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Ticket sales and event promotion are sets of jobs-to-be-done that the Internet enables very well. Individuals can send waves of spam event-promoting notices over Facebook, and of course the 800-pound gorilla of "high-end" ticket sales is Ticketmaster. One startup, however, believes there's space in between: Eventbrite, backed by $6.5 million from Sequoia Capital, is seeking to provide a lower-end, less-expensive Internet-based ticketing and event promotion solution for the masses. But can they successfully disrupt Ticketmaster and find space in a crowded market?

One potential hurdle Eventbrite faces is what one might call "ease of imitation." An event-promotion website isn't terribly difficult to set up, and a model that targets less-demanding customers would in theory be very easy for Ticketmaster to replicate. Of course, Eventbrite's willingness to charge much less than Ticketmaster does, and its focus on less-enormous events (Ticketmaster's home page promotes everything from U2 to the NFL to Cirque Du Soleil) may protect it if Ticketmaster sees that segment as too unattractive and unprofitable to bother with. But the catch-22 is that if Eventbrite succeeds, Ticketmaster will strike.

Eventbrite faces significant less-sophisticated competitors as well: simple solutions individuals organizing small events might turn to, from handwritten notes to Excel to Craigslist. A statement from one of Eventbrite's backers, Roelof Botha, is telling: "Most of the people who use Eventbrite didn't switch from anything else. These are people who organized events using spreadsheets, pen and paper. They never had a solution before." Of course, spreadsheets and pen and paper are solutions, and if many of Eventbrite's target customers are happy with them, what will motivate them to go online and pay a third party a fee?

Again, the Internet can be a terrific tool, and sites and applications built on it can do an ever-expanding array of jobs, but it's a mistake to assert that something people aren't doing on the Internet is something people aren't doing well. Using something as low-tech as a notebook to track ticket sales for your garage band or your small company's annual forum doesn't mean you need something electronic and "better." Eventbrite will only thrive if a niche truly exists between people for whom low-tech is "good enough" and higher-end customers for whom Ticketmaster will aggressively compete.

One of the most enjoyable sessions I saw at the World Business Forum was an interview with filmmaker George Lucas. Quite striking was the degree to which both serendipity and fate were intertwined in his education and early career. Also striking was seeing film clips of one after another scene showing a way in which Lucas has innovated.

And beyond the obvious – that he’s an extraordinarily creative filmmaker – Lucas has innovated the very business of filmmaking in a variety of ways:

• Lucas was among the first to insist on getting merchandising and sequel rights. He then created the kind of move-related merchandising we know today, and created the sequel-as-franchise idea with Star Wars
• Rather than limit himself to contractual obligation as a way of keeping control, Lucas simply formed his own studio
• Lucas saw digital moviemaking coming and started Industrial Light and Magic to experiment with digital filmmaking techniques that pioneered an industry.
• Lucas innovated the very sound of movies when he created THX Sound, paving the way for a day when enhanced sound became part of every entertainment experience from car stereo to mp3 player earbuds to video games with surround sound and a DVD player in your living room.

While Lucas has made his mark pushing the technological envelope, he described himself as not particularly technologically oriented. He writes in longhand and when developing filmmaking technologies often seems to cast himself almost in a “lead user” role, directing others as they do the technological work of creating the user interface. He focuses on the goal and lets others actually do the work.

Lucas seems to be unusually adept at spotting the overall direction indicated by trends, and is unusually fearless and clear-thinking as he goes about inventing ways to capitalize on new trends and technological innovations without regarding to protecting what he already has. This is a trait shown by almost no incumbent whose businesses and products are under attack from potential disruptors.

For example, although Lucas said he “never imagined people would go through Star Wars frame by frame, and tweet their friends about its cinematic tricks,” he embraced DVD technology when it came out. He has embraced every type of medium, and said during his World Business Forum interview that not only has he made films for all kinds of screens, he’s now focused on learning to make films for mobile phones.

