While it does not get enough attention, businesses have a problem with innovation. They don’t invest in it.
The Council of Foreign Relations highlights that countries like the USA, Germany, and Taiwan are falling behind the pack. All of these countries were once known as leaders in research and development (R&D) in science and manufacturing. Of course, businesses and industries that perform R&D exhibit greater likelihood of innovation, but their innovation can stagnate as investments in R&D decline during economic downturns. The National Science Board found that only a few businesses conduct R&D (3 percent), but the private sector still accounts for a majority of R&D performed in the US (71 percent 2009).
Invention Leads to New Levels of Productivity
Looking back at innovations, there was the printing press, the steam engine, telegraph, radio, TV and the PC (to name a few). Many of these inventions led to new levels of productivity in business. One can hope that history will add cloud computing to these distinguished achievements. These are relatively early days for cloud computing and we forget there’s a lag between investments in IT and improvements in productivity. Advisors like Dell make it their business to help close those gaps in places like Vyatta and Lunacloud.
Look to Cloud Computing for Innovation and Disruption
Cloud computing will create both innovation and disruption, but organizations can often have a gap with the vision and skills. First, we’re undoing decades of “legacy IT” practices, tools and staffing. Second, cloud is mistakenly seen as exclusively technology, when it should be seen part of the business strategy. Lastly, innovation evolves, often with technology-led growth, in ebbs and flows. Chad Syverson Professor of Economics at University of Chicago states in The Economist that, “…productivity growth during the age of electrification was lumpy. Growth was slow during a period …then it surged.” Notwithstanding the similarity of cloud consumed as a “utility,” the information age trajectory is rather similar.
Cloud computing is a cheaper way to innovate with lower risks than in the past. Striving for more of Asymmetric Business Models, those investment returns offer greater upside than downside, the economics of cloud are well suited. All investments have meaningful barriers to entry and, while computing was a large(r) portion of the past, today it is only a fraction of the cost of an experiment. Alas, business still needs to invest and adapt.
Has the slowdown in technology investments stalled potential for innovation? Add your thoughts in the comments.
Matthew Mikell is serving as a Cloud Evangelist with Dell, where he provides leadership, awareness, and future perspectives for cloud computing. Matthew has over 20 years in international software operations, alliances, and product marketing at midsize and large enterprise.