Often we read and hear about R&D (Research and Development) and innovation as if they were interchangeable concepts, as if they were the same or very similar.
Sometimes, in an article from a media outlet, we might come across something like '...the company's strong commitment to R&D,' and in the next paragraph, '...with innovation being important for the company, as mentioned earlier...' implying that, in some way, R&D and innovation are the same thing.
However, this is not the case, and all of us who are interested in the world of innovation need to have a clear understanding of the difference between the two concepts and how they relate. If we don’t start from that solid base, we will be confused the rest of the journey.
Let's get to the heart of the matter.
R&D
Basic science discovers or invents things, that is, it creates new knowledge through the application of the scientific method. The goal of research is to generate this new knowledge.
For example, the first transistor was invented at Bell Labs by scientists John Bardeen, Walter Brattain, and William Shockley.
By the way, Shockley would be indirectly connected to the creation of Intel, the giant in microprocessor manufacturing, and a whole movement of spin-offs that would occur in Silicon Valley after part of his team decided to stop working for an unpleasant boss, to put it mildly, and chose to start their own company. But that's another story we can share another day.
No. The transistor was an invention that was the outcome of an R&D (research and development) effort in the scientific world.
Innovation
New ideas applied that create value, that's my definition of innovation. There are as many definitions as one might seek, but I intend for this one to encapsulate well what we want to understand about innovation.
New ideas
Applied
Create value
These are the three key elements that, for me, innovation must have.
Let's define them to ensure we're all talking about the same thing.
New Ideas: This one is self-explanatory.
Applied: For something to be an innovation, it can't live solely in a scientific paper, in the form of an idea in an entrepreneur's head, or in an inventor's laboratory. It has to be applied to solving a real problem in a real market.
This connects with the third element, create value. This vague concept simply means solving someone's problem. That's creating value. And nothing else.
So, innovation is new ideas applied that create value: new ideas that solve a real problem for some segment of customers in a real market, and, therefore, it's applied knowledge.
If we want to summarize it even further for our conversation in the bar:
R&D is investing money to generate knowledge.
Innovation is investing knowledge to generate money.
And then, how does the R&D that invents the transistor relate to the innovation represented by the radio?
When someone connected seemingly unrelated dots and put a few transistors into a plastic box because they knew it could tune in to radio signals, then... an innovation happened: the radio.
The radio is an innovation. The transistor is the invention, the R&D.