Yet he also seemed quite humble, acknowledging others’ innovations and at one point saying that he had thought that due to its complexity the Lord of the Rings saga couldn’t be made into movies, and that he thought Peter Jackson had done a great job at that.

Running as a theme throughout Lucas’ story was that you should keep trying, keep experimenting, move on when the experiments don’t work, and build on them when they do. He quoted one of his most famous characters, Yoda, saying “be careful what you hate – you may become it,” which is one way of saying don’t focus on negativity and failures. Another Lucas aphorism appropriate for innovators: “Nothing is a lost cause, unless you give up.”

• The Wall Street Journal 2009 Technology Innovation Awards | WSJ.com

  Innosight's Scott Anthony served on the judging panel for this year's awards, which looked at business that were "truly groundbreaking and whether their application would be particularly useful in a time of economic hardship."

• Will 'The Jay Leno Show' Reinvent Network TV? by Alan Sepinwall | NJ.com

  Critic wonders whether new Jay Leno show is the first instance of a legacy network retooling to be as nimble as a cable network: "What if NBC's fall to rock bottom allowed management to see things more clearly than its more successful competitors? What if 'The Jay Leno Show' isn't a desperation move, but the wave of the future?"

• The Good Enough Revolution: When Cheap and Simple Is Just Fine by Robert Capps | Wired

  Wired explores Clayton Christensen's concept of "good enough": "Customers would sacrifice lots of quality for a cheap, convenient device."

• What Will Be Disrupted Next? by Jeffrey Phillips | Innovate on Purpose blog

  Good blog post and comments about how to scan the possibilities and see where disruption might happen next.

• The Disruption of Scientific Publishing, by Bruce Sterling | Wired's Beyond The Beyond blog

  Description of a new "flourishing ecosystem of startups that are experimenting with new ways of communicating research, some radically different to conventional journals" and the "gradual rise of science blogs as a serious medium for research."

• The New Media Crisis of 1949, by Terry Teachout | WSJ.com

  A look back at 1949, at the start of the television era, in which TV disrupted other forms of media and entertainment. Author notes that CBS and NBC, which had been big radio players, also came out on top in TV by the 1950s: "The old media of today have a similar chance to prosper tomorrow if they can survive the heavy financial losses that they're incurring while they develop workable new-media business models."

• Start-Ups Are Poised For Latest Space Race, by Andy Pasztor | WSJ.com

  With its budget eroding and virtually certain not to keep pace with stated space exploration goals, NASA is increasingly turning to outsource portions of its programs that have never before been outsourced. Smaller firms and "scrappy entrepreneurs" are expected to win contracts.

• How to Build a Culture of Innovation, by Jessie Scanlon | BusinessWeek

  Description of the top-down innovation culture at Tata, including the Tata Group Innovation Forum (TGIF), a 12-member panel of senior Tata Group executives and some CEOs of the independently run companies.

   

• Tide Turns 'Basic' for P&G in Slump, By Ellen Byron - WSJ.com

  Interesting story of how P&G learned to "love the low end" not by introducing a new low-end brand but by the riskier bet of introducing a low-end version of a premium brand.

• A123Systems Awarded $249m Federal Grant, by Sean Sposito - The Boston Globe

  Federal stimulus money finds its way to a Boston-area electric battery company, but the batteries will be made in Michigan. Story notes that another Boston start-up, Boston Power, which had planned to manufacture batteries in Massachusetts, got none of the stimulus money.

• Culture at Netflix | SlideShare.net

  Lengthy slide deck released by Netflix offers insights into its recruiting and talent management, optimized for innovation. Example: "We're like a pro sports team, not a family. Coach's job at every level of Netflix is to hire, develop, and cut smartly, so we have stars in every position."

• Le Whif: Inhaled Chocolate

  Inhaled chocolate -- a new product meant to offer benefits of chocolate without the calories. Illustrates the principal of "de-featuring"!

