When we spoke of innovation while I was in the Cameron School of Businesses’s entrepreneurship program, I always felt like something was missing. Often times the business ideas that students came up with were still the same sports bar, bed and breakfast, and restaurant from years past. Now, it really could be that America needs another sports bar or that this next student is going to rejuvinate the bed and breakfast market (both unlikely). But it could also be that some students are a bit misguided as to what exactly constitutes innovation here as none of those business ideas are really innovative (don’t even start with how components of them could be).
I think part of the reason for the misconstrued direction of innovation is because often times people don’t have a solid criteria for what constitutes innovation. If I made a wireless Christmas tree, that’s not innovative (though wireless Christmas lights might be…), it’s just an incremental change. It’s just making a better widget.
To me, the best criteria for innovation is a product’s potential not just for success, but to move beyond being a market grower, and become a market creator. If your product causes new businesses that otherwise couldn’t have existed before to now enter into the market, that is an innovative product.
eBay, for example, was an innovative idea. Their website wasn’t just a market grower, but a market creator. Their site allows millions of people to suddenly become a business and doesn’t just give them the ability to sell things online, but an audience to sell them to. eBay also caused the blossoming of books upon books about how to make money on eBay, and even consultants or lessons on the matter- jobs that otherwise wouldn’t have existed.
The iPhone’s AppStore is another good example of an innovative product (or in this case platform) that didn’t just grow the cell phone market, but created an entirely new market. In the AppStore’s case, it created a number of new software businesses, and as developers continue to harness and push the potential of the innovative device, I am sure we will begin to see even more businesses grow out of this new market.
None of this is to say that building a business off of incremental changes won’t lead to having a successful business. On the contrary, comparing the potential risk of innovation based on my criteria to approaching product development through incremental change, the ROI based on the risk is in favor of incremental change (according to Winning At New Products: Stage-Gate). Let’s just be sure not to call it innovation.
Fundamentally what it comes down to is what kind of change do you want to be a part of, and what kind of change do we want to encourage? Are you interested in making a better widget? Or are you interested in starting a company that will create a new foundation for other companies to build upon- because that’s innovation.
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Tags: business ideas, entrepreneurship program, how to make money on ebay, innovation, iphone, jobs, online
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