What types of “innovation” should markets and society value?

What types of products, services, and businesses can justifiably be labeled as “innovation”?

I mindlessly use the word “innovation” tens of times every single day without pausing enough to ponder these fundamental questions.  Heck, I’ve helped architect a product called i3 for “insight into innovation”, regularly assist clients build “innovation sourcing” teams, and help host a conference with an “innovation showcase” (don’t forget to join us in San Francisco on March 26-28^th!).  I really should have a thoughtful opinion here.

On one hand, having spent most of my career as an entrepreneur, I think that there is a fair argument to be made that the answer to the question, “what is innovation?” should be “who cares about semantics!”  Let’s go out and build new stuff.  If it replaces the old stuff, makes for a profitable business, and nets a good return for investors, we can call it whatever we want.

On the other hand, I think we, especially in some corners of the U.S. entrepreneurial community, have forgotten what innovation truly looks like.  Jon Gertner presents his case for a definition of “innovation” in this past Sunday’s New York Times piece entitled “True Innovation”.

Gertner is the author of “The Idea Factory: Bell Labs and the Great Age of American Innovation,” and his piece lays out the remarkable history of technological advances – from the transistor and communication satellites to silicon solar cells and computer programming languages Unix & C – churned out by Bell Labs scientists.  He argues that the success of Bell Labs rests in part because it gave its researchers the freedom and time to take on truly, big questions.  In doing so he takes a swipe at today’s fail-fast-and-often, early stage model of incubating internet businesses.  In his words…

Regrettably, we now use the term [innovation] to describe almost anything.  It can describe a smartphone app or a social media tool; or it can describe the transistor or the blueprint for a cellphone system.  The differences are immense.  One type of innovation creates a handful of jobs and modest revenues; another creates millions of jobs and a long-lasting platform for society’s wealth and well-being.

I have a great deal of respect for the type of work done at institutions like Bell Labs, or Xerox’s PARC facility.  I spent a short professional stint on the campus of SRI, another iconic pillar of Silicon Valley that turned out such minor “innovations” as the computer mouse and speech recognition.   There would be no Facebook or Google without the work done by many of these firms to lay the groundwork for today’s digital world.

I worry that working on these foundational, grandiose questions is becoming less and less respected by young technologists in the United States.  They see piles of incubation capital available to build quick flip ideas which may generate wealth for themselves and investors, but will never be the true engines of job and economic growth that politicians speak of when they wax poetic about entrepreneurship being the backbone of our economy. 

Cleantech, especially in the US, currently faces a very similar conundrum.  Feeling burned by high profile, big bets gone wrong in core solar, energy storage, and biofuel technologies, investors are now seeking the safe harbor of “capital efficient” plays into cleanweb and software investments that address energy efficiency.  Don’t get me wrong, I am a huge fan of these investments and many do cross the line into true “innovation”, but we should not back away from tackling big, gnarly scientific challenges.

The rest of the world is certainly dreaming big.  China’s recently announced Five Year plan features a massive commitment to fundamental, clean energy research.  According to a recent piece in Smart Grid News, “China’s 12th Five Year Plan, considered the world’s most comprehensive technology development initiative, calls for hiking R&D funding for emerging technologies by a staggering 159% to $18 billion… The country is concentrating on sustainable growth to deal with its environmental challenges, and about 48% of the $18 billion investment will be in environmental technologies, with 32%  for new energy and 12% for smart grid.”

The bottom line for me is that we should celebrate entrepreneurship in all its forms.  I am as entertained as anyone by the world of consumer applications that I now have at the touch of my phone.  But we should never forget and should never devalue the absolutely miraculous amount of true innovation that underlines it all. We can send data through the air and move power across thousands of miles to recharge your phone.  Sometimes you just need to pause and think about that to realize how remarkable it is.  The countries and people that tackle the next century of challenges on a similar scale will be the ones remembered as true innovators.