Anders Drejer & Christer Vindeløv-Lidzélius

The Innovation Journal. No 1. Kaospilot Publishing

The Times They Are a-Changin

Nobel Prize-winner (and singer-songwriter) Bob Dylan once wrote, “He Not Busy Being Born Is Busy Dying”. The same goes for organisations. Is your organisation busy being born or busy dying?

Evidently, most organisations need to be more innovative and think proactively in their strategic management. At least, this has rapidly become the mantra of the new decade, both among managers and in academia. Well-known works on innovation management and technology management has gained newfound – or perhaps re-found – respectability and has begun to influence the way we think about management as a discipline.

Is there something rotten?

Is there something rotten in the state of Denmark? Being a small, open and international economy certainly has advantages for a country with few natural resources. Thus, Denmark has lived better and longer as a trading nation than as an agricultural society, albeit based on exporting products from the primary as well as secondary sectors. In the so-called “Industrial Society”, Denmark managed to establish itself a lucrative niche based on the selling and exporting of a relatively small number of products and services that was world-leading, despite (or perhaps even because of) the country’s small size. Denmark did this while importing all other important goods and services. Much of this has happened through a collaboration of industry and research/science, as in the case of the export of pork from Denmark, which is based on a rather unique research-based genetics programme, managed by a collaboration between organisations representing the primary producers of pigs, the state and Danish universities. The medical giants Novo Nordisk (mostly recognized for insulin for diabetes patients), Novozymes and Coloplast (mostly recognized for its ostomy products) as well as Carlsberg (which has the classic slogan “Probably the best beer in the world”) have benefitted greatly from close ties with universities and the Danish State.

A phone was once just a phone

Of particular interest in this context are the examples of the predecessor to the smartphone, the GSM-based cell phone and wind turbines. While the software enabling the creation of the global cell phone industry (GSM) was programmed (invented) in Denmark and created enormous interest in the cluster of companies around Aalborg University dedicated to the emerging cell phone industry, eventually mass production competencies eluded Denmark, and the industry was further developed in Sweden, Finland, Germany and the Far East, where the big bucks were made as it matured. But as the industry lost its innovative edge it became eventually overrun by smartphones/a new industry. Contrary to this is the case of wind turbines. With the current hype surrounding the wind power industry, it is easy to forget that getting there required a massive amount of (state-sponsored) R&D. As such it is well documented that the early 1990s saw an R&D arms race between the US and tiny Denmark with regards to wind turbines. In fact, in the late 1990s, seven of the ten largest manufacturers of wind turbines were Danish, while the last three were American. This, despite the fact that the US had funded 500,000 man-years of R&D into wind turbines, while Denmark had funded “only” 100,000. Still, Denmark won – at least in the sense that mass production capability and, hence, the big bucks are still located in and around Denmark. At least for now as US, China and others are catching up. But how did Denmark win, despite a much smaller amount of resources dedicated to R&D? The answer, sadly, is not smarter researchers. Instead, Professor Peter Karnoe of Copenhagen Business School has demonstrated that the initial success was a result of better collaboration between universities and industry, resulting in a succession of minor improvements of a proven wind turbine design, eventually outperforming the “Big Science” approach of the Americans. The rest, as they say, is far from trivial.

Need for innovation, anyone?

Today, we know that competing is not just a matter of creating and safeguarding an attractive competitive position. In 1905, the average age of a commercial organisation was about 70 years. A century later, the average age has fallen to a mere 20 years. While one cannot blame the Internet for everything, this major decline in life expectancy certainly is food for thought. What if our businesses today are based on an unsustainable business model? It seems a real danger that successful businesses are ephemeral, i.e. they build something of value, and once that value has been exhausted, they vanish!

How close is your company to extinction?

Also available through Spiro School of Business -The Innovation Series

Kaospilot Publishing launches a journal aimed at disseminating research, ideas and opinions about innovation and related fields. This piece is out is by Anders Drejer and Christer Windeløv-Lidzélius. It speaks to the fundamental need of renewal and development.

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