Monetizing Innovation

Foreword

Innovation is my family business. My grandfather was a master electrician, master machinist, and inventor who came up with a new kind of fire alarm. My father is a physicist who worked day and night at the massive Bell Laboratories research and development facility in Murray Hill, New Jersey, which now has his picture at the door.

Growing up as a Bell Labs kid, I often wondered why these scientists, the smartest guys in the room for sure, were working in what looked and smelled an awful lot like a dungeon. Why weren't they rich and powerful? Of course, it may be that money and success weren't their goals, or there may be truth in the saying: Good at chess is bad at life.

But let me put it another way: Why don't all innovations become successful products? Why do so many fail?

This book has the answer.

Consider the way most companies turn ideas into products and services. They start by analyzing costs, a whole constellation of them: headcount, material inputs, machinery, tech requirements, infrastructure support, and on and on. They subtract these expenses from estimated revenues and out pops the expected profit. On that basis, the company places its bets.

But hold on: where did the revenue number come from? There was no careful scrutiny of detailed inputs. Generally, there was nothing more than an educated guess. That's a wild asymmetry of precision. It's even more reckless when you consider that the two elements—revenue and expense—are equally important in determining ...