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Measuring innovation not novelty
Too often confused with novelty, innovation is about growing capacity of your existing resources – here’s how think tank The Drucker Institute measures Innovation for the Management 250.
Why it matters
Writing in the Wall Street Journal, Drucker Institute executive director Zachary First explains that his organisation follows the standard for innovation set by its founder: “endowing human and material resources with new and greater wealth-producing capacity.”
Bottom line: innovation is about doing what you do better, not just doing the new new thing.
Four principles of innovative companies
The Institute’s most innovative company for 2021 is Amazon, whose flywheel model (and its even more famous two pizza rule) has become an often-cited case study of how to generate and execute new ideas swiftly, effectively, and accountably.
Peter Drucker, an extremely influential management consultant, outlined his four ideas of innovative companies as:
- Continuous improvement of product, service and internal process.
- Exploit successes.
- Stop doing things that don’t provide value.
- ‘Create the different tomorrow’ by aiming to replace the successful products available today.
In practice, this translates to a count of patent and trademark applications and registrations, an analysis of innovation management across the supply chain, and R&D spending and hiring. The analysis also explores patent sales, as stopping ineffective activities is key.
Sourced from the Wall Street Journal
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