Innovation in and of itself has no value. It creates value when it results in either sustainable competitive advantage for you, neutralization of a competitor’s competitive advantage, or increased productivity within the status quo. By these standards, most innovations fail to create returns. They do make improvements, but not so great as to create sustainable competitive advantage. Customers are grateful for them but will not pay a premium to get them. As a result, the innovation budget is spent, but there is no economic return.

Companies complain that they have to do this to stay in business. But the truth is, if all they want to do is make improvements but not create sustainable competitive advantage, they would succeed with much less focus on new features and functions. They could focus their innovation instead on productivity improvements.

– Geoffrey Moore