A recent re-read of Eric Beinhocker’s tome Origin of Wealth reminded me of the essential lesson in innovation based business strategy, or in his view any business survival.
Beinhocker (who heads the economics think tank at McKinsey’s Global Institute) takes you through a wonderful historical journey to prove that businesses just like any organisms go through predictable evolutionary cycles:
- Differentiate (by trying more effective ways)
- Select (traits that work best)
- Amplify (selected traits)
That is the gist of 540 pages of intense research and like anything profound - it is quite simple.
Most businesses (including our own) grows by trial and error innovating products or business models depending on our conviction of competitive advantage. Then we standardize on what seems to work best and scale it by adding resources (people, money) behind it.
The model of Pilot / Standardize / Scale has been an extremely rewarding strategy for us for many years to innovate new products, services and business models or sometimes all three. It is good to see that great minds confirm our efforts to, well, Differentiate.
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