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29 March 2013

Adjacent vs Incremental Innovation in Digital Age

I've just finished reading a book called "Digital Disruption: Unleashing the Next Wave of Innovation", by James McQuivey. I enjoyed reading it, and that's why I'd like to share a quick review for the book here.

"Instead of asking How can we make a new product that we can successfully sell? the disruptor asks: How can we give people something they really want". Replace "Make" with "Give", "Product" with "People" and "Sell" with "Want".

This sentence summarises the main idea of the book. In digital age, the cost of producing new products is much lower than it was one decade ago. And the author is not only talking about digital products, but analog ones too. Hence, it is all about innovation now. People want experience rather than products. It doesn't matter if you make it, or if you can partner with others and use free tools to give that experience to your users. Your focus should be on what your users want rather than on what you can produce and sell. The two concepts seem to be similar, but if you think about it, you will find them leading to different set of priorities when you are trying to innovate. The author added later on, "R& D teams have a tendency to confuse product features with customer benefits. They assume that more features equals more benefits. This is not true".

One other quote that I liked is, "When companies adopt technology, they do old things in new ways. When companies internalize technology, the find entirely new - disruptive - things to do".

He also set some differences between two concepts of innovation. Incremental versus adjacent innovation. Incremental innovations focuses on the the current product you have, the current customers you target, and the current process you use to make your products. Whereas, Adjacent innovation leads you to explore new markets, and new experiences to offer to new users. To do so, you need to think of competition differently, it is not those who sell the same products as you do, but anyone offering good experience to their users. Take Nike Runner app for example, they did not limit themselves to other shoe-makers, they rather explored new areas, they witnessed the likes of Apple and Facebook, they learnt from them how people want to share their activities, and how gamification is invading social services. Nike is not an app maker, it is not part of their production process, but this didn't stop them from moving to one new adjacency to explore new customers and new experiences to offer to those customers. They may choose to partner with Apple or compete against it in order to offer such experience to their users. It doesn't matter whether they choose the former or the latter. Because in the digital disruptive age, what really matter is offering your customer's value not products.