Great post over on Heads Up on Organizational Innovation regarding "The Cost of Not Innovating"....which author Ruth Ann Hattori describes as "what happens when you don't innovate but your competition does?" and "the estimated dollar value your competitors have gained and that you have failed to capture through your own innovation efforts."

Sounds simple, but here's why it's important, according to Hattori: "A simple ROI can never truly measure innovation because it does not account for the lost opportunities, such as AT&T missing the cell phone, Kodak missing the digital camera, and the radio companies that blinked while Sony brought the Walkman to market."

I've been to lot of conferences and read lots of articles where formulas for innovation ROI have been presented, but this is the first time I've seen it approached this way. And it makes perfect sense.

My first impression is that you could only convince a company of this in hindsight, or if you were trying to convince them in general to be more innovative. What would be great is if you could find a way to convince a company of this *before* the opportunity was lost and not after.

How would you frame the case for spending the money to innovate using this concept *before* the fact and not after? One way would be to determine customer pain points that your industry could address, identify ways of addressing them, and then do competitive intelligence and SWOT analysis on all of your competitors (and potential competitors). And you'd have no way of researching companies and people flying under your radar. By the time you found out if a potential competitor was in the process of launching a product that would be a threat, you'd be too far behind.

So maybe it's better to use the concept of the cost of not innovating as a general inducement to pick up the innovation pace. In any case, Hattori is looking for real-life examples of the cost of not innovating -- if you have any, add them to the post comments.