Work, business & professional services

How innovation works

The image of a lone genius slaving away in a dimly lit basement or garage is the traditional image of the inventor. However, according to Andrew Hargadon (Assistant Professor of Technology Management at the University of California) this is largely a myth. Moreover, when it comes to innovation, a collective effort is more usually the norm (i.e. two heads are better than one). Andrew Hargadon's book (How Breakthroughs Happen) says that innovation is largely a result of networks. These are formal and informal collections of people and projects ranging from employees and suppliers to customers and even competitors. These networks are highly social in nature, which means that cultivating relationships can be just as important as creating processes. Another key observation is the thought that ideas are rarely new. New ideas are usually a recombination of old ideas and thus diversity in terms of people, ideas and experience is key for the production of new knowledge and ideas.

Ref: Various including Imaginatik Research (US). 'How Breakthroughs Happen: The Surprising Truth about How Companies Innovate', by Andrew Hargadon, Harvard Business School Press.

Why things fail

Why things fail is an interesting, if ultimately disappointing, book. The book starts with a fabulous insight - companies fail at roughly the same rate that biological species become extinct. Currently 10% of companies in the US fail every year and the rate is roughly the same year after year. However, occasionally the rate is exaggerated much in the same way that every now and then species face mass extinctions. So, if the rates are roughly the same, could the process at work be similar too? This is an intriguing idea, although the book ultimately takes the metaphor too far. For one thing a living species has no real control over its destiny (i.e. it cannot really improve its own fitness to survive) whereas a company can. Moreover, it is unclear whether a company or an entire industry should be regarded as a single species in this context. Nevertheless, if you want to stretch your thinking this is a thoroughly worthwhile book.

Ref: Financial Times (Asia), 30 April Æ 1 May 2005. 'Jungle theories and the limitations of animal cunning', K.Guha. Why Most Things Fail: Evolution, Extinction and Economics' by Paul Ormerod (Faber).

In praise of slow innovation

Traditional wisdom says that if you want to dominate a market you need to be first in as the innovator. However, according to Costas Markides (Professor of Strategic and International Management at the London Business School) the theory of 'first mover advantage' is historical nonsense. When it comes to long term success, it is often the companies that avoid radical innovation that win in the end. Innovators who come up with disruptive ideas either go bankrupt, are swallowed up by larger companies or fail to grow beyond a niche position in the market. Innovation, Markides argues, is therefore an activity that should be left to start-ups, entrepreneurs and University incubators. Large companies are incapable of replicating the culture of such organisations and shouldn't even try. This is precisely the opposite of what people like Gary Hamel, Tom Peters and others have argued, which is essentially that radical innovation is the only route to success and that companies should embrace their inner child and let their imaginations fly (cue coloured bean bags and the latest whiz-bang processes). However, the theory that 'next is best' does fit with what the Economist magazine has referred to as a need for slow, incremental improvement.

Ref: AFR Boss (AUS) March 2005. 'When second is first', H.Trinca.

Where have all the workers gone?

Work used to be a battle between the bosses and the unions and companies were usually in the driving seat due to an excess of labour supply over demand. But this is changing. Most countries face a demographic double-whammy, with an ageing workforce colliding with a declining fertility rate. And while some of the slack will be taken up by automation, there will still be a huge battle to recruit and retain skilled workers (particularly in customer facing, service industry jobs). Solutions may include keeping workers on the payroll for longer, recruiting older people (especially those aged 55+) and starting a dialogue earlier with potential recruits. There could also be a partial re-run of the generational war from the era where young, hungry and enthusiastic workers clashed with the attitudes and behaviour of their older counterparts. The most successful strategy in the future will probably be to offer people a job with real meaning. The emergence of the so called 'sandwich generation' (those people who look after their children and their parents) will also mean that successful companies will find ways to provide flexibility in terms of hours, time off and place of work.

Ref: Various including Sun Herald (AUS). 'And another thing', D.Edgar. See also The War Over Work: The Future of Work and Family' by Don. Edgar.