What is Innovation?

By Andrew Hargadon | July 30, 2019

I’ve never met anyone who was against innovation. Why is that?

My hunch is because we are too lax with our words. Innovation, creativity, invention, and entrepreneurship are one-sided terms—they refer, typically, only to those successful outcomes we read about, enjoy in our daily lives, or look to for solving major problems like healthcare or global warming. Before talking any more about innovation and entrepreneurship, then, let’s make sure we’re talking about the right thing.

In 1952, Mississippi lawmakers were debating whether to legalize the sale of liquor in the state. Despite being illegal, the state collected a “black market” tax that brought in millions of dollars. Noah “Soggy” Sweat a first term state representative and was asked to take a stand on the issue. It was then that he delivered his famous whiskey speech. Standing up at a banquet at the old King Edward Hotel, with the senators, their wives, members of the House and others attending, he took his stand:

My friends,

I had not intended to discuss this controversial subject at this particular time. However, I want you to know that I do not shun controversy. On the contrary, I will take a stand on any issue at any time, regardless of how fraught with controversy it might be. You have asked me how I feel about whiskey. All right, here is how I feel about whiskey.

If when you say whiskey you mean the devil’s brew, the poison scourge, the bloody monster, that defiles innocence, dethrones reason,    destroys the home, creates misery and poverty, yea, literally takes the bread from the mouths of little children; if you mean the evil drink that topples the Christian man and woman from the pinnacle of righteous, gracious living into the bottomless pit of degradation, and despair,   and shame and helplessness, and hopelessness, then certainly I am against it.


If when you say whiskey you mean the oil of conversation, the philosophic wine, the ale that is consumed when good fellows get together, that puts a song in their hearts and laughter on their lips, and the warm glow of contentment in their eyes; if you mean Christmas cheer; if you mean the stimulating drink that puts the spring in the old gentleman’s step on a frosty, crispy morning; if you mean the drink which enables a man to magnify his joy, and his happiness, and to forget, if only for a little while, life’s great tragedies, and heartaches, and sorrows; if you mean that drink, the sale of which pours into our treasuries untold millions of dollars, which are used to provide tender care for our little crippled children, our blind, our deaf, our dumb, our pitiful aged and infirm; to build highways and hospitals and schools, then certainly I am for it.?

This is my stand. I will not retreat from it. I will not compromise.

In my paler prose, the same is true for innovation.

If when you say innovation (or creativity, or entrepreneurship) you mean the new ideas and technologies that bring light to darkened homes; that saves the lives of sick children, frail elderly, and wounded soldiers; that gives the power of computing to our scientists, doctors, and engineers; that delivers the extravagances of yesterday’s richest to every family today; and that creates new jobs, increases our wealth, and resolves such looming threats as climate change, mental illness, and poverty—then I am all for it.


If when you say innovation you mean an uncertain undertaking, one that is fraught with risk; that takes resources away from our current commitments and activities; that forces people to learn wholly new skills and perspectives or be put out onto the street; that taxes all of us to support the risks and enrich a few; that undermines the authority and social norms of our generation and tears at the very fabric of society—then I am against it. At least, I am against doing it myself.

Like the Mississippi State Legislature in the 1950s, corporate leaders, managers, and even policy makers today too easily view innovation as a one-sided coin—though in this case an unmitigated good. As a result, they dependably place innovation as one of their highest priorities but, as dependably, they resist the necessary commitments to make it happen, and often provide the wrong support for the innovators and entrepreneurs they hope to encourage.

So, really, what is innovation?

For starters, it’s not about the mousetrap. In other words, innovation is not about the idea. Ideas are cheap and the sooner we acknowledge this, the sooner we can get on to the real work of innovation.

Certainly creativity, and its kin invention and discovery, plays a role in innovation. The ability to come up with a novel, valuable, and non-obvious idea is often necessary, but it’s never sufficient to guarantee success. And the more time and energy we spend pursuing the next great idea, the more we neglect the challenges of turning an idea into an innovation.

