The words innovation and innovate come to us from the Latin innovāre, or “to renew.” So, according to most dictionaries, innovation means “something new or different,” or “the act of creating something new or different.”
However, for most businesses, merely being new or different is not enough. A product, service, or process can be new or different, but if it’s not in some way better than existing products, services, or processes, then what’s the point?
So what we’re looking for are ideas that are new and different that make some sort of improvement on things. In their book Leading Innovation: Creating Workplaces Where People Excel So Organizations Thrive, Brian McDermott and Gerry Sexton define innovation as the value-added application of a creative idea.
What does it mean to add value? In purely monetary terms, you can add value by reducing money going out or increasing money coming in. By that measure, any creative idea that you can use to cut costs or increase revenue is an innovation.
This fits with the definition of innovation that Apple Computer’s Advanced Technology Group used, according to Dave Yost:
An innovative product is one that makes a leap in the benefits-to-costs ratio in some area of endeavor.
Another way of putting this is that an innovation lowers the costs and/or increases the benefits of a task. A wildly successful innovation increases the benefits-to-costs ratio to such an extent that it enables you to do something it seemed you couldn’t do at all before or didn’t even know you wanted to do.
Lower the cost. Increase the benefits. That’s innovation.
But remember that you can add value (lower costs, increase benefits) in non-monetary ways, too. For example, you can add value by changing the emotional interaction people have with a product, service, or process.
You can add fun. See “The World’s Deepest Bin” and “Piano Staircase” over at www.thefuntheory.com to see how someone added fun—and value—to the rather mundane activities of throwing away trash and using the stairs.
You can focus on esthetics. An essential part of Apple’s success is their obsessive focus on the esthetics of their products, and people love the way their iPhones, iPods, iPads, etc. look. Cirque du Soleil took the basic idea of the circus and incorporated the esthetic sensibilities of theater, changing how their audiences feel about the experience.
Bottom line: Innovation is using creativity to add value. And there are myriad kinds of value you can add.