Invention is creating something new, while innovation is turning an idea into a result the market pays for. An invention becomes an innovation only when it solves an urgent problem, reaches customers through an orderly plan and produces a financial return that the company can measure against clear indicators.
Whenever I start a presentation I ask the audience what innovation means to them. I always get different answers, but the idea that covers nearly all of them is creativity. People picture a laboratory, a sketch on a napkin or a brilliant late-night idea. I have a phrase that I think is quite real, and I repeat it often. There are many occurrences and little entrepreneurship. A company can have a hundred ideas in a quarter and still fail to innovate, because an idea that is not planned, executed and sold is only an occurrence.
Picture a quarterly leadership meeting at a mid-sized manufacturer. The head of product presents three prototypes that engineers built with real enthusiasm, the head of marketing shows a campaign for an app that customers have not requested, and the chief financial officer asks a single question. How much revenue has all of this produced? The room goes quiet. Nobody in it is lazy or uncreative. The company has simply been rewarding invention, the act of making something new, and has not yet built the discipline that turns invention into money. This article is about that discipline and about why executives should insist on it.
Innovation involves planning and orderly execution to actually create wealth. It is important to be clear about this. If an innovation project does not generate a monetary return, it is not innovation, it is just invention. That may sound harsh to people who love ideas, but the distinction protects the company, because it forces every initiative to answer for itself.
Invention is basically a gamble. It does not require an orderly process of thought, and its value depends on luck, timing and the inventor's persistence. Innovation, on the other hand, involves a process of analysis and implementation of objectives, with compliance indicators, in order to generate money. An inventor asks whether something can be made. An innovator asks who urgently needs it, what they will pay, how it will reach them and how the company will know whether it worked.
This view is consistent with how the field has long been defined. International statistical guidance, such as the OECD and Eurostat Oslo Manual, treats an innovation as something implemented and put into use, not merely imagined. The author's position here is a practical, management-level version of the same idea, namely that value must be realized and not only conceived.
Most people confuse the two. They consider creativity to be invention, and they usually reject the notion that innovation can also be copying something. That second point is uncomfortable and we will return to it, because for an executive it may be the most useful idea in this article.
I divide innovation into three parts. The first is solving a problem, the second is a service, and the third is a product. These three approaches lead to different solutions, which can be complementary or, in many cases, conflicting. It will depend on each case, but in general, if we want to innovate we have to attack one of these areas.
The order is deliberate. A problem comes first, because without one the service and the product have no reason to exist. Companies often start from the product, since that is what they know how to make, and then search for a problem to attach to it. The result is the quiet failure that investors and executives know well. Research that tracks reasons for startup failure, compiled by CB Insights and summarized by Quake Capital, ranks lack of market need first, cited in 42 percent of the failures it studied, ahead of running out of cash or being outcompeted (Quake Capital, the top 10 reasons startups fail). In other words, the most common cause of failure is not bad execution of a good idea. It is a good execution of an idea nobody urgently needed.
If your business is not addressing a problem in society, the chances of success are quite low. For that reason, observation exercises, research and surveys are vital tools to discover where those problems are in the market. My first recommendation is simple. Ask every entrepreneur you know what the main problem is that they face in their business today, the one that represents an urgency. Clearly they will say there are many, and some will give elusive answers. When you ask several, you will find someone who sheds light on how to build a business around that issue.
The key to identifying an opportunity for innovation is to answer one question. How urgent is that solution to the market? Remember that if innovation does not generate revenue, it does not work, so the urgency factor plays a vital role. People do not buy something that generates no value for them. They do not buy to resolve a situation for the sake of resolving it. They buy because it makes economic sense.
The author illustrated this in 2020 with the COVID-19 pandemic. In his account, mouth masks had no real effect on the possible spread of the virus, and some experts even considered them counterproductive, but people bought them in large quantities because they found them urgent. A reader should treat the medical claim as the author's view at the time and not as settled science. The evidence on masks has remained contested, and a widely discussed Cochrane review in 2023 found its results on masks inconclusive, while stating that the review could not answer whether mask wearing itself reduces a person's risk, in part because many trial participants did not wear masks as assigned (Cochrane statement on the review of physical interventions). Cochrane also called the reading that the review shows masks do not work an inaccurate and misleading interpretation. The management lesson does not depend on who is right about masks. It is that perceived urgency, whether or not a product performs as imagined, drives demand, and that a company can only serve that demand if it listens to what customers feel is urgent. An executive should therefore test both whether a product works and whether customers believe they need it now.
Your business should not only solve a problem but also provide a service. It should not just sell a product. Many times companies stop selling services that complement the main product or service, without knowing the mistake they are making. The notion of post-sale service is vital to generate more sales.
Consider a distributor of industrial equipment that sells excellent machines. A customer who buys one needs installation, training, maintenance and spare parts, and each of those is a chance to deepen the relationship and to earn revenue that does not depend on the next sale. A competitor who copies the machine cannot easily copy a decade of service relationships. In many industries the service is the part of the innovation that lasts, precisely because the product is the part that others can imitate.
This is also where innovation connects with customer experience. A customer remembers how a problem was solved, how long it took and how they were treated afterward. An executive who treats service as a cost to be reduced may be removing the very layer that makes the product defensible.
