Stephen Crooks Experience Economy Blog

Leapfrogging – It’s a phenomenon that I see occur time and time again, where the industry leader is blindsided by a leap in innovation – an innovation they should have owned.  Yet so many organizations still only make marginal/incremental enhancements to their products or services.   But in this globally competitive world minor tweaks and updates aren’t going to keep your company at the top of the pecking order.

In Canada there are a lot of companies that hit it big with a one-off idea.  Which they do very well with is during the growth cycle  – but once the market becomes either over saturated or is on the decline where you really start to see the “hold the fort” mentality.   Their original “winning formula” is really what  prevents the reinventing of the wheel.   Being market leader in a dying market to most would seem to be a losing proposition.  Ideally a company should position itself as leader in a growth (or stable) market.  But time and time again we see organizations that through indecision or paranoia fail to grasp the concept of radical change – until they wake up and can’t figure out why their stock is worthless.

This happened recently when Toronto based CD/DVD maker Cinram lost the contract with a major studio.   It should be no surprise to anyone that the concept of the pressed disk is dying – fast.  And this is something that was easily predictable when iTunes or Napster first launched.  But here you have a company that once was trading  5 years ago in the $30 range, now sits in the $1.20 range.  Not to pick on any one company – but what was their plan 5 years ago to deal with the change in markets – what was their leapfrog strategy?    Without one marginal changes won’t grow the company.

Another example is Palm, the makers of handheld PDA’s.  This company essentially invented the concept and the market for the smart handheld device, but a company that once was market leader has since been very quickly trounced on by Apple.  The iPhone/iTouch isn’t any Sci-fi alien technology – it’s all off the shelf, available to anyone.  What Apple did is they effectively re-thought, re-engineered the concept of of a PDA.  But because Apple lacked any attachment to previous designs, standards, ways of thinking – they were able to leapfrog Palm and come out with a better device.

Leapfrogging as a concept is not that hard to understand – but it means a company has to ditch what it knows now and embrace blue-sky thinking.  The question of organizational strength is whether or not a company is capable to get past the silo thinking and be progressive enough to go to the next level.

Leapfrogging Techniques:

- Look 5 Years into the Future, and not at what pundits or commentators are talking about – but rather what are the geo/political/social/technological developments that you see as becoming a huge trend.

- Forget everything you know – depending on if you offer a product or service – depart from your offering in brainstorming sessions.  Think more holistically about what it is your company has been put on earth to solve.  Off the top of my head: Palm = your data where ever you are.  Cinram  = Permanent content storage.

- It’s about evolving not finding one off fixes.  As much as the iPod was a major leapfrog device – the product continued to evolved incrementally, and so too with the various subsequent leapfrog devices Apple has since released.
Related articles by

• Cinram stock plunges as Warner ends contract (thestar.com)
• Cinram shares dive as biggest customer ends deal (financialpost.com)
• Rumor: Apple developing second tablet device, made from unicorn tears (tuaw.com)