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MIT Sloan economist and digital-business expert Erik Brynjolfsson tells how the rising data flood and emerging tools for analyzing it are changing the ways innovation gets done.
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Best practice in product development (PD) is migrating from local collaboration to global collaboration. Global product development (GPD) represents a transformation for business, and it applies to a range of industries. The objective of this article is to present frameworks that can help companies address strategic and tactical issues when considering GPD. The concepts have been developed through discussions with more than 100 companies in 15 countries in North America, Europe and Asia.
Nurturing a new and lasting idea doesn’t result from analyzing market data. Aspiring creators must act on what nonprofits already know: you get the best answers by burying yourself in the questions. The authors explore the efforts of companies such as Grameen Bank and Hindustan Unilever Ltd., the Indian subsidiary of the Dutch consumer products multinational Unilever N.V. They are engaged in serving the multitrillion-dollar consumer market at the “base of the economic pyramid” or BoP — the four billion people with annual per capita incomes below $1,500.
To understand how breakthroughs in creativity occur, managers must understand how most collaborations work. “Managers first need to understand that invention is essentially a process of recombinant search,” writes Lee Fleming. “That is, I adopt the classic definition of invention as a new combination of components, ideas or processes.” Fleming adds that “Almost all inventions are useless; a few are of moderate value; and only a very, very few are breakthroughs. Those breakthroughs constitute the ‘long tail’ of innovation.”
Advances in development tools have tremendous potential for increasing productivity, cost savings and innovation. To reap the full benefits of such technologies, though, companies need to avoid some common pitfalls.
Smartly placed, legitimizing constraints actually enable innovation by focusing it and giving it traction in the competition for corporate attention and resources.
Some companies are better off making incremental improvements to their products. Others that must compete on their ability to innovate focus on breakthrough inventions. Either approach requires the exploration of a specific type of “technology landscape” and the right strategy for searching across the terrain.
Innovation has become the defining challenge for global competitiveness. The authors show the degree to which location matters for successful innovation at the global technology frontier. Such locational advantages help to explain an apparent paradox of globalization: Ideas and technologies that can be accessed at a distance cannot serve as a foundation for competitive advantage.
Innovation today calls for the complex knowledge that only a broad network of specialists can offer. The most effective companies, however, keep core-competence activities in-house, outsourcing the rest to best-in-world suppliers. The author discusses the multiple challenges of successful outsourcing.
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