2010 BCG Innovation Survey

It’s April again, and that means it’s time for the annual Boston Consulting Group’s innovation survey.  The report has a lot of valuable information, but I’ll start with their ranking of the most innovative global companies:

  1. Apple
  2. Google
  3. Microsoft
  4. IBM
  5. Toyota
  6. Amazon.com
  7. LG Electronics
  8. BYD Company
  9. General Electric
  10. Sony
  11. Samsung
  12. Intel
  13. Ford

Respondents’ votes counted for 80% of the weighted rankings, shareholder returns 10%, revenue and margin growth 5% each.

Apple and Google have held the top two spots for four years now. BYD Company is the surprise newcomer on the list, a Chinese company that makes automobiles and rechargeable batteries.  LG moved from 27th in 2009 up to 7th. Ford moved from 31st to 13th.

Now for the more provocative part of the report, which is subtitled “a new world order” because BCG believes that RDEs (rapidly developing economies) “are in the ascendancy and appear poised to put a major dent in the major economies’ self image and position” (p. 18).  The projected growth in China, India, and Brazil, as well as other countries, is far greater than that projected for the mature economies. How are they building innovation competitiveness?

  • investing in public education, particularly in STEM areas
  • large, permanent R&D tax credits
  • immigration policy that favors entrepreneurs and preferred expertise (and is starting to attract returning expatriates from Europe and the U.S.)

Business leadership in these countries is also committed to innovation. Eighty two percent of respondents in Brazil, India, and China (BIC) said innovation was in the top three priorities (92 percent in China!) versus 68 percent of respondents from mature economies. Eighty five percent of BIC respondents plan to increase innovation spending in 2010, versus 53 percent from mature economies.

The take-home message? “Becoming better at innovation is probably the single most important thing you can do this year.” (p. 20)

C. K. Prahalad, Management Guru

Sunday’s New York Times (April 25, 2010, p. A30) reported that management guru C. K. Prahalad died April 16 . He was 68 years old. He spent his career as a professor at the University of Michigan School of Business. I met him only once, at Gary Hamel’s Inventing the Future of Management event in Half Moon Bay, California. A wonderful and giving man. He was a frequent collaborator with Gary Hamel. Prahalad became famous for the concept of “core competence” which he introduced, with Hamel, in a 1990 Harvard Business Review article. More recently, he wrote extensively on poverty, and on innovation and markets in emerging markets–arguing that companies could alleviate poverty and make money at the same time. His last book was titled The New Age of Innovation.

Rest in Peace.

The Volcanic ash cloud might have a silver lining

The dark clouds of volcanic ash that have closed airports and stranded travelers for days on end may have a silver lining. Like it or note, stranded travelers around the globe are suddenly finding  themselves with a lot of unscheduled time on their hands, and idle time is a key ingredient to becoming more creative in your personal and professional lives.

canceled_flights_1

Idle time allows people to think of their problems in new ways.  People talk about the ‘aha’ moment emerging when you are doing something else. The bottom line is that being creative in your work and personal life takes time, and more often than not, busy people simply do not find the time to examine their lives with fresh eyes, to really contemplate the big picture realities of challenges they face.

Creative people work hard but they also work smart. There is a certain way they structure their work habits. They structure their day so they alternate between hard work and time off. Researchers call it it idle time.

Creative people also tend to have multiple related long-term projects going on at the same time. When they are working on one thing and they get stuck, they shift to another project. That creates potential for unexpected connections between the projects.

Creative people also take breaks to do something radically different from their current project. They might read a book, play a board game or take a walk. These are times where distant analogies can happen — meaning something on the board game might provide an idea regarding the current project. Something in a book might connect two ideas together. A walk might allow for viewing of new concepts.

I always say that employees should take all of their vacation time. Many people don’t take their vacation and they end up rolling over all of their off time. If I were a senior manager, I would make everyone take all of their vacation time. Time away from work is essential for recharging the batteries, so to speak, and to help people think more creatively on the job. People need freedom in their schedule for idle time.

So if you find yourself with unexpected “idle time,” make sure you have a notebook and a pencil handy, to write down that important insight when it comes!

Government Support for Innovation

I am a professor in a research university, so I like to think that universities have played an important role in the U.S.’s success as an innovation economy. In fact, there is a lot of research showing that university research is an important part of the “national innovation system” of all successful countries. In the U.S., a lot of this innovation is funded by the federal government, according to a recent editorial by Tom Katsouleas in the Chronicle of Higher Education.* Beginning after WWII, the federal government began investing .2 percent of GDP in basic research, mostly at universities. This changed universities from the “pure knowledge/ivory tower” stereotype (filled with absent minded professors and genteel poverty of the faculty) into key components of national economic strategy.

Katsouleas argues that what is still missing from universities is “translational capacity”: the ability to take basic research findings, and show how to apply it to solve pressing social and economic problems. Most professors, myself included, are focused on the creation of new knowledge: advancing the boundaries of the discipline by contributing discoveries, theories, or frameworks that have never been known before. But sometimes, innovation requires taking existing knowledge and combining it, or applying it, in new ways. Most professors at research universities aren’t rewarded for combining existing knowledge, nor for applying existing knowledge. “Creating new knowledge” is how you get rewarded by your peers and by your university.

Katsouleas calls the translational gap “the valley of death”–implying that ideas die there. He acknowledges that things have gotten a lot better since 1980, when the famous Bayh-Dole act (named after its two sponsoring U.S. senators) gave universities the intellectual property rights to discoveries made with government funding, thus encouraging them to commercialize those discoveries. He argues that one solution is to teach doctoral students not only science, but

performing an impact or market analysis of the student’s field; minicourses tailored to Ph.D.’s in business skills, finance and accounting, science policy, entrepreneurship, etc.; and mentoring from successful entrepreneurs and from faculty members outside the sciences on how their work is informed by and affects society at large.

There’s no question that translation is a difficult problem. But Bayh-Dole has resulted in huge steps forward. And at my own university, it’s not uncommon for professors in the school of engineering to found startups based on their research, or for findings at our medical school to be commercialized. I agree that scientists are perhaps a bit too narrowly focused on their disciplines and could benefit from broader exposure to societal issues. But I’m not sure the solution is a mini-business education for scientists. What do you think?

*March 28, 2010. How Uncle Sam can support innovation.