V) Links Between Innovation, Entrepreneurship, Invention, Marketing, Sustainable Development, Etc

For innovation and entrepreneurship

"...usually the idea is the easy part.....often the real talent lies in knowing what to do next: how to finance and build the product, when and how to market it, and how to persist with it through very difficult times.....do not believe that there is one type of entrepreneur, one type of business, or one way to make a business work. Each entrepreneur has their own set of circumstances, their own personality, quirks and motivations which they then bring to bear on a business......is it really possible to learn from their experiences and replicate their success......their talents lie in hiring the right people to help them, and recognising which skills they need to learn to succeed. When opportunity knocks, they listen. The simple truth is that there are as many ways to succeed in business as there are great businesses..."

Emily Ross et al, 2004

Innovation relies on invention and marketing. Innovation is taking an invention successfully into the market place. There have been many inventors but few innovators. For example,

- while it was Alexander Graham Bell who discovered how sound waves could be converted into undulating electric currents, it took Edison, with Charles Batchelor, to produce an effective carbon-button microphone so that Western Union could pool the patents of Edison and Bell's rival Elisha Gray and create a working telephone. Then Theodore Vail presided over the amalgamation of Western Union and the Bell telephone to form the American Telephone and Telegraph Co.. Vail foresaw the potential of a long-distance system and overcame the many political, technical and bureaucratic obstacles. Thus the innovator of the telephone was Vail - not the others (Bell, Edison, Batchelor, etc)

- Chester Carlson played with static electricity and chemicals in his home to transfer a dry mark from one piece of paper to another. Initially, no commercial organisation was interested. Then, Joseph Wilson of Haloid Corp., a maker of photographic products, sent a colleague to investigate. By investing in the device, Wilson nearly bankrupted his company. Wilson is the innovator of the photocopier machine

- Nathaniel Hayward discovered how raw rubber might be rendered usable but he gave up. It was Charles Goodyear who took Hayward's insight and brought it to fruition. In doing so, Goodyear went in and out of jail for debt all his life and sacrificed his family to develop vulcanized rubber. Thus Goodyear was the innovator.

The defining characteristics of innovators are a determination and dedication to bring an invention into the marketplace that involves

- a readiness to take risks

- a thick skin to handle the "naysayers". For example,

"...Raymond Damadian was a 'screaming lunatic' for thinking that nuclear magnetic resonance imaging might be used for medical diagnosis. Theodore Judah was a 'crazy Judah' for advocating a railway over high Sierras. Amadeo Giannini was a ' hothead dago' for setting up branch banking for the masses: Bank of America was the result. Heading triumphantly spliced a gene, the young molecular biologist Herbert Boyer endured academic opprobrium by going into business to mass-produce man-made hormones; synthetic insulin and Genetech were the sequel..."

Harold Evans, 2004

- unrealistic obsession, ie pig-headedness and willing to press ideas beyond their sensible limits. For example, Samuel Insull and Juan Trippe demanded engines of unprecedented power for electricity generation and aircraft, respectively

- originality

- extreme persistence (remember: most new ideas are not initially successful)

- a willingness to borrow and combine inventions. As Henry Ford asserted

"...I invented nothing new.....I simply assembled into a car the discoveries of other men behind whom were centuries of work..."

Henry Ford as quoted by Harold Evans, 2004

- imagination, ie the ability to see relationships. For example,

"...Jean Nidetch did not invent the diet she used at Weight Watchers; she made it effective by borrowing the mutual support techniques of Alcoholics Anonymous. Ruth Handler based Barbie on a German sex doll named Lilli but transformed a static doll into a vehicle for role modelling when she offered a variety of outfits - an idea stolen from cardboard-cutout games..."

Harold Evans, 2004

- a desire to improve the lives of others rather than moneymaking as the main driver, eg

"...Giannini did it with his branch banking for the little man, Ford with these models T, ......Pierre Omidyar created a democracy of supply and demand with eBay. In Reno, Raymond Smith transformed casinos from dark, smoky places peopled by men to public places for entertainment, foreshadowing the rise of Las Vegas..."

Harold Evans, 2004

The diagram below shows the critical mass on innovations meeting real market needs and creating new waves of innovation

organisational development change management

Karlson Hargroves et al, 2005

The future is already here!!!!! But, you need to know where to look. Organisations wanting to be truly innovative have to go outside the industry's comfort zone. Some examples include supermarkets becoming banks, petrol stations becoming supermarkets, home ware retailers offering cooking classes, etc. This is sometimes referred to as cross industry pollination. We need to keep tabs on where technology is heading!!!!!

