The phrase “innovate or die” has been around for decades. Eventually, the notion caught on and the term “innovation economy” was coined. Greg Feldmann, President of Skyline Capital Strategies, writes, “The ‘innovation economy’ is a phrase that has become mainstream in recent years. But actually, it is not a new concept. Economist Joseph Schumpeter argued in his book Capitalism, Socialism and Democracy, published in 1942, that the foundation of economic growth is directly correlated to the pace of technological innovation and entrepreneurship. However, it has taken decades for countries around the world to embrace this as a central economic planning principle.”[1] Matthew Yglesias (@mattyglesias) adds, “Nothing matters more for economics and human living standards than innovation. It’s innovation that has allowed us to cure diseases and extend life spans. It’s innovation that has drastically increased the pace of transportation and communication, and ultimately it’s innovation that has let most people do high-wage work rather than subsistence agriculture.”[2] Since innovation is so important to society in general and companies specifically, learning how to make enterprises more innovative seems to be in everyone’s best interest.

Where does innovation come from?

There has always been the myth about a lone genius — like Leonardo da Vinci or Thomas Edison — being the source of creative ideas and earth-shaking innovations. Yes, they were smart and creative; but, they also had teams working with them. Dylan Minor, an assistant professor at the Kellogg School of Management, Paul Brook, Chief Customer Officer at Spigit, and author Josh Bernoff, assert their research demonstrates innovation is replicable (i.e., it can be “based on definable pipelines and applied technology to manage those pipelines”).[3] If true, that’s good news for businesses. Their conclusions are based primarily on research conducted by Minor about companies using Brook’s company’s product. They write:

“Dylan has analyzed five years of data from 154 public companies covering over 3.5 million employees that have used an idea management system called Spigit. For the millions of employees of these companies, the idea management system functions a little like Facebook — people can post ideas, get votes, deliver or respond to feedback, and develop the ideas into innovations that make a difference to the company. The innovation teams at these companies use them to track and process all the ideas and whether the company committed to putting them into practice. Some companies use this software for process innovation; others develop new products; others seek efficiencies and cost savings. Once you put innovation into a system like this, you can track everything. We know how many innovation challenges the companies are running, how many people are suggesting ideas, and how many ideas they suggest. We know how many people are participating in other ways – by voting or making comments, for example. And we also know how many of those ideas get through the endpoint of the challenge, which is where the company’s management determines which ideas to pursue further.”

What they concluded was this: “The key variable that we identified across all the companies in our analysis is the ideation rate, which we define as the number of ideas approved by management divided by the total number of active users in the system. Higher ideation rates are correlated with growth and net income, most likely because companies with an innovation culture not only generate better ideas, but are organized and managed to act on them.” While their research points to the fact that generating and managing a large number of ideas is important, it doesn’t address how you get people to generate good ideas in the first place. Some people, like da Vinci and Edison, seem to have more ideas than others. The big question is: How do raise children to be idea generators?

Raising innovators

Yglesias reports, “A unique combination of data sets for the first time lets us see more about who is — and, crucially, is not — able to successfully pursue a career as an inventor, and thus learn more about what’s arguably the biggest mystery in all of economics.” Before looking at the empirical evidence to which Yglesias refers, I should point out that invention and innovation are not exactly the same thing. That’s why the words “innovator” and “inventor” are both part of our vocabulary. Nuance matters. Unfortunately, Yglesias uses the terms interchangeably. He writes:

“[Researchers] discovered that both an actual ability to invent things and early life exposure to a culture of innovation and opportunity are crucial to driving inventions. Ability itself is, of course, unevenly distributed. But in the United States, so is opportunity — with huge numbers of highly skilled children from unfavorable backgrounds seemingly locked out of pathways to careers as inventors. ‘High-scoring black kids and Hispanic kids go into innovation at incredibly low rates,’ says Raj Chetty, a Stanford economist who led the research team. ‘There must be many ‘lost Einsteins’ in those groups’ — children who appear to have been similarly able at a young age to their white and Asian peers but who never got a chance to deploy their skills.’ Girls also grow up to be inventors at a much lower rate than their early-life technical skills would suggest, and though the gender gap is closing, it’s doing so very slowly. On the current pace of increase in women’s involvement in innovation, it would take 118 years to reach gender parity.”

If we are going to prosper as a society, we need to ensure children are given opportunities to succeed. If, as Minor, Brook, and Bernoff assert, idea generation is the key to innovation. We need to encourage our children to think creatively about problems they face. “Gaps in opportunity for talented kids with low socioeconomic status don’t just hold back poor, female, black, or Latino children as individuals,” writes Yglesias, “they also impose potentially enormous losses to society as a whole.”

Summary

John Nosta, Founder of NOSTALAB, asserts, “To survive in today’s hostile world, a company must out-think and out-innovate the competition.”[4] I wouldn’t limit that statement to “today’s hostile world.” For the foreseeable future, survival in the business world will depend on innovation. That means we need to start today to help children of every race, creed, and color to achieve their potential. We can’t afford to leave any creative minds behind.

Footnotes
[1] Greg Feldmann, “Feldmann: Why innovation matters,” The Roanoke Times, 4 January 2018.
[2] Matthew Yglesias, “Groundbreaking empirical research shows where innovation really comes from,” Vox, 5 December 2017.
[3] Dylan Minor, Paul Brook, and Josh Bernoff, “Data From 3.5 Million Employees Shows How Innovation Really Works,” Harvard Business Review, 9 October 2017
[4] John Nosta, “The Evolution Of Innovation And The Rule Of Punctuated Equilibrium,” Forbes, 7 December 2017.