz and it was generally four days of nonstop go-go-go.
Now the show is still big, but not quite as big as in days gone by. I think the economy and changes in the industry, as well as changes with trade shows in general, have taken a toll. People don’t like to travel. It’s expensive and a big hassle anymore. Manufacturers, especially the equipment companies, face a huge expense to get the production machines onto the exhibit floor for just a few days of exposure.
The biggest change has been in the complexion of the show. Ten years ago there was a smattering of inkjet companies. Companies with a long history in screen printing dominated the industry. That’s all changed now. Huge companies like HP, EFI, Agfa, and the like now take up more of the floor space, and we see $1-million-plus inkjet printers in the high end of the market. It’s a different game now—and that got me to thinking.
Any business, technology, political ideology, society, or culture goes through four distinct phases. They are: invention, invention extension, functional substitution, and devention. These ideas were proposed by Geoffrey Moore in his book, Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers. This model is used mostly with product lifecycle, but it applies equality to all the other areas above. As we move from one phase to the next, there are distinct challenges and characteristics. Let’s take a few minutes to outline what these phases mean before we apply them to what we’re seeing in our industry.
This marks the introduction of the technology or idea. Invention is true innovation—something new and unseen. It is usually met with ridicule and mockery. The rare exception is when it’s such a brilliant idea that everyone gets it right away. True ideas are greeted as crackpot notions that will never fly because they are almost always disruptive to the existing status quo. Think of the telephone, automobile, airplane, and so on.
The average person thinks small. They don’t like change and they don’t like a disruption in their established daily routine. Business as usual is their operating mode, and they don’t want anyone messing with it. They say embracing every new idea that comes down the road is time consuming and risky. By challenging new ideas and inventions, they can hopefully nip it in the bud or squash it before it has a chance to affect them. Weak invention perishes under these conditions; true invention is unhindered.
True inventors couldn’t care less what the general public thinks. They’re after those people in the population who will see the value in what they’re proposing and will embrace it. Historically, this is 2-5% of the general market or population. These people are the innovators—the ones who embrace the cutting or bleeding edge before anyone else does. They tend to stick together because they all speak the same language, and they’re particularly open-minded and excited about the things with which they’re involved. This is one of the reasons cults get started: There’s relative intellectual safety in numbers, as well as obsession with seeing particular ideas become reality.
Most innovation and invention dies in this phase as the innovators try to make the transition to the general mainstream.
The lifecycle blossoms in this phase, and this is where digital imaging is today in our industry. It’s the expansion and growth phase of the idea or culture and where the mainstream begins to venture into the market and make the purchase. The screen-printing industry can appreciate this as they make collateral purchases of digital imaging equipment to complement their traditional printing methods. It’s definitely established in the graphics side and is about to make a big leap on the textile side.
If an idea or technology can make it into the invention-extension phase, there’s a really good chance it’ll be hugely successful. As an example, look at the failure of Apple Computer’s Newton PDA. It was introduced too early and only gained limited acceptance among the geeky gadget gurus before dying. The Palm Pilot eventually established a foothold and was the precursor to the modern smart phone.
Compare that failure to the enormous success of the Apple iPod and iPhone. Both of these have millions of users and they built their market share very quickly. The market was ripe and the timing was spot on. Apple didn’t have to convince people this was the next big thing. It was almost self-explanatory.
The invention-extension phase can go on for decades if not hundreds of years. Look at our own industry. The invention was moveable type, created around 1439 by Johannes Gutenberg. It was a totally disruptive technology to society and lead to the single largest expansion of culture and knowledge in our civilization. We could argue that everything (including digital in the broadest sense today) is an invention extension of this innovation.
This is where the lifecycle gets interesting. It’s the phase at which a better alternative, that’s not a direct extension of the original invention, begins to supplant the latest invention extension. It’s the better or more efficient way of doing things—or the choice that offers less resistance or is easier to use than what it replaces.
A great example is the invention of the first working incandescent light bulb. Edison invented it in October of 1879 and demonstrated sustained lighting for 40 hours. The invention extension is the socket to hold the bulb and any of the numerous improvements in filament composition. These remained largely unchanged until just recently, when the overall environmental impact of electricity generation and the efficiency of energy use became more important issues.
