The bigger the company, the tougher it is to innovate. There are two main pillars to this “innovation resistance” that seem common in large, profitable organizations.

1. Fear that innovative products will cannibalize existing revenue streams. The bigger the product line revenue, the more resistant that product group is to innovation that would threaten its growth.

Consider the post by former Microsoft exec Dick Brass in the New York Times Op-ed section, titled Microsoft’s Creative Destruction:

“At Microsoft, it has created a dysfunctional corporate culture in which the big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence. It’s not an accident that almost all the executives in charge of Microsoft’s music, e-books, phone, online, search and tablet efforts over the past decade have left.”

There’s a lot going on in this Microsoft example, but the undesirable effect of cannibalizing existing revenue streams is a substantial contributor to resisting innovation. As an example, e-mail built into a social networking app could threaten Exchange revenue, so naturally the Exchange team might lobby to restrict that feature on behalf of revenue protection. (Note: there is an increasing percentage of people that leverage Facebook’s messaging capability as their primary e-mail service.)

2. Product re-invention means throwing away deep feature lists. Market-leading products measure their dominance by revenue and feature depth. Feature depth broadens their relevance to a wider array of customers. So, adding functionality and features to a product trumps re-invention.

Clayton Christensen’s explanation of the impact of “disruptive technology” is a straightforward summary on why this is so common. One part of Christensen’s theory states:

“Low-end disruption” occurs when the rate at which products improve exceeds the rate at which customers can adopt the new performance. Therefore, at some point the performance of the product overshoots the needs of certain customer segments. At this point, a disruptive technology may enter the market and provide a product which has lower performance than the incumbent but … Next Page »

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We are increasingly a knowledge-based economy in the U.S., and work can be delivered digitally from anywhere. Take NightHawk Radiology in Coeur d’Alene, ID, for example—they are providing radiologists to any hospital that needs real-time availability and lower costs. They work online from Switzerland and Australia, but it could just as easily be Wenatchee or Usk, WA. These are often the jobs that create other jobs. An Amazon, Microsoft, or RealNetworks software technician for example, creates two to four other jobs within the communities they live.

This has all been made possible by the following 5 trends/innovations of the past decade:

1. Expansion of broadband throughout the U.S. and abroad.

2. Maturing of Web development tools and standards.

3. Usable Web access via handheld devices.

4. General acceptance of financial transactions over the Web as being safe and secure.

5. Emergence of online work and worker marketplaces.

I believe that a huge portion of the highest paying jobs in the next 10 years will be served across the wire, with less and less dependence on physical location. [Disclosure: The author is the co-founder of Smartsheet, an online collaboration and work management firm---Eds.] Small towns across the Northwest are currently growing with telecommuting professionals moving toward lower costs, higher quality of life, and less city hubbub.

The past decade’s innovations coupled with the increasing base of knowledge workers leads to my predictions for the coming decade:

1. Migration of professional people from high tax & regulation states to low tax & low regulation states.

2. Explosive expansion of work marketplaces and paid crowdsourcing for all kinds of jobs.

3. More productive people will work for themselves by shopping their considerable talents around the world via work marketplaces.

4. Job performance and work quality will become transparent as people’s work is reviewed online much as products are today.

5. Average earnings for high performers will be more than double the average earnings in their category.

Virtual assistants, a job category that is growing 50 percent a year, is already demonstrating these trends. More and more people are timesharing executive administrators. Most are home-based women (98 percent of V.A.s are women) who are now picking up extra income, or building full businesses.

I expect that we’ll look back in 10 years and wonder why we spent over $4.2 billion to move a relatively small amount of Washington state’s population less than 10 miles through a new tunnel [to replace the Alaskan Way Viaduct in Seattle---Eds.]. Had we spent half that much on schools, high-speed Internet access, and infrastructure across the whole state, it would have been a much bigger boon for the state’s economy.

Ten years from now, where you live will be a matter of lifestyle choice, not proximity to work.

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Sometimes the only way to flush out the truth on something is to state an opinion and spark a discussion. Using on-demand workers has been around for over 10 years, but there are precious few resources available for someone to get educated. Hopefully my report will stimulate discussion and bring a greater level of awareness to the paid crowdsourcing market.

Let’s look at crowdsourcing’s evolution this decade:

* Wikipedia started the revolution

* Jeff Howe coined the term crowdsourcing

* Elance and Guru made it into sophisticated electronic marketplaces

* Amazon’s Mechanical Turk turned it into a computing platform

* Kermit Pattison writes prolifically about it

* John Winsor’s company does creative things with it

* 50+ companies provide products and services designed to bring it to the everyday business person

So after 10 years and more than two million workers getting paid half a billion dollars for work online, where is the Gartner Magic Quadrant, or the Forrester Wave Diagram, or the TechCrunch Top 50 list?

