Magazine

Where The Innovation Is -- And Isn't


I found it interesting that the No. 1 obstacle to innovation cited by respondents to your survey in "The world's most innovative companies" is slow development times (Cover Story, Apr. 24). It seems to me that the No. 1 obstacle is getting people to generate truly innovative ideas in the first place. Maybe not all innovation is created equal. Directional innovation -- the linear thinking that moves you to improve a product or a service incrementally -- may well be time-sensitive, and these ideas may come more readily. But "intersectional innovation" is something different. This is the type of thinking that is nothing short of revolutionary.

This type of innovation -- the Holy Grail that can put a company on the map or revitalize a sleepy organization -- is in short supply. The reason is not lack of incentives; it is lack of understanding and opportunity. I was encouraged to read that some of the companies on your list do embrace the practices that foster innovation by providing opportunities for cross-functional and cross-cultural dialogue. But as a business consultant, it is my sense that most companies still don't get it. Corporations need to find more engaging ways to get people to think outside their comfort zones on a daily basis so they don't miss opportunities for groundbreaking innovation.

Michael DiGiovanni

Bloomfield, Conn.

I applaud your broad definition of innovative companies that goes beyond product innovation to include process and business model innovation. It was a step in the right direction, but you didn't go far enough. The most innovative companies on the business side of the ledger are often the most innovative on the financial side as well. Google Inc.'s (GOOG) creative initial public offering and Dell Inc.'s (DELL) extensive use of free trade credit are just two of many examples. In short, don't forget the right hand of the balance sheet when you define innovative companies.

Jonathan B. Welch

Northeastern University

Boston

I am disappointed to see companies such as Apple (AAPL) Computer Inc. featured at the top of your list of most innovative companies. Let me tell you what constitutes an innovative company: the ability to produce a product that makes a difference in the lives of mankind at a price that is affordable. Agreed, iPods are cute, though expensive, but do you think we would be missing something if the iPod didn't exist?

I am glad to note your comments on the efforts of Nokia Corp. (NOK) to make cell phones that suit the environmental conditions in India and elsewhere. Innovation should never be about producing the best value for shareholders or having high margins but should always be about the usefulness of the product.

Srinivas Balla

Arlington, Va.

By including Microsoft (MSFT) Corp. in BusinessWeek's list of most innovative companies, your survey respondents selected a company that copied the idea that became the Windows environment. This "innovative" company did not invent the spreadsheet or the word- processing program. It also didn't see the Internet coming and even more more recently did not recognize the importance of the search engine.

I have no doubt that Microsoft deserves the title of "Most Opportunistic Company" -- that would at least reflect how many of us resent the lack of productivity we suffer because of Microsoft's non-innovative products.

Carlos A. Sanchez

Miami

Re "Why biz backs this tax hike on the rich" (Up Front, Mar. 27) on California's Proposition 82: For our members, including the dozens of local Chambers of Commerce that have joined in opposition, the question is not whether preschool is good or bad or even if expanding preschool opportunities is a worthwhile goal. Instead, the question is this: At a time when California has many other pressing needs, such as fixing K-12 schools, should we institute yet another new government program, at a cost of $2.4 billion annually, to increase preschool enrollment by a mere 4% or 5%?

That's why even the former and current state Senate presidents -- Democrats both -- have joined with California's business community and many other groups in opposition to Proposition 82.

Allan Zaremberg

President

California Chamber of Commerce

Sacramento

Re "Flight of the investor class" (News: Analysis & Commentary, Apr. 24): Perhaps the defections of voters from President George W. Bush and the GOP reflect the thinking of those who are not true investors. The poll numbers are of consequence, but I wonder about those who were surveyed. They do not seem to recognize the robust economy that Bush has helped to create, including the fairly tame inflation rate and extraordinary unemployment rate. The rising national debt is of concern but not unusual in our history and represents a fraction of gross domestic product. Bush was even blamed for high gas prices. Have the investors you quoted forgotten that Bush has worked to expand oil production but that environmentalists have blocked new exploration for decades?

Chuck Lindell

Colorado Springs, Colo.

"The best immigration reform" (Outside Shot, Apr. 24) repeats a frequent refrain that the countries of immigrants should institute policies that reduce the need for citizens to go elsewhere to find jobs. If it were easy, they probably would. But how long do you think it would actually take for Central and South America to match the job availability in the U.S. economy -- 10 years, 50 years, 100 years, or maybe never?

One thing that could be done today that would show results within 5 to 10 years would be to have the native countries of immigrants reduce their rates of population growth. This third rail of politics is even more difficult to deal with and survive than controlling illegal immigration, especially where large families are traditional. So when a country's population growth outpaces its job growth, perhaps the only easy solution is to export the resulting unemployment.

Population growth is something that individual countries can manage. The U.S. should not bear the consequences because they refuse.

Don Reid

Round Rock, Tex.

The Heritage Foundation's Stephen Johnson may have forgotten to mention three key areas that would help the U.S. and Europe manage their immigration problems. One: Establish transparency in government entities and companies in South America. (This would ensure consistency in applying any free market reforms.) Two: Eradicate corruption at all levels of government that allows for a vicious cycle of wasted money. Three: Provide strong support for education initiatives since countries with strong educational programs tend to succeed in the global marketplace (Chile and Mexico being two examples).

Regardless of what measures the U.S. and Europe take to make their borders more secure, such as guest worker plans and the like, they will not fully succeed if the elements above are not tackled.

Tomas A. Romero

Chelmsford, Britain

I don't typically respond to BusinessWeek columns, but I felt compelled to weigh in on Don Moore's "SarbOx doesn't go far enough" (Outside Shot, Apr. 17). Moore argues that auditors lack independence because of "moral seduction" and because the corporate executives who are their clients exert too much control over them. That may be what Moore's academic research tells him, but the reality is that in most cases auditors are fiercely independent. The Big Four have to maintain their independence because they are closely monitored by the Public Companies Accounting Oversight Board (PCAOB). They are also scared to death because they know their potential liability in lawsuits would skyrocket under the current system, and Sarbanes Oxley gives them even fewer excuses for missing material issues.

Moore also discusses the fact that the law still allows auditors to perform non-audit services. True, but in reality most audit committees do not allow the auditors to perform significant non-audit services anymore.

Overall, though, I think Moore has missed the point because you cannot legislate or, based on his suggestion, insure morality. If a manager lacks morals and is smart enough, he or she will find a way to commit fraud.

The truth is that the vast majority of companies are managed by honest people who want to get it right.

Aaron Lawrence

Allen, Tex.


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