At a time when digital technology is transforming one industry after another, large companies tend to view innovation and disruption as the result of breakthrough discoveries or technological wonders. They look at the explosive growth of companies such as WhatsApp or Instagram and assume that true innovation is the realm of digital wonks and ambitious entrepreneurs. The corollary, of course, is “we don’t know how to do that.”
But when Mubarik Imam, head of growth and partnerships for WhatsApp, told the company’s extraordinary story to a group of high-level executives and technology experts at a conference in Palo Alto last year, the narrative was conspicuously free of digital breakthroughs or “aha!” moments. For those who hoped to hear the secret of how digital wizardry turned two disgruntled Yahoo veterans into overnight billionaires, the real story was an eye-opener. Transforming a relatively simple idea into a $19 billion windfall,
turns out, was more about solving problems with the tools at hand than inventing new solutions from scratch.
The product is hardly revolutionary in terms of its technology, but it is easy to use and allows people to do what they want — chat securely (individually or in groups), share pictures and videos, make internet calls — all without fearing that someone is watching over their shoulder or playing with their data. That was enough to allow WhatsApp to go viral and produce incredible growth, powered mostly by word of mouth among online communities.
The lessons here are clear:
- The power of focus. WhatsApp knew what its customers wanted and stuck to it, avoiding the usual corporate temptation to do multiple things at once.
- The importance of scalability. The business model WhatsApp has today is essentially the one it started with. It launched a product, gathered feedback, and kept iterating as it scaled and added users.
- The primacy of asset building. In deciding to forgo ads, WhatsApp made a bet that the company’s value depended more on building a user base than bogging down the business with worries about monetization. The bet clearly paid off. WhatsApp has a revenue model, but it is based on volume. That volume depends on utility, and utility depends on building the largest, most vibrant network possible.
Examples such as WhatsApp demonstrate that real-world innovation, in many ways, looks like an assembly line. At one end is a customer pain point or a potential new market. At the other is a product or service that solves the problem or addresses the market in a way nobody has thought of before. In between, people sit down and force themselves to examine the problem from a variety of fresh angles. Sometimes they tap the lab and bring a radical new technology to bear. But much more often they reach for pieces of technology that already exist and assemble them with new (or old) capabilities to produce a solution that turns the pain point into a delighted customer. Think of it as high concept meets whatever is lying around — an unconventional recombination.
Another good example is what’s happened with elevators. The obvious pain point for anybody trying to get to an office on the 49th floor is waiting for the elevator to show up. For years elevator companies have been using electronics to coordinate banks of elevators and make the wait times as short as possible. But only recently have elevator companies found a way to personalize the solution by coordinating sensors in building employees’ access badges with systems that calibrate where each elevator should be to optimize wait times. That, in turn, has allowed the elevator companies to revamp their business models. By tracking a metric, they can sell optimized wait times (elevators as a service) rather than banks of elevators based on price. They are selling performance, not hardware.
This kind of innovation often is difficult for traditional companies to understand. Not every company can (or should) reinvent its business model. But sustainable growth relies on developing a culture of constant innovation in everything the company does. Coming up with new ways to engage your customer is not so much a matter of experimentation in the lab as it is experiential. Organizations need to practice looking at pain points and opportunities in entirely new ways until it becomes a habit.
The most innovative companies not only excel at deploying digital technology but also win by constantly challenging problem-solving methods by recombining elements in distinctive and unconventional ways. That ability is critical and will only become more so as the explosion of digital technology speeds up innovation in the years ahead.