How to Innovate When Platforms Won’t Stop Moving

The article How to Innovate When Platforms Won’t Stop Moving in MIT Sloan Review has several interesting pointers towards R&D management:

Businesses must cultivate agility — the ability to adapt quickly to or even anticipate and lead change. Businesses must develop deep differentiating capabilities that enable them both to separate themselves from competitors and endure disruptions. Companies such as Apple and IBM show how agility and capabilities can enable organizations to shape-shift as industry models rapidly change.”

Prof. Cusumano has four suggestions on how to be more agile (rearranged based on needs for R&D):
1. Emphasis on flexibility: As markets, customer needs and platforms are changing rapidly, we need to change our development approach so products can be successful despite changes.  This is hard to do using current processes and tools for R&D management, however, it is good to keep in mind.

The key for many firms is not to always be creating plans and pushing products out to market but to find ways to react very quickly to new information or responses from customers and other partners to what you are doing or intending to do. 

2. Capabilities rather than strategy: One approach to flexibility is to develop capabilities that can be reused if market changes.  Capabilities are broad tools while products are targeted towards specific needs.  My suggestion is for R&D managers to characterize plans and projects as leading towards key capabilities in addition to products that satisfy particular strategies.  This way a minor change in processes can help lead us to flexibility.

For example, the future is unpredictable, so strategy needs to change, but companies can still build unique capabilities that provide a stable base for new products and services as well as help them navigate through change. 

3. Economies of scope rather than scale: In case flexibility adds costs to development, one way to make the business case for the additional investment is to see that a broad set of capabilities will let companies address more market niches.

Economies of scope are also useful here because customers today often want a variety of new products and features but do not want to pay much money for them. Companies need to go beyond traditional scale economies and find ways to leverage existing knowledge in the form of reusable components and frameworks to produce a variety of products and services as efficiently as possible.

4. Information Pull Rather than push:  To understand what capabilities to focus on, companies need better market information.

Managers also need to create mechanisms that “pull” information from the market in something resembling real time, such as customer-driven product development processes or production management systems that allow firms to change their product mix very quickly.

How do we identify what market information to focus on?  Look for “megatrends”:

Managers certainly need to ask themselves — and the smartest people they can find around themselves, inside and outside the company — what are the potential megatrends that could disrupt their businesses in the future or make their business models obsolete. In the industries that I study, for example, there have been two such trends emerging over the last several decades: the rising importance of industrywide platforms as opposed to stand-alone products, and the rising importance of services or service-like versions of products.

That brings us to platform-based design (PBD), which underlies points 1 to 3 above.  Prof. Cusumano is focusing on computing industry where platforms provide standards (e.g. PC, WCDMA, 802.11) and standard interfaces (e.g. PCI express, USB) that can be used to define flexibility.  There are other forms of platform-based design that can be used in industries such as medical devices which do not depend on standardization.  I recently presented a paper on this form of PBD.  Please email if you would like to find out more.

Finally, this focus on flexibility may require more significant changes than just R&D:

IBM did a number of studies and figured out that it had all these processes that were designed to ensure quality, but they also meant that it was extremely slow to develop anything new. Different markets, like the PC market and then later the Internet market, required much faster decision making. They didn’t require the same kind of quality standards, but different kinds of standards. And so IBM did decentralize its decision making, but without physically breaking up the company. IBM reorganized into a small number of groups that mapped better to how customers needed to integrate the new technologies.


Kodak’s 30-year Slide into Bankruptcy

The article What’s Wrong with This Picture: Kodak’s 30-year Slide into Bankruptcy in [email protected] makes some interesting points.  Here is my summary.  Kodak, once an industry leader and an innovator could not succeed because of the fear of cannibalizing existing film business.

The technology is one of countless innovations that Kodak developed over the years but failed to successfully commercialize, the most famous being the digital camera, invented by Kodak engineer Steven Sasson in 1975. Digital technology has all but done in the iconic filmmaker. Since 2003, Kodak has closed 13 manufacturing plants and 130 processing labs, and reduced its workforce by 47,000. It now employs 17,000 worldwide, down from 63,900 less than a decade ago.

The challenge in innovation is getting it into a product. Most companies either focus on incremental improvement of current products or long-term research.

Innovations that reach a middle ground — such as envisioning new product lines in the next two to five years — are much more elusive and often don’t have a champion pushing for them in the organization.

One of the root causes is that innovation disrupts the business model. Kodak made money on film and gave cameras away. They could not do the same with Digital imaging.

