Another Innovator’s Dilemma

What if being immersed in an innovative culture made us less able to spot what’s next? It may seem like an odd question, but lately I’ve been thinking about how groups of people can fall victim to their success, where their prosperity erodes the core reasons why they were successful in the first place.

This is not a new concept – it has been observed and studied before in other areas, but I suspect there will be future studies concerning how this dilemma – a variant of Christensen’s Innovator’s Dilemma, if you will – is at play right now in the US technology industry.

The idea has been understood for years in the wealth management world, where they have an adage about going from “shirtsleeves to shirtsleeves” in 3 generations. The story behind the adage goes like this: a hard-working individual of modest means (e.g. someone who rolls up his shirtsleeves to earn his keep) applies thrift, focus, and perseverance to a new business endeavor, and in so doing amasses a fortune which he bequeaths to his children. His children and grandchildren however, surrounded by wealth and privilege, will not develop the same character as their forefather.  By the third generation the wealth will have been dissipated and the succeeding family generations will be back to working in their shirtsleeves.

Sociologists have observed this as well, most notably in Daniel Bell’s seminal work on what he referred to as “The Cultural Contradiction of Capitalism”.

So, my question is this: what if Facebook, Google, and Apple are preparing the way for tomorrow’s innovation to come from cultures other than the Sand Hill Road VC community?

I’ve long expected this to happen anyhow. When I began my career in the Silicon Valley, talent movement was a decidedly one-way affair. Engineers and entrepreneurs from other countries came and stayed – in part because many of them came from poor, less-developed countries, and the California lifestyle looked pretty good compared with home. So much has changed since then: the cost to begin a business anywhere has dropped, important information is widely available, and there is investment capital elsewhere.  Also, many of those poorly-developed countries are not so poorly developed anymore and thus afford an opportunity for their prodigal sons to return from San Francisco, establish a pretty nice lifestyle, and start new companies back home.

It is an ongoing concern among large new tech companies that their success could cause them to become focused on big-company problems – growth metrics, financial reporting, organizational structure and the like, and miss “what’s next”. Many large tech companies are well aware of this. Christensen’s work showed how innovators are seldom beaten by other giants, but have their opportunity chipped away gradually by small attackers who gain footholds in the low-margin slices of very valuable pies (suddenly I’m hungry for some reason…).

But could this apply, through some sort of personal technology osmosis, to those of us who live in those companies’ ecosystem?  You don’t have to work for any of those companies to have their products occupy how you communicate and search for information several times per day.  There are more people living outside our corner of the developed world than inside it.  Will the recent tech “boom” cause us to be unaware of what is coming next?

The Alibaba IPO puts this in sharp relief. I first ran across them in China years ago, and have been waiting for their big US coming-out party to occur, as it now has. WeChat, also based in China, is the largest standalone message app in the world. Alibaba and WeChat aren’t perfect examples of what I’m talking about, since they already have scale. But consider this: few people expressed a need for an automobile before Henry Ford. Few were clamoring for smartphones or touch-screen tablets before the Apple product introductions. Few considered how the category of “search” could be deepened (and monetized) before Google. Whatever big innovations come next, few of us are asking for them right now.

So here’s the question: although we may think we’re working hard towards innovative goals, do we, in some small way, have a sense of entitlement? By that I mean, do we unconsciously believe that by virtue of our geographic and market location, success is somehow guaranteed – if not for us then at least for other participants in our industry that are already familiar to us? How might we miss “what’s next”?

I wonder if the common market news sources and technology innovation sources we consume  (including blogs like this one) have this bias toward the familiar. This bias, known as the availability heuristic, is pernicious because we’re unaware of it.  If we’re interested or worried about “what’s next”, we need to seek new sources of information that others aren’t consuming.

Let’s make that the simple task for the next week: see if you can discover one new information source that is relevant to your industry that nobody else is reading.

Good luck!