Killer Innovations

In 1965, a little known article appeared in Electronics magazine that would change the planning process for generations. Gordon Moore had made a memorable observation after graphing the growth in performance in semiconductors. What is now known as Moore’s Law, states that each new chip contained twice as many transistors as its predecessor and was released on a schedule of every 18 to 24 months. This foundation laid the groundwork for the planning process still in use today to predict the performance of future generations of computers. As a result of its accuracy, it’s become more than just a law; it’s become a design rule.

Since this time, industry observers are constantly on the lookout for the new “doubling” trends that can help explain the chaos and complexity inherent in any industry. The reward for uncovering these trends is the ability to leverage unique anomalies to your advantage. At the same time, a technology with an innovation rate (doubling rate) that falls behind the alternative technologies becomes a target for replacement.

One example of an innovation rate that is having a significant impact on planning is that of magnetic disk storage capacity. Rather than the 18 month rate of Moore’s law, the disk drive industry is on a 12 month innovation rate. As a result, the cost per megabyte has plunged from $1.00 in 1994 down to $0.10 in 2000 with the projection that the cost will continue to plunge to $0.04 by the end of 2002.

However, the disk drive industry has not always been on a 12 month innovation rate. During the 80’s, the industry was on a much slower 24-month rate, a pace that placed it behind most other technologies. It quickly became a target for technology replacement. During the later half of the 80’s, many industry experts were projecting that silicon storage would replace what they viewed as the “old” technology of magnetic storage. To make this projection, industry experts made the assumption that all innovation rates were fixed resulting in silicon overtaking disk storage sometime in the early 90’s. The disk storage industry proved the experts wrong.

What caused the disk storage industry to accelerate their rate of innovation?

One word – competition!

The response was a sudden burst in innovation driven by market pressures. The result was the industry improved their rate of innovation from 24 months down to 12 months. The impact, silicon never caught up and never will unless the innovation rate for silicon improves

As an example of how far the industry can push itself, current state of the art for disk storage has the capacity to store information that, if printed, would stack higher than a 54-story building – stashed in a single square inch of a disk drive’s spinning platter. This abundant and cheap storage has been one of the drivers behind the “keep everything” storage management practice. How many times have you really bothered to clean up your disk drive on your PC? In most cases, people upgrade their system long before the drive gets full. In addition, thought leaders were able to take advantage of the unique anomalies in low cost disk storage giving birth to the Storage Area Networks [SAN] market – a ‘second order’ effect of the innovation rate.

The real insight here is that innovation rates, the laws that businesses use, can be changed and improved upon.

In most cases, real improvement in the innovation rate is the result of a catalyst or crisis. The catalyst can come from inside or outside a given organization or industry as a result of R&D or other similar type activities that are funded to be on the constant look out for breakthrough opportunities. Likewise, there’s nothing like a crisis to help management clear the fog and become laser focused on what the results need to be in order to survive.

Question To Ponder

1) What is the innovation rate for your technologies, products and/or services?
2) What are the innovation rates that will impact your industry, competition, and customers?
3) Are there anomalies in your innovation rate that you could exploit to your advantage?