here’s a different perspective on innovation. Everyone talks about being innovative, ideating (whether big or small). I think there’s another side to it - the ability of absorbing and deployment innovation within the system. It might be as simple as rolling out best practices or as complex as coming up with a startup that disrupts the incumbents. This ability is a cultural thing, every culture has it to a differing extent.

Deployment is as critical since innovation/ideas/inventions have no meaning if there wasn’t a system to absorb them. This is the reason why some patents become so valuable. Another way to look at it. 15 years ago, it used to take 3 years or more to get a new phone. Now, you are starting to get 2 MBPS broadband with your phone and IPTV is perhaps a few years away. The rate of deployment is accelerating and hence ideas are becoming more and more important. This is extremely visible in India. I remember as a child, new ideas were not as important as “conforming” was.

There was an article from McKinsey that looked at the productivity of nations. US was on top. I am wondering if productivity of an Organization / community / society / Country is not directly linked to it’s capability of absorbing innovation.

I submit that while ideating/innovating is the sexy thing to do, it is the capability to absorb and deploy innovation deeply is where the real payoff happens. While new ideas, patents generate revenue. The real money lies in identifying the right ideas, absorbing and deploying them deeply. And yes, the ability to create and deploy are very closely linked together (but not always - e.g. I consider myself quite innovative but I’m actually very conservative in trying out new software or new equipment - I usually stay behind the curve).

Arun, The zero-sum idea looks promising but I have to think more about it. Somehow I don’t look at relentless continuous improvement, say the Toyota Way, as having only zero-sum outcomes.

Atul’s point about a toddler is applicable to companies as well. Indian MNCs are just discovering what they can do. Its an exciting phase of growth. Right now they feel that anything is possible. They are still trying to find their limits.

I like your simplified matrix.

Some thoughts:

1. With the opening up of the Indian economy, we have been suddenly exposed to an array of new things of all sorts, akin to a toddler’s first visit to the toyshop. That creates more potential for innovation.

2. The ‘race for recognition’ is what causes people to club both significant and not-so innovations together. I like Arun’s test (above) - innovation must not be zero sum.

3. There is more scope for innovation in the local context than when the end customer is geographically distant, simply because the problem can be understood more deeply.

4. Quality processes may or may not be innovations by themselves, but are enablers for sure. For example, better effort estimation ability may be an incremental improvement to an organization’s process, but is an enabler for the innovative estimation tool possibly developed to achieve that improvement.

Regards,

Innovation - NOT a zero sum game. As Vijay said, these create new categories and create a whole new ecosystem that is worth much more than whatever it replaces.

Improvements - Incremental improvements are mostly zero sum games. if you can do something for 10% cheaper, you have 10% more profit. Or if you can achieve very good JIT inventories, usually the inventory costs are moved to the supplier who has to take care of warehousing to meet Dell’s JIT contracts.

I have no experience with TQC and JIT. But looking at Six Sigma and CMMI, I would be right in saying that these have not added value into software development. CMMI level 4 and 5 usually means the PM spends time inventing metrics to get the SQA out of range. Six Sigma is another manufacturing metric that everybody has happily imported into software development. As I keep on telling my colleagues, CMMI doesn’t write great software; great developers do.

Leap-frog instead of “catch-up” as the term for the quantum reactive? iPod I would characterize as a leap-frog given we’ve seen mp3 players before. I would characterize this as the most common category of what we commonly (lay terms) call “innovation”.

On the proactive quantum, “category creators” could be a term I can suggest. World wide web, open source software are examples. Quantum innovations I presume are not just radically different ideas but also successful ones in terms of adoption, business models etc.

I presume your scale on quantum-incremental is more in terms of adoption and impact, hopefully not in terms of how innovative the solution is? If so, I wouldn’t bucket process innovations into the incremental — TQC, Six Sigma, JIT could be significant?

If people were honest with themselves, they would realize that there is indeed a lot of innovation hype resulting in everybody branding everything they do as innovation. I would say that process and incremental improvements are very very important in their own right. But we should not confuse them with innovation.

Instead these incremental improvements are COMPLEMENTARY to innovation. A company cannot move forward with innovation alone.
– Incremental improvements are the mainstay to extract most value (aka money) out of innovations
– Incremental improvements create more profits that can be used for more innovations
– Process improvements allow companies to scale their innovations efficiently.
Example:
1.) The iPod is a great innovation in simplicity. But Apple is rumored to have a top-class SAP ERP system that allows them to fine-tune and keep on lowering the cost of their iPod’s and get more and more $$.
2.) The hybrid engine in the Prius is an innovation, but Toyota keeps on chipping down the cost of the Prius with incremental improvements.

Key takeaway:
You cannot come up with an iPod with incremental improvements. And lowering the cost of the iPod thru careful ERP and supply-chain optimization is not innovation; unless Apple came up with a revolutionary component that replaces an existing component at 1/2 the cost

Now let’s look at why most firms in India are more of cost and concept arbitageurs rather than real innovators. I would say that the reason is that there is no reward motive. You make much more money thru cost arbitrage that management doesn’t need to innovate or promote such a culture. Indeed the Indian firms do well thru operational and execution excellence more than anything else.

This is the same reason why customer service is absymal in India. Because there are so many new customers breaking down the door that the RoI on customer service is negative.