Why Most Startups Are Creative, Not Innovative

WIRED ran an opinion piece last week on writer Neal Stephenson’s fear that big thinking – the sort that propelled the space race – has slowed down considerably in present times. The piece tickled a thought that’s been skirting the edge of my mind for a while. I’m just as guilty as the next person when it comes to touting a novel idea, but where do we draw the line between what’s innovative, inventive, disruptive or merely creative? Wikipedia isn’t helping, if we go by these definitions.

An invention is a unique or novel device, method, composition, process or discovery.

An innovation is the creation of better or more effective products, processes, services, technologies, or ideas that are accepted by markets, governments, and society. It may also be an improvement upon a machine or product, or alternate means of achieving a process.

Creativity refers to the phenomenon whereby a person creates something new that has some kind of value.

disruptive innovation helps create a new market and value network, and eventually goes on to disrupt an existing market and value network, displacing an earlier technology.

Helpful, those.

In plain English – an invention is something that materially changes how our needs are met e.g. communicating via a telephone instead of “snail” mail or peeling vegetables with a peeler instead of a knife. Innovation is when we “tweak” these inventions to become more effective or user-friendly e.g. communicating on the run with a cell phone or a peeler with a better grip. Creativity is a subset of both so while an invention or an innovation are often creative, the converse is not necessarily true. A disruptive innovation completely displaces an earlier technology over a period of time e.g. mobile phones. I’ve crystallized some of this in a rough illustration – I suspect this will evolve over time as I talk to more of you.

So lets consider what BIG inventions we’ve seen lately. The internet, alternative energy, asteroid space mining all qualify although only the last has really occurred in the last decade – lately, BIG inventions have been noticeably sparse as Neal Stephenson has observed. BIG innovations would include social media and mobile technology. BIG disruptive innovations could arguably include open source technology, the cloud, and crowd funding.

What about the startups that we hear about in the news every day? Going by the above definitions, Facebook is merely a creative take on social media, and the freelance economy is a creative, more efficient way to recycle existing resources. Both Fred Wilson and Brad Feld – two VCs who have earned our respect many times over – recently talked about the noise in the entrepreneurial ecosystem on their respective blogs. So I’m not alone in calling many of these startups merely creative, not innovative.

That said, I’d argue that at least some of these startups are serving an important purpose – they’re encouraging ideas and helping us become more tolerant of mistakes. James Joyce believed that mistakes are the “portals of discovery”. IBM’s Thomas Watson said “If you want to succeed, double your failure rate.” For decades, conventional thinking has dictated that process and structure are critical to a job well done. That may be so, but they also kill aberrant behavior which is inherent in thinking up a novel idea. To those who say invention and innovation are dead today, I’d say – wait. Today’s startups are not only a financial phenomena; they are also a cultural phenomena that pave the way for inventions to come. Who knows, more effective or cheaper healthcare delivery or diagnosis today could lead to a cure for the common cold ten years from now. Now that would be a BIG invention worth talking about.

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