FC NOW: The Fast Company Weblog
January 26, 2006
Live From Davos: Development and Innovation
A Columbia University economist, Xavier Sala-i-Martin, spoke at a session on global competitiveness in Davos this morning. He offered what I think is the most succinct statement of the stages economies move through on their way to becoming innovation-based. First, he said, you concentrate on making something cheaper than anybody else. And when you can no longer make something cheaper than anybody else, you concentrate on making something better than anybody else. And when you can no longer make something better than anybody else, you concentrate on making something different than anybody else. That's the innovation economy.
Posted by Mark Vamos at January 26, 2006 1:49 PM | Category: davos 2006 |
4 Comments
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ayn rand, phone your office.
A great definition and clear!
And arguably about ten years on since the term "knowledge management" started coming into use is a summation of that discipline as well.
The points also are a bit like the Escher optical illusion stairs which go round and round - in that when you've done these three steaps - someone starts making the "different" cheaper!
Steve
This definition, though clear and concise, runs counter to the steps in the "disruptive technology model".
This model lists price as the final basis of competition, where the product has become a commodity.
A distinction should be made between "sustaining" and "disruptive" product development.
Well, if you want to really look at the issue consider the George Land research on innovation that describes a life cycle, cause-effect relationship that applies to businss:
It has three phases: 1.) Formative structure creates (oh, the original Apple computer!), normative structure defines and delivers (Apple gets corporate in the 1980s) and there is a point that integrative structure is used to intervene when the normative cycle no longer delivers competitive advantage (Apple sales declined, Jobs leftbut Jobs came back and reinvented Apple!-iPod, G5 computers, etc.) This is where innovation comes in! Sustaining is maintenance and reactive/preventative. Disruptive innovation is to change the dynamics.