The company didn’t envision making money off cameras themselves, but rather the images it assumed people would store and print. “If you look at R&D, they were superfast. In terms of the business model, they were quite the opposite.

The problem is the the existing business model is the one generating all the profits.  It is very difficult to divert those into new competing business models (because most companies I know allocate R&D resources to each product line based on the revenues they generate). Furthermore, many times Wall Street expectations drive businesses away from innovation.

Over the years he watched digital projects lose battles for research dollars. Even though film’s market share was declining, the profit margins were still high and digital seemed an expensive, risky bet.

Furthermore, a successful business model leads companies to try to change the customer needs to fit existing business model instead of trying to change the business model to fit the market needs.

“It succumbed to inside-out thinking,” says Day — that is, trying to push forward with the existing business model instead of focusing on changing consumer needs. Accustomed to the very high film margins, the company tried to protect its existing cash flow rather than look at what the market wanted.

So, one lesson is to periodically ask the question about what is our core competency? What is our businessbeyond our business model – the way in which we are making money right now? Is our competency in customer understanding (e.g. Nordstrom), technological superiority (e.g. Intel) or execution efficiency (e.g. Walmart).  Then focus the investment around the competency:

Innovation is “the match between a solution and a need, connected in a novel way,” Terwiesch says. Kodak had a choice in how it pursued innovation: If it focused on the need, it would have to find new ways to take and store photos. If it focused on the solution, it would have to find new markets for its chemical coating technologies. Kodak’s competitor, Tokyo-based Fujifilm, focused on the solution, applying its film-making expertise to LCD flat-panel screens, drugs and cosmetics. “You have to make a decision: What are you as a company? Is it understanding the need or understanding the solution?” Terwiesch asks. “These are simply two very different strategies that require very different capabilities.

Another approach is to spin out companies that focus on new innovation and business model. It is hard to focus on disruptive innovation within an existing business.  

He recalls efforts in the 1980s to drive innovation by setting up smaller spin-off companies within Kodak, but “it just didn’t work.” Venture companies in Silicon Valley are “pretty wild,” Larish adds. “In Rochester, people come to work at 8 and go home at 5.”

On the other hand, the same problem makes spinning out businesses also hard.  Who is going to decide how much investment should go into which spin off?  Does one set up completely separate infrastructure for the spin off or bring it back once it succeeds?  How does one measure success of the spin off? Hence, once the spiral of business model driving the business starts, it is difficult to get out of it.

The digital era pushed Kodak into “a position of reacting,” and the company seemed to lose focus. “They had reorganization efforts … [and] brought in CEO after CEO. When you have that much disruption and change,” it becomes difficult to implement a long-term strategy

The final quote is one we should all remember:

“Don’t assume that just because you’re not willing to do it, somebody else won’t.”


Why Open Innovation is hard to implement

We have often discussed how innovation has become a buzzword with many myths surrounding what drives innovation. I was recently discussing Open Innovation with an R&D executive.  He made a pretty significant remark: There are lots of positive articles around open innovation, but there do not seem to be many balanced evaluations of the approach.  Fortuitously, [email protected] has an interesting note about The ‘Flip Side’ of Open Innovation that addresses some of the concerns. 

A lot of people have been writing about open innovation,” says Wharton management professor Felipe Monteiro. A typical example, he adds, is Procter & Gamble’s Connect + Develop strategy, which encourages collaboration with outside organizations as a way to bring new products to market faster and more efficiently. 

While the P&G approach “has gained a lot of traction,” Monteiro notes, it also raises questions about whether, and when, companies should be concerned about protecting their own knowledge. Monteiro’s research into this issue has led to a paper titled, “Does Strategic Protection of Knowledge Undermine the Effectiveness of External Knowledge Sourcing?” co-authored with professor Michael Mol from the Warwick Business School, and professor Julian Birkinshaw from the London Business School.

