Innovation Day

What the day is

Innovation Day is observed on February 16. The first useful distinction is that invention and innovation are different activities.

Origin and background

Invention produces something new. Innovation gets it adopted, which is a separate and usually harder problem involving manufacture, distribution, price, habit and regulation. The history of technology is full of things invented decades before anybody managed to innovate with them, and the inventor and the beneficiary are frequently different people.

The sharper idea concerns why established companies fail at it. The disruption account, set out by Clayton Christensen in the 1990s, argues that the failure is not incompetence but the opposite. A successful company listens to its best customers, invests where margins are highest, and declines opportunities that are small, low-margin and serve people it does not currently sell to. Every one of those decisions is correct by the standards the company is run on. A new entrant takes the unattractive low end, improves steadily, and eventually reaches the point where it satisfies the mainstream customer at a much lower cost. By then the incumbent cannot respond without destroying its own economics.

The theory has been criticized, partly for how loosely the word disruption is now used and partly because some of the original case studies look weaker in hindsight, but the core mechanism, that rational prioritization blinds organizations to threats beneath their notice, has held up well.

It also explains why innovation programs so often achieve nothing. A separate lab, a hackathon or an innovation day produces ideas, and the organization then declines to fund them for exactly the reasons it declines everything small. The binding constraint is rarely a shortage of ideas.

How to take part

• Look for what your organization routinely declines because it is too small to matter.
• Separate the invention question from the adoption question when assessing an idea.
• Ask who your least profitable customers are, which is where entrants start.
• Fund one idea properly rather than generating twenty and shelving them.
• Read the disruption argument, including the criticisms of it.