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News : Innovation Last Updated: Sep 21, 2015 - 2:54 AM

Innovation the business buzzword of the decade?
By Michael Hennigan, Finfacts founder and editor
Nov 5, 2013 - 5:42 AM

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Henry Ford, Thomas Alva Edison, and Harvey Samuel Firestone, US innovators of their age, in 1929. Photo Wikimedia Commons

In a patent lawsuit over the invention of the automobile, Ford testified, “I invented nothing new. I simply assembled into a car the discoveries of other men behind whom were centuries of work. ... Had I worked 50 or 10 or even five years before, I would have failed. So it is with every new thing. Progress happens when all of the factors that make for it are ready, and then it is inevitable. To teach that a comparatively few men are responsible for the greatest forward steps of mankind is the worst sort of nonsense.”

"Innovation is a strong contender for the crown of business buzzword of the decade. The term has all it takes. It is ubiquitous, mysterious and, like its acolyte 'leadership,' it works alone and pairs well with many adjectives," Gianpiero Petriglieri, an associate professor of organizational behavior at INSEAD, the French business school, recently wrote in a Wall Street Journal blog.

Micheál Martin, when Irish enterprise minister, had a weakness for superlatives and buzzwords and once managed to use "cutting edge” and "state-of-the art" in the same sentence.

Once terms such as outside-the-box, strategic, synergy, game-changer and low-hanging fruit become overused, an individual using them risks being viewed as a fool.

Innovation as a term has still some mileage to go yet.

In May 2012 Leslie Kwoh wrote in The Journal: "A search of annual and quarterly reports filed with the Securities and Exchange Commission shows companies mentioned some form of the word 'innovation' 33,528 times last year, which was a 64% increase from five years before that.

More than 250 books with "innovation" in the title have been published in the last three months, most of them dealing with business, according to a search of Amazon.com."

"Most companies say they're innovative in the hope they can somehow con investors into thinking there is growth when there isn't," said Clayton Christensen, a professor at Harvard Business School and the author of the celebrated 1997 book on disruptive technologies, "The Innovator's Dilemma."

Innovation comes from the Latin innovationem, noun of action from innovare and dates back to 1540. It stems from the Latin innovatus: "to renew or change."

The word 'innovation" implied dissent from received wisdom, for many centuries.

Benoît Godin, a Canadian historian, quotes in a paper, from Edmund Burke, Irish political philosopher and parliamentarian, in 'Reflections on the Revolution in France (Burke, 1790: 64)." To Burke, innovation is revolution - - and revolution is innovation.

Not one in a hundred amongst us participates in the ‘triumph’ of the Revolution society …. Thanks to our sullen resistance to innovation, thanks to the cold sluggishness of our national character, we still bear the stamp of our forefathers. We have not (as I conceive) lost the generosity and dignity of thinking of the fourteenth century; nor as yet have we subtilized [sic] ourselves into savages. We are not the converts of Rousseau; we are not the disciples of Voltaire; Helvetius has made no progress among us.”

Godin says that as early as 1934, Joseph Schumpeter, the Austrian economist who had moved to the United States in 1932, defined innovation as consisting of any one of the following five phenomena: 1) introduction of a new good; 2) introduction of a new method of production; 3) opening of a new market; 4) conquest of a new source of supply of raw materials or half-manufactured goods; and 5) implementation of a new form of organization. "Of all the science and technology statistics that were carried out before the 1970s, however, very few concentrated on innovation as defined by Schumpeter."

Godin adds that "before the 1970s, innovation was usually measured with proxies, the most important of which were patents and industrial expenditures on R&D. The extensive use of patents as an indicator of innovation was pioneered by Jacob Schmookler in the 1950s. People soon began to realise, however, that patents actually measured invention, not innovation."

Joseph Schumpeter (1883–1950) coined the seemingly paradoxical term “creative destruction,” in 1942 and considered it "the essential fact about capitalism."

Creative destruction refers to the incessant product and process innovation mechanism by which new production units replace outdated ones. This restructuring process permeates major aspects of macroeconomic performance, not only long-run growth but also economic fluctuations, structural adjustment and the functioning of factor markets. Over the long run, the process of creative destruction accounts for over 50% of productivity growth. At business cycle frequency, restructuring typically declines during recessions, and this add a significant cost to downturns. Obstacles to the process of creative destruction can have severe short- and long-run macroeconomic consequences."

One certainty about innovation is that it's going to continue to be easier to talk about it, than to achieve it.

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