August 2009

"Most companies with a practiced discipline of listening to their best customers and identifying new products that promise greater profitability and growth are rarely able to build a case for investing in disruptive technologies until it is too late."

The Innovator's Dilemma, Clayton Christensen

There are some fundamental differences between how you go about being innovative in a startup and how you go about it when you have more than 350 customers in 75 countries already running their business on your product and over 2,000 active deployments serving 40 million people every day. We faced that challenge at Movius Interactive Corporation. This article provides a description of how we took on the challenge of revitalizing innovation and entrepreneurship and how open source plays a part.

Innovation as Strategy

It is easy for an incumbent supplier to wait until the market has proven that there is demand for something before building it into a product. Those who are quick at building and testing can introduce a competitive product, capture market share, and become a successful fast follower. That works as a business strategy as long as the supplier's customers don't need to lead the market.

The fast follower strategy worked for many years in the telecom industry. However, increasing competition among carriers globally over the last decade, especially in the wireless space, means that today's operators need to innovate just to stay competitive. That innovation needs to come from many places, especially from trusted suppliers, in order to reduce qualification time and time to revenue. In order to provide innovative differentiation in their offers, established suppliers have to challenge the status quo and become entrepreneurial.

Movius has gone from a proprietary application platform to a next generation platform built on open standards. We recognized the need for a platform on which new applications could be developed and deployed more efficiently. Understanding this need differs from embracing the underlying impacts on the development process.

The point of "open" is not only to improve interoperability (the common reason given for open standards) but also to enable better accessibility and creativity (the basis for open source). Most telecom incumbents understand the need for the former but have taken a little longer to embrace the latter.

Movius faced that challenge as recently as a year ago. At the time, all of our research and development (R&D) was targeted to address enhancements and extensions for our existing customers. We realized that this would not serve our customers in today's market and that we needed to foster an entrepreneurial attitude within our organization. We decided to bootstrap our innovation engine, starting with a contest. We chose team leaders who chose multi-disciplinary teams. The goal was to develop and demonstrate a new application within 30 days. To help foster creativity, there were few limits on the type of application: it had to be a commercially viable concept and it actually had to work. The teams' innovations would be judged and a winner declared based on the opinions of two panels of judges. The first panel judged the applications based on usability while the second team took the first panel's input into consideration along with innovation, market potential, and quality to declare an overall winner.

The results were amazing. When the contest was launched, the initial expectation was that we might see one application which had promise and could be taken to market. Instead, even though we declared a clear winner, we found to our surprise that all the applications were of sufficient value to take to market. The teams were called together again and given just over three months to take the application from a demo to a solution that could be presented for trial by a carrier. All the teams completed their solution successfully.

The difference in spirit and approach within the development team during and after the contest was palpable. The teams, no longer limited to the current platform, incorporated existing technology as well as other open source implementations. Team members who were supporting, maintaining and enhancing our existing products started bringing forward new and innovative ideas for products which had been around for years. The transformation was remarkable.

Innovation Portfolios

Once you have proven to yourself that you can innovate, you have to focus that innovation. This is where a company with multiple products and an established customer base really differs from a startup.

A startup has a single vision, employees must buy into that vision and everybody works towards fulfilling the vision. From R&D to sales, focus is critical. It is an all or nothing bet. Startups do well because they get the idea right from the outset or they are close enough to getting it right to adapt the idea to the point that it is successful.

If you use the analogy of investment, startups are like a single stock investment. That stock either does well or it does not. With no hedge fund options, diversification options, or insurance, the only way forward is success of a single idea. Startups must bet big and work to make the core idea a success.

For a company with an established product portfolio, much of the startup dynamic is the same within the product team. The difference lies in how the portfolio is treated overall.

Back to the investment analogy, if a startup is a single stock, an established company is like a focused mutual fund. The idea is to invest in a given area, such as green technology, but to make multiple bets to achieve good returns overall. The company has to be very disciplined in evaluating its investment options and if something isn't working out as expected, it must take corrective action to modify the product, or eliminate it from the company portfolio.

