Commentary

The Corporate Challenge: Innovate Or Die

Although Google-bashing has been elevated to sport, the decade-old $175 billion change agent has created a new corporate paradigm--something that more companies need to do in troubled times.

Google CEO Eric Schmidt concedes: "The speech I give every day is: This is what we do. Is what you are doing consistent with that, and does it change the world?" Resisting a traditional strategy or planning process allows Google to innovate quickly. While debate rages about Google's real intensions and power, the innovation quotient is its driving engine.

Sony chief executive officer Howard Stringer in closed-door meetings in Tokyo last week implored his managers to be "more imaginative, bold and energetic" and to move quickly to reclaim its electronics leadership from Nintendo, which was revived by the 2006 Wii innovation. Sony is the only traditional media company in the top 10 most innovative companies, ranked by BusinessWeek; Walt Disney makes the top 20, headed by Apple, Google, Microsoft and General Electric.

Microsoft founder Bill Gates said at his annual CEO summit that "information empowerment" will be driven by innovation that reaches well beyond normal product cycles. Microsoft's internal practice of identifying and developing innovative "quests" over the next 10 years will involve digitizing communications (no phone numbers) bill-paying (no checkbook), business relations( paperless) and home entertainment (no TV set).

Thinking outside the parameters of the fiscal constraints of their budgets, while difficult for many companies, has become a long-term imperative for all. Innovation--defined as an invention or a new way of doing something--needs to be a line item. It makes creative, enterprising employees the most valuable asset, if a company is wise enough to provide an innovation framework to support them. And it must be accompanied by new metrics--such as margin of revenue and margin growth, as well as stock returns.

Conglomerate GE (owner of NBCU) has successfully mandated imagination and Six Sigma-styled thinking. Its corporate-wide Ecomagination program, which provides an impressive template for sustainable enterprise, generates billions in revenues and cost reductions by transforming its legacy businesses.

Steve Jobs resuscitated himself and Apple, developing simple mobile wireless iPod and Mac products that captured tech-dazzled consumers' lust for anytime information, entertainment and communications. Forrester predicts that eight future products (including Apple TV, home server and digital media extender) will digitize the home with an array of interactive, touchscreen digital screens and devices. Spending less than $1 billion annually on research and development, Jobs argues that Apple's corporate culture is all about consumer and business innovation.

It's not just a matter of throwing money at innovation. Microsoft spends $7 billion annually on research and development; Google spends more than $2 billion to develop more of the algorithms, multi-dimensional mapping and information management that are transforming media.

Innovation unleashed is a growth catalyst; the impetus is coming from the consumers empowered to devise their own plans if corporate America fails to deliver. The willingness of even the most aggressive, enterprising new media players to open their platforms to outside third-party developers is an acknowledgment that the next great idea or application can come from anywhere. If digital technology provides the tools and people provide the intellectual capital, what's to prevent raw innovation from sparking amazing change?

Corporate management and the bureaucracy that binds can be a huge impediment to innovation. Some attribute the corporate leadership line to the difference between an engineering and empire-building mentality: the Googles and Apples of the world and the News Corps and Viacoms of media.

The engineers are learning how to translate intellectual capital into marketable goods and services that can be monetized. Media companies are more often innovating off the safe--if not soft--platform of their existing brands. As time passes and all things become digital, these disparate forces will better collaborate and serve their constituents.

When corporations embrace innovation as a growth objective, outside financing and support is never far behind. The credit crisis has masked a wealth of available funds--$3.5 trillion by some estimates.

The prospects have never been brighter for building innovation into everything we do--and elevating corporate as well as national economics, creativity and productivity. The exchange of data, communications and video on ubiquitous platforms in formats as simple as blogs and as complex as IBM's Many Eyes (a user-friendly, collaborative visual communications tool box) are radically changing our lives--business and personal. As newer social and search tools are integrated into our daily exploration and learning, the power to initiate change from a single keypad will be mind-boggling. Socialization is much more than MySpace; search (or findability) greater than Google.

Yet what the experts call "disruptive innovation" is the most underestimated element in our march to transform the way we live, work and play. Our lives have been so quickly cast in instant access and digital trappings--from smart phones to MP3 players to pocket-sized video players and computers--that we are only now backing into innovative ways to relate. We're like children stuffing ourselves with goodies. Now, if we can turn play time into profitable problem-solving, corporate powers-that-be will realize innovation is the fuel of a digital nation.

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