• “Innovation is the route to economic growth. Innovation is the creation and transformation of new knowledge into new products, processes or services that meet market needs. As such, innovation creates new businesses and is the fundamental source of growth in business and industry “ (2)
• “A report from the OECD says that in future Germany should develop more innovation in it’s domestic market” (3)
• “Canada is poor in creating innovation, and other OECD countries outperform us; we rank 14^th among OECD countries. R and D financing by the Canadian private sector remains considerably below the OECD average .In terms of business investing, Canada ranks 15^th.” (4)
• “The Science, Technology, and Innovation Council state of the union report confirms Canada’s underperformance in innovation. Data indicates that our nation suffers from low business R and D” (5)
• “It’s beginning to look like bad news for the innovative edge the United States has long enjoyed. From 1995 through 2001, China, South Korea, and Taiwan increased gross R&D spending by about 140 percent, while the U.S. increased its investment by only 34 percent” (6)

• Individual product and services innovations seldom add any value in isolation; they must be integrated and physically “bundled” with a wide range of other physical and process technologies to be applied. This presents great potential risk, since a particular innovation can appear to create competitive value by itself, but may not be compatible with the physical and process infrastructure in which it must be embedded. As an example, Intel may come up with a computer microprocessor innovation, but it may be too fast for the other components in a particular notebook to run with.(“You don’t put a Ferrari engine in a dump truck.”)
• A huge range of internal and external factors affect the success and failure of any innovation. Innovations can have interesting and positive characteristics in and of themselves, but in a real competitive situation there are hundreds if not thousands of internal and external factors, many outside the control of the management team involved, that will affect the success or failure of an innovation.
• What this means is that any innovation, if it is to hope to be successful, has got to have a huge advantages and offer competitive differentiation against the existing and competing “bundled” customer solutions.
• In addition to all of these challenges and difficulties managing the innovation-development processes in companies, there is an equally complex set of customer and market network-adoption processes to manage. When adopting a particular technological innovation, organizations can take a long time to go through a very complex adoption processes. In many cases adoption is very slow, making the imperative to develop companies’ cash flows even more intense.
• In the midst of all these factors that can affect the success or failure of an innovation, specific decisions are made by managers. These decisions involve conceptual, organizational and analytic processes of enormous ambiguity and complexity. Different parts of the organization may be involved, different functional managers, different geographic areas, and different manufacturing plants. There are a lot of decisions that have to be made that affect each other, and there is certainly an element of chaos.
• Different managers and organizational processes have different cultures, different personalities, different power systems, different reward and compensation systems for the success of innovation, however it’s viewed.
• At the real level of market competition, where innovations ultimately have to make their impact, and in specific product/service/market segments, every competitive and market situation is largely unique. There are no simple or general solutions. A particular innovation might be successful in one market, in one segment, in one geography, and fail miserably in another. There are no boilerplate solutions; no two competitive strategies are the same. A winning innovation for one company can be a losing innovation for another. So, an innovation is not in and of itself good or bad, it depends totally on the unique and complex DNA of the company and the specific competitive situation.
• Another huge complexity with innovation and all professional management decisions is that the evidence is clear that faced with a particular strategic situation in all its complexity, any two different teams of managers will see different factors as key and will make different strategic choices. A particular innovation will be viewed differently individually and by any group of managers who are looking at it. This has huge consequences for choosing innovations that can be successful versus innovations that are clearly sure to fail. Individual managers and those in a group will see it quite differently. And a fantastic innovation from the viewpoint of one group will be seen as a potential disaster from another group’s perspective.
• There is no way to predict the success of any innovation before its introduction. This begs the question of what makes an innovation a success.
• Every competitive strategy, every marketing strategy, and every innovation has the possibility of failure. There are numerous examples of innovations that started out with great potential and wound up as dismal failures. So at the very best, innovation is partly a “crap shoot.” It’s an issue of the probabilities of success; there is no way of viewing any innovation as an absolutely sure thing to succeed.

