Innovation in The Information Age

The “winners” in business are the companies that first recognize and effectively use new ideas and technologies, or find and exploit new efficiencies and markets.
Two dramatic examples are FedEx and Microsoft. FedEx developed a way to deliver packages overnight at a profit. Microsoft found ways to take advantage of improved computer hardware to standardize and sell software repetitively.
In both cases, the companies used technology in a new way, before anyone else did. On the other hand, they didn’t invent or create anything new. People and businesses have always shipped packages. FedEx didn’t invent airplanes or distribution centers. It didn’t even build the computers it used to track packages. It found and exploited a new market and took advantage of existing technologies.
Microsoft wasn’t the first to develop an operating system for personal computers. The genius of Microsoft is that it identified growth in new computer hardware technology and standardized its product to run on most manufacturers’ hardware. Microsoft didn’t invent the hardware or invent programming. It used existing technologies in a new way to exploit new markets—in this case, home and small-business computer systems.
This same phenomenon happens every day in business—not as dramatic or public, but equally effective. I’m sure all of you are familiar with the statistics showing that most economic growth in the U.S. is in small- and medium-sized business. The main reason for this is that small-business owners have found new ways to improve on technology and are willing to take risks more quickly than a large company can research and analyze the same changes.
It is also important to remember that not all new ideas are good ideas. While the largest share of economic growth is in small- and medium-sized companies, so is the number of bankruptcies.
Does this mean that drycleaners aren’t pursuing these innovations? By the time a good idea is generally accepted by an industry, the period of competitive advantage is over. At this point, the remaining companies need to incorporate these ideas just to remain competitive. Years later, Airborne Express and even IBM can’t make up the distance created by the original jumps made by FedEx and Microsoft.
Drycleaners’ use of computers is no longer a technological innovation. Companies that got the jump on the competition by improving counter operations and cash control by using computers have already done so. Those cleaners that haven’t are now in a position of trying to stay even with the market.
But to say that you shouldn’t install a point-of-sale computer system because it’s too late is ludicrous. The improvements in operations and cost controls are still there. It is just that the gains in competitive advantage and profitability are past.
The new technology cleaners should incorporate today is information. More accurately, it is the accumulation of good information and the appropriate use of that information that is the new technology available to cleaners today.
If you are a cleaner looking to become a leader in the future, you should already be using information for your benefit. Much of this information is generated internally, in the form of customer and sales histories. Other information needs to be acquired from external sources, such as non-customer databases and community demographics.
This is another way a business looking to get a competitive edge by using technology can fuel growth. No one is inventing anything new; customers still have addresses and sales are still tracked in dollar amounts. It is the knowledge and interpretation of this information on which we can base decisions that is the new technology.
Data is not information—it is merely fact. The meaningful interpretation of what specific data means, and what that interpretation means for your business, is information. From this, you get the opportunity to make superior choices in the market and gain on the competition.The Cycle of Change. Like all innovations, the use of information will be adopted in a cycle. The first step in adoption is made by the Pioneers. Pioneers are companies and individuals willing to take a relatively high risk on an unproven technology. Pioneers often try several unsuccessful new ideas before finding one or two that give them the high returns of being first on a profitable new technology. In the computer industry, the old saying was, “You can always tell who the Pioneers are by the arrows in their backs.”
Being a Pioneer has many drawbacks and risks, and it’s rare that an individual is a pioneer in all aspects of business. Most Pioneers become Pioneers because they developed the idea themselves or have some other commitment to the new technology. For every successful Pioneer, there are probably hundreds of failures.
The second group of people to embrace a new technology are the Innovators. Innovators can still reap high rewards but are more selective, basing decisions on Pioneers’ experiences. While Pioneers tend to see an idea and take the “Let’s give it a go” attitude, an Innovator looks at what happened and asks “How can I benefit from this idea today to gain in the market tomorrow?”
Third are Early Adopters. This group builds on the successes of the Innovators. They are in a position to make accurate predictions on the returns and risks associated with the innovation. The potential returns are not nearly as high as for Pioneers and Innovators, but their risk is usually known and more easily managed.
Fourth are Adapters—the mainstream. Often, they adapt an older innovation to stay competitive, or the innovation has matured to the point of being a commonplace feature of the business. An example is the automated shirt press. Though it’s hard to imagine a cleaner without one today, not long ago, it was considered an expensive, unnecessary innovation.
Late Adapters, or Strugglers, are those that miss every opportunity but somehow stay in business. Usually, they do so at high cost by maintaining outdated methodology under false assumptions of their operations and their positions in the market. Many times, Strugglers were Innovators that became complacent with their gains in position, while the competition made steady gains against them.
By delaying decisions, Adapters and Strugglers force themselves to make an investment just to stay even in the industry. These companies still gain operational benefits from their investments, but the technologies are no longer new, and the competitive returns are marginal, at best.
The cleaning industry is in a unique position. In the use of information as the new technology, individual cleaners can be considered Innovators. Compared to other industries’ use of information technology, cleaners are Adapters or Late Adapters—so you can reap the high return of an Innovator with the low risk of an Adapter.
Every time a new technology comes along that can improve a business’ operations, it’s only a matter of time until every company in the industry uses it. The decision whether to invest in information technology today is not just a decision. It is a question of how far down you are willing to let your competitive advantage dwindle, and for how long.


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