Baard, V. and Watts, T., Breaking the Paradox of Innovation: Lessons from history, the story of a small manufacturing company, School of Accounting & Finance, University of Wollongong, Working Paper 8, 2006.
In 2005 Deloitte Research released a paper examining the phenomenon they refer to as the ‘Innovation Paradox’, the inability or reluctance of manufacturing firms to pursue the strategies that build the operational capabilities necessary for innovation that will provide both profitability and growth. The report claims that this is due to the rapidly increasing complexity of global markets and the lack of synchronising innovation efforts across their value chain, thus positing the problem as a 21st century issue. While the research did not target the small and medium enterprises specifically, the implications for the business sector are apparent given their substantial contribution to global economies and their high failure rates in the first three to five years of operation. While the researchers do not question the data contained in the Deloitt’s research, this paper does question the assumption that the phenomenon is irreversible and the apparent underlying self fulfilling prophecy with respect to Small to Medium Enterprises. To demonstrate this the authors draw on a case study of a small manufacturing company in rural New South Wales, Australia, operating between 1889 and 1983 to show that the breaking of the innovation paradox was successfully achieved by this firm in the late 19th and early 20th century. Applying the case study to the Deloitte model, the authors overlay the history of Joseph Laycock and Son on the various success factors, and problems, identified in the Deloitte’s study to demonstrate temporal similarities or differences.