An example of functional substitution is the CFL or compact fluorescent lamp, which uses far less energy and is far more reliable (25 times longer life than incandescents). The economics and the impact on our environment are leading to the substitution of this type of lighting to replace incandescent filament bulbs entirely. In fact, energy ministers in the European Union have agreed to a ban on incandescents starting in 2010.
The existing idea or technology enters the declining phase of its life once it moves into the functional-substitution phase. More importantly, as more and more of the population embraces the newer alternatives, the price drops, the adoption rate increases, and the new alternative enters its own aggressive invention-extension phase.
Eventually, everything ends in the devention phase. This is where the original in-
vention and all of its extensions are no longer relevant. There’s no longer any economic or intellectual value and there are far superior alternatives that render the demise of the idea, products, politics, religion, etc. They become historical footnotes.
Where does this leave us?
Using this model, most would argue that screen printing is firmly rooted in the functional-substitution phase. It’s easy to see all of these emerging alternative technologies growing like crazy. The entire traditional analog printing industry is facing the same situation. The economics of the processes have changed and the new digital technologies are seemingly running roughshod over the old guard.
Can we do anything about this situation? Is this an inevitable situation to which we must resign ourselves? I don’t think so—yet. I say this with cautious reservation because ongoing future profits will come only when the shop owners, investors, or marketing groups really begin to understand what is going on in their own businesses.
We can delay the process, but we cannot stop it. That’s the bad news. The good news is that there’s no time limit on how long it will take before our traditional analog processes and services become economically and ideologically obsolete. Our first and foremost job is to look at how we can apply the methods and techniques of invention extension to the current invention-devention phase.
We have to find ways to extend the life of what we do and for whom who we do it. We must act now; otherwise, the marketshare expansion of competing technologies and delivery channels will quickly overtake what little we have left. This is akin to kicking ’em when they’re down.
Passive, unresponsive companies will be down for the count and kicked to death. The more responsive firms will find their way back to their corner and regroup. They’ll have to dig down deep inside and somehow find the strength to pull themselves together. What they’ve got going for them is experience and relationships in the marketplace. They’ll have to rely on those relationships to keep them alive.
For years we’ve been hearing about how much excess capacity exists in the market. We’re about to find out just how much. The weak won’t make it through this winter. The playing field will be much different come spring. In the second part of this column, published exclusively on ScreenWeb.com, I will lay out the battlefield, discuss who the players are, and examine what we can do to stay alive and to actually prosper. It’ll be the functional blueprint to help re-energize your business and to help you make the transition from the declining analog business model to the more flexible, adaptive, rapid-response digital model.
Extending the Innovation Cycle: Ideas on Competing in a Changing World
Part 1 of this column introduced the concept of the Innovation Cycle. I outlined that graphics screen printing is entering the Functional Substitution phase of the cycle. This is traditionally viewed as the declining phase prior to demise. As grim as this sounds, there are things we can do to extend our business and position in the market.
Every company in each market has its own, unique situation, so there are no general quick fixes here. You’ll need to apply the concepts to your own situation. I welcome your questions or comments about what I’m presenting.
From the outset it’s important to keep the situation in perspective. You’re delivering goods and services using specific processes—for instance, screen-printed T-shirts or die-cut P-O-P displays. This is product- and process-focused. When the market or technology shifts away from product and process we become vulnerable. We need to go deeper to define our value so we can continue to survive and potentially even prosper.
I’ve mentioned before that we’re all in the graphic-communications business. That’s it. We can extend this further and say we’re in the marketing business as well, although our focus is pretty narrow to truly be considered a marketing company. These two perspectives provide the launching point to which we can redefine our efforts.
The single greatest assets you bring to your customers and clients are three fold:
• Your relationship with the market, your customers and clients.
• Distribution of your goods or services to many companies or individuals.
• An expert understanding of how your goods or services are used to the maximum potential for your market.
These three items are independent of technology, product, or process. That means all of those elements can change and you’ll still have someplace to sell whatever you intend to sell. With this in mind, you still have to maintain your connection to your market and your customers, and you must remain relevant to them. This is another way of saying you bring value to them.
The most important thing you can do right now is strengthen your relationship with your client base. Your single goal is to become their trusted advisor in your area of specialization. You many think you already are. Examine closely whether you are a screen-print expert or a graphic-communications expert. If you’re the former, you have work to do.
The best way of starting this process is to gain a more complete understanding of how each of your customers or clients uses your products or services. The more you know, the better off you’ll be and the easier it will be to change or alter your course while still remaining true to your expertise.
