Information, Technology, and Innovation: Resources for Growth in a Connected World

CHAPTER 35

Innovation

“Innovation” is a word that veers into the realm of motherhood and apple pie: It's good because it's good. If innovation is in fact essential to the American future, however, it must move beyond personal idiosyncrasy, magic, and luck. Merely because innovation does not result from relatively rote application of algorithms does not mean it cannot be learned, measured, or codified. Two examples, among many others, may serve as inspiration going forward.

Amazon

After more than 15 years on the Web, Amazon.com remains a pioneer in online commerce. From the days when its peers were E*TRADE and Dell, then through the periods of iPod and Google ascendency, Amazon is the one company that can claim a consistent leadership position on the Web. It serves as an information-age exemplar because of its combination of innovation and execution, and especially its mastery of platform economics. Today, Amazon continues to help define the Internet as a consumer environment, with rules, limits, and opportunities often different from those experienced in physical channels. Operating under assumptions at variance with conventional businesses, and a survivor of the 2000 dot-com bubble, Amazon is a harbinger of successful business practices in a connected economy. (See Figure 35.1.)

Amazon.com opened for business in July 1995 as an exclusively Internet-based effort. After books, Amazon initially expanded into books on tape, videotapes, and sheet music. It then moved into compact ...