A Quick Lesson On Innovation

In economics there are two major areas of study, micro and macro; micro being the study of economic activity for individual organizations, and macro being the study of the sum total of all economic activity in a region or zone. I was thinking the same two areas of study could be applied to the technology industry, since the industry follows some of the same patterns as basic economics.

In the world of macro technology one would look all the big picture trends in the industry and in micro technology one would stay focused on what's right in front of their nose. Micro stuff is what we're focused on today, such as how we get our email, which phones we use, the type of laptop we prefer, and the web-based tools we use, like Twitter and Goolge+ for example.

The macro stuff, well that's something different altogether. It is thinking about what's coming next, and this is important because of the speed at which technology evolves. Macro is all about innovation. It doesn't affect us today, but it's going to change the micro technology we work with in the future. The coolest thing about macro technology is the lessons we can learn about innovation and productivity.

Countries, states, and geographic regions are most often measured by their GDP (Gross Domestic Product) output—a measurement of productivity. Productivity gains are mainly driven through innovation. The more complacent and less innovative a region is, the lower its output. In the technology industry, innovation is the difference between life and death. We've seen it time and time again as technology companies rise and fall, and we're seeing it again right now the maker of the Blackberry, Research In Motion (RIM), fights for its life simply because it stopped innovating.

Innovation in technology happens fast and what happens in macro technology can quickly make its way to micro technology as we've seen with social media tools and now with cloud computing. That Blackberry or iPhone you're using today may quickly be replaced by the next big innovator in the industry tomorrow.

In the brick and mortar world, innovation may happen at a slower pace but the outcome is always the same. Failure to innovate reduces productivity, which in turn opens the door to competition. The more innovative the competitor, the faster they will dominate the market. It's almost always the case that the failure to improve productivity through innovation causes a business or organization to lose its position in the market. Sometimes this is driven by the arrogance of success, the idea that because a company is on top they can dictate how the market functions by relying less on innovation and more on market clout. In the end it is always innovation that gets a company to the top of its market and it is innovation that keeps them there.

So in the world of macro technology and in your own industry, keep your eyes on those who innovate to improve their productivity and position in the industry, and those current market leaders who only rely on their market clout to remain on top. In the end, innovation will always win because what trends in the macro world will eventually become reality in the micro world.

Joe Perraton
jperraton@pointonemedia.com