Home > Event Management, Identity & Access Management, Manufacturers > Gimme Some Disruptive Innovation!

Gimme Some Disruptive Innovation!

Here is a message for Cisco, Novell, IBM, Oracle and the rest of the IT powerhouses taking some steps toward the physical security industry.  So far, what I’ve heard from each of you is a message that confuses us.  It sometimes sounds like you are trying to re-invent the wheel – no, that’s not it.  It’s worse than that.  It sometimes sounds like you are trying to do what other companies are doing quite well already.  Like you don’t have any special difference, any special value.  You sound like "me too" vendors.

That is discouraging to me and many of the securitydreamers out there.  We are looking for ways to advance the industry, so we are looking to you to make a difference – to lead us out of the wilderness.

But that’s not what we hear from you.  So I’d like to challenge each of you to come up with a more compelling message and strategy, please.  Here is what you can go ahead and strike out of your marketing messages from this point forward:

  • Any reference to how you can do video surveillance capture, transmission, processing, analytics or storage almost as well as the leading physical security vendors.
  • Any story of how your integration projects persevere to completion.
  • Any language that sounds like it came from ADT or Honeywell. (Nothing against those guys, you understand. But they are already here. We don’t need another ADT.)
  • And I definitely don’t need you to start pitching an access control message even remotely resembling Lenel, Quintron or S2. They are fitting the bill just fine, thank you.

What do I want?

I want you to ROCK the physical security industry!

I want you to create a great story and build solutions (products and services) that inspire and turn on physical security and logical security folks alike instead of preaching convergence – especially not the convergence of physical security teams with logical security teams. A subtle but profound difference – but one that separates a ho-hum non-strategy from a game-changing value-creating growth strategy.

C’mon IT folks.  Bring IT to the physical security industry.  Bring the software, the hardware, the networks, the processes, the people, the best practices and the innovation. We’ll all be glad you did.

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  1. John Honovich
    November 18, 2007 at 9:28 am

    Large, mature, corporations generally do not spearhead disruptive innovation. It’s indeed the core of the theory of disruptive innovation (Clayton Christensen – Innovator’s Dilemna).
    Rather, these organizations tend to acquire innovators, package and streamline the distrubition of these innovations.
    Indeed, this is the area where most analysts offer Cisco the highest praise. For over a decade, Cisco has driven its growth through dozens of acquistions. Cisco does not develop innovation as much as it packages it up for mass consumption.
    Steve, I share your sentimenets. It would be great if these titans could transform physical security. I think the reality is much closer to these big companies buying an S2 rather than out innovating an S2.
    Christensen’s theory (which is the most well regarded on innovation) is that incumbent have difficulties with fostering disruptive innovation because of adverse incentives. The new markets and opportunities are too small and the margins too low relative to the mature markets they are dominating (classic example DEC and the minicomputer).
    By contrast, small companies have better motivations to tackle markets that are initially small. The smaller company gains expertise and skills over the years as they grow that business.
    By the time, the market is mature enough for a major company to find it financially interesting, they lack the specific skills and expertise to overtake the smaller disrupter.
    Then, often enough, the big company (the Cisco, the IBM) buy the smaller company.
    All of this to me is confirmed by numerous conversations with people at these big companies. They are smart and nice people but they don’t understand the market and what customers really want (e.g., IBM S3). And given that situation, the best I expect is for these big companies to continue to buy out small innovating company.
    Steve, thanks for the great thought provoking post. It will be interesting to see what these large companies can do.

  2. November 18, 2007 at 4:29 pm

    I understand what you are saying, John. But it’s not very satisfying. I obviously can’t look to established physical security vendors to be disruptive. (It’s not in their best interests, right?) And you are saying I can’t look at the big IT vendors. So that leaves us looking for disruption from young companies — Quantum Secure and the like. I get that. But gee whiz, isn’t there anything new we should expect from the IT companies?

  3. M
    November 18, 2007 at 9:54 pm

    This is a very interesting thread. From my vantage point John really is on to something. There has been a lack of investment in true innovation by most firms in the security space, with the ‘big guys’ the biggest offenders.
    What is going to occur ultimately is these big companies (Cisco, IBM, etc) are going to purchase the small innovative companies; and thus new standards will be born as this convergence really takes hold. The market still isn’t ‘certain’ that the investment should be made towards better, IP-based solutions because their businesses by-and-large in the old-fashioned way of doing things hasn’t been impacted enough.
    The big players entering the market threatens the way many of these legacy firms will do business in the future. I wish I could point to them taking specific action (Rather than just acquiring) towards disruptive technologies, but the truth is you are right – they aren’t!
    There are many innovative technologies out there that truly understand the customer (both the integrator as the customer, as well as the end customer); and have leveraged IP-based technology to deliver superior solutions. They are disruptive in their own right, but not as well known just yet – but will be soon. S2 has this figured out and is popping up everywhere. Another is Steelbox Networks in another arena.
    It’d be great to have a conversation on the site regarding the technologies that are indeed disrupting as the market sees it today – knowing that sooner or later the big boys will pony up through true investment! The IT companies still are on the sidelines though, without a doubt.
    Great subject!!

