What is this “Innovation” Everyone is Talking About?

August 28, 2013

“Innovation Insight” is a blog series written by SRC’s CEO and President, Dr. Laurier Schramm, which aims to shed light on the importance of innovation in driving economic, societal and environmental growth. This is the first post in the series.

innovations sign

Everyone seems to be talking about innovation these days. It’s on the news, it’s on board meeting agendas, it’s driving 236,000,000 Google search results.

So what is innovation anyway?

Innovation is the conversion of ideas and knowledge into new and commercially successful products and services. This isn’t new, it’s been going on since the beginning of commerce. What is somewhat new is the focus on how to get more successful product/services into the marketplace when there are so many there already. The tricks are to:

  • come up with the ideas
  • get the knowledge to be able to put the ideas into practice
  • get the product or service developed and introduced in to the marketplace
  • have it be something the market wants to buy and
  • be able to sell it at a price that exceeds all of the development, production, marketing, distribution, and sales costs.

Not an easy task. But when these things have been accomplished, innovation has been produced.

Although the product or service has to be new and commercially successful, none of the other elements have to be new. You could take an old idea, apply existing knowledge, and use known techniques to accomplish all the other steps and it would still be innovation as long as it is new and commercially successful.

This may sound like heresy, but research and development (R&D) are not always needed to produce innovation, and even if R&D is conducted it may not result in innovation. When R&D is used to develop new ideas — that’s not enough to be called innovation yet. If they are taken a step further and developed into a new product or service, that’s not innovation yet either. It’s only when a new product/service is commercially successful that innovation has been produced.

R&D really is quite often needed in order to get to innovation, it’s just that R&D by itself isn’t enough.

Have you been part of “innovation” conversations? What ideas are being tossed around?

Further reading: The Oxford Handbook of Innovation, Fagerberg, J., Mowery, D.C., and Nelson, R.R. (Eds.), Oxford University Press: Oxford, UK, 2004