Real innovation relies on a myriad of macro and micro-economic benefits to succeed. The key to a lasting technology business is not just the introduction of modern new technology, but more importantly, how well macro-economic improvements address the needs of everyday consumers.
Below are three examples of a misrepresentation of the benefits of innovation that will strike early adopters.
1) Digital Photography
We all instinctively believe the innovation from analog to digital is fantastic, and for some (like me) it is. But when you look closely, the conversion from analog to digital suddenly requires everyday users to tether a camera to a computer, buy and learn about digital asset management systems and figure out which service to use to get images printed (not even a trip to Walmart erases the Do-It-Yourself paradigm). So, rather than a more streamlined process, we’ve complicated the process, increased the initial cash outlay and forced users to learn, often complex computing skills for novices.
Kodak’s biggest challenge is to convince users that their camera is not broken when it gives the cryptic message “Error: CF card is full” (check out EyeFi, for another technology “solution” to that). So, the reduction of expenses in printing that digital photography promised has shifted to an upfront expense in computer technology and knowledge that has so far amassed less market penetration than traditional cameras. That, to many, is a step back, rather than forward.
2) Internet Television
Many broadcasters now provide internet-based viewing to anyone with a web browser. But the protocols and video players of each of those providers (CNN, ABC, NBC, etc.) is different. So, for years the FCC has regulated the creation of a standards-compliant way of watching TV with any NTSC television (or PAL in Europe), suddenly, thanks to our border-less innovation we find ourselves with as many video players and playback encodings as there are content providers. While companies like Boxee attempt to provide a TV portal, the playback mechanisms are unique to each source, and thus delivering a confusing user experience. That, to many, is a step back, rather than forward.
3/ Mobile telephony
While GSM (the underlying technology for most mobile phones) was designed and implemented in its early days to provide free-market access to mobile telephony network, companies like AT&T (that support GSM protocols), artificially restrict the use of other (competing) networks (such as T-Mobile) by locking the SIM cards that are pre-installed on the phone. As a consequence, consumers are restricted to a proprietary brand and narrower network coverage while there is no technical reason to do so. That, to many, is a step back, rather than forward.
Plenty of other examples exist. The role of technology is to disappear, not to expose itself. Few companies (big and small) achieve that objective today.
As gambling-style exits and IPOs disappear, it becomes more important for technology companies to keep both macro and micro-economics in check. More investors should screen companies for these more impact-full innovations that focus on making technology less, rather than more prominent to consumers.
That is where the real big bucks are.