I recently had a chance to interview John Flynn, CEO and founder of Fleet Advantage. He illustrates beautifully what I think is wrong about our entire narrative on innovation. You see, when we mention the word innovation, what immediately comes to mind are new products and services. But so many of history's greatest innovators’ developments were on the periphery. They didn't make new cars; they made the roads smoother. They didn't invent quicker milkshake makers; they invented a quick-service restaurant.
John is that kind of entrepreneur.
For his first company, he created a truck-leasing firm. He built it out of a simple insight. The tax rules were such that if a company owned a truck, they had to depreciate it more slowly than if John's company owned it. This meant he could buy trucks from the company and lease it back to that company at a lower price. It worked, and the company went public--at least until the tax rules changed.
Now John is doing it again. He isn't making trucks; he’s making them more efficient. He knows that truck manufacturers invest millions improving the fuel efficiency of their vehicles. They install computers in their engines that track hundreds of variables. John knows that if your truck driver drives in ninth gear when he should be driving in 10th, and he does this consistently, he adds $2,000 a year in your fuel costs. He knows that if a truck driving up a hill doesn't start decelerating as it approaches the crest, it wastes even more gasoline. And he knows how to fix such problems.
John's company installs technology that plugs into the truck’s computer. Now, when the driver sits in ninth gear for too long, the truck automatically starts slowing down. When the driver puts on the parking brake but keeps the engine running for more than a few minutes, perhaps to keep the air-conditioning going, the truck shuts down. He can even link your truck’s computer to a GPS with topographical information that predicts that the truck is approaching a hill. It knows when the truck is about to reach the crest of the hill and makes it slow down as it reaches the top.
John is not producing new, proprietary technology. What he brings to the game is know-how. He takes a whole fleet of trucks and soups them up with new technology. Then he can offer the customer a lower price because his trucks are more efficient.
But John understands that he is building a sustainable competitive advantage. His company is amassing a huge database of information about truck performance. This database crosses multiple trucks and truck types in multiple regions. With this data, using new forms of analytics, he can spot patterns and trend correlations that others cannot.
So next time someone on your team brings up the word innovation, notice if your colleague turns immediately to the product. Remember that an innovation not adopted has no value and that you can generate value by getting people to use technology already invented. Remember that a fast car can’t pick up speed without a smooth road. Think about John and Fleet Advantage. Don't blindly bet your company's research dollars against your competitors. Look around the periphery, look at the content in which your product is being used, and see how you can move into a place where others are not looking. Smooth the road.
[Image: Flickr user Moyan Brenn]