Innovation: the attacker's advantage.

• Author: Peters, Thomas J.

Innovation: The Attacker's Advantage.

Richard Foster. Summit Books, $19.95. Talk of innovation is on the lips of every American business person, and correctly so. Our failures in steel and textiles, and among leading-edge industries as well, are as often as not failures of entrenched leaders to move in a spirited fashion to embrace the new.

One way out, the route of both George Gilder (The Spirit of Enterprise) and the much maligned Atari Democrats, is to engender more small business growth. The unleashing of venture capital in the wake of the tax changes of 1978 and 1981 was the watershed for this set of proponents. The economists Barry Bluestone and Bennett Harrison in The Deindustrialization of America state the case for the other side. The small business resurgence is fine and dandy, but what about the 27 million people so far dislocated by the ineptitude (and greed, argue Bluestone and Harrison) of the big companies? Writing off the big and waiting for an entrepreneurially induced Nirvana entails unacceptable costs, this set of analysts argues.

The microeconomists, that is to say management theorists who focus on the individual firm, have also joined the fray. The year 1984 brought The Change Masters from Rosabeth Most Kanter and 1985 was marked by Intrapreneuring from Gifford Pinchot III and Innovation and Entrepreneurship from Peter Drucker. Kanter, coming from a sociological background, analyzes the process of overcoming barriers to innovation within the sizable firm. Pinchot's effort is similar in result, though using very different language. He urges big firms to create internal entrepreneurs and tells them how to find and nurture such talent, including suggestions for setting up internal capital markets. Peter Drucker, as usual, is exhaustive in approach. Unfortunately, so many ideas--from a typology for sources of innovative ideas to details about structuring the firm--leave no coherent impression behind. All three views are limited.

Now, in early 1986, we have a truly sweeping and fresh approach to this crucial issue. Richard Foster, a senior partner at the consulting firm, McKinsey & Co., has written Innovation: The Attacker's Advantage. It can, as most good books can, be boiled down to a single, memorable idea. Big companies must learn to be "close to ruthless in cannibalizing their current products and processes just when they are most lucrative and begin the search again, over and over.'

Foster argues correctly that we are...