Research Shows Product Innovation is Just the Beginning in U.S. Competition with China and India
U.S. businesses have latched onto product innovation as the last hope for extending our lead in the world economy. But a seven-year study into corporate competition shows this misses a bigger opportunity. Creativity experts are being surprisingly uncreative when it comes to corporate innovation and may be limiting U.S. competitiveness as a result.
Miami (PRWEB) August 3, 2005 -- GE is betting its future on it. Gurus claim
it is our last hope. The media call it the next revolution. But a seven-year
study of over 300 competitive business cases shows that what experts call
“innovation” is but the beginning. Applying creativity to new products, the
focus of most innovation experts, misses a much larger opportunity.
The
study finds that companies that create the greatest value do not focus their
creative thinking on products. Instead, they find creative approaches to
pricing, distribution, and business practices.
Apple’s iPod may be touted
today as a revolutionary innovation but this innovation is already attracting
powerful copy-cats.
Contrast Apple’s creativity with Dell’s. Dell
focuses little on product innovation (indeed it does not even make its own
products). Instead it has radically innovated how computers are sold.
This type of “strategy innovation” in which companies find creative new
ways to price, distribute, source, or promote their businesses, is far more
important than product innovation because, as the author of the study, Kaihan
Krippendorff, notes, “strategy innovation is harder to copy.”
The
result: over the last five years, Dell grew revenues 60% while Apple produced
just 3% growth.
Kaihan Krippendorff, a former McKinsey & Co.
consultant and the author of “The Art of the Advantage: 36 Strategies to Seize
the Competitive Edge” spent seven years studying over 300 competitive business
cases.
He found that creativity is a critical competitive advantage. He
says, “The companies beat their competition with creativity. Money and know-how
play roles, but creativity properly applied is far more important.”
But
contrary to what innovation experts advise today, focusing your creative
energies on products is misguided investment. Instead, companies that
consistently beat their competition apply their creativity more broadly. They
think beyond products to find out-of-the-box options for bigger strategic
questions related to sourcing, pricing (who would have thought of pricing coffee
at $1.50 before Starbucks came along?), distributing, and promoting their
products.
“History shows that while product innovation is important,
limiting ourselves to being creative with products is unnecessarily limiting.
There are many ways to outthink the competition beyond product. The most
competitive companies think outside of the product-innovation box,” says
Krippendorff.
This has two important implications for U.S. managers.
First, we have within our grasp an opportunity to maintain the U.S.’s position
as the leading economy. Creativity is a powerful competitive weapon and U.S.
workers seem to be more creative than our neighbors’. But product innovation is
easy to copy. If we limit our focus to product innovation, as we are doing now,
we may just miss this opportunity.
For additional information on the
research or its findings, contact Kaihan Krippendorff or visit www.artoftheadvantage.com.
About Kaihan
Krippendorff:
Kaihan Krippendorff is the author of “The Art of the Advantage:
36 Strategies to Seize the Competitive Edge” and the President of The Strategy
Learning Center, a business education firm. A former consultant with McKinsey
& Co., he holds degrees from the Wharton School of Business, Columbia
Business School, and London Business School.
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Source : http://www.prweb.com/releases/2005/8/prweb268245.htm