Innovation Is Quickly Replacing Manufacturing As The Engine Of Our Economy. Companies Will Scramble To Equip Themsleves With New Innovation Capabilities. The Key Is How Fast And Selective You Can Forget The Past.

Innovation is never easy. But then there are so many ideas such as Google, satellite navigation, cloud computing, OnStar, Kindle, Blackberry, YouTube, Facebook... that made to innovations that change the way we work and play forever and created hundreds of billions of shareholder value. But what inspires their creators?  How did these great ideas happen? What is the next big thing?  Will Geo-engineering sparks many of the next big thing?  From engineered crops to fertilized oceans, anything that can help our Earth quickly in the face of a climate emergency. Or are we actually creating more problems?

What were the great ideas of the last two decades?  A few that come to my mind include digital theory, futurism, the uncertainty principle, social technologies, industrial design, space shuttle, fast food, television, the marginal productivity theory of wages, consumerism and modernism. Many of these ideas grew in a world with fundamental economic convictions (namely the mass-production and mass-consumption of goods), but these assumptions are fast becoming obsolete. Mass is not the same mass anymore. Those goods are now produced in China and the great legacy manufacturing of the West are mostly in a parlous state.  Even you have some really great ideas (and patents), there’s not guarantee that it can be reversed engineered in Shenzen (the manufacturing concentrated part of southern China).

Innovation is hard. Imagine an organization that operates as five business units, with a staff of tens of thousands and where the corporate strategy is incomprehensible, the marketing effort is massive but not customer-centric, where there is an over-abundance of information, most of it of very low quality, and where the marketing environment is often out of sync with the purposes of interactions and innovation. Such an environment is very common in large complex organizations.

Executives understand that innovation is necessary in order to stay ahead or just to survive, yet only a handful have the conviction, discipline and energy to act on that understanding. Very few have the will to change and even fewer led their organizations through disruptive change and discontinuities. Over decades, business schools have developed a language for talking about business, from marketing to finance. We hear this corporate jargon all the time in the boardroom and see it in annual reports and press releases.  It helps us to understand and communicate. But because we don’t have a language or framework for innovation, the word was used loosely and even improperly, confusing many people. Innovation needs processes, languages and visual metaphor.

And for the next 10 or 20 years, the ability to create innovative ideas will replace manufacturing as the core engine of our economy. Every organization will need to rethink their core capabilities. These manufacturing jobs will be gone for good. Another way to see it, our flattened world is dematerializing. Production lines have been replaced by a satellite uplink; experiences are better than possessions; advertising replaced by communities and social media and social technologies replace enterprise resources management systems.

For some corporations, if you are making tons of money out of what you’re doing today, why border to create something new?  For the once big mighty corporations, when you were making so much money out of cables, newspapers, steel or railroads, why take a punt on some wacky creative idea? The DCF model just doesn’t look right.

I met Vijay Govindarajan (Tuck School of Business) briefly last week at the World Innovation Forum in NY. Vijay describes the fundamental difference between the organizational DNA of the established company and the new innovative business unit. The mother ship is all about capital optimization, leveraging core assets, delivering on customer needs, efficient processes and clear growth path and ROI metrics.  His view of innovation is typically organization’s investment spans across three boxes: Manage the present, Selectively forget the past and Create the future.

Stating that “Future is Now”, VG impresses upon the point that strategy must revolve around the last two boxes for an organization to sustain through. I guess this is called “change”.  I love academics, because they can creatively come up with different ways of saying the same thing.

Saying that innovation is about the future is not helping anyone. It is really not the “what” but the “how”. Of 10 people that talk about the “what”, usually only one can talk about the “how”. Back to the question of how did these great ideas happen? What inspires these innovators?  What are these people like? They are never academics, rarely they come from the industries that they disrupted. These are people with ideas that tend to be both illogical and contradictory.

Explaining his discovery of relativity, Einstein said: "I just ignored an axiom." Nothing defines creativity better than the ability to defeat habit by originality. There seems to be a physiological source for new ideas. We have 10 billion brain cells, each one is capable of making 5,000 connections, but it is making unusual connections that provide a basis for new ideas.  Sometimes it feels like we need to shake our brain so the cells can make more connections. Innovative new ideas are sometimes at odds with the stern disciplines of business management. In some cases, you need to temporarily (just temporarily) forget what you’ve learned in B-schools. One good example is what Christensen always use, when conventional wisdom asks you go after big established market, you should ignore it and find market that yet exists.