Management Principles for Continuous Innovation

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This section is about global changes—why they are bigger, come more often, and are becoming more difficult to predict. It’s also about what companies have done, and are doing, in order to take advantage of the opportunities and avoid the threats embedded in these ever accelerating changes. Certain changes are products of shifting technologies. One established technology is replaced by something new. We’ve seen this before. Steam engines were replaced by internal combustion engines and electricity, electricity grew into electronics, landlines are being replaced by mobile telephones, and newspapers and paper books are increasingly being supplied as digital files for tablets and e-book readers. These changes also affect how people live their lives. Even when they are staying home with their sick child, they are now expected to be accessible by phone and to answer your e-mail. Some experience this as a source of stress, while others find greater freedom. Most of us experience both these feelings as a result of the changes that follow in the wake of innovations. When something new appears, whether a technological solution or a change in social norms, things generally start manageably. As the innovation gains adherents, development accelerates, and finally, when the change has become widespread, the rate of change tapers off. Subsequently, a new innovation appears, and the process begins again. We often depict this process as an S-curve. The transition between one technological curve and another is an indication of innovation. I call this a phase transition. When a phase transition occurs, it creates opportunities for companies that are able to innovate. For those who are not able to manage this, the phase transition signals the start of a process of decline. Researchers who have studied such processes1 explain that the