Innovation vs. invention: Knowing the difference makes a difference

Editor's note: This is the first part of a three-part series on innovation written by MedTech Futures columnist Dr. Ogan Gurel. This column discusses innovation and, in particular, distinguishes it from invention. The second and third parts will discuss the elements of fostering innovation and accelerating development.

Consonant with the etymological origin of the word, “innovation” implies the creation of something new. In this regard, innovation is often equated with invention. However, the two definitions - innovation and invention - have been evolving.

Only recently has an appreciation for the difference, and the need to regard them differently, emerged. As Jan Fagerberg wrote in his 2004 article:

“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.”

Definitional capture What is captured in this definition is the concept of innovation being the actualization or realization of an invention, whether it be a societal benefit, commercialization, market entry, or monetization.

One critique and failing of the dot-com boom was that while some of the software developed may have been quite inventive, this was not balanced by sustainable business models by which such inventions could be made commercially viable.

Clinical medicine is replete with inventions that failed market entry for any number of reasons, including a lack of physician adoption, complexity, safety concerns, and non-interoperability. Just like art for art's sake, invention for invention's sake may be intellectually and aesthetically pleasing, but making a substantial societal impact is another thing.

That is the job of innovation, and yet there is another crucial distinction between invention and innovation that is not often appreciated.

Unlike invention, which often concerns a single product or process, innovation often involves a combination of products and processes that allow the successful translation of “new ideas into tangible societal impact,” as Krisztina Holly, executive director of the University of Southern California's Stevens Institute for Innovation, once put it.

One example is the iPod, which as a standalone product is really not very inventive. MP3 players had been around for several years before the iPod. While there may be unique hardware and software aspects to the device, the fundamental invention of having a handheld MP3 player was not at all new.

What made the iPod truly innovative was its combination of aesthetic design, elegant ergonomics, and ease of use. Also, there was the creation of the iTunes software and website that enabled listeners to actually use their fancy iPod. It is the combination of all these elements that made the iPod truly innovative.

Tales of innovation

One of the greatest examples of innovation and a case study for how to foster innovation and accelerate development was the IBM PC. As an innovation that changed the nature of the computer industry and society, most will not doubt the innovation and significance of the IBM PC. The history of this is nicely summarized by Tom Hormby.

However, it may not surprise you that the IBM PC at that time did not contain any new inventions. What may surprise you is that the IBM team - under pressure to complete the project in less than 18 months - was under explicit instructions not to invent anything new.

The goal of this code-named “Project Chess” was to take off-the-shelf components and bring them together in a way that was user friendly (at least by the standards of those days), inexpensive, and powerful enough for “home use.”

To some extent, the process by which IBM (which is ordinarily quite bureaucratic) created the IBM PC was an innovation in its own right.

IBM innovated around its own processes by creating a small team composed of people from multiple disciplines. IBM cut out much of the bureaucracy and blinkered focus that would have been otherwise applicable by licensing technologies from outside companies (Microsoft and Intel) and a completely new marketing model of advertising computers on TV.

When I received my first IBM PC in 1982, it even came with a comprehensive packet of information on how to contribute software applications. In retrospect, this may have been the first incarnation of open-source development.

To some extent, the IBM team did have to be inventive (though its inventions were less in hardware and software but rather in processes and marketing). While innovation is not the same as invention, it is difficult to be truly innovative without any invention. So one can see that:

• Innovation is not the same as invention.

• Innovation does not require invention.

• However, invention can contribute to innovation.

Impediments to innovation

By corollary, the IBM PC example also highlights what can be considered to be impediments to innovation.

One can imagine, for example, that the project would not have been successful if there was excessive corporate input, an unwillingness to change focus, a lack of interdisciplinary expertise, and a lack of the big picture on the ultimate arbiter of innovation: market adoption. Having the right people is also critical.

Thomas J. Watson Sr. (the venerable chairman of IBM and an industry genius in his own right) was once famously quoted as saying in 1943: “I think there is a world market for maybe five computers.” He helped build IBM to become the giant that it was but he certainly may not have been the right person for Project Chess.

To the extent that the market adoption of the IBM PC exceeded all expectations, and indeed went way beyond IBM, itself, is testament to the wildly successful innovation that it was.

With the fact that most economists would agree that innovation is ultimately the fundamental driver of productivity growth and to the extent that many believe the 1990s productivity boom in the U.S. was at least partially driven by desktop information technologies, all of us can attribute some of our present standard of living to that innovation.

The next column in this series will highlight the opportunities and challenges involved in fostering innovation.

Previous articles by Ogan Gurel

• Ogan Gurel: Lessons from the deconstruction of Amgen

• Ogan Gurel: Crazy like a Google? With GE-Abbott deal scrapped, could Google be next buyer?

• Ogan Gurel: Reforming FDA: Focus on safety, let market judge efficacy

• Dr. Ogan Gurel: FDA: Tortoise, hare, or something else?

• Dr. Ogan Gurel: Who is minding the Innovation Gap?