In the 1990s a group of developers at Microsoft came up with an innovative device for reading electronic books. At that time no such product existed as a commercial entity. The team was excited at the possibilities for this innovation and they sent the working prototype to Bill Gates. He rapidly rejected the idea. It did not fit in with the Microsoft business strategy and the product did not have the Windows look or feel. Microsoft missed the opportunity. Amazon went on to develop a huge business based on e-books and the Kindle.
Bill Gates is renowned for being an open-minded leader receptive to radical ideas. But in turning down the e-reader he was displaying a trait common among leaders. He rejected something with an uncertain future and which did not fit in. In the book Orbit Shifting Innovation, Rajiv Narang and Devika Devaiah argue that the main obstacles to radical innovation inside organisations are not a lack of creativity or ideas. They are the search for certainty and fit.
Most managers when looking at a radical proposal will try to reference it against an existing model of success. And of course it does not fit. They compare it with current products and markets. They try to use existing products as benchmarks because that is what they understand best. But if the idea is revolutionary then existing products are useless as comparisons because they are so different. To compound the problem decision-makers ask for Return on Investment (ROI) projections in order to consider the business case. The bigger the investment that is requested the greater the demand for a bullet-proof business case.
How do you construct a business case for an e-book reader when there are no e-books yet?
‘Does it fit with our strategy and product range? What is the ROI?’ These are the wrong questions to ask. Four far more important questions are:
1. Do the customers who have seen the prototype like it?
2. Does it solve a real problem?
3. Can we make it?
4. Does it play to our strengths (in technology or markets)?
If there are positive answers to these questions then there is a strong case for taking the idea to the next stage of development. When Amazon developed the Kindle there was no certainty, no accurate estimate of future sales. It did not fit with their existing business – they were a software business and not an electronics manufacturer. However, they identified a need which would suit their strength in the books market. They asked the right questions and came up with the right answer.
 Kurt Eichenwald, Vanity Fair, Microsoft’s Lost Decade http://www.vanityfair.com/business/2012/08/microsoft-lost-mojo-steve-ballmer
Previously published on Destination Innovation
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