The New Killer Apps: How Large Companies Can Out-Innovate Start-Ups
Chunka Mui and Paul Carroll
Cornerloft Press (2013)

How your organization can get its share of $36 trillion of “reimagination”

As I began to read this book, I was again reminded of Jack Welch’s remarks at a GE annual meeting years ago when its then chairman and CEO was asked why he so much admired small companies:

“For one, they communicate better. Without the din and prattle of bureaucracy, people listen as well as talk; and since there are fewer of them they generally know and understand each other. Second, small companies move faster. They know the penalties for hesitation in the marketplace. Third, in small companies, with fewer layers and less camouflage, the leaders show up very clearly on the screen. Their performance and its impact are clear to everyone. And, finally, smaller companies waste less. They spend less time in endless reviews and approvals and politics and paper drills. They have fewer people; therefore they can only do the important things. Their people are free to direct their energy and attention toward the marketplace rather than fighting bureaucracy.”

These remarks should be taken into full account by leaders of any a large company that attempts to out-innovate much smaller ones. Chunka Mui and Paul Carroll are convinced — and I agree — that what they characterize as a “perfect storm of six technological innovations — combining mobile devices, social media, cameras, sensors, the cloud, and what we call emergent knowledge — means that more than $36 trillion of stock-market value is up for what some venture capitalists are calling ‘reimagination’ in the near future.” One of the most significant implications of unprecedented opportunities — and, yes, perils — the nature, extent, and velocity of innovative change (i.e. the “new killer apps”) are certain to increase more than many business leaders now realize.

In an earlier book, Unleashing the Killer App: Digital Strategies for Market Dominance, Mui and co-author Larry Downes define a “killer application” as “a new good or service that establishes an entirely new category and, by being first, dominates it, returning several hundred percent on the initial investment.” As they explain, the primary forces at work in spawning today’s “killer apps” are both technological and economic in nature. “The technology we are concerned with is the transformation of information into digital form, where it can be manipulated by computers and transmitted by networks.” Digital strategies are needed to achieve market dominance. They suggest several, each worthy of careful consideration.

In another earlier book, Billion Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years, Carroll and Mui observe, “Failures could certainly happen for other reasons, but if a company followed one of these strategies it is far more likely to fail.” Here’s where it gets really interesting. For as long as I can remember, all of these strategies have been included among those that organizations are most likely to select: synergy, financial planning, rollups, “staying the course,” adjacencies, “riding” technology, and consolidation. Carroll and Mui duly acknowledge the merits of each and the fact that they have served many organizations well. So what’s the problem? In many instances, excess is the root cause. For example, overestimating the potential benefits of mergers (e.g. AOL Sears, Time Warner, UnumProvident,), aggressive accounting that crosses the line into illegality (e.g. Conseco, Green Tree Financial, and Spiegel), buying dozens, hundreds, and even thousands of local businesses and combining them in a regional or national “behemoth” (e.g. AutoNation, Tyco, and Waste Management), and ignoring or underestimating a serious threat to “business as usual” and then making insufficient adjustments (e.g. Kodak, Mobile Media Communications, and Pillowtex).

The abundance of information, insights, and counsel provided in these previously published books (both of which I highly recommend) provide a rock-solid foundation on which to develop several key ideas in greater depth in The New Killer Apps. Here are three. First, big companies have all the resources they need to dominate, including growth platforms that would require start-ups and other much smaller companies years to build…and probably at a prohibitive cost. Also, successful big companies think big but start small and learn fast. They quickly cut losses that few much smaller companies can afford. The value of economic agility is incalculable. Finally, successful big companies can stay a new course when there is sufficient progress. In a high stakes card game, with $36 trillion at stake, many (most?) players cannot do that.

These are among the dozens of business subjects and issues of special interest and value to me, also listed to indicate the scope of Mui and Carroll’s coverage.

o What to consider when unleashing a killer app, not a killer flop (Pages 13-14)
o Social Media (Pages 33-36)
o Emergent Knowledge (41-44)
o The inadequacy of the Fukushima Daiichi approach (48-52)
o Rational and irrational barriers to innovation (56-59)
o Mini-case study: Walgreens (65-66)
o Six technology megatrends: Applications (73-75)
o Net present value: Pros and cons (86-88)
o “Culture eats strategy for breakfast” (94-95)
o Leadership lessons to be learned from Robert Nardelli and Home Depot (95-97)
o Mini-case study: Motorola cell phone (98-101)
o Mini-case study: Netflix (115-116)
o Mini-case study: McDonald’s (116-118)
o Prototyping: Do’s and don’ts (131-142)
o Benefits of having a “devil’s advocate” (143-155)

Keep Welch’s comments in mind as you work your way through several mini-case studies as well as the case studies provided at the conclusion of Phase One (Think Big: Google Cars and $2 Trillion in Auto-Related Revenue Up for Grabs), Phase Two (Start Small: Auto Insurance in a World Without Accidents), and Phase Three (Learn Fast: Are Hospitals DOA?). There are valuable business lessons to be learned from these real-world situations as large companies killed or were killed during what a Mui and Carroll characterize as a “perfect storm” of six technological innovations.

Their skills as raconteurs serve them well. This is one of the most entertaining as well as thoughtful and thought-provoking books I have read in recent years. Although their focus is on large companies, much of the information, insights, and counsel they provide (e.g. do’s and don’ts when launching or responding to innovation initiatives) is also relevant to almost all other organizations, whatever their size and nature may be. Congratulations to Chunka Mui and Paul Carroll on another brilliant achievement. Bravo!