Breakthroughs Don’t Pay

An excerpt from [amazon_link id="9814351105" target="_blank" container="" container_class="" ]Sidestep and Twist[/amazon_link],  (your comments welcome!):

One of the greatest myths of our time is this: if you create something original, something that’s genuinely a breakthrough, you have a better than average chance of getting rich. For most businesses and most entrepreneurs, this notion is something of a fantasy. If you think back over the great corporate successes of the last two or so decades, you’ll find a striking absence of any great breakthroughs significant enough in themselves to create huge wealth. On the other hand, many endeavours that have become hits are at best incremental improvements of other things.

It is a story I’ve found repeated time and time again, across sectors, countries, and cultures. Hit products and services are almost never genuinely original.

Some readers will be familiar with the top-selling drug of all time, a product called Lipitor, by Pfizer. It has broken all records in the deeply research-dependent drug business. But Lipitor wasn’t all that new. It was the fifthdrug in its class, and was just a bit stronger than what came before. Yet it has eclipsed all its competitors.

Even if you’ve never taken Lipitor, it is almost certain you’ve heard of the world’s best selling book series. Harry Potter, by J.K. Rowling, is a publishing juggernaut.

But Harry Potter is, in fact, based on a long tradition of stories set in British boarding schools, such as the famous Tom Brown’s School Days, topped up with a smattering of slightly derivative fantasy. What many readers don’t know, actually, is Britain’s best-selling fantasy author prior to J.K. Rowling was Terry Pratchett, whose novel Discworld has a school for young magicians and a young wizard with dark hair and glasses.

A lack of genuine originality is a feature of almost every category-defining product in the last decade. Was Facebook the first social network? Certainly not: MySpace, Friendster and a host of others preceded it. In fact, the first real social network was a site called SixDegrees.com, and it was founded a decade before Facebook’s meteoric rise began. Was it Google that created web search? Of course not: the company’s contribution was to improve what Alta Vista and the other web search engines that had pioneered the field were doing already.

I could spend pages and pages going through examples like these, and will do so later on in this book. But one thing unites all these products and services: they’re built on something that was working well somewhere else.

There’s another thing many of the great hits of the last decade have had in common: they’ve built their successes by creating value for customers that’s independent of the features of the core product itself. Facebook, for example, is valuable not because it has the best and most features of any social network, but because most people are on Facebook. The more people who join Facebook, the better it functions for everyone.

Why is Harry Potter a money-printing machine for J.K. Rowling and her publishers? Of course the books are great sellers, but it is the ecosystem of complimentary products the franchise has spawned: movies, toys and games, homewares, posters, trivia and all the rest – which create the extraordinary demand for the novels among ever-widening audiences.

How did a few derivative fantasy books manage to create such an ecosystem of demand? Why is Facebook the premiere social network? The answer is simple. Both are products that get better the more they are used. This is true for many – perhaps all – category-defining products we’ve seen in recent years.

And the key to all these successes is this: the sidestep and twist joins incrementally improving a product with a track record of working elsewhere, with strategies that ensure it gets better as it is consumed.

9 Responses to“Breakthroughs Don’t Pay”

  1. October 19, 2011 at 9:25 am #

    Breakthroughs don’t pay? Rubbish. History is filled with breakthroughs that were original and made their makers rich, famous or both. Examples?

    Admittedly, the last couple of decades is a bit of a wasteland for pure invention, but that’s just a cyclical thing that happens throughout history.

    The idea of decrying an invention for its use of pre-existing components or concepts is ludicrous – you could say everything comprises of fundamental chemical elements on that basis.

    Sir Percy Shaw – cats-eyes. Barnes Wallis, swing wing planes, bouncing bomb. Sir Frank Whittle, jet engine. Guglielmo Marconi – inventor of radio.

    Sir Frank Dyson – vacuum cleaners, fans, bladeless fan, hot air dryers. Alexander Bain – fax machine.

    William Shockley – the transistor and the “man who brought silicon to Silicon Valley”.

    Nobel prize winners James Watson and Francis Crick – discovered DNA’s double helix.

    Any look through British Inventors a to Z show many, many great inventions that brought success to those who took them forward.

    http://inventors.about.com/library/inventors/bl_british_inventors.htm

    I feel the article is groundless and poorly researched and there to reinforce an apologistic stance for the failure of half-cocked innovation programmes only.

  2. October 19, 2011 at 11:20 am #

    Thank you Neil, again, for your comment. Yes, Sidestep and Twist is controversial. It will make some people – you for one obviously – angry.

    The point I make in the book is not that breakthroughs aren’t important, only that genuine, first of a kind, fundamental breakthroughs don’t usually make money for their inventors. They do, usually, make money for those who do incremental improvements to them over time.

    Most of the examples you list, by the way, have precedents upon which they were based.

    I’d love to see how you feel about this argument after you’ve read the whole book.

  3. October 19, 2011 at 12:04 pm #

    Hi James,

    I like your argument, nothing is ever pure black and white but I think your insights are spot on. I for one cannot wait to read the book! How will we be able to get our hands on it?

    Innovation discussions these days highlight the importance of customer advantage and dramatically impacting on daily behaviours vs differentiation. Being different or breakthrough is great but it is not enough. It is about value creation and the usability of innovations in people’s daily lives.

    • October 20, 2011 at 8:57 am #

      Henra,

      Thank you for your comment! I really appreciate your interest in Sidestep and Twist. You can pre-order it through Amazon UK right now, or you can go to the http://www.sidestepandtwist.com where there is a direct-to-publisher pre-order button.

      I can’t wait to come and visit South Africa!

  4. Stephen
    October 19, 2011 at 1:27 pm #

    The article made me want to read-up about first and second mover advantage. Interestingly Amazon.com is a second-mover. http://en.wikipedia.org/wiki/First-mover_advantage. I am sure there are many issues here e.g. what Google+ is doing and where they might be in 12 months’ time with it. Google+ is a lot closer to Facebook than Google Wave was, and Wave failed; not only was Wave complex to use, but I also think it would never have scaled, though they did try quite hard to create a developer ecosystem. Ability to execute might also be part of the story. It is probably easier and perhaps cheaper for a company to take something that works in one space and differentiate it in another. This could also be a strategy (one of a number) for creative thinking in the innovation space. I suppose there are also issues surrounding technical debt and being a first mover. I think the hypothesis here though is take something that works effectively in a space, and bring it into a new space and create two-sided value, and this latter piece seems to be a very important part in enabling success. I am looking forward to reading the book and reflecting further on the ideas.

    • October 20, 2011 at 8:58 am #

      Thank you very much for your ongoing support Stephen. It is very much appreciated.

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