I am going to use the article as backdrop to summarize four key concerns about Open Innovation and why it appears that many companies are not really recouping their open innovation investments (much less earn a return on them).  We should all think carefully about these before investing in open innovation:

  1. Valley of Death: A key concern in innovation is getting it transitioned into delivered products.  Many companies I have worked with fail pretty frequently at this stage. We have discussed the valley of death extensively. The more disruptive (and hence the most valuable) the innovation, the more difficult it is to get it to market because it disrupts company culture and bureaucracy.  When accessing innovation from the outside, this becomes even more difficult because of “Not Invented Here” mentality.  Unless one can find an internal technologist or champion, open innovation just withers on the vine.  This is very hard to overcome and needs active management involvement.
  2. Trade Secrets Protection: We have often discussed how innovation is not about an aha moment or one brilliant idea.  Innovation happens at the interface of multiple disciplines and technologies.  (For example, iPhone could be seen as combining a capacitive touch screen with low power processing and an intuitive user interface.  Each was available in the market, but the integration generated value). To access innovation from the outside, companies will need to share their problems in enough detail that potential suppliers can describe solutions.  However, this description will also be available to all competitors – which defeats the whole purpose.
  3. Evaluation / Management costs: As discussed earlier, managers need to consider many potential issues before deciding on accessing any innovation from the outside.  A key issue that is forgotten is the time involved in evaluating innovation ideas.  Because of trade secrets related problems described above, most companies use open innovation to access ALL innovation.  Broad ideas need to be filtered before they can be sent to the technical teams – a task that requires management involvement.  Companies quickly realize that this is VERY expensive.  Even when ideas sound interesting, the value is difficult to estimate.  Innovation needs to be accessed when needed – we can not just let innovative ideas sit on a shelf and get to them when the need arises.  Innovative ideas require maturation and many cospecialized assets to get them to market.  This is not cheap to evaluate.
  4. Liability: When suppliers submit their ideas to companies, how should they be protected? Any implied protection exposes the company to potential litigation liability.  Disregarding inadvertent public release,  consider the possibility of independent discovery.  The company may have independently developed  ideas similar to those accessed through open innovation.  If they decide to use internal ideas, they might still be exposed to IP litigation.  Hence, most companies ask suppliers to submit ideas with all rights released!  Most people are not willing to do so…
I welcome comments…

A wake-up call for Big Pharma

Another interesting article in the McKinsey Quarterly “A wake-up call for Big Pharma” describes how big pharmaceutical companies are becoming less innovative. We had discussed the same trend in the past (Big Pharma’s Stalled R&D Machine). This chart from the article has great data about declining contribution of new products to the bottom line:

Some more evidence of this lack of innovation is in the Booze’s Global Innovation 1,000 list which does not rank pharma companies as very innovative.  The article further suggests that some fundamental changes are necessary:

The good old days of the pharmaceutical industry are gone forever. Even an improved global economic climate is unlikely to halt efforts by the developed world’s governments to contain spending on drugs. Emerging markets will follow their lead and pursue further spending control measures. Regulatory requirements—particularly the linkage among the benefits, risks, and cost of products—will increase, while the industry pipeline shows little sign of delivering sufficient innovation to compensate for such pressures.

The article suggests that the pharmaceutical industry might evolve away from vertically integrated model like the automotive industry.

A look at the evolution of the automotive industry may offer some lessons. For many years, it was vertically integrated and dominated by large, primarily Western corporations. But the value chain has been disaggregated into companies specializing in narrow parts of the process. Today, component manufacturers, design houses, and basic-materials companies share much of the industry’s revenues: the automakers are responsible primarily for the design of major components (such as engines), assembly, sales, and marketing.

This whole article is a very interesting read. I suggest you consider reading it.


Booze’s 2011 Global Innovation 1000

I have been meaning to post about a pretty good survey by Booze (Global Innovation 1000).  The study has a lot of useful data for benchmarks.  The overall message is very important:

As our annual Global Innovation 1000 study, now in its sixth year, has consistently demonstrated, the success of these companies is not a matter of how much these companies spend on research and development, but rather how they spend it.

Here is the data supporting the hypothesis:

For the second year in a row, Apple led the top 10, followed by Google and 3M. This year, Facebook was named one of the world’s most innovative companies, entering the list at number 10. In a comparison of the firms voted the 10 most innovative versus the top 10 global R&D spenders, Booz & Company found that the most innovative firms outperformed the top 10 R&D spenders across three key financial metrics over a 5-year period — revenue growth, EBITDA as a percentage of revenue and market cap growth.

I guess being a consulting house, Booze would like to teach organizations how to spend their cash…  But still, it is an important message.  We need a culture that supports innovation and strategic alignment of innovation with goals (duh!).

Every company among the Innovation 1000 follows one of three innovation strategies — need seeker, market reader, or technology driver. While no one or another of these strategies offers superior results, companies within each strategic category perform at very different levels.  And, no matter a firm’s innovation strategy — culture is key to innovation success, and its impact on performance is measurable. Specifically, the 44 percent of companies who reported that their innovation strategies are clearly aligned with their business goals —and that their cultures strongly support those innovation goals — delivered 33 percent higher enterprise value growth and 17 percent higher profit growth on five-year measures than those lacking such tight alignment.

