What is Innovation?

Creativity is about thinking new things. Innovation is about doing new things – Theodore Levitt.

Innovation is combining new and existing ideas to create something new that adds value to the marketplace. It could emerge as a new product or selling the existing products new ways.

Most people associate Innovation with Invention. While the two are related, you don’t have to invent something to be innovative. This association paralyzes many individuals and companies, who never set foot on the road to become innovative. People are often looking for that “aha moment”, the “genius idea”, or that “clever product” that will captivate the market. In the process, they ignore the importance of adding value to existing products and service. Take Toyota for example. Toyota is recognized among the top most innovative companies, but Toyota did not invent the car. Similarly, Netflix did not invent the DVD rental business, but changed the way we rent and watch movies. Starbucks did not invent the café, but revived the coffee industry. All of these companies changed their respective industries without inventing the core product.
Innovation and invention are two different things
During my presentations, I frequently ask the audience to name few innovative companies. Apple seems to win the popularity contest. I agree. Apple is a very innovative company. But, what did Apple invent? iPod, iPhone, iPad? Yes, they invented these names, but did they invent the MP3 player, the Phone with internet connection or the tablet? The iPod was the signature product of Apple. It turned the company from near bankruptcy to one of the most valued companies in the world. When Apple introduced iPod, market was flooded with MP3 players. It was not the re-invention of the MP3 player, the catchy name or the storage capacity that turned iPod into the most wanted music player, but rather the experience of owning one. Apple focused on customer centric experience: the store, the box, the aesthetics, the white earphones, and above all iTunes: free software to manage music. It was simple: plug the device into the computer and music is automatically transferred to the iPod. Apple transformed a very geeky piece of electronics into a piece of jewelry that everyone loved wearing. My point: Apple did not invent the MP3 player, but rather the experience of owning a MP3 player.

Sometimes looking at these innovative companies can be very intimidating. Plus, not everyone has the dedicated resources for continuous research and development. It was certainly the case for me. I created the innovation program out of necessity when I was cutting cost and trying to do more with less. I leveraged the principles of pooled creativity to transform entire staff into innovators by focusing on small incremental innovations. Besides, innovative products rarely emerge fully baked. If you research the evolution of great products, you will find that they all started from a very simple idea and overtime morphed into an outstanding product through small incremental innovations.

It is best to test ideas on smaller scale, and keep adding on to the ones that stick. I found this to be a common theme in my research of most innovative companies. It was never any one thing that made them stand out, but rather small improvements in all the related products and services to form a holistic new experience. Starbucks is another fine example of small incremental innovations. Howard Schultz had a vision of bringing Italian café experience to America, so in its early days, Starbucks menu was written in Italian, baristas wore bow ties and the store played constant Opera music in background. It was a fine experience but not exactly what American consumers wanted. Starbucks listened to its customers and experimented on smaller scale. One of them was allowing 2% milk, which was against the original authentic Italian experience vision, but it skyrocketed Starbucks coffee sales. Now Starbucks allows customers to customize their drinks in so many ways that it has become their signature specialty. Starbucks earned its spot among the top innovative companies through small innovations and active listening.

In summary, innovation is doing new things that will add value to customers, partners or stakeholders. The most common examples of value-add are: saving money or time, added convenience and/or enhanced experience. Innovation is never a final state, but rather a mindset focused on continuous value-adds through small incremental innovations.

Recommended Reading:

Forbes: The Most Innovative Companies Today–And Tomorrow

The Innovator's DNA: Mastering the Five Skills of Disruptive Innovators The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators by Jeff Dyer
Little Bets: How Breakthrough Ideas Emerge from Small Discoveries Little Bets: How Breakthrough Ideas Emerge from Small Discoveries by Peter Sims
Empowered: Unleash Your Employees, Energize Your Customers, and Transform Your Business Empowered: Unleash Your Employees, Energize Your Customers, and Transform Your Business by Josh Bernoff
The Innovator's Solution: Creating and Sustaining Successful Growth The Innovator’s Solution: Creating and Sustaining Successful Growth by Clayton M. Christensen
Good to Great: Why Some Companies Make the Leap...And Others Don't Good to Great: Why Some Companies Make the Leap…And Others Don’t by Jim Collins

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