Why does a dolphin not have gills?
If a dolphin were to evolve gills (like fish and other marine animals), then it would be able to explore and utilise more of the ocean since it would no longer need to return to the surface frequently to breathe. Over time, natural selection might allow dolphins with gills to successfully exploit new niches, or perhaps even out-compete air-breathing dolphins.
So what is stopping dolphins from evolving gills?
It is because in between air-breathing dolphins and potential water-breathing dolphins, there is no viable intermediary.
In order for an animal to evolve over time through natural selection, each evolution needs to be able to survive and reproduce because it had an advantage compared to its predecessor. This ability to survive is its viability.
For example, how did dinosaurs evolve into birds that could fly? Let us take a very simplified explanation. There would have been an ancestor dinosaur who had feathers and likely jumped between trees. One offspring was born with a mutation that made it able to reach further trees between jumps, such as a mutation that made it lighter, or the feathers longer to make it glide better. This new offspring made gliding further more viable, and successfully survived to reproduce. Over thousands or millions of generations, with occasional changes which each made the gliding more viable, eventually the birds that could power their own flight evolved. There were always viable stages in between dinosaurs and birds.
But in order for a dolphin to evolve gills, it would need to fundamentally change how it got oxygen into its body. The first evolution of gills would not be efficient enough to provide enough oxygen, and yet in order for the first generation of gills to develop and improve over time, this would mean the lungs of the dolphin would need to become less effective. Very quickly, you would reach a version of a dolphin with both lungs which don’t work well enough, and gills which don’t work well enough, and the animal would not be able to get enough oxygen overall and drown shortly after birth. This would not be a viable intermediary, and not survive to reproduce.
What does this have to do with innovation?
When a company only has one product, then the analogy with evolution is clear.
Each iteration of the product, or the ways the company develops, produces and supports the product, will only change in incremental amounts so that the product is still viable and the company can survive.
However, what if a company is trying to develop a fundamentally different innovation to the market?
In this case, a company might have its core business model which is working well, but have an innovation which could fundamentally improve processes and delight customers. However, changing to this new innovation would require either leaving behind aspects of the core business, or put those at risk. The company might not consider this risk to be viable, and therefore the innovation is stalled due to the sunk costs of the previous business.
While I was a consultant, I once worked with a large multinational bank where I found out that some of its core business-critical processes were still running on a mainframe computer and code which was several decades old! While newer, more innovative solutions were on the market which would have significantly simplified and sped up processes if the company would upgrade, this would involve shutting down the mainframe, and the company had decided that this risk was too great, since any time when the mainframe was offline or caused errors could cost millions. There was a lack of a viable intermediary in the eyes of the company leaders.
There are also many examples of innovations which get stuck in the innovation valley of death, where they are proven from a technical level, but have not yet been accepted by the market. This lack of market acceptance means they are unlikely to get support for further development, and as such no viable intermediary can be seen.
Or what if the company whats to innovate itself completely, and change its core business?
Then the question becomes whether the company itself can survive during the time period when this transformational change, (or evolution) should take place, and whether they have the capabilities to deliver their new business model.
One example of a company which did this successfully is IBM, who grew rapidly as a hardware company in the 1970s and 1980s, but saw the growth of lower-cost competitors and Asian rivals in the 1990s. They made a strategic choice to move away from hardware and into services, including a focus on computing consulting and other subscription-based revenue streams. It was only because of making difficult choices and severe internal restructuring that IBM was able to survive this transformation event and now still have a viable business model.
So when thinking about viable intermediary innovations in your business, consider these questions:
- Am I willing to support this innovation through development and while it still requires investment?
- How can I shorten the length of experiments in order for the innovation to evolve faster?
- If we need to fundamentally change our business to remain viable, are we aware of the decisions we need to make, the changes we need to make, and do we have the resources to survive while the transformation is underway?