Who Innovates?


Schumpter first suggested that small entrepreneurial firms were the sources of most innovations. Later he changed his view and suggested that large firms with some degree of monopoly power were more likely to be the sources of technological innovation. He argued that large firms have the production and other complementary assets that are necessary to commercialize an invention; have the size to exploit the economies of scale that are prevalent in R&D; are more diversified and therefore more willing to take the kind of risk that is inherent in R&D projects; have better access to capital that smaller firms; and, as monopolists, do not have competitors ready to imitate their innovations and therefore are more likely to invest in them. By shifting the focus to the type of innovation, however, whether incumbents or new entrants are able to introduce and exploit innovation is a function of whether the innovation is incremental—a function of how new knowledge and the new product are.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Benefits of Using Teams


Teams are coherent groups of people with complementary skills who work together towards a specified goal. Teams are often the most efficient way of working, and their benefits include:

  1. The members achieving more by working together than they would by working separately or in large, unstructured groups;
  2. Improved motivation and effort;
  3. Flexibility to deal more effectively with change;
  4. More imaginative solutions to new problems; fewer mistakes, as faults are spotted by other members;
  5. Fair division of work, resources and rewards.

Nelson Mandela asked, ‘How can one individual solve the problems of the world? Problems can only be solved if one is part of a team.’ Notice that there is a difference between a team and a group of people who are simply working together. A team is a cohesive set of people who are motivated to achieve common goals. Simply collecting different people does not give a team, as they don’t trust each other, bring along internal politics, don’t share common goals and so on. Twenty people in a room don’t make a team. Team doesn’t just happen. They have to be developed, facilitated and motivated.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Product Specificity


Product specificity means the extent to which the use of a product depends on local socio-technical conditions. This is a function of the type of applications to which the product can be put, its inter-relatedness to other products, the local culture, and government regulation. Cars, for example, would sell better in a large country with a good highway system, space to park cars, good credit systems, and availability of gasoline, than in one without. Such complementary conditions for selling automobiles can be taken for granted in the United States, but not in Nigeria. In some countries, air pollution standards limit the level of pollutants that a car can emit.

Baking foods requires baking ovens, which many households in many countries may not have. Foods that require refrigeration may not do well in countries like Nigeria, where very few people have refrigerators. In the local culture there may be taboos associated with certain products. Local culture can also make some features in local products unnecessary.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Planned Firm Activities


Some innovations come from planned firm activities. This is what many people think about when they think of innovation. A manufacturer invests in R&D and other activities, and out of these investments come new ideas that are nurtured into new products.  A customer, in the normal course of using a product, adds something to the product to make it easier to use. A complementary innovator adds some features to the main product to facilitate the use of its complementary products. Universities and government laboratories, in their normal course of research, hit a breakthrough (such as DNA or the transistor) that firms can build on to offer new products.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Drive for Speed


The ‘time culture’ can impose unrealistic deadlines upon those who are charged with the responsibility for delivering improvements. When a supply chain is improved, the single company may be no more able to achieve a tangible impact upon the external environment than it can deliver all the value that is sought by a final customer. When others are involved, there is likely to be bargaining and negotiation.

Environmental initiatives should not result in the pressure for speed or ‘response’ driving out the long-term thinking that is required. Assuming ‘results’ are required, these might best be achieved as a result of flexibility within the framework of a longer term relationship.

Today’s craze can be tomorrow’s memory. Too many managers assume that trends will continue longer than subsequently turns out to be the case. With many environmental and social policies taking many years to have a significant impact, companies face a dilemma similar to that encountered by those seeking to change attitudes and behavior. By the time the outcomes initially sought have been achieved, the requirement may have changed. Will there be a backlash when people count the costs? Will they become bored?

Attempts to deal with ‘isms’ can open a Pandora’s box of dashed hopes and unfulfilled expectations, especially when initiatives are not thought through. Enough noise may be raised to alarm some, while not enough is done to appease or deliver to others. Companies should beware of cosmetic programs.

Winners assemble a comprehensive, complementary and coordinated set of initiatives, embracing all the parties involved, that are likely to have a significant impact upon an environmental or social issue. They achieve significant changes of attitude or behavior, because all the various change elements that are necessary have been put in place.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Sources of Innovation


The environment constitutes a very important source of innovations. Since tacit technological and market knowledge is best transferred by personal interaction, local environments that are good sources of innovation can make it easier for local firms to recognize the potential of an innovation. Take the presence of related industries. Being close to the supplier or complementary innovators increase the chances of a firm’s being able to pick up useful ideas from them.

Being close to universities or other research institutions helps in two ways. First, these institutions train personnel that can go on to work for firms or found their own companies. The knowledge that they acquire gives them the absorptive capacity to be able to assimilate new ideas from competitors and related industries. Second, scientific publications from the basic research often act as catalyst for investment by firms in applied research.

