The Psychology of Innovation

On the practical applications of innovative ideas and the creation of value… and why the 21st century is the century of innovation

Innovation is not just creating something completely new, but creating a product that will be of value, especially commercial, economic, practical or social value. Thus creativity when associated with value and enterprise is innovation and an innovative product is “useful to others”. Innovation could lead to enterprise and commercialization as innovative products are commercially viable. Whereas an invention is creation of something new, innovation is the creation of a product or service that is valuable and useful to consumers. New and innovative products are sometimes radical and revolutionary, although there is incremental innovation that improves systems or products that already exist. Innovation helps in creation of commercial, practical or social value by implementing new ideas.

Innovation is applied invention and helps to create a new product to fill the unmet user needs in the market. An invention is a new product but could be a valued solution to a problem and only by becoming commercially, socially or practically valuable, an invention is transformed to innovation.

This discussion is based on the psychological basis of innovation and although innovation would be associated with creativity, creativity is a trait in humans and innovation is ‘what you do’. Thus innovation is a form of action that requires creativity, enterprise and radical thinking. Thus innovation being focused on creation of a product is action-oriented whereas creativity is thought-oriented. Enterprise is necessary to turn a creative idea into an innovative product that will have significant value in the short or long term. The psychological process of turning an idea into an innovation goes beyond the creative process and involves practical planning of designing and marketing the product to make it commercially viable.

Innovation involves the stages of brainstorming of a creative idea, problem solving, processing or developing it to come up with something radical and different and then developing a business model to help meet market and user needs. Creativity as a thought process is the first step of innovation. Innovation usually involves a new idea, method or product and either the art, technology or business of introducing something new. When ideas are translated to innovation, value is created and this forms the potential for business. Innovation is creation of a product with inherent value and this is done by considering what product will be of value to the user or will be successful in the market. It could be argued that even creativity is responsible for creation of products with aesthetic value or artistic value. Well, that is true but the value created by innovation is probably more objective, because innovation creates economic, commercial and social value.

The psychological processes in innovation differ from creativity as the action-oriented nature of innovation will have to be directed towards fulfilling a user or market or product need. In creativity, the only goal seems to be the creation of the product, although creative products like books can also be market directed. Innovation is specifically focused on meeting user needs, it is action-oriented, so it is based on applications or practical purposes. Whereas creativity being thought-oriented, primarily fulfills the needs of the creative artist and is directed internally, innovation is about the world and fulfills the needs of the user and market and is thus directed externally. Creativity also does not involve a focus on commercialization whereas innovation is about developing the commercial value of a product.

Creativity is the basis of art, architecture, poetry and any artistic or scientific activity for the matter. Innovation is invention with added value, is based on action and is thus more practical in its applications and tangible in its usability. Creativity and creative products are more abstract and not too well defined or tangible as far as their applications are concerned. The only application of creativity seems to be aesthetic pleasure and creativity is the basis of the aesthetic value of any product, including an innovative product. It is when creativity helps make products that are significantly useful to the market that it evolves to an innovation. Thus creativity is the foundation of all innovation, however creativity is not based on innovation. Creativity is the first step towards innovation and innovation is focused on delivering exceptional product or service to the value chain. In innovation, value is added for both user and developer.

The different components of innovation are creativity, radical thinking, business model, user needs, market, design and practical applications. Any new product will have to be well planned in terms of design and application and the business model guides the innovation to market launch and profitability. Thus the ultimate goal of creativity is providing aesthetic pleasure to the users or perceivers and the ultimate goal of innovation is meeting user needs and deriving profitability through commercialization.

Innovation could be about a radically new product or an incremental improvement, so innovation is about improvement whereas creativity is focused on originality. However the most original products are also considered as the most innovative. For example Apple Inc.’s design of iPhones and iPads are among the most original and that is why the most innovative. Thus originality is a common factor in both creativity and innovation and it is the basis of self-expression in creativity and the basis of a business model in innovation.

Innovation is frequently about revolutionizing drastically what already exists. The most innovative products bring about a paradigm shift in technology, or other market and sometimes ‘create’ market needs, rather than simply follow or meet the needs. Apple successfully created market needs for new technology and new design by integrating user expectations. Thus innovation not only meets market needs but can create new market needs and change market dynamics. Innovation is a commercial and business process, whereas creativity is more of a personal process and creativity itself cannot change the market, whereas innovation can change market dynamics significantly and can in fact change the world. Innovation is about evolution and progress of an industry, whereas creativity is more of about the evolution and progress of a creator’s mind.

Innovation is necessary in technology and in every industry to keep the pace of progress in human civilization. Innovation is usually preceded by an invention, whereas creativity is preceded by incubation and organizing the thought processes. Innovation is capable of revolutionizing the market, any industry and set the direction for future technologies and products. Let’s talk about search engine technologies by Google. That’s an innovative technology which brought about considerable profits to Google and thus transformed from a mere technology invention to innovation. So success of an invention defines an innovation. Innovation is used not just in technology but in architecture, automobile industry, engineering, and in all other fields and the primary goal of innovation is progress and also profitability by meeting or creating market and user needs.

The most successful companies thrive on innovation and cannot survive in the market without innovation. Today’s market is an innovative market and the focus is on competition in innovation. Whether it’s Samsung and Apple competing for the most innovative product in the market or two lesser known advertising companies competing for the most innovative advertising campaigns, innovation is the pulse of modern businesses. Even in the 20th century, innovation was not so important and the focus of businesses was on growth, strategy and advertising with emphasis on quality of products.

Quality management is what drove the 20th century businesses. This has changed significantly as businesses have now realized that to reach to the top and to become a powerful force in the market, quality and strategy are not enough. The 21st century will truly be the century of innovation.

This is part of a psychology series archived by a University and copyrighted.

Copyright 2013 Saberi Roy. This is part of a psychology series published as a book in Reflections in Psychology – Part I & II – by Saberi Roy (2009/2012) and archived on the digital archives of University of Iowa.

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