Tag: joseph schumpeter

 Who Owns Idea Execution?

Scott Belsky tries to unravel the mechanics of creativity in his book Making Ideas Happen.  He includes this equation:

Making Ideas Happen = (The Idea) + Organization and Exuction + Forces of Community + Leadership Capability.

He goes on to say “Ideas are worthless if you can’t make them happen.”

Now consider this from Daniel Isenberg in Worthless, Impossible and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value:

Most of us would agree that innovation has something to do with the tangible manifestation of novel ideas.  But entrepreneurship is about the creation of tangible value.  Ideas help, but the sine qua nons for entrepreneurs – hard work, ambition, resourcefulness, unconventional thinking, salesmanship, and leadership – will usually trump brilliant ideas.

When he says “innovation” he clearly doesn’t mean the same thing that I mean when I say it:

Innovation is executing new ideas to create value.

Here is one way to picture it:

Thinking of it visually emphasises that all three parts of the definition.  Everyone gets the “new idea” part of it.  But it’s not enough to have a great idea, you also have to execute it.  And even after you’ve done that, you’re not finished.  It’s not innovation if you’re not creating value for people.

So the people talking about creativity, entrepreneurship and innovation all make a distinction between having ideas, and creating value with those ideas.  And none of us want anything to do with just the “having ideas” part of the whole thing.

Does that mean that we’re talking about the same thing?

Innovation, Entrepreneurs and Entrepreneurship

Strangely, this confusion didn’t exist 100 years ago.  When Joseph Schumpeter wrote about innovation, he was talking about the process of creating value from ideas.  My definition of innovation basically builds on his.  The “entrepreneur” was the person that innovated.  And “entrepreneurship” didn’t exist.

Check out these stats from Google NGram tracking the use of the three words in books published between 1900 and 2000:

Innovation is the most commonly used of the three words, and “entrepreneurship” as a concept was basically born in the 1950s.  Why?  Because the nature of innovation changed.

When Schumpeter was writing, innovation basically happened in startups.  So entrepreneurs were people that created innovation by starting new firms.  But the first half of the 20th century saw the rise of corporate innovation – which meant that we had to be able to distinguish between innovation taking place in large organisations and in startups.

That’s when we started to distinguish between innovation (which usually meant ideas executed in established firms), and entrepreneurship (ideas executed in new firms).

So Where to Next?

To answer my earlier question, I don’t think that we’re quite talking about the same thing when we talk about creativity, entrepreneurship and innovation.

In his forthcoming book The Myths of Creativity, David Burkus says:

Although there is still no precise and agreed-on definition of creativity despite nearly one hundred years of research on the subject, there appears to be at least a small consensus.  Creativity is seen by most experts in the field as the process of developing ideas that are both novel and useful.

Again, there is an emphasis on use (value!) – but the main concern is the processes through which we generate and execute these ideas.

This is obviously an issue of great importance in innovation, because better ideas lead to better outcomes.  Provided, of course, that we execute them!

Innovation, then, is this process of idea management.  Entrepreneurs are still the people that innovate, and entrepreneurship is doing this through the vehicle of a new venture.

If we accept all of this, there are a few important implications:

• Everyone focuses on idea execution for a reason. Why do all three fields want to own idea execution?  Because trying to improve your performance by simply generating more ideas is one of the biggest mistakes that both people and organisations regularly make.  All of us focus on execution because this is where the gap is.  The great news here is that it means you don’t have to be a genius to be a creative entrepreneur.  You can do this by being really good at executing.
• We need to put entrepreneurs back into innovation.  It’s too easy to forget that innovation is driven by people.  We need to put more focus on entrepreneurs – the people that are creating value out of ideas – and less on tools.  It’s people that create value.  If we’re in a big organisation, we need to figure out how to liberate and support our entrepreneurs.  If we’re in a startup, we need to figure out how to build a business model that creates value out of our great ideas.  Both approaches are people-based.
• We need to be clear on our definitions.  Creativity, entrepreneurs and innovation are all important, and they all intersect.  People that study or practice any of these fields should be working together, rather than creating artificial distinctions between them.  My definitions might not be the best, but I do think that they have some historical weight to them, as well as reflecting fairly common usage.  But I’m definitely willing to have a discussion about what’s what!

This important because while the three areas have slightly different meanings, they share the same goal – to create value for people.  This is what leads to longer lifespans, higher standards of living, and more interesting and fulfilling work.