Innovation is the buzzword of our era, it often seems like every single political and business leader has embraced the mantra of innovation in the hopes of creating or maintaining a competitive edge in our era of increasing competition and technological change. But what exactly is innovation?
The most elegant definition of innovation—at least, as it relates to economics—that I have come across is from Swedish Economist, Charles Edquist, who stated simply that innovation is a creation of economic significance. Innovation can occur in the form of a product, a process of production, or in an entirely new organizational structure. Innovation is related to invention, which is the creation of a new idea, technique, or technology. But an invention only becomes an innovation if it takes on economic significance. Either it is sold as a profitable product, or is a labor saving process that increases profitability. There are innumerable inventions that for various reasons—whether cost of production, lack of market, or sheer neglect—never evolved into innovations. Similarly, countless new processes and organizational structures have been conceived of but never successfully developed into innovations.
I have long been fascinated by innovation—how, when, and where it occurs—and have spent some time thinking about it and how we can best cultivate it. I think that creation, whether art, music, literature, or invention is when humans really shine. But to turn an invention into an innovation requires our society to come together and collectively make use of an individual genius. When done right, it can revolutionize the world forever, a gift to our grandchildren’s grandchild. When done wrong it can do great harm, and we must educate our society to think carefully about the direction it wants to go. It is through innovation that we get new products, cost saving processes, and even whole new industries such as the computer industry.
Innovation, globalization, and entrepreneurship are intrinsically linked. Globalization offers the promise of global markets, where regions that succeed at technological innovation, like California’s Silicon Valley, will grow rich exporting their goods to the world. At the same time globalization will destabilize many regions as their industries lose market share in the face of cheaper goods from abroad, or are replaced outright by innovations from abroad. For these reasons, among others, I feel that it is critically important that educators, particularly social scientists, grapple with innovation and incorporate what lessons we learn into training the next generation. Also, innovations are often pretty dang cool, so it’s not too hard for me to try and follow them.
Good Blogs to Follow:
The indispensable Marginal Revolution, Co Bloggers, Alex Tabarroc and Tyler Cowen’s blog is clearly written and reasoned. Tyler’s provocative short book, The Great Stagnation, asks a profound question and his ongoing thoughts are always self-recommending. Alex is obviously no slouch ethier authoring this guidebook to innovation.
Idea Connection – Ideas.
Idea Sand-box – More Ideas. Play with them.
A few recommendations on books to follow. Check back soon!