Government Intervention or Innovation?

Government intervention is not a new, untested concept in America. Banks, mining companies, railroads and now insurance companies and automobile manufacturers have been the beneficiaries of government support for economic and social gains. We still talk about the collapse of the entire economy during the 1930s and the savings-and-loan industry implosion in the 1980s – both times the government stepped in to rescue the economy.

History shows that brief and select government involvement can have some positive short-term impact on the economy. To power America as an innovation economy, however, government should step away from longer term business intervention and direct management of corporate operations.

I’m not suggesting that the government fail to intercede for the protection of tax-paying citizens or the environment. But political intervention without sufficient planning, operational competencies and exit strategies can lead to lackluster performance, a “good enough” mentality, lost competitiveness and a dearth of innovation, whether here or across the globe. Take China, for example. Industry reports cite that state-owned commercial banks in China are largely the cause for sluggish financial services profitability. Complacency has replaced competitiveness and innovation is low.

On the other hand, look at India. Since the government stepped back and opened up the market, innovation has soared.  Tata Motors’ Nano, dubbed “the people’s car,” has made headlines. It provides a safer and more fuel friendly alternative to the two-wheelers that have been the standard mode of transportation for families throughout the country. The cost? Twenty-five hundred dollars, the cheapest car on the planet. That’s just one example of affordable innovation.

A year ago I was in India to meet with our customers and resellers as well as other movers and shakers in the innovation space, including Dr. R.A. Mashelkar, president of the Indian National Science Academy. It was refreshing to hear their views on innovation culture and the impact of global collaboration in India, which has fostered innovation and attracted multinational companies like General Electric to open labs there. I also believe that the country’s tri-parte consortium – the government, academia and industry — has helped India make the list of top innovative countries, along with Singapore, South Korea and Switzerland.

How does government intervention limit innovation?

• It forces companies to think short term and not about what they have to do in the present to gain a competitive edge once the market turns around.
• Political agendas can target CEOs, make them insecure, resulting in their replacement or shifts within a competent board, leading to executive turmoil and instability.
• Cuts are made to R&D budgets, stalling innovation and reducing investments in sustainable innovation processes.
• Innovation workers are cut arbitrarily while administrative, legal and management positions are saved to work through the bureaucracy.

The dilemma in the United States is in dealing with the “General Motors” of America – the situation where the government owns substantial equity in a company. By selling its assets to emerge from Chapter 11, GM, once a powerhouse of patents and products, will no longer be an innovation leader.   

Even consumers agree.  According to a recent article in BrandWeek, “A post-bankruptcy Rasmussen Reports poll found 41 percent of respondents saying the quality of GM cars will get worse with the federal government as the company’s chief owner, vs. 19 percent saying it’ll get better.”  Without innovation, GM will not have the staying power.

So how does a company evolve into an innovation leader, sustain growth and avoid government takeover? Here are my suggestions:

• Understand that the global landscape is undergoing dramatic paradigm shifts.
• Relate the impact of the paradigm shifts and trends to your company and its positioning.
• Be bold in seeking new ideas and identifying the right people to lead your business model, innovation strategy and product development to accurately meet today’s demands.
• Invest in product innovation, similar to Apple’s strategy, in order to generate dramatic results in a turnaround economy.
• Like Boston Scientific, empower innovators with knowledge-enabled technology to accelerate and sustain every day innovation and deliver the right product the first time.
• Ensure the company retains trust and faith with shareholders, bondholders and others at all times.

Following the above guidelines will guarantee innovation leadership, which in turn will lead to positive monetization, without government intervention. After all, sustainable innovation and corporate integrity are keys to driving business opportunities, growth and market-share.

What do you think?

 

 

 

 

Looking up in a down economy

I have been writing about and providing tips on what companies could do to innovate in a down economy even before the market crashed.  Now that economists are predicting that the end of the recession is in sight and that the U.S. manufacturing orders are rising, it’s time to focus on what companies should do to thrive in a rebounding economy.  

Survival of the fittest
Over the last 12 months, companies and people have been put to the test. The recession has hit the manufacturing industry hard, among others. Yet, best-in-class companies have survived despite budget cuts and reduction of innovation workers.  In fact, these companies have become leaner and learned to do more with less as well as embraced smart technology to sustain the innovation process. In short, the best companies have right-sized themselves, focused their business agendas and retained their best and experienced people to keep innovation moving forward.  These are the people who have been chartered to accomplish the most innovative deliverables in half the time, and help their respective companies attain global market leadership positions – from alternative energy to life sciences.

Innovation mandate
Now that the fittest companies have survived and new leaders emerged, here are some tips on what CEOs should do as the economy stabilizes and emerges from the recession:

• CEOs must continue to drive the innovation agenda.  Reward employees for their leadership and creativity that has impacted the bottom-line.  
• CEOs should take inventory of its operating paradigm, get new perspective on what’s viable and adapt quickly to today’s changing environment.
• Capture and remember the lessons learned from this recession and continue to run lean, innovation-focused organizations.
• Empower innovators with collaboration and knowledge-enabled platforms to boost the innovation economy.

As I tell my employees, every cloud has a silver lining. Even though we have been surrounded by negative news, the recession has made us stronger, smarter and street savvy. Best-in-class companies have retained people with attitude and aptitude to drive innovation. They should be nurtured, given the right innovation platforms and environment. And together, we as a “global nation” can look up in a down economy and prepare to enter a decade of innovation excellence.