May 16, 2013
In my last two posts I’ve argued that Adobe Photoshop is a mature product that isn’t likely to see many new and radical innovations in the future. The most radical innovation coming from Adobe in the last few years was probably Lightroom in 2006/7. This is not surprising. Large, established players in an industry tend to protect their turf and this often precludes thinking ‘outside the box.’ New innovations alter the shape of markets and industries to the detriment of existing players. The Austrian economist, Joseph Schumpeter, famously called this process “creative destruction.”
So if not Adobe, whom? To be honest, if I knew the exact answer, I’d be rich. But alas, that is not the case. Nevertheless, we can look at typical trends and get some clues. Two potentials quickly emerge as answers to the question. The first contender is a smaller player in the industry that creates a disruptive and lower-priced product that eventually surpasses the needs for all but the most demanding users. Think Nik, Topaz. The products of these companies mostly add functionality to Photoshop/Lightroom, but they might evolve into more full-featured independent players in the future. Now that Nik has been acquired by Google, the firm certainly has the resources to emerge as a leading player in the industry (if Google invests in the company). Clayton Christensen calls this process “disruptive innovation.” This is the process where products with lesser features and performance, but “good enough” performance for the masses, creep up the product chain until they become dominant players. Cell phone companies, although large organizations, also fit into the model of small players in this industry. Cell phones are making good progress with content aware issues. Samsung’s recent advertising of it’s eraser shot feature is a good example.
A second possibility for new products comes from lead users. Lead users are power users that develop new classes of products in an industry. The classic example of this comes from Eric von Hippel’s analysis of the development of the mountain bike in the 1970s. Large bicycle companies like Schwinn didn’t invent the mountain bike. A group of enthusiastic riders in Marin County, California did. Only after the new market was created did the large companies enter the market. Also, notice that the big players like Schwinn never really became a force in the mountain bike market. They were displaced by many newcomers. Admittedly, developing new photographic software takes a lot more resources than a mountain bike, but we also have completely new tools for collaboration today.
Academic research predicts that the average life expectancy for a S&P 500 firm will be 10 years in 2018. Think about how many large firms today were barely blips on a radar 10 years ago: Google, Facebook, Amazon, Netflix. On the flip side, look at some of the companies identified by Jim Collins in his 2001 best selling book Good to Great. Three of the eleven companies were: Circuit City (bankrupt in 2009), FNMA (bailed out by US Govt), and Wells Fargo (required a $25B bailout).
Hybrid products that blend still and motion pictures will likely be the future of the industry. The first company that gets this processing/interface right, will be the next Adobe — and I’m betting it won’t be Adobe.