How Firms can Reap the Rewards of Innovation

Knowledge at Wharton has a podcast interview (and an edited version of the transcript) with Harold Sirkin, who is senior VP at Boston Consulting Group and co-author of Payback: Reaping the Rewards of Innovation.

One concern is how to apply process to innovation, and preparing so the payback, i.e. the financial return that validates new ideas and inventions:

[…] to profit from their innovations, companies need to develop a process to collect, screen and nurture new ideas and “commercialize and realize them in a way that achieves payback.”

I think that he’s talking about business model innovations most of the time, e.g. when talking about the innovativeness of Microsoft, which he get’s right in my book:

[…] we say Microsoft is probably the most innovative company. We may define innovation differently than others do, and we think that definition is very important. We think without getting payback, ideas are ideas but they’re not very valuable. Businesses are in business, like Microsoft, to make money.
Microsoft is one of the most innovative companies because it is very good at not just identifying ideas but at driving them into the marketplace and driving them successfully to earn a return. That makes Microsoft, by our definition, the most innovative company.

Note also this on Apple

[on building cash traps with a goal in mind] You may think about an ecosystem. A lot of what Apple does with the iPod is they’ve built an ecosystem around it for all the products that go with it. This helps Apple make more money in that area.

Overall interesting, touching also on orchestration vs. outsourcing, innovation in different companies and countries and more

  1. Payback on Innovation…

    There’s another worthwhile podcast on the Payback meme, this time in the Harvard Business Schools IdeaCast series:
    The Rewards of Innovation: In our feature segment, Jim Andrew, co-author of Payback: Reaping the Rewards of Innovation, takes a cal…

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