Why Innovation Is Tough to Define -- and Even Tougher to Cultivate
Innovation: It's something everyone
is in favor of, everyone likes the idea of, yet no one really understands it,
according to Wharton legal studies and business ethics professor Kevin Werbach. Werbach moderated a panel on the topic at the recent Wharton
Economic Summit 2013 held in New York City, during which
he challenged the participants to define innovation, talk about its relationship
to entrepreneurship, and explain what is needed to nurture it. He noted that
innovation is essential for companies to grow, and that it is transformative.
In response to a question about
whether innovation is necessarily related to new technology and big
breakthroughs, Lady Barbara Judge, chairman of the United Kingdom's Pension
Protection Fund, defined innovation as either "using something new, or
something known, but in a different way, different time or a different
place."
To illustrate the latter, she spoke
of two men who are bringing car sharing, a concept popularized most notably by
the Nasdaq-traded company Zipcar, to India in the guise of a company called
Zoom. "It is not new technology but somebody saw it, used it, did it in a
different place, in a different time and it's really very innovative," she
said of the fledgling firm.
George Damis Yancopoulos, president
of Regeneron Laboratories and chief scientific officer of Regeneron
Pharmaceutical, defined innovation as "an approach ... that addresses a
major imminent want or need that people have, [something] they know they want
or need or that they will want or need once we provide it." He pointed out
that innovation isn't always easy to spot. "A lot of things get hyped as
innovation but ultimately ... they're not really that innovative because
they're not all that useful."
Yancopoulos put his definition of
innovation in the context of the industry in which he works -- biotechnology --
reminding the audience and fellow panelists that at the turn of the millennium,
the sequencing of the genome was being hailed as a great innovation. "A
lot of people thought that was going to change everything," he said.
"The problem was that [for] the people who really knew about the
challenges in providing new treatments for diseases, it was just an incremental
step."
He cited his company's discovery of
a new kind of medicine to address disease mediators as a genuine example of
innovation. The medicine was first tested on an "orphan disease," one
that afflicts only a few hundred people. Yancopoulos noted that the medicine
was innovative because it addressed the needs of those patients, giving them
enormous relief, yet it was only seen as an innovation when the approach was
applied to a more common ailment, macular degeneration, which robs elderly
people of their vision.
"It's now in the history books
as the third-biggest drug launch in biotech history. It's transformative for
the company," he said of the later use of the medicine. "The
interesting thing is that it's gotten lots of hype, it's gotten a lot of credit
and there's very little recognition of where the true innovation actually
occurred. We got very little credit for it at the time."
The Key Ingredients
Key ingredients for innovation also
include entrepreneurship and execution, pointed out John Rogers, executive vice
president of Goldman Sachs. "There's probably an oversupply of
innovation," said Rogers. "It's the execution that makes a
difference."
With that distinction in mind,
Goldman Sachs made changes to its foundation five years ago to focus more on
program-driven initiatives like 10,000 Women, which offers a business education
to females in underserved places of the world. The program's curriculum and
business model provides women with mentorship and teaches critical business
skills such as planning and negotiating. The program now successfully operates
in 22 countries. "As innovative as the program is, it's no substitute for
the entrepreneurship of the women themselves," Rogers noted. "Goldman
Sachs had nothing to do with the innate skills or the capabilities of those
women."
Looking at innovation on a larger
level and the critical role of entrepreneurship, Ted Dintersmith, a partner in
Charles River Ventures, put forth the supposition that the single biggest
factor that has improved the world over the past two millennia is the U.S.
innovation ecosystem. He pointed out that in the 50 or so years it has been in
existence, some $500 billion has been invested, approximately half the amount
of the stimulus package or one-third of the cost of the war in Iraq. He added
that 11% of the private sector workforce in the U.S. and 21% of the U.S. GDP
are a result of venture-backed startups. "The single biggest source of
global competitiveness, improving productivity, improving quality of life is
due to what entrepreneurs are doing every day," said Dintersmith.
Government has a key role to play,
according to Jay Schnitzer, former director of the Defense Sciences Office, and
must become more innovative and more supportive of it. Schnitzer added that
while there may be no formal department of innovation or innovation czar in the
United States, DARPA -- the Defense Advanced Research Projects Agency -- is
actually an innovation engine for the federal government. "In fact, I
would argue that DARPA's product is innovation," said Schnitzer of the agency, the arm of the U.S. Department
of Defense charged with the development of new
technologies for use by the military.
He called for adapting the DARPA
model across other government agencies. "The aspect of letting the best
and the brightest do what they do best, [while] getting out of the way, and
providing adequate resources for them to do so.... Why can't other parts of
government work that way?" he asked. DARPA's approach is "built on
fulfillments, milestones and metrics," Schnitzer noted. "It's not
built on entitlements or equality."
The government also has a role to
play in enabling innovation in the private sector, with both policy and
regulation. "It's going to be really important, particularly in the health
sector, to have good public policy.... Likewise with the regulatory
agencies," said Schnitzer. "Even though patient safety has to come
first, there has to be some intelligent, reasonable approach to how you identify,
measure and then mediate the risk."
Education's Role
Education is also critical for
innovation and entrepreneurship, the panelists agreed, adding that greater
emphasis is needed on areas that the U.S. school system doesn't currently focus
on, and a more enlightened approach to teaching children about failure. Judge
said that the United States can no longer afford to ignore the need to educate
engineers. "We don't have enough engineers across the country," she
noted, adding that there is too much attention given in the U.S. to training
future financiers. "We don't need these financial engineers. We need real
engineers if we're going to build things." She also noted that there is a
need to encourage women to become engineers. "If we don't educate women
[in this area], we are missing a bet."
According to Dintersmith, the
approach to education taken in this country does little to advance innovation.
"What are we doing to make sure that our truly innovative, entrepreneurial
people make it through the education process and come out confident in their
position to start companies and do great things?" he asked. "The
[Steve Jobs-types] of the world are incredibly rare, and the education system
can't create one ... but it can destroy one. Today's schools largely crush the innovation
out of kids."
Based on the experiences of 10,000
Women and another Goldman Sachs-sponsored program, 10,000 Small Businesses,
Rogers agreed that entrepreneurship is not a learned skill, but he believes
that schools have a role to play in fostering it. "I know that we can't
just teach it," he said. "We can give skills that help to enhance it,
to help move to the next stage, but the determination and the absolute
pervasive optimism about possibilities are innate." It's critical that
schools learn how to channel natural, innovative entrepreneurs into places
where they can execute and create, he added.
A characteristic that innovators and entrepreneurs share, Dintersmith noted,
is their lack of fear, and their understanding of the importance of failure.
"Success is key, but it's quite possibly the case that you can't succeed
unless you understand failure and every aspect of it and you're comfortable
with it."The danger is that schools don't allow, or encourage children to fail. "How many kids in school are being given the message that it's OK to try things that are different and then fail because you're going to recover versus how many are told: `Don't take a course you might not do well in; you've got to have a high grade point average?'" he asked.
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