Salon The Art of Innovation
"A whiz kid might make a technological breakthrough and create a corporation to exploit it. But even a new-economy corporation can't last long without what old-economy corporations depended on: a reliable, skilled workforce, which takes time to assemble; effective distribution systems, which take trial and error to perfect; and customer loyalty, which is earned only gradually. It was this kind of environment that nurtured old-economy innovators.

One whiz kid's invention, followed by a second whiz kid's innovation, followed by a third, is merely a recipe for a stock bubble. Technological innovation will continue to come from youth, but for corporations to thrive, they need gradual innovations, not just revolutionary ones.

Take, for example, the case of Paul Cézanne."

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Fortune Getting Beyond the Innovation Fetish
"Jennifer Brown, the executive vice president of e-business at Fidelity Investments, has a serious problem with innovation in her group. There's too much of it.

"We have more good ideas than we can handle," she confesses. "We have so many good ideas here--truly innovative ideas--that sometimes our people get a little frustrated that we can't act on most of them.""

"At times like this, a cold economic reality kicks in: The more innovations there are, the less valuable any given innovation is likely to be.

"Another thing that makes cashing in on innovation so difficult is that, as any good intellectual property lawyer will complain, the very digital technologies that make it faster, easier, and cheaper for innovators to innovate also make it faster, easier, and cheaper for imitators to imitate. In the e-world, today's innovation is tomorrow's imitation is next month's commodity. The Net is a fabulous medium for "fast followers"--firms such as Microsoft and AOL, which do a fabulous job of spotting an innovation trend and leveraging resources to make it their own."

Inc.Com Best Beats First
"In fact, being first seldom proves to be a sustainable advantage and usually proves to be a liability. VisiCalc, for example, was the first major personal-computer spreadsheet. Where is VisiCalc today? Do you know anyone who uses it? And what of the company that pioneered it? Gone; it doesn't even exist. VisiCalc eventually lost out to Lotus 1-2-3, which itself lost out to Excel. Lotus then went into a tailspin and was saved only by selling out to IBM."

"The pattern of the second (or third or fourth) market entrant's prevailing over the early trailblazers shows up throughout the entire history of technological and economic change.

"We can already see the fundamental laws of management and commerce reasserting themselves. Consider America Online, clearly a new-economy star that got there by being better, not first. As Kara Swisher describes in her book aol.com, AOL lagged far behind CompuServe and Prodigy, and as late as 1992 had only 200,000 members compared with Prodigy's nearly 2 million. AOL beat out the early leaders not because it had the ultimate solution, but precisely because it knew that it didn't. So long as AOL continues the process of nonstop improvement and evolution -- step-by-step improvement in the eyes of the customer -- it will likely remain strong."

BusinessWeek The Innovator's Dilemma
"This chapter summarizes the history of the disk drive industry in all its complexity. Some readers will be interested in it for the sake of history itself. But the value of understanding this history is that out of its complexity emerge a few stunningly simple and consistent factors that have repeatedly determined the success and failure of the industry's best firms. Simply put, when the best firms succeeded, they did so because they listened responsively to their customers and invested aggressively in the technology, products, and manufacturing capabilities that satisfied their customers' next-generation needs. But, paradoxically, when the best firms subsequently failed, it was for the same reasons--they listened responsively to their customers and invested aggressively in the technology, products, and manufacturing capabilities that satisfied their customers' next-generation needs. This is one of the innovator's dilemmas: Blindly following the maxim that good managers should keep close to their customers can sometimes be a fatal mistake.

The history of the disk drive industry provides a framework for understanding when "keeping close to your customers" is good advice--and when it is not."