• “Innovation is the production or adoption, assimilation, and exploitation of a value-added novelty in economic and social spheres renewal and enlargement of products, services, and markets; development of new methods of production; and establishment of new management systems. It is both a process and an outcome.” (8)
• “Innovation is reflected in novel outputs: a new method of production, a new market, a new source of supply, or a new organizational structure, which can be summarized as doing things differently.” (9)
• “Innovation is a new way of doing something, or new stuff that is made useful.” (10)
• “Innovation occurs when someone uses an invention or an idea to change how the world works, how people organize themselves, or how they conduct their lives.” (11)
• “Innovation is generally understood as the successful introduction of a new thing or method. Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services.” (12)
• “Innovation is a new element introduced in the network which changes, even if momentarily, the cost of transactions between at least two actors, elements, or nodes, in the network.” (13)

• Commercialization
• Market introduction
• Bundling or integration into a product or service
• Export to some market
• Purchase by a particular customer
• Generation of some revenue dollars
• A successful application of the technology in the sense that it physically works
• Formation of a “company” based on the innovation
• Value- creation

• Revenue
• Profit
• ROI
• ROE
• ROA
• EBITDA

• POSITIVE CASH FLOWS, $/YEAR (“CASH EARN”) = REVENUE ($/YEAR) X PERCENT MARGIN (%)

• NEGATIVE CASH FLOWS,$/YEAR (“CASH BURN”) = FIXED COSTS ($/YEAR) + INVESTMENTS COSTS ($/YEAR)

• NET CASH FLOWS (NCF, $/YEAR) = POSITIVE CASH FLOWS — NEGATIVE CASH FLOWS = CASH EARN — CASH BURN

• The amount of money paid by household and business power users in $ per MWH (megawatt-hour) has tended to be somewhat stable and low. They have been driven by the historical large-scale “conventional “power plants, long-term government debt amortization supported by long power plant life-cycles, and the roles of government power monopolies and regulation. It is unlikely that household and business power users will be willing to pay a multiple of today’s $/MWH, so any real cash losses will show up somewhere as taxation or government subsidies.
• Because of their intermittent operation (wind does not always blow), wind turbines need power backup from some other sources (example of another source) to sustain the needs of the electrical power grid.

• Investments per MWH of power are far higher for wind power than for nuclear energy, and other power sources.
• Operating fixed costs per MWH are far higher for wind power than for nuclear energy, especially when you analyze the realities of up-time and actual power outputs of existing wind turbines.
• A recent article by Schleede (15) highlights in detail the extreme inefficiency and high investment and operating costs of wind turbines when compared to other alternative energy sources.
• Another article by Will (16) outlines the incredible cash flow inefficiency of wind turbine power compared to nuclear power. Will notes that “America, which pioneered nuclear power, is squandering cash on wind power, which provides 1.3 percent of the nations’ electricity: it is slurping up $30 Billion of tax breaks and other subsidies amounting to $18.82 per MWH, 25 times as much as the combined subsidies for all other forms of electricity production.” He goes on to note that, “To produce 20 percent of America’s power by wind would require 186,000 tall (40 stories tall) turbines, and occupy land area the size of West Virginia. The same power could be produced by four nuclear plants occupying four square miles of land.”

• From a competitive point of view, Volt is not an electric car, such as the Nissan Leaf, and other emerging products. It really competes with gas/electric and diesel/electric alternatives, of which there are many on the market already.
• Revenues will likely be very low, with likely very low unit sales, with very high Volt prices, limited range, a small market segment for ultra-high gas mileage “green” cars, and successful existing and proven competitive cars at much lower prices and proven reliability (Toyota Prius, Honda Insight, Honda Civic hybrid, Ford Fusion hybrid and others).
• Margins will likely be slim and possibly negative, with very high variable production costs compared to likely car prices. A key component of these high variable production costs will be the batteries, which have proven to be a major problem for GM.
• Positive cash flows will therefore be very low, if there is any at all. If margins turn negative, potential positive cash flow also turns negative. If this occurs, the whole Volt innovation will suffer even greater cash losses.

• Investments will likely be very high, with new motive technologies never tried before, and extremely high and uncertain battery technologies and costs.
• Fixed costs will likely be high, with limited cross-vehicle scale economies and sharing with other cars in the General Motors portfolio. Also, GM seems determined to build its own battery production plants.