Defining Innovation in the Information Age

Innovation is one of those terms that people talk about all the time, but few really understand its meaning and implications. This term has been present for a long time (in literature you can trace it back to at least the 16th century) and its meaning and components have evolved greatly in the last years. So let’s examine the meaning of this term, how it has changed and where does it apply.

If you think Innovation is a term related with business and management, you’re absolutely right. Innovation is a characteristic that organizations can possess. Sometimes I hear people saying they are Innovative, something that strictly speaking is nonsense. People on the other hand are creative. Creative people make up Innovative organizations. Some will argue this previous statement, however this is a widely accepted definition and is the one I’ll be using for this and other articles on this Blog.

Some 15 or 20 years ago, Innovation was related to big companies who invested great deals of money in Research and Development (R&D). Also, this term to some extent was related to the introduction of technical elements, such as a new machine or new software. This vision is not wrong, however today it can be incomplete. To start, this vision excluded small companies who didn’t had enough money to invest in R&D. So to sum up, Innovation was a synonym of money, something that today is not necessarily true. As I’ve said this vision is correct, but new elements have arisen making the definition more complex.

Internet has changed the way we live and work in the last couple of decades. One of the aspects Internet has brought is that information can easily be shared all through the world. For instance, Wikipedia is the largest knowledge project man has ever accomplished. It was created (and still is) by “normal” people and anybody in the world with an Internet connection can access it. This type of changes has also affected organizations, as information that used to be private, nowadays is being shared in the Internet for free or for a low fee. With this reality, companies can easily access new information and transform their business bases on knowledge from abroad.

Taking into account this new reality, Innovation had to accept new elements. R&D continued to be important; however these new elements had to be considered in its definition. So now a company can innovate, not based on its own R&D, but on experiences carried out by others. It’s very important to clarify that companies should base their changes on information that’s freely available (or paid for), but never stealing private information, such as patents.

Another big change is that innovation used to be related with “big changes”. Today, small and simple changes (such as moving from a desktop accounting system to a cloud accounting software package) can be considered innovation. For instance, if a company decides to change the color and shape of the packaged of one its product, this has the potential to be considered an innovation. In order to be considered as an innovation, the following must be met:

An Innovation is the introduction of something (a process, an idea, a product, etc.) in an organization, and it must accomplish the following:

1. In a predetermined amount of time, the introduction has to bring an economic gain (economic utilities).

2. The element has to be new for the organization.

This definition has several implications, but for the time being I will only analyze one. The other implications will be analyzed on a future article.

Under the previous definition, Innovation doesn’t require the creation or invention of something new. For example, if an organization that was been doing for years its accounting by hand decides to acquire a computer and a spreadsheet package like Excel, this has the potential of becoming an Innovation. For most organizations this is old news, something that was introduced decades ago. But since this is new for this particular organization, if it meets the other requirements it can be considered an innovation.

Business Innovation is a very wide and interesting topic. I’ll be writing more on this, trying to show new aspects. For the moment, I invite you to share your thoughts at the end of this article. Don’t be shy, they will be very valuable and add value to this conversation.

Image taken from Flickr.com

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