Home Articles Why Innovation (with a capital ‘I’) is not essential to long term...

Why Innovation (with a capital ‘I’) is not essential to long term success


Here are some revealing statistics. The following excerpt was paraphrased from Creating Wealth by Lester Thurow:

In the 1920s the life expectancy of a publicly listed company in the USA was some 65 years. By the 1990s, this figure had fallen to less than ten years. Of the companies forming the original list of the Standard and Poor’s Index, only one, General Electric, still survives today, and to do so GE has had to constantly re-invent itself to remain relevant.

Innovation versus Invention

Interestingly, some of the less initiated in this business often use the word innovator interchangeably with inventor. This is often done in a polite and misguided endeavour to differentiate the person in question from the classic stereotypical inventor, represented as some eccentric weirdo with fuzzy, white hair and a lab coat.

In fact, innovation and invention are different.

Whereas innovation may be defined as ‘change that adds value’, invention may be perhaps best defined as something ‘new, novel and without precedent’.

Notwithstanding the above, most inventions are, in fact, created by making improvements to existing things. Indeed, there are few totally new inventions.

However, whereas novelty is an essential part of an invention, novelty is not an essential part of an innovation.

Big ‘I’ and little ‘i’

When it comes to understanding innovation further, some texts refer to so called big ‘I’ and little ‘i’.

The former refers to big or disruptive innovations that totally change the landscape of a business, its products or the dynamics of the market. In contrast, little ‘i’ refers more to incremental changes or improvements to businesses and products.

In theory, or more likely with the benefit of hindsight, many thinkers and writers on the subject refer to big ‘I’ as essential for businesses to survive for the longer term. The push is for businesses to ‘disrupt’ themselves and radically change for the better following in the footsteps of companies cited as case studies that have successfully done so.

Rear Vision is a wonderful thing!

NOKIA is one exceptional example of a company that successfully migrated its core business from timber to electronics.

It did this after it saw growing resistance to the use of dwindling natural timber resources and the emergence of the new mobile phone business with almost unlimited market potential. This is a wonderful success story operating on the big ‘I’ model.

General Electric is another company that has reinvented itself to become strong in the financial sector. However, in doing so, GE took the safer option in that, while creating its new enterprise, it did not turn its back on its traditional engineering business. Instead, it used its brand strength to underpin the new endeavour.

Many texts refer to these case studies as a blueprint for the future and an endorsement of big ‘I’ as the means to renewed riches as companies model themselves on the NOKIA style of rebirth. Unfortunately, all of these case studies are just that, studies in hindsight of a few ‘stars’ that have successfully crossed the bridge to new horizons.

Rear vision is a wonderful thing, but if you look at the history of disruptive pioneers you will find the path littered with the corpses of those who dared to be first with disruptions but failed, as is so often the case. The problem is that these pioneers are seldom heard from.

Failure is an orphan

Consider some of the so called disruptive technologies that have either failed or undergone a very difficult and expensive birth.

The ill-fated COMET jet passenger airliner, a revolution in its day, was plagued with technology problems. The ultimate solutions to the problems enabled Boeing, untarnished by the pioneering COMET failures, to win the world market for passenger jets. Concorde is another example of a technology before its time. Ultimately, supersonic passenger transport will become commonplace but not to the benefit of the Concorde pioneers.

Even the ubiquitous computer took many years to be adopted by the greater community. Indeed, had it not been for the development of both word processing and spreadsheets, computers today would be little more than scientific novelties and platforms for games.

So too the computer mouse which was a complete novelty when first conceived in 1968. In fact, it was some 13 years before this disruption in the way we use computers was actually commercialised.

Similar observations came be made about the internet. This was possibly one of the most disruptive technologies of the 20th century and it has revolutionised the way business is conducted worldwide. But it was the application developers, not the creators, who have won the rich spoils offered by this disruption.

There are countless examples of pioneers who failed with disruptive ventures and seldom rate a mention in the end game.

Unfortunately, too often we are encouraged to follow the path of the very few successful winners who steal the limelight, as they should. But be warned, these people are few and far between.

What about little “i”

The ‘incrementalists’ are the little ‘i’ operators and there would be no better example than the car makers.

Incrementally, these people release face lifted new models with perhaps just one tiny added feature almost annually. They do this for no other purpose than to render your current model obsolete and to keep you continually upgrading to the newer one.

The cell phone and computer games companies are also wonderful exponents of this art.

And what abut Microsoft? None of us can even use all the features of Windows 98. Yet, we still get a new, non backward supposedly compatible version with extra features every couple of years. Indeed, Microsoft even today still owns this market and drives it through incremental innovation.

There can be no doubt that little ‘i’ is far easier to manage than big ‘I’; and little ‘i’ carries far less risk.

So what is it to be?

For my money, little ‘i’ wins pretty well every time. However, if you do wish to have a go at investing in a disruption, use the tried and tested ‘outrigger model’, as this certainly mitigates much of the risk. But that’s a post for another day.

Roger La Salle is the creator of the Matrix Thinking technique and is a prominent international speaker on innovation, opportunity and business development. He is the author of three books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australia and overseas.