Invention vs Innovation

Innovation is not a magic pill to solve the current afflictions that ail our 21st century economy.

From the collection: Economics of Innovation


From the collection Economics of Innovation

In its purest sense, “invention” can be defined as the creation of a product or introduction of a process for the first time. “Innovation,” on the other hand, occurs if someone improves on or makes a significant contribution to an existing product, process or service. In other words, they are, as Andrew Wyckoff, Director of the OECD’s Directorate for Science, Technology and Innovation (STI), related but not identical. Innovation flows from invention. It is a core competency, sought by both companies AND governments alike. And countries that harness innovation and entrepreneurship as engines for new sources of growth will be more likely to pull out and stay out of recession.

Consider the microprocessor. Someone invented the microprocessor. But by itself, the microprocessor was nothing more than another piece on the circuit board. It’s what was done with that piece — the hundreds of thousands of products, processes and services that evolved from the invention of the microprocessor — that required innovation. The same can be said for the Internet, as we understand it today. Or Apple’s ubiquitous iPhone, where Apple took a stagnant product category - the mobile phone - and completely rethought how it could be used. They took an existing product category and existing technologies, but still somehow reshaped modern society. Apple’s innovations in design and user interface sparked a tech revolution.

In general, most national and sub-national governments have developed some policy frameworks to encourage innovation. Why not? Innovation, after all, is said to drive growth. No less an authority than the great Joseph Schumpeter affirmed as much. As a result, there has been a remarkable convergence of opinion on the importance of research and development (R&D), though there is still considerable diversity over the best policies for encouraging it. And it is also the case that innovation per se is not a magic pill that will solve many of the current afflictions that ail our modern 21st century economy - growing inequality to cite one example, or the “Uberization” of our economy, as another troubling example which Wyckoff cites in the interview below. As the interview makes clear, Wyckoff is a champion of innovation, but not a mindless cheerleader.

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