I was invited to be the keynote speaker for international accountants, Mazars, earlier this year. The topic was innovation and the theme of the conference started from an assumption that it benefits both business and society.
But I decided to throw a hand grenade into the room – the theme of my speech was that innovation is not something that can be predicted or managed and frequently benefits no-one, least of all society.
I see it as ‘benefit neutral’ – the pros pretty much balance the cons.
In the first part of this two-part blog I want to look at how innovation happens and who benefits – if anyone can make such general statements – and in the second part to look at the role of a board in governing innovation.
1. New products do not always benefit business?
The conference invitation said “those who take bold steps to pioneer new products, processes and ideas that create benefit for both business and wider society will succeed in the future”.
There are two elements to this statement. The first is an assumption that you can predict which processes and ideas will benefit business and wider society. The second is that these are the businesses and ideas that will succeed.
And I don’t agree with either. At least not fully.
Of course, some of the world’s most profitable businesses have been founded on outstanding innovations – Apple, Microsoft, Google and Amazon to name a few. But their success has included plenty of innovations along the way that could have wiped out any one of these corporates forever.
Apple III was a complete failure and after three years of building its market profile, this summer Google dropped its Google Authorship very quietly. So a company can be innovative overall, but still have great innovations within it that don’t succeed.
And there are many companies that have taken bold steps to pioneer new products but miss the market because of competition or timing.
Twenty years ago I worked on e-health and e-cash – great ideas, but 20 years too early. We lost a lot of money for our shareholders and jobs for our employees.
2. Who benefits from innovation?
Do innovations always benefit society? Not a bit of it.
And innovation always has winners and losers.
The coming tide of innovation in technology and working methods is increasingly creating a divided society of a minority of highly skilled, highly paid, flexible, global workers and a majority of poorly paid local workers competing for service jobs where they cannot be replaced by technology.
Dealing with this is a political issue of supreme importance but I would argue that it is something companies can do little about.
3. Innovations can change the world – for better and worse
I’d like you to think of two specific major innovations and their impact on society.
The first is nuclear physics. I have been the recipient of the benefits of nuclear medicine and like millions others, I am profoundly grateful for it.
Nuclear power also allows us to deliver low cost, low emission energy that may save the planet from destruction – if we can also stop nuclear warfare from blowing humanity to smithereens.
The other area is where some of the world’s brightest brains came up with a series of complex, innovative products that did more between them to destroy wealth and jobs than anything since the last war. I refer to the banking crisis that started in 2007 and still goes on today.
In part two of this blog on innovation I will look at the role of the board and what they can, and do, govern – and mostly don’t.