Essay Contest pg3



The need for a business strategy to adapt to innovations more quickly has become far more important to corporations in recent years. This is due partly to the rapid and chaotic commoditization process (depicted to the right) occurring in technology.  

Rapid innovation and the accelerated commoditization of recent innovations has created a firestorm of new products and services that create a competitive advantage for new market entrants.



This scenario has led to an increased importance on corporate creativity and innovation which is highlighted in recent literature, such as The Innovator's Dilemma, HBR's Succeeding As An Entrepreneur, Little Bets, Adapt: Why Success Always Starts With Failure, Do More Faster, and dozens of other highly-regarded essays and books.

The image to the left originates from Simon Wardley's excellent
presentation at Oscon in 2006. He uses real data to describe where various technologies are on this commoditization lifecycle and how competitive disadvantages arise when your business fails to keep up with new products and services.

Two important keys to viable innovative solutions are 1) to capitalize on the cost-gap created by this rapid flux in technologies so that existing competitors are at a disadvantage, 2) to use innovations in a new way that obviates current products and solutions-- simpler, cheaper, different, less robust at first (ref Innovator's Dilemma).




The image below shows one example of how rapid commoditization can give advantages to new market entrants. It depicts a software application design scenario that we still receive proposals for today in 2011. The difference in the cost and ease of new architectural solutions is fairly dramatic with time gains of 10-50 times or more when the new, superior technology is chosen. Bad choices early can propagate for a long time.


In tandem with accelerated business cycle for products and services , the process of starting a new technology venture has recently become more structured and far less expensive such that start-up companies themselves are becoming commoditized. The many business incubators and accelerators operating across the United States have recently launched large and successful new concepts. 500Startups.com is one well-known example which operates out of Silicon Valley. It grew out of Y Combinator (started ~2006) which is a type of micro fund for high-tech entrepreneurs. Some other technology accelerator concepts are TechStars (Boulder and Boston), LaunchBox Digital (Washington DC), DreamIT Ventures (Philadelphia), Shotput Ventures (Atlanta), and Capital Factory (Austin).  In addition to this, larger entities have begun to focus on the small business area in general with new financial strategies, such as Goldman Sachs 10,000 Small Businesses and even Office Depot's Business Center. And there are even new crowd-funding concepts, such as KickStart which have revolutionized financing for artistic and novel endeavors.

Current Environment For Innovation

Most innovative products and services originate in either start-up companies or in corporations large enough to have the money and personnel to support innovation internally, such as Amazon with its cloud services. Most start-ups are formed independently, but a growing number are formed at business incubators and accelerators.

Business incubators often provide an entrepreneur access to seed capital, low rent offices, facilities, and mentors. The entrepreneur may also receive other member benefits, such as advertisement, business connections, and authenticity. One example of this model is The Ben Craig Center in Charlotte, NC which is affiliated with UNC, but there are lots of similar University-affiliated incubators.

Business accelerators are similar to incubators, but provide programs that give entrepreneurs intensive team strategy sessions geared to take a start-up from concept to market in just a few months. LaunchBox Digital in Washington DC is one such accelerator, and there are many other examples.

If you are a committed, full-time entrepreneur, the many university and VC-related incubators/accelerators are a great place to start your company provided you are willing to take the risk.  But, as usual, the odds favor the house.

If you are a large company, such as GE, PG, Apple, or Microsoft then you have the capital and resources to finance innovations internally although there is some debate (Harvard Business Review) over the effectiveness of some large corporate innovation strategies.  Six Sigma is excellent at addressing known processes, but it has the bad habit of creeping into areas that need to be Agile. Keeping these areas decoupled and allocating proper employee risk/reward incentives is proving to be a deceptively hard task for large corporations.



The bottom line is that in order to get involved, most innovators must either commit full-time to a start-up or accept greatly reduced financial incentives. As mentioned before, about 5 in 6 start-ups fail
(reference) and 90% of new product launches fail (source), which puts the innovator in a difficult situation.  

The market currently forces most people with viable, innovative plans into a situation where to profit they must commit entirely to a single venture which is statistically likely to fail.  It is only the governing entity-- the incubator, large company, Angel group, or VC firm that is likely to benefit in aggregate.



Our Thoughts: The prevailing idea at most accelerators today is that ideas are pretty worthless and that investments are made in people instead (TechStars has an excellent book on this, do more faster). The thought here is that the initial idea is almost certainly wrong and that good teams of people are better able to adapt, implement, and survive.  

Although this is certainly true, we think there are other very good approaches for facilitating innovation as well. Experienced experts often have insight into potential solutions to problems that 25 year old start-up entrepreneurs can't hope to even know exist. Whereas the accelerator model puts a good, young team together to try lots of variations and take on the entirety of the venture, the DC7 approach creates a team of experienced experts and decomposes the process so that each person only focuses on what they know best. In addition, experienced experts often know where money is spent and who to call on with innovative products.  

In other words, we think expert understanding of a business market or field does have value over brute force. It seems more likely to us that many experts do not have a viable creative discovery outlet than that their thoughts are rigid or inherently too conservative.




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