I attended the annual Wired Business Conference in New York last week. I figured that any conference that featured speakers as diverse as Bill Gates and Martha Stewart had to have some interesting things to say. And, on the whole, it was worthwhile.
The theme of this year’s conference was how discontinuous change occurs in an industry. The main message is that disruption in an industry always comes from the outside. Those inside the industry are good at incremental improvements, but it is hard for them to see things very far outside their familiar context.
It takes an outsider’s view to envision things dramatically different from how they currently are.
Apple’s iPhone is a classic example. The Editor of Wired made the point that the iPhone’s innovative disruption started with a “user-centric” view, typical of Apple, while the rest of the industry (Nokia, Motorola, etc.) was trapped in a “carrier-centric” view.
After all, when you sell your product exclusively through the cell phone companies, you naturally come to see them, rather than the eventual consumer, as your customer. So Apple was able to nearly destroy these companies and achieve market leadership with one brilliantly executed product introduction.
Bill Gates On the Future of Energy
The first speaker was Bill Gates, talking about energy innovation.
Gates believes energy is mankind’s biggest problem. He would like to see more leadership from the government in the form of funding research. Instead, he points out, our political system tends to align with the current industry, subsidizing oil exploration, ethanol, and wind farms with tax credits, etc. These are all incremental, whereas we need to find something fundamental.
Lots of people are working on the problem, including Gates, who has investments in a number of energy companies. For example, he is working with Nathan Myhrvold on a radically different nuclear reactor design. In the past, nuclear reactors have been approached as essentially engineering challenges, with safety deriving from layers of redundant, “fail safe” systems. The result, of course, is Fukushima.
Instead, we need a radically new design which looks at the problem from a fundamentally different perspective.
He believes their reactor design is promising, and hopes to have a first working plant around 2020. Its safety will be designed in, rather than engineered, and it will burn all its fuel, so there will be virtually no waste needing storage.
There was an interesting session on finance. Often, small companies that develop something radically different find they need the resources of larger companies to bring their ideas to fruition. These mergers all start with great fanfare and expectation, but often end in disappointment. The acquirer often does not really know what to do with the opportunity and does not follow through on its commitments.
The investment ends up being written off and the original ideas just get buried somewhere.
Carl Bass, CEO of Autodesk, made another interesting point about innovation. Often, the earliest examples of something radically new look like toys – cute and fun, but without any apparent practical application. The earliest personal computers, for example, were developed by hobbyists. It took about ten years and Apple (again) to get IBM’s attention.
The ‘Net’ in Netflix Keeps Dominating
Reed Hastings, from Netflix, said he always knew that Netflix would evolve from mailing DVDs to online streaming, once the network technology could support it. I find that remarkable, since he then was responsible for two highly disruptive ideas:
- DVDs by mail destroyed Blockbuster.
- Streaming movies on demand is essentially destroying his own initial business model.
He was asked what he will do now that the cable companies, with vastly greater resources, are becoming his competitors. He said he needs to be aware of them, of course, but he has no real control over what they do. Therefore, his best competitive strategy is to maintain his sharp focus on his product vision, and simply deliver the best product that he can for his customers.
I’ll end with Martha Stewart, who was remarkably boring. Her main message, apparently, was that she has designed a new omelet pan. It will be in Macy’s in time for Christmas.