Exnovation: Where Innovation Ends & Scaling Begins
We are obsessed with innovation. We idolise innovators and hail innovation as the solution to all our ills.
But something we don’t hear much about is this slightly clunky word — exnovation.
“…exnovation, an opposite of innovation, can occur when products and processes that have been tested and confirmed to be best-in-class are standardized to ensure that they are not innovated further.”
Exnovation is the process of actively preventing further innovation. It is the process of standardisation that allows replication. Exnovation is an approach that aids the productisation, commercialisation, and scaling of product-led ventures.
Exnovation in Action
We see exnovation in product strategy when a product line has been developed to a sufficient degree that the company no-longer wants to devote resources to its development.
You can see car manufacturers doing this.
Tesla first released the Model S car in 2012 and developed the product line significantly over the next five years. But since 2017, there have been only limited changes to the Model S hardware. Innovation in the Model S line slowed right down. While improvements to the battery technology continued, and over-the-air updates enabled new post-launch features, everything else — from the steering and seats to the wheels and chasis — remains unchanged. Someone made the call that it was “time for exnovation!” (note: they almost certainly didn’t, but you get the idea).
Exnovation takes place not just at the whole-product level, but at the feature and core component level too.
You can see electronics manufacturers doing this.
Apple has a line of low(er) cost smartphones called the iPhone SE. Unlike the flagship iPhone and iPhone Pro, which are updated annually, the SE has much longer update cycles and is not in active development. The features of the iPhone SE are determined not by a process of dedicated component development, but by choosing from existing components from production lines that are already running. This is a product comprising features that are already popular with customers. The iPhone SE is an exnovative product.
So exnovation can take place at the product level, where this approach delivers singular products with reduced variant in features, essentially driving product focus. But it also takes place at the component and feature level, where limited component selection determines a focussed feature set that is already popular in the market and ideal for the late majority.
Halting Innovation
Why would a company halt innovation? Because it’s time to scale-up, optimise resources, reduce costs, increase margin, and grab the market opportunity the company sees for its product.
Numerous different variants of a product are difficult to make and difficult to support. You have to standardise to develop anything at scale and for it to be adopted by a large number of customers.
In the case of Tesla, the company had to make significant investments in supply chain, manufacturing systems, and assembly line. Factories had to be designed and built around the world (the infamous “machine that builds the machine”) to sell cars into protected markets. Exnovation had to begin in order for the Model S to be cost effective to manufacture at scale and in multiple locations and, crucially, for the price to be low enough for customers to afford.
In the case of Apple, it already had a successful product on its hands with the iPhone 5. Customers loved it and the iPhone 6 design had been met with some resistance. But some customers (see: early adopters) still wanted something new. So the iPhone 5 evolved into the iPhone SE, and in the same year, the upgraded iPhone 6s was released. Exnovation combined with repackaging allowed the iPhone 5 core technology to reach an even wider audience as Apple was able to drop the price without undermining it’s newer, more innovative product, the iPhone 6S.
In both examples, an exnovative approach will compress the unit economics of a product to allow the company to reach more people with it’s product, either in new market segments or new price categories.
Innovative technology gains greater diffusion through a strategically exnovative approach.
Braking Early vs. Braking Late
Innovation stops at the point at which exnovation begins. Choosing when to stop development of a product line is critical to capturing the maximum market opportunity.
If you stop feature development or whole-product innovation too early, you limit the opportunity your product represents. This could cap the potential market size for your product way too early, limiting the customers you can reach, the market you could serve, and the long-term revenue available to the business.
But if you stop product innovation too late, you will over-invest in a product that has already reached it’s full potential in the market. Alternatively, the market opportunity could keep growing, but you will devote more resources to development than is necessary, directly impacting your profit margin. You are burning money developing something which is already finished and ready to go to market.
A good product leader should think carefully about the right time to put the brakes on product innovation. Know where you are in your product lifecycle. Have a keen eye on what it will take to access the late majority and the laggards in your market. And kill investment in innovation at the right time to maximise on-going revenue.
If you get the timing right — not too early, not too late — you will capture the maximum possible market opportunity, without wasting resources on something that is already complete.
Culture Clashes
Finally, a brief note on culture. There is a lot of energy devoted to developing “innovative culture” within companies. But what about an “exnovative culture”?
An innovative culture will focus on continuously seeking opportunities to develop new and exciting products. An exnovative culture will focus on taking existing products and achieving maximum market penetration with minimum effort.
These different approaches of innovation and exnovation will attract different profiles with different personalities. The teams that emerge will have different objectives and different agendas. An innovative culture may be focussed on creating joy in the customer or deriving maximum utility in a feature. An exnovative culture could be more focussed on impact, scale and revenue for the business. Different world views will come along with this. Tension will emerge.
But this tension is healthy and is inherent in the different goals of the two approaches. Carefully managing this tension is the key to having a productive team focussed on making great products for maximum scale.
Exnovation = Innovation, Distributed
Innovation and exnovation are two different approaches for two different stages in the development of something new.
Innovation is concerned with the beginning. Exnovation is concerned with the end.
Innovation is about starting, iterating, improving, and advancing.
Exnovation is about finishing, standardising, multiplying, and limiting.
Exnovation is the process by which innovative technologies scale.
Innovation can be inefficient and focussed on creating something new, with cost in blood and treasure being an important but secondary concern.
Exnovation meanwhile is concerned only with efficiency, optimisation and scale.
Innovation is about launching your first attack and securing a beach head. Exnovation is about how you win a war.
Innovators take an idea from 0 to 1. Exnovators take a product from 1 to 100 and beyond.
Anyone involved in the development of something new with a desire to gain maximum global impact, should spend time considering both the innovative beginning and the exnovative end.
