Failing by Design
Whether you're launching a new business, creating a new product, or developing a new technology, one of the best tools for learning is failure. This isn't to suggest that failure is a good thing. Failure can waste money, destroy morale, infuriate customers, damage reputations, harm careers, and sometimes lead to tragedy. Failure is inevitable in uncertain environments, and, if managed well, it...
Read MoreInnovating on the Cheap
Everyone knows that innovation is essential to a company's long-term success. But even in the best of times, innovation investments can be painful. Typically, success rates are low, and returns on investment are far from assured. That makes spending money on innovation hard to justify in a down economy. Even when cash is tight, businesses don't have to stop innovating. Fortunately, it is...
Read MoreThe CEO’s Role in Business Model Reinvention
Consider a few of the great innovation stories of the past decade: Google, Netflix, and Skype. Now ask yourself: Why wasn’t Google created by Microsoft, or Netflix by Blockbuster, or Skype by AT&T? In fact, why do almost all established corporations fail to find the next big thing before new competitors do? The simple explanation is that many companies become too focused on...
Read MoreThe 5 Myths of Innovation
Today, most managers assume that innovation is supposed to be done constantly, by everyone in the company, on every area of the company, while using new Web-based tools to help it happen. Does this conventional wisdom really make sense? Or do the experiences of companies reveal something different? To find the answers, a team of researchers spent three years studying the process of innovation in...
Read MoreAre you using the best business model to wow your customers and win big profits?
Discover the 10 business model patterns that serve as blueprints for blockbuster 21st century businesses. Instead of designing a new, customized Value Proposition by making decisions on several elements of a business model, you can also begin with a business model pattern in which all of the decisions have already been made for you. To use this approach, you simply consider the various types...
Read MoreBusiness "Invention" and "Re-Invention": The Overarching Imperative of the Coming Decade
Imagine a group of runners lined up, waiting to start a one-mile race. Just before the starting gun goes off, another racer pulls up to the line on a motorcycle. The gun goes off and he squeals out, beating the rest of the field by a very wide margin. The losing runners complain, but the “winner” observes that no one specified he had to run the race on foot. He was simply “introducing a...
Read MoreA Garage and an Idea: What More Does an Entrepreneur Need?
Silicon Valley started with a garage, or so the story goes. In a small garage in Palo Alto, California in 1938 to 1939, William Hewlett and David Packard experimented with numerous electronic devices, including a prototype for an audio oscillator. That product enabled the entrepreneurs to launch Hewlett-Packard, one of the largest high-tech companies in the world today. The HP garage is the...
Read MoreThe Ignorance of Crowds
In 1997, a software programmer named Eric Raymond presented a paper at a technology conference in Würzburg, Germany. Titled “The Cathedral and the Bazaar,” the paper caused immediate stir, and it is now widely considered one of the seminal documents in the history of the software industry. As the author explains in “The Ignorance of Crowds,” in the Summer 2007 Strategy+ Business,...
Read MoreThe Evolution of Technology: An Interview with W. Brian Arthur
Who determines the path of new technologies: the engineers in the R&D lab, the decision makers of a company, or the consumers who put that technology to use? For many people, W. Brian Arthur’s theories about complexity and innovation have provided the most effective answer. In the 1980s, as an economist based at Stanford University and the Santa Fe Institute (to which he would move...
Read MoreThe Innovator’s DNA
“How do I find innovative people for my organization? And how can I become more innovative myself?” These are questions that stump senior executives, who understand that the ability to innovate is the secret ingredient of business success. Unfortunately, most of us know very little about what makes one person more creative than another. Perhaps for this reason, we stand in awe of...
Read MoreAre You Killing Enough Ideas?
Right at this moment, a group of senior leaders of a large global company are wondering why they aren’t innovating enough. Yet, the biggest problem many companies face isn’t a lack of good ideas. Instead, the real challenge is that they are still wasting resources on ideas that should have been abandoned a long time ago. As the authors explain in “Are You Killing Enough Ideas?” in the...
