The Innovation Factor

Innovation and entrepreneurship may not be perfect synonyms, but semantically the two are at least kissing cousins. "Entrepreneurs innovate," writes Peter Drucker. "Innovation is the specific instrument of entrepreneurship." Having emerged largely unsullied from its ill-fated tryst with the new economy, innovation remains a thing universally revered. You can never be too rich, too thin, or too creative. Call me anything; just don't call me derivative.

But innovation is no mere vanity plate on the nation's economic engine. Technological innovation trumps capital accumulation and allocation of resources as the most important contributor to growth, say Harvard economists John McArthur and Jeffrey Sachs in the Global Competitiveness Report. That report doesn't even mention nontechnical innovations by the likes of Starbucks, Wal-Mart, and Dell, companies that famously moved and shook without inventing much more than a strategy. For business the imperative is clear: eschew the tussle for incremental market share in favor of new wealth created by new customers drawn by genuinely new products and services.

This month Inc launches a three-part series that explores innovation as it applies, in turn, to organizations, leaders, and markets. In this issue we focus on continuously inventing organizations, companies designed expressly to churn out ideas. The 50 small businesses considered here -- all of which have amassed at least 30 patents in the past five years -- are tearing up turf in many of today's riskiest and most competitive industries.

"Companies living off a single great insight are the corporate equivalent of dead stars," write innovation experts Gary Hamel and Peter Skarzynski in their essay for On Creativity, Innovation, and Renewal. "In spite of their sparkle, they're cold at the core." We hope this special section provides you with a wealth of ideas that set your own cores boiling.

The Innovation Factor

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Published on: Aug 1, 2002