Innovation rules. I was stoned in '04 (I mean, stones were thrown at me) for saying that. But in '05, AMD, Apple, RIM, Nokia, and a few others illustrated my case ably. That's why I frequently chose to write about those companies and their products.
In 2006, I have little doubt we'll see the soul of my brand of innovation appear again, which I'll summarise in a phrase that might make you wince: Never take customers for granted. That's it. If you adopt that as a mantra, you'll either succeed and stay successful or you'll go out of business because you say it but don't really believe it.
If you believe it, innovation - which is secretly what people with money to spend want every time they whip out their cheque books - occurs naturally. There are other ingredients to success through innovation such as patience, curiosity, skill, and opportunity, but the belief that your customers have a deep-seated desire to transcend the status quo trumps the rest. If you don't have that in your bones, get out of the industry and go into politics.
As a practitioner of innovation as a success strategy, you can't beat AMD, the darling of my column for 2005. AMD's Opteron and AMD64 CPU technology are Space Age stuff. They turned Intel's road map, from mobile to Itanium 2, into a personal-hygiene accessory. But AMD64 dates back to 1999. Back then, would you have blueprinted a 64-bit PC processor with a 1GHz serial system bus, on-chip memory controllers, and non-uniform memory access for an entry-level rack server?
Hell no, which is why Intel laughed itself sick over the idea. AMD's spec did everything but lay the Opteron chip mask on Intel's doorstep. If Intel had the least inkling that PC server customers would want, or even comprehend, what AMD was proposing, Intel had plenty of time to jump AMD on x86-64 technology. And AMD would be RIP.
Perhaps Intel figured that pipsqueak AMD could never get AMD64 built, but I think it's more likely that Intel took for granted that its customers would acquiesce to the safety of mediocrity - something "good enough" created by somebody who knows they're capable of far better and believes you're enough of a chump to settle for technology on cruise control. I call it the Tin Standard - which people may be willing to accept, but only if they don't know silver or gold exist.
The greatest innovators take the profit and prestige accrued from getting ahead of the game and invest in the next level of advanced technology. Of course, that strategy can go too far.
You could argue that Intel's Itanium flopped due to a level of innovation that crossed over into hubris - the arrogance of a market leader that thought it could take its customers anywhere it wanted to go, backward compatibility be damned. It left an opening a mile wide for a customer-focused innovator like AMD.
Looking back on 2005, however, even Intel deserves a nod for reverse-innovation, if you will, when the company snatched a simpler, saner Pentium CPU core from a spin-off mobile project.
It would be a shame if innovation fell out of fashion again because those players that can't do it right convince the market that mediocrity is industry standard and safe. It would be a shame, but it would be possible only if the industry takes you for granted. My hope is that vendors have learned enough from recent history to realize that underestimating customers may be the highest risk strategy of all.