Read MoreThe Talent Innovation Imperative
Many executives assume that in the current economic crisis, employees are so grateful to keep their jobs that they can be relied on to deliver 100 percent. On the other hand, the crisis only increases the need for companies to rely on their most talented people. And while the commitment of employees is most needed in a crunch, that commitment is all too easy to lose. For example, surveys...
Read MoreDecisions 2.0: The Power of Collective Intelligence
First, thanks to the Internet and other information technologies, you now have access to more data about customers and employees than ever before. However, data is not enough; you still need to make good decisions. To improve the quality of their decisions, many companies are now using Web 2.0 applications to tap into “the collective” on a greater scale than ever before. In fact, the...
Read MoreHow to Delight Your Customers
It’s important to realize the difference between customer satisfaction and customer delight. Customers are satisfied when you give them what they expect. To delight them, you have to give them more than they expect. By giving them a positive surprise, you can commit them to your product. For example, a supermarket satisfies customers’ expectations if its produce and meat are of good...
Read MoreInnovation in Turbulent Times
During a recession, when many companies face declining revenues and earnings, executives often conclude that innovation isn’t so important after all. Better to focus on the tried and true, they think, than to waste money on untested ideas. However, innovation is both a vaccine against market slowdowns and an elixir that rejuvenates growth. Imagine how much better off General Motors might be...
Read MoreWhat People Want (and How to Predict It)
Consumers today are overwhelmed by “the paradox of choice” — so many choices to make, and no easy way to distinguish among the offerings. Producers face the opposite problem: They need to make wise investment decisions in a world cluttered with products. Historically, neither the creators nor the distributors of “cultural products,” such as books or movies, have used analytics —...
Read MoreHow to Win by Changing the Game
Let’s discuss how you can boost your company’s growth by building a capabilities-driven strategy. When most corporate leaders hear about using capabilities as a strategic advantage, they tend to think internally. They assume that building capabilities is a job for their human resources, training, or R&D departments; or they squander their efforts on a variety of initiatives that...
Read MoreReinventing Your Business Model
Let’s discuss business model innovation. Why is it so difficult for established companies to pull off the new growth that business model innovation can bring? Here’s why: They don’t understand their current business model well enough to know if it would suit a new opportunity or hinder it, and they don’t know how to build a new model when they need it. In “Reinventing Your Business...
Read MoreWanted: Time to Think
In recent years, we have experienced a speedup in the pace of life that leaves us little time to stop and think. Yet during this same period of time, we have produced extraordinary tools for investigating the world and for sharing our findings. Thanks to networked digital computers, e-mail and the World Wide Web, access to scholarly information and research results has never been easier. We...
Read MoreP&G's Innovation Culture
The heart of a company’s business model should be game-changing innovation. This is not just the invention of new products and services, but the ability to convert ideas into new offerings that alter the very context of the business. As they lead to repeat purchases, these offerings reshape the market, so that the company is playing an entirely new game to which others must adapt. Consider...
Read MoreManagement Innovation
Over the past half-century, scholars around the world have produced a vast body of academic research on innovation. While most of this research has focused on technological innovation, management innovation has not received as much attention. In fact, very few businesses have expertise in the area of management innovation. A typical large organization might employ hundreds of scientists...
Read MoreCreativity and the Role of the Leader
Let’s talk about creativity. In today’s innovation-driven economy, understanding how to generate great ideas has become an urgent managerial priority. To connect theory and practice, Harvard Business School professors Teresa M. Amabile and Mukti Khaire convened a two-day colloquium of leading creativity scholars and executives from companies such as design consultancy IDEO, technology...
Read MoreOutsourcing: From Cost Management to Innovation and Business Value
Over the past 20 years, many companies have outsourced their information technology to outside providers as a way to cut costs. Now, as those companies face the urgent need for new ideas, they face the challenge of innovating in an outsourced world. Can CIOs who have outsourced most of their IT meet this challenge, or is outsourcing incompatible with innovation? In “Outsourcing: From Cost...
