In the past four years, we were attempting to understand how innovation is actually created and analyzed how we were building startups that became ten years later billion-dollar companies. We were also exploring how other startups that became billion-dollar companies created their ideas and successes. We found striking insights about the difference in innovations power between startups and established billion-dollar enterprises – who were startups themselves just a few decades ago. Also, we explored the difference between invention and innovation.
From invention to innovation
The automobile evolved from INVENTION to INNOVATION. The disk brakes moved from INVENTION to IMPROVEMENT. The first electric BMW car made it from INVENTION to an EXPERIMENT, while Tesla made it to INNOVATION without even having it invented. A self-driving Mercedes S-Class made a 1,000-mile journey from Munich to Copenhagen and back in 1992! It was already using computer vision and computers to react in real-time. The autonomous car achieved speeds exceeding 110 miles per hour (175 km/h) on the German Autobahn with nearly no human intervention for 95% of the distance. It drove in traffic, executing maneuvers to pass other cars. Also, here, all the necessary inventions have not been taken to innovation but ended up in drawers. Analyzing the reasons is equally complex and interesting but exceeds the purpose of this post. We will do this in another post.
Invention vs. Innovation
In most enterprises, we may find hundreds if not thousands of geniuses with fabulous ideas but no way to go. There is this massive difference between INVENTION and INNOVATION. INVENTION is the act of having and documenting an idea, maybe building a prototype, and perhaps even being granted one or more patents. Unfortunately, the invention is of no value at all. Bringing such an invention to market, scale the business or business unit and make it a global success is when we talk about INNOVATIONS. The full cycle of invention, prototyping, market validation, product-market-fit, funding, marketing, testing, producing, launching, more funding, branding, selling, customer engagement, servicing, business model optimization, more funding, going international all the way up to being a global player in that segment is a successful innovation. Innovation is neither a product nor service nor the marketing or sales effort to make it big – INNOVATION is the result of a series of activities, engagements, teams, and market conditions that lead to groundbreaking new solutions for a larger group of users.
The value of innovation grows with its distribution!
The good news, pretty much every large enterprise on earth is struggling with being innovative. Even enterprises that came just two decades ago with highly innovative solutions to market, now struggling to be innovative. The bad news, more innovative startups, than ever before in history challenge any size enterprise. The question arises: Is the lifecycle of the innovation, the future lifecycle of a company in general?
The five biggest mistakes
- The company never developed a comprehensive plan to identify the brilliant ideas, which their employees already created, usually based on their experience with the problem. Inventors are mostly not communicative managers but more introverted engineers!
- Seeing the brain spark of an invention already as innovation and wonder why it is not successful in this highly competitive global economy.
- Completely ignoring the fact that innovative businesses require a lot of funding to become that innovative business everybody is dreaming about.
- Running innovation alongside and hoping for magical growth and market disruption.
- Management teams never asked themselves where these ideas are actually coming from and how they can be harnessed.
What to do
- A great starting point is to see the act of invention as an ignition point that triggers a comprehensive process of innovation.
- It is far better to develop trust in the “Innovation Potential” of the company’s employees than looking into startups.
- Rationalizing that any major innovation is also a significant investment, and there is no difference between a startup and a global enterprise.
- Creating a serious effort to include customers into the innovation process and stop looking at what the competition is doing.
- Stop hoping that employees think like startup entrepreneurs. If they would, they would be long gone, and if they stayed, they much better contribute to an enterprise-level innovation process.
We will share more findings and more insights as we progress.