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Anil Gupta and Haiyan Wang Talk Innovation

7th February 2012

Corporate speakers and authors Anil Gupta and Haiyan Wang speak to Wired Magazine about the harsh reality of why innovators don’t always win.

“Godfrey Hounsfield, an EMI scientist, conceived the world's first CT scanner in 1967. By the time he won the 1979 Nobel Prize in Medicine, EMI had ceded almost complete control over the CT scanner market to later entrants GE and Siemens. Ed Roberts, designer of the Altair computer, is widely regarded as the inventor of the personal computer. Steve Jobs and Steve Wozniak brought computing to the masses in 1977 but it was a later entrant, IBM, that first dominated.

“These and countless other examples illustrate a harsh reality. Often, it's not the innovating firm that emerges as the market leader. Steve Jobs 1.0 was blind to this common reality. Jobs 2.0 was shrewder. During his exile from Apple, he had learned that he must also translate great innovations into market leadership.

“Why do innovators not always win (and why do they sometimes)? There are three reasons.
“One: Inability to protect IP rights is the most obvious reason why innovators lose out. Schneider Electric, a French firm, learned this lesson when it faced a lawsuit brought by Chint, a Chinese firm. Schneider's argument that Chint was a copycat proved futile in Chinese courts. Schneider was forced to pay damages and cede the market for that product to its nemesis.

“Two: A second reason is devotion to technology instead of usability and customer benefits. This is why Apple's first PDA, the Newton, was a dud. Instead of resting on their laurels, innovators need to spend time and effort to look at the product from the customer's point of view. Customers care about ease of use and benefits, not innovation per se.

“Three: The third reason is blindness to the importance of complements. EMI's leadership in CT was by itself insufficient. It needed a manufacturing, sales and service network -- which GE and Siemens dominated. The 1984 Mac could not by itself win market leadership. Computers are useless without software, a domain where the IBM-Microsoft-Intel team was ahead of Apple. Too many innovators overlook the role of complements in enabling firms to win the hearts, minds and wallets of the end customers.

“Barack Obama too has made this mistake. He has called on the US to out-innovate other countries. What he overlooks is that the US's problems have little to do with R&D. Instead, the problems lie in a complement to R&D -- a manufacturing sector that is much weaker than it was in 1990.”

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