4
Thriving in Change
Capitalism is by nature a form or method of economic change and not only never is but never can be stationary.
—Joseph Schumpeter1
Strengthening your organization's innovative capacity directly affects its viability and sustainability. In fact, it may be the key to the very survival of your business, and it's so important that management guru Peter Drucker once said, “Every organization needs one core competence: innovation.”
Strengthening innovation capacity also leads to higher performance, as common sense tells us that innovative firms outperform their competitors.
But is this really true?
In 1999, the consulting firm Arthur D. Little conducted a comprehensive study of 338 of the Fortune 500 and found that the firms rated as highly innovative produced returns to shareholders that were nearly four times greater than those produced by the least innovative firms over the period from 1987 to 1996. That bears repeating:
Hence, if investors could know in advance which firms will be most innovative, they would buy those stocks, creating an upward spiral of value creation. Those going up will accumulate more resources to leverage. At the same time, investors would dump the laggards, and a downward spiral would ...
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