An Innovation Machine That Pays Off

In fact, contrary to popular belief, innovation isn't synonymous with profitability. Numerous researchers have demonstrated that the most innovative companies aren't necessarily the most profitable. Peter Drucker, the celebrated management guru, expounded on this at length in a 1996 interview: "The computer industry hasn't made a dime.… Intel and Microsoft make money, but look at all the people who are losing money all the world over. It is doubtful the industry has yet broken even."[52] Several studies since then have confirmed Drucker's pessimistic view that the most innovative business sectors are not inevitably those earning the most.[53]

Two phenomena explain this paradox. One is competition, which initially ...

Get The Google Way now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.