Director's Letter

This month’s newsletter focuses on faculty research related to the theme of innovation, including who captures the value from innovation, how to foster innovation, bringing innovation to the poor and the increasing globalization of innovation.

Who captures the value from innovation is the subject of the first article “Does it pay for firms to innovate?” Jason Dedrick, Greg Linden and Ken Kraemer use an economic perspective to show where the value-add ends up and who benefits from the Apple iPod. These are early results from an ongoing research project that examines which companies and countries benefit from radical vs. incremental innovations. The iPod is a relatively new and radical product innovation. Therefore, it is an excellent case to analyze for better understanding of where the value-add ends up for an individual product, and for a product family over time. The research team will be comparing iPods to PC notebooks, which are considered mature products. Overall the research team hopes to unveil a better understanding of the value from different kinds of innovation.

How to foster innovation is addressed by David Obstfeld, who talks about how innovation is increasingly a social enterprise and therefore how social networks are key to successful innovation. As he puts it, “…individuals walk around with stocks of knowledge and social networks. Then, on top of that, they need to be able to articulate that knowledge and connect the key people – when all four of these are present, the probability of innovation occurring increases greatly.” He then uses this framework to develop some preliminary ideas about the practices that managers can use to foster innovation.

Using her knowledge from study of email and instant messaging by professionals such as engineers and software developers, Gloria Mark addresses the question: Can innovation occur if there are constant interruptions in the work place? While some people argue that innovation and problem solving can occur on many different levels, Gloria emphasizes that innovation usually requires focused concentration, time and deep reflection. Yet, she finds that many professionals are engaged in a dozen different work spheres (multi-tasking) and with frequent interruptions. She argues that multi-tasking and constant interruptions do not provide an environment conducive for innovation.

Bringing technology innovation to the poor is addressed by Victor Gonzalez and Ken Kraemer who describe technology innovation being introduced into new housing complexes by developers and internet service providers in the city of Tecámac near Mexico City. Beyond the types of applications available to everyone, here the Internet is being used to provide specific applications that enable households to better manage their consumption of utilities like electricity, water and gas and also to manage the business of the neighborhood associations. The research is examining the use of the systems and possible behavioral changes that might result from use.

The globalization of innovation is addressed in the last article. As the iPod article illustrates, although a single company such as Apple might lead in the creation of a new innovation, firms increasingly rely on other firms around the world for component technologies and for production and distribution. Dedrick and Kraemer show that the personal computing industry has been global from its beginning, but has evolved to be even more so over the past twenty years with most production and development now occurring offshore, mainly in Asia. They document the consequences this has had for firm profits, jobs and the competitiveness in the U.S. PC industry. This paper is one of a dozen industry papers prepared for the National Academy of Sciences Task Force on the Globalization of Innovation.

We hope that you enjoy this issue and find insights that are interesting and useful.

Sincerely,