Innovating New Winners in Established Markets

11/17/08Follow @b_frei

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 »

Brent Frei is the co-founder and executive chairman of Bellevue, WA-based Smartsheet.com, an online work management software company. Follow @b_frei

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