Cloud and the Innovation Cycle (Guest blog from Intel)
Author: Richard Pilling, Cloud Account Executive, Intel
Many years ago, the late, great, Peter Drucker made the observation, “Because the purpose of business is to create a customer, the business enterprise has two - and only two - basic functions: Marketing and Innovation. Marketing and Innovation produce results; all the rest are costs."
Innovation comes in waves and reminds me of how music genres come and go: the new wave/genre rebelling and railing against the (perceived) problems of the old. To then just become the ‘old something’ the next generation are rebelling against. What’s new today, is old tomorrow; the innovation cycle continues apace in all markets.
In our rapidly changing world, we need to understand where this innovation will come from. I’ve seen that in times of recession, technology innovation happens behind closed doors, then in times of growth that innovation is put to market. McKinsey research is but one example showing that companies who invest in innovation during a crisis, generally outperform their peers by around 30% during the recovery.
"Innovation does not happen in isolation; it is shaped and influence by what came before and what is around it."
Innovation comes to market in one of two ways: an experimental R&D-team creates a brand-new product or service, which in turn enables a new revenue stream. Let’s call this “primary-innovation”. Following this, innovation enters the market through improvements to existing products or services, incrementally increasing the existing revenue stream. This we can call “secondary-innovation”, essentially this is evolution of what already exists.
Markets driven by primary-innovation tend to follow exponential paths; where nothing seems to happen for a while, then everything seems to change almost overnight. Ernest Hemingway poetically described phase transitions as, “Gradually, then suddenly” – to describe the compound power of exponential growth. We saw it with smart phones, social media and soon electric vehicles. Then secondary-innovation causes the continued linear development of a market, after the primary (exponential) expansion begins to quiesce.
And just like the music trends, innovation does not happen in isolation; it is shaped and influence by what came before and what is around it. A useful model for understanding this, is by looking at the effects of Porter’s five forces acting upon one’s company, products, and marketplace. As shown in Porter’s, no market acts alone - the ‘threat of new entrants’, and the ‘threat of substitute products’ tie a marketplace to its adjacent markets - or in other words: innovation in one market impacts those around it, as well as within itself.
If the impact of a particular innovation is significant enough, it can cause ripples to spread outwards further still, impacting seemingly unrelated industries – this might sound familiar if you’re a student of complexity science. One such example is how SpaceX’s reusable launch vehicles have enabled cheap and ubiquitous satellite-based internet access all over the globe. This in turn could lead to the collapse of information restrictions by authoritarian nation-states, or a blossoming in educational standards in remote areas where internet access is currently not geographically possible or prohibitively expensive.
Let’s look at an example closer to home: Cloud has had a huge impact in how companies consume IT resources - akin to procurement moving from waterfall to Agile methodologies in terms of their usage model. This acceleration (and optimisation) of procuring new compute resources has enabled innovation in all business sectors because the cost of failure for rapid/continuous experimentation of new ideas has dropped to almost zero. However, the cultural inertia of large companies means they can be slow to adapt to these new ways of working. This in turn means that employees can become frustrated when seeing what is possible elsewhere and will head to places where the culture enables them to creatively experiment and explore - to innovate.
In the coming years, as we see companies really get behind the ideas of continuous experimentation - especially when paired with acceleration through cloud and machine learning - we can expect to see much more primary-innovation coming to market
The ripple effects here, are that the impact of cloud can lead to brain-drain at inflexible, slow-moving companies, and the founding of new innovative ones. One could argue that this is a necessary cycle of business; a little upheaval in a free market once in a while is a healthy thing. As more and more primary-innovation comes to their markets, these ripples will become larger and more frequent – causing increasingly more formidable challenges to companies accustomed to linear change.
This is where we at Intel can help you - no matter the size of your company, Intel has the depth and breadth of skills to help support your innovation and advise on your cloud journey. We have the tools to enable your cloud migration, and then optimise your cloud infrastructure and cloud workloads. Additionally, our highly experienced team of cloud solution architects can be brought in to work with you on improving cloud security, benchmarking & rightsizing, workload optimisation, and workload automation (amongst other areas). When these are combined, we help to keep your cloud spend under control and help you to get the best performance possible – all with the portability of your workloads being able to run on Intel hardware in whichever cloud(s) you favour. Our aim is to remove the roadblocks in your cloud journey, and to be the enablers of your innovation.
In the coming years, as we see companies really get behind the ideas of continuous experimentation - especially when paired with acceleration through cloud and machine learning - we can expect to see much more primary-innovation coming to market, which will in turn cause great advances - and market upsets. The trick is to be able to spot those early-stage exponential growth (primary-innovation) markets, whilst they’re still under the radar.
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Authors
Richard Pilling
Richard has spent the last 12 years of his career leading the charge into the latest waves of new innovation, in areas such as Cloud, Data Insights, Machine Learning, and Analytics at companies such as Oracle, Intel, Luxoft (now DXC), cloud & data strategy at Accenture, Epam, and Cloudreach; and was the founding chairman of the TechUK ‘Cloud, Data & AI’ council: transforming global Fortune 1000 companies in their journey towards information enablement, with technologies such as (Big) Data, IoT, Cloud, Blockchain, and AI/ML.