Digital Innovation Is Kind of a Big Deal Right Now
We currently find ourselves in what I would call the big deal phase of a digital transformation where exponential change is creating dramatic advancements in a very short space of time. However, to fully understand how we can use this to accelerate innovation in our own organization, I invite you to take a short trip back in time.
Way back in 1983, after launching my company, Burrus Research, I was studying innovations in all areas of science and technology on a global level. I came across something that is well known today, but back then very few knew about — Moore’s Law. Because of my science and research background, I knew he had created something that could shed light on some of the darkness the future holds. In short Moore’s Law states that processing power would double every eighteen months as the price halved.
Using this, I could look out to the year 2000 and know how powerful a computer would be, and roughly how much it would cost. Knowing this, I could make predictions about technology-driven change that would be very accurate, but I needed more than Moore’s law.
After more research, I developed the Law of Digital Storage and the Law of Bandwidth — which, in short, would closely mirror Moore’s doubling prediction for processing power. In 1983, I put them together, calling them the Three Digital Accelerators, and I started writing and speaking about how they would drive predictable exponential change and economic value creation for decades to come.
As the first professional futurist to accurately identify the Exponential Change curve in ’83, I can tell you it was much harder to get people excited about all of the transformational changes that would happen, because the time frame was so far off. Let’s face it: it took 20 years to go from a five-megahertz chip to a 500-megahertz chip, and while I knew it would happen, I still had to wait like everyone else. However, thanks to the power of doubling, it only took less than a year to double that — and that was years ago, now.
The point is that today, we are in what one could easily call the Big Deal phase, because the Digital Accelerators have reached a point of exponential change that is creating dramatic change in very short periods of time.
Why did Netflix start out by renting DVDs of programs instead of starting with a streaming video model from the beginning? The Three Digital Accelerators were not ready yet.
Two Types of Trends Can Accelerate Innovation
Based on three decades of research and applying the principles I’ve developed to organizations worldwide, I have developed a way of separating what I call Hard Trends, trends that will happen, from Soft Trends, trends that might happen.
A Hard Trend is a projection based on measurable, tangible, and fully predictable facts, events, or objects. It’s a future fact that cannot be changed. In contrast, a Soft Trend is a projection based on statistics that have the appearance of being tangible, fully predictable facts. It’s a future maybe. Soft Trends can be changed, which means they provide a powerful vehicle to influence the future, and they can be capitalized on.
The increasing use of cloud computing, the virtualization of services, the increasing use of high speed analytics, the predictable aging of baby boomers, and increasing government regulations governing cyber security are good examples of Hard Trends.
Soft Trends that were assumed to be future facts include China’s demand for raw materials will never decline, national home prices will never go down, Eurozone countries will never default, Saudi Arabia will never let the price of oil crash, and the largest financial institutions will never fail. Kodak treated digital photography as a passing fad. Knowing the difference can make all the difference.
This distinction completely changes how individuals and organizations view and plan for the future, and how they innovate. Understanding the difference between Hard and Soft Trends allows us to know which parts of the future we can be right about. When you learn how to analyze trends in this way, you can accurately predict future disruptions, identify and solve problems before they happen, and practice what I call “everyday innovation.” This enables you to solve challenges and problems faster, and see opportunities that were impossible just a few years before. In other words, you can drive low risk innovation at the speed of need.
Business strategy that is based on the certainty Hard Trends can provide allows you to innovate at a much lower risk and at the same time provides real value and significant ROI. Alternatively, a strategy based on uncertainty (Soft Trends) represents a high risk that often slows progress and prevents a business from being able to move forward at a time where adapting to an evolving marketplace is paramount.
Innovation comes in many forms but there are two forms that are not common and are now needed more than ever; Everyday Innovation and Transformational Innovation. For example, by learning how to use Hard Trends to predict and pre-solve problems, individuals can drive local innovation on a daily basis. With training focused on developing inventive solutions to everyday problems, individuals can bring significant results by pre-solving those problems that plague businesses on a regular basis. We are all familiar with headlines suggesting that everyone is chasing big innovation, but how many companies can honestly say they actively encourage a mindset and culture that allows innovation to flourish everyday?
It’s only when we teach everyone within a business to look for the Hard Trends on the horizon that they learn to anticipate changes in their industry and ensure solutions are in place before the problems even arise. We all understand that it’s more beneficial to be pro-active rather than reactive, but many continue to reward playing it safe and the avoidance of risk until inevitably they run into problems.
In this digital age, it’s clear to see how society-shaping, exponential technology is driving transformational innovation. Much of the success of Uber, Airbnb, and Bitcoin, for example, can be attributed to capitalizing on the accelerated change and leaving the traditional businesses scratching their heads wondering why they have such an enormous lack of foresight.
Many companies who have failed to invest in creating an anticipatory mindset and decided to stick to their tried and trusted methods are increasingly struggling to keep up the pace. Those who continue to react and respond to change and fail to act on the Hard Trends shaping the future will be unable to adapt and will only fall farther and farther behind until its too late.
The ironic aspect of this familiar story is that it’s the organizations that fail to see the value in driving both small everyday, and large transformational innovation that often find their industry has been dramatically changed by a yet another start-up that arrives on the scene. The backlash from the taxi industry after the arrival of Uber is a fantastic example of what happens to those that fail to follow the methodologies I have mentioned in this article.
Embracing both transformational and everyday innovation by embedding it into your company culture is no longer a nice to have option, but crucial to the future of your business. Learning to use Hard Trends to anticipate disruptions, problems, customer needs and game-changing opportunities and acting on them right now is your biggest weapon against your competitors.