The increasing importance of sustainable development, innovation and knowledge (ie knowledge worker) with greater focus on initiative, flexibility and creativity in developing business, and on maintaining competitive edge (especially through improved integration of information and smarter ways to manage internal business processes) is now being acknowledged. Sustainable development is shaped by an innate appreciation of systems: particularly the mutually-sustaining, interdependent, causal relationships among the economic, environmental and social spheres. Actions to meet goals in one of these spheres affects the others, and are helped or hindered by them. This is linked with a concept called conscious oversight, ie a discipline of care and nurturing of people and systems with an eye toward the impact on generations who come after them. This discipline encompasses the ability to see and understand the system at hand as part of a nested body of larger systems, and to make thoughtful decisions about matters which will have significant, long-term consequences.

Decisions made as part of this discipline are based on the consideration of:

- traditions of the past (while distinguishing those parts which are still important)

- realities of today (from a variety of points of view)

- sustainability of life for generations who come after.

When practising conscious oversight, decision-makers focus on:

- ensuring congruence

- the viability of a system larger than themselves

- the service of a purpose larger than themselves

- community life and well-being that is beyond the life of an individual or organisation.

More and more evidence is stressing the importance of innovation, ie

"...Detailed case studies of hundred of industries, based on dozens of countries, reveal that the internationally competitive companies are not those with the cheapest inputs or the largest scale, but those with the capacity to improve and innovate continually. Competitive advantage, then, rests not on static efficiency or on optimizing within fixed constraints, but on the capacity for innovation and improvement that shifts constraints......Increasingly then, companies that are most competitive, achieving the greatest productivity gains, are not those with access to the lowest cost inputs. Rather, they are those firms who constantly innovate......A major study by McKinsey & Co, of over 1000 companies in 15 sectors over 36 years, found that innovating to become the best in new emerging markets was a key element of success..."

Karlson Hargroves et al, 2005

An organisation's survival depends on its ability to capture intelligence, transform it into usable knowledge, embed it as organisational learning and diffuse it rapidly throughout the organisation.

"...Maximizing an organisation's intellect......taking everyone's best ideas and transferring them to others is the secret. There is nothing more important......than being open to the best of what everyone, everywhere, has to offer. The second is transferring that learning across the organisation..."

Jack Welch as quoted by Jack Welch et al, 2001

Knowledge management

This includes analysing core competencies to form the basis of innovation. Furthermore, a peak-performance organisation has a culture which views failure as a learning experience, ie it encourages innovation and risk, in the quest for continuous improvement. This leads into knowledge management. Until now, managers have focused on managing and controlling the key processes and distribution channels, which explains the popularity of techniques such as TQM and business process re-engineering. With rapidly changing customer desires, managers have to look beyond these techniques. The need for knowledge management grows from a recognition that inflexible structures are more likely to collapse when the ground is shifting as rapidly as it does in today's markets. Knowledge management involves managing both intangible and tangible assets. Furthermore, the management of knowledge and data are different. Data is the basis for information; knowledge has more to do with the process of learning, understanding and applying new tasks and procedures.

Remember: data is not information; information is not knowledge; knowledge is not wisdom!!!

There are 4 components to knowledge management:

i) a database subsystem that allows the sharing of information in a timely and efficient manner

ii) an organisational language subsystem that is understandable and user-friendly

iii) a networking subsystem for locating and acquiring information and knowledge, both external and internal to the organisation

iv) a transfer subsystem whereby systemic knowledge is either directly transferred between individuals, or new knowledge is created by the unique combination of information with the individual's experience base.

Linked with this formal structure is the informal structure. The formal structure is linked with the IT system; however, the informal structure is more how people network and communicate with each other. Usually the informal networking is more powerful, and as a result, its role in knowledge management needs to be understood

If you think that the revolution is over, think again!!!! The rise and fall of the dot coms is not the real story. That was merely the most talked about evidence of the increased importance of speed, adaptability, and imagination in business success. No matter how many dot coms fail, the landscape for those organisations that remain is changed forever. The age of incremental innovation has passed - we have entered the age of radical innovation. Can your organisation afford to be left behind?

