one of the key concepts to understand is how innovation today differs from invention and why innovation in business must be pragmatic. When Thomas Edison developed the system of electrification and the electric light bulb, and when Ford perfected the assembly line to produce an affordable automobile, the Model T, those were inventions. one replaced gas as the primary energy for lighting at work and at home, and the other made gas (fossil fuel)-driven vehicles as inexpensive as horses and horse-drawn carriages. What was formerly beyond the imaginative daydream of the common person became an essential part of new routines and enhanced lifestyles. These inventions were technological leaps. The scale of the leaps was significant in one dimension but lacking in others. The Model T was noisy, uncomfortable, and dangerous to start, and early electric light was not as warm and attractive as gaslight or candles. We are at a point in the evolution of technology where inventions are still occurring, but innovation has replaced invention as the main day-to-day driving force in the global economy.
It is common for a word to shift in meaning to reflect changes that are occurring in business or the world at large. The term innovation is now being used to describe a new force in business in the same way the word quality shifted in emphasis and in meaning in the last two decades of the twentieth century. What we mean by innovation extends beyond invention of new technology and includes a thoughtful and insightful application, delivery, extension, or recombination of existing technology. Although innovation might involve a big engineering leap of technological invention, innovation may simply be technologically incremental. The key is that an innovation is a valued leap from the viewpoint of consumers whether or not it is incremental from the producer’s standpoint.
innovation, then, is a new comprehensive approach to product and service development that scores high on consumer value, connecting to and altering consumer lifestyles. innovation is the ability to find nonobvious opportunity in what, after the fact, seems obvious and needed to everyone else. It is the ability to see extraordinary potential in ordinary events. It is the ability to see how to fulfill the desire of others, to elevate their common, everyday world into uncommon lifestyle experiences. We have further clarified the term innovation by adding the word pragmatic. Pragmatic innovation is a balanced approach that not only explores a range of interesting alternatives but converts that exploration into successful, profitable products. Pragmatic innovation is a process of inspired management of diverse teams working on a significant opportunity in the market. We use the term pragmatic innovation and innovation interchangeably throughout this book.
Whereas everyone can be innovative in addressing the problems in his or her own personal life, managing innovation in a corporate context is a more complex challenge. In business, innovation must be not only the development of products or services that are useful, useable, and desirable, but it also must be marketable and profitable. Balancing new insights with the practical realities of the marketplace requires a balance of vision and business acumen. Finding the right pH value between a product that is too acidic for the public to digest and one that is too basic to generate appeal is the challenge that companies face. The stakes are significant, but so are the profits. The point is that “basic” commodity products will not generate significant profit. Companies often choose the basic option because they see the opposite as dangerous, that developing “acidic” products might be trendy but too costly to risk without a clear return on profit. Instead, finding the balanced approach of pragmatic innovation will grow the company and keep it competitive in today’s global economy.
A great example of innovation with minimal technological advances is the redesign of a pager by Motorola in the 1990s that had few enhanced features but offered colorful faceplates. Based on the faceplates alone, Motorola was able to successfully charge an extra $15 per unit.1 Or consider the design of the Palm V, a commercially important advancement in the generations of Palm PDA devices. IDEO designed the unit for Palm. According to Tom Kelley, general manager of IDEO, the Palm V was designed with essentially the same technology as the previous-generation Palm but was aesthetically and ergonomically designed to appeal to executives and to women in general. The device was given organic lines, made thinner, and finished with brushed aluminum. The product was successfully sold at an additional $150 and expanded the PDA market. 
Invention is often the output of an individual genius, and inventions also come out of groups dedicated to an objective that results in a superior technological advance. The focus in invention is on the device more than the experience. Inventors are happy with Rube Goldberg solutions that work, failing to see the value in ergonomics and aesthetics. Innovation is customer-driven, a carefully crafted integrated response to customer needs and desires. It must be broader in scope to take into account the myriad of factors that make products successful. Starbucks did not invent coffee; it changed the way you experience it. Starbucks took a risk pushing the quality of the taste of coffee, the feeling of the drinking environment. It charged a price that no one would have anticipated, but everyone was willing to shell out. Chrysler did not invent the PT Cruiser; it created an innovative retro-future interpretation of a hot rod, a small van and a station wagon, while simultaneously extending its established brand. General Motors took the Hummer and turned it into the ultimate statement of fashion and security and hit a post-9/11 emotional need to make the bulky and awkward into a trend. BodyMedia, as we will soon see, did not invent sensors to measure acceleration, heat flux, skin temperature, or skin response. Their innovation was to extend sensor technology into a contemporary-lifestyle wearable product with easy-to-interpret and up-to-the-minute personal health data being collected 24/7 regardless of the activity.
