Harvard Business Publishing

Agreed! Placing a premium on progress is essential and it always has been during times of change. Consider the quote of the Louis Pasteur that "chance favors a prepared mind." The backdrop for our 2006 book "The Prepared Mind of a Leader" is a cycle of Sense >> Make Sense >> Decide >> Act. This cycle is running faster than ever and the prepared minds skills of challenging and imagining are probably more important than ever.

I think we need to distinguish between the continuous innovation and the discontinued or disrptive innovation. The author seems to refer mostly to the continued innovation which is mostly an extention of the existing ideas, services or products. Although there could be a few exceptions, the disruptive innovation usually comes from geniuses with creative minds rather than someone with a fixed mindset with a long time experience.

I believe that the message is...

"We have yet to learn what long-term effects of a globalized competition are about in practice, but the road ahead seems bumpy, and the slope is steep."

Great article! Thanks!

Greetings,

Years ago, I read an article by a very wealthly entrepreneur, technologist, and Harvard drop-out. He stated his strategy was to innovate, innovate, and innovate. Seems to me that his strategy is still a great strategy for today's business. Thanks for your time and attention.

In the media and entertainment world, we have been so focused on squeezing what's left from an old model. Meanwhile new "bottom up" models have delivered for new brands like AMAZON. How exciting it is to shift focus on untapped opportunities and technologies. Hallelujah!

Katherine Warman Kern
katherine@comradity.com

A quick note:
While a certain (increasingly large) segment of the population is looking for the "low cost" options, not everyone is. There's also a difference in what constitutes "low cost."

Example:
At BMW North America, overall sales were down in November by about 26%. However, sales of the MINI were *up* - a smaller car, but a nicer one than, say, a Toyota (where, again, sales are down). So - not cheap, but smaller and cheaper than a 3-series (I wonder what's happening with the 1-series?). Edmunds.com reports that people in my area (Durham, NC) are paying full MSRP ($18,700) for a base '08 MINI Cooper, no options - significantly more than, say, a similarly-sized (or larger) Honda, Toyota, Kia, etc. And, again, sales rose comparing Nov 07 to Nov 08.

I would argue that it's not all about figuring out, "how to deliver what consumers in low-end segments consider value;" I would say that it's about figuring out what will provide optimal value to consumers in your segment. You can't expect consumers to immediately pay a premium, unless you give them a good reason to do so.

Recognize that we are at war w/o end and buckle up your chinstraps and we will be fine. I am confident in the American workers ability to adapt and adjust in the face of dynamic change. However, we must reformat our education system to provide workers of the future to our industries. As the dollar continues it's long term descent, we could become the new manufacturing floor of the world. We also need enlightened tax policy that matches or exceeds our competitition. If we had no corporate income tax, I believe that many international corporations would relocate their HQ here vs. other tax havens.

I respectfully disagree about your assessment of the American worker's ability to adapt in the face to change. However, more importantly, the leadership in American companies have been ignorant about what consumers want, which has caused so many companies to fall behind the competition. What's more troubling is the culture of greed that has caused much of the financial crisis going on in our economy.

In regards to your comments on the tax policy, I believe Mike Huckabee has an excellent response. He advocates a "fair tax," which is a consumption tax, in which people pay taxes when they spend money rather than on the money they earn. His proposal will bring companies back to US, create jobs, and lower the unemployment rate.

Mike: A consumption tax is not a fair tax, it is regressive as the burden falls disproportionately on the poor, as a proportion of income, unless we only place such a tax on luxury items.

Michael: Corporations need to be subject to progressive taxation to prevent them from becoming too big to fail, as well as to prevent them from having undue influence. All natural systems are subject to gravity which fill this need. Our economic system, as a manmade system, needs something that is analogous. Then if a corporation wishes to do business in the US it needs to have a US registered corporate form so that it has to pay tax here.

Hi Scott

Love your post - and a big fan of the concept of "The Great Disruption" - very accurate in my view.

I think of particular note for me is this concept of learning to love the lower end - although I'm not so sure it's necessarily the low end of the market per se that they have to learn to love - but rather the consumers for their products and services that are purchasing on the low end. In the past, we as innovators have frequently looked to "lead users" as a source of innovative thinking for the next generation of products - frequently dismissing those that wouldn't cough up for our products as not worthy of being considered. However - maybe this more value-driven potential lead user is exactly what we should be looking to in this day and age. It's not a question of wanting to sell at the low end - but rather understanding what someone who buys at the low end is really looking for, what would satisfy that need, and finding out what they'd be willing to pay a premium for!