Read MoreService-Logic Innovations: How to Innovate Customers, Not Products
From the perspective of traditional product innovation theory, it is hard to understand how Google, just seven years after its founding, has achieved a valuation of billions of dollars and enjoys a market capitalization that surpasses a long list of business giants, including Coca-Cola, Honda, and British Airways. Similarly, traditional marketing and strategy literature can’t explain the...
Read MoreOpen Innovation and Strategy
A new breed of innovation — open innovation — is forcing firms to take a different view of business strategy. Traditional business strategy has focused on building barriers to competition, rather than promoting openness. Recently, however, firms are experimenting with new business models based on harnessing collective creativity through open innovation. If we are to make strategic sense...
Read MoreLaunch and Learn
Despite the critical importance of innovation, many companies lack the ability to develop new products and services consistently. What’s holding them back? The root of most business innovation problems is a lack of clear linkages among three distinct “innovation portfolios”: The current portfolio of products or services. The portfolio of advanced technology capabilities. The...
Read MoreBreakthroughs and the ‘Long Tail’ of Innovation
Many managers have little understanding of the process of invention, or the most likely sources of breakthroughs. Specifically, are blockbuster innovations more likely to come from a lone inventor, or from a collaborative team? As Harvard Business School professor Lee Fleming explains in “Breakthroughs and the ‘Long Tail’ of Innovation,” in the Fall 2007 Sloan Management Review, to...
Read MoreThe Flatbread Factor
Today’s emerging markets, from China to Brazil to Eastern Europe, have strikingly similar life cycles of development. As Alonso Martinez and Ronald Haddock of Booz Allen Hamilton explain in “The Flatbread Factor,” in the Spring 2007 Strategy+Business, companies that recognize those patterns can pursue global consumers strategically. Consider Gruma SA, a company headquartered in Mexico. ...
Read MoreDiffusion of Web-Based Product Innovation
Every manager knows it’s important to involve customers in the creation of new products. By becoming directly involved in the innovation process, customers can help companies better anticipate market changes. However, the absorption of customer knowledge is not an easy task. It’s difficult to learn what customers want, and it’s also hard to transfer that knowledge. The Web can greatly...
Read MorePurpose and Innovation
Michael Porter asserts that “Innovation has become perhaps the most important source of competitive advantage in advanced economies.” And yet, when Booz Allen Hamilton recently conducted a study of the 1,000 biggest spenders on innovation — the companies with the largest research and development budgets around the world, they found no significant correlation with any measures of corporate...
Read MoreThe Innovation Sandbox
Many people believe that to innovate successfully, companies have to break free of the constraints that determine what is possible. However, as C.K. Prahalad explains in “The Innovation Sandbox,” in the Autumn 2006 Strategy+Business, breakthrough innovations actually happen when companies start by setting limits. Prahalad is Distinguished University Professor of Corporate Strategy at the...
Read MoreDesigning the Right Product Offerings
Businesses are constantly making decisions about which products and services will attract customers. In an era driven by the mantra of “give customers what they want,” some businesses feel compelled to offer many different versions of their products. This development is relatively new. For years, blue jeans traditionally came in only one shade of blue and in only one style, but now they...
Read MoreFinding Your Next Core Business
How do you know when your core business needs to change? And how do you determine what the new core should be? These are the questions that have driven the efforts of a research team led by strategy consultant Chris Zook over the past three years. Zook leads the Global Strategy Practice of Bain & Company. He is the co-author of the 2001 best-seller Profit from the Core and the author...
Read MoreInnovation Versus Complexity: What Is Too Much of a Good Thing?
What’s the number of product or service offerings that would optimize both your revenues and your profits? For most firms, it’s considerably lower than the number they offer today. The fact is, companies have strong incentives to be overly innovative in new product development. But continual launches of new products and line extensions add complexity throughout a company’s operations,...
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