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Synopsis

Innovation is more than creativity; it is a process that is structured, with rules and best practices. This summary of HBR’s 10 Must Reads on Innovation gives you some of the key takeaways from experts who take the mystery out of creating new products and services. Here are just a few of the key points you will learn:

  • Innovative ideas are not just something new, they provide value and solve problems.
  • It takes "buy-in" from an organization to support innovation.
  • Understanding customer's needs are critical to design new products.
  • Change requires analysis and testing just like any other experimental effort.
  • Minimizing risks is possible with the right approach.
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Customer insights can be incorporated into the innovation process in several ways. First, by conducting customer surveys and interviews to understand their needs and preferences. Second, by analyzing customer behavior data to identify trends and patterns. Third, by involving customers in the ideation process through co-creation workshops or innovation labs. Lastly, by testing new ideas with customers and gathering their feedback for improvement.

An organization can ensure that its innovation efforts are sustainable in the long term by fostering a culture of innovation, understanding customer needs, and implementing a systematic approach to risk management. It's also important to continuously analyze and test new ideas, and to secure buy-in from all levels of the organization.

Some ways to promote a customer-centric approach in the innovation process include understanding and prioritizing the customer's needs, involving customers in the innovation process, using customer feedback to guide innovation, and designing products or services that solve customer problems.

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Summary

Innovation's holy grail

Most innovation efforts focus on creating the most profitable results or appealing to affluent markets. However, there is a large market for inexpensive products driven by customers who are looking for more value for their money. The real opportunities in innovation are the ones that create affordability and fill a need for the masses.

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Companies can use innovation to create a balance between profitability and affordability by developing products or services that offer high value at a lower cost. This can be achieved by improving operational efficiency, utilizing cost-effective materials or technologies, and optimizing the product design for mass production. Additionally, companies can explore innovative business models that allow for lower pricing, such as subscription services or shared economy models.

Focusing too much on profitability in innovation efforts can lead to several pitfalls. It can lead to neglecting the needs of a larger, less affluent market that is looking for value for money. It can also result in a lack of affordability in products, which can alienate potential customers. Furthermore, it can stifle creativity and risk-taking, as the focus is primarily on safe, profitable outcomes rather than groundbreaking ideas.

Companies can ensure that their innovation efforts are meeting the needs of their target market by focusing on creating products that offer value for money. They should aim to create affordable products that fill a need for the masses, rather than just focusing on affluent markets. This approach can help them tap into a larger market and ensure that their innovation efforts are successful.

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Tata Motors of India is an example of how collaboration created an affordable innovation that fills a real need. The car company worked with other countries like Germany, Italy, Japan, and the United States to create a $2,000 Nano car. Each country contributed cost-effective components that reflected their particular area of expertise. The result of this collaborative effort is a quality-built, more affordable car.

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Affordable innovations can have several potential impacts on the economy. They can stimulate economic growth by making products and services more accessible to a larger portion of the population. This can lead to increased consumption, which can boost economic activity. Additionally, affordable innovations can foster competition, leading to further innovations and improvements. They can also potentially create new markets and industries, leading to job creation and further economic growth.

Some of the trends in affordable innovations in the automotive industry include collaboration and cost-effective component sourcing. Companies are working together across borders to create affordable vehicles. For example, Tata Motors of India collaborated with Germany, Italy, Japan, and the United States to create a $2,000 Nano car. Each country contributed cost-effective components that reflected their particular area of expertise. This resulted in a quality-built, more affordable car.

Some other examples of innovations that fill a real need include the development of mobile banking in Africa, which has provided financial services to millions of people who previously had no access to banking. Another example is the creation of low-cost, high-quality eyeglasses by VisionSpring, enabling affordable vision correction for people in developing countries. Also, the invention of portable, life-saving medical devices like the LifeStraw, which filters water to make it safe to drink, addresses a critical need in areas without access to clean water.

