The Problem with Great Ideas

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Here's the sentence that should immediately set off alarm bells for those who don't want to head to the cemetery of one-category wonders: "We can't pursue that idea, because doing so will cannibalize our existing revenue stream."

If you hear this phrase, stop whatever you are doing and give what lies behind these words your undivided attention. In general, here is my advice: If you can't change the minds of those uttering it, you should head for the door.

The reason is simple: If you can see a way to shoot yourself in the foot, so can the competition. So the only course of action is to do it yourself. At least that way you get to choose when to pull the trigger and which toe you can live without.

Rather the toe than the business.

Design the Transitions

Here is how I have seen this play out. A company has a high-margin, industry-leading technology. It allocates a part of revenue to support long-term, high-risk R&D. The team develops a proof of concept demonstrating that they can do the same thing as the flagship product with an order-of-magnitude improvement in price/performance. But when they go to the executive with a business proposal, they are rebuffed. The current technology is still generating solid revenue—but since the growth is trailing off, the executive is hypersensitive about maximizing the revenue stream. So, the answer in regard to making a product from the new technology is a solid "No!" The ambitious, smart young team that developed the new concept leaves the company and joins a startup. They develop the concept and within a few years put their previous company out of business.

This story plays out year in and year out. SGI and Nvidia (NVDA) come to mind. But the key thing is that such stories could have a different ending—if companies invested as much in the design and innovation needed to manage these transitions as they should in the new technologies themselves.

The moral of the story: Design and innovation are as important in the strategies and tactics of the boardroom and the executive suite as in the engineering and design divisions. While they are no substitute for strong and enlightened leadership, they sure can help.

Bill Buxton is Principal Scientist at Microsoft Research and the author of Sketching User Experiences: Getting the Design Right and the Right Design. Previously, he was a researcher at Xerox PARC, a professor at the University of Toronto, and Chief Scientist of Alias Research and SGI Inc.

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