  
  

Last week, I attended the Games for Health conference here in Boston, an ambitious gathering with a very broad scope that brought together game developers, researchers, physicians, and academics (as well as the occasional consultant) to discuss the many ways games could contribute to better health. Topics ranged from cognitive fitness (think Brain Age) to “exergames” (like Wii Fit) to the use of games to educate and empower patients to simulations that could help train physicians – I even saw a game designed as a metaphor for addiction. Although it’s clear that the games-for-health space is still in its infancy, I was struck by the disruptive potential of many products and concepts.

Gyms and personal trainers, for instance, are already facing disruption from games: A personal trainer may push you harder and help you lose more weight than your grinning, non-sentient Mii, but a Wii Fit is less expensive (especially over time), much more convenient, and arguably more fun (not to mention the fact that Miis don’t complain when you miss a session). Typical disruptive patterns are already apparent in this industry as games get better and approach “good enough” for more applications; Electronic Arts’ new EA Sports Active title for the Wii, for example, is explicitly designed to deliver difficult workouts that make players sweat.

Medical education is another space facing disruption. Dr. Jeff Taekman, an anesthesiologist at Duke, discussed the development and applications of a software-based simulation of an operating theater, in which physicians can virtually come together and collaboratively practice on a simulated patient. We know all too well that disruption (and innovation in general) in the healthcare industry can be painfully difficult because the bar for “good enough” is fairly high. However, the developers of this simulation are doing exactly what they should to surmount that obstacle: finding appropriate foothold customers and circumstances (in this case, focusing on training teamwork and communication rather than specific skills and on continuing education rather than on medical schools), then testing and learning.

Although I left the conference excited by the many disruptive possibilities in the games-for-health space, it was abundantly clear that there is much R&D yet to be done to make these games even better. Popular games that seem healthy (like Brain Age) may sell well and be fun to play, but researchers don’t fully understand how (or whether) they really help people make lasting changes to their mental or physical health. As researchers and developers learn more about how games can help us get healthier and apply that knowledge to new and innovative games, more and more disruptive possibilities will undoubtedly emerge. 

• Learning, and Profiting, from Online Friendships , by Stephen Baker - BusinessWeek

  Exploration of the innovation taking place as companies work to figure out how to make money from the wealth of data they're beginning to have about our online friendships.

• A Real ROI from Twitter? The Start of Social Medical Networks, by Tom Steinert-Threlkeld - Between the Lines blog, ZDNet.com

  Tweeting to your doctor about the status of your health could revolutionize the treatment of chronic diseases.

• Gin, Television, and Social Surplus, by Clay Shirky - Here Comes Everybody

  Participation in social networks represents the shift of "cognitive surplus" from billions of hours of TV watching to a more participatory culture.

• Getting Money from Readers Who Won't Pay for Online News, by Steve Outing - Editor & Publisher

  It's too late for newspaper publishers who are not already charging for content to start doing it, says Outing as he puts forth a business-model concept of multiple revenue streams and describes what some of those might be.

• TRIZ-enabled Mergers and Acquisitions, by Jim Belfiore - InnovationTools.com

  TRIZ, a well-established method used for product and process design evolution, has elements that can be successfully used as an early-stage M&A planning and research tool to help predict and identify potential evolutions of products, technologies and markets.

We've all heard companies give lip service to the idea that failures — course corrections — must be tolerated in order for innovation to happen. Our feature story this issue highlights the work of Rita Gunther McGrath, co-author of the newly released Discovery-Driven Growth, who asserts that failure must be more than tolerated — it must be welcomed and planned for. McGrath cites Procter & Gamble's A.G. Lafley, who famously has said that unless P&G experiences a certain failure rate from innovation efforts, not enough of innovation is happening, as an example of a good approach to failure. McGrath talks more about how to plan for and manage course corrections in this issue's feature story. Here's an excerpt (full story is here; book excerpt is here):

Q. My understanding from having read the book is that we seem to be synched up in this area of what we're calling “emergent strategy.” We've covered this in Chapter 6 of The Innovator's Guide to Growth, among other places, yet we don't often go into as much detail about how this works as you do. You've taken that one concept and detailed it.

