ISSUE #67 – To understand how innovation is put into action, one has to analyse both its definition and its evolution from the birth of an idea to its implementation. Xavier Pavie (pictured below), Professor at ESSEC Business School Asia Pacific, shares more.
In 1911, the notable Austrian economist Joseph Schumpeter said that innovation is the industrial exploitation of inventions, their development and economic scope. Still valuable today, this definition clearly shows that while the invention is necessary in the innovation process, it is not the innovation. Firstly, to become innovation, the invention must be put into action, where it must be more than an idea, model or prototype and exploited in an industrial method. Even industrial production is insufficient – the invention must be part of a larger plan where it is implemented and disseminated. Last but certainly not the least, the invention’s value must be significant enough and monetised as economic success to be deemed as innovation. This success cannot be measured by a company’s turnover, but rather, by generated profit, the key to economic survival.
Consequentially, it is crucial to distinguish three phases in the life of a product or service. The first phase, upstream, concerns its elaboration. The second and third phases, both downstream, are when the product launches on the market, attracts buyers, generates sales; then the pivotal moment when the number of consumers drastically increases so as to compensate the investments made. The juncture from the second and third phase is characteristically called “Moore’s chasm”, which is an essential step in any innovation process. Before this gap, the product or service is only what we call a “candidate for innovation” as it does not contribute to a company’s economic survival in any way. When the new offer crosses the chasm due to new clients generating more profits than investments, the “candidate for innovation” then rightly becomes an innovation.
Consequently, innovation is clearly uncertain as no one can predict when any product or service will cross the chasm. While the organisation will do its utmost to communicate, implement, and market its offer, clients are the determining factor turning an invention into an innovation.
With this uncertainty in mind, any innovation must first be seen as a failure. This unknown, uncertain gap makes it necessary for the company to focus on the upstream phase and development of ideas. The more inventions an organisation produces, the more chances there are that one will evolve into an innovation. In other words, if an organisation only has one idea or invention, the risk of failure is certain.
To conclude, we can see that innovation and action cannot be separated. The role of innovators then, is to put into action the whole innovation process: crossing the chasm, overcoming obstacles and competition to drive success.
 Joseph Schumpeter, Theory of Economic Development, Harvard University Press, Cambridge, 1911
 Geoffrey Moore, Crossing the Chasm : Marketing and Selling High-Tech Products to Mainstream Customers, Harper Business; Revised edition August 2006
Interview with Xavier Pavie, Professor at ESSEC Business School Asia Pacific
Published in FOCUS Magazine — Issue #3 2018 “The Innovation Issue”