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Stop the innovation wars

Innovating requires a partnership between a dedicated team, people focused on creating something new, and the performance engine, teams responsible for established operations. These two groups compete for the same resources while their processes are very different. Friction between these two groups is inevitable, but there are three steps for reducing that friction.

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The principles of innovation can be applied to the relationship between the dedicated team and the performance engine by fostering a partnership between the two. This involves understanding that while these two groups compete for the same resources, their processes are different. Steps can be taken to reduce the friction between these two groups, such as clear communication, mutual respect, and understanding each other's roles and responsibilities.

Some potential pitfalls in the relationship between the dedicated team and the performance engine could include competition for resources, differences in processes, and inevitable friction. These issues can lead to conflicts and inefficiencies if not properly managed.

Effectively managing the friction between the dedicated team and the performance engine can lead to several benefits. It can foster a more harmonious working environment, improve resource allocation, and enhance overall productivity. It can also lead to better communication and understanding between the two teams, which can result in more innovative and effective solutions. Furthermore, it can prevent potential conflicts and misunderstandings that could hinder the progress and success of projects.

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  1. Decide which responsibilities fall to the performance engine and which ones will be handled by the dedicated team.
  2. Assemble the dedicated team. While bringing in outside team members can provide a "fresh set of eyes," team members from inside the company can help bring the innovation team and the existing teams together.
  3. Anticipate inevitable conflicts and be prepared to smooth things over with persuasion and positive feedback.
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HBR's 10 Must Reads on Innovation has influenced corporate strategies and business models by providing structured processes and best practices for innovation. It has helped companies understand the importance of having a dedicated team for innovation and how to manage conflicts that may arise during the innovation process. It has also emphasized the need for a balance between internal and external team members in the innovation team to ensure a fresh perspective and smooth integration with existing teams.

Some companies that have successfully implemented the practices outlined in HBR’s 10 Must Reads on Innovation include Google, Apple, and Amazon. Google is known for its culture of innovation and has a dedicated team for new projects. Apple's innovation is evident in its range of products and services, and it also has a dedicated team for innovation. Amazon is another example, with its constant innovation in e-commerce and beyond.

The concepts in HBR’s 10 Must Reads on Innovation can be applied in real-world scenarios by implementing a structured process for innovation. This includes deciding which responsibilities fall to the performance engine and which ones will be handled by a dedicated team. Assembling a dedicated team with both internal and external members can provide a fresh perspective and help bridge the gap between the innovation team and existing teams. It's also important to anticipate conflicts and be prepared to resolve them through persuasion and positive feedback.

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How GE is disrupting itself

GE achieved much of their success by offering high-end products across the globe. But the demand for more affordable products forced GE to change its focus. The company had to learn reverse innovation, the process of creating products in an emerging market and distributing them in developed markets.

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A startup can use the concept of reverse innovation to grow in developed markets by first creating and testing their products in emerging markets. This allows them to understand the needs and preferences of a wider customer base and make necessary adjustments. Once the product is successful in the emerging market, they can then introduce it to the developed markets. This strategy not only reduces the risk of failure but also allows the startup to offer a tested and proven product to the developed markets.

The key takeaways from the book's discussion on reverse innovation that can be actionable for managers are:

1. Understanding the need for reverse innovation: The demand for more affordable products in emerging markets can drive the need for reverse innovation.

2. Adapting to market needs: Companies like GE had to shift their focus from offering high-end products to creating more affordable products suitable for emerging markets.

3. Implementing reverse innovation: The process involves creating products in an emerging market and then distributing them in developed markets. This approach can help companies tap into new markets and expand their customer base.

The theme of reverse innovation in the book relates to contemporary issues in global business as it addresses the shift in the traditional innovation flow. Traditionally, products were developed in developed markets and then adapted for emerging markets. However, reverse innovation, as discussed in the book, involves creating products in emerging markets and then distributing them in developed markets. This is becoming increasingly relevant in today's global business environment as companies are recognizing the potential of emerging markets not just as consumers, but also as innovators. This shift is forcing companies to rethink their global strategies and adapt to this new innovation flow.

