Seven Takeaways on Innovation (No, the World is Not Flat)
A few important takeaways on The Economist’s recent special report on innovation. Worth reading for anyone interested in economic development, global competitiveness, and entrepreneurial activity in the world. And for the Friedman ‘the world is flat’ crowd and Richard Florida’s ‘creative class’ disciples, there’s something here for you too (emphasis added).
- The debate between idea creation and execution isn't as important as you think, more critical is the filtering process between ideas and execution
- Failure is good but fast failures are key (the U.S. has an advantage here, e.g. the ease of declaring bankruptcy and starting a new business endeavor without any baggage)
- Radical innovation and disruptive innovation are different and the two are often conflated
- User-driven Innovation: Listening to only your best (high value, etc.) customers can skew your innovations towards the niche and erode your market share with the mighty middle. Kenneth Morse of MIT's Entrepreneurship Center advocates firms should keep closer watch on new and dissatisfied users, who are much more likely to be source of disruptive ideas.
- Richard Lyons of NBER and Goldman Sachs argues that “commoditisation often occurs even faster in services than in physical products because innovations are easier to copy, patents can provide less protection, upfront costs are lower, & product cycles are shorter
- For businesses that use open, networked innovation, it matters less where ideas are invented and more about extracting value from ideas wherever they come from.
- Sergey Brin insists that “Silicon Valley doesn't have better ideas and isn't smarter than the rest of the world' but has an edge in filtering ideas and executing them (there's that filtering idea between innovative idea creation and the execution of those creative ideas, no. 1 above). Or put another way, domineering bosses and governments can only drive innovation so far because 'creative people like to challenge constraints and authority.'
[This seems to fly in the face of Michael Porter’s work on innovation clusters and Richard Florida's new book/research that location does matter (listed to his keynote from the Human Capital Institute conference last April, podcast here, where his new data shows that it's still job satisfaction, job challenge and responsibility, and relationships with coworkers BUT that it's also about your community's openness to new ideas and people.]
So what does all of this mean? Or why are these takeaways worth mentioning?
I studied International Political Economy in school and combined with having worked in economic development for the city of Colorado Springs, I like to read and study about economic development, innovation, competitiveness, and globalization for the long-term, macro reasons.
At a more personal level, I want to know how where the economy and business world is going in the next five to ten years and how this will affect entrepreneurs: given the changes we’re seeing above, how can new companies or business models develop that harness the knowledge and implications of these insights above?
And just so you or I can make a buck (which there’s nothing wrong with) but also so society in general can enjoy an expanding economic pie. Improving our own lot can, should, and does improve the lot of others.
Now playing: Stars - My Favourite Book