Whenever we hear a great business success story, whether it is in the news media or in a business case study, the conclusion is usually that success of the business was due to the people working there and their innovative practices.

I remember reading about Nike in school – and the cases kept going back to the same story of relentless innovation. There was even one story about the founder of Nike pouring rubber into a waffle iron in an attempt to create a better running shoe.

The waffle iron legend at Nike is definitely a nice story – one that no doubt continues to inspire generations of Nike employees – but to what degree did their culture of innovation really matter? Taking a look at Nike’s stock price, you can see a steady rise over time from 1987 to today – a rise which roughly mirrors the growth in world population during the same time period. A culture of innovation is no doubt a tremendous corporate asset; however in the business of selling shoes, I would argue that the most important thing – is the total number of feet.

Was Nike’s success due to their unique culture of innovation? Or, was it just the fact that they were one of the biggest shoe manufactures selling shoes at a time of tremendous world population growth? It’s hard to say.

It’s nice to think that extraordinary individuals and hard-nosed American innovation is what leads to success – but I would argue that the greatest force in business (like in many things) is simply being in the right place at the right time.

The Importance of Innovation?
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  • Yeah, innovation is vastly over-sold as a wealth-creator.

    The emphasis on ‘innovation’ means people then tend to obsess about the value of ‘ideas.’

    Which is useless. Ideas are a dime a dozen.

    Execution is what really matters. Which is why it’s so often the fast-followed who “popularizes” something that succeeds. From Eli Whitney to Herbert Hoover to, well, any company today – success comes from excellence in execution, not from coming up with a good idea.

    Now, innovation in “process management” is good. Such as WalMart’s obsessive focus on their supply chain. Innovation focused on improving the way you do business, on finding and entering new niches, and in identifying and capitalizing on market change are all useful forms of innovation. The RIAA wouldn’t be where it was now if member organizations has innovation in the right way much earlier; instead, they put their fingers in their ears and pretended it wasn’t happening. Hell, at this point, the entire “content creation” industry is pretending they can put their fingers in their ears and ignore the market – and passing international agreements such as ACTA will somehow change the shift in transaction cost (publication, distribution) and save their business models.

    I suppose you could say: Innovation in processes, and business models, are good; innovation in everything else is mostly useless.

    Though I suppose a certain amount of innovation in marketing is requisite, particularly if you define marketing as “interfacing with the customer.”