A. Yes, I call that “strategy dynamics” — this idea that when the data doesn't exist, you need to be taking action before you can begin to understand what's going on. The whole strategic planning idea, where you're going to sit there and project out five years — in a lot of today's markets, it's not practical and it's not really going to get you anywhere. So it's the whole concept of you just realizing the right strategy as you go. We call it “discovery-driven” mainly to get the idea across quickly that this isn't about planning, it's about discovering.

Q. Can you give me the capsule description of what discovery-driven growth is?

A. Sure. Discovery-driven growth had its genesis in the recognition that existing planning systems make a lot of assumptions that are just not borne out in highly uncertain situations. So the book is really about ways that you can take strategic action, minimize your risk, and move forward, even without all the data that conventional planning systems assume you have.

Also in this issue is our monthly Disrupt-O-Meter, this one a look at the new OnLive gaming service (full story is here):

The brand-new gaming service OnLive has been surprising and delighting consumers and pundits since it was announced about a month ago. The service proposes a very different and novel way of delivering games — users stream the games over the Internet instead of running them on physically local hardware. In so doing, OnLive challenges the conventional wisdom that the Internet just isn't good enough to stream content like graphically intensive games at high resolutions without perceptible lag. If OnLive can deliver against this ambitious goal it may have substantial disruptive potential.

As always, thanks for reading Strategy & Innovation! Archives are free with registration here.

• Yes, I'm A CEO Who Really Uses Twitter - Forbes.com

  Communispace CEO Diane Hessan discusses why she's found Twitter compelling: "Twitter has brought me new ideas and new friends, and it has connected us to a world of people who are trying to be adventurous and innovative."

• How to Save Newspapers (Or, Why the NYT Should Acquire Twitter) - Umair Haque - HarvardBusiness.org

  Haque points out that Twitter is a great way for a newspaper to build four resources and capabilities that will save them: viral distribution, context, relational capital, and business model experimentation. And — "conversely, if Google snaps up Twitter instead, it likely really will be the end of newspapers as we know them."

• The Challenge of Recipes on Twitter - NYTimes.com

  The strict 140-character limit on Twitter posts is predictably enough inspiring creativity, including from Marueen Evans, whose tweets are entire recipes that work, once decoded. According to this article, Evans' tweets are "awesome acts of compression. Ingredients, actions, quantities, times and temperatures — both Fahrenheit and Celsius — boiled down to utmost richness, density and clarity. A dish, a meal, a trip to deliciousness magically packed into the tiniest carry-on bag."

• Kind of Blue: Pushing Boundaries with Miles Davis — HBS Working Knowledge

  MIels Davis as inspiration for business innovation: "Davis' ability to nurture talent is legendary...and...the process that led to Kind of Blue is an example of pushing boundaries and taking experimentation right up to the edge of failure in the pursuit of something new; Davis pushed his musicians 'to the edge,' but he did it in a way that effectively managed the risks. This might be something we can learn from in business as well."

• Understanding Dolly Parton, Broadway's Newest Composer -- New York Magazine

  Worth reading for the description of Parton's leap into Broadway, for which she has composed the music for a stage version of 9 to 5, and also for a description of her process for singing harmony: "She keeps trying variations on her riffs, which she calls 'my little curls' — an astonishing armamentarium of baroquely detailed turns, runs, melismas, appoggiaturas...not so much performed as shed. You’d think you could pick them out of the carpet when she was done."

• Council on Competitiveness President to Senate Energy Committee: "America Leads in Innovation, but Is Bleeding Opportunities" - MSNBC Wire Services - msnbc.com

  Deborah L. Wince-Smith, president of the Council on Competitiveness, called for "focus" on turning energy research and development into real economic value.

• Firepower of the Lowly Caulk Gun - WSJ.com

  More effective in conserving energy than any green solutions on the market now is measuring where air is leaking into and out of a house and caulking those spots.

• The Music Industry's New Internet Problem - BusinessWeek

  Turns out that a large group of consumers would rather listen to streaming services than buy even mp3s, let alone CDs.

