Is innovation really going to save the economy?

First of all, I’m not even sure what we want out of innovation. If we take what we see out there as a signal, then we sure aren’t innovating anything.

It’s gotten to that point where the word innovation is anything but meaningful. Were in the ‘over-innovation’ economy. Yes, over-innovation. As in, we’re over innovation. And this is because we are over-innovating? Or are we?

Alexis Madrigal makes a great point that we are indeed over-innovating:

Innovators innovate innovations, no? That word is everywhere these days. It’s a stand-in for: THAT THING THAT WILL SAVE THE ECONOMY FROM EVERLASTING DOOM. It’s seen as an unmitigated good.

At the same time, when you’re walking down a grocery store aisle staring at 40 brands of tortilla chips, you want to say, “Actually, maybe there’s been enough innovation in the corn chip industry. Time to move on guys. Barring the ability to innovate to the apotheosis of the tortilla chip, we have reached the pinnacle for this salty snack.” It’s times like that when you realize, there is such a thing as over-innovation.

Similarly, Just-Drinks columnist Richard Woodward makes a hilarious case for over-innovation in the spirits industry.

I call that insignificant innovation. Under-innovation.

But this is really the nature of innovation, especially when everyone is talking about it. Innovation means something different to everybody. Creating something new is the goal of most innovation initiatives, but new does not mean valuable. Increasing the value created for customers should be the focus of initiatives intended to generate business growth. But before judging, we have to understand something: innovation needs space to sing. A lot of bad ideas will eventually yield a great ideas.

Let’s take for example all the startups that are being launched. Are they really innovative? It depends on who you ask. But if you ask normal human beings (the non-tech obsessed), the answer is most likely no.

An an article titled “Web Start-Ups Hit Cash Crunch” the WSJ reports that in contrast to the exuberance of most of this year, “for the past couple of weeks” startups are having a harder time raising early stage and Series A funding.

Word quickly spread through the web about the funding crunch and how capital is drying up (whether this is true or not is another story). I don’t want to focus on the issue of ‘is capital really drying up?’ but on where is the funding going to.

The problem with funding, IMHO, is that you don’t really know where the next breakthrough will come from. Again, the underlying assumption is that a lot of crappy ideas will eventually yield a few great ideas. And so all this funding is going on because you don’t want to lose an opportunity at funding the next breakthrough company.

The fact remains that we’ll keep seeing some undifferentiated businesses out there, Some VC’s pointed out that most of the ideas they get pitched are of the ‘me-too’ variety. I know of a few people in Mexico who have told me the same. There’s no way around it, a lot of tinkering around is happening.

Consumers perceive value not innovation

But even if we’re tinkering around, ‘innovation that works’ should be the goal. If anything maybe we should completely drop the word innovation from our vocabulary and turn the focus to value. Value innovation. Because unless we treat innovation as a source of inspiration, it’ll just come across as anything that is new just like those drinks.

As I told a buddy of mine this week, ‘if we really want to create a culture of innovation in Tijuana, incubators by themselves are not going to cut it. What we really should be focusing on is creating companies that first and foremost stand for something significant. To create a company like Wegman’s in up state New York or like Apple in Cuppertino. Beacons of hope, of inspiration. We need to create examples to follow.’

This also makes me think that the real question is not how does innovation save the economy but how does innovation transform the economy?

What do you think dear reader, have we lost sight of what innovation is really about?

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