“Few ideas are in themselves practical.” said John Arnold, the Stanford engineering professor who in 1958 launched their now famous design program, “It is for want of imagination in applying them that they fail. The creative process does not end with an idea–it only starts with an idea.”

Google was not the first search engine; Amazon’s Kindle followed a decade of electronic book readers; Apple’s iPod was the thirteenth MP3 player on the market; Penicillin was discovered by a French medical student 30 years before Alexander Fleming (re)discovered it. Even the light bulb was a 40 year-old idea when Edison successfully commercialized it. As technologies and markets converge, ideas about what’s possible and valuable appear to many people at the same time.

Innovation is about the difference between an idea that quietly dies and the same idea, in another’s hands, that changes companies and industries. This is, in many ways, the difference that makes a difference. In making the entrepreneurial leap, nothing is more important to understand.

Who will be successful and who a footnote depends on who builds the better network around that same idea. Who builds, first, the networks that surround an idea–a research finding or market opportunity–with the right team and support to grow it into a viable venture and, second, the network that will transform that venture into a business that delivers growth and profit.

In short, innovation is about connecting, not inventing. No idea will make a difference without building around it the networks that will support it as it grows, and the network partners with which it will ultimately flourish. Here Thomas Edison’s real genius can be seen.

By the time Edison introduced his light bulb, there were already dozens of manufacturers selling electric lighting. These were isolated systems that included generators, wiring, and bulbs, and were is use in ships, hotels, office buildings, and public parks (New York’s Central Park and Brooklyn Bridge were already lit in this way). But the limitations of these existing systems were clear—they required skilled engineers to maintain the steam engine and generators; they worked only when all the lights were on; and the market was crowded—and self-limited—with independent and competing systems.

Edison saw the potential of the idea of electric lights and also the limitations of the current systems on the market. He began by trying to improve on just the light bulb —experimenting with ways to make it work better with these existing systems. But soon after starting, he recognized that the entire system was the problem, and envisioned (literally and strategically) a new network that put the technical complexity of electric lighting in a central location and simply sold power to those who wanted lighting, but not the cost and effort of maintaining their own systems.

To Edison, the network was the innovation.

His success in creating the first and prototypical electric utility corporation reflected his ability to first see and then create a new network reconnecting the resources— the people, the ideas, and the technical artifacts—of the existing electric lighting industry as well as others from the venture finance community (including J.P. Morgan) and from the gas lighting and telegraph industries.

As I’ll talk about later (and have before), this networked innovation process underlies the success of Ford’s Model T, Microsoft’s MS-DOS and Windows, Apple’s iPhone and countless smaller but no less innovative efforts.

Shifting the central activity of innovation from ‘having an idea’ to seeing and building the networks shifts the attention from thinking to the actions required to build the network that will realize the idea.

In other works, innovation has two sides: creativity and entrepreneurship. The creativity lies in conceiving of new possibilities, while entrepreneurship describes turning those new possibilities into realities. The economist Joseph Schumpeter recognized this while writing in 1934,

To undertake such new things is difficult and constitutes a distinct economic function, first, because they lie outside the routine tasks which everybody understands and secondly, because the environment resists in many ways that vary according to social conditions from simple refusal either to finance or to buy a new thing, to physical attack on the man who tries to produce it. To act with confidence beyond the range of familiar beacons and to overcome that resistance requires aptitudes that are present in only a small fraction of the population and that define the entrepreneurial type as well as the entrepreneurial function. This function does not essentially consist in either inventing anything or otherwise creating the conditions which the enterprise exploits. It consists in getting things done.

There is no value, and there can be considerable harm, in talking about innovation without talking about both creativity (having a new idea) and entrepreneurship (getting it done). Further, it’s not the presence of these two activities that make innovation successful, but rather the relationship between them.