How to define Innovation?

1 Aug 2010 Sandeep Mehta

We have discussed the problem surrounding definition of what constitutes innovation and what is invention or just engineering. The issue is important because funding and management of innovation is different from other R&D. Here is a paper in the Journal R&D Management that gives a background on what is innovation:

‘Innovation’ was defined by Schumpeter (1934) as the commercialisation of combinations of the following:
(i) new materials and components,
(ii) the introduction of new processes,
(iii) the opening of new markets,
(iv) the introduction of new organisational forms.
According to this definition, innovations are the composite of two worlds – namely, the technical world and the business world. When only a change in technology is involved, Schumpeter
terms this invention; when the business world is involved, it becomes an innovation (Janszen,

Another definition of Innovation is:

In this paper, innovation is defined as ‘the successful exploitation of new ideas incorporating new technologies, design and best practice’ (BIS, 2008).

This is what Peter Drucker had to say about it:

It is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth – The Discipline of Innovation (HBR 1985).

Here is another definition – radical or disruptive innovation as opposed to incremental innovation:

Incremental innovation reinforces the capabilities of established organisations, while radical innovation forces them to ask a new set of questions, to draw on new technical and commercial skills and to use new problem-solving approaches (Tushman and Anderson, 1986; Burns and Stalker, 1966). Incremental and radical innovations require different organisational capabilities and may require different management processes.

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