Futurist Wolfgang Grulke says radical innovation in technology is the main reason humans are the dominant life form on earth, despite the fact that modern man has been here only for 100 000 years, while animals such as echinoderms have existed for hundreds of millions of years. ITWeb attended a seminar where Grulke applied this concept to business.
Wolfgang Grulke, futurist, author and CEO of global business and technology think tank FutureWorld, says evolution is more profound than just change. While most people think of evolution in Darwinian terms, other definitions include disengaging from an existing envelope, and developing from a rudimentary to a complete stage.
Speaking at a CCH "In Touch with the Future" seminar in Sandton this week, he said echinoderms (marine animals including starfish and sea urchins) evolved incrementally, but humans became dominant because of what he calls radical innovation. The key to human ascendance lies in the use of tools, in other words, technology.
"Tools are not technology, but what you do with them is," he said. Grulke defines technology as "the practice of any of the applied sciences for practical value or industrial use". Even an idea can be technology. According to Grulke, radical innovation in business breaks the mould, gives better returns than incremental innovation, and establishes the future norm. Radical innovation also attracts venture capital "like bees to honey".
He lists four kinds of innovation: incremental innovation, niche innovation, revolutionary innovation, and radical innovation. The greatest risks and returns are offered by radical innovation.
Preparation
Ideally, he said, stable companies should have business in all four areas. Those which are innovating radically are preparing for the future and thus companies without business in that area do not have a future.
If innovation is a change in a technology, disruptive technology is a change that topples the industry leaders. In business life cycles, organisations tend to move from being disrupters to evolvers once competitors imitate a good product and make it cheaper. The original innovator then moves from a market focus to an internal focus and the organisation becomes more important than the business.
Disruptive technologies usually exhibit a poorer product performance initially. The cellphone is an example. Initially reception was bad, the phone was large and cumbersome and it could operate only in a limited area. Yet the cellphone is now toppling telecommunications industry leaders.
A radical innovation can occur even at component level. A product innovation affects a product, which affects a business, then an industry, and may even have a global effect. The video cassette recorder (VCR) is a product-level innovation. The original recorder was an extremely large machine which Sony bought to make smaller. It succeeded, but video tape was still very wide and could not be used in the smaller machine. The innovation was in the development of the angled read/write head. "There are now more VCRs in the world than telephones," Grulke added.
Uncertain
Radical innovation, he said, is highly uncertain and unpredictable. Eight times out of 10 it will fail, which is why a good company will be engaging in all kinds of innovation. He cautions that management practices that work for incremental innovation will often deter radical innovation.
Grulke said organisations need to ask themselves what business they are in. "Your business will be created by how you answer." Then they need to ask where the value and profit is. "Are you producing what customers will be prepared to pay for in the future? If not, you need to start."
Investors should also ask themselves what companies they want to invest in - those engaged in low-risk incremental innovation, or those preparing for the future, with high risk, but high returns.
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