The Pony Express showed us a way to innovation

The Pony Express showed us a way to innovation, but more on that in a minute…

Put simply, there are two ways to innovate.

(1)    Product and Service Innovation

(2)    Business Model Innovation (new ways of working)

Some of the world’s biggest and most successful start-ups have focused on (2) whilst many large incumbents are still labouring on (1).  Product and Service innovation alone is becoming a gamble you can not afford to take.

In 1860 the Pony Express started in the United States. The Pony Express was started by a group of successful business owners to reduce the time it took to get mail from St Joseph, Missouri to Sacramento, California. A journey of 2,000 miles (3,200 km). It was a bold plan. The Pony Express consisted of 80 riders, 157 “stations”  and  over 400 horses. The stations were typically 10-15 miles apart which was the maximum distance that the horses could make at full gallop before tiring. It took under 10 days for the first east bound mail delivery. The riders were brave, young and light. (Wild Bill Hickok and Buffalo Bill being two of them)

This was an example of what so many successful business model innovations do;  It increased the speed of doing something. In this case it reduced the time taken for mail to be delivered. The prevailing system of communication in 1860 was letters delivered by the United States Postal Service utilising stage coaches and wagons. The Pony Express was much faster and in anticipation of Civil War, there was an anticipated strategic advantage to communication speed. The Pony Express didn’t invent a new technology to disrupt postal delivery. It just changed the way things were done using two things already available – horses and riders. This is a great example of how innovation in “how business gets done” can be just as powerful as the innovation of a completely new product.  In fact unless you are a consumer product company in the B2C world, your best shot at not being disrupted by technology, but leveraging it to your advantage, is to develop new ways of operating; new business models, new revenue models, new market models.

Uber and Airbnb have done EXACTLY what the PONY EXPRESS did. They took two things that are already available (Cars and Drivers, Hotels and Patrons) and changed how the prevailing industry model worked. That’s the innovation. Unfortunately, a lot of people will put their success down to a digital strategy or the on-line platform used. These are enablers not strategies. In every technology disruption, there are always going to be experts and companies that help people use the new technologies more quickly and ENABLE a new strategy to be put into place. The strategy comes first. Lets not put the wagon before the Pony!!

Netflix originally offered DVD rental by mail order to disrupt the Blockbuster store model. They didn’t invent the DVD.

Amazon tapped into books, warehouses and existing transport methods but changed the prevailing industry model of where a book was purchased. The books, the warehouses and the transport were not new developments but it leveraged people’s move onto the internet.

Low Cost Airlines – yet another example of changing the way business was done and not about product innovation.

You get the picture right?

The best way for a new entrant or an ailing incumbent to flourish is not to tweak a prevailing industry model. IF you aren’t in the business of coming up with entirely new products and services, then work on changing the way business gets done in an industry and thus BE the disruption others talk about.