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Tuesday, November 9, 2004

Innovation Gap

My friend and colleague Paul St Clair Terry has developed the following model of innovation, in which an innovation gap is composed of a utilization gap and a requirements gap.

From his first graph, we get a picture of innovation surfing the crests of the technology waves.

surfing the crests of the technology waves

The second graph shows what happens when business innovation and technology innovation are out of phase, giving us an innovation gap. (For the purposes of this model, we make the simplifying assumption that the two curves have the same cycle time.)

utilization gap - business innovation lags technology

This picture supports a three-stage model of business development:


(bet-spreading stage)
Free proliferation of technology-enabled ideas exploiting new and emerging technologies.

(value focus stage)
Harvesting, focusing and disseminating best-practice thinking to maximize value-creation.

(leveraging stage)
Commoditizing and embedding sustainable/mature business innovations.

Finally, the third graph shows a further phase gap. If infrastructure is aligned to current strategy, it continually lags behind business development. The largest gap occurs when infrastructure is most out of phase as business seeks to innovate in rapidly evolving markets. The smallest gap occurs when requirements stabilize as business matures and innovation slows.

requirements gap - infrastructure lags innovation

© 2001 Paul St Clair Terry, Chief Strategist & Architect, Zurich Financial Services

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