Wall Street Week on PBS featured an interview with Richard Florida author of The Flight of the Creative Class. Try to catch the episode if you can.
In this second book by Dr. Florida, he makes a great argument that growth comes from the efforts of those in society who are most creative. His arguments are compelling. In a nutshell, those companies (and economies) that help develop and then use the talents of our most creative people are most successful.
This may not seem insightful, until you think about how we actually have been treating creative people since 2000. Business R&D budgets actually declined in 2002 – for the first time in 15 years. And with those budget declines went many jobs for those leading our economic innovation engine. Businesses went even farther, though, by actually farming out much of their R&D to offshore companies in an effort to lower development costs. As a result, non-U.S. companies began gaining ground in the ability to innovate and create competitive advantage.
Defend and Extend behavior can be deadly. Using the need for profits as the justification, management can literally shoot the goose which laid the golden eggs. Lock-in to old business ideas leads managers to believe they don’t need innovation, just better execution. They prefer the cost reductions to the investment in innovation. Yet, the data would indicate otherwise. Execution quickly becomes meaningless (and not very profitable) in a highly competitive world — where a more innovative competitor can obsolete your superior execution in a heartbeat.
Despite what the politicians might say, businesspeople know its tough out there. Profits are harder and harder to come by. Every trip to China or India produces less return. What’s needed is a change in management thinking. Away from a focus on execution, and a return to recognizing the importance, and value, of innovation.
Internal innovation is as critical to business as oxygen is to human life. Businesses won’t competitively win in a dynamic world unless they ask for, develop, seek out, relish and promote innovation.
Businesses need those highly creative people in Marketing, Sales, Product Development, R&D – and all aspects of the company. Businesses need to hire, and listen to, those outside organizations (lawyers, ad agencies, consultants) filled with "outside the box thinkers". These outsiders have been proven to drive innovation – and innovation drives growth!