In order to do this without confusing customers, the market, or the company itself, the company must know what it is good at and what space it wants to play in. At Movius, we were known for voice messaging and for enhancing messaging offers with interactive mobile multimedia capabilities. This is the market segment we understand and where we have demonstrated success. We know how to develop the kind of capabilities for this market that can be deployed on a very large scale, with high reliability, and with the appropriate interfaces and support capabilities needed in a carrier network.

Now as we evaluate our business, Movius requires its product team to manage our products like an investment portfolio. We balance the investment based on demand and timing of the market. We also recognize that it is easier to see the potential revenue in adding features to an existing product rather than building a new product or application. For that reason, we created a separate budget for investment in new offers. That isn't uncommon in most established product companies. What we do that is unique is to establish innovation vector guidelines for our investment in new entrepreneurial areas.

An innovation vector is a common core capability that is identified to help align the direction of product development. In this way, we invest the majority of our R&D dollars into applications which are relatively close to home. Although the new product development is aligned to one of our core capabilities, the result must be a new product, not simply an extension of an existing product. The fact that the new product is aligned with one of our core capabilities makes it easier for our customers to understand and take to market as part of a portfolio of offers.

We reserve a portion of the R&D budget to spend on new endeavours, ensuring that we invest in development of products which are different from what we would normally bring to market. As a company, our challenge is to determine the best way to take these innovations to market. These innovations also allow us and our customers to look at what could be offered from a totally new perspective.

It is easy to build new and innovative things. The real trick is to build new and innovative things which people will be willing to buy. This is where we took a page from the open source world: get feedback early and often. To accomplish this, we prototype early and refine all through the life cycle. We identify customers and prospects that we believe are the best fit for a new solution. We partner with them throughout the process from initial idea to demo to prototype to trial product to deployable product. We listen carefully to feedback. It is important to identify both positive and negative aspects of the solution as early as possible during the process and to do so in an objective fashion. This is important in minimizing wasted investment, both for us and our prospective customer.

Using Open Source to Innovate

We have talked about restarting entrepreneurship and innovation but only hinted at how open source enables that entrepreneurship to flourish. Open source lets you start at a baseline of the state of the industry without having to re-invent the wheel. It lets you try things and add innovation without having to start coding from scratch. As a result, you can spend your time innovating. While this may seem simplistic, embracing the benefits of this idea is incredibly powerful.

The first benefit is similar to the advantage an incumbent has in a particular area. As an example, Movius has more than twenty years of code accumulated and refined for our existing messaging products. We use that code as a series of building blocks to develop new things, providing a tremendous advantage in the messaging space. Open source greatly expands the domain in which we have building blocks.

The second major benefit is more subtle but potentially even more powerful. Open source allows cross domain fertilization of ideas. Some of the greatest innovations have come from applying how things are done in one industry to another industry. It is astonishing how people with different domain expertise often solve the same problem quite differently. Sometimes their solutions are simple, elegant and reliable but sometimes they are convoluted to the point of being impractical. Often one domain solves half the problem in quite an elegant manner then hacks its way to solving the rest of the problem. Another domain, when confronted with the same issue, solves the other portion elegantly but totally fails to solve the first part of the problem. Knowing the advantages and limitations of those solutions allows a company to apply them appropriately to solve a problem more simply and reliably. Open source, by its very nature, provides insight into how others with a different industry background approach a given solution. A company can pick the good points and contribute back an improved solution based on their experience from a different domain.

Closing Thoughts

Companies often approach using open source as an all or nothing proposition. By embracing both open source and its philosophies, then learning how to marry that with a company's core competencies and intellectual assets you can help energize an established technology company and give it a foundation for renewed entrepreneurship. At Movius, open source let us extend the domain over which we could innovate and allowed us to cross fertilize solutions from one domain to the other to bring some pretty innovative new products to market.


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