Will Innovation Lead the Way?

Glenn Hutchins one of the founders of the highly successful private equity firm Silver Lake, after studying and outlining how we got into this mess, sees the way out - Innovation.

Hutchins says, "While at times rushed and incoherent, the public policy response to the crisis has been breathtaking in its scale. The approximately $10 trillion in resources shoveled at the problem dwarfs any prior undertaking in our history including World War II - which is estimated to have cost $5 trillion in today's dollars. This is the all-important difference between today and the '30s. In contrast to the passive and counterproductive actions taken then by the Hoover administration and the world's central bankers, today's leaders - having learned the lessons of the Depression and quickly grasping the ramifications of the Lehman failure - resolved to err on the side of doing too much rather than too little."

Hutchins is may be right about innovation but consider that ninety percent of new products fail. Venture Capitalists have shoveled billions at innovation for years yet only one in ten shows any return and most are returns are modest. The aviation is landscape is littered with the wrecks of the dreams of dreamers. The Eclipse Jet is only the most recent disaster.

Tony Ulwick developed a concept he calls Outcome-Driven Innovation® (ODI) and founded Strategyn, Inc., a global innovation management firm. ODI starts not with a product but by finding the answer to the question, “what does the customer want to accomplish? Or as Harvard professor Theodore Levitt often remarked, “People don’t want drills, they want holes.” DARPA didn’t want the Internet; they wanted a way to communicate.

I am concerned that throwing $10 trillion at our current problem might result in getting a lot of “drills” that don’t work very well. It may be too late to apply ODI concepts to what we need. But perhaps in a small way we can fund innovation in a different way. Ulwick and Jay Haynes have formed a new venture capital firm, Strategyn Ventures, to fund ODI proven products and services. If they can change the odds from 1:10 to something much less, perhaps innovation will lead the way out.