It depends in which stage of innovation (development) they are. If the product or service is ready for the market and they can sell then they can make profit on the them. But if the product is still in the development phase it will not make profit for them. If they will sell the company though they appraise the value of everything, also of the product and services in development and sell the company at a higher price.

Some companies like Tesla, Uber, Lyft, etc. are rather innovative and at the moment, the main result of their activity is to destroy huge amounts of capital. Moreover, it appears to be at the expense of workers who fave bad working conditions, social insecurity, etc. I don't think the debate can be limited to profit and innovation, it should also take into account the working force.

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Rudi Darson

Thank you for the response. If I understand you correctly, you are saying that not every innovative activity along "The innovation Value Chain" is profitable? As a result, not every innovative company will be profitable. Is your main premise that some "innovation" activities such as "idea generation, idea conversion" consume cash and do not generate any revenue?

If we are to follow this logic, using Hansen and Birkinshaw's language in the HBR article below, should we then expect every company in "idea diffusion" stage to be profitable?

https://hbr.org/2007/06/the-innovation-value-chain

Michel Héry

Very interesting perspective Michel. I take your point that some innovative companies such as those mentioned above burn a lot cash and as you point out as well, burn "human capital" as well. Before we broaden the discussion, which we should by the way, let me first understand why the companies mentioned above "destroy capital?" Is it an age issue? In other words, the innovations that they have developed are still in their infancy, hence need to be fed or is efficiency issue? By this I mean either operational or capital efficiency?

Kheepe Moremi Your conclusion based on my reaction is correct. Not every innovative company will be profitable. Think of Xerox with a lot of innovative products they have developed and didn't bring to market while they have invested heavily in their development. Think of the phenomenon of creative destruction that can go wrong. If innovation is not managed well it can bankrupt an organization or make it less profitable. If done well it can make an organization more profitable.

Rudi Darson Your point makes very good sense. In other words, a company does not only need to innovative, create new news, but also need to take those "newly created" things to market effectively and profitably? Are there any other companies apart from Xerox that you know of that suffered the same fate as Xerox?