The effects of innovation have long been recognized as a principal determinant of economic growth. In recent years the importance of management innovation has become one of the principal factors in that determinant. While difficult to quantify and measure, its results are recognized as one of the most significant influences on economic performance.
In the 1980s, an era of increasing business leadership for Japan,the Nikkei 225 Index grew significantly. During that period,many American and other Western managers visited Japan to learn about “Japanese management.” Innovative management in all its forms was clearly recognized as fundamental in powering Japan’s increasing world leadership in industries ranging from automobiles to consumer electronics.
As those Japanese innovations became better known throughout the United States and the West, they spread across many companies, helping them build their business strength.Those imported innova tions became powerful center points to add to the strong competitive improvement initiatives already under way in those organizations. Meanwhile, the pace of the leading-edge management innovation in Japan seemed to slow.The Nikkei 225 Index began to drop and continued to drop significantly, while increases in American and Western economic performance indicators reflected corresponding improvements in business results.
During the 1990s, American and other Western companies increasingly became the leaders in newer developments that became important keys to the resurgence of the American and Western business economies, even though many Japanese companies— from automobiles to electronics—maintained their customer quality leadership
One important factor underlying this economic change is that long-term economic expansions create major business disconnects. In some companies, the relentless development of new areas of management leadership was not always institutionalized as the fundamental leading edge it had become constancy of management innovation:
Remember that what rises can also fall: Innovation helped some companies rise. An inability to institutionalize the development of new areas of management caused some to begin to fall
Learn from failures as well as from successes: Learn from what companies have done right. Learn from what companies have done wrong. Sometimes it’s only what they’ve failed to continue doing right.
Be attentive to business disconnects: Recognize these problems that result from long-term economic expansions. Innovation and growth are successes only if you can sustain them.
“One of the lessons of innovative experience is to avoid two of the biggest competitive dangers—becoming too fond of any business leadership initiative and sticking with an initiative for too long.”