Far from being an occasional creative eruption, innovation is the engine of long-term business growth. bloombergbizweek_341x199To generate consistent returns and sustain performance, companies must continually refresh their portfolio of offerings and the business models that drive them.

With so much at stake, innovation can’t be a hit-or-miss proposition based on vague prescriptions about fostering creativity. It must be managed like any other key process of the company. Before you can manage it, you must understand what it is—and isn’t.

What I mean by innovation can be summed up in three words: newness, commercialization, and impact. Newness isn’t limited to a product. What’s new could be a product, service, process, business model, or some combination of them all. Think of making medical counseling services and products for managing diabetes more available and affordable at pharmacies (many of which operate 24 hours a day) rather than at inconvenient and expensive doctors’ offices. Or think of the way Apple’s groundbreaking iPod hardware and the iTunes business model work together to reconfigure the way music is consumed.

If a new offering isn’t commercialized in some way, it remains an invention, not an innovation. The light bulb was an invention. The network of generators, meters, transmission lines, substations, and the light bulb—all of which Edison combined into a profitable new business—was an innovation. Too often what companies think of as innovation efforts are really isolated invention initiatives that, in lieu of institutional support from the parent company to find a path to market, are doomed practically from the start.

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