sexta-feira, janeiro 15, 2010

Innovation, Invention and Entrepreneurs

Innovation, Invention and Entrepreneurs
by Jeffrey Phillips
http://www.stumbleupon.com/su/23ImEV/www.business-strategy-innovation.com/2010/01/innovation-invention-and-entrepreneurs.html/r:t

After all I read on the blogs and on Twitter, and all the new innovation programs and initiatives in state and local governments, I feel the need to revisit the definitions of these key words. While innovation, invention and entrepreneurs are important and somewhat interconnected, they aren't synonyms and they have different needs, intents and purposes. Whether accidently or on purpose, we can't allow them to mean the same things.

First, the definitions:

An entrepreneur is a person who starts a new business. That's not necessarily innovative, but it can create new jobs and new wealth, so it is valuable. Sometimes, entrepreneurs create new businesses based on new ideas, either inventions or new innovations. However, a person running a McDonald's is also an entrepreneur, but not necessarily innovative.

An inventor is someone who creates a new to the world product or solution. Inventions become interesting when they create value for the inventor or consumers or the world at large. Inventors are often innovative, but innovative solutions don't have to be inventions. Many innovations are new business models, new services or new experiences that aren't necessarily "inventions".

An innovation is a new idea that is put into valuable or profitable action. An innovation can be created by an inventor who then licenses her invention to others to commercialize, or commercializes the concept herself as a small business person - in this case as an entrepreneur. An innovation can (and often is) created by a large organization to disrupt an existing market space or create an entirely new market (the iPod or Flip Video recorder are two good examples). Innovation can happen in any organization, of any size. Additionally, there's innovation in governments, in academic institutions, and in not-for-profits. We typically don't think of these organizations as entrepreneurial or as inventing new things, yet they can be innovative. Further, innovations can be new products, but can also be new service models, new business models and new customer experiences.

The reasons the distinctions are important are hopefully obvious. There are a number of state governments, as well as the federal government talking about innovation policy. Read the fine print and they are really talking about funding and sponsoring entrepreneurs and technology transfer from institutions and universities. This may have some aspect of innovation, but doesn't really consider organizations outside the start-up realm. A vast majority of disruptive and incremental innovations come from larger, commercial organizations, and these organizations can become more innovative as governments adjust tax policies, intellectual property rights and a number of other components of regulation and legislation. Yet most of the state and federal initiatives are really targeted at starting and funding new entrepreneurs and small businesses.

Interestingly, if you stop to consider the most "innovative" locations in the US (Boston, Research Triangle Park, Austin, Silicon Valley as a few) you'll note that they have all three things in common - government, education and technology are closely linked and vital to all of these cities. Innovation thrives in an interlinked, internetworked community. The same isn't necessarily true of inventions or entrepreneurs.

The overwhelming focus as well is on product innovation, yet we see consistently that business model innovation and customer experience innovation are much more compelling. After all, the icon of innovation, the iPod, is simply another MP-3 player unless iTunes is attached. It was the radical change in the business model and customer experience that made the iPod a true disrupter. Yet we don't find too much focus or government initiatives in these areas. And almost no policy or funding for the organizations that need innovation the most - governments and educational institutions and bureaucracies.

Another thing - having been a founder in a start-up, most entrepreneurs don't need or want a lot of help from an "innovation" perspective. They are betting the farm on their one great idea. For them, its all a matter of execution to bring that one idea to life, and then successfully scaling that idea. In contrast, larger organizations which have lost the passion and initiative of the entrepreneurs need a great deal of help and encouragement to innovate, since they have much to lose if a new product or service fails. In larger firms there is almost never a shortage of ideas, but a shortage of risk-taking, passion and resources to develop the new idea. Interesting that the problem the small firms have (scaling) is one the larger firms can offer, and the challenge the larger firms have (risk-taking, passion) is one the smaller firms can offer.

We need all three of these concepts work well to succeed. We need inventors to create new products and new processes, and we need entrepreneurs to disrupt existing markets and bring these new products and services to the market. We also need innovation from large existing firms, because without innovation they stagnate and die. When we talk about innovation, invention and entrepreneurs, and when we put policies in place to encourage certain types of activities or investments, we need to understand the implications and ramifications of those words and actions.


"While closely related, invention, innovation and entrepreneurs are not the same things, and should not be treated in the same fashion."



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Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of "Make us more Innovative", and innovateonpurpose.blogspot.com.

1 Comments:

Anonymous clay barham said...

Those who admire and criticize Ayn Rand’s beliefs about people standing on their own feet say she advocated selfishness, thereby greed. That implies self-centered, like the arrogant left. It is anti-individual creativity, anti-entrepreneur, which is not Ayn Rand. From her works, it is apparent Ayn Rand admired people who were courageous pebble-droppers, the nails standing above the boardwalk that ruling elite might trip over, who challenged the established and accepted way things were done. They were outer- and other-centered visionaries and dreamers. This is reflected in a new book due soon on Amazon called SAVE PEBBLE DROPPERS & PROSPERITY, also on claysamerica.com. She pitched for the entrepreneur, accomplished individuals and for individual freedom. Only the leftists believe individuals are bad and community, led by them, is good. They believe they are the elite who must rule and Ayn Rand opposed that. Claysamerica.com

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