Innovation and the last war

I don't know which way to feel about this topic. I was reviewing the latest report from the InnovateAmerica site, whose tagline is "Innovate or Abdicate". This is a group sponsored by the Council on Competitiveness to focus on improving innovation in the US. I think many times think tanks present solutions that solve problems we're already working on and miss or distract the real upcoming problems. In military lingo, they are fighting the last war.

In the research, InnovateAmerica has released a report or a better a survey of senior executives from 200 companies in the US. The report calls out a lot of the things you'd expect:

1. New ideas are coming more and more from suppliers and customers over internal resources
2. Engineering and scientific talent are ranked as the most important asset to improved innovation
3. Top barriers to innovation include poor internal infrastructure and lack of internal talent
4. Over 40% of productivity gains in a business can be attributed to innovation alone, yet
many CEOs rank innovation below low price and quick delivery in attractiveness to customers
5. Most innovation is defined as extensions to existing products

So, what to make of this?

Well, it's a good thing that ideas are coming more and more from suppliers and partners, but I think that was fairly evident. What bothers me about a lot of these findings is that it feels like we are fighting the last war! If 80% or more of our economy is based on services, why do we need such an emphasis on scientific and engineering talent? I am going to assume, although I could not find it in the writeup, that most of the people who participated in the survey were from the manufacturing or product sector. There's simply too much emphasis on product-focused innovation.

And another thing - which CEOs place more emphasis on low price and quick delivery? Sony didn't. Apple didn't. But Dell does. Is Dell an innovator? Possibly with it's business model but not in its products.

That's another problem with this research - a lot of innovation is focused today on business process innovation, business model innovation and service innovation, not product innovation. Sure we want to provide goods and services at low prices, but we can command greater margins and more loyal customers by providing valuable and differentiated goods and services.

Innovation should be about more than simply cutting costs, yet that seems to be the primary focus of the people who wrote this research. We should consider more than just product innovation, yet this research does not dive deeply into business model or service innovation.

We're building the innovation maginot line and missing the service innovation revolution.