Creative Destruction

I first heard about "creative destruction" in an economics course.

Fascinatinated, and of a curious nature, I began to read Joseph Schumpeter's Capitalism, Socialism, and Democracy.

Anyway, the book was an amazing insight into business cycles and how innovation contributes to these cycles. Essentially, by "creative destruction," Schumpeter means that innovations destroy equilibrium in business cycles, thus promoting social progress. (If you're in equilibrium, you are stuck in equilibrium; you cannot progress - not much fun).

On a different topic (and much more dire), Schumpeter believed that entrepreneurs will eventually disappear, as companies are consolidated to benefit from economies of scale. Does this mean that intrapreneurship (i.e. entrepreneurship within companies) is going to take centre stage? Where will these innovations emerge?

Tested and true, Wired provides a biography and overview of Schumpeter's work. Ah, Schumpeter: Europe's greatest horseman and economist... . (That's all I can vouch for...).

Emphasis on Entrepreneurship

Cool Resource:
EntreWorld - an incredibly comprehensive site with links to entrepreneurship resources. I've been lost in it for hours and always come away with interesting tid-bits. An invaluable project of the Kauffman Foundation (along with the Kauffman Fellows Program offered by the organization - check it out if you're interested in an intensive internship in the venture capital industry or at a venture-backed start-up).

Hot Tip:
If you are having problems thinking of a technology to commercialize, look into finding a technology to license and develop (a tip I've passed on to quite a few friends now...).

Clustering

For the last few years, I've been intrigued by the "cluster" economic development theory, which attributes the growth of economic regions to the concept of a cluster of experts, institutions, and resources in a geographical area.

The foremost expert on this topic (and one who has been working to apply his findings to real communities around the world) is Michael Porter at Harvard. I've also worked with the Toronto-based Innovation Systems Research Network (an amazing group of researchers!).

In this "knowledge-based economy" (the phrase is becoming so cliched...), the concept of the cluster may be either more relevant or less pertinent than ever.

On the other hand, Richard Florida claims that various aspects of geographic regions can be particularly adapted to attract - and effectively cluster - knowledge-based workers (whom Florida dubs the "creative class").

Check out Florida's book on the subject:

Networks and IP

Cool Resource of the Week:
AlwaysOn Network - blogging taken to a new level (much more than just ego-stroking; there's a wealth of information here, if you're willing to dig).

Get-Going Goal:
Intellectual property protection is much more than just patenting. Visit the United States Patent and Trademark Office web site or the Canadian Intellectual Property Organization to find out about various types of intellectual property protection for different types of technologies. If the topic fascinates you, the World Intellectual Property Organization's Academy offers a free online primer (or a comprehensive course, complete with exam and certificate) on types of intellectual property protection.

Democratizing Innovation - Eric von Hippel

Way cool innovator:

Eric von Hippel, Professor and Head of the Innovation and Entrepreneurship Group at the MIT School of Management

Apart from having patented inventions, von Hippel also studies the economics of innovation - a fascinating subject. Check out his online book on democratizing innovation.

In 1986, Von Hippel created a formula for the measurement of whether or not a company should pursue innovation: b=(v x r) - c - d.
b --> decision about whether or not to deploy new product
v --> dollar volume of business derived from innovation
r --> rate of profit resulting from innovation
c --> cost of switching to new method
d --> loss of "old benefits" when doing "new thing"

In this month's Wired magazine (ahhh...the open sharing of information...why do I bother paying for my subscription, I wonder), Bruce Sterling writes an in interesting article about the shift (?) in perception of innovation from the benefits (v x r) side to the cost (-c-d) side. Sterling argues that this shift arises because innovation has become a commodity. Interesting stuff, with implication for both individual innovators, large corporations trying to retain market share, and policy makers.

BTW, Sterling also blogs...

Market Research and Competition

Cool Resource of the Week:
Market Research Guidelines - Why another mention about market research? Because it's important. And repetition is a great mnemonic. And the guidelines are very helpful in getting you started on finding out the demand for your product.

Get-Going Goal:
Think about your competition. Think you have none? Think about why that might be. Is there really a demand for the product? Are there barriers to entry that you won't be able to overcome?

Talk about out of the box

As an innovator running your own business, you will need to differentiate your product or company in the market. A particularly masterful maverick at this is Richard Branson of Virgin. Although I must admit that I was less than impressed by some of the stunts pulled on his reality show, I find his biography(Losing My Virginity) an engaging and inspiring read. Check it out!

Cool Resource

I've decided to change the flavour of the blog a bit. Expect two new things - at the beginning of the week, I'll post a cool resource and an action item to help innovators get going. At the end of the week, I'll post a tidbit that influences thoughts about innovation more generally (things to ponder over the weekend, I suppose...).

As always, I welcome comments, questions, and suggestions.

Cool Resource of the Week:
allbusiness.com - admittedly, this site has information particularly useful for small businesses, but there are some great tips for innovators, as well (including information on finding early-stage funding)

Get-Going Goal:
Ask yourself, who are three specific customers for your product? Don't assume you will capture th market in its entirety. Be very specific. You should think about this before you sink funds into development of your product. If you can't think of three SPECIFIC customers, is there really a market for your invention?