The Latin word »innovare«, means to introduce something new. But often people confuse innovation with the pure act of coming up with a creative idea or invention. That’s too generous. Inventions are often ingenious new (recombinations of) devices or processes, which for example come in the form of enabling basic technologies, patents, or primary products. But if they fail in customer discovery (the phase looking for problems worth solving and customers willing to pay) they will neither create value for society nor for the company. Therefore inventions are usually ‘only’ inputs to a possible innovation. They also need to be incubated, accelerated, and scaled-up to become successfully commercialized.
An example of ‘invention commercialization’ is the Apple iPod, which extracted way more (dollar) value from the Fraunhofer ‘MP3 codec’ than Fraunhofer ever earned in license fees for theír invention. In the example, the inventor at least earned good money. But there are countless examples of Tech R&D inventors proudly hoarding patents which will never see the light of day. We therefore strictly define innovation as a clever (re)combination of existing ideas and enabling technologies (inventions) into a desirable product or service, which is embedded into a viable business model. In the case of the iPod, it was the recombination of already existing technology (MP3, Click Wheel, Micro HDDs) into a seamless customer experience (1,000 songs in your pocket, iTunes, Music Store, etc.) that made all the difference.
Creativity is thinking up new things.
Theodore Levitt
Innovation is doing new things.
This means that innovation is also always in service of (corporate) strategy, which tries to ‘change the game in the market’. They come as a twosome — always (see also ‘innovation strategy’)!
This is of course a high-level definition, which we propose for the sake of simplicity. There are much more differentiated views on/sub-kinds and types of innovation and not all of them are commercial in nature. If you are interested in that please also refer to: Types of Innovation.