Here is some interesting commentary from 24/7 Wall ST:

The overlap of these “innovators” with the firms that spent the most money on R&D last year is small.

The difference between the two lists is that the largest spenders mostly invest dollars to stay in the places they already hold in the business world. Pharma companies need to replace drugs that are about to come off patent, or already have. Old world tech companies like Microsoft and Intel need to keep pace with firms that have new successful hardware and software products that challenge their sales. Auto companies are in a race to make their cars and light trucks safer and more useful to consumers.

May be it is just the industry companies are in and the maturity of the market place:

It is easy to believe that the companies growing the fastest and with the most attractive products to consumers and businesses are the most innovative. This will not last for those firms. Eventually all companies spend R&D money to hold their positions within their industries. It is just a matter of the age of the each company’s products and the state of new competition, which is always entering the market — often aimed at the innovators with sharply growing sales.

So, do we believe that all the current innovators will remain innovative for the foreseeable future?  Probably not:

But Apple, Facebook, and Google are only a few years away from the need to spend R&D money to hold their own rather than advance rapidly within their own industries. Almost no one believes it about Apple, but eventually there will come a time when its revenue growth is no longer in the high double digits. Google’s products like

I guess every on believes that Apple will be an exception!  Even without Steve Jobs?


Risks of government investment in innovation

We have often talked about the role of the government investment in driving innovation (and here).  We had identified the risks of government investment as corruption and inefficiency.  We had also discussed potential solutions: 1) Have a large number of industry participants competing for government investment and 2) address smaller industries such as wind power for innovation investment (as opposed to large fixed cost industries such as high speed rail).

The article How do we know that China is overinvesting? by Prof. Pettis has one additional major risk – lost economic value.  The article discusses large investment made by the Chinese government in the electric car industry:

The electric car industry was often Exhibit A in the argument that Chinese investment was in the aggregate rational and economically sensible. This industry is clearly the industry of the future, the China bulls argued, and China’s massive investment in the technology, which would allow the country to dominate one of the key sectors of the future, showed why it was mistaken to complain about capital misallocation. This kind of investment was actually very clever stuff.

Prof. Pettis points out two major concerns about the investment:

  1. Whether the total economic costs of investment are less than the total economic benefits: Innovation should create additional wealth for the country that more than offsets the government investment.
  2. Whether there is a mismatch in the timing of costs and benefits: Even if the value generated is positive in the long-term, it might be negative for short to medium term and harmful to the economy.

These are good question to ask, but probably difficult to answer effectively.  Computing economic value of an innovation investment is likely expensive.  It would be difficult to build a business case to invest in the effort to compute economic value.  However, the key problem that the article identifies is very valid:

… risky high-technology ventures are not best funded and directed by companies, industries and policymakers who are historically weak in the technology sector, especially when they have no shareholder or budget constraints and have almost unlimited access to heavily-subsidized capital. This seemed to me a recipe for wasted investment.”

After the significant thrust by the Chinese government in electric vehicles, the reality set in – there was no market for the electric vehicles.  Instead of redirecting the innovation investment, the government tried to compensate for it through regulation:

…a directive signed by four government ministries encouraging 25 pilot cities, including major markets such as Beijing and Shanghai, to “actively study” exemptions for electric cars from license plate lotteries and auctions, as well as a host of other purchase restrictions.

Hence, the industry was propped up:

The only way to make electric cars economically viable in China, in other words, is to put into place administrative measures that divert buyers, but as any economics student can tell you, these kinds of administrative measures simply shift resources from one sector of the economy to another without creating wealth. In fact because they force consumers to choose something that they otherwise wouldn’t, they actually reduce overall wealth.

One way to justify this additional regulation could be reduced emission / pollution.  But the fact that the regulation was not planned in the first place, and is being considered solely to account for lack of market demand reduces the efficacy of that justification.

So, we could add a couple more solutions to our list: 3) Target small businesses for the bulk of the innovation investment; 4) Focus on investment, not regulation to promote adoption of innovation; and 5) if regulation is necessary, plan for it upfront while deciding the investment.


Innovator’s DNA: Some are born, others can learn

A couple of related articles in INSEAD Knowledge (Innovator’s DNA and Innovator’s DNA: Some are born, others can learn) are quite interesting:

Some people are born innovators. Others can become innovators, providing they follow some simple guidelines. That’s the thesis of ‘The Innovator’s DNA’, just published by Harvard Business Review Press, by Hal Gregersen, INSEAD Senior Affiliate Professor of Leadership, with Jeffrey H. Dyer of Brigham Young University and Clayton Christensen of Harvard Business School.”

