Friday, November 24, 2006
Innovation: Kidnap anyone who says ideas are a dime a dozen...
This phrase is most often uttered by those who champion weaker forms of innovation when in all reality they should be focused on unleashing good ideas by acknowledging the differential. Some will wonder how big the differential is while others will go in the wrong direction by attempting to capture metrics behind it. For example, there isn't a large difference in the bushel price of wheat from different sources but there is a big difference in the price of houses, and this has practical consequences. One consequence is that if you talk about the average price of wheat, you're talking about something meaningful, whereas if you're talking about the average price of houses (three orders of magnitude) or the per capita income in a country like the USA (three or four orders of magnitude), it really doesn't mean anything.
So what's the differential in the value of ideas? This requires establishing a lower bound for marketable ideas and an upper bound and then comparing the two.
So what's the value of the most pedestrian run of the mill ideas which are productive and which people will actually pay to get? Let's consider a process engineer or site engineer as the lower bound. And let's say that a mediocre (but competent and marketable) process engineer working to improve a production line is worth $1 million dollars to a plant (an overestimate). Now, process engineers have numerous small ideas which are put immediately into effect, fully mature, and a halfway decent process engineer might improve a production line a dozen times over a given year in various minor ways. So the minimum value of a good idea can be as low as $100,000.
Now what's the maximum value of a good idea? Well, a revolutionary idea can annihilate entire industries. Not immediately of course but once it matures; the lifecycle of a revolutionary idea is very different from that of a pedestrian idea. So marketing and advertising is a trillion USD a year industry in the USA and if a single idea could wipe out this industry, it would thus have a value of a trillion dollars. This is hardly the only trillion dollar idea. Nuclear bombs have a value around negative a hundred trillion.
So comparing the highest valued ideas (trillion) to the lowest valued (100k), one finds seven orders of magnitude in difference. If one compares the output of the most talented IT professionals with the least talented, there may be as much as two orders of magnitude difference. Two orders of magnitude is considered a fantastic difference. For ideas we have seven.
I wonder if outsourcing surpresses innovation? The task of going to another country to find lower productivity or not even acknowledging productivity as the TCO is cheaper wastes good ideas. Maybe innovation requires challenging enterprise architecture approaches which are based on habitual cheap junk ideas that are lying around them in the form of inventoryism, over-reliance on industry analysts and management by magazine.
What if enterprises who wanted to become truly innovative figured out first how to appreciate the magnificence of good ideas? Maybe enterprise architecture teams don't have the breadth of thought to step back and appreciate the value of a good idea in its full scope, an idea that may easily affect every single person on our planet in profound ways. This requires imagination...
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