By Cronan McNamara.
We were promised flying cars and instead all we got was the entire planet communicating instantly via pocket sized supercomputers!
This is paraphrasing from Chris Dixon of Andreessen Horowitz's blog post and which is response to Peter Theil's of Founder Fund's complaint that "We wanted flying cars, instead we got 140 characters".
Some commentators have decried the lack of real innovation taking place in Silicon Valley in recent times, complaining that companies are focused on trivial products such as instant messaging and social networking apps.
Under the veneer of the “trivial” high-profile web and mobile app companies, incredible and relentless increases in computing hardware performance (processing power, storage, battery life, screen resolution, networking) are continuing.
When you compound the technology advances based on Moore’s law over a 10 year horizon, applications, and products become possible that would have been simply unimaginable a mere decade ago. We are not used to this pace of progress in more traditional industries.
Bill Gates famously joked that if “If GM had kept up with the technology like the computer industry has, we would all be driving $25.00 cars that got 1,000 miles to the gallon". (GM’s response to that was equally amusing, cars shutting down and needing to be rebooted on the highway, etc…)
Despite the heavy lifting being done by hardware innovation, it is actually software companies (like Google, Facebook, Microsoft, Amazon, Oracle, et al.) that tend exploit the new capabilities to extract the majority of the value from the market, while at the same time hardware becomes more and more commoditized. Tom Foremski goes as far as saying that “Hardware Is King, Software Is A Spoilt Brat Grown Fat Suckling On The Teats Of Chip Industry Innovation” (Apple is one company to buck this trend, so far).
I would argue therefore that we should not get too distracted by the short term. Bill Gates also said that "Most people overestimate what they can do in one year and underestimate what they can do in ten years".
This is why, I believe, scale up companies who can survive the 10 year horizon can start to achieve something really special. Gradual progress that doesn’t seem to be too explosive on a day-to-day basis, when compounded over 10 years, can be extremely impressive.
Founders and management teams take time to mature - developing the leadership and management skills. The very skills needed to create a team that is capable of not only surviving but thriving in the global marketplace.
As a company grows, resources increase and new and even more exciting R&D and innovation projects become possible.
The company I founded, Creme Global, is eleven years in business this year and I see this as phase two of the company. I have followed the philosophy (tips) below, investing heavily in R&D (67% of turnover invested in R&D in 2015) over the years resulting in the development of a modular and extensible data science platform called Expert Models.
Expert Models is now a truly world-class technology platform which will deliver value to the company and our clients for many years to come.
Here my top 10 tips for founders of technology companies on disruptive innovation for the medium term:
- Avoid investors if at all possible, or at least those who are in it for the short term.
- Jeff Bezos has said: invent on behalf of your consumers and think about the things that are not going to change in the next 10 years (e.g. customers will always want low price, fast delivery and a vast selection to chose from). Focus on the things that won’t change over a 10+ year time horizon.
- Develop a vision for your company that you truly believe in and that inspires you. Evaluate every opportunity, tactic and strategy for your organisation against that vision. Is this vision something your organisation can be truly world class at? Explain that vision to your team and to anyone who will listen. Constantly seek feedback that supports or challenges that vision and evaluate it honestly.
- Stay open to inspiration - follow people, technologies, products and companies that inspire you, use lessons from these to identify and seek out opportunities and strategies for your organisation.
- Build a strong team around you so that you can free up some of your time for exploratory work, vision and strategy development and blue sky thinking. Free up time to work on the the organisation rather than in it.
- Invest in R&D, engage with R&D funding opportunities such as Enterprise Ireland and H2020 research grants. The core goal of the funds being generated by the company during scale-up should be to reinvest in R&D until the company finds strong product-market fit with a truly scalable and global opportunity.
- Try to be modular in your R&D so that the fundamental building blocks you develop can be applied to various opportunities that you may have not foreseen yet - i.e. build a platform technology.
- Focus your technology on one or two key niches where you can compete immediately (e.g. you have the network, track record, less competitive landscape, etc…) and use that to win business that can fund the future development of your technology and product(s).
- Build your commercial network and sales resources - so that when you develop the right product or service, you are in a strong position to ramp up business development and exploit it. Try to build network effects into your product or service to make competition meaningless.
- After that a reproducible, scalable sales process needs to be created and once in place - major funds should be directed your sales effort and building out your sales team.
So that’s it, simple as that!
To summarise, the main lessons for me is are stay in business, keep abreast of technology development and seek new opportunities that align with your vision and continuously build them into your strategy. This can lead to significant success over 10 years that you could hardly have imagined at the beginning.
Sometimes art imitates life and other times life imitates art - so always use your imagination to see a better future and work hard to invent on behalf of your customers to build it. And with the Human-carrying drone debuting at CES (Jan, 2016), we actually have flying cars now!
It is hard to predict the future, but as Alan Kay and others have stated: “the best way to predict the future is to invent it” - so in these disruptive times, your best opportunity for stability is to be disruptive.