  4. John Honovich
    November 19, 2007 at 2:16 pm

    Hi Steve,
    What I expect from IT companies is for a number of them to retreat or exit from the physical security market in the next 12 – 24 months.
    A growing consensus exists that we are entering into a recession driven primarily by the collapse of the housing market and its rolling consequences to the broader economy.
    The physical security market’s growth in the last 5 years has been strengthened by the global war on terror and the strong domestic economy. The country does not seem highly motivated to expand the former and the later is slowing down. As such, it’s not hard to imagine that physical security demand will slow over the next few years.
    Combine the lack of value IT companies have generated in physical security with a recession and the senior managers at these IT companies will be motivated to cut their losses into what is for them a small, peripheral and mildly attractive segment.
    Six years ago I saw these big IT companies retreat in other new markets they were pursuing and would not be surprised if many do the same soon in physical security.
    Though I am a believer in the long-term power of IT to transform physical security, the short term outlook does not bode well for big IT companies to deliver those changes.

  5. M
    November 20, 2007 at 4:12 pm

    Your thoughts could prove to be correct. I also believe a recession is imminent, but the aftermath of this is not entirely clear. It could be that the margins that these IT companies are experiencing in security would allow for a sustained or possibly increased investment in the space.
    They actually may cut from their core “commodity” type businesses that have really bad pricing pressures. So, it could happen either way but there are two vantage points on the subject. I for one see no chance of CSCO pulling out of the physical security space anytime soon, and IBM is notorious for mal-investments and slugging around in various different markets.
    What will help the security industry in a recession is that a lot of these ‘noise’ companies will fold and quit distracting ‘real’ technology innovators! In addition, there is a chance that since IT is such a bigger portion of a companies headcount, that IT Managers will more quickly assume responsibility for security as headcount goes down. This won’t happen overnight, but the paradigm is shifting big-time in these large companies.
    In the end, yeah, I think you’re right we’re in for some interesting economic times, and this will disrupt us and a lot of different industries alike… Although, we are in a wartime economy and from my calculation we’ll be at war for a pretty long time, so money will be spent on defense and the like and this will be a measure the government takes to prop the economy – they always do!
    It will sure be interesting to watch!

  6. John Honovich
    November 20, 2007 at 10:30 pm

    Hi M,
    This is great feedback and very interesting observations.
    A couple of thoughts:
    – I would be surpised if the margins generated in physical security by these IT companies are high relative to their core businesses. When entering new markets (like IT is doing into physical security), gross margins are ususally depressed because of immature products and operation margins are usually constrained because of insufficient scale. That being said, I would also suspect that Cisco’s core “commodity” business (routing and switching) is generating much higher margin percentages and is likely a cash cow. Of course, these are factual issues; perhaps someone can share those details.
    – As for Cisco and IBM, specifically: I don’t disagree with your assesment of IBM but if they do just slug around, it’s really no better than exiting as it relates to those of us in physical security. I will say specifically for Cisco, I would not be surprised if the Broadware product line is discontinued in the next 1 to 2 years. In its time (5 or 10 years ago), it was an innovative product but it’s too bulky, complicated and costly to compete against the likes of Steelbox or Genetec even if Broadware’s supposed sweet spot (which is only a fraction of the video market). This is the area specifically where I can see Cisco retrenching in the next few years, especially under growing economic pressures.
    – As for the wartime economy, we shall certainly see. Maybe if Rudy or Hukabee (http://tinyurl.com/ywbxxp) gets elected, the money will keep flowing. But if a Democrat wins, it will be very interesting. Though I do remember 4 years ago, a number of military/govt projects I had got temporarily delayed due to anxiety about the last presidential election.
    Again, great points. Thanks for the conversation.
    Best,
    John

  7. M
    November 21, 2007 at 8:48 pm

    Hi John,
    Nice comments… For the political situation it is anyone’s guess really…
    Remember these big companies are flush with cash and interest rates are low, so I’m betting they’ll continue in our space, and actually suspect new entrants will be coming in shortly.
    Broadware is tired, but it’s a mere speck on a large CSCO business – even if that doesn’t work out they’ll likely stick around since so many security devices now plug into their switches.
    I don’t think the big guys have been good for innovation at all, but am not sold yet that they’ll retreat due to a recession – unless it’s one heckuva global recession and then all bets are off. Some of the most innovative companies may run out of $$$ if this happens as well so it’s difficult to predict…
    Regardless, there are innovators today that are changing perspectives and more importantly winning IT budgets around the country. You mentioned Steelbox, they have something unique that solves a problem. As does S2 Security. There are several others as well that have brought creative solutions forward that solve problems. For Steelbox it is a nice way to manage bandwidth and storage concerns in video. For S2 it’s an embedded linux server replacing clunky PC-servers and browser-based software that replaces cumbersome and costly clients.
    These are innovations, albeit the ‘big guys’ have little to do with it… Were not there yet but the industry is waking up to disruptive ‘thought processes’ if nothing else that really threaten the business of the current players in the physical security space. Someone mentioned 3VR as well – very innovative and intriguing equipment there as well. Solving problems and saving overall costs on both the front and back end will help the industry get larger.
    We sure do have a ways to go, no doubt at all!
    Great dialogue, and I look forward to hearing a lot more perspective on the matter – it’s about time there was a place we can gather to chat about these issues!
    M

  8. December 28, 2007 at 11:40 am

    Disruptive technology does tend to come from the small guys like you say and it is difficult to imagine the 800 pound gorillas moving in any sort of innovative way suddenly.
    There are lots of innovations out there, particularly in ways that might make the physical side “smarter” , but what will be the driver from the client side?
    Is NIMS /ICS going to lead a major change in security thinking or just set a new low benchmark?

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