Thursday, August 2, 2007

The Complex Definition of Innovation

Just as I recently wrote about how the words User Experience are becoming Elastic, Innovation has been thrown around in the same manner. Dr. Sam Pitroda is the National Knowledge Commission chairperson of India. He just released a report on how innovations in processes and products could bring about seminal changes in the functioning of large and small and medium enterprises. When giving the report, he and his fellow researchers had a tough time deconstructing the definition of innovation. When reading about this I felt good because it is complex and so many use it so cavalierly these days.

In the report, while 81% of large firms agree that innovation is critical to growth and competitiveness only 37.3% of them have introduced breakthrough innovation. 76.4% feel as if they have introduced incremental innovation. I guess that means that 76.4% have a pulse and that, sadly, 23.7% are in a corporate coma. You'd basically have to do nothing at all to not have any incremental innovation under their definition.

The report also commented on how public & private owned firms are much more innovative than government agencies. Maybe this is the reason NASA and other agencies are sponsoring these contests in order to innovate. Are they just not built to innovate? Didn't they innovate when they were in a race to get to the moon?

Non-government agencies need to show profits in order to stay in business. This doesn't force them to innovate however, especially after they've produced something that has made them profits. A lot of times companies that display innovation initially lose that over time. This is especially true for public companies that have to justify every penny they spend. It's easier to show an investment into Technology vs. Innovation. This goes back to the difficulty in defining it. What does $300,000 invested in innovation mean? I know what $300,000 of technology means or even $3,000,000, and I can share that easily with my shareholders. Innovation inherently includes risk in its investment and is a much harder sell.

Look at what has gone on with Nintendo and Sony. The result? Nintendo stock is at a six-year high while Sony stock continues to slide since May. It’s difficult to compare the two stocks for a lot of reasons, but if you read the stories about the two over the last year you get the point. Nintendo innovated with the Wii and won while Sony stayed in the game console arms race and lost.

The Wii spawned stories about people using the system while the Playstation boasted processor speed and Blu-ray capability. Experience vs. Technology. Even the bad experiences didn't really hurt the Wii. Stories of the joystick flying out of player's hands and breaking HD TVs or even giving their girlfriends black eyes have done nothing but created more buzz about the console. There is even a website dedicated to such stories. There is a strong bond between experience design and innovation.

The investment Nintendo made in their innovation must now look very small to its shareholders while the technology investment Sony has made will probably weigh down their annual report. It's important to remember that Nintendo innovated during the seventh generation of video game consoles. So how do we move this away from Monday morning quarterbacking and get investment in innovation well before annual reports are printed?

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