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 / Spring 2005 / Issue 38(originally published by Booz & Company)


Suits to the Rescue

It was the laws of economics and competition that provided the constraint — the unyielding medium — that freed Samuel Insull to reimagine and then re-create the entire electricity industry. And that is precisely the advantage that those with a deep understanding of the “hard side” of business bring to innovation. They can dream in dollars, in the real currency of the marketplace. With those innovators, there is little gap between the imagined and the real.

It’s no surprise that the popular conception of a business innovator runs more toward the shaggy-haired tinkerer in a garage than the stiff-collared analyst in an office. Even in commerce, we like our heroes to come wrapped in a romantic aura. But when you peel away that aura, you’re as likely to find a Samuel Insull as a Steve Jobs.

Look at Michael Bloomberg. A bookkeeper’s son, he spent his youth earning an MBA at Harvard, then went to Wall Street to trade stocks at Salomon Brothers. He rose through the ranks to become a supervisor and was eventually given responsibility for running the firm’s information systems. It was then that he saw that automating the storage and distribution of trading data could save brokerage firms a great deal of money and time. From that insight grew Mr. Bloomberg’s eponymous financial information powerhouse.

The Insull story, in fact, plays out over and over again in business, and it’s not hard to understand why. Coming up with a great new idea or even a new product is certainly a praiseworthy accomplishment — the very cornerstone of a vibrant, entrepreneurial economy — but it’s usually only the first step in a long and complicated journey to business success.

Peter Drucker explained the reality of business innovation well in his 1974 opus Management: Tasks, Responsibilities, Practices: “For every dollar spent on generating an idea, ten dollars have to be spent on ‘research’ to convert it into a new discovery or a new invention. For every ten dollars spent on ‘research,’ at least a hundred dollars need to be spent on development, and for every hundred dollars spent on development, something between a thousand and ten thousand dollars [is] needed to produce and establish a new product or a new business on the market.”

It’s difficult, in other words, to plot and navigate such a course without a good head for numbers.

Not every accountant is a Samuel Insull, of course. Most do an adequate job of placing numbers in the right categories — a useful skill in itself — but few can see beyond the rows and columns of a spreadsheet. Insulls do exist today, however, and if executives took a hard and open-minded look at the operating and financial sides of their business, they’d likely find a good number of them.

Unfortunately, few managers seem to make that effort. Buying into the popular but false distinction between suits and turtlenecks, they tend to leave creativity to the so-called creative types. That’s a shame. Think of how much more productive corporate innovation might become if those with a deep understanding of the numbers were brought more fully into the processes for generating and commercializing new ideas. Edisons need their Insulls.

Reprint No. 05103

Author Profile:

Nicholas G. Carr ([email protected]), a contributing editor to strategy+business, is the author of Does IT Matter? Information Technology and the Corrosion of Competitive Advantage (Harvard Business School Press, 2004).
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