• TaylorMade's Innovation Test - BusinessWeek

  "The only way you are going to innovate," TaylorMade CEO Mark King says, "is if you build chaos into the system."

A few people have asked for my thoughts about the second version of Amazon.com's Kindle e-reading device. The short answer (as I told a reporter from Advertising Age): a nice evolutionary move, but one that is unlikely to drive a step change in the product's adoption.

I've long admired the Kindle, particularly the simplicity of Amazon's integrated business model. It literally takes seconds to download content and begin reading. Some analysts suggest that simplicity has led Kindle users to triple their book purchases.

The original Kindle wasn't the most beautiful of devices. It was all too easy to accidentally press a button and advance a page. The second version of the device looks more attractive. It is significantly thinner and more ergonomic. It also has additional features, such as the ability to translate text into speech. The price is the same as the original Kindle.

The upgraded device should appeal to customers who liked the Kindle's premise, but didn't like its clunkiness.

Read the rest at Scott's Harvard Management blog.

• Innovate Like Chris Rock - Conversation Starter - HarvardBusiness.org

  Emergent strategy illustrated in Chris Rock's approach to comedy.
  

• Free Newspaper Venture Depends on Local Blogs - NYTimes.com

  More business model innovation in media.
  

• Cisco Plans Big Push Into Server Market - NYTimes.com

  Cisco plans to release a server equipped with virtualization software, a product that "threatens to shake up the technology industry and put the company on a collision course with traditional partners like Hewlett-Packard and I.B.M. ... [this] is a bold but risky move by Cisco into an unfamiliar, intensely competitive market that typically produces far lower profits than Cisco makes from network gear. ... Cisco’s push into the server market...could cause an all-out war among the tech titans for one another’s customers.
  

• Asleep at the Wheel of Creative Destruction - Umair Haque - HarvardBusiness.org

  Wall Street's moral hazard has a mirror image.. The perverse irony of the collapse of industrial-era capitalism isn't just that Wall St ended up being massively risk seeking, taking bets it never should have. It's also that venture capitalists ended up being risk averse - never making the bets they should have. ... Venture investors have been free to take hidden action that maximizes their own near-term returns - underinvesting in radical innovation.
  

• The New Reality: Constant Disruption - The Big Shift - HarvardBusiness.org

  John Hagel, John Seely Brown, and Lang Davison argue that "equilibrium is a thing of the past" because "Today's core technologies--computing, storage, and bandwidth--are not stabilizing. They continue to evolve at an exponential rate. And because the underlying technologies don't stabilize, the social and business practices that coalesce into our new digital infrastructure aren't stabilizing either. Businesses and, more broadly, social, educational, and economic institutions, are left racing to catch up with the steadily improving performance of the foundational technologies."

Two emerging technologies entering the living room. One still largely a pipe dream, and likely to be expensive upon introduction. The other seemingly just around the corner, and likely to be reasonably priced. Which one is most likely to gain rapid adoption?

While the disruptive models generally favor cheap-and-quick technologies, my money is on the expensive pipe dream (three-dimensional television) over the almost-here-and-affordable offering (televisions with embedded Internet capabilities)--unless companies can break from past patterns and embrace simplicity.

The simplest way to assess a technology's potential is to ask whether it helps the consumer do what they are already trying to get done....

Read the rest on Scott's Harvard Management blog, Innovation Insights.

Apple held a somewhat underwhelming press event on Tuesday, September 9th, but while the deafening buzz Apple’s unveilings typically generate made this one seem a little dull by comparison, I found it quite interesting. The beautiful (and very colorful) new iPod nano wasn’t what made me sit up and take notice, though. What caught my attention was a feature in the new iTunes 8 called Genius.

