joke goes, a so-called innovation that does not create incremental value is generally called a failure.
The popular understanding of innovation focuses on new technologies such as those offered by major corporations like Intel, Microsoft, Apple, and Google, but innovation is much, much broader than that. Consider for example such relatively new firms as Starbucks, eBay, Staples, and PetSmart. In each case, the innovation was in the company business model and in how the company operated to create and serve its customers.
One useful way to think about the broad range of possible innovations is in terms of what is called the
business value chain
, the sequence of activities that a firm undertakes to create and serve customers. In this construct, innovation is possible in the entirerange of business functions, including research, design, engineering, sourcing, production, distribution, marketing, sales, service, and so forth.
Yet despite this vast potential breeding ground for innovation, innovation remains relatively rare, especially those disruptive innovations that create new companies and even entire new industries. Innovation is particularly difficult for large companies and well-established companies, in part because they pay so much attention to defending what they have already achieved. Their innovation challenges have birthed a fairly large population of consultants, authors, and researchers eager to help these firms break out of their encrusted business habits. (Those consulting firms, in turn, each have their own well-established ways of doing things, but they need to be constantly innovating their practices as well.) Despite the difficulties of innovating, the U.S. has long led the world in innovation. For example, in technology hardware, we have Apple, Cisco, Dell, Intel, HP, Motorola, National Semiconductor, Nvidia, Qualcomm, and Texas Instruments. In software and services we have Accenture, IBM, Microsoft, and Oracle. Not only was the Internet invented here, but we also have the world’s leading Internet-based companies, such as Amazon, Craigslist, Google, eBay, eTrade, Facebook, Flicker, Pandora, Twitter, and Yahoo.
We are also strong innovators in health care and related sciences. Our pharmaceutical, biotechnology, nanotechnology, aerospace, and chemical industries lead the world. Although we can complain about the costs, the fact is that the wealthiest people in the world journey to the United States to receive the best and most advanced medical treatments possible.
Moreover, the impressive U.S. innovation track record in industrial technology also extends to the creative arts. Hollywood dominates the world’s big and small screens. Our independent studios make movies and TV programs. Our music industry and book and magazine writers and publishers are among the best and most prolific in the world.
Why does the U.S. lead the world in innovation, especially by such a wide margin? This issue has been much studied and debated, and I am persuaded that the answer lies in what has been called
American exceptionalism
. In my opinion, it is the fortunate result of our nation’s rich and unique stew of individual liberty, constitutional democracy, limited government, free enterprise, social mobility, ethnic diversity, immigrant assimilation, intellectual freedom, property rights, and the rule of law. I can’t deconstruct how each factor makes its individual contribution, but I believe each is vitally important.
I should also add that, in comparison to most of the industrialized world, Americans work harder. Despite the image of the pampered or spoiled American, the fact is that Americans on average work 1,776 hours per year. This is 467 more hours a year than Germany, 307 more hours than France, and 43 more hours than Japan. As Edison once said, success is 10 percent inspiration and 90 percent perspiration. We may also work smarter and be relatively more creative, but I don’t know for certain.
Years ago, the
The popular understanding of innovation focuses on new technologies such as those offered by major corporations like Intel, Microsoft, Apple, and Google, but innovation is much, much broader than that. Consider for example such relatively new firms as Starbucks, eBay, Staples, and PetSmart. In each case, the innovation was in the company business model and in how the company operated to create and serve its customers.
One useful way to think about the broad range of possible innovations is in terms of what is called the
business value chain
, the sequence of activities that a firm undertakes to create and serve customers. In this construct, innovation is possible in the entirerange of business functions, including research, design, engineering, sourcing, production, distribution, marketing, sales, service, and so forth.
Yet despite this vast potential breeding ground for innovation, innovation remains relatively rare, especially those disruptive innovations that create new companies and even entire new industries. Innovation is particularly difficult for large companies and well-established companies, in part because they pay so much attention to defending what they have already achieved. Their innovation challenges have birthed a fairly large population of consultants, authors, and researchers eager to help these firms break out of their encrusted business habits. (Those consulting firms, in turn, each have their own well-established ways of doing things, but they need to be constantly innovating their practices as well.) Despite the difficulties of innovating, the U.S. has long led the world in innovation. For example, in technology hardware, we have Apple, Cisco, Dell, Intel, HP, Motorola, National Semiconductor, Nvidia, Qualcomm, and Texas Instruments. In software and services we have Accenture, IBM, Microsoft, and Oracle. Not only was the Internet invented here, but we also have the world’s leading Internet-based companies, such as Amazon, Craigslist, Google, eBay, eTrade, Facebook, Flicker, Pandora, Twitter, and Yahoo.
We are also strong innovators in health care and related sciences. Our pharmaceutical, biotechnology, nanotechnology, aerospace, and chemical industries lead the world. Although we can complain about the costs, the fact is that the wealthiest people in the world journey to the United States to receive the best and most advanced medical treatments possible.
Moreover, the impressive U.S. innovation track record in industrial technology also extends to the creative arts. Hollywood dominates the world’s big and small screens. Our independent studios make movies and TV programs. Our music industry and book and magazine writers and publishers are among the best and most prolific in the world.
Why does the U.S. lead the world in innovation, especially by such a wide margin? This issue has been much studied and debated, and I am persuaded that the answer lies in what has been called
American exceptionalism
. In my opinion, it is the fortunate result of our nation’s rich and unique stew of individual liberty, constitutional democracy, limited government, free enterprise, social mobility, ethnic diversity, immigrant assimilation, intellectual freedom, property rights, and the rule of law. I can’t deconstruct how each factor makes its individual contribution, but I believe each is vitally important.
I should also add that, in comparison to most of the industrialized world, Americans work harder. Despite the image of the pampered or spoiled American, the fact is that Americans on average work 1,776 hours per year. This is 467 more hours a year than Germany, 307 more hours than France, and 43 more hours than Japan. As Edison once said, success is 10 percent inspiration and 90 percent perspiration. We may also work smarter and be relatively more creative, but I don’t know for certain.
Years ago, the
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