12 different ways to innovate

S PRING 2006

VOL.47 NO.3

SMR207

Mohanbir Sawhney, Robert C. Wolcott and Inigo Arroniz

The 12 Different Ways for
Companies to Innovate

Please note that gray areas reflect artwork that has been intentionally removed. The substantive content of the article appears as originally published.

REPRINT NUMBER 47314

The 12 Different Ways for
Companies to Innovate
F

Companies with a restricted view of innovation can miss opportunities. A new framework called the
“innovation radar” helps avoid that.
Mohanbir Sawhney,
Robert C. Wolcott and Inigo Arroniz

Illustration: © Brian Raszka/Veer

aced with slow growth, commoditization and global competition, many
CEOs view innovation as critical to corporate success. William Ford Jr., chairman and CEO of Ford Motor Co., recently announced that, “[f]rom this point onward, innovation will be the compass by which the company sets its direction” and that Ford “will adopt innovation as its core business strategy going forward.”1 Echoing those comments, Jeffrey Immelt, chairman and CEO of General Electric Co., has talked about the “Innovation
Imperative,” a belief that innovation is central to the success of a company and the only reason to invest in its future.2 Thus GE is pursuing around 100
“imagination breakthrough” projects to drive growth though innovation.
And Steve Ballmer, Microsoft Corp.’s CEO, stated recently that “innovation is the only way that Microsoft can keep customers happy and competitors at bay.”3
But what exactly is innovation? Although the subject has risen to the top of the CEO agenda, many companies have a mistakenly narrow view of it.
They might see innovation only as synonymous with new product development or traditional research and development. But such myopia can lead to the systematic erosion of competitive advantage, resulting in firms within an industry looking more similar to each other over time.4 Best practices get copied, encouraged by

References: 2. J. Immelt, “The Innovation Imperative” (2004 Robert S. Hatfield Fellow in Economic Education lecture at Cornell University, Ithaca, New York, April 15, 2004). 3. C. Nobel, “Ballmer: Microsoft’s Priority Is Innovation,” Oct. 19, 2005, www.eweek.com Hannan and J. Freemen, “Organizational Ecology” (Cambridge, Mass.: Harvard University Press, 1989). and accomplishment of innovation. See J. Schumpeter, “The Theory of Economic Development” (Cambridge, Mass.: Harvard University Press, 1934). 6. B. Nussbaum, “The Power of Design,” Business Week, May 17, 2004, 86. Strategies for Continuously Creating Opportunity in an Age of Uncertainty” (Boston: Harvard Business School Press, 2000); and School Press, 2003). Copyright © Massachusetts Institute of Technology, 2006. All rights reserved.