Invention has an important role in advancing society’s abilities to meet demanding needs. Consider the technological challenge for fuel-cell technology, biodegradable materials, and nanotechnology to noninvasively perform surgery. But invention tends to be focused along the technology dimension only. The invention—the technology—is not enough. A successful product needs to consider the complete delivery of the technology as an object or service to be used, desired, and considered useful. In other words, the successful delivery of a new technology requires innovation.
Invention and discovery must continue. We do not question the basic and core value of these two activities. The difference is that we are now talking about pragmatic innovation rather than applied technology and invention. Pragmatic innovation requires observation, interpretation, and cycles of prototyping comprehensive versions of intended solutions, not only of technology. This is as true in consumer products, the medical industry, and business-to-business. The other important concept of today’s innovator is that he or she is customer – driven, not invention-driven. Finding what customers want and developing innovative solutions often means that you must bring new capabilities to a company to meet emerging customer needs. It also means that the company is not defined by its history of invention or by the number of utility patents it owns. The company’s core is its knowledge of the customer and its capability to meet customer needs.
Pragmatic innovation is driven by and must respond to three factors: social change, economic situations, and technical advances. Each opportunity for a new product arises due to different combinations of changes in these factors. The social dimension is especially interesting. Responding to changes in trends and developing solutions that meet those trends tends to be the most successful strategy from a brand standpoint and allows for fat profit margins. The Segway is a great technological solution for personal transport, but the company failed to predict the lack of societal acceptance. The Prius, introduced by Toyota, anticipated the growing acceptance of hybrid power magnified by an increase in gasoline prices. whereas both Honda and Toyota made initial hybrid versions that were met with mixed results, Toyota stuck with it and found a breakthrough solution.
Developing innovative products is not easy. The challenge now is not inventing and rushing new unrefined technology into the marketplace. The challenge is to provide more integrated, holistic solutions that address consumer needs, products, and services that respond to the changes in social conditions, economics, and technology. Given consumer expectations at home and at work, a product must successfully maximize its core technology, have a clear use in daily life, be easy to use, and be attractive enough to appeal to sensory desires. Many companies have been trying to compete by being excellent in one or two of these categories. we fully recognize the challenge in optimizing all these categories, but it is the level required for effective global competition and the core to achieving successful innovation. To be an innovative company, everyone must contribute in his or her own way to changing the culture and creating an environment that generates true consumer value.
Everybody, in some way, is an innovator at either work or home. Companies need to help their employees turn their innovation abilities, often focused on their avocation at home, into innovation in their vocation. Almost every way that you find to improve upon a task is an innovation. You may have found the perfect way to save time getting to work. You may have a unique strategy for raking leaves or for shoveling snow. it may be that you find yourself pressed for time and are preparing the same meal over and over, such as macaroni and cheese. sometimes, you just open a package of the Kraft mix, that blue box sitting in everyone’s pantry. But at other times, you might cook it from scratch. It’s pretty easy. You boil the elbow noodles. Mix in some melted butter, milk, shredded cheddar. sprinkle with breadcrumbs, and bake. You might experiment a bit by changing the pasta to penne and adding a dash of mustard and Worcestershire sauce. Each change is an innovation, a modification, or extension from the original. Not every example of personal innovation converts into a profitable idea, and some of the innovative ideas that work best for you might be rejected even by your family. When making a meal, you can afford to have some ideas that work and some that do not. When companies innovate and fail, the price is much higher and the factors that dictate success and failure are far more complex. The process of experimentation to find the right solution, however, is fundamentally the same. You can be the average Joe making adjustments to improve your car in your garage, or Steve Jobs inventing the personal computer industry in his.
How do you instill that feeling of risk and experimentation in employees in a 100-year-old company with publicly traded stock in a mature industry with global competitors aimed at defeating you in every market segment in which you compete? When you do get that new insight, how do you translate it into a useful, useable, and desirable solution that will be produced flawlessly, distributed, and sold in a systematic and thoughtful way in an appropriate amount of time to be ahead of your competition? If that is not enough, your solution has to stay competitive long enough to generate a return on investment and contribute to the company’s well-established reputation for excellence. This is exactly what Dee Kapur was faced with when he started the program to develop the 2004 Ford F-150.