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An unexpected opportunity and management that was committed to reverse innovation helped jump-start GE's efforts. Rural clinics in China were unable to afford GE's ultrasound machines, so a local team built an inexpensive, portable ultrasound unit using a laptop with external hardware and specialized software. The new product created demand across China and helped GE get their reverse innovation efforts up and running.

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Potential obstacles companies might face when applying the concepts from HBR’s 10 Must Reads on Innovation could include resistance to change, lack of resources, and lack of a clear innovation strategy. To overcome these obstacles, companies could foster a culture of innovation, allocate sufficient resources to innovation projects, and develop a clear innovation strategy that aligns with their overall business goals.

HBR's 10 Must Reads on Innovation has influenced corporate strategies and business models by providing insights and best practices on innovation. It has helped companies understand that innovation is more than just creativity, but a structured process. For instance, it has inspired companies to leverage unexpected opportunities and commit to reverse innovation, as exemplified by GE's development of an inexpensive, portable ultrasound unit for rural clinics in China. This not only created demand across China but also jump-started GE's reverse innovation efforts.

The HBR's 10 Must Reads on Innovation includes various case studies that highlight the importance of innovation in business. One key case study is about GE's reverse innovation. Faced with the challenge of rural clinics in China not being able to afford their ultrasound machines, GE innovated by creating an inexpensive, portable ultrasound unit using a laptop with external hardware and specialized software. This not only created demand across China but also kick-started GE's reverse innovation efforts. The broader implication of this case study is that innovation is not just about creating new products or services, but also about adapting to the needs and constraints of different markets. It shows that successful innovation can come from understanding and addressing the specific needs of a target market.

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The customer-centered innovation map

Consumers buy products to solve problems and perform tasks. Colleges buy software programs to streamline admissions. Electricians buy meters to test electrical work. Maybe these insights are obvious, but most companies do not look for opportunities from this perspective. Most companies are on the look out for the "next big thing" while plenty of opportunities are right in front of them. Companies can identify those opportunities by using "job mapping."

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The ideas from HBR’s 10 Must Reads on Innovation can be implemented in real-world scenarios by first understanding that innovation is more than just creativity. It involves a structured process with rules and best practices. One of the key takeaways is the concept of 'job mapping'. This involves identifying opportunities by understanding the problems and tasks that consumers or businesses are trying to solve or perform. For instance, a company can innovate by developing a product that streamlines a specific process or solves a particular problem. This approach can help companies to identify and seize opportunities that are right in front of them, rather than constantly searching for the 'next big thing'.

Potential obstacles companies might face when applying job mapping could include resistance to change, lack of understanding of the concept, and difficulty in identifying the right jobs to map. Overcoming these obstacles could involve providing adequate training and education about job mapping, ensuring top management support, and using a systematic approach to identify the jobs that are critical to the organization's success.

Job mapping is a process where businesses identify the tasks or 'jobs' that their products or services can help customers accomplish. For a small business, this can be instrumental in growth. By understanding the 'jobs' their products or services fulfill, they can better market and innovate their offerings. They can identify gaps in the market, create solutions that better meet customer needs, and ultimately drive growth. This approach shifts the focus from creating the 'next big thing' to understanding and meeting customer needs more effectively.

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Job mapping means looking at all the steps involved in a task. By breaking down each step of a task from beginning to end, a company can find areas of the process that can be improved. This focus on the individual parts reveals areas of opportunity that could be missed when looking at the task as a whole. Using the job map, a company can analyze the shortcomings of a product or service, and begin to create solutions.

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Job mapping is highly relevant to contemporary issues and debates in the field of innovation. It allows companies to break down tasks into individual steps, thereby revealing areas of opportunity that might be overlooked when viewing the task as a whole. This detailed analysis can highlight inefficiencies or shortcomings in a product or service, providing a basis for innovative solutions. In the context of ongoing debates about the best ways to foster innovation, job mapping offers a structured, systematic approach that can complement more creative, free-form thinking.

