For several years Peter Denning, co-author of The Innovator’s Way, has been puzzling over why it seems that our innovation adoption rates are low even though our idea production rates are high. The overall success rate of innovation initiatives in business is around 4%. Yet many businesses report that they have too many ideas and waste precious time and resources struggling to select the ones most likely to succeed and then work them through to adoption. We are idea rich, selection baffled, and adoption poor.
From a Forbes article by Steve Denning we learn that a magisterial study by Deloitte’s Center for the Edge shows the rates of return on assets and on invested capital for 20,000 US firms from 1965 to 2011. It shows that “managerialism” has been steadily failing for the last half century.
The graphic shows that something has gone so terribly wrong with the US private sector—the supposed engine of economic growth and the supposed creators of jobs. When the best firms have rates of return on assets or on invested capital of, on average, just over one percent, we have a management catastrophe on our hands. Continue reading