Innovative Waves or Ripples?

Is innovation always necessary?

The 18th century embraced the idea of progress, in the 19th it was evolution, the 20th century gave us growth, and now the catch-phrase is innovation. Innovation is held out as the key to success. Public policy goals require innovative solutions. Smartphone apps provide innovative approaches to finance, health, diet, education, and even relationships.

Firms are told to “innovate or die.” The expectation is that if a firm doesn’t continually upgrade its products and processes, someone else will. If the company can’t compete with the new concept, it will fail. Many long-haul trucking companies have shut their doors because they didn’t embrace intermodal shipping. IBM is another example: it’s Selectric typewriters were dominant in the ‘70s, but they became obsolete when PCs arrived on the scene. IBM had the foresight to embrace the new technology and became a leading PC-maker.

But for every PC there are dozens of New Cokes—changes for changes’ sake, that upset an otherwise sound business. People sometimes lose perspective when something new shows up, and become evangelists for a novel solution to a problem that isn’t really a problem.

Consumers love new things, but they also like what works. The future is uncertain. Sometimes firms do need to innovate or die. But sometimes they die precisely because they innovated.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2017-07-17T12:34:16+00:00 June 18th, 2014|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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