Thursday, October 29, 2009

Invention vs. Innovation


"Innovation is far more about prospecting, mining, refining and adding value than it is about pure invention." --- William Buxton

There is no question in my mind that with appropriate management, we can improve the levels of innovation and creativity within organizations. There is no magic here. Innovative people are no more ‘born’ than Olympic gold medalists or virtuoso musicians. Yes, some of us are gifted with more initial aptitude, but as music and sports show, the ‘natural’ or the ‘child prodigy’ frequently does not graduate to the top level. Hard, focused and appropriately- directed work trumps natural talent in virtually every case. The question is, where to focus? Let us start by looking at the anatomy of the beast.

Too often, the obsession is with ‘inventing’ something totally unique, rather than extracting value from the creative understanding of what is already known.

For example, U.S. took a materialistic approach to their investment, focusing on products, while the Japanese focused on process. His observation was that while the U.S. invented DRAM, the VCR or the LCD, it also incurred the highest up-front costs, while the Japanese reaped the primary profit due to their superior processes of manufacturing and distribution.

Today, we have a comparable example in Apple and Dell. Apple is now below Acer in PC market share, but they have beautiful, design-intense systems. Dell’s computers, on the other hand, are boring and have virtually no technical or design innovation. But Dell’s process has given them a dominant market share. Some business publications (e.g., Fast Company, Jan. 2004) have come to the dubious conclusion that this says that innovation may not be all that it was cracked up to be. Of course, what they miss are two things: (a) the distinction between innovation in product and process, and (b) the following rule, which I have decided to decree: innovation in process + design trumps innovation in process alone. This, of course, should be obvious, but it sure went over the head of the Fast Company writers. If you want to compete with Dell, ‘all’ you have to do is match or exceed their innovation in manufacturing and service, and do so with
innovative products.

To find an example that illustrates this, we need look no farther than, yet again, Apple. Forget their PC business for the moment. In the music business, in which both Dell and Apple are competing, Apple is the hands-down winner. While Dell has relied on their previously successful formula of efficient process, but boring design,Apple has triumphed on both fronts in their iTunes and iPod product lines. Apple not only dominates the music market, their sales in that sector now exceed those of their PCs – transforming the very nature of the company, to the point where the tag-line on their new iMac computer is, “From the company that brought you the iPod.” This, despite the iPod being launched only in 2001 – 24 years after their first computer, the Apple II, in 1977!

The first confusion to dismiss is the difference between invention and innovation. The former refers to new concepts or products that derive from individual’s ideas or from scientific research. The latter, on the other hand, represents the commercialization of the invention itself.

Whereas the earlier part of the 20th.century was the century of ‘INVENTION’,the tail end of the 20th. century and the beginning of the 21st. has been dominated by ‘INNOVATION’. If ‘ NECESSITY and NEED’ were the mother of Invention, ‘ GREED and INTEREST’ are the mother of Innovation.

I am a firm believer in the free market economy, so I have no problem with the notion of simple motivating forces like greed and interest being the driving forces that compel individual agents in what is an emergent system.

As an executive, of course we have to have creative an innovative ideas. But at the top of the list should be ones that reflect (a) how important innovation is to the future of your company, (b) the role of design in this, (c) a recognition that innovation cannot be ghettoized in the research or design departments, since it is an overall
cultural issue, and (d) an awareness of the inevitable and dire consequences of ignoring the previous three points..

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