I recently read an intriguing article in the NY Times: In the Ordinary, Silicon Valley is Finding the Next Big Thing, by columnist and Ohio State professor Steven Davidoff. The article focused on the recently announced deal between Starbucks and Square, the San Francisco-based mobile payments startup. Under the deal, customers will be able to pay for their purchases at any of Starbuck’s 7,000 US coffee houses using Square’s mobile phone app by simply telling their name to the cashier, who will just verify the customer’s picture appearing next to their name in the iPad-based digital cash register.
While the Square technology is very cool indeed, Davidoff’s key point is the ordinary nature of the innovation in question.
“The deal not only has the potential to change the way people pay for coffee and everything else, it also shows how small innovation applied to everyday tasks may be the next new thing for venture capital. Call it the rise of the ordinary innovators. . . And while it may be revolutionary, Square is really just an example of what Silicon Valley is increasingly about: process and networking [i.e. VC ecosystems] at its finest. . .
“Square shows how these venture capital networks can be used to transform the ordinary. Its idea was not particularly new, but Square designed a simple but usable device, patented some of the underlying technology, leveraged other technology like the iPad and added some marketing. With the Starbucks partnership, Square is also showing the opportunity for old-line companies to capitalize on their large customer bases.”
For a long time, people associated disruptive innovations with major new technologies coming out of R&D labs, like the transistor, penicillin, DNA sequencing, TCP/IP protocols, and so on. Such major lab-based disruptive technologies are at one end of the innovation spectrum. At the other end are market-facing innovations, whose purpose is to develop transformational applications which will significantly improve the productivity of business, government and other institutions as well as the quality of their products and services.
These two kinds of innovations are quite different. We generally associate lab-based innovations with scientists, engineers and mathematicians working away in a lab developing new theories, technologies, algorithms and inventions that will hopefully, over time, find their way to the marketplace. We associate market-facing innovations with entrepreneurs, startups, and established companies who will leverage the disruptive technologies and ideas to develop whole new products, services, businesses and industries.
Professor Davidoff makes a very important point about this latter kind of innovation: what makes these innovations disruptive is the way they transform every-day, ordinary activities. These innovations are simultaneously revolutionary and ordinary. As a result, they are often much more subtle than classic lab-based innovations, which few would ever call ordinary.
The article resonated with me because when reflecting on the impact of digital technologies over the past twenty years or so, I have often thought about the ordinary nature of many of their most remarkable achievements.
For example, in The World is Flat, Tom Friedman wrote that wherever he went he asked people where they were when they first discovered that the world was flat, - that is, when they realized that something profound was under way that promised to change all aspects of business and society. I thought a lot about how I would answer Tom’s question. In my Internet work I have been involved in some very exciting, sophisticated projects, but I actually experienced my Internet epiphany during a rather small, ordinary occasion.
Sometime around the late summer days of 1996 I was attending a meeting in Tokyo, and had arrived the day before from New York. Not surprisingly, given the 13 hour difference, I was up in my hotel room around 4 am doing e-mail which I had just downloaded over an Internet phone connection. I was thinking about the Mets baseball game being played back in New York where it was 3 pm, wishing that I could follow the game but reconciling myself to the fact that I had no way of getting the game on Japanese TV or radio from my hotel room.
But then . . . I remembered. Live baseball radio broadcasts were starting to be available over the Internet. I found the right Web site, clicked on the URL . . . and there I was, in my hotel room in Tokyo at 4 am, wearing a yukata, drinking green tea and listening to the live Mets game back in New York, just as I had wistfully wished moments before. My wish was fulfilled. It felt like pure magic. All of a sudden, the world had shrunk and become incredibly personal.
On a related point, it is interesting to reflect on the concept of killer apps, that is, those IT applications that turn out to be unexpectedly useful and help propel the success of a new product or service in the marketplace. For example, there is general agreement that spreadsheet and word processing applications were the killer apps of the PC era, not because they were particularly exciting but because they helped validate that PCs were becoming an ordinary tool for improving personal productivity at work.
I believe that customer self-service was the killer-app of the early days of the Web. These kinds of apps were so simple, yet so useful that they helped convince companies around the world that the Web was something real that they had to pay attention to or else. It was quite revolutionary how easy it was to now do for yourself so many ordinary activities that previously required a trip to a store or office, or at least a phone call during office hours. All of a sudden you could track the status of your packages, access the latest sports results, check the weather of any city in the world or buy a book with nothing more than a browser and an Internet connection. And when done well, everybody benefitted. Companies could provide superior customer service at lower costs, and their clients were happy that they could easily get whatever information they wanted any time of day or night.
There are a number of strong candidates for killer apps in the world of smartphones and clouds, but my favorites are Web mapping and navigation applications, like those provided by Google Maps and MapQuest. They are among the most widely used such apps because they address such an ordinary human activity, - finding directions to a new place without getting lost. Users get maps-as-a-service and navigation-as-a-service over a variety of devices. The apps are really easy to use because all the complexity has been pushed backed into the cloud, as well as the bulk of the computations required to generate directions in near real time.
According to Davidoff, the ordinary nature of many successful market innovation is nothing new. It was an attribute of many of Thomas Edison’s innovations over a century ago. “Edison would pinpoint areas where innovation was possible and percolating, then piece together pre-existing inventions and ideas to push technology forward with a usable device. The light bulb is a perfect example, a device based on previous designs for something everyone was pursuing. Edison just managed to put it all together and take the credit.”
A similar characteristic permeates the work of Steve Jobs. As many have observed, a number of Jobs’ most profound innovations, like the iPod, iPhone and iPad, were based on existing technologies available to everyone, which he linked together with exquisite designs and sophisticated marketing. His new products did extraordinary things with available technologies. They were highly successful and captured our imagination because as he once said: A lot of times, people don’t know what they want until you show it to them.
Davidoff writes: “[It] is not just your idea that matters, but being at the center of the innovation network. The founders of Square had their own good idea, but it was one that incrementally built on existing ones. It also merely tweaked an ordinary habit - how you pay for things. The difference is that Mr. Dorsey [Square founder Jack Dorsey] knows the people to finance it, the designers to make it better and the firms to market it. He also kept things simple with the idea of returning to the time when there was only cash and it was easy to use and spend.”
“. . .The future of venture capital and Silicon Valley may be more like Edison’s laboratory, looking for the innovation in ordinary tasks and doing so based on leveraging pre-existing ideas and products. . . It’s more likely to be in the simple and ordinary. It’s about spotting the everyday problems and providing solutions that leverage on venture capital’s networking and operational skills, not to mention its knack for spotting someone else’s good idea.”
“In this situation, Silicon Valley will become less about the dreamers and more about the marketers, the connected and the everyday.”
The great science fiction writer Arthur C. Clarke captured the essence of innovation when he famously said: Any sufficiently advanced technology is indistinguishable from magic. And, perhaps we might add, - the more ordinary and every-day the innovation, the more magical it feels.