After Lehman: How Innovation Thrives In a Crisis
By Scott Anthony
The economic shocks that reverberated through the economy a year ago could easily have marked the end of the nascent "Innovation Movement." After all, how could companies prioritize developing innovation programs in the face of very real questions of fundamental survival?
A year later, it is clear that innovation has never been more important. And, in a strange way, the scarcity forced on many companies has been a hidden accelerator of efforts to systematize innovation.
Certainly companies like General Motors faced such critical operational issues that innovation efforts had to be de-prioritized, if not shut down. Arguably the struggles of these companies highlighted how very important it is for companies to get ahead of the innovation game by investing in innovation before they need to invest in innovation.
More and more executives have come to terms with the fact that the "new normal" of constant change necessitates developing deep competencies around innovation.
The increasing pace of change is not really new. Long-term research by Innosight Board member Dick Foster shows how the pace of "Creative Destruction" has been accelerating for some time.
One simple way to demonstrate this increase is to look at the turnover in Standard & Poor's index of leading U.S. companies.
The S&P index goes back to 1923. Foster's research found that in the 1920s (when the list contained 90 companies), when a company got on that list, it would stay on for about seventy years. That meant that people who joined an S&P company might be joining the same company their parents worked for and might expect their children to work there as well.
In the 1960s, a company that entered the S&P index could expect to stay on it for about 40 years -- long enough for one career at least.
Today, a company that enters the S&P 500 index will stay on it for less than 20 years. That means if you join an S&P 500 company today, it most likely won't be an S&P 500 company by the end of your career because it will have failed, shrunk, or been acquired.
Increasingly, companies that buck the trend and last 30 or more years will do so only by mastering the ability to perpetually transform themselves. As Foster notes, "It's an entirely different world where the balance between continuity and change has moved to change."
Companies that continued to focus on innovation in the midst of the downturn, such as Amazon.com, IBM, and Procter & Gamble, are very well positioned to create substantial distance between themselves and their competitors. Their success will provide further fuel to arguments that innovation isn't a nicety, it is a necessity.
For the rest of Scott's article, please click here.
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