Three New Trends in Innovation

Disrupting the Disrupters

Paul Paetz at The Anti-Marketer does a brilliant analysis of the paradox Starbucks has got itself into. In line with the classic Christensen model, Starbucks, which introduced a series of New Market disruptive innovations, is now under threat from Low End disruptive innovators. To indicate how bad it’s getting, Consumer Reports’ expert panel recently rated McDonalds’ new coffee as nearly as good as the premium coffees, at a much lower price and (depending on circumstances) faster as well. The diagram above shows partial strategy canvases (as I see them) for the two companies.

Starbucks’ differentiation as a ‘third place’ offering a home-away-from-home experience has fallen off as a result of the ubiquity and sameness of its establishments, at the same time McDonalds is starting to offer some low-end ‘third place’ amenities like free wireless. McDonalds has also significantly improved its coffee quality, and is reportedly starting to use more wholesome foods, environmentally-friendly and fair-trade practices. So now, of the 8 differentiating qualities on the Canvas, Starbucks’ has lost its substantial edge over McDonalds on three qualities, and has a strong lead now only in coffee variety. Meanwhile McDonalds has maintained its edge on three qualities: price, speed and the variety of other foods served. This doesn’t bode well for Starbucks.

I’m not a coffee nut, and don’t patronize either of these places, and I prefer to make my own tea rather than buy it (I’m cheap, and sweeten with stevia). But my sense is that Starbucks’ best opportunity is to re-engender its ‘third place’ advantage. To do that they need to become even more ethical — no trans fats, nutritional focus, fair trade, no buying from factory farms (which Burger King has just announced they will do), etc. And they need to start sponsoring community events and running local community activities ñ customized to each community. That will be tough if the store managers don’t live in the community. They need to capture the wisdom of crowds by getting to know their local customers as intimately as British pub owners know theirs.

What would your advice be to Starbucks if it was your job to give them a strategy to sustain their innovativeness and market share?

New Innovations in Peer-to-Peer Technology

The BBC reports on a German company’s plans to introduce a combination of sensors, GPS-based dashboard notification systems, and peer-to-peer communication tools that will allow cars and their drivers to convey important information to each other, automatically and just-in-time ñ accidents ahead, dangerous drivers, traffic hazards etc. What intrigues me about this is that it involves person-to-person, machine-to-machine and machine-to-person communication and the coordination of all three, and also the fact that as much as possible this communication is automated and presented in real time.

I can envisage similar innovations in health-care (sensors to detect and report personal health emergencies, including those in accidents etc., and connection to systems that could pinpoint the nearest doctor, hospital, laboratory etc.). What other examples can you think of?

Next-Generation Biomimicry

Fast Company Online summarizes some of the major focus areas for business’ emerging social consciousness, including:

• low-cost urban infrastructure for struggling nations
• new reduce-reuse-recycle technologies
• self-help and peer-to-peer help network solutions (a la Grameen Bank microlending)
• products for socially and environmentally conscious consumers and 
• peer production and mass customization

The focus that interested me most, though, was that on biomimicry innovations, that draw on how nature has evolved solutions that, for example:

• enable durable sustainable building with local materials
• purify materials effectively without waste using minimal amounts of energy
• self-clean (a process that can be adapted for use in paints and clothing)
• adhere without glue
• produce hydrogen naturally
• neutralize toxins and re-use waste, and
• support a huge amount of weight despite weighing almost nothing themselves

I continue to believe that nature has millions of other answers to perplexing problems awaiting our discovery, answers that don’t pollute, waste, or demean us. All we have to do is learn to pay attention. Andto stop destroying nature before we learn what she has to teach us.