What the hell does a soggy meat pie have in common with an iPhone 11?

Let’s imagine a fictional scenario where two oven manufacturers are competing in a market. They both make ovens; good ovens. Every year they announce their new oven in an attempt to stay relevant and keep their market share.

This years’ models are the best ovens yet! Two heating elements instead of one, setting the temperature with buttons instead of knobs, the oven heats up 12% quicker.

This continues for years. Bigger window here, faster heating there. Always improving!

A third manufacturer enters the market out of nowhere, they advertise that their oven is so small that it no longer needs to fit in the wall, it cooks food in minutes instead of hours, and it doesn’t need to be preheated. This new oven completely takes over the market. It’s so successful that it puts one of the original manufacturers out of business!

The third manufacturer created a microwave oven. They innovated on the problem and broke into a mature and dominated market because of it. The first two manufacturers were so stuck with the idea that “we make ovens” that they neglected that they were actually selling solutions to the problem of uncooked food. There are many ways to cook food.

Really what did the third manufacturer do that the other two didn’t or couldn’t?

Us humans are pretty bad at coming up with completely new or unique things. Most ‘new’ ideas are just combinations of existing ideas and experiences that combine in unique ways to create a new idea. The microwave oven is a clear example of this process. A radio engineer who had no interest in food preparation noticed that the chocolate bar in his pocket would melt when he was working on a radar set. Then he cooked some popcorn and then an egg. The engineer -Percy Spencer- then filed a patent a few months later.

Who would imagine that radar would be used to cook food?!

Improving the shape of a product isn’t innovation. Adding another camera to your iPhone 11 isn’t innovation. Making a wrap around screen on your Xiaomi Mi Mix isn’t innovation. You’re just iterating and developing on an existing idea. If your whole business relies solely on iteration and gradual improvements then eventually an innovation will remove you from the market.

Look at horse cart manufacturers, someone dared ask the question “what if we remove the horse?”. If your head is stuck in the “we make carts for horses” then you’re not going to survive as a company when someone starts selling horseless carts.

What about the rise of the “Battle Royale” genre in video games. Most modern interpretations of the last-man-standing fight came from a Japanese film of the same name. An insight or an idea derived from another industry gave rise to one of the most notorious paradigm shifts in the gaming industry since the gritty realistic military shooter a decade before it.

Like the rivalry between the top two Battle Royale games of 2018? Fortnite and PUBG? Epic took an insight from casinos and black market drug dealers making a game that uses social pressure to get kids hooked on gambling, thus coming out on top even though they were second to market. I’m kidding, it’s actually their adoption and modification of Valve’s Battle Passes from DOTA2 and a more accessible visual design that won that round.

But still… Fortnite is pretty damn addictive.

Innovation is hard and innovation is very risky. You can mix, match and blend as many concepts from as many different fields as you want but you’ll probably only make a hit less than 1% of the time. The killer insights, the million dollar innovations tend to come out of nowhere. They come to you when you’re not looking for them. Usually from a body of knowledge or industry experience that you have for other reasons. Like Percy and his “microwave cooking process”. I’m sure if you sat down with the intention of innovating on ovens that would be the last thing you come up with.

So, if you can’t innovate with intention then how do you as a business use innovation to stay relevant and try to stay alive? With most, if not all creative pursuits the gems live on the margins. The ideas come to you in the shower, or while you’re watching TV. They’re shy and need mental freedom to come forward.

What if Percy was being monitored by some tyrannical structure or manager and the moment he started looking into why his chocolate bar was melting he was reprimanded and possibly fired? We probably wouldn’t have had soggy microwaved meat pies until much, much later. Innovation requires freedom and if your company is too big that it requires process over people and subtle tyranny to keep the company running then you won’t be able to innovate as hard as you try. What usually happens is the company will create a department, their whole responsibility is to innovate and come up with new ideas. That makes sense at first but the department’s purpose is to innovate. They have a limitation and an expectation. If we accept that the golden ideas come from the margins, the times where you’re not thinking about anything and just ‘existing’ then having innovation as the goal or the job is contradictory. What if one of the “innovation specialists” decide to chill out at the office and play some video games to pass the time? Probably reprimanded, definitely fired if they work some of the companies I’ve worked with in the past.

The number of technical and social problems I’ve discovered the solution to while playing video games is too numerous to count. Most of my innovations have come to me when I’m not “working”. I know that’s not universal but ironically if I didn’t allow myself to drift and be idle, I wouldn’t be able to do my job.

Smaller companies tend towards more innovation and the ability to innovate and execute on those innovations due to the freedom that their size allows for. 2 guys in a garage can disrupt and dominate a market because they have the freedom to invest in a computer for ordinary people in a market that was convinced that only universities and big companies needed computers. Innovation wins over brute force and endless resources every time.

Apple took on IBM and won because they had the freedom to innovate.

Apple is stagnating and “innovating” by adding a third camera because they’re too big to take the risks and allow their employees the freedom that’s required to actually innovate.