If we are going to talk innovation, then we also have to talk status quo. Innovation points to change, and so we may ask, “change from what?” We can call this what the “status quo”. The status quo is the way things are, but it is important that we see that the way things are is not a static thing. It is a thing that also changes, and has peaks and valleys of opportunity. Just that the status quo has its dominant modes and players. In terms of markets, the status quo is shaped by the industry leaders. They define what is manufactured or offered as services. Whatever changes the leaders introduce is by way of features added to a platform, or efficiencies that reduce costs and increase margins, or regulations or deals to create barriers to competition. The leaders also may make mistakes, or cause accidents, and these too are part of the status quo, though they may in their way lead to innovation. The Post-It note effect, if you will.
Geoffrey Moore describes a mature market as having a gorilla leader (or maybe two), some few chimpanzee mid-sized competitors, and a lot of monkeys hanging around the margins. The status quo is this whole complex of things. It remains relatively uniform, persists long enough for us to perceive it, and we come to take it into account in our planning, our likes and dislikes, and even our longings for change. “I sure wish the cable company would lower its prices.” From this we can distinguish a simple change from a change of status quo. For innovation, we can see how change stands in relationship to the thing changing–the status quo (including how it *expects* to change).
The status quo is marked by community and industry leaders, by regulations, strategic plans, chambers of commerce, blue-ribbon panels, credentials, standards, building codes, and curriculum, among other things. The status quo tends to favor changes that are incremental, that preserve or enhance leadership positions of leaders, and that maintain the status quo. Planning itself involves an expectation of future mostly uniformity within which one seeks some advantage, which however individually attractive is minor in terms of the overall status quo. One may aspire to be a pro baseball player or mayor, or build a new office building. These are all very status quoish aspirations.
There are a number of ways to get worked up over the definition of innovation. Change, fashion, originality, creativity, new things, new things as perceived by an adopting group. Here, let’s not push things for precision until we have got some sense of accuracy. We identify innovation as change that obsolesces some aspect of the status quo. Our interest is in how innovation does this, and the nature of the change.
Eric von Hippel points out that innovation may show up in different places within an industry value chain of suppliers, manufacturers, distributors, and after-sale service providers. In one industry, innovation may be led by the OEM, while in others, it is upstream with suppliers, and in others, the sales reps bring back ideas from the field.
For this exercise, let’s identify four kinds of innovation interface with the status quo. That is, ways that innovation comes to poke the status quo and its value chains. There may be others, but let’s look at these as a way of getting at innovation. Change may come to the status quo from the inside, from above, from below, and from the outside. These are not symmetrical in behavior, though the ontology may look that way.
Innovation from within is what we might call the official future. It is was committees come up with by way of mission statements, it is the next product revision, it is the consensus roadmap for technology or standards. Innovation from within is what the status quo aspires to. It is incremental, forward-looking, progressive, seeks improvements and efficiencies, seeks to solve problems its aspirations and actions pose, and adopts a rhetoric of transformation, consensus, and betterment. Folks on the inside do not meet to put themselves out of jobs or lose standing in the community. No, they want to better themselves, which limits their options for innovation.
Innovation from above involves a complex of things. Above change involves stuff not available to just anyone. High tech is such a thing. Advanced laboratories and equipment studying things that are outside the range of most investigators. Linear accelerators, scanning electron microscopes, Saturn V rockets, VLSI circuits and the like characterize high tech. But change from above also can mean choices made by dominant players to do something different, and use access to an important piece of status quo, such as a company, or law-making authority, to do it. Forcing out incandescent lighting in favor of alternatives by regulation is a change from above. Walmart requiring RFID for all products in its stores is an instance. So is the way in which Steve Jobs shapes design at Apple. These sorts of change push into the status quo and ask for adoption of something that has separation from the norm.
Innovation from below is the classic disruptive innovation that Clayton Christensen writes about in The Innovator’s Dilemma. Innovation from below is often uncredentialed, has poorer performance, is off the official roadmap, and breaks the status quo’s financial and investment models. USB memory instead of magnetic media. Facebook. These are changes that come from the bottom, build often with legacy tools and materials, and come to compete successfully with the status quo, not just for value but even over the control of what carries value. Open source software is another instance of change from below, imitative, collective, and running a decidedly different model of operation.
Innovation from the outside is what the status quo most fears and often most needs. This sort of change may appear as a threat, as badness, as heterodoxy. Change from the outside involves such things as file sharing, pirate radio, pornography, racketeering, and revolt. But change from the outside may also appear to be simply opposed to the official future of the status quo, or skew from it. If one is embedded in the status quo, such as in a leading technology company, then it is really difficult to propose a direction that differs from the official future. But if a suggestion for change comes from the outside, then it may be fielded and discussed without appearing to conflict with what every good worker is expected to do to achieve the official future.
I propose this ontology for innovation more to show how innovation can have structure, that there are different sorts of innovation, with different impacts on the status quo. Further, that the status quo, in planning for innovation, appears much better at inside innovation (efficiencies and product revisions) and above innovation (top down, high tech, premium product) than innovation from below or the outside. How does one plan for stuff that one does not know about (it’s outside!) and what does one do when stuff that would never make it through a committee of experts becomes more powerful than all the important stuff one has committed to and threatens to destroy the market leader without ever competing with it directly?
With this ontology we can start to make some sense of university efforts to “innovate”–or, more explicitly, to license patent rights claimed from research inventors for the purpose of creating commercial products that will pay a royalty on sales. One might observe that in attempting to license to industry leaders, a university patent licensing operation has almost no window in which to work: if the invention is incremental, then the industry leader already has it, or has decided against it, or it’s not worth much; if the invention is transformational, then it is likely outside the official future and is more likely a threat than a help. If the invention is a few product revision cycles into the future, then it’s uncertain, and it may be as easy to design around it as to swallow a control point and be paying royalties that one does not have to pay. There’s not a lot of room for selling innovation to the status quo! No wonder universities have trouble with their model.