It was about two months ago, while sitting at my desk at an accounting firm calculating the net asset value of a clients portfolio when I had the realization that that was not what I wanted to be doing for the rest of my life. Confined to a small desk working in a mundane work environment that brought about no creative stimulation. So, in turn I made the conscious decision to drop accounting as my second major and ultimately dual major in Finance and Entrepreneurship, with the end goal of bringing about an innovation of my own. I chose Entrepreneurship because I believe it will serve as a great creative outlet to balance out the more dry topics and work that accompany the field of Finance.
Interestingly enough this Innovation course is the first Entrepreneurship class that I have ever taken and I found it to be quite fitting that one of the first topics we discussed was on how the human mind works to prevent and also enable creativity. The human brain works as a 4 step process by first filtering everything through our senses, next processing the information using categorization, followed by storing select attributes of the processed information, and finally acting upon the information. During this process the mind makes perceptual shortcuts based off of past experiences resulting in the human ability to make quick judgments and predictions. However, the downfall of these shortcuts is that they limit creativity as the mind gets used to routine ways of thinking.
However, not all is lost, creativity can be brought about by seeking out novel experiences that excite the brain. Berns’ (2008) explains how the human mind is naturally lazy and does not like to waste energy. He goes on to explain, “The best way to provoke the imagination is to seek out environments you have no experience with. They may have nothing to do with your area of expertise.” Coincidentally, that is exactly what I did when I switched majors from Accounting to Entrepreneurship.
So a person may ask, why creativity is important? My answer would be, because it makes things interesting and most importantly brings about innovation and invention. Commonly viewed to be one in the same innovation and invention stand as two very distinct entities. Invention has a narrow focus and can be defined as the finding or creating of a new pattern, composite of material, device, or process. In comparison, innovation is much broader and can be defined in two ways:
1) Market Application of a new invention:
2) Market application of existing inventions through the creation of new processes
In an article by Tom Gratsky (2012) entitled “The Difference Between ‘Invention’ and ‘Innovation’ the relationship between invention and innovation is expressed in an interesting way: “If invention is a pebble tossed in the pond, innovation is the rippling effect that pebble causes.” This makes for very good imagery, but to set the record straight innovation does not require invention. However, when used in accordance with one another invention can make a great contribution to innovation.
At the moment, one of my main goals before I graduate is to be able to take the different aspects of Finance and Entrepreneurship that I like and mash them into one great innovative idea. After reading Greg Stevens and James Burley’s (n.d) article entitled “3000 raw ideas= 1 commercial success!” I was informed of the “significant odds would-be innovators currently face while attempting to produce one substantially new commercially successful industrial product”. The odds stated as the title of the article (3000:1) although seemingly daunting can in fact be reduced through business model innovation and the integration of different innovations.
The Aravind Eye Care System (AECS) is a great example of an organization that has overcome the odds by incorporating a number of different innovations. These innovations include the utilization of a hybrid business model (business that has both for profit and non-profit divisions) making the business completely self-sustainable, implementing an assembly line model for cataract surgeries resulting in a higher volume of patients helped, and price differentiation in which customers regardless of their economic status have to option of paying or not paying for treatment received. The more general type of innovation that AECS has brought about over the course of 37 years is disruptive innovation (an innovation that creates a new market and goes on to disrupt an existing market). Disruption serves as a great source for competitive advantage.
Before innovation can be accomplished, its progression throughout history has to be analyzed in order to understand the type of innovation that the market place calls for today . In Kurt Buyse (2012) articled entitled “5 Generations of Innovation Models” the author provides readers with “British sociologist Roy Rothwell’s historic overview of industrial innovation management in the Western world from the 1950’s onwards”.
The five generations of innovation management are provided below:
1g: Tech push (50-60’s)
2g: Market/Demand Pull (60’s-70’s)
3g: Coupling of R&D and marketing (70’-80’s)
4g: Integrated business processes (80’s-90’s)
5g: Systems integration or Networking (90’s and onward)
Of all these generations of innovation I believe the most important ones to expand on are tech push (1G) and market pull (2G). The technology push brought about radical change and put a great emphasis on pushing new inventions through research and development. The problem that arose from this was that these inventions were created without taking consumer needs into consideration and in turn did not conform to the market. As a result the process of market pull was introduced, bringing about change in a more incremental fashion. Market pull unlike market push put an emphasis on learning and understanding the needs of consumers in order to deliver a product or service that functioned as a solution to those needs.
Four generations later, now the time has come for a new era of innovation to make an impact on the lives of both businesses and consumers. This new generation of innovation (G6) is referred to as design driven innovation. In an article by Robert Verganti,(2009) entitled “Design Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean” design innovation is defined as “a radical innovation of meaning”. He explains how consumers give meaning to the products and services they use and provides examples of businesses today that have changed their main focus from simple product development based on needs to the development of new meanings. These newfound meanings can bring about the creation of whole markets that produce sustainable, profit generating products and services.
As I look to bring about innovation of my own by combining different aspects of Finance and Entrepreneurship it is beneficial that I know the many different underlying aspects behind innovation. Starting with its difference from invention, the importance of seeking novelty to promote creativity, how to reduce the 3000:1 industry odds aspiring innovators face, and its progression over a span 5 generations that has resulted in the new concept of innovation through creating meaning.
Berns, Gregory. (2008), Neuroscience Sheds New Light on Creativity. http://www.fastcompany.com/1007044/neuroscience-sheds-new-light-creativity
Buyse, Kurt. (2012). Five Generations of Innovation Models. http://strategicongr.wordpress.com/2012/09/29/rothwells-generations-innovation-models/
Grasty, Tom. (2012). Retrieved from http://www.pbs.org/idealab/2012/03/the-difference-between-invention-and-innovation086/
Stevens, Greg A. Burley, James. (n.d). 3,000 raw ideas = 1 commercial success!. Research Technology Management. May/June97, Vol. 40 Issue 3, p16. 12p. 7 Charts, 2 Graphs.
Verganti, Roberto. (2009) “Design Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean. http://www.designdriveninnovation.com/book.html