How Not to Manage Innovation (Umair Haque)

Umair Haque is one of luminaries who deserves to be read and reread by all those who care for or envision a better, less consumerist and money-bogged future.

In the article below he shows his take how venture capitalists are stiffening innovation by focusing on numbers, short term goals, quick profits, etc. Read this englightening piece and look around for many examples. Below are his strategies (based on Jeremy Liew’s analysis) of Apple’s iPhone AppsStore outlining how not to manage innovation.

Focus on short-run numbers

When venture investors or middle managers act like, well, middle managers, innovation is likely to wither.

Apply surface economics

When venture investors or managers don’t look deeply at the economics of the markets and industries they are investing and competing in, the result is a hodge-podge, often unsuccessful innovation portfolio — one where potentially successful innovations are under-invested in, and almost certainly unsuccessful innovations are over-invested in.

Be strategy-blind

When venture investors or managers alike act like purely financial backers — instead of partners who acknowledge and encourage a durable, shared strategic interest — the disruptive potential of innovation is sapped.

Fail to see the right context

When investors or managers fail to place innovation in the right context, value is difficult to assess. Context is what makes numbers meaningful: it adds validity, reliability and accuracy to financial logic that is otherwise bereft of it.

Never have an ideal

The mistake isn’t particular to venture guys. It is what happens when we misapply the mechanics of finance to the art of innovation. The fallacy of inferring economic meaning from financial numbers is what’s bankrupting Sony, what eviscerated Detroit, and what, ultimately blew up the investment banks.

The full article is here.