A revolution is now underway. Most innovation occurs first in software.1 And software is the primary element in all aspects of innovation from basic research through product introduction:
- Software provides the critical mechanism through which managers can lower the costs, compress the time cycles, and increase the value of innovations. It is also the heart of the learning and knowledge processes that give innovations their highest payoffs.
- In many cases, software is the core element in process innovations or in creating the functionalities that make products valuable to customers. In others, software is the “product” or “service” the customer actually receives.
- Software provides the central vehicle enabling the inventor-user interactions, rapid distribution of products, and market feedback that add most value to innovations. Consequently, customers — and the software itself — make many inventions that the company’s technologists, acting alone, could not conceive.
All this demands a basic shift in the way managers approach innovation, from strategic to detailed operational levels. Some portions of the innovation process may still require traditional physical manipulation, but leading companies have already shifted many steps to software. And those who do not will suffer. Managers can shorten innovation cycles through other means, but through properly developed software, they can change their entire innovation process, completely integrating, merging, or eliminating many formerly discrete innovation steps.2 In the process, they can dramatically lower innovation costs, decrease risks, shorten design and introduction cycle times, and increase the value of their innovations to customers.
Software Dominates All Innovation Steps
Innovation consists of the technological, managerial, and social processes through which a new idea or concept is first reduced to practice in a culture. Discovery is the initial observation of a new phenomenon. Invention provides the first verification that a real problem can be solved in a particular way. Diffusion spreads proved innovations broadly within an enterprise or society. All are necessary to create new value. Software dominates all aspects of the cycle from discovery to diffusion.
· Basic research.
Most literature searches, database inquiries, exchanges with other researchers, experimental designs, laboratory experiments, analyses of correlations and variances, hypothesis testing, modeling of complex phenomena, review of experimental results, first publication of results, enhancements to existing databases, and so on are performed through software. To a large extent, software search tools determine what data researchers see and what questions they ask.