The history of innovation in business shows a mix of extraordinary successes and unexpected disasters - sometimes both together, as Morgen Witzel explains.
Innovation is a bit like virtue. Every company would like to have more of it, but not many know how to acquire it and keep it. We know innovation matters, but we are uncertain of how to go about developing and nurturing it.
At the heart of all innovation lies a paradox. We must innovate in order to succeed. The economist Joseph Schumpeter argued that innovation is closely linked to entrepreneurship, and suggested that innovation is one of the things successful entrepreneurs do well; innovation allows them to carve out a niche in the market, or even create an entirely new market. In his book Innovation and Entrepreneurship, Peter Drucker claimed that managers only have two jobs: innovation and marketing
Yet we also know that most innovations fail. Innovations in products and services, the things we make and sell, are particularly vulnerable. According to a report by market research firm Nielsen in February 2018, between 80-85% of all new products in fast-moving consumer goods are failures. In other categories the failure rate may drop to as low as 50%, which is still high
Innovations in process, how we make those things, are also highly risky; no one seems to know how many process innovations fail each year, but there are a lot of management consultants out there making a very good living by picking up the pieces and helping put things back together.
This is an extract from the Innovation Special Report, December 2018.
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