Recently Ben Thompson penned an excellent piece on Unilever’s acquisition of Dollar Shave Club, a firm made famous by its bootstrap marketing as it became the poster child of the subscription economy. What struck out to me was the subtlety of Dollar Shave club’s counter to each step of the P&G’s multi-billion dollar stranglehold of the razor market.
In being the de-facto consumer goods behemoth, P&G has amassed several key competitive advantages over half a century. Yet with changing consumer behaviors driven by new technology in the mid-2000’s, Dollar Shave Club conjured a pandora's box of a business model that allowed it to go toe to toe with the reigning shave-tech incumbent. Multi-Billion R&D dollars could be countered by “good enough” blades imported from Korea. Ever-present branding and advertising campaigns could be matched for pennies on the dollar via viral content streamed on Youtube. Decades of expertise in distribution and retail were matched by new, delivery-based online businesses powered by Amazon.
"Let's circle back on that"
The subtlety of the innovation is what astounds me. Dollar Shave club quietly built itself up on no single block-buster concept, instead simply looking at what had gradually changed in the portfolio of business technologies that might allow their business to scale. More intriguing is that some of the world’s most heralded break-throughs follow the same pattern. I call these "checkback innovations."
Take Tesla for example. Electric cars had been an object of fascination for hobbyist engineers in the 90’s and early 2000’s. Despite the hype, the solar focus of early models failed to deliver. In Ashlee Vance’s book on Elon Musk, JB Straubel, the firm’s chief technical officer in, noticed that many consumer electronics were now running on mass-produced lithium ion batteries. “We wondered what would happen if you put ten thousand of the battery cells together… we did the math and figured you could go almost one thousand miles.” The slow and steady march of lithium battery capacity over two decades now made possible an entirely new business model previously dismissed as a playground for hobbyists.
Palmer Luckey’s Oculus Rift follows a similar convention. The idea of VR had been around for decades, but practical application of the concept was costly and limited. In trying to crack why so many VR systems had failed to reach consumer scale, Luckey looked to what new technologies had gradually emerged since the failures of his predecessors. “With screens from mobile phones, which the smartphone arms race had made bigger, crisper and less expensive than ever before,” he was able to come up with a cheaper, lightweight version of a military-grade VR headset. The Oculus and its technology have led to a gold rush in an entirely new industry, all thanks to a novel repurposing of existing, ongoing improvements in smartphone technology.
Mark Zuckerberg noted that the innovation that made his company possible was the "early conception of a true online identity" Facebook followed the roll-out of standard issue .edu email addresses by American universities in the early 2000’s - each assigned directly to a student the time of enrollment. Due to the one-to-one relationship between students and .edu addresses, members of Facebook were encouraged to accurately portray themselves on the site, thereby giving Facebook a leg up on its more shady predecessors. This concept became the bed-rock of one of the most transformative technologies at the turn of the century - true human identities online.
Hiding in Plain Sight
In this vein, I often think the best innovations are likely right under our noses, slowly incubating in an slowly shifting ecosystem. At what point does X technology become just small enough or Y technology become just fast enough that the ideas of our past begin delivering the futures we were promised? For example, for years the internet of things and big data have been heralded as leaders in the next wave of technology innovation, with little visible improvement in our day to days when compared with smartphones and computing technology. Perhaps the roll-out of 5G cell networks will be the incremental improvement that ignites the true delivery of these technologies’ main-stream value.
If you look at Gartner’s Hype Cycle, it accounts for these “checkback innovations.” After an initial inflation of public expectations, the slow, tedious, and true work of innovating begins; sometimes this can be a multi-year or multi-decade process. Despite these timetables, it does give great hope to the technologists, designers, and entrepreneurs of the world to realize that light nuance and tiny improvement can spur the same game-changing companies that all-in-one innovations promise. Keep your eyes peeled.