The premise is that we can all learn to be more innovative:

Research involving identical twins suggests that only about 20-25 per cent of our creativity ability is geneticically driven. “This means the other 75-80 per cent comes from the world we live in…

 Here is my takeaway about five skills that can make us more innovative:

  • Observing: Innovators are “intense observers.” They learn from observing others.
  • Questioning:  Innovators ask questions about what they have observed to find out if there is a better solution. 
  • Associating: Innovators make unexpected connections and combine known pieces into new solutions (such as iPhone or iPod).
  • Experimenting: Innovators experiment with solutions to potential problems to find the optimum.
  • Networking: “Innovators are intentional about finding diverse people who are just the opposites of who they are, that they talk to, to get ideas that seriously challenge their own.”
Here is all of it put together in a nice summary:

Take notes when observing others. “Step back from (the problem or situation), talk to people: ‘What did you learn? What surprised you? What was interesting?’ If you like to talk to people, talk to somebody different: maybe on another floor, a different building, a different office, another country, but talk to somebody who’s 180 degrees different from you. These are things that we can do and they don’t take a lot of time to do them.”


Necessity is the mother of Innovation (Continued)

We have had a theme here at the blog: Innovation does not happen by accident, it requires challenges. If the external environment does not generate the challenges on its own, R&D managers have to create those challenges. Here is some more evidence to support the thesis. Last year, China clamped down on the export of rare earths metals crucial for modern electronics and motors.
The industry has responded with innovation!  The first is a rare earth-free motor from Continental Corporation that provides better efficiency than rare earth magnets without the rare earths!

As for the drive unit, Continental has opted for an externally – excited synchronous motor. Compared with a permanent magnet electric motor, this technology offers an better overall level of efficiency across the whole of an electric vehicle’s operating range, and also enhances the safety of the electric drive system. In addition, no expensive rare earth metals are needed for magnets.”

The new motor would have been developed regardless of the shortage of rare earths.  However, the shortage is definitely driving innovation elsewhere. A Japanese group is focusing on developing novel materials that provide rare earth performance:

A Japanese research group succeeded in producing powder of iron nitride (Fe16N2) by the gram. The group, which consists of Migaku Takahashi and Tomoyuki Ogawa, professor and associate professor, respectively, at a graduate school of Tohoku University, and researchers at Toda Kogyo Corp, succeeded in generating Fe16N2 powder with a purity of 91% and a reproducibility for the first time in the world.

This technology will have repercussions beyond replacement of rare earths. Another technology being pursued is recycling of rare earths from old components:

Hitachi Ltd developed a technology to recover rare earth materials such as neodymium (Nd) and dysprosium (Dy) from rare-earth magnets used in the motors of hard disk drives (HDDs), the compressors of air conditioners and so forth.
The company developed equipment that separates rare-earth magnets from used products and succeeded in recovering rare earth materials from the magnets by using a new method.

In summary, three new (and hopefully innovative) approaches to address a challenge posted by lack of availability.  May be we need to pose more challenges….


Procter & Gamble: Mastering the Art of the Innovation Tournament

[email protected] has an interesting article Procter & Gamble: Mastering the Art of the Innovation Tournament.  P&G CEO has set up a great challenge for the company (A great way to foster innovation is for the leader to create or emphasize challenges):

Procter & Gamble CEO Bob McDonald is a man with a plan. Last year, he and his company declared a bold vision — one that includes making all products and packaging with recycled or renewable materials, and ensuring that no waste from P&G products touches a landfill. Prominent in the vision, too, is powering all plants with renewable energy. Because all of this will take decades to achieve, P&G also declared a series of shorter-term, 10-year goals to guarantee that the company is making progress. The 2020 renewable energy goal is to power 30% of P&G’s energy needs for 180 plants worldwide with renewable sources.

Interesting: the no waste recyclable product idea became accessing renewable electricity.   The challenge could have been used to drive P&G engineers to develop new innovative renewable products…  Anyway,  the energy problem was solved by an Innovation Tournament.  I am not sure if accessing renewable energy can be counted as innovation, but there are some interesting lessons in the article.

First: P&G defined a narrow scope for the brainstorming (innovation tournament).  This would help focus the discussion and help generate more useful results.

