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Dealing with Darwin Focusing Innovation in Maturing Markets Philip Lay Managing Director Software 2005 - April 27, 2005
Dealing with Darwin
Focusing Innovation in Maturing Markets
Philip LayManaging DirectorSoftware 2005 - April 27, 2005
Darw in and the Demon © 2005, TC G A dv isors LLCA pril 29, 2005
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Focusing Innovation
Innovation Types andThe Category Maturity Life Cycle
Darw in and the Demon © 2005, TC G A dv isors LLCA pril 29, 2005
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Time
Rev
enue
Gro
wth
Technology AdoptionLife Cycle
Early Main Street
Mature Main Street
Declining Main Street
Indefinitely elasticmiddle period
End of Life
A
FaultLine!
E
DC
B
Innovation’s LandscapeThe Market Maturity Life Cycle
Darw in and the Demon © 2005, TC G A dv isors LLCA pril 29, 2005
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DisruptiveInnovation
ApplicationInnovation
ProductInnovation
PlatformInnovation
EnhancementInnovation
ProcessInnovation
ExperientialInnovation
IntegrationInnovation
MarketingInnovation
Broad Universe of Innovation Types
Business ModelInnovation
Line ExtensionInnovation
Value EngineeringInnovation
Harvest& Exit
Renewal Innovation
OrganicRenewal
StructuralRenewal
Darw in and the Demon © 2005, TC G A dv isors LLCA pril 29, 2005
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Four Innovation Zones
DisruptiveInnovation
ApplicationInnovation
ProductInnovation
PlatformInnovation
EnhancementInnovation
IntegrationInnovation
ExperientialInnovation
ProcessInnovation
MarketingInnovation
Business ModelInnovation
Line ExtensionInnovation
Value EngineeringInnovation
Harvest& Exit
Renewal Innovation
ProductLeadership
Zone
OperationalExcellence
Zone
CustomerIntimacy
ZoneValue
RenewalZone
Darw in and the Demon © 2005, TC G A dv isors LLCA pril 29, 2005
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DisruptiveInnovation
ApplicationInnovation
ProductInnovation
PlatformInnovation
Innovation Types for Growth MarketsThe Product Leadership Zone
Darw in and the Demon © 2005, TC G A dv isors LLCA pril 29, 2005
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Innovating for Growth Markets
DisruptiveInnovation
ApplicationInnovation
ProductInnovation
PlatformInnovation
• Enterprise: Voice over IP (Vonage)• Consumer: Overnight package delivery (Fed Ex)
• Enterprise: Customer Behavior Measurement (Brickstream)• Consumer: Short Message Service (Vodafone)
• Enterprise: Application Servers (BEA)• Consumer: iPod (Apple)
• Enterprise: Relational databases (Oracle)• Consumer: PlayStations (Sony)
Darw in and the Demon © 2005, TC G A dv isors LLCA pril 29, 2005
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ExperientialInnovation
MarketingInnovation
Innovation Types for Maturing MarketsThe Customer Intimacy Zone
Customer IntimacyZone
EnhancementInnovation
Line ExtensionInnovation
Darw in and the Demon © 2005, TC G A dv isors LLCA pril 29, 2005
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Innovation Types for Maturing Markets
ExperientialInnovation
Line ExtensionInnovation
EnhancementInnovation
MarketingInnovation
• Enterprise: Mainframes (IBM)• Consumer: Laptops (Sony)
• Enterprise: Dedicated portals (Dell)• Consumer: Dedicated storefronts (Apple)
• Enterprise: Executive dashboards (Cognos)• Consumer: Mediated Internet (AOL)
• Enterprise: Servers (Sun)• Consumer: Inkjet printers (HP)
Darw in and the Demon © 2005, TC G A dv isors LLCA pril 29, 2005
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Innovation Types for Maturing MarketsThe Operational Excellence Zone
ProcessInnovation
IntegrationInnovation
Business ModelInnovation
Value EngineeringInnovation
Operational Excellence Zone
Darw in and the Demon © 2005, TC G A dv isors LLCA pril 29, 2005
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Innovation Types for Mature Markets
Process Innovation
IntegrationInnovation
Value Engineering Innovation
Business ModelInnovation
• Enterprise: Shotgun genomic sequencing (Celera)• Consumer: On-line retail checkout (Amazon)
• Enterprise: Hosted applications (Salesforce.com)• Consumer: Contextual advertising (Google)
• Enterprise: ERP/SCM/CRM suite (SAP)• Consumer: Semiconductor chips (Intel)
• Enterprise: Storage ATA RAID (Nexsan)• Consumer: PCs (eMachines)
Darw in and the Demon © 2005, TC G A dv isors LLCA pril 29, 2005
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Innovation Types for Declining MarketsLeveraging Market Renewal
Harvest& Exit
Renewal Innovation
Organic
Structural
Darw in and the Demon © 2005, TC G A dv isors LLCA pril 29, 2005
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Innovating for Declining Markets
OrganicRenewal
StructuralRenewal
Harvest& Exit
• Enterprise: From hardware to software and services (IBM)• Consumer: From PCs to entertainment (Apple)
• Enterprise: BEA buying Weblogic; DCTM selling to EMC• Consumer: Gateway buying eMachines; Visio selling to MSFT
• Enterprise: Legacy enterprise applications (CA)• Consumer: Long distance services (AT&T)
