Innovative ideas can make a splash, but entrepreneurs are more likely to create value, change the world, and make profits. Pro or con?
Cross posted from Bloomberg Businessweek, February 28th, 2012.
PROS: IDEAS DON’T EQUAL VALUE
If you had one dollar to invest, would you invest it in an innovator or an entrepreneur? Innovation is crucial to social advancement, but the entrepreneur gets my buck every time. Innovation is about the manifestation of novel ideas, but entrepreneurship is about value creation. Ideas help, but the sine qua non for entrepreneurs—hard work, ambition, resourcefulness, unconventional thinking, salesmanship, and leadership—will always trump brilliant ideas.
I know who and where the entrepreneurs are, but who is an “innovator?” Is it anybody tinkering with a grand idea or just a mystical few? Is it a group of people or a lone inventor? I might spend my buck on an innovator if I could find one; I suspect if I did, lurking behind the innovation get-up would be an entrepreneur.
Furthermore, innovation without an entrepreneur is like a car without a driver. Entrepreneurs will navigate the road to value creation and growth, with or without innovation. Generic pharmaceutical entrepreneurs create economic and social value around the world—without innovation. In fact, “generic” is an antonym for “innovative.”
Oh, and don’t go bending the definition of innovation to suit your purposes. Something that means everything ends up meaning nothing.
So let the entrepreneurs rummage through piles of society’s innovation assets. As they determine what is valuable from scrap, watch as they surprise us in their value creation.
Yes, I have heard it ad nauseam: “Innovation is more than technology,” but when push comes to shove, societies measure innovation by R&D investment, IP (intellectual property) generation, and STEM (science, technology, engineering, and mathematics) education. Sure, STEM sells, but value-creating entrepreneurship will get my dollar every time.
Daniel Isenberg is a Babson Global professor of management practice and the founding executive director of BEEP, the Babson Entrepreneurship Ecosystem Project, the global action research subsidiary of Babson College. Isenberg has a Ph.D. in social psychology from Harvard University.
CON: INNOVATORS TURBOCHARGE ECONOMIC GROWTH
Innovation trumps entrepreneurship when it comes to economic growth. Don’t get me wrong. Entrepreneurship matters, but innovation and innovative entrepreneurs matter more. Here’s why.
Eighty-eight percent of the world’s entrepreneurs succeed through “exceptional execution of an ordinary idea” (meaning one that’s already succeeded somewhere else in the world), according to research by Amar Bhidé, an entrepreneurship guru and author of The Origin and Evolution of New Businesses. By contrast, the other 12 percent of the world’s entrepreneurs succeeded by executing on “an unusual or extraordinary idea” (usually their own).
Indeed, innovators and innovative entrepreneurs fuel phenomenal economic growth by creating entire new industries. They are the disruptive ones. They change the way things are and, by so doing, turbocharge economic activity. Let’s look at one historical innovation that produced more than 100 years of substantial economic success.
In 1884, George Eastman launched an economic growth engine by patenting the first film in roll form, and then, in 1900, he single-handedly created mass-market photography by inventing the Brownie camera. His innovative ideas, especially the Brownie camera, started an economic wave of success that spread from Rochester, N.Y., to the rest of world for a century. The tragic ending of Kodak’s century of success, however, underscores the dilemma that any company or country faces in search of growth. Innovative ideas spark new markets and strong economic growth, while the repetitive reliance on well-known ideas ultimately stalls and crashes. Kodak failed to learn this lesson fast enough and went bankrupt in the process.
In short, entrepreneurship fuels economic growth, but it’s the disruptive innovators of the world who turbocharge it.
Hal Gregersen is a professor of leadership at the graduate business school INSEAD. Gregersen’s work has been published in many academic and business journals. His most recent book is The Innovator’s DNA, co-authored by Clay Christensen and Jeff Dyer.
[photo from SpeedHunters]