Innovation theory

I have a theory – the companies that are least likely to innovate are the ones which have got the most to lose from that innovation. Don’t get me wrong here – the innovation will happen sooner or later. It just won’t be done by the incumbent. Big companies sit on their fat derrières hoping that there is no disruption to their business model. The status quo continues. They’re too afraid to find a more radical, efficient or better way to do things. They don’t want to shake things up.

Let’s take a few examples – why didn’t Barnes & Nobles, Borders etc. be the first ones to sell books online? Closer home, in India, why didn’t Crosswords or Landmark launch online bookstores? They waited for a FlipKart to show up and change the way people buy books.Why didn’t Jet Airways think of no-frills flights with cheaper fares before Air Deccan showed up? Why wasn’t Skype invented by a telecom operator having domain knowledge of telephony and networks?

No incumbent wants to go through the pains of transformation to try out an unproven business model. Fear paralyses them. That’s where startups fill the gap. They don’t start out trying to artificially keep an old business model alive. They don’t have any fear of losing. Startups challenge the traditional and change it for the better. Then, ironically, they get acquired by the very same big companies (more on this in a later post, maybe).

The same theory applies to countries too. Look at the oil producing countries. They’re the most orthodox in culture and thought. Now look at a middle-east country that was one of the first to run out of oil – Dubai. They’ve innovated. They’re more progressive in their outlook. With no oil money to depend upon, they embarked upon a transformation of their country to an investment and tourism hub. What a beautiful transformation it has been.

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Author: anand

Currently CleverTap. Founder & ex-CTO - burrp. A techie and an entrepreneur at heart. Have worked in US, China and India.

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