Innovation: history’s great free lunch
Innovation as a concept suffers from the paradox of being both overexposed and underappreciated. Countries seek to build innovation economies, regions want to be innovation hubs, companies hope to be seen as innovators, and so on. People certainly see innovation as important and desirable, but they sometimes fail to recognize just how fundamentally important it is to the modern economy.
The role of innovation in driving economic growth is nothing short of astounding. For developed economies, most of today’s economic output can be attributed to the technological innovations of the past 150 years. The world owes much to innovation, and to the intellectual property (IP) systems that secure investment in it.
The OECD defines innovation as “the implementation of a new or significantly improved product (good or service) or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations.”
Definitions vary, but this one is useful as it casts a wide net over new, economically beneficial activities. Human creativity is constantly seeking ways to improve economic activity, develop new business models and processes and provide us with new goods and services.
The breadth of activities covered by the concept of innovation is also reflected in the annual Global Innovation Index (GII) (see article) produced by WIPO and its partners, which benchmarks the innovation performance of some 130 countries against more than 80 factors.
Innovation is more than just invention. People have great new ideas all the time, but creating a marketable product is the challenge. The economist Joseph Schumpeter famously observed that innovation happens when an invention is brought to market so people can enjoy its benefits. This distinction between invention and innovation helps to highlight the importance of IP as a means of securing the investment needed to develop and commercialize inventions so that they can indeed become innovations.