
Does Innovation Have Any Generalizable Principles? 131
Principle 10: Innovation Pays Off, Often
in Unpredictable Ways through
Secondary Applications
Adopters of innovation are also diverse and unpredictable, so it is dif-
cult to predict how an innovation will take off. Often the “standard”
rules of capital budgeting and resource allocation produce exactly the
wrong prescription. They generate negative Net Present Values (NPV)
when they are applied to innovative projects. And consequently, these
projects often do not survive the usual capital budgeting screens.
The mistake in applying the NPV rule to Green projects is the assump-
tion that if