There are multiple reasons companies don’t invest in innovation — even though they know that, by definition, the opposite of an innovation is a commodity. Two reasons we’ve noted before are: 1) they’d rather invest in their own stock, thereby increasing earnings per share; and 2) industry shrinks in the face of protected foreign competition, thereby reducing the pool of available skills and money with which to invent.
Respondents to Boston Consulting Group surveys over many years also cite a risk-averse culture and lengthy development times as factors holding back innovation investment.
‘The opposite of innovation is a commodity’. High on the innovation bandwagon, Apple is able to charge a premium for its iPhone. In the market for computers [a commodity], Dell does not have that luxury. Giving credence to this statement – if you are not innovating, your intellectual property [IP] may have zero value someday.
Cost, productivity and operational excellence all require innovation. However, making a product better, faster or cheaper is irrelevant unless you are making the right product in the first place. How do you know what those products are until they are invented?
Since innovation seems to be the right strategy, then creating a process to drive innovation would be a good strategy. I have not concluded whether you could come up with a defined process or if it would need to be an ad-hoc process. But, I do believe that not having a process is a bad idea.
After surviving the recession, companies may feel even less inclined to invest in the unknown – but that is the path to breaking out of the recession with increased market share.
Has your company come up with a strategy to innovate?