Innovation Summit Presentation - Miami 2007

Innovation is a hot topic and there’s no question about it. It's now on the agenda of every senior executive. I was speaking in Miami this week in a summit to demystify this subject. People often equate innovation with creativity or novelties, but not seeing it from a business strategy perspective. Innovation strategy models often follow an uninspired formula - let's encourage employees to come up with some creative ideas, conduct a few focus groups and voila! We have an innovation strategy.

It is extremely common for organizations and consultants who believe in innovation starts from a product. The question is 'what is a product anyway'? There are those who believe that there is no formula to make innovations happen, it is all about creativity, but that’s not true. “While it is true that innovation is not the product of logical thought” as Einstein put it, “the result is tied to logical structure."

So what is an innovation strategy? At the very minimal your innovation strategy model must allow you to do the following:

1.      - It allows you to explore the changing landscapes (convergence, market shirts, discontinuities and technology disruptions)

2.      - It allows you to identify customer unmet needs or explore non-consumption (through journet mapping, obervational research and other ethnographic exercises)

3.      - It allows you to open up your opportunity horizons

4.      -  It allows you to link ideas to economic value.

5.      - It helps to create multiple scenarios for the future.

Inn Innovative leadership means navigating and opening undefined pathways through the boundaries you operate within or prepare to expand into. First you must decide on your innovation posture (see my presentation below). It also requires innovative leadership to use one of these models to fully leverage the many strengths of their available human capital assets - intellectual and physical assets, production and social assets, capital and developmental assets. As Drucker puts it "Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth”.

Large companies will continue to struggle to innovate and end up writing big checks. Economist Joseph Schumpeter foresaw that organizations cannot easily forgo the products and processes that brought them great success and eventually get stuck. As I told the audience in all my innovation keynotes ”The biggest enemy of innovation is size.” Large companies with their vested interests and huge market investments (to achieve scale) will simply not be as agile as smaller maybe even “open source” companies in delivering new ideas to the market in a speedy manner.

Microsoft, Yahoo and Sony are all good examples. They are all standing on weak legs. Take Microsoft Vista for example. Avalon/Windows Presentation Foundation is really a mix of MacOS GUI features, Mozilla XUL, and lots of Xerox Parc. .NET is Sun’s Java and Jini plus Bell Labs substantial language framework innovations. Expression Suite is an acquisition. Yukon/ WinFS bares amazing resemblance to SQL Anywhere. Hotmail was an acquisition. Finally, most of the key clustering technology - its Open Source. Despite all the resources and amazing teams of top tatents, innovation for Microsoft is a serious challenge. I'm trying to think of a few innovations that come from Microsoft that achieved moderate success.  Can you?

Comments

[Chris B]

Hi, I just came across your site and am enjoying browsing. Thanks for all the interesting tid-bits.

Anyway, if you have time, I would like to ask about your comment "the biggest enemy of innovation is size". I haven't read many recent papers, but from what I have read, empirical research in this area is mixed.

(running down what most of your readers probably already know)....
Large firms enjoy scale economies in R&D, can spread risk and have greater financial resources. On the other hand, as you stress, they may be more bureaucratic, slower to react and more risk averse. Some researchers suggest that medium sized firms are best placed to radically innovate because they possess the necessary R&D resources but are not weighed down by bureaucracy. Conversely, other literature posits that mid-sized firms have the weak points of both large and small firms, but few of their strengths.

For example, Chandy and Gerad in their 1998 paper "Organizing for Radical Product Innovation: The Overlooked Role of Willingness to Cannibalize" note that size may not play as large a role as other “attitudinal and organizational” factors in influencing the propensity to engage in radical product innovation.

Their research suggests that manageble factors such as amount of specialized investments, active internal markets, influence of product champions, and future market focus may influence an organization's willingness to cannibalize (their assets and routines) and engage in radical innovation. They also suggest that these factors have a much greater influence that size (which is not easily influenced by managers).

Maybe you've come across this article (I'm sure you have). What is your take on this? I don't have a lot of practical knowledge in this field so I would appreciate your point-of-view.

Also, as an example of an innovative large organization, Intel seems to have engaged in, promoted and acheived striking innovation in the PC industry (see, e.g. Platform Leadership by Gawer and Cusumano)(and Chandy and Gerad's framework seems relevant here).

Anyway, thanks for the nice site. It's a pleasure to read. I look forward to your response if you have time.

[Idris]

Chris

You raised some very interesting question in this subejct and obviously you're well read. Your questions demand a long answer so I'd like to respond to that when I have a break from my business travel. Try next week. Thanks for visiting. Idris

[Hamed Elbarki]

You have some great information here, thanks for posting!

[George Hamilton]

There is so much good stuff here. I've only discovered last week and feel like missing a lot of discussions here. I am coming here every other day, don't want to miss some good stuff. Thanks