“Creativity involves breaking
out of established patterns in order to look at things in a different way.” -- Edward de Bono
Innovation is the engine of entrepreneurship. It is also more than a technical term. Defined in consumer terms, innovation can be
defined as “changing the value and satisfaction obtained from resources by the
consumer” (Peter Drucker, Innovation and Entrepreneurship, 1984, p.
33). Innovation is the process of
creating new technologies and putting them to economic use. Jean-Baptiste Say, the French economist who
first coined the term Entrepreneur around 1800, defined it: “The entrepreneur
shifts economic resources out of an area of lower and into an area of higher
productivity and greater yield.” Innovation
is a matter of exploring and recognizing where the higher-productivity arenas
are in order to do this, typically by (but not limited to) inventing and
instigating new technology or applications.
This does not imply high-tech solutions: It can be low to no-tech at all. It can
be a concept of a symbolic environment (the theme park), a new way of symbolizing
relationships (jewelry), or a new approach to working (remotely, on virtual
teams, by zoom). Such
solutions are not always immediately recognized. Among the unanticipated innovations that were
at first totally dismissed by the public are the plow, the umbrella,
automobiles, the electric light bulb, telephones, cell phones, space travel,
mosquitos as the carriers of malaria, anesthesia for surgery, personal
computers, and the theory that the earth is round.
The creation of a new value source can
come about just by “combining existing resources in a new and more productive
configuration” (Drucker, p. 34). The
information age has created an entire economy devoted to entrepreneurship from
about 1980, in the midst of a giant recession.
The technique was the application of knowledge to human work – both high
and low-tech. The term for this applied
knowledge is techne—making or doing. As
the father of 20th century management theory, Drucker calls this the
dynamic disequilibrium that informs all aspects of society. Creativity works as a major destabilizer
that, despite its heavy fallout of problems we weren’t ready to deal with, is
the new basis of economic expansion driven by managed creativity. This is the thought movement which took hold
under that label around the same time in the late 70s, as the engine of
entrepreneurship.
This renaissance holds a positive
view of change as healthy and the basis of opportunity, relocating innovation
at the central reality for economic thinking.
Examples are Bell Labs, IBM, and 3M, which created 100 major new product
lines at an 80% success rate by the mid-80s. Not everything worked as planned –
the Segway, DuPont’s Corfam shoes, hoverboards, and Google glasses. Yet doing something differently is the
impetus behind the American university, the economic engine of technology
transfer worldwide. The re-invention of
the hospital on the specialty service model and the creation of the mass market
food service industry by McDonald’s are other case studies.
These institutions, says Drucker,
are at the heart of innovation by increasing the yield from resources,
discovering new markets, optimizing value for the customer, and redefining the
values around the customer “experience” – the latest definition of meeting
customer needs and values. This is the
major transmutation of value that makes the markets creatures of what the
consumer, not business, needs and wants.
Economists use a comprehensive definition of
technology. When they are talking about innovation, they are not thinking just
about new machines or inventions, but any new way of doing things. This includes finding gaps in consumer demand
and devising ways to fill them. Any innovation
that increases the value consumers derive from everything they buy and use –
provides ways to do away with pain---of cost, time, energy, loss of use, and
inconvenience—which can cause obstacles to fulfillment that are considerable
and prolonged.
A few years back actor and science
promoter Alan Alda hosted a three-part Nova program called “The Human Spark,” a
search for what makes us uniquely human. In this exploration Alda marvels at
the importance of innovation to homo sapiens in our evolution from homo erectus
1.3 million years ago as we became hunter-gatherers making tools and operating in
groups by virtue of language. From
200,000 years ago homo sapiens were the leading humans on earth, having
mastered fire, then jewelry made from our ancestors’ teeth. Jewelry was and is far more than
ornamentations; it operates as a form of wearable symbolism made of bead, bone,
seeds, then metals, a form of communication signaling our alliances with others
living outside the immediate band or village, widening our leverage by
affiliation with—theoretically—anyone and everyone on the planet.
While Neanderthals relied on a generalized
set of tools and processes (hand ax production prominently), our group
surpassed these fixed methods by a steady ongoing practice of innovation and
change. The result can be seen in the
cultural development of technology and social communications we now enjoy. Our culture was developed by ongoing
challenges and the change management we invented to meet those challenges, from
ice age art 20,000 years ago, agriculture 10,000 years ago, to today’s
information age.