Genius is, in a nutshell, a music-recommendation feature that works with the songs in your own library. It does basically two things for the user: it can suggest songs similar to the one being played that the listener might like to buy from the iTunes Store, and it can instantly sift through the listener’s library to generate a playlist of songs that are musically similar to the one currently playing. The former functionality is a transparently good idea to inspire more purchases (tailoring suggestions to what the listener is demonstrably in the mood for at any given moment makes a lot of sense), while the latter has already come in handy for me as it has shown me songs from my cavernous music library that I was in the mood to hear but had forgotten about.

So why is this interesting? Genius takes advantage of the wisdom of large numbers of people to recommend music in a way that makes Apple’s job easier and makes the service more accurate. As Steve Jobs (vaguely) explained in his speech, Genius will initially recommend music based on a proprietary, Apple-designed algorithm, but as more and more users turn on Genius it will (anonymously) gather data about users’ listening and playlist-management habits in order to “get smarter” (i.e., refine recommendations and more accurately determine which songs share qualities).

Pandora, an Internet music-streaming service that plays songs that share qualities with songs or artists you like, bases its recommendations on the mammoth Music Genome Project, which requires very smart people to spend up to half an hour per song creating a database of musical “genes” or shared qualities. But why spend all that time and effort (and money) when the preferences of the people you actually care about – end users – can easily be aggregated to produce recommendations that may even be more accurate?

Finding ways to take advantage of the information waiting to be gathered from large numbers of people is advantageous in many areas. Amazon.com, which disrupted brick-and-mortar retailers through an online offering with a limited ability to interact with customers, doesn’t need to develop a sophisticated recommendation system for determining which of its products go well together; it can simply track purchasing habits and tell you what other people combined with the purchase you just made.

The Dash Express, a potentially disruptive GPS navigation device (see here), doesn’t use the hard-to-gather and often inaccurate traffic information provided by the complex variety of traffic monitoring services; instead, it simply aggregates the positions and speeds of its users to come to more accurate, real-time conclusions about traffic conditions. Amazon and Dash are particularly interesting in that they have utilized this kind of information to strengthen their highly disruptive offerings by making them much better than competitors’ products along the dimensions that matter most to their customers (i.e., quality of product recommendations and quality and quantity of real-time traffic data).

Genius thus joins a long list of systems that leverage the “wisdom of crowds” to create improved products and services. The system may not make iTunes a more disruptive product (it adds features without any trade-offs), but it has the potential to be a powerful sustaining move. More broadly, seeking out and using crowds’ wisdom is easier than it has ever been, and many more new ways of taking advantage of it are undoubtedly yet to be discovered. 

One of the trickiest bits of the disruptive innovation puzzle comes once a company launches or acquires a disruptive business: How to integrate the new venture into the parent company while protecting what made it work in the first place. We refer to it as “avoiding institutional antibodies” — making sure that entrenched rules or nit-picking comments (“…But we don’t do it that way!”) don’t prematurely kill innovation efforts.

An article in the New York Times a couple weeks ago gave a surprising example of successful institutional antibody avoidance. Disney and Pixar: The Power of the Prenup outlined the various ways those two wildly divergent companies have worked to maintain the spirit of Pixar since their 2006 merger.

“When Disney bought its rival, Pixar, in 2006 for $7.4 billion, many people assumed the deal would play out like most big media takeovers: abysmally,” wrote Brooks Barnes in the June 1 article. “The worries were twofold: that either Disney would trample Pixar’s esprit de corps (turning Mr. Lasseter into a drone, chanting “Hi Ho” en route to Mickey’s animation mines) or that Pixar animators would act like spoiled brats and rebuke their new owner.”

In fact, so far the companies seem to be getting on well, and Disney’s stock has made welcome gains in recent months. Some of the successful tactics Barnes described include drafting an explicit statement of what would not change at Pixar, including the retention of superior benefits packages, no contracts and no move from Emeryville to Burbank. Meanwhile, the company has conceded to Disney’s push for sequels to popular movies like Cars, ramping up its production schedule and outsourcing some animation.

It should give others who are facing the institutional antibodies challenge hope: If Disney and Pixar — who spent years before the merger embroiled in personality clashes and combat over partnership deals — can make it work, anyone can.