Due to the growing economic importance and disruptive consequences, experts have suggested that Innovation is too important to leave to innovators. They have been after finding means of managing them for crafting predictable growth paths. Hence, like many other branches, such as physics, we should codify the characteristics of innovations as a set of principles. However, if innovation is the heroic art of magical characters, is it pointless to search for innovation principles?
If innovations were just Eureka out of creative sparks in the mind of a genius, why could not Steve’s Apple Newton take off? Similarly, why did the sale of the iPhone 1 come down to almost zero before the first birthday? Besides, despite the remarkable performance, why could not Jeffry Hawkins’ Palm Pilot keep flying? Why did the Apple board accept Steve’s proposal to kill its life-saving iPod? Despite apparent randomness, innovation dynamics in driving the evolution of products and processes–creating successes and failures, unleashing disruptive consequences, destroying and creating jobs, migrating innovation epicenters, rising and slowing down firms and nations–have underlying reoccurring patterns.
Although, some people are naturally more innovative than others, learning innovation as reoccurring patterns shaping invention and evolution of products and processes is helpful. Hence, if we have a set of principles about how ideas grow as successful innovations in a competitive market, teaching innovation can significantly improve the success rate.
Although innovation has been gaining increasing importance in driving prosperity, the high failure rate is a grave concern, as more than 75 percent of innovations retire before generating profitable revenue. To cope with it, bright graduates, a rich R&D environment and funding, and seed capital for taking innovations into the market are insufficient. Google’s graveyard of 293 innovation projects (as of Nov 2023) underscores this reality.
Process of reaching to innovation principles
- Innovation is not just fun playing with creativity; instead, innovation is a painful process of generating Wealth through the creative destruction of skills, jobs, firms, and businesses.
- Innovation is a process of evolving ideas and winning the competition to serve customer purposes better.
- Due to growing importance and disruptive consequences, managing innovation has been drawing increasing importance.
- Despite the role of heroic character, innovation dynamics in the Market Economy show reoccurring patterns.
- A set of innovation principles distilled from reoccurring patterns underlying innovation dynamics may form the foundation of management, governance, and investment decisions in creating wealth by leveraging technology possibilities.
Table of content
- Defining innovation and the role of the market economy
- Magical innovation performance of heroic genius—why not good enough?
- No natural correlation between STEM indicators and innovation performance
- Innovation management urgency
- Importance of principles in managing innovations
- Review of innovation principles
- Reoccurring patterns in innovation dynamics
- 10 Innovation Principles—for creating wealth from ideas in the market
Defining innovation and the role of the market economy
There have been many connotations of innovations. Invariably, everyone has been pursuing innovations in getting day-to-day jobs done. There have been millions of examples and micro and grassroots innovations. However, those innovations with large-scale economic consequences and are being pursued by profit-making competition are of immense importance. There have been numerous examples, from automobiles, mobile phones, semiconductors, consumer electronics, software, and computers to clean energy. Due to significant bearings on economic growth, jobs, and competitiveness, such innovations deserve to be managed.
Hence, in deriving innovation principles for managing the enormous scale of prosperity out of ideas, we need to set the context by defining innovation. Innovation refers to winning the competition by profitably serving consumers’ purposes better by leveraging technology possibilities through the invention and evolution of products and processes.
Irrespective of the greatness, inventions, and innovations perpetuate in embryonic form. Initially, they can hardly serve any purpose better than existing. They need a Flow of Ideas to grow the latent potential. It has been found that profit-making competition is far more powerful than any other means to keep making them increasingly better alternatives in Getting jobs done. Hence, evolution and uncertainty are integral parts. Besides, once emerging alternatives become better options, demand for matured products, skills, jobs, and businesses needed to make and distribute them become obsolete. Consequentially, disruptive effects unfold.
Profiting from innovation in the market economy demands overcoming the threshold and winning the competition. First of all, as explained, irrespective of the greatness, all innovations face the reality of overcoming the barrier set by prevailing alternatives in getting jobs done. The next one is that innovation opportunity is not for solo genius profiting from patented great ideas. Besides, innovations must evolve, and the race to be won.
Magical innovation performance of heroic genius—why not good enough?
Innovation perception as having fun and enjoying aha-moments of magical insights in giving birth to lightbulb moments that suddenly change everything, seemingly overnight, is false or gross over-exaggeration. Profitable business and economic prosperity out of innovation are absent from the heroic, magical art of an innovative genius.
The innovation process is a stressful, long journey of winning competition by taking ideas to market to serve customer purposes better and generate and sustain profitable revenue. Creating an innovation flywheel effect is at the core of innovation success. Besides, as winning innovation is not about one seemingly overnight activity, we need innovation management practices to guide rational decision-making amidst uncertainty.
As success distills from winning innovation evolution, lasting over years and decades, innovation management through principles plays a vital role in driving prosperity.
