INNOVATORS' INSIGHTS ISSUE

The start of the innovation process almost always begins with some kind of question. “What if we did this?” “Why don’t we go after this market?” “What could we do with this technology?” 

It pays to choose your starting question carefully. The right question can send you down the path to disruption. An overly narrow question too focused on competitors or existing capabilities can unintentionally wall off disruptive options.

Consider two recent developments: the launch of Cuil Inc. (pronounced “cool”) and Alcatel-Lucent’s move into services.

Cuil’s strategic intent is to take on search powerhouse Google Inc. While the challenge of topping a well-financed, well-run incumbent leader is incredibly difficult, Cuil has a lot going for it. Its veritable dream team of engineers cut its teeth creating search technologies for AltaVista, eBay, IBM, and Google. Its first offering has some impressive elements. Cuil covers three times the amount of content that Google covers and summarizes search results in an easy-to-read, intuitive fashion.

However, history is against Cuil. Clayton Christensen’s seminal research that pinpointed the concept of disruptive innovation found that market entrants almost always fail when they try a full-frontal attack against market-leading incumbents. Market entrants have a much greater chance of success when they seek to follow disruptive strategies, finding ways to play the innovation game in a meaningfully different way from incumbents.

Further, it seems that Cuil let hype get ahead of its technology. Mainstream media members and influential bloggers ridiculed the company’s clunky interface and incomplete search results (searches for Cuil returned no matches). One commenter on TechCrunch wrote, “If this was an alpha launch it would have been OK but the publicity they generated as a ‘Google killer’ and no mention of alpha or beta on their site means that if the results aren’t great, the reviews won’t be either.”

While we weren’t there at Cuil’s inception, it seems that the founding team started by asking, “How do we do search better than Google?” That question narrows focus on developing superior search technology. That’s a tough challenge to begin with, made tougher by the fact that Google has its own army of brilliant engineers, cash coffers of more than $15 billion, and an intense motivation to own search.

Imagine the different set of options enabled by questions such as, “How do we disrupt Google?”, or even, “How do we create a disruptive growth business?”

The more expansive questions open up additional strategic options. Perhaps Cuil would have foregone a traditional search-based offering to try to figure out ways to develop unique advertising solutions for companies. Or it could have foregone consumer-based search to focus on helping companies manage internal information. A narrow starting point has limited Cuil’s chances of success.

The second example comes from the communications equipment industry. In predictable fashion, the merger of Alcatel and Lucent has been a huge disappointment. As we wrote after the merger, combining two ailing incumbent companies together to fight against disruptive threat (in this case Cisco Systems, Skype, Huawei Technologies Inc., among others) almost never works.

This week featured Alcatel-Lucent’s sixth consecutive quarter of losses and the announcement that the merger’s architects—Chief Executive Patricia Russo and Chairman Serge Tchuruk—would step down by the end of the year. The company’s market value has been sliced in half since the 2006 merger.

Yet, there are glimmers of hope for Alcatel-Lucent. While the company’s core business is ailing, its services arm has experienced substantial growth. A recent Wall Street Journal article described how the unit doubled in size over the past year. It now represents about 20 percent of Alcatel-Lucent’s total revenue.

An important driver of the growth has been expanding beyond telecommunications to build communications systems for hospitals and government departments. For example, Alcatel-Lucent is working with the U.K. Highways Agency to develop a system to improve highway communications systems and streamline traffic flow.

While other equipment providers have also branched into services, they have primarily focused on supporting traditional telecommunications providers. As Ericsson’s head of global services told the Journal, “We target the telecom operators because that is where our expertise lies.”

In this case, Ericsson seems to have asked, “How can we leverage our current capabilities to better serve traditional customers?” That starting point inevitably narrows potential customers to those that are already being served.

On the other hand, Alcatel-Lucent seems to have asked, “Which customers might find our current capabilities valuable?” The more expansive question opens the door to target new customers or construct new business models.

Generally speaking, more expansive questions are better starting points for innovation than overly specific questions. Questions that start with markets and customers are better than questions that start with capabilities and competitors. Don’t ignore competitors and capabilities, of course. But prematurely narrowing your innovation focus makes it incredibly difficult to come up with something truly innovative.

—Scott D. Anthony

For more information

“Alcatel-Lucent Shifts Direction to Offset Slow Growth,” by Leila Abboud. The Wall Street Journal. 28 June 2008. http://online.wsj.com/article/SB121720010754188341.html

“New Search Engine Boasts Depth,” by Jessica E. Vascellaro. The Wall Street Journal. 28 June 2008. http://online.wsj.com/article/SB121721408704288951.html

Initial and follow-on takes on Cuil are available at http://discussionleader.hbsp.com/anthony/.

“When is Bigger not Better?” by Scott D. Anthony. 11 April 2008. http://www.innosight.com/innovation_resources/insight.html?id=257