Innovation: It's a relative thing...

Innovation, its an interesting word couched in context. It's one I have an affinity with, so much so that it's a part of my job title.

Dictionary.com describes the term as thus;

Noun: something new or different introduced, or the act of  innovating; introduction of new things or methods.

Seems clear cut, I know what's new or different to me by virtue of existing! Inevitably though, my perception of the term is my own; others will view it differently via their own lenses and set their own benchmarks of what that reality is for them.

Simply put; new for me may not be new for you - and visa versa.

The greatest manifestation of this truism is when you look and the differences between sectors & industries, particularly through the lens of technology. What is common garden process in one can take on a mythic quality in another, and when that change comes it can knock an entire sector on it's head!

Uber, Deliveroo and Airbnb are obvious names we all know of from recent years, and all of these took traditionally clunky customer experiences and aligned them into simple and streamlined processes designed with the customer in mind.

In the modern age, customer centricity is key, and remembering how annoying booking a taxi was before this disruption makes me shudder; I'll never understand how a driver could be "just around the corner" for 45 minutes after ringing for the fourth time to find out where my ride into town is.

It's not that hard for gods sake! It's 4 degrees out here, why the hell am I standing in the cold waiting for your bloody driver! They're clearly not around the corner, because I'm looking around said corner, so where are they!?!?

Not that I'm bitter. Or hold a grudge. Much.

I suppose my core point here is this, disruptive innovation is great as long as it benefits your customer, whoever they may be. The focus on a real, tangible benefit is imperative.

So, the right thing to do is put your customer at the heart, understand what makes them tick and make changes to improve their experience with your services; but what do you improve exactly?

The obvious thing to do is engage in direct research efforts, looking at how your customers use your products and from that understand the areas of improvements. This is essential and will tell you what to do, but not necessarily how and whether it will work.

The smart thing to do is look at what's proven to be working in other areas, companies or sectors that could truly give your services an edge if applied to what you do; this is known as the Adjacent Possible.

What on Earth is the Adjacent Possible?

I'm glad you asked! It's a term that has it's home in evolutionary biology with a sprinkling of quantum mechanics for good measure, first coined by the author and theoretical biologist Stuart Kauffman in his book "At Home in the Universe".

However, it entered business parlance through Steven Johnson's book "Where Good Ideas Come From"; that's where I first encountered the concept upon reading this book some 5 years ago.

The basic premise is this; evolutionary change is a gradual process based on trial and error; Darwinian evolution 101. Each successful change is a beneficial adaptation to the current situation and makes use of the resources and structures available at the time, building upon what's already there.

To make the example real; Elephants didn't spontaneously pop into existence several billion years ago, they came to be over time with each iteration of life making minute but measurable changes along the way. The prehensile trunk is an adaptation that came to be through evolution favouring those lines capable of independent discrete nasal movement.

But in order for that massive nose to provide an advantage, the conditions had to be such in their locality that it did provide one in the first place; meaning trees and bushes had to have co-evolved in such a way responding to their own evolutionary pressures and stimuli. It's a connected system, all adapting to preserve the structures within from the inexorable march towards entropy for as long as possible; the only true cosmic imperative.

This co-evolution, where everything within a system is existing in a balance between order and chaos, constantly adapting to each other on an evolutionary teeter totter is essentially what the adjacent possible is about; small changes, slight improvements, constantly shifting normality.

Now let's apply this principle to innovation in business.

Netflix is a good example for this, having started as DVD rental company it's a very different beast now. But to begin, lets cast our minds back to what world was really like in 1997...

Party Like It's 1997

To give a quick year in review, this was when Tony Blair was first elected into office as Prime Minister on a landslide win by the Labour party, Princess Diana died in a car crash through an underpass in Paris, Steve Jobs returned to Apple, Titanic blitzed box office records and I turned 13.

This was also the year we got the internet at home for the time (true trailblazers in my family!) on a 28.8 kbit/sec dial up modem, and my search engine of choice, AltaVista, looked like this;

This world is not a place where on demand streaming could even begin to exist. Napster, the first P2P service to bring the hammer of legality down on music piracy, didn't emerge for another 2 years; and it would take 45 minutes just to download one 3.5 mb MP3 if you were lucky enough for the connection to hold (it was impossible to resume downloads, you had to start again from scratch).

Not that I engaged in piracy as a child, that of course would be bad & wrong. Perish the thought...

So, considering this, Netflix wasn't even thinking about streaming. What is was thinking about was the recent floating of Amazon on the stock exchange by taking the traditional bricks and mortar sale of books online and making an absolute killing. The lightbulb moment occurred - "why don't we do the same, but for DVD rentals?". So began the first 10 years of the companies existence and it's core business offering.

The adjacent possible, made manifest.

Fast forward to 2007; the year Gordon Brown succeeded Tony Blair as PM, Northern Rock collapsed following the "Credit Crunch" (that decades version of "Austerity"), Android was unveiled by Google and the first iPhone was released to delirious acclaim.

It was also a time when broadband internet became commonplace, with over 50% of the UK connected and we had 5 mb/s connection online permanently via a now defunct provider Cable & Wireless - absorbed by Virgin Media some years later. Wifi was the norm, no more PSTN cables trailing the upstairs landing into my bedroom, and everyone in the house had their own PC / Laptop rather than one shared machine sat in the corner of the dining room.

That means, over 10 years, internet connectivity speeds increased by 1778% in my household, and with that came an enormous shift in our behaviours, expectations and engagement with the internet. We were truly, and irreversibly, online.

It's in this environment a previously little known site called YouTube, launched in 2005, shot to fame. One statistic I've found claims that YouTube consumed more data in 2007 than the whole of the internet had done in the year 2000; that's the pace of change for you.

With the ecosystem now existing to enable online video delivery, viewing habits were shifting online, and the mail order rental DVD (even with next day delivery) was too slow.

Enter another evolutionary shift; "Lets put our movie rentals online, and then people can stream them without having to wait for postage. It's working for those little videos on YouTube - why not for us?".

Netflix took a concept proven for user uploaded videos, applied it to the video rental market, and in doing completely turned the whole sector on it's head.

Once again, the adjacent possible made manifest. The rest is history.

By simply copying what's working for other people, and applying it to their specific sector, they made a killing; but always evolving within it's own ecosystem, building on a basis and using the knowledge & experience already available within itself.

Netflix never left the net, and it never left movie rentals really, but how it delivers the experience to its customers has evolved dramatically.

This is the real crux of the Adjacent Possible; you don't necessarily have to change what your core offering is to embrace innovation, just how your services are consumed by your customers; specifically, changing so they match how your customers want to consume them.

The customer is the queen, the king. Follow their lead.

Next time: more on Innovation, and how to make it work in your business every day (Hint: There's a few processes involved!).