Innovation is the life source in the world today. For a long time, it has been taken as a given that the world is changing at an increasing rate and the only way for companies and people to cope with this increasing rate of change is innovation. So what exactly is innovation?
Wikipedia defines innovation as "a new way of doing something." Additional definitions of innovation can be found at the Innovation Zen blog. The key take away here is that innovation involves doing something in a new fashion. In every industry or market, there evolves a consensus on doing things. Innovation comes when someone, usually an outsider, discovers a new way of doing these things. Or a discovery or invention renders the product or service obsolete. What is interesting about innovation is that incumbents are usually not the people who innovate. This is in many respects surprising when one considers that the incumbents should be most aware of discoveries or inventions or trends that will affect them. After all, their very survival depends on it.
Case after case in industry after industry has shown companies being caught flat footed and in many cases going out of existence. Delving into the (relatively) remote past, coach makers failed to see the arrival of the automobile as a threat and an entire industry was extinguished to be replaced by another. More recently, in computers, mainframe manufacturers almost went under under the onslaught of the personal computer. In both cases, new players on the scene pulled the rug from under the feet of the incumbents. For a more recent example, take the music industry. When the Internet came along, there arose the question of what to do with the medium. The music industry viewed the new medium as a threat to its lucrative sales of CDs. Also, in the beginning, no one was sure exactly how to make use of this new medium. Then Napster came along and showed how music could be efficiently distributed to large numbers simultaneously. The industry's response? Sue Napster out of existence. However, by then the cat was out of the bag and for the next 15 years, the music industry struggled with the rise of online music. Even now, it is only reluctantly coming round to viewing the Internet as a new medium. Only now is it reluctantly acknowledging that the old business model is dead and a new one has to be found.
So now the question is why are incumbents so blind? Why does innovation typically not come from them? Part of the reason is that incumbents, being so close to the action, fail to see the wood for the trees. Also, when a new innovation comes along, it often is not seen as a potential threat because of (usually) teething problems. A third reason is that over time, large corporations have ceased to be well springs of research and innovation. Instead they have tended to become rent seekers. So for a variety of reasons, well established companies cease to be innovative and thus lose their edge and often their very existence.
Wikipedia defines innovation as "a new way of doing something." Additional definitions of innovation can be found at the Innovation Zen blog. The key take away here is that innovation involves doing something in a new fashion. In every industry or market, there evolves a consensus on doing things. Innovation comes when someone, usually an outsider, discovers a new way of doing these things. Or a discovery or invention renders the product or service obsolete. What is interesting about innovation is that incumbents are usually not the people who innovate. This is in many respects surprising when one considers that the incumbents should be most aware of discoveries or inventions or trends that will affect them. After all, their very survival depends on it.
Case after case in industry after industry has shown companies being caught flat footed and in many cases going out of existence. Delving into the (relatively) remote past, coach makers failed to see the arrival of the automobile as a threat and an entire industry was extinguished to be replaced by another. More recently, in computers, mainframe manufacturers almost went under under the onslaught of the personal computer. In both cases, new players on the scene pulled the rug from under the feet of the incumbents. For a more recent example, take the music industry. When the Internet came along, there arose the question of what to do with the medium. The music industry viewed the new medium as a threat to its lucrative sales of CDs. Also, in the beginning, no one was sure exactly how to make use of this new medium. Then Napster came along and showed how music could be efficiently distributed to large numbers simultaneously. The industry's response? Sue Napster out of existence. However, by then the cat was out of the bag and for the next 15 years, the music industry struggled with the rise of online music. Even now, it is only reluctantly coming round to viewing the Internet as a new medium. Only now is it reluctantly acknowledging that the old business model is dead and a new one has to be found.
So now the question is why are incumbents so blind? Why does innovation typically not come from them? Part of the reason is that incumbents, being so close to the action, fail to see the wood for the trees. Also, when a new innovation comes along, it often is not seen as a potential threat because of (usually) teething problems. A third reason is that over time, large corporations have ceased to be well springs of research and innovation. Instead they have tended to become rent seekers. So for a variety of reasons, well established companies cease to be innovative and thus lose their edge and often their very existence.
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