Innovation: What Is It and What It’s Not

Have you ever heard a word so many times that it starts to lose all meaning? This often happens in the business world. And this may happen to the word “innovation,” which has increasingly been thrown around with reckless abandon in workplaces and boardrooms all over the world.

This word holds huge importance – not just for businesses – but for the future growth and prosperity of the country. Those who understand the true meaning of innovation and understand its practical applications will usher us out of the economic recession. While those who think it simply means “something new” or confuse it with “entrepreneurship” may see their business plans end up in the garbage heap of “good ideas without a market.”

Chicago Innovation Awards Co-Founder, Tom Kuczmarski told that the key to measuring if something qualifies as an innovation is answering these three questions:

• Does the product or service meet an unmet need in the marketplace?

• Does the product or service bring new value to the end-user?

• Is the product or service unique relative to existing offerings?

Of course, innovations are not just found in the physical form of new products or services. They can be internal processes, business models, consumer experiences, and more.

For example the bus tracker application. Now, let’s say you have the Bus Tracker in your pocket, a mobile app that tells you exactly when the next bus is going to arrive at your stop. Before the Bus Tracker, commuters would stand at the bus stop, huddled in their winter coats, and periodically lean into the street to see if a bus was coming. Given that some buses arrive, on average, every 20 minutes, you would be leaning into the street quite a bit.

The bus tracker doesn’t make buses arrive faster or more frequently, but it gives the commuter control over knowing when the bus will arrive. That means no more having to wait outside! Since its inception in 2006, the Bus Tracker has been downloaded hundreds of thousands of times. This brings us to one of the most important features of innovation: It brings real market impact, often translating into new revenues, new customers and increased market share.

However, innovation and entrepreneurship are two very different things. And yet, people often lump the two together.

Entrepreneurship involves creating a new business, whereas innovation may have nothing to do with the creation of a new business. In fact, innovation happens at existing businesses all the time, including large ones. Chicago has a proud history of big company innovation. Motorola developed the cell phone. USG, with annual revenues of $3 billion, continues to develop wallboard that is stronger and lighter than competitors’ products. Middleby Marshall, with nearly $1 billion in 2013 sales, brought us the world’s fastest pizza oven.

The reason this matters is because most of us won’t be starting new businesses this year, which is the true definition of entrepreneurship. Most of us will continue working at our current organizations. But what’s important is knowing that innovation applies to us all. So the next time you’re in a meeting, discussing a new venture at your organization, think about the three questions above. If the answers are “Yes, yes and yes,” you may be on to something big.