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Innovate, baby, innovate!

Posted by: Helen Walters on September 8, 2008

That’s the chant Thomas Friedman of the New York Times wishes he’d heard people at the RNC chanting instead of “drill, baby, drill.” The chorus of calls for U.S.-centric, government-sponsored innovation is growing, though the two candidates currently seem somewhat less than entirely focused on the topic. It seems to me that corporations have much to teach the government here, particularly in terms of what not to do. Irving Wladawsky-Berger recently wrote a nice piece for us about the challenges of innovation. He spent 37 years working at IBM so has seen a few schemes fail in his time. His definition of the biggest problems facing innovation initiatives? Indifference, hostility, and isolation. Learning how to negotiate these on a global scale would be an invaluable skill for executives — and politicians — in this day and age.

Reader Comments

ritu venkatesh rangachari

September 15, 2008 12:17 AM

Hi Helen, we wrote a note recently capturing the "centrality" of innovation in any company/ industry. Its called "THE HEART OF A BUSINESS":

1. All companies process information: Whether you are making bricks, operation systems for computers, printing magazines or making tires. You are processing information in converting resources from one form to another.

2. Industries differ in the type of information they process. The tire industry converts rubber to tire. A publishing business converts knowledge and paper to a readable document. Etc.
a. Within industries, companies vary in the efficiency with which they process information. This sets apart the good performers from the bad.
b. In selecting core products/ service, keep in mind that market share and price premiums do not go hand in hand. There has been no known example of this

3. Finally, in a stable state (stalemate), all companies converge in terms of their offers. The returns to all companies converges to the minimum returns. Any higher or lower than this will destabilize the industry and cause the equilibrium to move back to the lowest value.

To avoid this, continuous differentiation is required. This depends on innovation.

1. Innovation secures above normal profits for companies.

2. Innovation is the application of the brain to deliver differentiation.

3. It is always possible to innovate.

Innovation is possible across all frontiers:
Product/ Process/ Price/ Place (distribution) etc.

Innovation is necessary to avoid stalemates (Bruce Henderson) and consequent commoditization of industries.

The rate of successful innovations determines the vibrancy of an industry.

Innovation is either disruptive or evolutionary. But it is necessary.

Strategy then becomes a bet on which innovations to fund. This leads to the classical view of strategy that “Strategy is about how the future will unfold and taking in the resources today to handle this.”

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What comes next? The Bloomberg Businessweek Innovation and Design blog chronicles new tools for creativity and collaboration, innovation case studies in both the corporate and social sectors, and the new ideas that have the power to change the way things have always been done.

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