Invention and Innovation

There is a subtle difference between these two words, but it is an important one for Business Studies students. Invention if the formulation of new ideas for products or processes Innovation is all about the practical application of new inventions into marketable products or services

Most of us have visions of mad inventors who come up with ideas with no practical use! Like everything else in Business Studies, we are interested in activities that actually help a firm meet its objectives, such as growth, profitability, increased market share or stability so it is Innovation, rather than Invention, that really counts

Innovations can fall into one of two categories:

Product (or service) innovation

As the name suggests, this is all about launching new or improved products (or services) on to the market. Advantages might include (note links to marketing) First mover advantage which can include some of the following; Higher prices and profitability Added value Opportunity to build early customer loyalty Enhanced reputation as an innovative company Public Relations e.g. news coverage Increased market share

Process Innovation
This has to do with finding better or more efficient ways of producing existing products, or delivering existing services.

Advantages might include: Reduced costs Improved quality More responsive customer service Greater flexibility

Possible drawbacks Loss of jobs, especially if work is outsourced Need for re-training of workers

Innovation and Invention - Similar Words, Different Concepts

Oct 11, 2007 Ogan Gurel, MD MPhil They have evolved - look at them differently

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Innovation vs. Invention Consonant with the etymological origin of the word, innovation implies the creation of something new. In this regard, innovation is often equated with invention. However, the two definitions innovation and invention have been evolving. It has been recently appreciated that these two should in fact be regarded differently. As Jan Fagerberg wrote in his 2004 article:

An important distinction is normally made between invention and innovation. Invention is the first occurrence of an idea for a new product or process while innovation is the first attempt to carry it out into practice.
What is captured in this definition is the concept of innovation being the actualization or realization of an invention whether it be a societal benefit, commercialization, market entry or monetization. One critique and failing of the dot-com boom was that while some of the software developed may have been quite inventive, this was not balanced by sustainable business models by which such inventions could be made commercially viable. Clinical medicine is replete with inventions that failed market entry for any number of reasons including a lack of physician adoption, complexity, safety concerns and non-interoperability. Just like art for arts sake, invention for inventions sake may be intellectually and aesthetically pleasing but making a substantial societal impact is entirely another thing. That is the job of innovation. There is another crucial distinction between invention and innovation that is not often appreciated. Unlike invention, which often concerns a single product or process, innovation often involves a combination of products and processes that allow the successful translation of new ideas into tangible societal impact, as USC Stevens Institute for Innovation executive director Krisztina Holly once put it. One example is the iPod, which as a standalone product is really not very inventive. MP3 players had been around for several years before the iPod. While there may be unique hardware and software aspects to the device, the fundamental invention of having a handheld MP3 player was not at all new. What made the iPod truly innovative was its combination of aesthetic design, elegant ergonomics and ease of use. Also, there was the creation of the iTunes software and Web site that enabled listeners to actually use their fancy iPod. It is the combination of all these elements that made the iPod truly innovative. Examples of Innovation One of the greatest examples of innovation and a case study for how to foster innovation and accelerate development was the IBM PC. As an innovation that changed the nature of the computer industry and society, most will not doubt the innovation and significance of the IBM PC. The history of this is nicely summarized by Tom Hormby. However, it may not surprise you that the IBM PC at that time did not contain any new inventions. What may surprise you is that the IBM team under pressure to complete the project in less than 18 months was under explicit instructions not to invent anything new.

The goal of this code-named Project Chess was to take off-the-shelf components and bring them together in a way that was user friendly (at least by the standards of those days), inexpensive and powerful enough for home use. To some extent, the process by which IBM (which is ordinarily quite bureaucratic) created the IBM PC was an innovation in its own right. IBM innovated around its own processes by creating a small team composed of people from multiple disciplines. IBM cut out much of the bureaucracy and blinkered focus that would have been otherwise applicable by licensing technologies from outside companies (i.e. Microsoft and Intel) and a completely new marketing model of advertising

Ten Innovation Trends of 2010

In speaking with strategic innovation and R&D leaders at companies across industries and across the globe, I have been afforded the unique opportunity to hear the challenges both internal and external that global companies are facing relative to innovation. It is based on these interactions that I formulated the following list of the top innovation trends, which I first presented at Invention Machine's inaugural Power to Innovate user conference event back in 2008 and recently revisited in this year's user conference keynote address - The New Innovation Economy : 1. 2010 will kick off the Innovation Decade. The Innovation Olympics have begun on a global basis companies as well as countries are vying for supremacy in this innovation race in the decade of 2010. This is a critical decade and the strategies and actions in place in this decade are going to impact us for the next forty years taking us to 2050. 2. The emergence of BIC (Brazil, India, China ) in the Global Innovation Economy. The innovation landscape is changing. The emergence of companies in these countries as well as these countries themselves means companies need to take fast action to analyze and define growth plans for emerging markets to be served now and in the future. 3. IP monetization vs. IP quantification. Amassing patents for patents' sake is not a meaningful measure of success. Instead, companies are looking at the value their IP delivers? Are we generating revenue? Are we opening new markets? What are our returns on our IP? 4. Product obsolescence of 50-70% will occur by 2012. Companies are faced with products in many cases entire product portfolios - in maturing markets that need to be repurposed into new markets or replaced with new products representing new revenue streams. 5. The impact of the Baby Boomers exodus. In the US, with a huge percentage of todays workforce will becoming eligible for retirement, companies are facing an unprecedented demographic challenge: the largest generational turnover we have ever experienced. Companies must act quickly to preserve and leverage corporate expertise that would otherwise be lost through attrition, retirement or outsourcing.

6.

Time to market in half the time. Companies must significantly cut the time it takes to get product to a commercialized state. Speeding time to market will be key to winning in the new innovation economy.

7.

Develop & connect global collaboration. Building a strong culture of collaboration is vital to fostering productive innovation. Companies must foster collaboration amongst employees by providing them with a practical collaboration framework which allows them to connect without the need to leave the context of their innovation work.

8. 9.

Product differentiation vs. commoditization. New and differentiated products will be the primary source of revenue growth in the new innovation economy. Radical engineering vs. incremental engineering. Incremental improvements to existing products to improve performance or reduce costs continues to be a must. But to drive new revenue streams and compete in the new innovation economy, companies must look to radical engineering to bring about better performing and more competitively differentiated products.

10. The evolution of the Innovation Intelligence Ecosystem. There is a real need for knowledge enablement for innovation. Companies need to design an Innovation Intelligence Ecosystem a framework for delivering precise and critical information from a variety of sources that lead to increased productivity and accelerated innovation.