Good stuff Scott :)

Boris Pluskowski
http://www.completeinnovator.com

We have already seen the ideologies fall, Wall Street crash, big names winding down or seeking government help all across the globe and economies tumble into recession.

We have seen the many CEOs diminished and some come stronger in the wake of these changes and difficult times. We have seen businesses cashing in on the opportunity and some losing out in these troubled times.

It is great to see certain leaders stating that they will desist giving Quarterly projections!!!

For the first time we witnessed our savings diminish, our home prices go down, consumers get into their shells and we are hearing the term “Deflation” & seeing the effects of it.

2009 has come... How does the future looks like? What exciting things it holds for us?

Glazing the Crystal, I could see the year 2009 will be the year of Change and Disruptive Innovation.

1. Old way of doing things will no longer guarantee success; be it manufacturing, hardware, software or services

2. Newer disruptions out of the current crisis will emerge, but will take some more time

3. Leaders will be challenged and the most flexible ones will survive

4. Organizations that bet on and keep their most valued assets “People” with a long term perspective will succeed

5. There is nothing called stable / secure / comfortable. Be prepared for change and disruption will be the driving force.

6. It’s NOT just the hard skills or the soft skills that will reward. Those with a combination of both, speciality with generalist skills will take it all.

7. Social will rule; we are not only a Flat world, but a connected world; Collective wisdom or wisdom of the crowd will affect the way we perceive certain things.

8. Portable and ultra portable will be the order of the day in computing. SAAS, Cloud, NetPCs, Mobile Computing, 3G, affordability are all the at the top of the inflexion point.

9. While lower oil prices may dampen the efforts, a conscious desire for alternative energy has been kick started; we shall see breakthrough innovations in this area.

10. It’s NOT just the efficiency, capacity and price that will be differentiators. Quality, Usability, Perceived Value delivered and on top, social pride will be way to win over consumer hearts and minds.

Let me stop here and wish you all a Very Happy New Year 2009...

I particularly like the comment: "Over the past generation, path-breaking academic research and work by companies like Procter & Gamble and IBM has shown how innovation can be managed like any other corporate process."

This is proven by companies like IDEO whose businnes is entirely innovation. IDEO, as I understand it, is a company that Procter and Gamble employs as one of their "innovation vehicles".

IBM's Innovation Jams is another excellent example of an innovaton idea generation process.

Great stuff.

Hi Scott,

Somehow we came across Innovation in three blogs on this site...and left this comment with each...we are writers on Marketing- Sales and Strategy... here is something on innovation we have observed and learnt,

THE HEART OF A BUSINESS:

1. All companies process information: Whether you are making bricks, operation systems for computers, printing magazines or making tires. You are processing information in converting resources from one form to another.

2. Industries differ in the type of information they process. The tire industry converts rubber to tire. A publishing business converts knowledge and paper to a readable document. Etc.
a. Within industries, companies very in the efficiency with which they process information. This sets apart the good performers from the bad.
b. In selecting core products/ service, keep in mind that market share and price premiums do not go hand in hand. There has been no known example of this

3. Finally, in a stable state (stalemate), all companies converge in terms of their offers. The returns to all companies converges to the minimum returns. Any higher or lower than this will destabilize the industry and cause the equilibrium to move back to the lowest value.

To avoid this, continuous differentiation is required. This depends on innovation.

1. Innovation secures above normal profits for companies.

2. Innovation is the application of the brain to deliver differentiation.

3. It is always possible to innovate.

Innovation is possible across all frontiers:

Product/ Process/ Price/ Place (distribution) etc. Therefore it is not restricted to the R&D department. This is critical and often overlooked when we are thinking of innovation... it need not alwasy be big ticket, expensive investment based...it can be the basic task of differentiating pricing in an industry where this did not exist...

Innovation is necessary to avoid stalemates (Bruce Henderson) and consequent commoditization of industries.

The rate of successful innovations determines the vibrancy of an industry.

Innovation is either disruptive or evolutionary.

Strategy then becomes a bet on which innovations to fund. This leads to the classical view of strategy that “Strategy is about how the future will unfold and taking in the resources today to handle this.”

thank you
Ritu Venkatesh Rangachari
Logothoughts
rituvenkat12.blogspot.com