Thursday, January 30, 2014

Revolutionary Innovation: Hockey Stick, Curve Jumping Ideas

Innovation is anything that reduces the cost of a transaction. Revolutionary innovation is a curve jumping idea that looks like a hockey stick graph in a growing market. 

There are incremental improvements and then there are revolutionary improvements. The latter are improvements that aren't only twice as good, rather they're ten times better. It's a paradigm shift that disrupts markets. 

The ice trade is a perfect example of revolutionary technological improvements. In the late 1700s, only the rich had ice since it had to be harvested in the winter and then shipped like granite or marble and stored with a short shelf life. Frederic Tudor was Boston's "Ice King" who made his fortune by harvesting and shipping ice to places that would not have otherwise had it such as the Caribbean and India.

Innovation during Ice 1.0 revolved around making sharper saws to cut the ice and inventing insulation, other than hay, to keep it from melting.

With the advent of electricity, ice harvesting was no longer necessary. In Ice 2.0, warehouses could make ice anytime and send it out for local delivery. This is, in its truest sense, a curve jumping disruptive technology. If you worked in the ice business in the late 1800s you needed to pay attention when refrigeration technology came along otherwise you'd be left out in the cold. 

Looking back, it's obvious that Ice 3.0 was the invention of the personal ice maker, AKA: our home refrigerator. If warehouse refrigeration and ice delivery companies didn't start making home refrigerators in the first half of the 20th Century then they were left behind.

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