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Interview with Don Strickland

Innovation seems to be on the lips of everyone these days and it seems to be a term much overused by companies. Are companies really being innovative, reinventing themselves and their products, or is it all marketing hype from the innovation industry?

There have been many surveys on how innovation has impacted companies. While we hear success stories where a company has invented a revolutionary new product or business model, the fact is that most CEOs are disappointed with the results of their innovation initiatives. A recent survey found that over 90% of executives say innovation is critical to their company’s success but less than 20% believe they have a competitive advantage because of innovation.

This is a huge gap between expectations and results. The gap is caused by two main reasons. First, most executives are expecting breakthrough results from innovation, as promised in the exaggerated claims from consultants and innovation tool providers. In reality, 99% of innovation activity leads to only incremental results. The second reason for the expectation gap is based on the fact that most organizations have been implementing innovation programs for years. In the beginning, these innovation processes were novel and produced some impressive results. Innovation was hailed as the next great strategic tool, and everyone claimed to be a leader in innovation.

This had the effect of diluting the meaning of the word to the point where now it means next to nothing. Think of past strategic fads such as “management by objectives,” “business process reengineering,” “one minute manager” and “management by walking around.” Each of these was popular for ten to twenty years and then they fell out of favor and were replaced by “the next big thing.” Innovation has been a strategic fad for the last fifteen years. Like previous strategic fads, innovation has run its course and the world is moving on. I think that is a good thing. Time to move on!

Is there anything new and exciting in the field of innovation that will change the innovation landscape or is it just another fad and, like you said, has run its course? If innovation has run its course, what is the next big thing?

Innovation will continue at a rapidly accelerating pace, but it will not be driven by the traditional innovation programs and tools. The new driver of innovation is data. “Data Driven Innovation” is the next big thing. We live in a “New World of Data” caused by the rapid expansion of social media, the Internet of things, mobile connectivity, video downloads, online transactions and many other data producing activities. None of us can escape creating large quantities of data.

It is estimated that the average American office worker produces about 5 gigabytes (that’s with 9 zeros) of data a day. All total, the world stored several exabytes (21 zeros) of data in 2014, and that amount will double every two years. This “data exhaust” is revolutionizing innovation processes and tools. Think about the traditional “ethnographic” approach to consumer product innovation – observe the customer, create a “Day in the Life” video of the customer, really get to understand the customer, etc. These kinds of customer research projects typically took months and were costly. And if you are an international company and need to do this in multiple countries, the cost quickly becomes prohibitive.

In Data Driven Innovation, you combine data sources with analytical software and in real time you can predict what someone is going to buy, how much they will pay and where they will buy it. You profile the customer at an individual level from their data exhaust. You don’t need proximity to the customer; you just need the data and analytical tools. I can’t think of a single industry sector or government service that will not be transformed by Data Driven Innovation.

How is this “New World of Data” transforming consumer marketing?

We all leave data exhaust everywhere we go and in everything we do. In fact, we leave so much data exhaust that companies can identify and connect individual customers with lifestyles, interests and activities – such as getting married, buying a car, and personal interests such as sports, movies and travel. Acxiom, a data broker, holds an average of 1,500 pieces of information on more than 500 million consumers around the world.

This off line database is created from data that consumers put into the public domain when they use their credit cards, purchase books on Amazon, use a cell phone, fill out surveys or subscribe to services such as Netflix, to mention just a few data generating activities. There is nothing new about this and marketers have been exploiting this type of data for years.

However, a new breed of data broker is emerging in the form of Internet companies such as Facebook and Google which collect vast amounts of personal information automatically, effectively creating an online database that operates in real time. When Facebook went public in 2012 it reported that it stored about 110 megabytes of photos and videos, plus “likes,” texts and IP addresses for each of its over one billion users. Since then Facebook has partnered with traditional data brokers Acxiom, Epsilon and Datalogix to target ads on Facebook to users based on their recent in-store purchases. This is Data Driven Innovation in real time.

What are some examples of Data Driven Innovation outside of consumer product marketing?

One example is the business model for vehicle insurance. It is undergoing rapid innovation
by capturing real time data on driving style. They capture data on location, date and time, speed, braking events and other factors that affect driver safety. Insurance companies have developed algorithms that give drivers a “safety score” which impacts their insurance premium. One such company, Progressive Insurance, has collected over 10 billion miles of driving data from their customers who opt to install Progressive’s “Snapshot” tracking device in their cars.

Another industry being transformed by Data Driven Innovation is farming. Modern farms are becoming part of the Internet of things, using sensors in fields, on livestock and on drones to determine when to water, fertilize and even when a cow is ready to give birth. These “Smart Farms” obtain higher yields and lower costs than traditional farms.

Lastly, entire cities are becoming “smart” and are able to offer citizens innovative services and efficiencies ranging from reduced energy costs to direct routing to available parking spaces. And the police in major cities around the world are being directed to locations that have a high likelihood of a crime being committed based on advanced data analytics. Data Driven Innovation is transforming the world we live in and, in my opinion, for the better.

Is there a danger that companies and governments misuse all of this data?

Unfortunately, it is already happening. I am going to focus my comments on the unintentional misuse of data, rather than intentional misuses such as identify theft. The dark side of Big Data is that even with the best of intentions, you can fall into the “dead zone” of an algorithm.

You can be subjected to “guilt by association” and lose a job offer because your “character and capability” rating is low based on the associations you have on social media sites. You may be assigned a lower credit rating because of behavioral scoring based on algorithms that analyze the repayment record of other customers of stores in which you shop. You may be rated a high health risk based on a history of buying “plus size” clothes and eating fast food. All of these are rational correlations but are not true for every individual.

The scary thing is that you don’t have access to the data or analytical methods used to analyze you. I get asked often “what is the solution, more regulation?” Regulation cannot keep up with technology. It loses that race every time. My recommendation is to act at all times as if you have no personal privacy, because most often you don’t.

There are many new technologies such as Google Glass, the Apple Watch, and the Oculus VR display – what has recently caught your eye?

These are all amazing devices that collect data, analyze data and display data. What is exciting is the convergence of many data technologies to transform an industry. I am particularly excited about the transformation that is occurring in the healthcare industry. All three of the devices you mention have healthcare applications.

Google Glass coupled with third party software will provide a hands free environment in which surgeons can check patient status, request patient records and monitor real time vital signs. The Apple Watch, and similar devices, will soon be monitoring blood pressure, glucose levels and other health data which will be transferred to databases in which it will be analyzed for purposes of preventative medicine. The Oculus VR headset is already being tested in the treatment of phobias such as Post-Traumatic Stress Disorder (PTSD), and to help autistic children learn social cues and fine tune motor skills. The New World of Data was formed by the convergence of technology, and it is this same convergence of technology that is driving transformational changes everywhere.