Why the ability to innovate is tied to market leadership

In a recent INSEAD interview with Craig Barrett, the chairman of Intel, he articulates why the US needs to improve its innovation capacity to maintain its lead role in the world. “We’re not doing enough to get our own citizens interested in the skills and mindset required to retain a leadership role.”

Emerging economies around the world are focused on the necessity of well educated people required to pull their economy ahead of the pack. Our standard of living and economic standing in the US and Europe can only be maintained with investment in education and R&D. Lately it seems, points out Barrett, the greater the level of poverty in a country, the greater the government focus on high-tech and innovation education. The wealthier the country, such as the US and Canada, the inverse seems to take place.

In Barrett’s words, the best education system needs to be coupled with industry input. The people coming out of education institutions must be competitive in the world’s growing talent pool. Societal attitudes need to make sure the environment is suitable for investment and innovations.

Businesses must also take it as a high priority to educate their own workforce and focus on closing the gap between the unmotivated cog makers and the enthusiastic innovators within their company, not isolating sections of the staff due to organizational cultural misconceptions.

Barrett ties into the idea that in entrepreneurship, intelligent risks are a reality and that failure leads to learning something. South America still has yet to learn this lesson but it is beginning to embrace the idea. A direct result will likely be product and service innovation to meet the growing demand of an increasing South American middle class.

Over 50% of VC investment from Intel is targeted at Asia as it is quickly becoming as competitive as any opportunity in the US. Under closer analysis of graduate numbers, India and China far exceed high-tech graduation numbers than the US and Europe, but the US and Europe still hold the innovation card, for now, with the skills to connect the dots and hold onto the cutting edge utilizing foreign resources for innovative ideas that will continue to define the next paradigm.

Investment in innovation education needs to be made today to see the results in 10 years. Investing in a company’s talent can be the best internal investment a company can make. Talent investment ties into a recent report from  Booz & Company on The Talent Innovation Imperative. In this article, the authors argue “any company that competes on the global stage must, in light of today’s changing workforce, rethink the way it manages the skills of its people.”

The other recent publication on the topic also comes from INSEAD professor Guenter Stahl called Talent management: Building and sustaining a strong talent pipeline. In his paper Gunter recognizes what works for one company may not work for another. He concludes that while there are some effective practices for attracting, developing and retaining talent, these will only be successful if they’re in line with the company’s business strategy and the firm’s value system.

What areas of talent investment should business leaders be looking at? According to Booz: differentiated capabilities, performance acceleration, leadership development, and talent culture are essential to supporting an organization’s business strategy.

An investment in innovative thinking processes and culture can help ensure a brighter future for any company willing to take the chance.

How to Measure Innovation, Part II

As a segue from the previous post on scoring innovation with metrics, Harvard blogger Scott Anthony posted a continuation this morning on The Danger of Innovation by the Numbers.

In short, he stresses that R&D must be tied to the market and that effort should be made to track the long-term impact of innovation development efforts.

His argument is backed by the claim that too much focus on the numbers will push researchers into a corner. A recent Harvard study showed close to 80% of respondents say they tie innovation success to the number of patents filed.

Scott takes the lead in asserting that patents for patent’s sake can be a null metric despite its current status as industry best practice. This metric can derail potentially lucrative research and prevent an opportunity to reach true value and success for the organization.

Instead of measuring the number of patents, a fool’s game for quite some time now, start measuring revenue generation tied to each patent in relation to its initial investment in the greater context of product adoption. Scott’s onto something by recommending taking an output focused approach to metrics beyond the walls the organization and into the market where ultimate success lives.