Everybody recognises companies that do it well
Innovation is “a creative idea that has been made to work”, wrote David Hussey in his book “The Innovation Challenge.” “It can be as basic as a procedural change in a distribution system or as complex as entry into a whole new market.” Innovation has been a subject of fascination for centuries. At the end of the 1500s Sir Francis Bacon wrote: “He that will not apply new remedies must expect new evils: for time is the greatest innovator.” John Jewkes, author of “The Sources of Invention”, reviewing the history of the subject, wrote:
Peter Drucker suggested seven areas where companies should look for opportunities to be innovative. The first four are internal to the company; the last three are external:
1 The unexpected success that is rarely dissected to see how it has occurred.
2 Any incongruity between what actually happens and what was expected to happen.
3 Any inadequacy in a business process that is taken for granted.
4 A change in industry or market structure that takes everybody by surprise.
5 Demographic changes caused by things like wars, migrations or medical developments (such as the birth-control pill).
6 Changes in perception and fashion brought about by changes in the economy.
7 Changes in awareness caused by new knowledge.
Drucker maintained that creativity was rarely a limiting factor: “There are more ideas in any organisation, including business, than can possibly be put to use,” he wrote. The issue is how to manage innovation so that it creates economic value.
Everybody recognises companies that do it well. In lists of them the same names come up again and again—3M, Apple, Hewlett-Packard, General Electric, Toyota—companies where continual innovation has produced exceptionally high returns. 3M’s progressive policy on innovation used to commit it to earning 30% of its revenue from products that had been brought to market within the previous four years. Others have since copied its idea.