The Innovation Imperative: How Corporations and Nations Can Survive the Tsunami of Global Competition and Thrive

9/3/10

Government leaders in Europe and North America are seeking to formulate enlightened, effective policies to create the necessary ecosystems and help their corporations respond to threats of loss of markets at home and abroad. The need to better commercialize public and private investments in R & D is well understood, but does not always happen as hoped for and mandated in well-intentioned protocols.

Hope is not a strategy.

At the inaugural meeting of the National Advisory Council on Innovation and Entrepreneurship yesterday, U.S. Commerce Secretary Gary Locke said the U.S. Innovation Engine is not working as well as it should, and that is not acceptable…particularly since governments around the world are putting more of their muscle behind their drive for innovation.

Innovation = Invention + Commercialization

One reason that hopeful protocols fail to deliver the needed results is that Innovation is difficult, and requires teamwork. The inventors of breakthrough ideas are rarely well equipped to lead their inventions from the cool comfort of the laboratory to the cruel crucible of the marketplace. Inventors need to team up with gritty, market savvy, workaholic entrepreneurs to reduce their ideas to practice, quantify the value proposition, earn beachhead customers, become an accepted standard, and finally, to achieve total global domination of their chosen market niche.

The Lisbon Strategy in its various forms envisions top-notch inventors achieving innovation by commercializing their ideas. How will they be more easily connected to passionate entrepreneurs, and where will the entrepreneurs come from?

Innovation Gurus

The challenge is palpable for both global and local corporations, as well as government-funded laboratories. The pace of change and the need for rapid innovation has never been greater. Today the CEOs of the top companies in the so-called mature Western economies have few tools (and little time) to help them re-engineer their organizations to be more innovative. They lie awake at night worrying that faster, more innovative, lower-cost competitors are springing up every day, eager to take big bites from their cash cows and star performers.

Indeed, according to an annual study by the Boston Consulting Group, the top 100 companies outside Europe and North America are truly globally ambitious. They have many advantages:

—flexible, talented, hard working, non-union work forces

—flexible labor policies

—modern industrial plants and equipment

—equally modern and flexible supply chains

—access to global capital

—access to international markets, while their home markets may be hard for competitors to enter

In the face of increasing global competition, more and more major companies are coming to understand the value of corporate venturing, which generally aims to give large mature organizations some of the agility of their smaller competitors. Such venturing works both to improve a corporation’s standing in its existing markets and to break into new markets.

Today’s major corporations pursue different organizational strategies to achieve incremental and radical innovation. Incremental innovation is usually managed inside the Business Units, using their knowledge of evolving customer needs, manufacturing flexibility, and short-term budgets. Radical innovation is best done by a team of trusted corporate veterans, protected from “NIH” and reporting directly to the CEO. Buying products from startups is one way to achieve innovation and shorten time to market.

Large Western corporations have many advantages when competing, IF they have the will and clockspeed to use them.

Charles Darwin’s conclusions about evolution also hold for business: “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” Innovation programs such as corporate venturing can help companies evolve in the face of a rapidly changing world, and not just survive, but thrive. The role of governments is to provide a level playing field with policies that support, rather than penalize, success in the highly competitive global markets.

Special thanks to my colleagues, and friends, Dave Weber and Carter Williams, for their help and advice on this article.

Ken Morse is a serial entrepreneur who has launched six high-tech venture companies and formerly served as Founding Managing Director of the MIT Entrepreneurship Center. Follow @

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  • http://www.agilityinnovation.com Paul Hobcraft

    It is always ‘funny’ to see the developing organizations and countries constantly looking at the developed one and visa versa. The role of government needs to be broadened out more than ‘just support’, it has to lead, to push beyond the known into the potential. It has to make all the connections happen.

    I like this as its role. It provides not just the ‘buttons’ but the ‘threads’ to hold it all together, not just the framework but the parts of the roadmap. The more it provides in buttons, the more threads can be created, the more threads the more opportunity. Government should be the master tailor that shapes the very fabric of innovation and provides the connectors to make the ‘cloth’ hang right.

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