I frequently come across entrepreneurs who have developed equivalent versions of globally-popular software (usually a Microsoft product) and want to compete on price. The prevailing sentiment is that if the entrepreneur sells his software at a lower price, customers are likely to swing the sale towards his cheaper option. These entrepreneurs get stumped when asked how they would react if Microsoft decided to drop the price by 90%, just to eliminate an annoying competitor. Large companies have the ability and resources to do exactly that – wipe out small upstarts for the sake of their wider product range. Often, entrepreneurs do not take into consideration the implications of their actions and the likely reactions from the market they operate in.
This is yet another aspect that differentiates the innovator from an entrepreneur. The innovator uses a method called CONI (Consequences and Implications), our next constructive thinking tool in this Mental Protein series, to understand the consequences and implications of his actions. Actions have three types of consequences and implications – short term, medium term and long term. Hidden in these consequences and implications are both threat and opportunities. CONI is a tool that provides the innovator a method of charting out his options for all three time frames, with the objective of either neutralising threats or identifying opportunities. As with most constructive thinking tools, the methods themselves are no rocket science and to the uninitiated, may appear as common sense. The power of these tools however, lies in their structured and systematic approach to ‘common sense’. Without the conscious and diligent uses of these tools, an innovator may miss out on likely, most obvious and important considerations that he should take into account.
Lets look at some examples of innovators who have used CONI successfully to create products by anticipating the consequences and implications of what was going on around their spheres. When the internet started becoming a household phenomenon in the early to mid 1990s, most telecommunications companies ignored it as they could not see the relevance of the internet to their core business – telephone calls.
Some of the telecom operators started venturing into the internet realm by becoming ISPs or by providing mobile access to the internet through cellular phones but, by and large, they stayed away from letting the internet get into their main voice business. British Telecom, at that time, took a completely opposite view. BT applied CONI to the situation and look at the short, medium and long term consequences and effects of the internet on it’s voice business. The output from CONI showed that in the short term, there would be negligible implications while in the medium term, BT would start losing revenue to companies that could provide cheap phone calls using the internet (Voice Over IP).
The longer term consequences and implications however, appeared devastating, there was no reason why all voice calls in the future could not be digitised, chopped up into packets and sent around the globe over the internet. This would make BT’s largest asset and investment, it’s copper voice network, redundant and it’s largest liability. CONI provided the company with a systematic and structured approach to investigating future consequences and implications of the internet and by doing so, completely changed BT’s direction. Today, BT is implementing the largest IP network in the world and all voice calls will be carried over the internet. CONI turned BT’s largest threat into it’s greatest opportunity.
Exactly one hundred years ago, Dr Paul Rudolph of Carl Zeiss designed a camera lens with unparalleled image definition. He termed it ‘Tessar’ (Greek for ‘four’), as the lens consisted of four elements. This high quality lens became the most successful camera lens of all times and was nick-named ‘the eagle eye of your camera’. When Carl Zeiss began to notice the emergence of cellular phones with low-cost and poor quality cameras, it decided to use CONI to understand the consequences and implications of this phenomenon on it’s business. Hidden in the mobile phone were both threats and opportunities for Carl Zeiss. CONI analysis revealed that the short term effects were probably negligible, the cameras in mobile phones were of such poor quality that they were of no serious use or threat to anyone.
In the medium term however, cameras in mobile phones were likely to become quite sophisticated and powerful. They could even begin challenging automatic digital cameras and given the convenience of having two devices in one (fully functional digital camera in a mobile phone), consumers would jump on the bandwagon. Carl Zeiss decided then that it would produce a special line of camera lenses to exploit the opportunity in the mobile phone market. Today, Carl Zeiss camera lenses are routinely found in mobile phones that offer 2 or 3 mega pixel cameras. CONI enabled Carl Zeiss to identify a hidden opportunity by systematically examining the consequences and implications of what was taking place in the cellular phone market
CONI work best when used with scenarios. Build different scenarios around varying time frames and you might be surprised at opportunities that await you at the horizon.
Source: Dr. Kamal Jit Singh is the regional director of British Telecom’s Asian Research Centre and specialises in using innovation as a strategy for increasing competitiveness. He also teaches strategic management to an MBA class in Singapore. Comments: firstname.lastname@example.org