Where do valuable innovations come from?

Tim does a really nice talk on the invention of the computer and he has posted the slides on this blog. While he uses the story to discuss the difference between innovation and invention, I think there are a lot of other really interesting lessons here. Firstly, I’d like to add to Tim’s story by claiming that Hindus invented the technology that allows the modern computer to exist and then I’d like to make the observation that the fundamental difference between innovation and invention is connections.

So, what was the amazing technology developed in India nearly 2000 years ago? Quite simply, it was the number 0. Before this invention, there wasn’t a numerical way of describing nothing. It seems such a trivial idea, but it the basis for the digital economy. The first record of a 0 in use can be found in a temple in India where the inscription dates to 876 AD (the inscription below is the number 50).

The number "50"

The idea of 0 is an invention but it becomes an economically valuable invention (an innovation!) when it gets connected to other things. When we combine 0 with other numbers then we can start to develop some pretty powerful mathematics, which become more valuable when we connect them to systems of accounting and government. It isn’t surprising that the Moghuls were masters of empire building through careful accounting and measurement of every activity. Fibonacci brought the decimal number system to Italy at the beginning of the Renaissance , which set the Medici family on the path to greatness through the development of modern banking. Imagine trying to perform complex financial calculations with Roman numerals!

Finally, when we connect the humble 0 to 1 to develop binary code and then connect this to other inventions such as transistors and silicon chips, we get the computers and their applications that would have been unimaginable for the Indian mathematicians who invented the 0 in the first place.

The point is that valuable innovations come about through connecting things together so that there are new applications for things that already exist. It’s a bit like the conservation of matter principle. Matter can’t be created or destroyed but we can get new combinations of matter that are innovations.

I think what this means for firms is that they can’t think of managing innovation without thinking about managing connections. They are two sides of the same coin. Tim and I get to see many firms who have innovation management processes but few consciously think about the role of connections. One exception though is one of our research partners, Rio Tinto. They don’t describe themselves as being particularly innovative, although we can see many incremental innovations that have resulted from their community of practice program that tries to bring people together to match solutions to problems.

If we are getting serious about managing innovation then we need to start to understand the connections that are behind them. One way of doing this is through network analysis and we are currently looking at how network structures in firms influence innovation performance (there is a chapter by us on this subject in a recent book published by the Australian Business Foundation).

Please note: I reserve the right to delete comments that are offensive or off-topic.

5 thoughts on “Where do valuable innovations come from?

  1. You’re right – I do like this post! I think that conceptualising connections as the difference between an invention & an innovation is a great idea.

  2. I agree that innovation is a multi-player game and most equate innovation only with scientific publications or patents on cutting edge technology. The more enlighted view recognises that knowledge and relationships that firms have are increasingly significant in how they can deliver value to customers and make money from their businesses.

    So, bringing people together to solving problems is key. In its Venturous Australia report, the Review of the National Innovation System emphasised the point that “the miraculous alchemy of innovation occurs close to the customer”.

    It is important not to ignore the contibutions of a range of players, and when you talk about bringing people together we should not overlook customers because they are close to being the top source of knowledge for innovation.

  3. That’s a really good point, Phillip. Customers are often in the best position to make the right connections to find new uses and adaptations for processes and technologies to facilitate the innovation process. Eric von Hippel has been making this case for decades of course – though he probably overstates the importance of customer-driven innovation these days. I saw a presentation by him at Copenhagen Business School where he seemed a bit disappointed to find evidence that not all innovation was customer driven!
    However, I am reminded of a very entertaining rural radio story about an old saddle maker who was told to put his wares for sale on the internet. The venture was very successful but the poor old guy really didn’t want to know why his best-selling items were stock-whips and the buyers were from places like London and New York, which don’t have a lot of cattle.

  4. Nice post John! I think the idea of creating more efficient internal markets to match solutions to problems within the firm is really valuable. This is one of the areas where large firms can make significant productivity gains over the next 5-10 years. Rio’s online collaborative forum is itself a great example of how existing technology implemented within a novel context can generate these sort productivity gains.

    I suppose the real problem comes when you want to measure the value created by these sorts of ‘connection’ innovations! As you say, network analysis can be valuable here…

Comments are closed.