“Innovate or Die!”

I was recently asked to give a presentation on how innovation can be harnessed to boost productivity and competitiveness. This is an interesting question, particularly coming as I do from an industry that is in a period of rapid systemic change, and which is not really famed for its ability to innovate.

The UK is the source of a wide number of impressive innovations….the television, telephone, bagless vacuum cleaner, and – my personal favourite – chocolate, were all invented in the UK. However we often look, perhaps unfairly, to the outside, and in particular the US for examples of great innovation.

Apple is considered to be one of the most innovative companies in the world, however it might be more accurate to describe them as leading the world in commercialisation of great innovations, rather than being themselves great innovators. The story of how the Apple Mac became the great success that it was is routed in the innovations of another company – Xerox. I was vaguely familiar with the story from business school, but recently looked up the details. In 1979, personal computing was in its infancy, and as the team at Apple was developing the Mac they heard rumours about something cool over at Xerox. So Steve Jobs paid a visit to their research facility and discovered a network of PCs, each using a desktop GUI and mouse – technologies we now take for granted, but which were unknown in 1979.

Xerox had built about 3000 of these machines, purely for internal use, and had no plans to commercialise the technology. Steve Jobs recognised that what Xerox had developed in order to boost its internal productivity could find its way into every office and every home in the world, boosting global productivity. A deal was done, and the Apple Mac, with its innovative desktop interface and mouse control was born.

Interestingly, Apple’s own attempts at innovation didn’t always go as well….their first attempt at a laptop weighed 7.2kg and was 10cm thick!!

On the other hand, potential innovations and their benefits can be identified early, but take a long time before the underlying technology catches up. A prime example being the development of mobile phone payments – in the dotcom heyday, there was immense buzz about how our phones would replace our wallets and make credit cards redundant, but only now, 15 years later, is that technology finally seeing broad commercial uptake.

Something similar is now taking place in the energy sector with similar levels of hyperbole around the emergence of domestic storage + solar. Early adopters can already purchase products such as the Tesla Powerwall or UK’s Powervault, and solar panels for residential properties have been around for some time. Current storage technology still lacks the duration and flexibility to replace the need to buy from the grid – the current solutions would be drained within minutes running an electric shower or induction hob for example, but companies from GE to Daimler are all betting on storage + solar revolutionising the energy sector.

That’s difficult reading for the utilities who are also busy trying to develop solutions in the space. It’s too early to be picking the winners and no doubt there will be deals done – partnerships, JVs and outright M&A to try and secure market position. “Innovate or die” indeed!