Foundations of Innovation

Understanding Innovation What is Innovation? Innovation is fundamentally about putting ideas into practice. More formally, innovation is the practical implementation of ideas that result in the introduction of new goods or services, or improvements to existing ones. This is a key distinction: innovation isn't just having a good idea—it's making that idea real and delivering it to create value. The International Organization for Standardization (ISO) provides a concise modern definition through ISO 56000:2020: innovation is "a new or changed entity, realizing or redistributing value." This definition captures the essential elements found across virtually all innovation definitions: newness (something is new or changed), value creation (it realizes or redistributes value), and practical implementation (something must actually happen). How Innovation Differs from Invention Many people confuse innovation with invention, but these are distinct concepts. Invention is the creation of something entirely new—the discovery or development of an original idea or technology. Innovation is what happens when you take an invention (or any existing idea) and implement it in a way that creates meaningful impact in the market or society. This distinction matters because you can have innovation without invention. For example, Netflix didn't invent streaming video technology, but the company innovated by applying streaming in a new way—by bundling content into a subscription service. Similarly, the bicycle was improved through many innovations long after its initial invention. Innovation focuses on practical application and value creation, whereas invention focuses on creation itself. When the problem being solved is technical or scientific in nature, innovation often manifests through the engineering process—systematically designing, testing, and refining solutions until they work effectively. Multidisciplinary Perspectives on Innovation Because innovation matters across many fields—business, engineering, economics, public policy—scholars from different disciplines have defined it in various ways. A widely-used multidisciplinary definition describes innovation as: A multi-stage process whereby organizations transform ideas into new or improved products, services, or processes to advance, compete, and differentiate successfully in their marketplace. This definition emphasizes that innovation is a process (not a single event) that involves multiple stages and ultimately serves the purpose of helping organizations succeed. The Organisation for Economic Co-operation and Development (OECD), an influential international body, provides another important framework through its Oslo Manual. This definition emphasizes that innovation involves "the production or adoption, assimilation, and exploitation of a value-added novelty in economic and social spheres." The OECD specifically identifies several areas where innovation can occur: products, services, markets, production methods, and management systems. <extrainfo> Other prominent definitions include Everett Rogers's perspective that "an innovation is an idea, practice, or object that is perceived as new by an individual or other unit of adoption," which emphasizes perception and adoption. Altshuler and Behn define innovation more broadly as "the generation, admission, and realization of new ideas, products, services, and processes, encompassing both original invention and creative use." </extrainfo> Dimensions of Innovation: How to Classify Innovations Not all innovations are the same. Innovation scholars have identified useful ways to classify and compare different types of innovations. Degree of Novelty The degree of novelty distinguishes innovations based on how new they are in different contexts: New to the firm: The innovation is new to a particular organization, even if other companies have done it before New to the market: The innovation is new within a specific market or industry, though it might exist elsewhere New to the industry: The innovation is the first of its kind in an entire industry New to the world: The innovation has never been done anywhere before—it's entirely original globally This classification helps us understand that "innovation" is relative. A company might introduce a product that's new to their own organization (and thus innovative for them) even though competitors have similar products. Conversely, truly game-changing innovations are new to the world. Kind of Innovation Innovation also varies by type of change: Product-service system innovation: Changes to the actual goods or services being offered Process innovation: Changes to how those goods or services are created or delivered For example, a car manufacturer might innovate by introducing a new electric vehicle model (product innovation) or by redesigning their manufacturing process to be more efficient (process innovation). Both matter, though they create value in different ways. Creativity vs. Innovation: An Important Distinction While related, creativity and innovation are not the same thing, and this distinction is important to understand clearly. Creativity is the production of novel and useful ideas by an individual or small group of individuals working together. Creativity is about generating ideas—it's the thinking phase. Innovation is about implementing those ideas to create practical value. You might have a creative idea that never becomes an innovation if it's never put into practice. Conversely, not every innovation requires exceptional creativity—sometimes innovation comes from cleverly applying existing ideas in a new context. Think of it this way: creativity is necessary but not sufficient for innovation. An individual working alone in a laboratory might be extremely creative, developing brilliant new concepts. But those ideas only become innovations when they're developed, refined, tested, and brought to market or implementation.