CREATIVE CONSTRUCTION

How big companies can innovate.

The economist Joseph Schumpeter said companies sow the seeds of their own “creative destruction”—and lose their original purpose—when they innovate. Not so, writes Pisano (Business Administration/Harvard Business School; Science Business: The Promise, the Reality, and the Future of Biotech, 2006, etc.). In this deeply informed book, he describes how large enterprises can succeed at transformative innovation by “systematically creating an innovation strategy, designing an innovation system, and building an innovation culture.” He goes on, “big does not always mean ugly. Scale alone is not an impediment to innovative capacity.” Nor is acquisition the only road to growth. Even so, innovation is hard work, “akin to renovating a home while living in it.” The key is leadership prepared to “exploit” scale; size and age matter far less. Drawing on research and his own consulting experiences, Pisano explains how companies from IBM to Apple have innovated successfully by building their capabilities, identifying unmet customer needs, and working in familiar or unknown terrain, or both, to achieve goals. Driven by his use of vivid examples, the narrative covers the types of innovation, from routine (ready-to-eat salad) to outside the home court (Honda creates HondaJet) to disruptive business model (Uber vs. traditional taxis); details what goes into them; and urges companies to pursue a balanced portfolio of approaches. Especially valuable is the author’s discussion of problems faced by multidivisional companies whose expertise is dispersed in independent silos that prevent them from bringing ideas together to exploit opportunities. Sony, for example, was a consumer electronics leader but lacked capacity for integrating its existing knowledge; Apple beat it in developing portable electronic devices. Pisano also examines DuPont’s invention of Kevlar, intended as a solution to a tire problem but most effective in stopping a bullet. “Kevlar, it turns out, is a great solution to many problems, just not the particular problem DuPont was focused on solving,” he writes.

A useful manual for fostering a sustainable culture of change.