Had a discussion with a friend some time ago about the definition of innovation, that we didn’t quite agree on the semantics but kind of agreed on the principles. After giving it some thought, I realize I was not arguing for the definition of innovation, but rather how I see the innovation process, and how to break it down, and how I value the steps of the process, which I have touched before here, but here goes another approach of it:

1. “Problem and revelation”
Either you have a problem or you just have a revelation of that something could be done differently. This can often coincide with step 2.

2. “Idea”
Elaborating, brain-storming or what-ever get’s you going, you conclude this to an idea of how something could be done, or doing something already existing better, or just different to fit another use. In this step an application is developed, e.g. “I want to pinch to zoom in when using the mapping application on the device”.

3. “Innovation”
You “solve” the idea, by developing methods, technologies etc to bring it to life. This is what is traditionally called an innovation. This could be the multi-touch screen technology on the iPhone, the software the processes the inputs. This step is often patentable.

Now the whole idea is that this 3 step process is what’s crucial for the innovation process to produce valuable outcome. Some put a very industrial approach to this, with a heavy emphasis on a problem (defined out of existing value networks), but no “revelations”, which can result in missing new customers groups and applications (non-consumers today), read more about this in Clayton Christensen’s “Innovators Dilemma”.

There are good examples of innovations that is extremely valuable that did not go through this process, one that changed the world as we now it, that with-out we would not have the speedy Internet, view DVD’s or play CD’s, or precision corrective eye-surgery among other things.

That is the Laser, which was an innovation that started in the 3rd step, with-out a problem, revelation or an idea of application.

So would you not want to be the inventor of the Laser? It would be fun, but I would rather invent something that did not take 20 years to find it’s first application, which is why I try to focus my Entrepreneurship on creating ideas and innovations that have applications in the near future.

Every week I talk to people about Entrepreneurship and what it is all about. Being Swedish of origin and interested in politics it’s quite interesting to follow the Sweden debate about the need for Entrepreneurship and needs for a more Entrepreneur-friendly Eco-system, like the one they have in the UK and US and many other countries in the world (there was a good discussion at the Swedish-US Entrepreneurial Forum the other week, more info on the Enbou blog), but I think many people get it all mixed up.

I think starting a new business (or actually keeping an established business competative) you need three things, or at least two of them.

Three cornors of a new business

Innovation
Innovation is not Entrepreneurship, it is about being passionate about creating a inventions or ways of doing things, innovation is a quite wide term, so in general I try to divide innovation into things that require some research and development, maybe can be patented. I would include things such as a very clever algorithm for computing relevance of information, but not a spectacular design or a clever packaging or positioning of a product.

Ideas
To successfully launch a new business you need new ideas, they do not have to be innovations, most successful business are not built upon innovations but new ideas.
Ideas include new ways of looking at the market, new ways to apply an innovation (get to a market segment that was a non-consumer of that product, and maybe changing/packaging the innovation for that market), a very attractive design that nobody else thought about before, or just clever business processes that produce higher quality products.
For example, I would not call Apple an innovations company in general, but a very successful idea company, that take commodity hardware components and build them into a really nice design and package. Apple have done tremendous innovations in the past, but most of the revenues and success today are not based on innovations per see, but on the ideas they use to package and make commodity hardware and phenomenons attractive to target group, such as with iPod, iTunes, which is very clever indeed. In my opinion idea companies are often more interesting (but not always).

Entrepreneurship
So what is entrepreneurship all about them?

  • Being brave, and boldly step out of the comfort zone.
  • Being attentive, listen to people, the market, what works and what not, what are you good at and what not.
  • Lot’s of passion, you got to love what you do! And you got to belief in the idea or innovation that drives your business.
  • Like to change things, being in to rattle the chain and make life uncomfortable for the established companies certainly helps.
  • Personal leadership.
  • Getting the idea/innovation out there.

It’s all about making it all happen, there are many good innovations that never reach their potential market, there are even more ideas that are never realized and many of them are very good. It’s all about execution and making it happen, and that is what Entrepreneurship is all about; seeing a potential to do something, make a change and making it happen.

Building a company takes…
Good Entrepreneurship, good ideas, good innovations (the two first is a must, the third not as needed as most believe), sometimes these things comes in three, sometimes in two, and for most people you will only have one of these, so find other people that complement your own drivers and abilities. If you have an excellent innovation and you are an excellent innovator, make sure you build a team around you that adds the other two aspects.

Established business often lack…
When a business have become well established and found it’s core market and starts to make money (especially if it’s based on an innovation), it starts to focus on improving quality, building sales and post-sales (support & service) organizations to be an attractive supplier for it’s customers. If they do it all right they will be very successful, but many will at the same time be on their downfall. They replace Entrepreneurship with “management”, which is much less prone to change and adopting to an constantly evolving and changing market (excellent reading up on this is of course the Innovators dilemma by Clayton Christensson, more info here), which I will try to elaborate on in a future blog post.