How True Innovations Really Take Off
You know that driverless car Google has been working on? That curious diversion of money and time that at least got some press attention for the search giant? It's just become a real business.
Mobile transportation company Uber, which has $307 million in funding, will buy 2,500 of those driverless cars. This is a reported $375 million purchase--even more than the total money the company has brought in.
The move makes sense. A company that matches people who need rides with limousine and cab services now has a way to dispatch autos to pick up customers without having to settle for a cut of the total fee. But more importantly, this is an example of an important type of partnership: one company that has something new and another that has a way to bring it to market.
It's actually fairly common for innovations from one company to languish until another develops a twist to make them popular. Credit cards, for example, were common in the early 20th century. Stores issued them to their customers, but the use was limited. Both Diners Club and American Express were products of the 1950s and helped expand consumer recognition of credit cards because they created cards that could be used across large networks of supporting vendors. It took Bank of America to broadly introduce revolving credit to turn the charge card into the credit card. People snapped them up because they had access to borrowing money on demand.
Television is another example. It has existed in various forms since the 1920s, not counting earlier precursors. For decades it was a curiosity whose practical expanse was curtailed by World War II and the diversion of materials and manufacturing to military use. What made it take off after the war? Texaco moved its popular radio program into the new medium and eventually settled on comedian Milton Berle as the host. A heavy use of slapstick and low comedy made the show highly visual, a must for success in the new medium. Add major guest stars and relatively strong production values, and, as The Museum of Broadcast Communications notes, the result helped drive television ownership from 500,000 sets in 1948 to 30 million in 1956.
PCs had been around for a number of years as curiosities. What started the broad march of sales was the appearance of applications that let people bypass the need to program and offer capabilities that consumers didn't know they needed, but recognized they wanted them when they saw them. A more recent example would be the smartphone. Cell phones had been around for decades and shrunk in size over time. The BlackBerry had a large following because of the email and messaging capabilities. But it took Apple and a slick touch interface combined with the ability to download apps that could harness raw computing power to create the iPhone, a device that changed what people expected from a mobile phone. Other vendors saw the possibilities and jumped aboard.
In each case, the concept of a product wasn't new. It takes time, energy, and a different type of innovation to take technology and realize what the native possibilities are. Someone has to recognize the potential and then package it in a way that makes this clear to consumers.
That's what Uber hopes to do with Google's driverless car. People might be hesitant to purchase one for their own use, but to have a vehicle show up when you need it and take you where you want to go? That could be enough for people to give the vehicles a shot. Uber shows that entrepreneurial start-ups don't necessarily have to invent the killer product if they can find the twist that helps the market recognize useful innovation for what it is.
ERIK SHERMAN | Columnist
Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.