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The Architecture of Innovation: The Economics of Creative Organizations Hardcover – September 4, 2012

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Product Details

  • Hardcover: 224 pages
  • Publisher: Harvard Business Review Press (September 4, 2012)
  • Language: English
  • ISBN-10: 1422143635
  • ISBN-13: 978-1422143636
  • Product Dimensions: 1 x 6.2 x 9.8 inches
  • Shipping Weight: 15.2 ounces (View shipping rates and policies)
  • Average Customer Review: 4.4 out of 5 stars  See all reviews (5 customer reviews)
  • Amazon Best Sellers Rank: #450,291 in Books (See Top 100 in Books)

Editorial Reviews


“Josh Lerner provides an authoritative analysis of the strengths and weaknesses of the American system.” — The Financial Times

“The Architecture of Innovation is a ‘must read’ for R&D managers and CTOs whose mission is to innovate. “ — Research-Technology Management

ADVANCE PRAISE for The Architecture of Innovation:

Paul Romer, Professor of Economics, New York University Stern School of Business; Founder, Aplia—
“In his latest book, Josh Lerner shows that by following a few basic principles, any organization can innovate more successfully. You couldn’t ask for a better guide to the solid knowledge about what works, or a better antidote to the misleading parts of conventional wisdom.”

Hal Varian, Chief Economist, Google—
“Which is a better model for innovation: corporate labs or venture-funded start-ups? Josh Lerner argues convincingly for a hybrid model that combines the best of both approaches. The Architecture of Innovation offers practical advice for those in both the public and private sectors who seek to stimulate innovation.”

Scott Anthony, Managing Director, Innosight Asia-Pacific; author, The Little Black Book of Innovation
“An important contribution whose lucid and thorough analysis provides practical guidance for leaders trying to transform innovation intent into substantial and sustainable impact.”

Pontus Braunerhjelm, Chair, 2010 Global Award for Entrepreneurship—
“Josh Lerner is a superstar, a contemporary giant of entrepreneurship scholarship in the domain of VC-backed business venturing. His empirical research on the interrelationships between venture capital, innovation, and entrepreneurship has greatly extended and improved our understanding of one of the engines of modern economic growth.”

About the Author

Josh Lerner is the Schiff Professor of Investment Banking at Harvard Business School and co-director of the Productivity, Innovation, and Entrepreneurship Program at the National Bureau of Economic Research. He is recognized worldwide as an expert on how innovation works. His books include The Venture Capital Cycle, The Money of Invention (with Paul Gompers), Innovation and Its Discontents (with Adam Jaffe), and Boulevard of Broken Dreams.

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7 of 8 people found the following review helpful By Joshua Gans on October 11, 2012
Format: Kindle Edition Verified Purchase
Josh Lerner's The Architecture of Innovation is an up-to-date recount of what we know about how innovation is encouraged. It is heavily research-based but extremely accessible and is a must read for anyone interested in the economics of innovation.

The basic thesis of the book is: monetary incentives matter -- they matter especially for people putting up capital -- venture capital has done great things but only in a few targeted industries but we don't really understand why -- corporate venturing has lots of promise but has been considered out of vogue -- but if we could make corporate venturing work alongside venture capital perhaps with more sub-industry specific funds things would be better.

That is pretty much it. A sound, well-argued treatment; a solid, theoretically grounded, empirically backed up story. It is not one of those management books designed to point you to a `new way.' It doesn't make up or even utilise new catchwords -- a simple searched indicated that the words "disrupted" or "disruption" turned up only 5 times in the entire book which must be some sort of record for a post-1996 book on innovation! It is just authoritative and informative while still being an interesting read with experience and historical stories where relevant. Refreshing.
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Format: Hardcover
By nature, books about innovation should contribute something new and/or something better to our understanding of what innovation is and isn't while also explaining how to develop a mindset and skills that will enable us to (yes) contribute something new and/or something better. Josh Lerner makes such a contribution as he explain how to combine the best features of two traditional models - the corporate research laboratory and the venture-backed start-up -- for innovation "within a powerful system that consistently and efficiently produces new ideas." What he proposes is a "hybrid" model that ensures that the powerful motivations and focused goals associated with venture capital will be preserved, "while the limitations that circumscribe the effectiveness of this intermediary can be overcome. The path that led us to this hybrid is firmly laid out by economics." More specifically, the power of appropriate rewards throughout the innovation process.Read more ›
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4 of 5 people found the following review helpful By Business consultant on April 26, 2014
Format: Kindle Edition Verified Purchase
Lerner presents some good data about venture capital with case studies, but overall this book offers a poor analysis of innovation. The mistakes are pervasive and deep.

Venture capital (VC) that supports entrepreneurship is not similar to the funding of R&D as Lerner thinks it is when he compares how he thinks both entrepreneurship and R&D create innovation in this book. The charter and mission for R&D is to create competitive, targeted invention as patented new technology, not to create innovation as is the charter and mission for entrepreneurship. Lerner never describes the new best practice for R&D and ignores describing the new best practice for entrepreneurship until the very end of the book when he briefly cites Eric Reis and the lean start-up methodology as a “requirement”. Lerner never mentions Steve Blank at Stanford who has done most of the work in developing and teaching lean start-up methodology. Lerner never recognizes he is talking about intangible capital (knowledge, brands, organizational structure, partnerships …) which is more important as a driver of innovation than tangible capital (money and equipment) . The importance of intangible capital is why VC’s rank skilled management with successful entrepreneurial experience as #1 on their wish list of requirements to get funding. Learner completely ignores the established theory of innovation driven by dominant designs that explains how new markets are created as Microsoft and Intel created with the “WinTel” platform for the PC market and Apple has for the smart phone market with the iPhone, iPad and iPod with their interconnected family of products which have great interactive user interfaces, connected services, and application partners.
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3 of 4 people found the following review helpful By Serge J. Van Steenkiste on December 2, 2012
Format: Hardcover Verified Purchase
Josh Lerner clearly weighs the pros and cons of the corporate R&D and venture capital models to come up with a hybrid model of innovation that overcomes the serious limitations of the corporate venturing model while leveraging the powerful motivations and focused goals of this model.

For this purpose, Mr. Lerner first reviews the corporate R&D model and its impact on innovation. Corporate R&D laboratories account for about two-thirds of all U.S. research. The author concludes from his investigation that firms have de-emphasized centralized research facilities in favor of strategic alliances, contests, and divisional laboratories due to the increasing competition and the perceived lackluster commercial returns of centralized research facilities. Furthermore, Mr. Lerner reminds his audience that traditionally, researchers in corporate R&D laboratories have received modest pay for performance. (Larger) firms have been reluctant to pay these researchers contingent compensation and have been concerned with the potential negative impact of `multitasking' (innovation crowding-out) on the collaborations of researchers with their colleagues. Despite these concerns, more and more firms are open to increasing incentives given to their researchers. The author observes that creative exploration and incentive compensation are compatible with one another as long as explicit, if deferred, financial rewards are on offer.

Mr. Lerner then explores the venture capital model and its impact on innovation. Venture capital accounts for only a low single-digit percentage of corporate R&D in the U.S. Despite its smaller size than the R&D and capital expenditure budgets of large individual companies such as IBM, General Motors, or Merck, venture funding has a positive impact on innovation.
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