1 00:00:05,442 --> 00:00:06,900 BILL AULET: In the last section, we 2 00:00:06,900 --> 00:00:09,500 talked about the two types of entrepreneurship, 3 00:00:09,500 --> 00:00:13,000 innovation-driven entrepreneurship and Small, 4 00:00:13,000 --> 00:00:15,570 Medium Enterprise, or SME entrepreneurship. 5 00:00:15,570 --> 00:00:18,690 In this section, we're going to talk about, what is innovation? 6 00:00:18,690 --> 00:00:20,660 Because that's fundamental to what 7 00:00:20,660 --> 00:00:23,530 we're going to do going forward. 8 00:00:23,530 --> 00:00:25,500 So what is innovation? 9 00:00:25,500 --> 00:00:27,690 At MIT, we like equations. 10 00:00:27,690 --> 00:00:30,040 So we like to define innovation. 11 00:00:30,040 --> 00:00:31,870 And this comes from one of my first classes 12 00:00:31,870 --> 00:00:35,360 at MIT from Ed Roberts, the chairman of the Martin Trust 13 00:00:35,360 --> 00:00:37,240 Center for MIT Entrepreneurship. 14 00:00:37,240 --> 00:00:39,250 And he defined entrepreneurship in a way 15 00:00:39,250 --> 00:00:40,900 that I thought was excellent. 16 00:00:40,900 --> 00:00:55,690 He said, "Innovation equals invention." 17 00:00:55,690 --> 00:00:57,530 And let me just stop here. 18 00:00:57,530 --> 00:00:59,280 Innovation equals invention. 19 00:00:59,280 --> 00:01:02,980 Often people mistake these two things for the same thing. 20 00:01:02,980 --> 00:01:04,980 Innovation equals invention. 21 00:01:04,980 --> 00:01:06,100 They are not. 22 00:01:06,100 --> 00:01:09,950 Innovation is something that generates value for the world. 23 00:01:09,950 --> 00:01:11,950 It makes something faster, better, cheaper. 24 00:01:11,950 --> 00:01:14,480 It gives someone some great satisfaction. 25 00:01:14,480 --> 00:01:18,560 An invention is an idea, a technology, a patent. 26 00:01:18,560 --> 00:01:21,750 In and of itself, it does not generate value. 27 00:01:21,750 --> 00:01:24,640 So these two are not the same thing. 28 00:01:24,640 --> 00:01:26,490 And sometimes you see them interchange. 29 00:01:26,490 --> 00:01:28,340 And that's not correct. 30 00:01:28,340 --> 00:01:33,460 So innovation equals invention times commercialization. 31 00:01:43,650 --> 00:01:47,730 And when we look at this equation of innovation, 32 00:01:47,730 --> 00:01:51,260 something of value, it requires a new idea. 33 00:01:51,260 --> 00:01:54,240 And then, it requires someone or some organization 34 00:01:54,240 --> 00:01:57,060 that is going to commercialize that idea 35 00:01:57,060 --> 00:01:59,210 and to make it a value to the world. 36 00:01:59,210 --> 00:02:03,030 So it's important to understand that an idea by itself 37 00:02:03,030 --> 00:02:04,020 is not valuable. 38 00:02:04,020 --> 00:02:05,190 Ideas are cheap. 39 00:02:05,190 --> 00:02:08,030 Is the commercialization when combined with it 40 00:02:08,030 --> 00:02:10,660 that makes them extraordinarily valuable. 41 00:02:10,660 --> 00:02:13,770 So while sometimes when I used to say 42 00:02:13,770 --> 00:02:16,730 invention plus commercialization, in fact, 43 00:02:16,730 --> 00:02:17,690 it's times. 44 00:02:17,690 --> 00:02:22,350 It's a product because if I don't have one, then it's zero. 45 00:02:22,350 --> 00:02:23,730 Then, I have no innovation. 46 00:02:23,730 --> 00:02:26,960 If I have no new idea, I can't commercialize anything. 47 00:02:26,960 --> 00:02:28,270 Therefore, it's zero. 48 00:02:28,270 --> 00:02:30,670 If I have an invention and no commercialization, 49 00:02:30,670 --> 00:02:33,110 I have no innovation as well. 50 00:02:33,110 --> 00:02:34,830 So it's actually a product. 51 00:02:34,830 --> 00:02:36,920 And we found this very, very helpful 52 00:02:36,920 --> 00:02:40,010 to help explain to people what is innovation 53 00:02:40,010 --> 00:02:42,067 when we're talking about innovation-driven 54 00:02:42,067 --> 00:02:42,775 entrepreneurship. 55 00:02:45,630 --> 00:02:51,970 So next, I want to talk about, what drives this? 56 00:02:51,970 --> 00:02:55,890 When we look at the idea, people think 57 00:02:55,890 --> 00:02:59,040 that this drives innovation. 58 00:02:59,040 --> 00:03:02,440 It's, in fact, the commercialization aspect of it 59 00:03:02,440 --> 00:03:05,030 that's very, very difficult. If you 60 00:03:05,030 --> 00:03:08,240 look at the most innovative company in the world 61 00:03:08,240 --> 00:03:13,000 today, which I would argue is Apple, the underlying 62 00:03:13,000 --> 00:03:17,320 inventions that created Apple, great innovations starting 63 00:03:17,320 --> 00:03:19,890 with the Mac, did not come from themselves. 64 00:03:19,890 --> 00:03:21,940 It actually came from Xerox PARC. 65 00:03:21,940 --> 00:03:24,480 It was windows, icon, mouse, pointer. 66 00:03:24,480 --> 00:03:27,120 That invention, they commercialized 67 00:03:27,120 --> 00:03:28,950 to create innovation, which created 68 00:03:28,950 --> 00:03:31,210 terrific value in the marketplace 69 00:03:31,210 --> 00:03:34,750 and for their customers and for themselves, 70 00:03:34,750 --> 00:03:36,840 their investors as well. 71 00:03:36,840 --> 00:03:39,150 Likewise after that, you look again 72 00:03:39,150 --> 00:03:43,650 that the invention for the underlying and enabling idea, 73 00:03:43,650 --> 00:03:47,429 technology from the iPod was MP3, which 74 00:03:47,429 --> 00:03:48,720 did not come from Apple, again. 75 00:03:48,720 --> 00:03:50,430 That came from Fraunhofer. 76 00:03:50,430 --> 00:03:52,510 But what Apple was terrific at was 77 00:03:52,510 --> 00:03:55,580 commercialization to create innovation 78 00:03:55,580 --> 00:03:58,260 and, again, to create great value for their customers 79 00:03:58,260 --> 00:03:59,600 and their shareholders. 80 00:03:59,600 --> 00:04:02,240 So this definition of innovation we 81 00:04:02,240 --> 00:04:05,040 found very, very helpful to make clear 82 00:04:05,040 --> 00:04:08,180 that innovation is a combination of a new idea, 83 00:04:08,180 --> 00:04:09,050 a new technology. 84 00:04:09,050 --> 00:04:11,230 But then, it has to be commercialized and mapped 85 00:04:11,230 --> 00:04:13,790 to some customer in the real world where 86 00:04:13,790 --> 00:04:16,030 it will generate value.