Company Strategies Policy Makers Need to Know

Translating innovation into U.S. growth: An advanced – industries perspective (McKinsey Quarterly, James Manyika, Daniel Pacthod, and Michael Park, 2011) 

The purpose of this report is to answer the following question: Has the United States been losing its ability to translate innovation into economic leadership?

Findings include but are not limited to: 

  • In leading industrial technologies, the United States finds itself competing against or even catching up with foreign companies and engineers. 
  • The composition of global demand has changed dramatically over the past few decades.  For the first time more than 50 percent of the global middle class lives outside North America.  While many next – generation engineered products are in high demand by customers in the U.S., Europe, Asia, Latin America, and the Middle East.
  • As a result of the declining prestige of the U.S. engineering profession and the lagging effectiveness of the education system, scientific talent is building outside the United States.
  • Entrepreneurship is the magic that binds all these elements, yet we see an increasing risk aversion toward new ventures in the United States.

Recommendations include, among other things:

  • Clearing the way for the cutting – edge industrial technologies of the future
  • Rebuilding infrastructure
  • Attract and retain talent
  • Reenergize the entrepreneurial spirit in large U.S. companies

The Next Frontier of Innovation(John Seely Brown and John Hagel III; The McKinsey Quarterly, 2005)

The purpose of this report is to look at impediments to push systems and examine ways pull systems can be advantageous to businesses. The authors proposed that the next frontier of innovation will require the broad adoption of pull capabilities and less reliance on traditional push systems.

Other findings include, but are not limited to:

  • Push systems inhibit product innovations and, even more importantly, make it much harder to implement incremental process innovations rapidly.
  • The next frontier of innovation will require the broader application of pull capabilities as well as less reliance on traditional push systems, which, as demand becomes more and more difficult to forecast, increasingly fail to deliver even the efficiency they were designed to promote.
  • Cocreation is a powerful engine for innovation: instead of limiting it to what companies can devise within their own borders, pull systems throw that process open to many diverse participants, whose input can take products and service offerings in unexpected directions that serve a broader range of needs.
  • The benefits of pull systems are: enhanced innovation, increased opportunity for collaboration, closer relationships with customers and suppliers, more rapid feedback, richer reflection on the results of distributed experimentation, and greater scalability.

Recommendations include, but are not limited to:

  • Use metaphors to deepen understanding- Push models are typically based on programs, such as tightly scripted manuals, standardized curricula, the offerings of network television, and software. By contrast, pull approaches tend to work on open-source platforms to accommodate the changing needs of participants. As an example, Expedia’s Travel Service employs a pull model.
  • Understand the spectrum- pull platforms and push programs are not mutually exclusive. Pull models can be used to help consumers gain access to products produced by traditional push programs, but pull distribution systems are now creating opportunities to reconfigure the production process through publishing on demand.
  • Examine your mind-set- instead of wondering what companies can get from their business partners, executives will have to ask for what they and their business partners can learn from one another.
  • Start where you are- executives can start to transform corporate operating processes by challenging the managers who run them to deploy additional pull capabilities as a way of meeting performance targets.

Innovation Strategies for the Global Recession(Chuck Frey of Innovation Tools and Rennee Hopkins Callahan of Innosight, 2008)

The purpose of the report is to examine the strategies that innovation authors, bloggers, and consultants, and practitioners recommend for maintaining innovation during challenging economic times. The authors proposed that if companies suspend innovation initiatives until the end of the economic downturn, they will risk being well behind the curve when the economy does recover. Findings include, among other issues:

  • Today, it is crucial to change as fast as the environment is changing around you; the race to reinvent your strategy and your business model before they become obsolete. Most companies tend to “postpone” this strategy when the economy is on the up, and risk breaking a successful business model overnight when the economy takes a downturn.
  • Companies who do best from a recession maintain their commitment levels to innovation, by not cutting back on advertising, training, marketing, and IT. Unfortunately, only 5% of the companies fit this description.

Recommendations include, but are not limited to:

  • Start scenario planning now. Forecast two to three years out and evaluate the likely changes and outcomes from the financial crisis. This will help to identify new ideas and opportunities.
  • Prune your innovation portfolio. Get rid of some of the riskier, longer-term, or overly broad programs, and redeploy the funds to support more promising initiatives with shorter time horizons.
  • Look for opportunities to inexpensively test new ideas. “Build, test, and learn-cheaply” is the mantra that experts suggest to follow.

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