Why executives should spend more time and less cash

By: Marcus Linder

Innovation management as a topic is wider than any single website can hope to cover completely. Marcus Linder, an innovation researcher at Chalmers, offers a regular column at innovationmanagement.se covering the most inspiring and actionable contents from other online sources, such as blogs and magazines. The first favorite link? Why executives should spend more time and less cash on innovative projects.

There are over 1 million new blog posts published every day. So it should come as no surprise that the web is teeming with blog posts about strategy, business models, organization of R&D and other areas closely related to innovation management. This column is a collection of links and reflections on the emergent themes on these blogs and – perhaps more interestingly – specific links to some of my favorite blog posts the last weeks. In some cases this will include magazine articles, as the border between blogs and magazines are increasingly becoming more blurred.

This column is a collection of links and reflections on the emergent themes on these blogs…

A common theme which regularly shows up on many strategy blogs related to innovation is the concept of expanding products into services in order to increase the value added. Academically this is often referred to as functional sales, servicification or product-service systems. Among more accessible blog-posts on the topic from the last week, I recommend a piece by Steven Heller offering a design inspired perspective on how a process (or mindset) to achieve such developments could look like. Also, in the latest issue of Harvard Business Review (which, admittedly, is more than a blog) there is a quite hands-on article offering a taxonomy of four types of such product-service combinations and their strategic properties.

Regarding the related topic of business model innovation, Tech Crunch had a nice and concise summary of one of Chris Anderson’s (author of The long tail) recent speeches on the topic of freemium business models. Related to concept of  business models are business plans. On that note, the venture capitalist Mark Suster provides a good post in which he explains why early financial calculations are important – even if proven wrong – to guide any startup. I think his advice is equally valid for anyone involved in organizing the development of new ventures, be it corporate or entrepreneurial. The essence of the article is best captured in one of the reader comments: “All [… business plans …] are wrong but some are useful”.

All business plans are wrong but some are useful

As Harvard has aptly noted, we are closing in on the 100th anniversary of the birth of the late management scholar Peter Drucker. Drucker was perhaps the first management gurus to argue that innovation can be systematically managed like any other part of a business and his impact on our field cannot be overestimated. In honor of his legacy, Harvard Business Review has published a number of modern commentaries on his work as well as rerun an article originally published in 1980, on how to read Peter Drucker.

The bottom line is that Drucker’s highly disciplined way of thinking about strategy and the management of innovation is arguably as important for managers as any of his specific concepts or ideas. For an easy yet relevant read by Peter Drucker, I recommend the book Innovation & Entrepreneurship from 1985. The basic ideas are also available in his HBR article from the same year: The discipline of innovation.

Meanwhile, the Harvard Business School blog debate about the state of the US innovation machine rages on, as it has for the last month. The debate originated from a post by Gary Pisano on the relation between outsourcing and innovative capability but has since grown considerably, as many quite distinguished professors in disparate fields have become involved (and seem highly engaged in the debate). Often the comments to each blog post are as interesting as the blog post itself. Arguments cover three areas so far, 1) offshoring’s impact on national innovation capabilities; 2) the impact of short-term thinking on firm innovation and 3) the role of government for national innovation. In particular the arguments in the first theme, regarding the need to have proximity between operations and R&D might be of relevance to the users of this site.

Scott Anthony, typically known for his work on disruptive innovation, has a pretty useful post explaining that for disruptive innovation to succeed, executives need to spend more time and less cash on the right development projects and with the teams. While in this case adopted mainly for the corporate innovation setting, his argument clearly relates to the so called bootstrapping argument within the entrepreneurship literature. And thus seems to make sense from an academic, albeit intuitive, point of view.