Innovation is becoming an important subset of most companies.  To survive financially in a competitive world economy a company must create new products continuously. The process of new product creation or new product development most now call “innovation”.   Innovation thought leaders have created careers at helping companies and leaders innovate more effectively which has generated great wealth to entire companies and their employees.

Let’s take a step back from technology innovation and look at human ingenuity in general and the creation of wealth. Technology innovation is essentially one subset of the creation of human wealth and value.  To accumulate wealth an individual or organization must create and possibly sell things of value.  Carl Menger said that value “is a judgment economizing men make about the importance of goods at their disposal for the maintenance of their lives and well-being.”  Yes value is a judgment made by men and we then agree to assign value to paper “money”.  Rabbi Daniel Lapin said “Animals merely seek their sustenance, whereas humans actively create theirs“.  The thirteenth century Jewish transmitter Rabeinu Bachya said “ a man’s active participation in the creation of his wealth is a mark of spiritual greatness” We see that creation of value represented by money is the unique and signature activity of human beings.  Creating value is the act of serving mankind.  As innovators we intentionally are tasked with the creative invention process. Once in a life time invention may be good enough for an individual but not for a multi-billion dollar company.  Combine that with the complication of having full-time employees and innovation must necessarily be an ongoing activity that must produce if a company wants to grow long-term.  For most companies to prosper through the decades and remain competitive it must innovate, it must invent, it must create new and better products and do what only human beings can do.  Over time technology innovation-centered companies have learned a thing or two about innovation, about inventing about technological advances that better mankind.  We have seen super-star inventors like Thomas Edison and Benjamin Franklin and Nicola Tesla and we think these are the examples that we should follow but what about all the innovation that people have done while a part of a company? A company that invents, a company makes new strides in fields like aviation, like communication, like lasers, like energy conversion and like weaponry? 

Thomas Edison may not have the credit for inventing the light bulb were it not for the innovation provided by Corning Incorporated, more specifically the skills, the talents and the ingenuity of the specific glass artists to develop and create the first glass bulb to house the light emitting filament.  And later the ingenuity of the Corning engineers and workers to create and perfect the ribbon machine to mass produce the light bulb.  Not to diminish the greatness of Edison but innovative employees did that in collaboration with Edison.

The private sector employment and effective management of scientists, engineers and technicians have taught companies how to harness and encourage human ingenuity and creativeness on a mass scale.  What exactly have companies learned about this process of value creation?

1. There is power in collaboration, Thomas Edison gets credit for the light bulb but his collaboration with Corning made it happen, outside of lab, for the rest of the world. People who will not work together will not accomplish much, even extreme genius, Edison understood this.  Countries and economies where people do not work together will not be able to harness the ingenuity and genius of some of their citizens. This speaks to the importance of long-term stability and safety for a country the general good-will of citizens for one another and between government and citizen.
2. Culture matters; a culture that is hostile and polarized, is competitive and plagued with extremes in access to resources is not healthy.  We know from business professionals that a healthy organizational culture enables the fullest use of the intelligence and creativity of employees. Toxic cultures where certain employees are marginalized and are distracted by office politics, hinders the efficiency and effectiveness of the overall innovation efforts of any company.  I don’t care how many articles are written about navigating politics and just accepting things how they are to move up the ladder.  Toxic cultures do not have to exist, we should not just settle and become a part of them and it doesn’t have to stay that way. Jiddu Krishnamurti said “It is no measure of health to be well adjusted to a profoundly sick society.”  Yes it is possible to adjust to a sick society, to a toxic work culture, some do, the strongest (or ruthless) can find promotion.  However a culture where team health is valued by leadership, where cooperation and goodwill is displayed and encouraged among the citizenry, where the less ruthless and competitive are also valued and contribute their gifts and talents will have a more healthy economy over time.
3. Freedom matters…a lot; a free employee who is trusted and behaves in a way that does not need to be micro managed is a more valuable employee. An employee who polices him or herself, who willingly contributes with passion and has real ownership of outcome will outperform one who is micro managed, who is looked on with distrust and contempt by leadership. Similarly, economies and nations whose people are not trusted, who are heavily burdened with an abundance of regulations, laws and taxation suffer and are less productive than those with adequate personal freedoms and real rights.
4. Innovation must be intentional; companies must invest resources into R&D in order to invent new products, to expect and hope that employees will develop new products without the time and money to experiment and learn is crazy.   There is a real financial cost to this, an investment must be made, it does not just happen within a company routinely.  Phil McKinney suggests that companies keep up with the R&D spending levels of their industry peers in my podcast interview with him here.   Steve Jobs adds to this and points out that it is not money alone, “Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.” I think they both are right.  Jobs was not saying that R&D spending can be zero he was saying it must be combined with other things or it is wasted.  Spending must be present ongoing, this is true at Apple and every tech company that has survived. obs was essentially saying that leadership via smart hiring and via culture management must be right (“how much you (leaders) get it”).

Similarly, governments of nations should intentionally encourage citizen innovation and invention with its regulation and with tax rates, with strong patent laws, with protections for those who are starting companies, with financial rewards for the creative citizens rather than punish them with taxation and with class warfare as people begin to prosper.  In a healthy company the productive innovators are rewarded, they are compensated; they are applauded with more income, with promotions, sometimes with awards, with more freedom and more budgets to invent and to learn with.  Governments and nations should remember to apply these learning’s from industry if they care about their economy.

What else can be learned from innovative companies?