INNOBLOG

Rebecca Waber

 

If youve ever wished you could buy your very own Star Trek-type replicator, youre finally in luck. While not quite so instantaneous or hands-off, it is now actually possible to create a vase or spatula right on your desktop. And "3D printing, as it is known, is a technology with incredible disruptive potential.

3D printing actually refers to a number of different processes, but what they all have in common is that they take a 3-dimensional image (like a CAD image, or even a CT scan) and build up that object in a progression of layers. These devices are sold by a number of companies, such as Dimension Printing, Desktop Factory, and Z Corp.

3D printing can not currently compete with traditional manufacturing in terms of mass-produced products; it has lower resolution and durability, not to mention the inability to produce high volumes of goods. However, 3D printers have been constantly improving in terms of their size, speed, cost, and need for human intervention.

So far, based on their current capabilities, 3D printers have found a foothold in rapid prototyping. They tend to be marketed towards professional designers, students, engineers and architects who value the ability to produce custom models and prototypes in-house, and for whom low volumes and the other deficits of the technology are not a problem.

And yet, the potential for this technology outside the rapid prototyping market is vast, and its eventual markets unknown. One exciting application may be in biotechnology, as researchers are already studying the possibility of printing organs and bones. The technology also offers the possibility for extremely personalized consumer goods, since tweaking a digital design is relatively easy. With companies competing to produce machines affordable for even the home, and one group even helping do-it-yourselfers build their own 3D printer, Im already imagining a future where people buy (and probably pirate with illegal file-sharing) digital blueprints instead of physical objects for certain classes of products. Consequently, not only does this process of manufacturing have the potential to dramatically shake up its own industry, but the industries of the products it manufactures. This may not be something well see soon, but this is definitely a technology that Im going to keep my eyes on over the next couple of decades. Breakthroughs in the key performance dimensions mentioned above size and cost of the machine, print speed and quality, ease of use and automation could lead to significant disruption in the markets suited for the new benefits that 3D printing provides.
 

Last week I attended a lecture by Boston Globe innovation columnist Scott Kirsner entitled "New Englands Innovation Economy: Understanding the Strengths and Challenges. Among the many recent innovative ventures mentioned throughout the lecture, Kirsner highlighted the enormous potential of Zipcar, the Cambridge, MA-based pioneer that is re-defining the concept of car rental. Drawing from disruptive innovation theories, he posed a question in passing:

Why have large car-rental companies not moved to replicate or acquire Zipcar?

The question was left unanswered, and has lingered on my mind ever since. Could it be that car-rental companies dont recognize Zipcar as a competitor? After all, Zipcar targets a different customer: someone who could benefit from the convenience of a car in their day-to-day lives but not so much that theyd be willing to own one, rather than the travelers who typically rent from traditional shops. The job-to-be-done is different, too: Zipcar customers need a car for a couple of hours to avoid carrying heavy grocery bags on a bus or subway, whereas Avis customers need a car for a couple of days while they are out of town on business.

I felt it unlikely that car-rental companies could fail to see that they are in the same business as Zipcar: the business of lending out cars. A quick web search confirmed this suspicion: Enterprise Rent-A-Car recently partnered with Metro-North railroad to place cars in train stations outside of New York City. Travelers can take the train out of the city and pick up a car for a few hours to complete their journey. The same service, in the same location, was previously offered by Zipcar.

But this is the only recent instance I could find in which car-rentals and car-shares are swimming in the same waters, although the Boston Globe suggests that other competitors are piloting Zipcar-style programs. While Zipcar is building scale (recently acquiring competitor Flexcar), it is business as usual for Avis, National, Hertz and Budget. Why are these incumbents seemingly slow to move?

The answer has to do with a key feature of the disruptive innovation model asymmetry of motivation. Zipcars car-sharing concept has true disruptive potential not just because it addresses key barriers to consumption (cost, access and time), but also because it addresses customers and jobs that appear unattractive to its competitors. While incumbents invest in gas-pumps at their brick-and-mortar stores, Zipcar invests in modifying its fleet to fit a remote-management information system. Incumbents buy and lease large plots of plants near airports, while Zipcar rents parking spots in congested city streets. Incumbents differentiate with car seats, GPS systems and at-home pick-up, while Zipcar differentiates with convenience at a low price.

Asking established rent-a-car companies to operate a business like Zipcars is like asking Starwood and Hilton to operate New York Citys new street toilets. Im not saying it cant be done but can you blame them for not wanting to?

We here at Innosight have followed the development of Tata Motors one-lakh "people's car with great excitement for the last few years (weve written about the development of the car numerous times in Strategy and Innovation and elsewhere, and interviewed the Tata Motors management team a year and a half ago in preparation for a feature presentation at a conference on business model innovation). The car, now dubbed the "nano, was officially unveiled yesterday to great fanfare.

Do we buy into the fanfare? Well, Tatas peoples car matches the pattern of disruptive innovation to a T. It uses an ingenious new business model the supply chain has been thoroughly reconfigured, to the point where risk is distributed among suppliers and dispersed dealerships will participate in final vehicle assembly combined with clever and unorthodox product innovations, such as a hollow steering wheel shaft, reimagined body, and plastic panels. Furthermore, Tata Motors engineers made critical tradeoffs, sacrificing many of the performance characteristics that most drivers take for granted the trunk is in the front of the car and holds just a briefcase, the instrument panel features only a speedometer, odometer, and fuel gauge, there is no radio in order to deliver a basic but critical value proposition to a new customer set: safe and affordable transportation for the emerging middle class in the developing world that is still priced out of the automotive market.

