Tuesday, May 15, 2012

Creativity, Market Domination and Innovation

Executive Summary: Filter thoughts on creativity, competition, and market domination, through the lens of experience and business history. Play devil's advocate to the obvious- Is all creativity about finding monopolistic market positions? How about sustaining advantages through competition? From the desk of Silver-Bullets-Are-Often-Traps.

David Brooks wrote an interesting article on creativity, and the importance of creative minds seeking monopoly like market domination, for society:

The article has some great lines, like "we sometimes confuse what is hard with what is valuable." I also found this article to be a good springboard to sift through some common thoughts and touchstones about creativity, competition, monopoly, and market domination.

An example from the non profit world, ModelAlliance.org, and its founder, Sara Ziff, may well be textbook cases for David Brooks' article. To get us started, let's break the article down into two contexts: Creativity in Industry and Business, and Individual Creativity.

A. Creativity in Industry and Business:
Let's pick key thoughts in the article around this context and find supporting cases for them.

Quote 1: "We often shouldn’t seek to be really good competitors. We should seek to be really good monopolists."
If you are familiar with the different flavors of innovation, David Brooks appears to be saying that breakthrough, disruptive innovation trumps incremental innovation.
Let's take Pharma industry as an example- the policy support for orphan drugs dovetails with this view.
In the technology industry, Facebook could be touted as an example of this strategy.

Quote 2: "It’s often more valuable to create a new market and totally dominate it."
Besides Facebook, Apple products like the iPod, iPhone and the iPad come to mind.

Quote 3: "The competitive spirit capitalism engenders can sometimes inhibit the creativity it requires."
Clayton Christiansen's examples from the hypercompetitive hard disk industry seem to support this. Business is littered with examples, where an organization's momentum often prevents it from acting differently, when required, to maintain leadership through market change. IBM had to face a major crisis to undergo change.

Quote 4:  "Value to society is often bigger (with dominant market positions)".
Facebook is being valued at over $100 Billion. That is a useful yardstick for impact on society.

Following this train of thought leads to these questions:
1. First Mover Advantage:

Are we only talking about the first mover advantage here?
There are very few business contexts where a first mover maintains a competition free market position indefinitely, or for a long time.

2. Sustaining the first mover advantage:
Once the market has been created, would you need skill in competition to find dominating differentiation, and to maintain profit margins?
Would you call that incremental innovation?
Or would you call that moving the market/ shifting the goal posts every time competition makes a move?
The current Apple iPhone 4S, and iPhone 5 rumors, are examples of this tactic.

3. Supporting Environment:
What kind of industry, business, public policy and cultural environment would support this consistently?
Would society be able to substantially increase the number of disruptively innovative people, and also allow a significant percentage of them to demonstrate achievements at a significant scale in society (these are two separate things)?

4. Impact on Society:
Given that several world economies have lost out on manufacturing exports, where sustained, incremental innovation is important, would it be fair to call breakthrough innovation a silver bullet?
Would a "portfolio" strategy toward innovation be more effective, whether active or passive (creating the right conditions for all type of innovation to prosper)?

B. Individual Creativity:
An individual's decision paths are complex, and heavily driven by the environment he/ she operates in. However let's simplify this section with some "devil's advocate" questions:

Quote 1: "Instead of being fastest around the tracks everybody knows, creative people move adaptively through wildernesses nobody knows."
This is a great description of one type of creativity. This type of person would be in the same category as Beethoven and Picasso. If even Steve Jobs could be said to have x number of great products in him, would you say this type of creativity is common?
What social, economic and cultural context would you need to harness this creativity?

Quote 2: "Competition has trumped value-creation."
In an effort to create value, wouldn't you need skill at competing for resources to achieve your monopolistic position?

Creativity and innovation come in many flavors. Diverse social, economic, cultural, and market structures may be required to support them all. Can we tweak these structures to support one type of creativity and innovation, with the intention of benefiting society more? Would it work, i.e. would it truly benefit society?

What do you think?

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