Inspector’s Column: Halloween costumes and innovation ghettos

Halloween happens every year at the same time, it is quite predictable, but people still manage to display creativity and out of the box thinking.

By the time I am writing this, I find myself in New York City. It is Halloween and everyone is in costume, one more imaginative than the other. In the daytime the kids are out, supervised by their equally dressed up mothers and fathers, trick-or-treating storekeepers, and others in the street. Here is a Harry Potter, there is Ariel, and over there is a father dressed up as Darth Vader. At night it is even more imaginative: one guy is dressed up as Björn Borg, with headband, a wig, and tight white shorts. And an old wooden racket. No jacket or anything, and it is around five degrees. My favourite was this fellow dressed up as a young Mormon guy: white shirt, black trousers, name badge, a backpack, well-groomed with a huge smile. The PBR can and his slur gave him away.

Halloween happens every year at the same time, it is quite predictable, but people still manage to display creativity and out of the box thinking. You clearly can be innovative and make an impression of novelty in a path dependent context. The same goes for many of the innovations in the corporate world too: innovations are often social in nature, and do not always need to be technological. Uber is a great business model requiring no new technology. Air BnB, same thing, Netflix too. Even Ikea, one of our favourite pedagogical examples, is not primarily technologically innovative, but rather a social innovation of a business model.

Sometimes we are too keen on radical changes and disruptive innovations, technological breakthroughs and drastic shifts in processes or material science. But obviously, a lot of value is created in incremental and steady-state contexts. Better car models, phones, software and garments are needed too. The problem we have with innovation is that we often forget the demand-side and focus on ourselves and our own competence and the other resources at hand, for instance: “look we have been outcompeted by the X but we have all this fantastic talent here in the area of T, we have to invest in it, something good is bound to come out of it”. “Innovation ghettos” in the corporate world are the result of the same thinking process – impressive amounts of competence sadly disengaged from the business and perhaps obsolete given the nature of demand.

No, in a world where innovation and renewal are based on the problems that existing and potential customers have, the question of whether the solution is radical or incremental is entirely subordinate. As is the question of whether there is technological breakthrough or not. Value-creation starts with the real needs of our customers, not with technology or capital. It is autumn and it is harvest time, but for those who sow, now is the time to invest in learning about the problems and needs of your market – and do not worry if your solutions are System 1 expressions, or do not involve any radical technology. The Mormon guy did not use any radical technology but he for sure helped resolve the needs we all have during Halloween, which is to have a good time.

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