A Brief History of Innovation
The word innovation originally comes from the Latin verb “Innovate”; which means to renew or to change. With the rise of the Industrial Revolution, the idea of innovation was encouraged and welcomed by governments. At the time it was named “invention” and was associated with science and the manufacturing of machines and industrial products.
Joseph Schumpeter, an influential Austrian economist who lived during the first half of the 20th century, and was considered the academic father of entrepreneurship and innovation, made a critical distinction that is still used to this day. He said that invention is the creation of something new (a product for example); while innovation is the adoption of that new product and bringing it to the market. Less than a century later, Steve Jobs put it in a similar way, saying “Innovation is creativity that ship.” Meaning, it is only when you deliver that you are called innovative. Some put it in a simple equation that makes it easy for the mind to distinguish.
Innovation = Creativity + Implementation
Two centuries before Schumpeter, Adam Smith, the father of economics, argued that given constant factors and no political interference, the economy of a country would grow continuously and steadily through the accumulation of capital and expansion of market, eventually leading to an increase in national income.
This theory is not incorrect, but it ultimately leads to a saturated economy - “an equilibrium” - causing a loss of profit on a micro level, and a general decline in said economy. Schumpeter, however, believed that development occurs when there is a high degree of risk and uncertainty in an economic environment. Innovations, he said, increase the economic activity by activating other innovators – ‘entrepreneurs’, thus opening new opportunities for profit, job opportunities and a growth in the economy, which finally results in a rise in people’s quality of life. An entrepreneur, as described by Schumpeter, is someone who makes new combinations of resources, and these combinations are the innovations that lead to a change in the market. Later in his career, however, he came up with a new theory saying that innovation mainly comes from large enterprises. He argued that having the capacity and necessary resources to invest in the R&D, implement, distribute, and advertise new products and services; they can make sure that such innovations are adopted by customers.
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