Pace of innovation heightens importance of relationships

A wise man adapts himself to circumstances, as water shapes itself to the vessel that contains it. -— Chinese Proverb

I work within the innovation industry — the industry of change.  Therefore, I commonly see new ideas as product and service prototypes when they are still trying to prove that they are worthy as the foundation for a new business.  Some of these innovations have the potential to substantially affect a market — to cause disruption.  When this occurs, everything within that market must adjust their status quo or face the threat of becoming extinct.

Early in my career, a few decades ago, driven by the concept of the personal computer, there was an ongoing discussion of whether we had achieved a new paradigm in innovation.  To that point of time, the introduction of innovation was serial.  The process of moving from concept to market acceptance would take five to 10 years.  Each innovation followed in the path of its predecessor.  Each innovation took its turn.

SPONSORED CONTENT

People Powered: Preparing Longmont Businesses for Economic Success

Longmont Chamber and FNBO present People Powered on April 24, 2024, aiming to inform business owners about workforce development, housing, and transportation issues.

It was anticipated that the time would come where innovation would cause a leapfrog approach:  A new product or service would not wait its turn for the last innovation to mature through its life cycle — it would simply jump ahead.  This concept was quickly demonstrated when cell phones were adopted in rural communities and developing countries where there still were no landlines.

The potential of leapfrogging innovations not only disrupted the markets they entered, but disrupted financial models that had planned on a longer product life in order to recapture money expended in research in development.  Research-and-development costs needed to be amortized over shorter and shorter periods of time. 10 years became seven, then five, then three, then one year for businesses with the lifespan of a mayfly like certain phone apps.

I see everyone entering 2017 with a new phenomenon in innovation: parallel disruptive innovations.  Where previously, we would see the impact of a disruptive innovation within a single industry or market, we may now see multiple impacts impacting multiple industries or markets all at relatively the same time.

I am working with investment crowdfunding, which is impacting the capital industry (or more correctly it is creating a new capital industry) where major changes in laws, technology and markets occurred once every calendar quarter in 2016.

At the same time, I have seen giant strides in block chain technology (privacy or anti-hacking and payment processing), artificial intelligence (self-learning systems and knowledge simulations), sources of unlimited information (such as Siri), Internet of Things (IoT) (embedded controls in all devices), unmanned vehicles (drones and cars and trains) and on and on and on.

Each one of these innovations is a big deal.  For the wrong business at the wrong time, they will forced out of the market by the innovations that have superior functions and/or lower prices.

However, when all of these innovations occur at the same time, change becomes constant.  Add to this new era in innovation the changes in political leadership (Obama to Trump) and in the marketplace (Boomers to Millennials), and entrepreneurs will find certainty and predictability a rare occurrence.

I anticipate that the relationships between businesses and their customers may last longer than the product or service that was sold.  Businesses will need to “engage” their customers, to “know” their customers and to build customer loyalty.  In turn, customers will need to expand their purchasing decisions beyond just the price tag.  Customers will need to understand the “values” of the business and the “impact” of the business upon their community in order to choose those businesses that benefit them most.

The relationships of an entrepreneur will become their greatest asset in times of change.

Karl Dakin is president of Dakin Capital Services LLC. He can be reached at kdakin@dakincapital.com.