Innovation for Hard Times

On businessweek.com i just read the text beneath. To make sure that i will not invalidate or take the edge of the text i shamelesly copied it. I want to stimulate you to read the rest of the text on Businessweek.com

The article is written by John Hagel and John Seely Brown. They are co-chairman and independent co-chairman, respectively, of Deloitte LLP's Center for Edge Innovation. John Hagel writes a blog at Edge Perspectives. Their monthly column, Innovation on the Edge, explores what executives can learn from innovation emerging on various forms of edges, including the edges of institutions, markets, geographies and generations.

(I added the link of his blog in our blogroll)

The intro of the article:

Innovation for Hard Times

"Cutting staff or programs while demanding more of your workers will yield diminishing returns. Executives should seek leverage to create economic value

By John Hagel and John Seely Brown

Everyone is familiar with financial leverage. It is a powerful way to improve performance when times are good. The danger, of course, is that financial leverage magnifies the impact of downturns in demand as well. It can literally kill a company, as we are witnessing in the financial-services industry.

But there are other forms of leverage. And executives should be searching for them in order to navigate the current crisis and allow firms to continue to create economic value, rather than becoming a victim of the destruction in value unfolding around us."

...

Effectively harnessing capability and learning leverage requires another form of innovation—institutional innovation. Companies will have to redefine governance structures as well as the roles and relationships required to effectively mobilize and coordinate activities of large numbers of firms. There's significant complexity in trying to scale the number of participants in networks and conventional rules might not apply.

This institutional innovation should be pursued in rapid increments. Rather than reimagining from the ground up a fundamentally different way of organizing activities across thousands of participants, companies need to find pragmatic ways to move from where they are today in ways that generate near-term financial returns. The well-known case of Procter & Gamble's (PG) "Connect and Develop" program illustrates some of the opportunities that can be reaped by building broader networks to source promising product ideas. Nearly 50% of P&G's products today have benefited from some form of external collaboration. Other companies might follow this example to position themselves to pursue even more powerful forms of capability and learning leverage, especially once the economy recovers.