Tuesday, October 6, 2009

What is "Innovation"?

Spirit of Innovation, promotional airship

Innovation refers to a new way of doing something. Wikipedia.

"An important distinction is normally made between invention and innovation. Invention is the first occurrence of an idea for a new product or process, while innovation is the first attempt to carry it out into practice" (Fagerberg, 2004: 4)

Successful innovations are ideas that ultimately get the support of senior management and government through tax benefits. Innovation involves something new that is substantially different, creating customer or producer value and productivity. It's a process or the output of a process, an idea and its transformation into something useful. Innovation is also about taking risk, taking a long-term view, being smart and aggressive, marketing the thoughts and feelings designed to create public awareness, and becoming profitable in action.

Innovations most frequently googled include inventions such as the blimp and Disney Studio animated features. The modern world has exploded with innovation. But with widespread unemployment, America and other parts of the world are now hoping for the momentum of new innovative ideas to begin a major new product cycle. It's the subject of countless business brainstorm panels, the focus of educational institutions and the obsession of big government.

How are businesses developed from innovative ideas?

"The goal of innovation is positive change, to make someone or something better...Innovation occurs when someone uses an invention or an idea to change how the world works, how people organize themselves, or how they conduct their lives." Wikipedia

A few innovative cycles of the past and present are:

1) the industrial revolution in steel that produced railroads, indoor plumbing, electricity and airplane travel
2) the communications revolution in telephony reorganized communication
3) the entertainment revolution created support for radio, television, movies,
4) air conditioners and heating appliances civilized and opened up new land for residential use
6) the computer hardware cycle dominated by computer companies linked businesses
7) the software cycle associated with the internet altered business plans and created broadband-facilitated music and video-streamed content
8) the invention of new financial instruments and derivatives developed creative financing of businesses and real estate, including new methods being formed now in the field of insurance
9) the wireless revolution; it globalized business and furthered human interaction
10) solar panels and green technologies that are currently being developed to reduce energy demand and enviromental damage, and many more.

Solar panels at Jane Fonda's Ranch, Courtesy Janefonda.com

Development and refinements of ideas have produced fortunes for anyone, any person, group or organization able to solve everyday problems and to follow through with production.

How do business ideas develop in a tough economic and political climate?

"Innovation is the successful introduction of something new and useful." Wikipedia.

Innovative ideas come from multiple sources, a group of people, "like a flower that needs gardening" Worldbank.

The Federal Trade Commission published a report in 2003 on how to promote innovation by finding the proper balance of competition and patent law and policy.

A book called Managing People to Promote Innovation claims that business personnel offices also have the potential to promote organizational innovation.

What drives innovation is mysterious. Experimentation is an important component, since much innovation begins at the borderlines of businesses where technologies can link needs and problems of users in creative, challenging environments. Businesses typically nurture many new innovations to replace older ones.

Widespread education, favorable tax incentives, efficient immigration procedures and the protection of intellectual property with patents are crucial to implement innovative ideas. "Innovation [is seen] as the successful implementation of creative ideas within an organization (c.f. Amabile et al. 1996 p.1155). Businesses where significant money has been made through innovative ideas tend to attract unwanted higher taxes. As the cost of staying competitive and paying expenses and taxes, businesses take further risks and constantly hunger for innovative new ideas.

Mark Cuban, the innovative billionaire, a pioneer directly responsible for the field of broadcast technology, has an excellent personal blog with lots of ideas on business creation called Blog Maverick.

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