This vision is at the core of the development of the Nano. Since first unveiling the idea and challenging his engineers to realize it, Tata Group Chairman Ratan Tata has been firmly focused on the goal of serving the underserved, of giving the families that crowd onto motorbikes in Indias crowded cities a better, safer, and more comfortable transportation option. He is competing against motorbikes and the non-consumption of cars, rather than any segment in the auto world that already exists.

This is brought home in competitors reactions, as captured by The New York Times:

Jagdish Khattar, a former head of Maruti 800 manufacturer Maruti Udyog Ltd., says its too early to say whether the Nano will overtake the original.

"Its a good product but its still too early to say whether it will overtake the 800 because it caters to a totally new market segment, he said while watching a live telecast of Tatas press conference after unveiling of the Nano.

But clearly, at least one other manufacturer was worried.

An official of Hyundai Motors, which unveiled an LPG version of its Santro Thursday, was more circumspect.

"We definitely see it as impacting our sales, he said in halting English, preferring to maintain anonymity.

Anand Mahindra, managing director for Mahindra & Mahindra, Tata Motors primary competitor, said before the unveiling, "I think its a moment of history and Im delighted an Indian company is leading the way.

The impact of the car figures to be enormous, in India and throughout the developing world. But what about its impact on the businesses and society in the developed world? The Times puts forth a compelling theory:

Some analysts are predicting that just as the Japanese popularized kanban (just in time) and kaizen (continuous improvement), Indians could export a kind of "Gandhian engineering, combining irreverence for conventional ways of thinking with a frugality born of scarcity. Or, as Indian auto executive Ashok K. Taneja describes the philosophy, "When I need silver, why am I investing in gold?

Gandhian engineering, or appropriate design, could be a terrific mechanism for forcing product and business model development to cleave to the need profile of a target segment. After all, there is no greater predictor of disruptive success than products and business models that are designed around important and unsatisfied jobs to be done.

NYT coverage of the Tata Nano here and here

Wikia, a for-profit company started by Wikipedia founder Jimmy Wales, made news yesterday when it took the cover off Wikia Search, ending months of speculation about what shape the high-profile startups open source search engine would take. Currently online in its alpha stage, Wikia Search promises that its open architecture will strip away the black box that surrounds search as run by the Googles of the world and ultimately leverage the collective wisdom of the internet to provide better search results.

Reviews thus far, however, havent been very positive. The blogosphere has not been too high on Wikias capacity to return even mediocre search results.

The reviews dont seem to faze Mr. Wales or the folks at Wikia too much, however. One need only click on the "about us button on the Wikia Search home page to find that even its creators dont have any illusions about where their product stands now: We are aware that the quality of the search results is low; Mr. Wales put it even more bluntly in a response to Michael Arringtons review over at Tech Crunch, writing "Yeah, the search sucks today.

This all begs the question: why would they take the cover off of Wikia Search if they absolutely knew it was terrible?

One might think that the answer, as it often does here on the Innoblog, lies in the patterns of disruption. Perhaps Wikia, the story goes, understands that to displace an incumbent the entrant needs to make trade-offs, developing a product that is worse than the incumbent along some dimensions while improving along other dimensions, particularly those that consumers really value. So it has pushed out a search engine that is worse along traditional metrics that define quality in search (like relevancy of results), but better along other dimensions (it provides a sense of community and channels human involvement). With time, Wikia doubtlessly hopes, its community will rapidly improve the quality of its search, elevating it to a level where it matches or overtakes the leading incumbents like Google or Yahoo.

It sounds like a decent story. And it might be. But just as I thought back in August when I wrote about Wikias acquisition of Grub, I dont think it will work. I have two reasons.

First, while many disruptions start out inferior to incumbents, they are at least good enough to attract a core group of consumers. Wikia is so disappointing that it might even fail to meet the good enough standard for even the tech-oriented, open source banner-waving, down-with-the-corporate-stranglehold-on-the-internet set to commit to it. Its index is so small right now that the search can, in many instances, barely be said to work. And its community-oriented features are limited, allowing account-creating users to do little more than post pictures, evaluate search results and write mini-articles describing search terms.

My second problem with Wikia is that it seems to be trying to be a low-end disruptor in a market that isnt yet overserved by leading incumbents. Low-end disruption, the type of innovation that starts off poorly but improves, eventually disrupting incumbents by being "good enough along traditional dimensions and better along new, customer-valued dimensions, typically works only when consumers are overserved by incumbent solutions. But with web search, people arent overserved by the Googles of the world. Instead, people are underserved, they consistently want more out of search engines than even the leading incumbents can provide today. In underserved markets, entrants only succeed by besting incumbents at the things that incumbents do best. Does Wikia really hope to produce more relevant search results than two-hundred billion dollar market cap search companies?

Bottomline: Wikia needs a game-changing feature in a market where a game changing feature might not even exist. The best search engines arent yet serving consumers at the level that they want. Wikia is going to have a difficult time doing any better. I predict a tough road for Jimmy Wales & company ahead.