The key takeaways from the concept of job mapping that are actionable for entrepreneurs or managers include: understanding the entire process of a task, identifying areas of improvement, and creating solutions to address these areas. By breaking down each step of a task, one can gain a comprehensive view of the process and identify potential bottlenecks or inefficiencies. This detailed view can reveal opportunities for improvement that may not be apparent when looking at the task as a whole. Once these areas are identified, solutions can be developed to enhance the product or service.

The concept of job mapping can be applied in the retail sector by breaking down each step of the retail process, from product sourcing to customer purchase. This allows for a detailed analysis of each step, identifying areas of inefficiency or potential improvement. For example, job mapping could reveal bottlenecks in the supply chain, inefficiencies in store layout, or opportunities to enhance the customer experience. By addressing these areas, retailers can innovate within their traditional sector.

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The innovation value chain

The innovation value chain means looking at new ventures from beginning to end to identify obstacles and opportunities. Most companies do not have a proper process for testing a product's worth or an understanding of adequate funding. By using the innovation value chain, companies can take practical steps to get a product to market.

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A company in a traditional sector like manufacturing can apply the innovation value chain to test a product's worth and secure adequate funding by first identifying the potential obstacles and opportunities. This involves looking at the new venture from beginning to end. Once these are identified, the company can then establish a proper process for testing the product's worth. This could involve market research, prototype testing, and financial analysis. The company also needs to understand what constitutes adequate funding. This could be determined by calculating the cost of product development, marketing, and distribution. The innovation value chain can guide the company in taking these practical steps to get the product to market.

The concept of the innovation value chain is a holistic approach to understanding the process of innovation from inception to market entry. It helps identify potential obstacles and opportunities in product development and market entry. It emphasizes the importance of a structured process for testing a product's worth and understanding adequate funding. In the context of contemporary issues, it can help companies navigate the complexities of product development and market entry in today's fast-paced and competitive business environment.

Potential obstacles companies might face when applying the innovation value chain include lack of a proper process for testing a product's worth and lack of understanding of adequate funding. These obstacles can be overcome by implementing a structured process for product testing and gaining a comprehensive understanding of the funding required for innovation. This involves careful planning, resource allocation, and continuous learning and improvement.

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  • Idea generation — Find the existing strengths and weaknesses of the organization and understand how they will affect a new idea. If there is a weakness that could cause obstacles, then get rid of those obstacles is now a part of bringing an idea into development.
  • Idea development — Does a company have existing resources that can handle producing a particular product? If new equipment is needed for manufacturing, then the cost may prevent the product from moving forward.
  • Diffusion of developed concepts — This means understanding how an organization's current way of doing things can stifle innovation. If the rest of the company does not see the value in a new idea, then they will not support it.
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Is it real? can we win? is it worth doing?

Companies know they should innovate, but they are afraid of the risks. That said, much uncertainty can be eliminated by a screening process.

  • Is it real? — Is There A Market For A Product And Can The Product Be Made? The Answers Come From Researching The Demand. Does The Product Solve A Problem Better Than Something Already Out There? If There Is A Demand, Can The Product Be Manufactured At A Reasonable Cost? The Answers Will Determine If A Product Is "Real" Or Not.
  • Can we win? — A company has to determine if they can get and maintain enough market-share. If the company comes up with a new idea, they can be sure the competition is close behind. In established markets, existing companies could just copy or piggyback on the idea with minor changes.
  • Is it worth doing? — Analyze the financial costs and determine how the product fits with current strategies. Will the product be profitable? How long will it take to see a return? Does the product reflect the current culture of the company? The answers will determine if it is worth doing.
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Companies can use several innovative strategies to determine if a product is worth doing. Firstly, they can conduct market research to understand the demand for the product and whether it solves a problem better than existing solutions. Secondly, they can analyze the financial costs associated with the product and determine how it fits with their current strategies. They should consider whether the product will be profitable and how long it will take to see a return. Lastly, they should assess whether the product aligns with the company's culture.

