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Innovation Always Trumps Invention

(Corrects second page, first paragraph, stores carrying HydroRight.)

Invention is often viewed as a source of economic growth. It isn't. It's innovation that generates new products, new services, new businesses, and new jobs. As a country we need to be focused on innovation more than ever before.

Invention and innovation have been mashed together so thoroughly that it is hard to tell the difference between them—yet they could not be more different.

The implications of this confusion are important, steering budding entrepreneurs down the wrong path, crimping the growth of existing companies, and muddying public policy intended to support business.

It is time to clarify and redefine the difference between invention and innovation.

Marketplace Value

Invention is accurately perceived as a cornerstone of innovation. It generates new ideas, patents, prototypes, designs, breakthrough experiments, and working models. However, it's innovation that transforms these inventions into commercial products, services, and businesses. Ultimately an invention is only valued by the marketplace when customers use it or buy it. For example, the technology behind flat-screen TVs was invented decades ago. The breakthrough innovation was the application of that technology to the public's insatiable appetite for crystal-clear digital pictures on big-screen HDTV.

For the past 30 years I have been teaching courses in the process of innovation in executive education programs at Northwestern's Kellogg School of Management and consulting with firms worldwide on the topic. When I started, the application of the word to new products and services was uncluttered by different interpretations or spin. But over time, marketers discovered "innovation." They found a word that evokes a good feeling without the burden of being specific. Do you want to avoid saying "new and improved"? Just say the product is the result of innovation. The word has come to mean just about anything that is new, which is too broad to be useful.

Competing with innovation for attention is invention, which is also surrounded by an aura of good feeling, conjuring up images of a computer being built in a garage and the inventor emerging as a billionaire folk hero. As a result, invention has been linked in the public mind to success in the marketplace, and that is not so.

When a new idea surfaces or a new patent is filed—that is an invention. It is the classic eureka moment when a person has an idea for the better mousetrap and sets about creating it, putting off concern about who will buy it for another day. At a different level, much of the basic research done in R&D labs in corporations and at universities is the invention process. It is research for the sake of building knowledge, which is certainly important, but not done with thought of commercialization.

Meeting a Need

Innovation is a very different concept. When a need is identified and a product or service is developed to meet that need, you have an innovation. People talk about the "invention" of the lightbulb or the "invention" of the iPhone, when in fact neither Thomas Edison nor Steve Jobs were inventors. They both used existing technology in new ways with an eye toward a big market for the result. They were innovators.

This is not simply an exercise in definitions. Entrepreneurs work tirelessly to form and build businesses, and they need all the help they can get. When they are launching their first enterprise, it is important for them to understand that an invention, no matter how inspired, will not be worth much if nobody wants to buy it. For established businesses looking for new profit centers, it is important to understand that brainstorming new product ideas is worth far less than identifying consumer wants and needs and developing products or services to meet them. For policymakers trying to figure out how to support a region's entrepreneurial spirit, understanding the difference between invention and innovation can lead to distinctly different approaches.

My message for an inventor is to think more like an innovator. His or her success rate would almost certainly go up. I was talking recently with Michael Schuster, whose product, HydroRight, easily converts a standard household toilet into a dual flush system, using less water to flush liquids and more for a "full" flush. He told me that he had at least 60 good ideas for inventions, but he focused on HydroRight because it taps into people's wish to conserve water and it fulfills that wish for less than $20. Sales are skyrocketing at Home Depot (HD) and (AMZN). Sure, he has patents on the small inventions needed to create his innovation, but it is not the patents that are making money. It is widespread acceptance in the marketplace.

My message for those running established businesses, perhaps built on a single successful product and seeking to expand, is to learn the innovation process. Spending time at the front end on what the marketplace needs, rather than trying to build a slick marketing campaign around a nifty invention that nobody cares about, is such a certain way to succeed that a business plan can include the guarantee of new revenue streams courtesy of innovation.

Public Policy Support

It is in the public policy arena where there is the greatest opportunity to stimulate the economy through support for innovators. Here in Chicago a colleague and I have established an annual recognition event, the Chicago Innovation Awards. True to my definition of innovation, nominees must have brought a product or service to market and show proof of impact. Two years ago a winner was a then-small firm named Groupon. Some years ago we recognized Archipelago, which became the electronic trading platform for the New York Stock Exchange. At the low-tech end, we honored HydroRight this year, as well as Liftaem, an inflatable hospital mat whose innovation is a way of sliding patients from one bed to another with virtually no effort.

Those responsible for economic development would do well to pay special attention to innovators. Ask any one of them about how a certain level of investment would turn into a specific number of new jobs, and each will have a solid, practical idea. A particular interest of mine is to work with innovators on strategies for manufacturing their products in the region where the innovation was born. Public policy designed to help those who have already taken the entrepreneurial risk and brought a successful product to market is, I believe, a high-percentage play, an important consideration where scarce taxpayer dollars are involved.

Cities and states spend a lot of money trying to lure new business. They should focus instead on businesses large and small that have already made a commitment to the region. Ask them about their ideas for new products and services, and help them bring their new innovations to market. Keep the process simple and straightforward. One innovator told me he looked into government programs and "they added up to a whole lot of nothing." People who are in the day-to-day work of running a business, especially small enterprises, don't have a lot of time or money to spend on process. They need focused, direct, and prompt action.

There are inventors and there are innovators. One is creating a product with the dream of success. The other brings a product to market knowing with certainty that there is a need to be met. Understanding the difference and acting on it can provide an important stimulus for the economy in the challenging years ahead.

Thomas D. Kuczmarski is founder and president of Kuczmarski & Associates, an innovation consultancy based in Chicago. The author of five books, Kuczmarski has also taught product and service innovation at Northwestern University's Kellogg Graduate School of Management for 29 years.

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