So innovation is a very hot subject now. Always was, but now more than ever. Companies are trying to innovate. They are so trying to be ahead and do really cool things, but unfortunately a lot of data shows that it’s just not working. Companies spend more money on R&D but sell less. Why is that? Let me try to make a list. You may find some of it really obvious, but maybe some will be new to you. Anyway, this is my two cents:

1. The crowd became picky, and they expect to get everything for free (how dare they!) – Many great ideas, but it’s one thing to get traction, and another to monetize. YouTube. Hulu. They are really great. No money. You say ads? John Malone (chairman of Liberty Media Corp. – DirecTV, Atlanta Braves and a host of cable channels to name some properties of his giant) says it’s not substantial on a Wall Street Journal interview: “I think that what you’re finding is that advertising is going to be insufficient as a revenue stream to support the breadth and depth of the quality that the public wants to become used to.”

2. Short product life cycle – You know it, I know it. We don’t have to, but we upgrade our mobile device every year or couple of years if you are as slow as I am. In Korea and Japan they upgrade literally every other month. We are at the point that you have to be innovative not in order to get a competitive advantage, but just in order to stay in the game! When I worked for a huge mobile device manufacturer we spewed out 180 models a year. That’s a new device every other day. This includes of course the 3-4 models that get dumped during the development lifecycle of the model that actually makes it to market. Tough baby.

3. Human knowledge base is huge – Gone are the days of Descartes, you know, the philosopher and ah, also the inventor of the Cartesian coordinate system (the simple x vs. y graphs). With today’s knowledge, you have to master something all your life in order to come up with a new invention. And this rarely happens. I mean, it happens all the time, but on a small scale. All the cool gadgets and scientific breakthroughs are built on many tiny cases of amazing innovations. But seriously, when was the last time a single person came up with the lamp, or electricity, or something as big as the steam engine? I told you, innovation is tough.

So what do we do? How does humanity advance in life? This is an interesting question. Well, scientists are always around to find new exciting things. Fortunately, they are not in it for the money. Companies are still investing huge sums in order to stay in the market. Changing and improving products is certainly necessary, but we are at a point where people have seen everything, and it’s very hard to impress them. Innovation today, I believe, lies in delivery, or as they say in marketing, distribution channels.   Two examples that come to mind are Netflix and Dell.

What did Netflix do? They brought the DVD to your home using the US Postal Service. So they took a set of existing technologies (DVD, USPS deliveries and the Internet), and combined them to create a revolutionary business model. You pick your movies online from a very comprehensive selection, and they start coming via the mail. So simple.

Dell, well, they cut out the middle man. They were the first to offer customizable desktops online. You would build your own model, pay and get your computer shipped direct once it’s ready. Oh, this is really good – they get your money before the computer is even made. Wow, talk about keeping low inventories! That was a great model. Now it’s not working so well, because the crowd moved to laptop computers and netbooks and whatever, so now they are coming back to the store because they want to feel their computer before they get it. Dell had to reluctantly bring back the middle man. Maybe they should open their own stores? Hmmm, but then the whole model changes, no more low inventories and cash upfront. Plus, this is not what Dell is supposd to be doing. They are good in assembling machines. Dell just posted a big loss. Innovation is tough.

Bottom line: We have to keep on doing! Keep on innovating. Personally for me, since I haven’t written for a while, and haven’t been following too much of the news lately, it’s been kind of hard to come up with a new post. But this is my own small personal practice in innovation. Step by step. Until next time…

P.S. Many thanks to my buddies Jeff Hui and Udi Schlessinger who urged me to keep writing and not falter in this turbulent hour. This post is dedicated to you guys :)