The concept of 'can we win' challenges existing practices in market competition by forcing companies to critically evaluate their competitive position and potential for success before launching a new product or service. This involves assessing whether they can secure and maintain sufficient market share, especially in the face of competition that may quickly imitate or adapt to their new idea. This approach challenges the traditional 'build it and they will come' mentality, instead advocating for a more strategic and calculated approach to innovation.

Companies might face several challenges when determining if a product is real. Firstly, they need to research if there is a market for the product and if it can be manufactured at a reasonable cost. Secondly, they need to assess if they can win enough market share against competition. Lastly, they need to analyze the financial costs and determine how the product fits with current strategies. To overcome these challenges, companies can conduct thorough market research, develop a competitive strategy, and perform a detailed cost-benefit analysis.

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Innovation: the classic traps

Hurdles too high, scope too narrow

Companies tend to seek out new ideas that will result in premium prices and excellent margins. Innovations that don't project high revenues over a short time are screened out of contention. This focus on significant returns while trying to limit risk means many companies miss the smaller opportunities. Companies must solicit ideas, both big and small, from people inside and outside the organization. The result will be more ideas, increasing the likelihood of finding the ones that will work.

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Controls too tight

The tight controls of an established organization restrict innovation. Innovative teams need the flexibility to react to unexpected results. The "standard operating procedures" of most companies just get in the way. Companies must redesign processes, from how funds are allocated to how performance is measured, to give innovative teams room to breathe. New ideas require new rules.

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The themes of HBR’s 10 Must Reads on Innovation are highly relevant to contemporary issues and debates in business. The book discusses the importance of innovation in business, which is a hot topic in today's rapidly changing business environment. It emphasizes that innovation is not just about creativity, but also about structured processes, rules, and best practices. This aligns with current debates on the need for businesses to be innovative to stay competitive. The book also addresses the challenges that established organizations face in fostering innovation, which is a key issue in many contemporary businesses.

A startup can use the key topics covered in HBR’s 10 Must Reads on Innovation to grow by implementing the best practices and rules of innovation. This includes creating a flexible environment that allows for unexpected results and encourages innovative thinking. The startup should also consider redesigning its processes, such as fund allocation and performance measurement, to give innovative teams room to breathe. New ideas require new rules, and by embracing these principles, a startup can foster a culture of innovation that drives growth.

The book presents several innovative ideas. One of them is the concept that innovation is more than just creativity; it's a structured process with rules and best practices. Another surprising idea is that the tight controls of an established organization can actually hinder innovation. Innovative teams need flexibility to react to unexpected results, and the standard operating procedures of most companies can get in the way. Therefore, companies must redesign processes, from how funds are allocated to how performance is measured, to give innovative teams room to breathe. These new ideas require new rules.

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Connections too loose, separations too sharp

Creating a new product requires support from the whole company. Innovative teams can feel isolated and end up feeling less valuable because of the lack of support. The rest of the company could feel "out of the loop" or even resentful. The solution is to create connections between the innovators and the rest of the organization. The new venture will have more visibility and gain acceptance by encouraging the innovators to report on their efforts regularly.

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Discovery-driven planning

Discovery-driven planning must replace conventional business planning when it comes to innovation. Where conventional planning would tend to see assumptions as facts, discovery-driven planning sees them as guesses that must be tested and questioned. The "discoveries" that result from testing assumptions are critical to creating something new. These discoveries are used to determine the direction and focus of an evolving plan.

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Potential obstacles companies might face when applying discovery-driven planning include resistance to change, lack of understanding of the process, and fear of uncertainty. These can be overcome by providing adequate training, fostering a culture of innovation and risk-taking, and ensuring clear communication about the benefits and process of discovery-driven planning.

A startup can use discovery-driven planning to grow by treating assumptions as hypotheses to be tested rather than facts. This approach allows the startup to learn from the process and adapt its plan based on the discoveries made. These discoveries can help determine the direction and focus of the startup's evolving plan, enabling it to innovate and grow effectively.

