Collingwood fan and outstanding economist Nick Gruen wrote an interesting piece prior to last weekend’s AFL Grand Final explaining why he thought his team would lose to Geelong. The underlying premise in the piece is that he thought Geelong would win because they were more innovative.

Here are some of the key points:

If I were to set out the way to win the premiership it would be the way Geelong have managed this season. The basic strategy behind the game changes subtly as sides come up with new approaches. But it takes the best part of a year at least to catch up with some new strategy. Thus we’ve seen Sydney get a premiership from flooding, and then they were unpicked. Then we saw the Saints doing something similar but somehow better. In each case both Sydney and the Saints didn’t have a very good bunch of players. They had a new strategy and players who were thoroughly drilled in how to make it work and they became almost impossible to beat.

The reason it takes time to peg such a strategy back is that, apart from figuring out exactly what they’re up to, you then have to figure out what to do about it. Collingwood has had its forward press going sufficiently well to win last year, but being the worrier I am I was always worried about Geelong, not just because they’ve got the fastest, most direct attacking game in the business, but because they added defence – copied from us – to that strategy.

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More alarming still is that as I read in an article that someone else may remember and link to (I can’t find it) that Geelong’s stats have changed dramatically in the last five or six games. Their average kick length and kick to handball ratio has gone way up. They’ve basically come up with a way of getting the strengths of their attacking game without the downsides of inattention to defence. And they’re tearing other sides apart.

Whether deliberately or not, this new style hasn’t been really shown to the world for long enough for people to figure out how to unpick it, let alone drill the necessary skills and structures into their players to do so. So I reckon we’re in a lot of trouble. Tehy will pick us apart in just the way Hawthorn picked us apart last week – with lots of pressure against us in defence to stop us getting our run out of defence and with lots of long direct kicking zig-zagging down the centre of the ground and leading out from full forward.

This is an almost perfect description of how business competition and innovation works too.

Someone comes up with a great idea and brings it out. This gives them an advantage for a brief period of time. If they have solid management skills and good systems, they can turn it into a sustained advantage, as Geelong has (they’ve won titles now in 2007, 2009 and 2011). But even when the innovator doesn’t have the resources necessar to win for an extended period of time, innovation can still result in short-term advantages, as in Nick’s examples of Sydney and St Kilda.

Finally, innovating doesn’t guarantee winning. If you innovate, and have good processes, your odds of winning increase. But in the end, you need a combination of innovation, good structures, execution and luck. The good news is that the more innovative you are, the luckier you’re likely to be.