As 2023 approaches, I’m hearing a lot about what companies will be announcing at the upcoming Consumer Electronics Show (CES). One pitch that stood out for me has a shot at owning the show in terms of innovation — and since CES is the first big tech event of the year, it would make this company an innovation leader for the new year.
But innovation carries risk. And while this company is not risk-averse, many are, making the innovation path problematic.
Let’s think about the yin and yang of innovation vs. execution, and why execution and tolerance for failure are critical to real innovation.
Winning the smartphone world
One of the most seemingly innovative products so far this century is Apple’s iPhone, which arrived in 2007. But about five years before that, Phillips had showcased a similar concept; a year before that, LG brought a similar product to market; and both Microsoft (a client of the author) and Palm had working groups on iPhone-like products.
But Apple executed first.
I doubt many people even know about the roles the other companies played because none of them succeeded. Phillips was too far ahead on technology (it had prototypes with rollable screens), the CEOs of Microsoft and Palm killed their efforts because they thought smartphones were only for business, and LG’s execution was so bad its Prada phone failed. (Eventually, LG got out of smartphones altogether.)
What mattered was who executed to the point that the market could see the benefits of innovation and embrace it.
I met with the CEO of Ford at CES a number of years back — my first and last meeting with that automaker. Some companies prefer analysts who speak their minds; most seem to like those who support decisions already made. I’m the former kind of analyst. At the meeting, I was adamant that Ford needed to quickly learn from Tesla. Otherwise, Tesla would eclipse Ford — largely seen as the father of the US automotive industry — and the CEO would likely lose his job.
Other analysts in the room called me a few names, SAID I didn’t know what I was talking about, and praised Ford. These days, Elon Musk, not Ford, is Tesla’s biggest problem, and that Ford CEO is long gone. Ford is struggling to compete even with some couple compelling products (the Ford F-150 Lightning and Mustang Mach-E), because it really doesn’t get why Tesla has been successful. (Side note: it is fascinating to watch Musk doing more damage to Tesla than any existing car company.)
Another memorable moment from the meeting was when the now-gone CEO said he had fixed the risk problem. He correctly noted that Ford had been intolerant of risk and was learning how to let executives take chances without losing their jobs if they failed. This is critical: if you’re going down an innovation path that carries risk, and then fire those who take risks, a competitor will innovate around you — just as Tesla did.
Accepting risk is binary. You either do or you don’t. If you won’t take risks with your most powerful product, it sends a message: senior leaders don’t tolerate risk and as an employee you’d be well to avoid it. That makes innovation harder.
Innovation requires a major marketing commitment. Humans don’t like change, but there’s no way to innovate without introducing change. You have to convince potential buyers that the benefits of the change are worthwhile. If you don’t, you could have the best product around and still falter in the market. Take the Microsoft Zune, for example. It was far more innovative than the iPod at the time. It was more robust, played video, allowed for legal music sharing, and it came in colors (all things the iPod later did).
But Microsoft didn’t market those differences, the design was less attractive, The Zune required a subscription, and getting video to work was … problematic. Microsoft fixed the execution problems made the Zune better looking, got video to work, and even made the subscription more compelling. But it cut back on marketing and lost even the fans it had.
Innovation needs both execution and marketing to make a difference – and that the most innovative products have the highest execution and marketing needs. Tesla is popular because it hit a niche otherc armakers didn’t take seriously, the ecologically conscious buyer. And its unique vehicle (and strong customer advocacy) allowed it to take market leadership.
As the next wave of electric cars arrive and Tesla struggles with an absentee CEO, I expect it to fail unless it corrects course.
Getting the balance right
I often get upset when vendors lead off with “innovation” as a differentiator; instead, it should take a backseat to execution and used only when existing tools and services can’t meet a need. Most people don’t like being different, so leading with a message of being different is often a mistake. While innovation is a way to sidestep competitors and gain markets, it must be used to address needs that aren’t being met. It requires high levels of execution, and top-nothc and consistent marketing.
That’s what Apple did with the iPod and iPhone.
Tesla showed that if you execute well enough — and the competitive hole you’re filling is big enough — you can succeed, even without marketing. (Remember, Tesla didn’t have other electric cars to compete with, while the smartphone market was relatively mature when Apple spun it on its head).
In the end, do you really want to innovate? If so, are you able to check all the boxes? If not, you may want to rethink the path you’re on.
Copyright © 2022 IDG Communications, Inc.
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