I recently read an article that referenced Jeffrey Phillips' article, "Innovation, Invention and Entrepreneurs," and its wisdom. Having spent a great deal of time dealing with innovation, invention and entrepreneurs, I was intrigued. Although I support Mr. Phillips desire to clarify these keywords, after reading his article I believe that some further clarification is warranted.
Lets start with Mr. Phillips comment that "[a]n entrepreneur is a person who starts a new business." In order to analyze this statement, we must first define what is meant by entrepreneur and by close association “innovation.” The terms “entrepreneur” and “innovation” are widely used, yet often misunderstood by the public, academics, professionals and government officials. Ask ten people about the difference between an entrepreneur and an innovator and you will get ten answers. According to The National Commission on Entrepreneurship, entrepreneurs are “men and women who lead small companies that are based on an innovation and are designed to grow quickly — at an annual rate of 15 to 20 percent.” Two key aspects of this definition are “fast growth” and “innovation.” According to leading scholars and professionals, innovation deals with an idea or invention and the commercialization of that idea or invention. Another way to think about this is that entrepreneurship is a sub-set of innovation. Every entrepreneurial venture is an example of innovation, but not every innovation deals with entrepreneurship.
For example, what makes an entrepreneur different from a person who starts up a standard pizza place? The pizza place owner launches a business based on an existing product concept and proven business model. An entrepreneur launches a business based on either a new product concept and/or new business model. In either case the entrepreneur is dealing with some type of innovation from incremental to radical. The pizza place owner is not dealing with any innovation at all.
Although the pizza place owner and entrepreneur are both taking risks when they launch their businesses, the entrepreneur deals with a greater degree of uncertainty. Uncertainty is a classic characteristic of the innovation process. Most innovations have some level of technical, market, resource and organizational (TMRO) uncertainty associated with the process. If you compare the degree of TMRO uncertainty between the entrepreneur and pizza place owner, you'll find that TMRO uncertainty is higher for the entrepreneur.
With so many books and articles written about innovation, invention and entrepreneurship one would think that we would all have a clear understanding of these basic concepts, but from professionals to academics these terms are often twisted to fit the needs of the moment.
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