Don't Confuse Change with Innovation

Peter Drucker said something very similar. “Don’t confuse novelty with innovation.” And what he meant was that innovation is much more than just change. It’s all about new products or new markets for existing products, or even new ways to sell existing products in existing markets.

It’s not so much about doing something different, as it is about doing something that increases profitability. And it’s usually not all that complex; it doesn’t require anything close to being a “stroke of genius.” In short, innovation is what differentiates you from the competition; it’s what gives you a competitive advantage that can’t be easily copied by your competitors; and it’s what affects bottom-line results.

In an essay titled “The New Venture,” Peter Drucker recounts a wonderful story of just such an occurrence – it’s a story I’ve highlighted before but I think it’s useful to cite again:

Shortly after World War II, a small Indian engineering firm bought the license to produce a European-designed bicycle with an auxiliary light engine. It looked like the ideal product for India, yet it never did well. The owner of this small firm noticed, however, that substantial orders came in for the engines alone. At first, he wanted to turn down these orders; what could anyone possibly do with such a small engine? It was curiosity alone that made him go to the actual areas that the orders came from. There he found farmers who were taking the engines off the bicycles and using them to power irrigation pumps that hitherto had been hand-operated. This manufacturer is now the world’s larger maker of small irrigation pumps, selling them by the millions. His pumps have revolutionized farming all over Southeast Asia.

In this case, it was an unchanged product that found a new market – certainly nothing that fits in the category of “novelty” or even “novel.” Rather, it was all focused about finding (and certainly, it appears, this was unplanned) a new market for an existing product. But the result of this innovation was that it catapulted this small Indian company into becoming the market leader.

Geoffrey Moore says it best in his highly influential book Dealing with Darwin by explaining innovation this way:

“Focusing on our chosen innovation…[so that] we will so outperform our competitors that prospective customers and partners will cease to entertain them as legitimate alternatives.”

Again, it’s easy to confuse change (or novelty) with innovation. But only innovation creates a unique outcome that, despite the superior financial returns resulting from the action, competitors are either unwilling or unable to match.

Here’s the takeaway: It’s quite simple – don’t confuse change (or even progress) with innovation. Only innovation gives you superior bottom-line results.

image credit: engineersjournal

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Patrick Lefler is the founder of The Spruance Group – a management consultancy that helps growing companies grow faster. He is a former Marine Corps officer; a graduate of both Annapolis and The Wharton School, and has over twenty years of industry expertise.