Beliefs is the unknowable variable in every innovation, and it is the variable that most determines the opportunity a new business organization model has to evolve and have advantage of the new beliefs.

It’s The Beliefs, Stupid

Nosotros are at the tail end of an era that has focused almost entirely on the innovation of products and services, and we are at the beginning of a new era that focuses on the innovation of what I similar to call “behavioral business models.” These models go across asking how we can make what nosotros make improve and cheaper, or asking how nosotros tin can do what we exercise faster. They are about asking why we do what we practice to begin with. And the question of
why
is almost always tied to the question of how markets behave.

When Apple created iTunes information technology didn’t just create a faster, cheaper, better digital format for music, it contradistinct the very nature of the human relationship between music and people. eBay did not just create a platform for auctions, information technology changed the style nosotros await at the experience of shopping and how customs plays a function in the experience. When GM created OnStar it didn’t simply make getting from point A to signal B faster, it inverse the human relationship between motorcar manufacturer and buyer, and fundamentally altered the reason nosotros purchase a car.

Google did not invent Internet search–there were most fifty software vendors delivering Internet-based search, some for as long equally twenty-five years before Google!–but Google changed the way we collaborate with the Internet and how our behaviors are tracked and analyzed, allowing advertisers to find and pay for buyers in a style that was inconceivable before.

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All of these are examples of innovations in behavior that led to entirely new concern models. Even so nosotros continue to exist obsessed with technology innovation. To paraphrase James Carville’southward now-popular political pun, “It’south not the technology, it’s the beliefs, stupid.”

The greatest shift in the way we view innovation will exist that the innovation surrounding behavior will need to be as continuous a process as the innovation of products has been over the final hundred years. The greatest shift in the manner nosotros view innovation will be that the innovation surrounding behavior will need to be equally continuous a process as the innovation of products has been over the last hundred years. It’s here that the greatest payback and value of innovation in the cloud has yet to be fully understood and exploited.

Unfortunately, far also many of us are stuck in an erstwhile model of innovation–just equally surely as nosotros are stuck in line waiting to accept office in the new one.

Innovative organizations are those that can depart quickly from their planned trajectory and leap onto a new opportunity; they’re organizations that recognize and take an active role in introducing new behaviors that were unknown. Information technology is ultimately the speed with which companies do this and the willingness to experiment in new and unanticipated areas that determines the extent to which their innovation is “open.”

This changes the idea of open innovation to mean more than than going outside the company to find new ideas from experts; it means developing a collaborative innovation model that intimately binds the market to the procedure of innovation, in lockstep. That does non suggest that companies are held earnest by their customers, who only know to ask for incremental innovation in what they have already experienced.

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Instead, information technology means that companies need to button the envelope of innovation based on observations of what a market place’due south behaviors are and then work closely with the market to identify how innovations tin can add value in unexpected ways.

Deject-based Dialogue

The cloud is the ultimate open organisation for this sort of innovation, one that is influenced past factors that are both unknown and unknowable. In other words, no amount of time, information, focus groups, or traditional market research will increase the certainty with which we can innovate. The nearly important matter to practise in the deject is to realize that innovation must involve openness and disruption. Then we accept to minimize the chance and incertitude so that we increase the opportunity for finding novel approaches to solving problems and expand the ability to quickly scale, then we tin can address these problems once a resonant nerve is struck.

This is precisely the blazon of innovation that companies like Apple tree, Google, Facebook, and Netflix have enabled by constantly challenging their customers to suit to new offerings. For Facebook, this creates a fairly consistent market tension. Whenever Facebook delivers a new feature, such every bit its Timeline adequacy, there is an almost immediate market backfire, which is followed by a lull in the market’due south pushback and an eventual credence and integration of the new capability. This dance is repeated on a regular basis. While information technology does create some degree of tension, the result is a steady disruptive force that provides both Facebook and its users with more than than merely a path to sustained innovation; it too provides a periodic leap to a new blazon of behavior that would otherwise exist seen by most companies equally incredibly risky. The benefit for Facebook is that it has a built-in deject that allows any innovation to be immediately presented to its customers.

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This sort of dialogue betwixt the marketplace and its providers has never been as pronounced and apparently dysfunctional equally it is in the cloud, where voices are amplified to an unprecedented magnitude. Just that increase in the decibel level of market pushback tin be a death knell for innovation. The cloud is not inherently for or against innovation, any more than the Net is. Both are simply new platforms for conversations that accept the power to drive both positive and negative momentum. And it is this point that companies demand to pay especially close attention to.

Innovation is always a tense chat between affected parties. That will non alter and it should not alter. It is the basic mechanism past which we align ideas with the value they can produce.

Reprinted past permission of Bilbiomotion. Excerpted from Cloud Surfing: A New Way to Think About Risk, Innovation, Scale and Success, copyright 2012 Thomas Koulopoulos. All rights reserved.