“Innovation is easier said than done. Indeed, there are some very good reasons why most companies — even the high-tech darlings of a year or two ago — can’t seem to muster the innovative behavior necessary to perpetuate their good fortune. Essentially, an innovation is a significant change in the way an enterprise mobilizes its resources to create value.

There are two basic planes of innovation:

Performance innovation
The more common form of innovation is “performance innovation,” which involves efforts to improve or make better in some way the fundamental, already-established products or processes that are the hallmarks of the innovative firm. Generally, performance innovations won’t shift a company from a slow-growth pattern to a faster pace of expansion.

Breakout innovation
The other type of innovation — the kind that truly makes a difference in the fortunes of a business — is “breakout innovation.” This involves development efforts that go beyond “new” into the realm of “different” — very different. Indeed, this kind of self-reinvention is essential if a company is to avoid the vulnerabilities associated with maturity, the next-to-last stage of natural evolution. Economist Joseph Schumpeter called it “creative destruction,” the dissembling and discarding of the old, established — albeit currently successful — ways of doing things before there is perceptible pressure to do so.

Today’s managers must determine what mix of evolutionary performance innovation and revolutionary breakout innovation is required, and then they must muster all their entrepreneurial juices to make it happen.”

For the complete article, Washington Business Journal, June 14, 2004, here.


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