Finally, governments play a critical role in the ability of firms to recognize the potential of innovations. Their role can be direct or indirect. The direct role may be in the sponsoring of research. The indirect role is in regulation and taxation: lower capital gains taxes or other regulations that allow firms to keep more of what they make can allow them to spend more on innovation.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Functional Sources of Innovation


There are five major sources of innovation for a firm: 1) its own internal value chain functions, 2) its external value-added chain of suppliers, customers, and complementary innovators, 3) university, government, and private laboratories, 4) competitors and related industries, and 5) other nations or regions.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Deliberate Innovation Strategy


The strategic choice view argues that if an incumbent is not the first to introduce an innovation, it may not be because it has no incentive to invest, its competence has been destroyed, it has not recognized the potential of the innovation, it does not have the complementary assets, it did not use the right adoption mechanism, or it is an environment that is not conducive to innovation. It may be because of the firm’s innovation strategy—its goals, timing, actions, and resource allocation in using new knowledge to offer new products or services. By making the right choices early, a firm can build the right competences and complementary assets, or even shape the kind of environment in which it is going to operate.

There are several innovation strategies: offensive, defensive, imitative, dependent, traditional, and optimistic. A firm with an offensive strategy is the first to introduce new products. If the strategy is to be the first to innovate, it will invest in the innovation and build the capabilities to do so.  In a defensive innovation strategy, a firm waits for a competitor with an offensive strategy to introduce a product first and resolve some of the uncertainties confronting the innovation. The defensive firm then introduces its own product, correcting any mistakes that pioneers may have made.

Firms pursuing a defensive strategy normally have very strong complementary assets—capabilities such as marketing, manufacturing, distribution channels, and reputation which allow a firm to commercialize an invention—and when they decide to move, they do so very quickly. They usually have a strong R&D since it takes knowledge to absorb knowledge. The product is not an imitation of the pioneer’s version but rather a differentiated product, often with better features and lower cost. The firm, in effect, catches up with or leapfrogs the pioneer. Thus not being the first to introduce an innovation may not be a sign of a lack of incentive to invest, competence destruction, absence of appropriate complementary assets, inappropriate adoption mechanism, or being in the wrong environment. It may be because the firm in question has a defensive strategy.

While a firm with a defensive strategy would like to differentiate its products, one with an imitative strategy would like to produce a clone of the pioneer’s product. It has very little attention of catching up with or leapfrogging the pioneer. It usually has such low-cost capabilities as lower labor costs, access to raw materials, and strong manufacturing. In the dependent strategy the firm accepts a subordinate role to a stronger firm. It imitates product changes only when requested by the customer or superior. Many large Japanese firms have these satellite firms. The traditional strategy makes very few changes to products, only striving to offer the lowest cost possible. In the opportunistic strategy the firm looks for some unique needs of a market segment that are not being met—it looks for a niche market. The point in all these other strategies is that a firm’s failure to introduce a product first can be due to its deliberate strategy.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Overspending on Capabilities


Given that competence and endowments are so important, why do firms not outbid each other in the process of acquiring a capability so that whoever ends up with it has paid so much for it that it is no longer profitable? In some cases firms have actually paid too much for capabilities. Some failed acquisitions can be placed in this category. For two reasons, however, winners can still end up with profitable capabilities. First, because firms may not even know explicitly if there is competition going on or what capability it is that they are competing for, there may not be enough competitors to overbid them for the capability. For example, not all firms knew that IBM was looking for an operating system to buy for its personal computers and therefore did not have a chance to compete for the standard. Second, not all firms have the right complementary endowments that are sometimes critical to build a capability. Not all firms have a Bill Gates whose shrewdness and experience helped make DOS a standard.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Nontalent vs. Weakness


As you might expect, great managers take a welcomingly pragmatic view of our innate imperfection. They begin with an important distinction between weaknesses and nontalents. A nontalent is a mental wasteland. It is a behavior that always seems to be a struggle. It is a thrill that is never felt. It is an insight recurrently missed. In isolation, nontalents are harmless. You might have a nontalent for remembering names, being empathetic, or thinking strategically. Who cares? You have many more nontalents than you do talents, but most of them are irrelevant. You should ignore them.

 However, a nontalent can mutate into a weakness. A nontalent becomes a weakness when you find yourself in a role where success depends on your excelling in an area that is a nontalent. If you are a  server in a restaurant, your nontalent for remembering names becomes a weakness because regulars want you to recognize them. If you are a salesperson, your nontalent for empathey becomes a weakness because your prospects need to feel understood. If you are an executive, your nontalent for strategic thinking becomes a weakness because your company needs to know what traps or opportunities lie hidden over the horizon. You would be wise not to ignore your weaknesses.

 Great managers don’t. as soon as they realize that a weakness is causing the poor performance, they switch their approach. They know that there are only three possible routes to helping the person succeed. Devise a support system. Find a complementary partner. Or find an alternative role.  Great managers quickly bear down, weigh these options, and choose the best route.

 My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight