Innovation || Imitation

By far the greatest flow of newness is not innovation at all. Rather, it is imitation. 

— Theodore Levitt

 

When a company — for the first time in its history — presents a product that offers a new capability that a competitor had already introduced to the market a year earlier, should that be considered an innovation or an imitation?

In his 1966 HBR article "Innovative Imitation" Theodore Levitt makes the following distinction:

Innovation may be viewed from at least two vantage points: 

1. newness in the sense that something has never been done before, and 
2. newness in that it has not been done before by the industry or by the company now doing it.

Strictly defined, innovation occurs only when something is entirely new, having never been done before. 

A modest relaxation of this definition may be allowed by suggesting that innovation also exists when something which may have been done elsewhere is for the first time done in a given industry. 

On the other hand, when other competitors in the same industry subsequently copy the innovator, even though it is something new for them, then it is not innovation; it is imitation.

The newness of which consumers become aware is generally imitative and tardy newness, not innovative and timely newness.

Imitation is not only more abundant than innovation, but actually a much more prevalent road to business growth and profits.

Hence the categorization of a new offer as innovation or imitation depends on the definition* of the term "innovation" you adopt - according to the 2007 research paper "Innovation and Imitation as Sources of Sustainable Competitive Advantage".

That paper addresses the following research questions: 

• What are the differences between innovating and imitating? 
• What factors explain these differences?
• Can imitation be a source of sustainable competitive advantage?

Companies with what the authors call an entrepreneurial orientation tend to generate their own ideas (innovation) rather than to adopt ideas generated by others (imitation).

The authors define innovation as a form of technological development that expands not only a firm’s existing knowledge set but also the existing world knowledge set, whereas imitation is defined as the form of technological development that expands the firm’s existing knowledge set but not the existing world knowledge set.

Innovation expands the knowledge existing in the world, 

Imitation expands only the knowledge existing in the company that adopts something new.

 

Three factors: Generation of ideas, timing, and space

The generation of the idea is the starting point for distinguishing between innovation and imitation. Only those companies that generate new ideas can be analyzed as possibly innovative, whereas those that take a previously existing idea should be considered imitators.

The generation of the idea is the necessary condition for obtaining an innovation, but this is not a sufficient condition in itself because, for innovation rather than merely invention, this idea must be put into practice (Damanpour; Schumpeter; Utterback).

The factor of timing must be considered for the differentiation of the two concepts, because generating a new idea means being the first to implement it and launch it on the market.

Innovation must be new for the organization and for its environment of reference. This consideration introduces the variable space (in effect, the global marketplace). This allows to separate the company that generates the idea, produces it, and applies it for the first time anywhere (the innovator) from another (an imitator) that later applies and markets that same idea.

One should distinguish between a company that follows the innovator in the same market (an imitator) and another that adopts an innovation so as to launch it in a different or new market segment or territory.

These three factors, the generation of ideas, timing, and space, help establish a typology of innovators and imitators that corresponds better to the real world.

Organizational attitudes: 
Entrepreneurial, Market-oriented

The literature distinguishes between entrepreneurial and market-oriented organizational attitudes as factors influencing innovation.

Companies with an entrepreneurial orientation are “exploiters” of the knowledge generated by the “explorations” of their scientists or R&D personnel, which leads them to propose new ideas that are brought into material form as new products, services, or processes.

They have a greater propensity to generate their own ideas (innovation) rather than to adopt ideas generated by others (imitation).

Entrepreneurial orientation is defined as the approach characterized by

• Innovativeness
  (defined as the tendency of an organization to support experimentation and creative processes intended to give rise to innovations),
• High-risk projects, and 
• Proactivity.

A proactive attitude or stance is identified with technological leadership and with the desire to be first or a pioneer.

The degree of risk incurred by launching an innovation is much greater than that accepted by the company that adopts an imitation because the innovator confronts a change in the knowledge existing at the global level, and incorporates the commercial risk and the technological risk inherent in true innovation.

An essential prerequisite for the development of successful innovations is a good knowledge of the industry and markets in which the organization operates.

Market orientation is the concern with or study of the business environment in general, including customers, competitors, suppliers, and other external forces that affect the behavior of the organization. Market-oriented companies continually modify their offer —their products, services, and processes—to satisfy the needs of their market.

Market-oriented companies with a corresponding focus on their clients ("proactive") have a greater propensity to generate ideas to satisfy their customers’ needs and innovate. Conversely, those companies with a focus on competitors ("reactive") have a greater propensity to adopt ideas generated externally and imitate.

Radical innovations emanate from scientific research supported by an entrepreneurial orientation. On the other hand, the strategy aimed at continually satisfying customer needs, characteristic of a market-oriented company, will lead to specialization in the development of incremental innovations.

Incremental innovation can be classified as a “pull”-type innovation, whereas a “push”-type innovation is radical innovation.

Topology of innovative and imitative companies

“Incremental innovator”

• Strong market orientation 
• Moderate entrepreneurial orientation (proactive attitude) 
• Moderate levels of technological and commercial risk

"Radical innovator”

• Moderate market orientation
• Strong entrepreneurial orientation
• High levels of technological and commercial risk

“Mixed innovator”

• Strong market orientation
• Strong entrepreneurial orientation
• Moderate levels of technological and commercial risk

“Strict imitator”

• Weak market orientation
• Lack of entrepreneurial orientation (reactive attitude)
• Low technological and commercial risk.

“Explorer”

• Strong market orientation
• Limited entrepreneurial (proactive attitude)
• Low levels of technological risk and moderate levels of commercial risk

The authors define global innovation as an innovation that is new for the economy as a whole and local innovation as an innovation that is new in a limited environment.

They distinguish between companies that imitate and operate in the same markets as the innovators, and those that do so in different markets.
In the same markets, taking into account the factor of timing, they argue that only the first to generate an idea and apply it as a new product should be considered an innovator, and that all the rest are imitators.
A company that adopts an innovation that is new for the company but has already been successfully applied or marketed in its reference market will be considered an imitator in the strict sense, whereas a firm is categorized as an explorer company if it introduces innovations in a market different from that supplied by the strict innovator company.

A previous article in this blog provides alternative views on how to construct a Typology of Innovation that imposes lesser requirements on the originality of an idea behind a specific type of innovation.

Competitiveness

Please consult the original article for an analysis of how both
innovation and imitation can be a source of sustainable competitive advantage, provided the company is capable of designing a strategy that differentiates it from the innovator.

The establishment of barriers to imitation promotes the maintenance of the competitive advantage achieved by the successful innovator, provided this innovation is impossible to substitute.

The innovator will obtain a sustainable competitive advantage based on an innovation if it maintains a strategy of differentiation against the imitator,
whereas the imitator will obtain a sustainable competitive advantage based on an imitation if it maintains a strategy of price leadership against the innovator.

The explorer will obtain a sustainable competitive advantage based on a local imitation if it maintains a strategy of price leadership vis-à-vis the innovator, and a strategy of differentiation against future imitators.

*Note that the definitions introduced earlier in this blog (such as "innovation = successfully exploited ideas") mostly follow Schumpeter in requiring a positive market impact —  a positive benefit, especially in the form of an economic improvement — but there are many alternative definitions including those following Thompson that do not (see research paper for bibliography and details). The only common element among all the definitions of innovation is that it implies novelty.

This table classifies the principal authors in terms of whether they consider the subsequent market or commercial success of an innovation as a necessary factor for innovation.

Schumpeter (1961) dealt with innovation within the theory of economic development as a process of putting into practice new combinations of materials and forces.

Thompson (1967) defined innovation as the generation, acceptance, and implementation of new ideas, processes, products, and services (without mentioning the need for the idea to have a positive impact in the market).

Google’s Nine Principles of Innovation

In 2013, Google codified a new set of “Nine Principles of Innovation,” which updated the version first unveiled by former Google executive Marissa Mayer in 2008.

1. Innovation comes from anywhere.
2. Focus on the user.
3. Think 10x, not 10% - Aim to be ten times better.
4. Bet on technical insights.
5. Ship and iterate.
6. 20% time - Give employees 20 percent time.
7. Default to open.
8. Fail well.
9. Have a mission that matters.

These principles have been commented on by many others, including Robert Brands ("Learn from the Best", 2016) and Martin Zwilling: ("9 Principles For Maximizing Innovation In Your Business", 2015):

Innovation can come from anywhere in the organization.
Entrepreneurs should look for ideas from anyone, inside the organization or outside, top down or bottoms up, but the implementation responsibility is all yours. [...]

Focus on customer needs rather than profits.
When innovations are implemented that have clear value and acceptance by customers, business success will follow. [...]

Target factor of ten improvements, not 10 percent.
[...] to make something 10 times better than it is to make it 10 percent better. It’s called radical innovation versus incremental improvement. [...]

Let new technical insights drive innovative products.
For Google, this has led to self-driving cars, based on work with Google maps and artificial intelligence. [...]

Ship and iterate, don’t expect instant perfection.
[...] No technical analysis has the power of real-time user and market feedback. [...]

Spend twenty percent of work time on innovation.
Everyone in a company should be encouraged to spend fully one-fifth of their time pursuing ideas for positive change, even if it is outside the core job or core mission of the company. [...]

Set your default to sharing rather than proprietary.
Information sharing and open source facilitates collaboration on a huge scale, and can bring in as many innovations as are sent out. [...]

Tolerate no negativity attached to failure.
Stigmas and penalties for failing are among the largest gates to innovation. [...] Failing well [...] means failing fast and failing cheap, [...]

Instill a mission and purpose that matters. People think harder if they really believe their innovations will impact millions of people in a positive way. Work can be more than a job when it stands for something people care about [...]

 

There also is an interim 2011 version authored by Susan Wojcicki that outlines "The Eight Pillars of Innovation"

• Think big but start small
• Strive for continual innovation, not instant perfection
• Look for ideas everywhere
• Share everything
• Spark with imagination, fuel with data
• Be a platform
• Never fail to fail

built on Mayer's preceeding nine principles of 2008:

• Innovation, not instant perfection
• Ideas come from everywhere
• A license to pursue dreams
• Don’t kill projects, morph them
• Share as much information as you can
• Users, Users, Users - It’s users, not money
• Data is apolitical
• Creativity loves constraints
• You’re brilliant? We’re hiring

Fail fast, fail often?!

“Success is the ability to go from failure to failure without losing your enthusiasm.”       

attributed to Winston Churchill.

Is the 'fail fast' culture creating irresponsible entrepreneurs? "Fail fast, fail often" is the mantra that echoes everywhere in the startup universe. Startup gurus, investors, and aspiring entrepreneurs are trying to embrace failure as part of the learning process and building resilience in early-stage ventures.
But, how genuine is this? Does the entrepreneurial community really accept failure? Or is it just hype?
asks Anastasia Haralabidou.

The blog article "Fail Fast! Creating A Culture of Failure?" by Larry Boyer contrasts the context of the startup culture where the "Fail Fast, Fail Often" mantra originated with the context of the established corporate world to argue that both cultures are sufficiently different to not allow a straight adoption of that mantra.

The Fail Fast! philosophy seems to work well in the startup culture of Silicon Valley [, but] there is a context in a Silicon Valley start up that simply doesn’t apply in the corporate world. [...] There are 3 key subcontexts to the concept of Fail Fast! paradigm that are missed in the typical corporate discussion and execution:

• Avoiding Analysis Paralysis -  Experimentation & agile development

• Startup Darwinism - Risk-reward trade-off

• Counterculture Reactionism- Backlash against punishing failure
  

Avoiding Analysis Paralysis

[...] The need to think through the potential solution from beginning to end, uncover and address any likely issues, present your plan, make revisions and get approval to move forward. [...] By the time you’re through that process the need for your product has probably passed and your competition has made its money and moved on. [...]Sometimes it costs less and takes less time to just try it than it does to develop a formal design and testing plan. [...] A similar [iterative learning process] process can be found in in software development. Agile development also involves the rapid iteration and evolution of the software through short term goals, learning and moving on. It is a process of continuous learning and improvement along the way. Setback are expected and addressed rapidly to move the product forward.

Start-up Darwinism
Startup Darwinism refers to venture capitalists and entrepreneurs rapid exploration of business ideas and either quickly grow the business or shut it down. It’s a strategy where you can win big or cut your losses quickly and move on to the next big idea. There are parallels between the roles of VCs with corporate shareholders or executives as well as entrepreneurs and employees or, as is now vogue, intra-preneurs. [...]There are, however, important differences and perhaps none as important as the mindset. For the entrepreneur and founding employees the success or failure of the project is personal. [...] In the corporate world where such investments are made there are frequently many layers insulating the investors and those doing the work.

Even so, venture capitalists don’t just through money at projects with the expectation of failure. The expectation is success.

Counterculture Reactionism
Entrepreneurs enjoy taking risks, taking ownership of a project and the results. [...] The fail fast concept provides an acceptance of risk taking, learning and accountability if your ideas and direction don’t work out.

Values and Watching Your Language
Values define the way we make decisions, approach problems and go about our daily business. [...]Corporate values will often include: Excellence, Innovation, Creativity, Curiosity, Respect, Teamwork and the like. Have you ever seen a corporate value of Failure, Fail Fast or Fail Often? 

PwC suggests both cultures can be bridged and elaborates on "How to bring a fail-fast culture to a slow-move company".

In "Failure is the Mother of Innovation" Baba Shiv argues that 

Experimentation and failure are essential to innovation because, by its nature, an innovation is an unknown that can only be discovered through trial and error. Still, for all the startups that follow the mantra of “fail fast,” there are many corporate leaders who see failure as something to be avoided, not embraced. [...]
In corporate hierarchies there is a tendency to give greater weight to the opinions of leaders rather than their subordinates. However, those opinions are usually based on instinct rather than information. The one thing that can trump a higher-up’s opinion is data, and repeated experimentation and failure lead to a lot of it. [...]
Data can also win over the opposition. Those with a risk-averse mindset generally oppose innovating through experimentation, like rapid prototyping or continual iteration. [...]
Organizations also tend to reward big breakthrough successes rather than smaller ones, but those game-changing innovations generally happen after, or in tandem with, the incremental ones. [...] This two-pronged approach relies on exploitation and exploration.
Exploitation [...] means honing competencies [a company] already has to reduce costs and improve the value for customers — incremental innovations. At the same time [a company] invests in exploration, which enables breakthrough innovations.

Technology first. User needs last?

“If I had asked people what they wanted, they would have said faster horses.” — attributed to Henry Ford

“It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them.”
— Steve Jobs

In his 2010 article "Technology first, needs last" renowned design professor Don Norman came to a disconcerting conclusion:

Design research is great when it comes to improving existing product categories but essentially useless when it comes to new, innovative breakthroughs.

[...] Although we would prefer to believe that conceptual breakthroughs occur because of a detailed consideration of human needs, especially fundamental but unspoken hidden needs so beloved by the design research community, the fact is that it simply doesn't happen.

New conceptual breakthroughs are invariably driven by the development of new technologies.

The new technologies, in turn, inspire technologists to invent things, not sometimes because they themselves dream of having their capabilities, but many times simply because they can build them. In other words, grand conceptual inventions happen because technology has finally made them possible.

Do people need them? That question is answered over the next several decades as the technology moves from technical demonstration, to product, to failure, or perhaps to slow acceptance in the commercial world where slowly, after considerable time, the products and applications are jointly evolve, and slowly the need develops.

[...] But if you examine the business impact of innovation, you will soon discover that the most frequent gains come from the small, incremental innovations, changes that lower costs, add some simple features, and smooth out the rough edges of a product. Most innovations are small, relatively simple, and fit comfortably into the established rhythm and competencies of the existing product delivery cycle.

Successful revolutionary innovation is rare. In any given arena, it happens only a few times per decade. Why? In part because it is difficult to invent a new concept that truly fits people's lives and needs. In part, it is because existing products already satisfy most people and when the new concepts appear, the older, existing technologies have a remarkable way of rising to the challenge and sustaining themselves for years - decades even - long after people thought they would disappear. [...]

Major innovation comes from technologists who have little understanding of all this [design] research stuff: they invent because they are inventors. They create for the same reason that people climb mountains: to demonstrate that they can do so. Most of these inventions fail, but the ones that succeed change our lives.

Build it and they might come? 

If you disagree with Don Norman's view - that he subsequently refined in a presentation on "Incremental and Radical Innovation: Design Research versus Technology and Meaning Change" together with Roberto Verganti - you may want to consult Bruce Neumann's objections documented in "Technology Vs. Design - What is the Source of Innovation?". Then again, Mr. Neumann has meanwhile distanced himself somewhat from the "Design Thinking" movement.

Norman has a model of innovation that is top-down, one-way and very old. It goes this way. Engineers invent. Marketeers construct products around the new technology. Designers put on a pretty face. And then the stuff is thrown at the consumer marketplace, with the hope that it finds a need or a want. In the past, sometimes it did. Often it didn’t.
[...]
Thanks to design thinking and new tools and methods in ethnographic research, we now have a new model of innovation that is flat, open-source and dynamic. It pulls people into an engagement with technologists early and perhaps more productively, rather than have them wait for technologies that may evolve into innovations they can actually use. Ethnographic research is especially important in an era of co-creation and social media, where consumers demand a say in creating the products and services they use.

I take note of Neumann's quote, though:

Invention has to have socio-economic value to become innovation. It has to be socialized or else it sits in the lab.

Technology-Push or Marketing-Pull?

See the "Typology of Innovation" blog entry for further categorization of innovation types.

Innovation Metrics

It should not come as a surprise since there is no single definition of the term "innovation" to start with: 

There is no established measurement framework in the software industry to measure innovation yet – according to this 2013 study*

Edison, H., Ali, N.B., & Torkar, R. (2013). Towards innovation measurement in the software industry. Journal of Systems and Software 86(5), 1390-1407. Available at: http://www.torkar.se/resources/jss-edisonNT13.pdf 

The article lists some metrics, though, that we can consider in this context (see Table 5 on pg. 1397) if we find a simple and reliable way to track them – highlighting is mine:

Category     Example 
Determinants The existence of a project champion, knowledge sharing, government regulation              effect
Inputs       R&D expenditure, R&D intensity (ratio of R&D expenditure to total assets),
             percentage of workforce time that is currently dedicated to innovation                      projects
Outputs      Patent density, new organisational programs, number of new processes              and significant enhancement per year

Performance  Percentage of sales that is generated by new products, citation ratio, impact              of brand
Activities   Percentage of ideas funded, quality of adaptation, managers survey

*Excerpt from 8. Conclusions on pg. 1405

The purpose of this study was to establish the current practices, mechanisms and challenges of innovation measurement in the software industry. […] The study found that among major challenges is a lack of a consistent perspective of innovation. This difference in views affects how innovation measurement initiatives are conceived (what is considered key aspect of innovation) and executed (which metrics are required to capture a particular aspect). […]

[…] there are several shortcomings in the state of practice. In the software industry, there is a lack of defined innovation process and measurement programs. Similarly, none of the well-known measurement frameworks are used to measure innovation. […]

The outcome of this review contributed to the existing body of knowledge in the form of an innovation measurement model, enumeration of metrics and their classification based on what aspect of innovation they are used to measure. […]

The metrics listed above are in line with the traditional innovation metrics documented in " The Complete Guide to Innovation Metrics – How to Measure Innovation for Business Growth" by Soren Kaplan, but he goes on to define more modern metrics that better reflect today's "Open Innovation" methods.

How do you measure innovation? One of the reasons that only about 1/3 of all Fortune 1000 companies have formal innovation metrics is because this simple question does not have a simple answer. [...]

The heart of the problem is that today’s competitive environment is radically different from the industrial environment in which traditional innovation metrics were born. Because most metrics programs begin with benchmarks of established companies that have been successful with new products (like 3M or Google), metrics tend to revert back to traditional measures of R&D or technology investment and effectiveness. Across the Fortune 1000 that do possess innovation metrics, for example, the most prevalent metrics include:

• Annual R&D budget as a percentage of annual sales
• Number of patents filed in the past year 
• Total R&D headcount or budget as a percentage of sales
• Number of active projects 
• Number of ideas submitted by employees
• Percentage of sales from products introduced in the past X year(s)

While some of these metrics are valuable for driving investment in innovation and evaluating results, they provide a limited view. In today’s environment in which “open innovation” (sourcing ideas and technology from outside the company) can create differentiation and competitive advantage, for example, some of these metrics actually inhibit strategic innovation. And in an environment in which disruptive innovation and cannibalization must be wholeheartedly embraced as a core strategy, fundamentally new types of behaviors are required, and subsequently new structures and related metrics to drive these behaviors. [...]

A Framework for Innovation Metrics

The best solutions create simplicity from complexity. Assuming that successful innovation results from the synergies between complementary success factors, it is important to address these by:

• Creating a “family of metrics” for ensuring a well-rounded portfolio of measures
• Including both “input metrics” and “output metrics” to ensure measures that drive resource allocation and capability building, as well as return on investment

A “family of metrics” ensures a portfolio of measures that cover the most important innovation drivers.  The following are the three categories to consider for any metrics portfolio:

Return on Investment Metrics
ROI metrics address two measures: resource investments and financial returns.
ROI metrics give innovation management fiscal discipline and help justify and recognize the value of strategic initiatives, programs and the overall investment in innovation.

Organizational Capability Metrics
Organizational capability metrics focus on the infrastructure and process of innovation.
Capability measures provide focus for initiatives geared toward building repeatable and sustainable approaches to invention and re-invention.

Leadership Metrics
Leadership metrics address the behaviors that senior managers and leaders must exhibit to support a culture of innovation within the organization, including the support of specific growth initiatives.

[...]

Please consult “Soren Kaplan’s article” for the details of the proposed metrics.

Open Innovation

Companies are shifting from the traditional closed model of innovation to embrace a more practical and smarter way of innovation – "Open Innovation", a term originally coined by then Harvard Business School Professor Henry W. Chesbrough.

Aditya Purohit has summarized the approach in his blog "What is an Open Innovation approach" as follows.

Moving from the "Closed Innovation" thinking that all R&D needed to be in-house and use only internal resources to develop intellectual property (IP) for new products or services, "Open Innovation" defines the antithesis of the traditional approach. "Open Innovation" (OI) helps companies look beyond their boundaries to seek and utilize inflows & outflows of knowledge, to accelerate innovation.

The concept of OI entails a series of activities that help with the integration and interaction with external sources of knowledge. This could include everyone in the ecosystem right from suppliers, clients, and customers to competitors, research institutes, and non-customers from completely different industries. The objective boils down to stimulating innovation by creating strategic alliances and networks. This process is characterized as the “Outside-In” processes.

The other way in which OI is approached is the “Inside-Out” process. The idea is for companies to appropriate value by bringing ideas to the market, trade their IP, and undertake technology transfer to the external market for further development of the technology/idea being transferred.

The primary aim here is to exploit their intellectual property developed beyond the firm’s boundaries. This is done either by licensing / joint ventures / spin-off’s the technology / ideas to other companies / industries. The value generated isn’t restricted to financial gain only. It’s about collectively engaging a larger audience to support an idea and thereby have a new business model for innovation in new markets.

Both aspects, the outside-in approach to secure new knowledge, and the inside-out process to bring ideas to the market, can be combined in a hybrid OI process which leads to co-creation between complementary partners via network alliances, joint ventures, and other vehicles of cooperation. This is where digital platforms and social media for idea exchange and community building, and advanced analytics come into play to bring together problem-solvers and those demanding an innovative solution.

Innovating Innovation

When I was reading Henry W. Chesbrough's book on "Open Innovation", the foreword by John Seely Brown, former Director of Xerox PARC, about "Innovating Innovation"  grabbed my attention.

Here's an excerpt:

[...] Some more definitions: by innovation I mean something quite different from invention. Innovation to me means invention implemented and taken to market. And beyond innovation lies “disruptive innovation.” By this I mean something that actually changes social practices — the way we live, work and learn. Really substantive innovation — the telephone, the copier, the automobile, the personal computer or the Internet — is quite disruptive, drastically altering social practices.

Disruptive innovation presents some major challenges. First, although it may be relatively easy to predict the potential capabilities of a technological breakthrough in terms of the products it enables, it is nearly impossible to predict the way that these products or offerings will shape social practices. The surprising rise of email is but one example. It is not technology per se that matters, but technology-in-use, and that is what is so hard to predict ahead of time. Nevertheless, technological breakthroughs that do end up shaping our social practices can produce huge payoffs, both to the innovator and to society.

A second major challenge is that a successful innovation often demands an innovative business model at least as much as it involves an innovative product offering. This is a hard lesson for research departments of large corporations to learn. It is why so many great sounding innovations in the research lab fail to see the light of day. In the lab, we have devised many ways to rapid prototype an idea, explore its capabilities and even test lead customers' reactions to it. But innovations that intrigue the customer don’t necessarily support serious business models — as the dot.com boom and bust showed again and again — and even those that do may support a model that threatens to cannibalize the sponsoring corporation's existing business models. So, as one aspect of innovating innovation, we need to find ways to experiment not only with the product innovation itself, but also with novel business models. Rapid business model prototyping is thus of critical importance to the future of technological innovation, [...]

There are additional reasons to innovate innovation. Most prior models turned on the creativity within the firm. In today’s world we are faced with two new realities. The first is that there are now powerful ways to reach beyond the conventional boundaries of the firm and tap the ideas of customers and users. Indeed, the networked world allows us essentially to bring customers into the lab as co-producers. [...]

The second reality has to do with the fact that today most of the world’s really smart people aren’t members of any single team but are distributed all over the place in multiple institutions. Similarly, we are now looking for innovations in the interstices between different disciplines — between, for example, biotech and nano technologies. Any new model of innovation must find ways to leverage the disparate knowledge assets of people who see the world quite differently and use tools and methods foreign to ourselves. Such people are likely to work both in different disciplines and in different institutions. Finding successful ways to work with them will lie at the heart of innovating innovation.

New technology offers us new tools to help in this meta type of innovation. ...

[...] 

The open innovation model that Chesbrough describes in this book shows the necessity of both letting ideas flow out of the corporation in order to find better sites for their monetization and also to flow into the corporation as new offerings and new business models. [...] An open innovation model diminishes both the error of squelching a winner (a false negative) and of backing a loser (a false positive). [...] Let us, instead, all engage in the process of innovating innovation. [...] "