Innovation was yesterday. Few today know the difference between incremental and disruptive innovation. But it doesn’t matter either, because much more important is in the 21st In the 19th century, the ability to exnovate.
Homo sapiens and Innovation
Our species, the homo sapiens, stands out from other mammals by an essential property: with the help of increasingly sophisticated tools and techniques (=technology), seemingly insurmountable hurdles are taken*. In the broadest sense, this also includes language and writing, as well as the use of fire, the invention of the wheel, the loom and the steam engine. The history of innovation is exciting, turbulent and sometimes tragic, but we will come to this later.
An essential feature of innovation is that the development of new methods, tools or even technologies make old, until then valid practices obsolete. So far, so trivial. This can happen step by step (incremental) or abruptly (disruptive). A few examples to fill these terms with life:
Examples of incremental innvations include:
Umbrellas were built from the early Middle Ages to the Enlightenment period in the 18th world. Only sparsely used in the 19th century. Also just didn’t fit the time… in any case, the rain-repellent helpers have developed over the centuries into true specialists – not least fueled by competition in the rise of capitalism. The Wikipedia list of types of umbrellas is longer than my 15″ notebook monitor can display. The bottom line: The product has been optimized over the centuries in many small steps to adapt it to the circumstances and customer benefit.
Writing instruments. How many different ballpoint pens, fountain pens, pencils, permanent markers are available today? History goes back to the year … No one knows for sure. The people of the Stone Age already used chalk, bones and charcoal to immortalize messages in the walls of their dwellings. So innovation is older than homo sapiens, aha! Be that as it may, today we are still writing down our thoughts for ourselves and our posterity; with ordinary pens, luxury versions from Montblanc to digitizing contact pins from Apple or HP. Incremental innovation!
Mattresses, chairs, bridges… Most of humanity’s ubiquitous achievements have been developed incrementally and optimized to date over many centuries. This does not diminish their indispensable value for our everyday lives, is clearly incremental from the present point of view. Straw mats have been improved, stool more comfortable, previous river crossings have been “bridged”. Step by step.
Examples of disruptive innovations:
At the turn of the century, the automobile drove coachmen, stables and riding companies out of the market. The same will soon be true for classic car manufacturers, whose suppliers are going for manual transmissions or rear-view mirrors and driver’s license providers. Market leaders are being pushed out of their own market? Disruptive innovation!
Digital cameras pushed analog models out of the market because they were available at comparable prices and were able to reproduce these impressions as often as they like through the classic function of capturing snapshots. Again and again ironic: The first digital camel was developed by an employee of the then market leader Kodak, but rejected by the board – did not correspond to the product range… a few years later, the Group filed for bankruptcy. Disruption!
CDs released vinyl records from the mass market, DVDs replaced VHS cassettes, MP3s and streaming platforms quickly replaced all media and moved the business to the Internet. Few people know which industry dominates the video recording format in particular… please write a comment ????
Smartphones quickly heralded the decline of the classic (mobile) phone industry, in which even in 2007 – after the announcement of the Apple iPhone – there was still (retrospectively) amusing ease of the impending innovation. Nokia, as the market leader, quickly lost ground – disruptive market shift.
Principles clarified? Okay, then continue into the 21st. Century!
Innovation in the 21st Century
At this point, I will save myself the list of the groundbreaking innovations of the 21st. Century. However, I would like to give an example and point to examples from other areas, which should prove my thesis: for the majority of the actors in business, science and politics, the age of innovation is over; the age of radical exnovation has begun.
Never before has humanity developed innovations at a comparable rate as it does today. I often say in my lectures, “Today is the last day in your life when the rate of change was so slow.” Because, thanks to the Moore and Metcalfese laws, the speed of potential technology innovation is accelerating for a few more years. Whether we like it or not, technology and the logics in our economic system are driving our world. Inevitably, this leads to the invention in some places of solutions or products that replace others.
A tragic example has been observed for a few years in one of the most important industries for the German economic system: the automotive industry has benefited for many decades from being a supposed pioneer in the development of vehicles with internal combustion engines (petrol engines with gasoline or diesel engines). Despite the global mix, the big corporations have wonderfully egocentrically continued to honing their models, opening up markets, increasing margins, making shareholders happy – at the expense of taxpayers and the environment. The criminal system, which knowingly manipulated emissions levels of the engines, flew up far too late and the image damage of the “systemic” brands is relatively small. In addition: the main thing is that the cart achieves 250 km/h on the motorway.