Discovery-driven planning challenges existing business planning paradigms by replacing assumptions with hypotheses that need to be tested and questioned. Unlike conventional planning which treats assumptions as facts, discovery-driven planning sees them as guesses. The discoveries made from testing these assumptions are crucial in creating something new and determining the direction and focus of an evolving plan.

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Conventional business planning cannot handle the uncertainty of results or the need for flexibility that are natural parts of innovation. Discovery-driven planning focuses on activity and learning rather than results. The real potential of a new venture is discovered as it develops, a potential that would remain undiscovered by conventional business planning.

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The discipline of innovation

Learning where to look for new opportunities and understanding their potential is an essential step in innovation. With practice, it is possible to spot which opportunities are too risky and the ones that have real potential. Most opportunities come from seven sources:

  • Unexpected occurrences — Be on the lookout for products that are trending better than expected and capitalize on that growth.
  • Incongruities — Find the gaps between what is and what should be to find opportunities for improvements.
  • Process needs — Focus on customer's problems and find ways to make their experience better, faster, or easier.
  • Industry and market changes — From deregulation to new technology, external forces and their impacts must be monitored for changes that provide opportunities.
  • Demographic changes — Demographics are always in flux. Keeping up with the constant changes can reveal new markets and give more insight into existing markets.
  • Changes in perception — The "cutting-edge" product of yesterday can become obsolete quickly as consumer's attitudes change. These changes in perception can diminish or create demand, providing an opportunity to respond to those changes.
  • New knowledge — Keeping abreast of advancements in technology and changes in business methods give companies the new knowledge they need to stay ahead of trends.
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Changes in perception can be implemented in real-world business scenarios to create demand by staying attuned to shifts in consumer attitudes and preferences. When a business identifies a change in perception, it can adapt its products or services to align with this new perspective. This could involve rebranding, introducing new features, or even creating entirely new products. It's also important to communicate these changes effectively to the target audience to generate interest and demand. Businesses can use marketing strategies like social media campaigns, influencer partnerships, and customer testimonials to highlight how their offerings align with the changed perceptions.

Demographic changes are highly relevant to contemporary market trends and debates. Demographics are always in flux, and keeping up with these changes can reveal new markets and provide more insight into existing ones. Changes in population size, age, race, gender, income, employment, education, and other demographic factors can significantly impact market trends. For instance, an aging population may increase the demand for healthcare services, while a growing middle class in emerging markets may drive demand for consumer goods. Therefore, understanding demographic changes can help businesses identify opportunities and threats, and develop strategies to respond to them.

Potential obstacles a company might face when responding to industry and market changes include lack of foresight, resistance to change, outdated technology, and lack of resources. To overcome these obstacles, companies can adopt a proactive approach to anticipate changes, encourage a culture of adaptability, invest in technology upgrades, and allocate resources effectively. Regular monitoring of external forces and their impacts, keeping abreast of advancements in technology, and understanding changes in consumer perceptions can also help in responding to industry and market changes effectively.

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Innovation killers: how financial tools destroy your capacity to do new things

Most companies want to innovate, but existing financial policies are a difficult hurdle. Companies decide where to invest their funds based on a projected return. They use facts, statistics, and other data to determine if an investment will create profit. However, with innovation, those facts and other data are not available because innovating deals with assumptions. Companies tend to view new ventures using the same criteria as traditional business efforts, so they often find that there is insufficient "evidence" to warrant an investment.

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Without any evidence to support predictable outcomes, many companies choose to do nothing. They assume that the current offerings of their business will continue to produce sufficient profits, so it is easier just to say "no" rather than take the risk. However, by avoiding the risk, companies are also avoiding any potential rewards that can be extracted by innovating. Companies need to develop a better understanding of the innovation process so they can create new rules for how these ventures are funded. These companies must understand that while innovating is unpredictable, it is also something that can be measured, limiting the risk.

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