5 Top Gurus Talk Innovation Principles and Practices

How things change.

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Decisions about approaches to the Internet were made at a time when there was a market mania. It’s one thing to make understandable mistakes and another to err by the orders of magnitude we saw. "Irrational exuberance," as it was described, was an understatement. Thinking something is twice as good as it really is is irrational exuberance, but thinking it is 100 times better than it really is is insane delusion. There’s something wrong with not testing innovation metrics against common sense.

The fundamental aberration is not just in valuations but in behaviors associated with how businesses want to create and manage value. Pure play? Brick-and-clicks? Spin-offs? Physical and virtual worlds should be complements, rather than one dominating the other. We’ll see that tension and trade-off played out for generations.

A lot of organizations also had difficulty confronting the question of centralizing or decentralizing. In pure, raw, economic and financial theory, private B2B auctions should be the most efficient way of acquiring commodities or services. But in reality, human relationships can still trump economic efficiency. Dealing with one familiar person whom you think you can trust has some economic value. The fundamental tenet that the majority of businesses make the majority of their decisions based on rational criteria is a big, fat lie.

What I am finding now, though, is a new sophistication about the business fundamentals. As companies discover clever, innovative ideas, they ask, "How do we integrate this?" rather than immediately saying, "Let’s spin this off to make a fortune." Here’s an example of how crazy that latter model can be: What happened when everybody in the office got their own phone for the first time? The nature of communications changed. But did we spin off the telephone division and run it separately?

The Internet is a medium that lets organizations better decide what kind of innovator they want to be. Will they keep up with the Joneses, redefine the marketplace or have as many channels as possible? And how are they going to invest-all by themselves? Are they going to draw in customers? Key suppliers? Channels, or not? Independent of technology, these changes are about the culture of the organization.

The more choices you have, the more your values matter. What kind of innovator do you want to be? How do you map that onto the Internet? Those are painfully simple questions that organizations weren’t answering. They preferred to imitate the apparent success of someone else rather than to be introspective about what they should do: monkey-see-monkey-do innovation management.

But now people have to rethink these things or else. Until recently, everybody thought, We’ll fall behind, get crushed. That’s what manias do. After you’ve had a binge you wake up with a headache. Some swear they’ll never have another drink. Others have the hair of the dog. And there will always be a few folks who start frantically searching for the next bar....

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