Readers Question: It’s not a good question, but I’ll ask it. Could you explain the differences between Research and Development and innovation?
Research and Development involves investment in discovering new technology and increasing capacity of a firm. It could involve technological innovation or improvements in human capital. It usually requires a willingness to forego current profit to invest. Successful research & Development may lead to innovate new products. There is no guarantee that Research & Development will be successful. You could spend Billions of pounds in researching an alternative to oil, but, it may fail.
Innovation. Innovation involves improving the method of working/producing goods. Often it will involve better technology or better methods of working. Innovation may be the result of Research & Development. But innovation could also be a ‘brainwave’ – A Eureka moment where someone has a good idea to improve working practices.
So they are quite similar. One difference is that innovation, may not require any investment of time or money.
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Hi there,
Nice blog…i have a question..how can i outline the major elements of the economic way of thinking?..
Thanx
Fathimath
One of the problems that I find with definitions of innovation is that they describe one equation with two or more unknowns – therefore most definitions for innovation are inactionable. If it is inactionable, it cannot be measured. If it cannot be measured, it cannot be capitalized. If it cannot be capitalized prospectus of 1000% ROI is required. At 1000% ROI, 99.999% of innovation is thwarted. Heck, I’ll take 20% ROI all day long if it were available.
For example: “Innovation is a new idea with an economic outcome” One equation with two unknowns; “new idea” and “economic outcome”. While this is intuitively a good definition, it reflects the desired outcome rather than the actionable inputs and really confuses a lot of people, I think.
A far better definition is as follows. Innovation is the rate of change of knowledge with respect to time. Knowledge is the rate of change of information with respect to time. Information is facts and data.
One may need to ponder this for a while, but it works. I can measure innovation with a proxy = the rate of change of knowledge w.r.t. If it can be measured it can be actionable, cpitalized, and pooled with similar risk, risk can be diversified away and people have a game that they can win. Entrepreneurs will launch the innovation economy that we’ve all been waiting for.
What a difference a definition makes!!!
An innovation is a creative act or solution that result in a quantifiable gain .
Cost would be cost of resources till the conclusion of idea and return would be from sale /saving /optimization and so on .
Now considering the fact only 4% of ideas generated get sponsorship and only 1% of ideas reach to its final conclusion .
Innovation could be Incremental or breakthrough , ROI is also depends on idea .
Taking the example from India , I TC -IBD , it grown from 300 to 3000 crore company after it business model innovation . It was a break through innovation in business s model. ROI of innovation is still low but dependent on leadership involvement ,idea generation , innovation system ,culture and number of factor could affect . The process of calculation of ROI it self is questionable .
Did it consider increase in motivation of the person whose idea’s have been recognized , increase in productivity , engagement , less attrition , and number of human aspect .
You need to optimize the formula for calculating ROI as per your organization .