Second, P&G involved both internal and external experts in the brainstorming. There were more internal participants than external. Hopefully, this would get more internal buy-in to ideas and ease the transition of external ideas into practice.

Instead of a far-flung event like X-Prize, P&G chose a more controlled process, inviting seven external experts to propose and brainstorm solutions with a team of 20 internal experts. Common among corporations that need to protect proprietary information, this format also made sense in P&G’s case “because a lot of it was about process innovation,” says Favaloro. “We wanted to engage people in an ongoing process that involves interaction between internal and external teams. They needed to be steeped in the process itself, instead of the next big widget.”

Third, everyone was asked to do preparatory work before the brainstorming sessions.  This not only increased the quality of ideas, but also ensured external experts’ discussion was more relevant to company needs:

Moreover, significant spadework at the outset resulted in a fast-paced, productive final round in late July. To start, P&G’s internal teams delivered in-depth briefs via webinar to bring the external experts up to speed on the plants so they could frame more workable, tailored recommendations. Then the outside experts submitted 150 ideas, which the internal and external teams together winnowed to 45 via online voting. By the time the groups met in person, “it was a supercharged environment,” says Favaloro. “Everyone was up on the problem and had already worked on it independently.” Adds Stefano Zenezini, P&G’s family care product supply vice president: “One hour into the discussion, [and] you’re already discovering new things.”

Fourth, a very broad set of experts were selected that could represent a wide variety of perspectives (e.g a public policy expert and a project finance expert):

From this discussion came one of the biggest differences in perspective between the external and internal teams. External finance expert Gardner suggested that P&G should add utility-sized renewable power projects to its portfolio. “Their overall electricity demand is 800 megawatts worldwide,” says Gardner. “At each plant, if you have less than five megawatts of renewable energy potential, that’s not significant enough to move the needle to 30% renewable energy at each plant. You could get 25% of your goal with one few-hundred megawatt wind project.”

Fifth and final point, there was enough time allocated to follow through and have detailed discussions about new ideas:

The P&G team was intrigued enough to ask for more information, and Gardner spent the first evening of the tournament preparing a presentation on project finance for the next day. From the presentation, it was clear that new approaches could be beneficial, in particular for large projects.

Pretty good addition to the checklist for my next brainstorming session!


The Innovation Premium

INSEAD Knowledge had an intriguing article that I have been meaning to write about.  The Innovation Premium meanders along multiple themes (some of them untenable) but in the end has a couple of interesting observations.  The article discusses the book The Innovator’s DNA:

“Innovation makes millionaires and undermines monopolies. It raises the profitability of companies and puts a premium on the shares of the most successful. But how can companies foster it? New research sheds light on the innovation process and how firms can tap into it to raise their performance and their share price.”

To that end, the article defines innovative companies purely based on share prices:

Common to all companies on the list is the fact that their share prices are 25 percent or more above what would be justified by cash flow alone. The leader is cloud computing company Salesforce.com, with its AppExchange that offers more than 1,000 applications for businesses, and which recently launched Chatter draws on features of Facebook and Twitter to provide social software for enterprise collaboration. Market expectations for further innovations have given it a premium based on 2010 results of no less than 75 percent.

We have discussed in the past that Wall Street is NOT a consistent or dependable evaluator of innovation. In fact, Wall Street rewards predictability more than disruptive innovations.  The share price measure would move companies like Netflix from innovative to not in the matter of weeks! RIM and Blackberry has moved into the non-innovative group since the article was written a few weeks ago…

The lack of universally acceptable definition of innovation (such as the Oslo Framework) notwithstanding, the article still had some interesting points.  A key point is that the leaders in innovative companies ask a lot of questions, challenge the status quo and do so based on personal involvement / observation (as opposed to through subordinate presentations):

They, too, are always asking questions and looking out for the unexpected: “Why not this? Why couldn’t we do that? What’s going on here? How could we do this better?” When someone “behaves that way, acts differently, asks lots of questions, observes like an anthropologist, experiments constantly, networks for new ideas,” Gregersen observes, “they’re likely to get incredibly insightful ideas about new businesses, new products, new services, breakthrough processes: things that will make a difference for any company or country.”

The article also suggests (as we have discussed many times) that innovation starts from the top and that the leaders actually have to start the innovation process – not wait for it to bubble up from the bottom.  The article also disruptive innovation is hard to manage and integrate into the product line. Innovative leaders have to actually nurture innovation.  Since the article mentions Steve Jobs, and we can certainly learn from him as well.