Every day, innovation happens. It's a major driver for increased productivity and possibly the best source for sustainable growth in interesting jobs that pay well. While introduction of market-changing technologies has slowed in recent years, business model innovation has accelerated, supported by technologies introduced in the last decades of the 20th century.

Creative Destruction

The fundamental thesis was well described by Joseph Schumpeter in Capitalism, Socialism and Democracy, first published in 1942. Essentially, if you're not changing the game, the game is changing on you. For a good place to start, try the Wikipedia entry for creative destruction.

The HP Way

Though a quick read, David Packard's autobiography is a necessary one as it outlines key principles followed by this very successful innovator. During the time HP followed these principles (Packard was nearby to remind people of them), the company became large and profitable through continuous innovation.
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Leadership Through Innovation

At the Haas School of Business, innovation is the core value that helps it achieve the highest level of business school quality. As an example, Berkeley professors consistently produce insightful works on innovation such as Individualism-Collectivism and Group Creativity, which highlights the need to "encourage independence and individual achievement to promote innovation."

Business Spending on Innovation

Existing companies are investing in innovation. The Global Innovation 1000 spent $407 billion in 2005 on R&D according to a recent worldwide study by Booz Allen Hamilton. Yet, less than 1 in 10 of these companies achieved returns greater than average in their respective industries. Those that succeeded were "masters of the innovation value chain," distinguished by their capabilities in product ideation, project selection, development or commercialization.

Emerging companies are being created through investment in innovation. Venture capital investors raised over $7.2 billion in Q2 2007, according to a press release from the National Venture Capital Association (NVCA). Yet, venture capital rules of thumb say that of 10 investments only 1 or 2 will be successful enough to cover the losses (or break even) of the others.

Innovation Means Yes, and No

Yes opens you up to new ideas, new situations, new discoveries, learning. Say yes to innovation. No keeps you comfortable, cautious, careful. Say no to reduce risk, removing chance of an unknown or unforeseen outcome. No limits choice, simplifies, and makes decisions easier.

But when you bring discipline to innovation, you have to know when to say yes and when to say no. Say yes to a really big market of potential customers. Say no to specific customer segments (for today) that you can't adequately satisfy with the product you can deliver in the time available. Then say yes to every possible means of best satisfying the one customer segment you want to serve. Think in gray and you will live to fight another day.

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