This process of discovery will reveal a great deal of very valuable information. You’ll find most of your customers or clients will give you the same common answers. “We use T-shirts for school spirit and as fund raising,” for example. However, some of the schools will tell you they use them to build community. While school spirit and community sound the same, there’s a much bigger difference. Spirit is temporary and fleeting. It can change with a winning or losing season. Community is on-going. This is a huge revelation and gives you the basis for comprehensive development in this direction.
What you’re after are the uncommon answers. Malcom Gladwell calls these the outliers. He wrote a best-selling business book of the same title. Statistically these are the group of people/answers that make up the farthest end, and least number of responses. Overall, the more customers or clients you talk to, the more answers you’ll get that are close to unique.
Where am I going with all of this? The common answers are the automatic assumptions of how your goods or services will be used and these are the things all of your competition is delivering as well. When you look at the outliers, you’re getting a glimpse of where you can develop additional expertise and understanding.
If everything digital is about smaller runs, shorter set-up (or no set-up) times, and quick turnaround, we now have a way of transitioning digital into our existing markets. In the T-shirt example above, building community is the key we’re after. It gives us the opportunity to create different products for the leaders, incoming students, senior students, and so on. We’re taking a general market (high volume) and subdividing it down into more specialized segments (niches)
You can charge more money for the shorter runs andegin making this part of your marketing plan. You now have a pathway to the segment of the market where digital is currently best served, without giving up the long run part. Over time, digital will get better and better, faster and faster, and it may in fact replace screen printing economically as the decorating method of choice. In the meantime, you now have a plan for incorporation that gives you time and flexibility to incorporate the best decorating method for the situation at hand.
Secondly, your objective is to hybridize or incorporate the emerging technologies into your existing business. By excluding them and resisting, you are only delaying a most unpleasant end result. You can accomplish this objective by figuring out how you’ll use digital in your business, for your customers and clients (above.) Find reliable vendors for these digital services and outsource now. Work the bugs out on someone else’s dime. Don’t make the investment until you have it all working and your customers are happy and eager to buy more from you.
When you finally make the capital purchase, you’ll be able to hit the ground running on day one. This is especially important with digital technologies. They only get faster, better, and cheaper as time goes by. If you try to develop the market while you learn all of this, you’ll never recover your investment before the next generation comes out. Your competitors will be watching and their investment in faster, cheaper, better devices will put you at a disadvantage.
As you move from analog to digital, you’re still offering your customers viable solutions for their needs. You can continue to develop your understanding of how the market uses your goods and services and this only strengthens your position of authority and expertise.
This brings me to the final point, the most important of all. It is relevance. For you to be successful and to remain successful, you have to be seen as highly relevant to your customers, clients, and market. As soon as you lose relevancy, you’re done. Simply focusing on technology does not make you relevant. It’s how your goods and services are used that’s important.
Your relationship to the people in the organizations you deal with is the cement that holds all of this together. All of us have been in the situation where we’ve lost a longtime account because the board of directors changed or a new buyer entered the scene with their own ideas and contacts. In these fragile economic and technologically challenging times, this is crucial to grasp.
Not only is it critical to remain relevant to the overall organization, you need to make yourself relevant to all those that surround your key decision makers. This is insurance against the loss of a key contact. No one is immune from downsizing or layoffs anymore. If one of your key contacts is the victim of such action, you many find yourself downsized right out the door too.
The whole concept of customer relationship management is something we’re all familar with, but rarely pay enough attention too. With change happening all around us, and demand remaining weak, the best use of your time is to further develop and strengthen your relationships within your customer base. The more you involve them in defining what’s important to them and to gain the complete understanding of how they use what you sell, the more secure you’ll be.
Nothing today is as it was. It seems the world is turned on it’s ear. What had value last year may be worthless today. But only if it’s lost relevance. To insulate yourself against the evolution (devolution) of the process, you have to look at what you do differently. Look from the perspective of your clients. What makes you valuable to them is your ability to completely understand how to maximize the relevance of the goods and services your deliver.
In this way, technology and markets may change. Product and market lifecycles will evolve. New processes will appear. None of that should come as a surprise. The key to survival is understanding how to be adaptive to these inevitable developments and to maintain rock solid connection to those that have given you business in the past. You are their expert advisor and your future depends on remaining so.
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