So the big ones carried on as usual, even though I know from confidential conversations with various insiders from Volkswagen, Daimler and BMW that the corporations operate in panic mode and are more like a wasp’s nest than a well-stocked company. Be that as it may, the traditional business model no longer works. To recognize this, you don’t have to be an expensively paid McKinsey consultant in the VW Group. For a long time now, all signs have been on “mobility as a service” (MaaS) about the sale of vehicles, alternative drives have long since become market-ready, and international competitors in Silicon Valley, China or Israel have long since been much further in development. autonomous vehicles. And yet, in 2019, one in three jobs in Germany will still depend indirectly on the automotive industry, including the automotive industry. suppliers and peripherals.
It is now an unspoken certainty that the golden age of Germany as a car location is over. But what now? This caesura in the history of innovation will go down in the history books. The question arises as to how to deal with this pink elephant. An inherent feature of innovation is that fundamental innovations (such as e-drives, platform economy, and autonomous vehicles) are eliminating jobs. This affected the farmers at the time, then the weavers, then the telephone connectors and so on. At this point, I would like to say that every single and family destiny that is marked by job loss is potentially tragic. We are talking about responsibility another time. At the same time, through the peculiarities of the human striving for ever new innovations, we can also learn something, after all, not least Martin Luther, Johannes Calvin and finally Max Weber, who came up with the idea of Protestant ethics much later. written, already many centuries ago knew what technological innovations entail.
Exnovation in the 21st Century
As a result of more or less radical innovations, companies develop (usually) business models that meet customer benefits in new ways (using scientific knowledge). Part of the bitter truth is that, as a result, the former providers of (now) outdated practices are losing market share, depriving the employment base for the people in the sector. Let’s change perspective. The “old” providers have slept through the zeitgeist, which is why it is not the innovation itself, but the conservative employers and sometimes the employee representatives who are “guilty” of structural change. If they had taken care of upcoming developments in good time and their business model, their strategic investments, their personnel policy, etc. then adjusted, they would have escaped the drama. But they are not. So Bayer will cut 4,500 jobs, ThyssenKrupp 6000, Deutsche Bank over 7000, and 50,000 jobs could be lost in total as a result of the large bank merger between Deutsche Bank and Commerzbank. What sounds a lot is a small number compared to the automotive industry with the thousands of suppliers. In my view, this is negligent.
After the 1950s, Germany experienced an incomparable economic upswing. Volkswagen, cheap nuclear power, recurrent diplomatic acceptance, and strong economic alliances are just some of the hallmarks of the country’s so far prosperous wealth. Over the decades, the country’s largest corporations have apparently forgotten a virtue of the middle class. This means that even in satisfactory times (= with a good order situation, with a sufficient number of product innovations), the overall market should not be lost sight of. As early as the late 1900s, it sent clear signals that the age of classical industries was threatened by global and digital actors and platforms. The painful keyword for the automotive industry is “Tesla”, for insurers it is “check24”, for notaries “blockchain” and for physicians “Watson”.**
Innovation today also means exnovation
The commonality of all these supposedly innovative companies: they have become too focused on innovation. This certainly did not happen without the help of their consulting firms, which have always focused on cash cows and strictly optimised processes to justify savings in the really important places. Innovation is important and right, but it is in the 21st world. It was all the more important in the 19th century to put old truths to the test again and again.
Innovations have always driven the status quo to rethink and act. Translated into corporate language, the catchphrase is exnovation: the ability to learn, to dismiss, to rethink learned and proven methods. We need to make friends with replacing tools, methods, technologies, production sites, work routines and processes in order to be able to do so in order to be able to To survive as an organization in the 19th century. Even when it hurts.
* Right, other species also use tools to deal with problems, and also use language. However, this is not the subject of this article.
** This pain would not be so great if the actors mentioned had taken weak signals seriously in good time. Sure, there are countless weak signals about technology or business model innovations “out there.” Not everyone is serious. But that is precisely the purpose of futurology: to draw expected, probable and consistent images of the future in order to improve the decisions of the present.