No natural correlation between STEM indicators and innovation performance
Unless and until we succeed in winning the innovation race by leveraging STEM competence, STEM indicators do not correlate to wealth creation. Besides, Google’s graveyard with 293 dead ideas (as of 2023) underscores the reality that bright graduates, a rich R&D environment and funding, and seed capital for taking innovations into the market are not sufficient to profit from innovations. Giving time, resources, and freedom to a bunch of creative people is insufficient for profitably taking ideas to market, so we need to manage creation.
Innovation management urgency–demanding innovation principles
Due to the increasing role of innovations in creating wealth, driving prosperity, transforming society, and shaping the rise and fall of firms and nations, innovation management importance is gaining momentum. Reality significantly differs from innovation myths, so we must focus on innovation management.
Due to innovations, we have been witnessing increasing disruptions. Innovation disruption means the destruction of demand for skills, jobs, firms, and industries due to the rise of reinvention waves offering alternatives to incumbent matured products. Innovation disruption underscores the importance of innovation management for minimizing the stress of creative destruction.
The uncertain, long process of profiting from technology possibilities through winning competition demands innovation management. Besides, as technological ideas can save material, labor, time, and energy and simultaneously increase quality, competing through innovation demands management importance. Furthermore, the race to make products better and cheaper naturally tends to surface as a winner. Due to the winner-take-all-all reality in pursuing technology possibilities for evolving products and processes, innovation management has been gaining further importance.
For meaningful innovation, we need to reduce negative consequences that may unleash on jobs, customers, the environment, inequality, and society. Besides, as competition drives innovation and innovation success weakens the competition force, competition and innovation are contentious issues. Hence, innovation management focuses on increasing economic value creation and positive outcomes by leveraging technology possibilities and creativity through market forces.
Importance of innovation principles in managing innovations
Profiting from innovation in taking ideas to market is not a linear pathway due to pervasive uncertainties, so we must focus on managing innovation uncertainty. Hence, we need to dissect innovation dynamics, detect reoccurring patterns, and devise a set of principles. Principles of innovation refer to a group of stylized facts summarizing the underlying patterns of the dynamics in turning resources allocated to taking ideas to market into wealth or waste.
Review of innovation principles
The literature review offers a diverse set of innovation principles. Some of the popular ones are as follows:
- conversion of problems into ideas leads to innovation.
- for innovation, passion is the driver, and pain is the integral element.
- colocation of the team facilitates and diversity of team composition improves completeness
- set ambitious goals, look forward, and failure is learning
- watch how people get their jobs done and pursue a Passion for Perfection
- leverage team’s capability, but ownership drives outcomes
- set your own goals and create the future.
There have been many such principles. Despite their relevance, they do not offer any hint about how innovations begin the journey and how they are shaped by competition forces in the market economy. Besides, their rise as the creative wave of destruction, unleashing transformational effects, has not been touched upon. Hence, such principles do not appear to be very helpful in managing market economy innovations.
Reoccurring patterns in innovation dynamics
Some of the reoccurring patterns underlying innovation dynamics in market economy are follows:
- despite the greatness, all innovations begin the journey in embryonic form.
- driving evolution through a flow of ideas in creating the flywheel effect plays a vital role.
- competition has a propensity to drift willingness to pay downward and offer alternatives.
- reinvention waves keep unfolding, causing disruption.
- the innovation process is painful and demands changes in values and culture
- innovations run the risk of suffering from directional failures
10 Innovation Principles—for creating wealth from ideas in the market
Here are 10 principles that could guide us in comprehending innovation dynamics and driving prosperity by leveraging technology possibilities:
- Principle 1: Innovation opens an endless frontier of wealth creation–due to the limitless urgency of getting jobs done better and the latent potential of an endless flow of ideas from boundless creativity and an ever-expanding scientific frontier.
- Principle 2: Innovation naturally starts the journey with loss-making revenue, demanding a flow of ideas for turning loss into profit.
- Principle 3: More than the Eureka moment– an incremental progression of both product and process through saving material, energy, labor, and time and increasing value through a flow of ideas is the key to success.
- Principle 4: Competitive market force demands releasing successive better versions and attaining market power—requiring successive releases of better versions for offering increasing value for money.
- Principle 5: Newly formed wealth creation territory is invaded and expanded by followers with additional ideas—making the patent barrier weak, demanding faster velocity to win innovation.
- Principle 6: Successive reinvention waves keep emerging–causing creation through destruction, disrupting monopolistic status quo and killing, and creating skills and jobs.
- Principle 7: Innovation is not benign—it causes stress, kills jobs, destroys business, and migrates prosperity.
- Principle 8: Innovation evolution race fuels Monopolistic market power accumulation and expands trade—posing governance challenges.
- Principle 9: Necessities dealing with conflicting outcomes for preventing directional failures of innovations.
- Principle 10: Demands policy reform, realignment of cultural values, beliefs, and rational decisions—facilitating ideas flow and creating demand for ideas, weakening monopolies by patronizing reinventions, nurturing empathy and passion for perfection, and understanding innovation dynamics for managing uncertainty.