In this blog, we frequently explore emerging organizational trends, with particular emphasis on those that fit with the meme of empowering small firms to have large results. Since 2008, one trend we’ve watched is the rise of the small firm and business unit and the huge influence it has had on both the parent company and the industry at large.
Innovation is being innovated
Ex-Bitly Chief Scientist Hilary Mason just announced the formation of Fast Forward Labs in a blog post describing their approach. According to Hilary, who is the founder and CEO of this new company, Fast Forward Labs recognizes that existing research processes have a hard time providing applied research that is turn key ready for use in business operations. With this in mind, their goal is to do the research in an effort to provide background, an application, and (most interestingly) a prototype of a useable turnkey innovation. They will then offer implementation services for those who want help incorporating this innovation into their products and services.
So why is this news?
To understand why this is important, we need to take a step back and look at where we currently are in relation to our recovery from the last deep recession. Since the 2008 downturn, organizations of all sizes have implemented extraordinary focus on their core businesses. Operations have been streamlined, unprecedented amounts of customer data has been mined, and business models have been honed and locked in with powerful tools. Business Intelligence investments, SAP, salesforce.com and other tools have locked these in place with measurement tools that allow each team member to “work the plan.”
The results have been astounding and confounding pundits for months – how can, in the face of strapped consumer spending, companies continue to increase earnings and strengthen balance sheets? The answer is focus, turbocharged with digital tools that allow companies to simply execute better.
That’s great – what’s the issue?
There is a limit to the return shareholders can expect from optimization, and in many cases those limits are being reached, as evidenced by the M&A tsunami currently blowing through Wall Street. Many of these acquisitions are driven by activist investors either demanding the cash be returned to them or put to productive use. When an organization’s internal innovation stalls or cannot provide growth on its own, boards pressure the operating management to buy their way into growth instead.
So why is the Fast Forward Labs trend relevant?
The large R&D labs of the previous eras are costly to staff and operate, and statistics show that actually bridging breakthroughs into business units is challenging work. Creating new open innovation structures that allow light and nimble firms to discover and implement breakthroughs is the challenge of the next wave of growth.
Having niche firms, such as Fast Forward Labs, that have the deep scientific expertise to curate and integrate useable turnkey innovation on a mass customization model could provide a scaffold for a very powerful and effective growth strategy. By allowing these organizations to move their energy to customer value proposition and supply chain focus, these applied research firms will become very real parts of the ecosystem.
Won’t we lose differentiation?
This is a great question, and brings up a key point: the locus of product and service customization will move to a higher level within the enterprise, with architects that understand all the opportunities and limitations of the key business platforms.
Product management optimization was the key theme of the last decade, however moving forward the real battleground is for agility in business model optimization and change. Business model improvement has been shown to have a very high return on investment by Doblin group and others, but business model change implies the ability to inboard competencies and capabilities that the organization does not possess. This will demand a whole new layer of leadership and business model architects – for more on this, check out this post.
So, what are the implications? Break it down for me.
- Expect the formation of a number of niche applied research firms, starting with big data, but spreading to areas like nano tech, the collaborative economy, consumer robotics, 3D printing, biology based treatments, self driving vehicles, etc.
- Open innovation / collaboration tools will go through a huge up leveling from where they are now. We are still in the infancy of forming truly open networks of innovation partners. The next wave will allow higher levels of sharing between boutique firms and customer-facing organizations, with tighter expectations of confidentiality.
- The internal innovation & enterprise architecture team will have a much larger impact going forward. Expect a specialty to emerge that integrates advanced training in data marketing, the sciences and core business model integration.
What’s your view? Do you see this as an early signal or a distraction? Drop me an email or tweet me with your thoughts.
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