Generic evolutionary processes have three parts – generation of variety, selection, and replication. This maps on to the three steps in the innovation value chain. The Innovation Value Chain also has three steps – idea generation, idea selection and execution, and idea diffusion. The connections between the two models should be fairly apparent!

Innovation as evolution has some interesting implications, including:

• The ideas that spread are often not optimal solutions to problems, they simply happen to be the best solutions currently available. In other words, our innovations just have to be good enough, not perfect.
• Consequently, the idea that we’re not looking for a perfect execution of our new ideas is a strong argument in favour of taking a build, launch, tweak approach to getting our new ideas out there. We’re most likely to get to the best solutions to the problems we are interested in through an iterative process, rather than through pure development.
• This leads to the last point, which is that the evolution of our great ideas is built on collaborative networks. The sooner we can enlist the help of our network (customers, partners, suppliers, etc.), the more likely we are to come up with the best version of our great new idea.

The economy is an evolving system. Thinking of it in this way gives us some important insights into how to best manage innovation.