We all knew what a coffee shop was - until Starbucks brewed up a whole new experience. We knew what a stockbroker was - until Charles Schwab rewrote the definition (twice!). A book shop was a bookshop - until Amazon broke down the walls. The lesson is this: your industry is going to be reinvented. If it's been reinvented once, it's going to happen again. As Gary Hamel (2000) sees it, the big questions for your organisation and industry are:

- Will you reinvent it (and reap the rewards)?

- Or will you fall into the dustbin of history because of it?

- Sure, your company has a strategy. But do you know how to calculate strategy decay?

- Do you know its implications?

- Does your company have a way to systematically sow, nurture and harvest innovation throughout the organisation?

- It can be done. The revolution is here. Are you ready?

Innovation and knowledge management are inextricably linked. As part of the ever-changing world, the importance of managing intangible assets such as knowledge (including intellectual property) and innovation are being recognised as key drivers to future, long-term corporate growth.

In fact, knowledge is fast becoming the prime factor of production, and as a result, is becoming more important than land, labour and capital in the creation of wealth.

Given the pressure on companies to maximise shareholders' returns, better utilisation of these intangible assets provides a great opportunity to maximise returns. For example, the revenues from the licensing on patent rights in USA has skyrocketed in the last ten years from $US15 billion in 1990 to more than $US110 billion (HBR 2000). As Jack Welch (2001), of GE fame, stated

"...there is much more leverage from brain power than products..."

Remember: knowledge management and innovation give several advantages:

- patented processes give you leverage into new markets and a competitive advantage

- help increase productivity

- reduce costs

- help capture and share knowledge (IT) to solve problems

- keep staff motivated

Some quotes from the Harvard Business Review

"...in a world where battles are increasingly being waged not for control of markets or raw materials but for the rights to new ideas and innovations, the management of intellectual property must become a core competence..."

"...It is recognized that the knowledge economy has given rise to a new ecology of competition in which intellectual assets rather than physical assets are the principal wellsprings of shareholder wealth and competitive advantage..."

"...The true source of a company's competitive advantage lies not in its products or services but in its innovative way of doing business..."

"...The competitive game has changed: the advantage now often goes to the company that is most adept at choosing from the large number of technological options and not necessarily to the companies that create them"(and) using knowledge more effectively than their competitors do..."

Perpetual innovation, etc

Need to institutionalise a capacity for perpetual innovation. This involves understanding the degrees of unpredictability and taking calculated risks. More often than not, each change can threaten to undermine the historical sources of an organisation's profitability, yet each change needs to bring customers new benefits that have enormous payoffs, eg Schwab in the discount brokerage industry introduced a change from "bricks and mortar" to "cliques and mortar" (online business). This means working from the customer backwards.

Key elements for perpetual innovation are

- a passion

- a broader definition of business boundaries based on core competencies and assets such as the ability to move quickly, satisfy customer needs, the first to the market and leverage distribution channels

- a vibrant internal market for new, wealth-creating ideas where new voices have the chance to get heard

- an open market for talent, especially as many innovations that will affect your industry come from outside your industry

- highly motivated entrepreneurial staff who get to share in the wealth they create

- fluid organisational boundaries that allow skills and resources to be creatively and endlessly re-combined

- minimum number of restrictions, ie few rules and regulations

- working from the customer backwards

- using stretch goals

- encouraging innovation meritocracy

- rapid experimentation and prototyping

- encouraging genetic diversity within your organisation

- in a quickly changing world, do not allow allegiance (to a particular technology/product/ service/business concept) to stifle innovation

Some additional comments on innovation include

- intrapreneurs (intra-corporate entrepreneurs) in large organisations need sponsors who will help intrapreneurs through the organisational barriers. Furthermore, the sponsors provide important coaching and support. Generally there is a lack of suitable sponsors in most organisations

- innovation in small groups generally works better than in large groups as the smaller groups allow for more effective development of personal relationships, thereby creating greater confidence within the people in the group and a readiness to express opinions and risk failure

- competition is important in innovation; competition inhibits complacency and status quo thinking which both work against innovative forces

It is felt that small organisations are in a better position to handle technology than larger organisations. The reason for this is the layers of management in large organisations where there are roughly 80% of people managing the 20% who do the work. Furthermore, these 20% spend considerable time managing others. This increase in overhead costs and the layers of management tends to stifle creativity. By contrast, a start-up organisation does not have these 2 impediments. Of course, the start-ups may lack resources, such as finance

Furthermore, big corporations are just

"...conglomerations of assets whose desire for short-term growth limits their capacity for innovation..."

Goran Carstedt as quoted by James Hall, 2005

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