The novelty of free crowdsourcing (getting something useful done by the masses for nothing) has been the romantic aspect most often studied and written about. “Free” differs from paid crowdsourcing in that free work gets accomplished only if it’s entertaining, emotionally fulfilling, or leads to recognition. The less sexy and decidedly more complex “paid” cousin, which uses money as leverage to generate results, has been more of a mystery. Ask 10 business managers whether they’ve used on-demand workers through an online service, and nine will cock their head like a lab that just heard a dog whistle.

Paid crowdsourcing can find a useful metaphor in e-commerce’s 15-year rise from cutting edge to preferred shopping mechanism. Want a book today? We don’t send our intern to the store to buy it. We go to Amazon, search on the book title, add it to our cart, insert our credit card information, and submit. One or two days later, we receive our book. Why is online commerce so mainstream … Next Page »

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The economy is forcing companies of all sizes to do more with less. The big winners are increasingly the small businesses and specialized sole proprietors. On one hand, they provide the “just in time” component services no longer staffed at the downsized firms, and on the other, they are adept at operating with lean resources and contracting for component services themselves.

This atomization of business is more than a reaction to the current economy. It’s a function of the nature of work today, and of the growing availability of technologies that will soon transform this approach to business-as-usual.

In the U.S. we are increasingly a knowledge worker economy, which lends itself perfectly to digitized deliverables. The ability to provide results electronically (vs. manual labor on the factory floor) greatly benefits small businesses and individual contractors, as geographical location and infrastructure are no longer barriers. More and more opportunities will be available to productive workers to serve countless niches.

The supply side is coming via the fracturing of integrated companies into specialty service firms and contractors. With the pay-for-performance contract, results become the job cost of the contractor. Companies can now hire highly specialized experts, spec out the results they want and pay only when the contractor achieves those results.

As an example, our small company Smartsheet outsources Graphics Production, Press Calendar Monitoring, Case Studies, Website Development, Website QA , Accounting, Video Production, Copy Review, and some Product Testing to different people who work an average of 1 – 4 days per month for our company. In addition, we use crowdsourcing (high volume on-demand outsourced data gathering) for prospect profile information, e-mail addresses, list building, and website keyword surveys, to name a few.

The main barrier to this volume of atomization has traditionally been the “productivity tax” on the coordinator who manages all the players working outside the company. The information overload becomes intense with too many e-mails, spreadsheets, and overhead material with so many separate contributors. The logistics and technological challenges often outweighed the gains. But new online tools are changing all that.

New technologies are making it very easy for delivered work to be traded online. These tools are also departing from the forced project management structure and process that has been the impediment to successful work management technology adoption for the past 20 years. They have been the equivalent of being required to understand how stock and bond trading worked in order to use eTrade.

Collaborative work management tools will be tightly integrated with online work marketplaces (LivePerson, eLance, RentaCoder) as well as crowdsourcing technologies (Amazon Mechanical Turk, Smartsourcing). Think of these solutions as part of a global switchboard that connects real and virtual teams on an as-needed basis in order to accomplish specific work. They will be as universally accessible as Gmail, and available to all. And the important components—the tasks, milestones and deadlines, as well as the team members who own specific responsibilities—will always be clearly visible to whoever owns the end results.

As the overhead costs of internal employees continue to rise from regulated increases in health care, payroll, and other taxes, looking outside the company walls will become more and more appealing. Integrated work collaboration tools enable every business to be a services provider and every business to be a services requestor.

My advice to everyone is to be very good at what you enjoy doing, and be prepared to shop it to the highest bidders around the world. Businesses will pay 3 – 4 times the rate of an internal employee for the same work delivered in a quarter the time with higher quality and less management. In fact, it will become table stakes to stay competitive.

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I’m attracted to the market opportunity within large, established markets. These markets already have huge spend, they have established dominant players with an inertia resistant to major change, most of the innovative talent and money is off in new market spaces, and innovation within these spaces tends to be evolutionary in nature and follow predictable paths.

Identifying a large market that can serve as an appropriate target is often as simple as listening for the drumbeat of consistent comments like:

— “Wouldn’t it be cool if…”
— “I wish there was a…”
— “Why doesn’t somebody invent a…”

The revolutionary innovation that occurs in many of these markets is often serendipitous. That means someone isn’t looking to solve the end problem, but something they did is applicable to it. See, for example, Viagra or Post-Its.

More often than not, however, the real revolutionary innovation is in line with the evolutionary. Therefore, pick a really big market and do something revolutionary within the natural evolution of the space.

So the key question becomes: what is it that successful inventors do to be revolutionarily successful within an evolution?

The current modern wonder of revolution within evolution is the Apple iPhone. Apple’s formula for innovation in mature markets is the gold standard. How do they do this? My assessment is that they follow two simple principles:

—Design for how people work.

—Consolidate and reduce core concepts to a ridiculous minimum; a core concept is anything the customer has to learn or understand in order to successfully use your product.

Mobile phones, e-mail on Blackberries and Treos, MP3 music players—all of these existed separately and with ever-expanding feature sets. The race toward consolidation had been going on for some time; but it carried with it the complex, rich feature sets of each independent device.

Apple, with its special magic, stuck with the less-is-more approach and let’s make the … Next Page »

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