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How the Cloud transforms the Innovation Model?

We are all familiar with the traditional innovation model.

It always starts with an idea that solves an existing challenge. Then, you would prepare a Business Plan get some funding and start building your solution. When you are done, you deploy it to your target customer and either succeeds or failed.


Today the cost of innovation is extremely low. There is no need for funding most of the time to build your solution. There are no hardware costs due to the Cloud subscription model. There are no software costs due to open source and trial / development versions of commercial software packages. And using the internet and social media it is very common to go viral once you come up with a good solution.

Due to all these changes the innovation model completely changes.


The new model requires a small team of committed professional to decide that they wish to solve an existing challenge. They come up with an initial idea, build a solution, run it,  update the idea and continue to iterate in the learning cycle till they come up with a desirable solution. Only then they get some funds to accelerate the market adoption and only once they solution is market proven they come up with a business model that shows how they might make some money from their solution.

The new innovation is model drastically different.

  1. Success or failures are not binary – One can fail early multiple times before risking any significant amount of money.
  2. Business Plans are obsolete – They were required to reduce risk of innovation when the cost of innovation was significant. Today, it’s enough to come up with desirable solution. If enough customers uses it, a viable business model will be found
  3. Bottom up innovation – Anyone can innovate today. Any motivated talented professional can put together a small team and try something new. No requirement for CxO level executive to allocate a big budget.
  4. Designers & Engineers takes priority over business & finance people – Since solution building comes before funding for many of the solutions you can do well without having a business guy in the initial team (even though it is still more practical to get them involved as soon as possible)
  5. Riskless innovation – Now it is clear why we see so much innovation now days. It is practically free to innovate. The real risk is to stop innovating and get obsolete by new comers.

We have a new model that each of us can utilize to innovate. No need for permission, no risk of failure. What are we all waiting for?

I would like to leave you with one thought, one question, which I borrowed from the ex-Director of DARPA “What would you attempt to do if you knew you could not fail?”

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  • The traditional model, also known as "stage-gate", is indeed outdated today for innovation projects. An obstacle I've found is that "stage-gate" is how we are used to work with customers: we do a project proposal, validate if it's a profitable opportunity, sell, execute the project and collect our profits; so we tend to apply this model to innovation projects as well, and management want's certainty and predictability from the start, which is of course not possible.

    Great article BTW!

    • Hi Ricardo,

      A great comment. I agree that we need to think if we can apply the new innovation process to the deal acquisition process.

      Enjoy, Itzik