Finally, the product as such does not need to be incredible. Remember that in a world like the current one, copying is the easiest thing that exists. Inventing products is very good, but it involves a lot of effort and risk. Generate the minimum viable product and get it to market as soon as possible, because if you are going to fail, do it quickly and cheaply.
The minimum viable product is the smallest version of an offer that lets you learn whether customers care. It is not a poor product. It is a disciplined experiment. A company that spends two years perfecting a product in private discovers the market's reaction after the money is spent, whereas a company that releases a simple version in three months pays for its learning in small installments. When the urgency is real, early customers forgive imperfections and tell you what to improve. When it is not, you find out before the budget is gone.
This brings me to the last point, which many people will find objectionable but which is interesting. Copying, they say, is the greatest form of flattery, because it means we did something good. When it comes to copying, it is important to be clear about the boundaries. It is not the same to copy an idea or business models that are in plain sight as it is to engage in corporate espionage. Copying things that are in the market, whether they are business models or sales styles, is valid and is part of innovation. What is wrong is copying patents, stealing trade secrets or generating unfair competition.
That said, I maintain that copying good practices, importing business models or looking at what the competition offers, and then doing it better, is a way to innovate. Many of the best-known companies in the world adapted a model that already existed in another industry or another country and executed it with more discipline, better service or a sharper understanding of a local customer. This is the practical meaning of the sentence that innovation can also be copying. The test is whether the adaptation creates value for a specific customer, not whether it is original.
The legal boundary matters to executives and should be stated plainly. Observing public information, studying competitors' products and learning from published practices are standard business activities. Taking confidential information, infringing a patent or deliberately misleading customers is not innovation. A company that cannot tell the difference should involve counsel before it launches an imitation strategy.
For a visual overview of the many forms innovation can take, beyond product and service, the infographic below summarizes ten types of innovation, which ICX also describes in the 10 types of innovation framework.
For the chief executive, the distinction between innovation and invention is a governance tool. It allows leadership to ask of every initiative what problem it solves, for whom, how urgently, at what return and by when. Initiatives that cannot answer are not necessarily bad ideas, but they belong in a budget for exploration, separate from the one that is expected to produce revenue. Mixing the two budgets is how companies end up with a portfolio of interesting projects and no measurable growth.
For the chief financial officer, the author's insistence on compliance indicators is the practical point. An innovation project should have a hypothesis about revenue, a timeline and a threshold at which it is stopped, and the finance function should be involved from the start and not only at the end. For the chief marketing and sales officers, the urgency question translates into customer research before launch, and the service question translates into the post-sale experience that supports repeat revenue. For the chief information and technology officers, the minimum viable product principle suggests building small, testing quickly and avoiding large platforms before demand is known.
For the whole executive team, the copying principle carries a strategic message. Originality is not a requirement of success. Execution, speed and fit with a real customer problem are. A company that studies the market carefully and adapts proven models with discipline will often outperform one that waits for an original idea.
Begin by listing every initiative your company currently labels as innovation, and next to each write the problem it solves, the customer who has that problem and the revenue it is expected to produce. You will probably find that some projects have no clear customer and no revenue hypothesis. Do not cancel them on the spot, but move them to an exploration budget with a defined end date and a modest allocation, so that they are no longer expected to deliver commercial results they were never designed to produce.
Then pick the one or two initiatives with the clearest urgent problem and ask the team to talk to ten customers in the next two weeks. Ask what their biggest operational problem is, what they have tried, what it costs them and what they would pay to solve it. As the author recommends, ask several people, because the elusive answers of one will be clarified by the others. After that, define the smallest version of the offer, including the service that will accompany it, and set a date to put it in front of real buyers. Agree in advance on the indicators that will tell you whether to continue, change direction or stop.
Finally, review how your competitors serve the same problem and decide where you can do it better. If a model that works in another market or industry fits your customers, adopt and adapt it, within the legal and ethical limits described above. ICX offers the Value Proposition toolkit, which helps a team describe, in a structured way, the customer problem, the offer that addresses it and the evidence that customers value it.
ICX Consulting is a customer experience and commercial strategy firm headquartered in Miami that serves companies in the United States and Latin America. We help leadership teams separate invention from innovation in practice. That means identifying urgent customer problems through research, designing the offer and the service around it, building the business case and the indicators, and running the first small launches so that the company learns before it commits. Our work on business model innovation and on customer experience supports executives who want innovation to show up in revenue.
If your company has many ideas and not enough measurable growth, request a diagnostic with an ICX consultant. In the following articles we will continue to look at how to apply innovation techniques to the development of your projects, and we will start from the same principle, that planning is vital to generate revenue.
Invention creates something new, while innovation turns an idea into a result that generates money. Innovation requires planning, orderly execution and indicators, and an invention that produces no return is, in this view, not yet an innovation.
Yes, within limits. Adopting business models, sales styles and good practices that are visible in the market, and improving on them, is a legitimate way to innovate. Copying patents, stealing trade secrets or competing unfairly is not.
Ask several people who face the problem what it costs them and what they have already tried to solve it. If they describe it as a priority and are willing to pay, the urgency is likely real. If answers are vague, keep researching before investing.
Because it lets you test demand quickly and cheaply. If the idea fails, you lose little, and if it works, early customers show you what to improve.
Products can be copied easily, while service relationships are harder to imitate. Complementary services create additional revenue, deepen loyalty and make the original product more valuable to the customer.