Earlier today, Ed Milliband, the Minister for the Cabinet Office, was speaking at a conference I was attending on creating the conditions for public sector innovation. He made the point that this is necessary, but easier said than done, particularly when the public sector doesn’t enjoy the same levels of ‘creative destruction‘ as the private sector. Rather the mentality is: if it’s not broken, why fix it?

The economist Joseph Schumpeter, who founded the concept of creative destruction in capital markets, advocated fixing things even before they were broken! He described the innovation process as one of dissembling and discarding the old, established - albeit currently successful - ways of doing things before there is a perceptible pressure to do so. In other words, making changes when everyone is quite comfortable and happy about how things are going.

With the average age of a Fortune 500 company , being only between 40 and 50 years this kind of re-invention is absolutely essential in the private sector. In addition to ongoing performance innovation, companies need to launch fresh cycles of activity that involve a significantly different product, services, process or way of doing things. This is the route to to avoiding the vulnerabilities associated with maturity - also known as the next-to-last stage of natural evolution!

Of course this kind of innovation is always difficult to pull off. Nobody likes to tinker with a well-running machine, especially if there is no guarantee the tinkering will pay off in the short run. My feeling is that the kind of people a business needs to help make this innovation leap, are not traditionally trained managers, but hungry, spirited entrepreneurs willing to take a spanner to work.