For the past 10 or 15 years, it seems as if innovation has continually been a hot topic. And yet while everybody claims to want innovation, do they even know what it is? Innovation seems to be an overused word.
Fortunately, clarity on the subject came in 2005 with the publishing of business consultant Geoffrey Moore’s book “Dealing with Darwin.” In his book, Moore breaks down various types of innovations into four general zones, each zone then consisting of specific types of innovations, for a total of 12 distinctive innovations.
I liked Moore’s book because it appealed to my analytical nature that drives me to categorize things. In addition, the book is a marvelous tool for examining what sorts of innovations and products can benefit from software outsourcing.
In this post, I will discuss the first zone: Product Leadership, which describes innovations for growth markets. Moore identifies four types of growth-market innovations, which are generally defined by their mix of new or existing technology, and new or existing markets:
Disruptive Innovation. This involves the creation of new technology at the same time as a new market. The software example here is eBay; it came about when the Internet was a new technology. The new market in this case was online auctions. No one had ever done online auctions before.
Could software outsourcing be used to facilitate this type of innovation? I think most venture capitalists would say, “No way. I’m not going to invest in a company that has developed this unique innovation in some foreign country, such as India, China or Russia. It just doesn’t make sense.” They would want to develop new technology close to its market rather than half a world away, where the developers may not have a good understanding of the technical winds that might be blowing and whether or not the innovation would be accepted.
Application Innovation. Here you’re taking an existing product and applying it to a new market. One of Moore’s examples for this was BlackBerry. At the time BlackBerry was unique, as it transitioned from a cell phone to a method of sending and receiving emails. It became the must-have device for business.
This type of innovation could clearly be facilitated with outsourcing.If your own development team created a successful application in market A and you needed to make some changes in order to apply it to market B, you would be starting from a well-understood platform, which you could introduce to an outsourced team.
Production Innovation. Next we come to creating a new product for an existing market. The example Moore gives for this is Google. Certainly, there was already a well-defined market for searching online. Google’s innovation here was simply being able to deliver results that were far superior to those of its competitors.
I don’t think you could have necessarily outsourced this innovation, but you could have certainly outsourced some of the development. I suspect Google did just that, taking advantage of outsourcing and the creation of operations in other countries to get the most programmers it could.
Platform Innovation. Finally, there’s innovation in which you evolve an existing product or market into a platform or a basis for other applications. Moore discusses Windows and Oracle in this light, but a more modern example would be some of the new NoSQL databasesnow becoming integrated into analytics products and other services. Outsourcing could definitely be useful for delivering these types of innovations to the market.
Three out of four of Moore’s Product Leadership innovations would be amenable to outsourcing at some point in time. Why does this matter? By identifying which category an innovation fits into and whether it can be outsourced, a company can brainstorm, to ensure the product is developed in the most cost-efficient way possible. And let’s face it: cost efficiency may not be sexy, but it can be integral to a product’s successful development.
In my next post, I’ll discuss what Moore calls the Operational Excellence Zone: innovations for mature markets.
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