Thursday, March 1, 2018

Innovation: A Matter of Vision

Depending on how it is done, innovation can have a very brief shelf life.   If your firm depends on novelty to sustain its market, anything “new” quickly loses its flavor.    This is particularly true when competitors notice that a firm has discovered something that excites the market and move quickly to imitate it.  In a very short amount of time, the quality that was unusual and unique to one specific brand becomes ubiquitous and everyone is offering it.

There are, of course, some protections afforded to manufacturers to give them exclusive demesne over a slightly differentiated product – but since business has gone global, these protections have no teeth.   It’s nearly impossible to prevent a manufacturer on the other side of the globe, or even on the other side of a political border, from copying a product.   Even manufacturers in the same nation, subject to the same legal system, are quite adept at finding loopholes that enable them to adopt and imitate any quality that customers find attractive.

In such an environment, innovation gives a company only a short-term advantage: it enjoys consumer preference between the moment it delivers something unique to the market and the moment its competitors take away this advantage by replicating that quality.   Hence, the constant atmosphere of panic at many firms to “innovate or die” is an attempt to constantly stay a step ahead of imitators that are hot on their heels.

But all of this is predicated on certain premises: that the competitors recognize the value of the innovation and wish to imitate it.   Particularly in an atmosphere in which innovation has become rampant, there is much greater value in being able to evaluate innovation than to be nimble in imitating it.    Not all new ideas are good ideas, and quickly imitating a bad idea can be devastating – as such an evaluative step is critical.

And this provides an opportunity for sustainable innovation: an idea whose value is seen by the market, but whose profitability is missed or underestimated by competitors.    It is impossible to conceive of an innovation that cannot be imitated – but rather simple to conceive of one that will not be imitated.

An entrepreneur is defined by his willingness to take risks that others will not, to bring something “new” to the marketplace that customers will find more appealing than existing options.      The difference between the successful entrepreneur and the dilettante whose ideas result in a string of failures is in the ability to preform an accurate assessment and prediction.   And the ability of the entrepreneur to stay ahead of his competition is in seeing the value that they do not.   Their lack of vision is its own impediment.

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