What is Innovation?

I gave a presentation at ASAE’s Great Ideas conference this past Saturday on innovation, technology and risk for associations. This post is the first of several I’m going to write this week on elements of the presentation. A good question to start with is: what is innovation?

Innovation often gets mythologized in the business press to the point that mere mortals feel that they cannot hope to do something innovative in their work. However, to innovate merely means to do something as you haven’t done it before. Not much more to it than that.

Peter Drucker, in his seminal book, Innovation and Entrepreneurship, defines two kinds of innovation: supply-side innovation and demand-side innovation.

Supply-side innovation is when you improve the use of your resources in support of existing value delivered to your customers. This is often in the form of greater efficiency but could also mean achieving the same end via means that result in improved employee morale, for example.

Demand-side innovation refers to changes that create greater value for your customers. This could be improving an existing product or service or creating entirely new offerings. The impact of the innovation is on the value received/perceived by the ultimate customer.

Looking at it in those terms, it is easy to realize that you probably innovate something every week if not every day. Innovation is merely the creation of new value.

Update: Here are the slides from the presentation:

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Comments

Tony Rossell
David — I enjoyed your presentation. I think we all found it very helpful to step back and think strategically through your presentation. Thanks for doing it. Tony

December 11th, 2007 at 5:20 pm
David Gammel
Thanks, Tony!

December 11th, 2007 at 5:57 pm