Innovation

Innovation = Idea x Implementation

Let’s try to find out the real meaning of the buzzword “innovation”. It has become the top 1 positive keyword in nearly any area of life, including: economy, science or business. Governmental programmes support innovation, job applicants claim they are innovative and companies sell innovative products.

But what exactly innovation means? Does everyone get it right?

Definition

Dictionary is not of a great use here…

Looking into dictionary doesn't help us understand what is innovation...

The first definition we get:

Innovation is a process of innovating.

Well, a bit of tautology.

The second one:

A new method, idea, product.

Is every new idea an innovation? That would mean that somebody who only comes up with new ideas without implementing any is an innovator.

We need something different.

One innovation consultant coined pretty accurate and brief definition of business innovation that I liked pretty much:

Innovation is an idea that makes money.

I even went one step further and made it more general:

Innovation is an idea that works (delivers expected outcome).

In my opinion this is the most powerful answer to question of what is innovation.
Let’s break it down into smaller parts.

Components of innovation

Innovation consists of two key elements:

1. Fresh idea of a company, business model, product, process optimization, acquisition channel. Not yet verified.

2. Successful implementation – proof that something delivers expected outcome which can mean different things, for example:

1) reducing costs

2) increasing revenues

3) attracting visitors

4) engaging users

Two notes on the side:

1. The outcome must be net positive, which means that benefits > costs.

2. Also it is worth remembering that it is about outcome – not the output. It is not about doing things differently. It is about creating value through doing things differently. The key element is the value you create with innovation. Not the fact that you do something in a new way.

Innovation funnel

You can imagine innovation process as a funnel:

1. On the first level you got tons of raw ideas. (100%)

2. Then there are well-thought out ideas that you believe are worth testing. (20%)

3. On the third level you got innovations – ideas that proved they deliver value. (1%)

I covered this topic in some more details as a part of Lean Innovating framework here.

Application

Thanks to the fact that this definition is so broad, it can be applicable to many different fields and organisation types. Let’s consider some examples:

1. In marketing – new marketing channels that let you acquire users at the lower cost than before.

2. In product development – new feature that significantly increased your users engagement.

3. In military – new tactics that help you win battles.

4. In physics – new way to measure optical phenomena.

5. In archeology – new method of assessing the age of buildings.