The Innovation Formula

The press seems littered these days with articles bemoaning Canada’s poor record at Innovation.  Unfortunately, I think much of what is written and said misses the point. Let’s go back to what Innovation actually is: It is successfully taking a new idea, product, process or something to the market. As such, this process involves two distinct parts. The first part involves coming up with the idea, developing it into a product etc., and this is what everyone looks at. They use patents and such to measure new idea creation. However the second part of innovation is actually the most important part. That is taking the idea to the market. This is marketing, sales, business development, whatever you want to call it. In formulaic terms:

People who comment on innovation continually forget the importance of marketing so they don’t measure it in looking at innovation. Statistics show that rapid growth of new software companies is more of a function of marketing that it is of R&D. The more successful startups spend much more on sales and marketing than they do on R&D and the ratio is 2:1. If marketing is twice as important in successful startups as R&D then this same sort of ratio must hold true for larger companies. This if you want to find innovators, you must look for marketing as a much more important factor than R&D in the success of innovators.

When people talk about innovation, when governments fund it, when companies do it, they forget the second part of innovation, that of marketing and this in fact is the most important factor in success of innovation.