52 • Rotman Magazine Fall 2005
Point of View:William Buxton
Innovation vs. Invention
There is no question in my mind that with
appropriate management, we can improve
the levels of innovation and creativity
within organizations. There is no magic
here. Innovative people are no more ‘born’
than Olympic gold medallists or virtuoso
musicians. Yes, some of us are gifted
with more initial aptitude, but as music
and sports show, the ‘natural’ or the ‘child
prodigy’ frequently does not graduate to
the top level. Hard, focused and appropri-
ately-directed work trumps natural talent
in virtually every case. The question is,
where to focus? Let us start by looking at
the anatomy of the beast.
One key lesson that I took away from
Lester Thurlow’s book, Head to Head,is
the observation that, “Innovation in process
trumps innovation in product.” Thurlow
was contrasting the research investment
strategies between the U.S. and Japan in
the post-war years. His observation was
that the U.S. took a materialistic approach
to their investment, focusing on products,
while the Japanese focused on process. His
observation was that while the U.S.
invented DRAM, the VCR or the LCD, it
also incurred the highest up-front costs,
while the Japanese reaped the primary
profit due to their superior processes of
manufacturing and distribution.
Today, we have a comparable example
in Apple and Dell. Apple is now below
Acer in PC market share, but they have
beautiful, design-intense systems. Dell’s
computers, on the other hand, are boring
and have virtually no technical or design
innovation. But Dell’s process has given
them a dominant market share. Some busi-
ness publications (e.g., Fast Company, Jan.
2004) have come to the dubious conclusion
that this says that innovation may not be all
that it was cracked up to be. Of course,
what they miss are two things: (a) the dis-
tinction between innovation in product and
process, and (b) the following rule,which I
have decided to decree: innovation in
process + design trumps innovation in
process alone.
This, of course, should be obvious,
but it sure went over the head of the
Fast Company writers. If you want to
compete with Dell, ‘all’ you have to do is
match or exceed their innovation in manu-
facturing and service, and do so with
innovative products.
To find an example that illustrates this,
we need look no farther than, yet again,
Apple. Forget their PC business for the
moment. In the music business, in which
both Dell and Apple are competing, Apple
is the hands-down winner. While Dell has
relied on their previously successful for-
mula of efficient process, but boring
design,Apple has triumphed on both fronts
in their iTunes and iPod product lines.
Apple not only dominates the music mar-
ket, their sales in that sector now exceed
those of their PCs – transforming the very
nature of the company, to the point where
the tag-line on their new iMac computer is,
“From the company that brought you the
iPod.” This, despite the iPod being launched
only in 2001 – 24 years after their first
computer,the Apple II, in 1977!
Let’s look at another aspect of all of
this, the difference between ‘innovation’
and ‘invention’. The closer one gets to
Route 128 in Boston and Silicon Valley, the
more it seems that people confuse the two.
Too often the obsession is with ‘inventing’
something totally unique, rather than
extracting value from the creative under-
standing of what is already known.
In a recent study, the U.S. National
Research Council tracked a number of
telecommunications and computer tech-
nologies from first conception to the point
where they reached a billion dollar indus-
try.The key thing to note is that the average
time from invention to market was 20-plus
years. So much for fast moving tech sector!
Which brings us to one of the most insight-
ful quotes that I have encountered, from
William Gibson: “The future is already
here. It is just not uniformly distributed.”
Here is the business lesson: innovation
is far more about prospecting, mining,
refining and adding value to ‘gold’ than it is
about alchemy. Rather than focusing on
the invention of the ‘brand new’, one
might better strive for creative insights on
how to combine, develop and leverage
Innovation is far more about prospecting, mining, refining
and adding value than it is about pure invention.
Too often, the obsession is with ‘invent-
ing’ something totally unique, rather
than extracting value from the creative
understanding of what is already known.
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