Introduction - Innovation – from new ideas to value creation
What is innovation, what forms can innovation take – and why are people, knowledge and implementation crucial?
Innovation is one of the most widely used concepts of our time. It is used for new products, technology, digital services, organizational changes, business models and social solutions. But not everything that is new is innovation. Innovation research shows a much richer field of study, from Joseph Schumpeter's early theories of economic development to Peter Drucker's systematic innovation, Clayton Christensen's disruptive innovation, Henry Chesbrough's open innovation and modern research on organizations, users, employees and innovation systems. This course series examines what innovation actually means, how different forms of innovation differ from each other, and how innovation can contribute to value creation.
Innovation is more than a good idea
Innovation is often associated with creativity, inventions and technological breakthroughs. The story of innovation is therefore often told through spectacular products, entrepreneurs and businesses that have changed entire markets.
But innovation is a much broader phenomenon.
An idea can be the starting point for innovation, but an idea is not an innovation in itself. An invention can represent significant scientific or technological innovation without necessarily being put into use. New technology can be developed without creating significant changes for users, businesses or society.
Implementation and application are therefore central to the modern understanding of innovation.
The OECD and Eurostat's Oslo Manual 2018 , a key international reference for defining and measuring innovation, defines innovation as a new or improved product or process that differs significantly from the actor's previous products or processes, and that has been made available to potential users or put into use.
This implies a crucial distinction between developing something new and realizing innovation .
Innovation only happens when knowledge, ideas and solutions move from possibility to application.
A field with long historical roots
Modern innovation research has developed through contributions from economics, organizational theory, strategy, entrepreneurship, technology, psychology, and social sciences.
Joseph A. Schumpeter was particularly influential in understanding the role of innovation in economic development. He described how new combinations of products, production methods, markets, inputs, and organization can transform the economy. Later, the notion of creative destruction became central to understanding how new solutions can challenge and replace existing structures.
Peter F. Drucker shifted attention to innovation as something that businesses can work on systematically. Innovation does not have to be the result of a random moment of genius. Changes in markets, demographics, processes, knowledge, and people's perceptions can be analyzed as sources of new opportunities.
Later, researchers have developed theories that describe different aspects of the innovation process.
Clayton M. Christensen developed the theory of disruptive innovation and showed how certain types of new players and solutions can develop from emerging markets and eventually challenge established businesses.
Henry Chesbrough introduced the concept of Open Innovation and challenged the notion that the business itself must develop, own and commercialize all relevant knowledge. Innovation can be created through knowledge flows across organizational boundaries.
Eric von Hippel has shown the importance of users and lead users as sources of innovation.
James G. March's research on exploration and exploitation , later further developed through Michael Tushman and Charles O'Reilly's research on organizational ambidexterity, has contributed to the understanding of how businesses must handle both the development of existing activities and the exploration of new opportunities.
Teresa Amabile has conducted extensive research into creativity and the organizational conditions that affect people's ability to develop new ideas, while Amy Edmondson's research on psychological safety and learning organizations has provided important perspectives on the environments where people dare to ask questions, experiment, learn, and challenge established ways of working.
Innovation is therefore not one theory.
It is a comprehensive field of research that attempts to understand how new ideas, new knowledge and new combinations actually turn into solutions that are put into use .
Innovation and value creation
Innovation has a natural connection to value creation.
New products can create value for customers. New work processes can free up time and resources. New services can solve needs better than previous solutions. New business models can change how value is created and distributed. Innovation in the public sector can provide better services, greater accessibility or better utilization of community resources.
But innovation does not automatically create value.
A business can invest significant resources in technology that no one wants to use. A new product can fail. An organizational change can make work processes worse. A new business model can create value for one player while others lose.
Innovation therefore involves both opportunities and uncertainties.
This makes the connection between innovation and value creation particularly interesting. The question is not just whether something is new, but what value it creates, for whom the value is created, how it arises and how it is distributed.
This issue runs through the entire subject series and connects Innovation directly to the subject universe of Value Creation .
Content – Innovation
What must be new, how new must it be, and when does an idea or invention become an innovation?
The article examines the development of the concept of innovation through, among others, Joseph Schumpeter, Peter Drucker and the OECD's Oslo Manual . We distinguish between idea, creativity, invention, implementation and innovation and examine why different researchers emphasize different parts of the innovation process.
The goal is to establish a precise professional definition that the rest of the series can build on.
Much innovation occurs through continuous improvements to existing products, services and processes. Other innovations represent much larger technological, organisational or market leaps.
The article examines the difference between incremental and radical innovation , how the concepts have evolved in research, and why the degree of novelty must be assessed in relation to what existed before.
We also examine why radical innovation is not necessarily the same as disruptive innovation.
Few innovation concepts have become more widespread – and at the same time used more imprecisely – than disruptive innovation .
Based on Clayton Christensen's research, we examine what the theory actually describes, how disruptive development processes differ from other forms of innovation, and why not every technology or business that changes a market is therefore disruptive.
Through documented examples, we examine both the theory's explanatory power and limitations.
Knowledge is not only found within the company's own walls.
Henry Chesbrough's theory of Open Innovation describes how businesses can use internal and external knowledge flows and multiple paths to market in their innovation efforts.
The article examines how collaboration with research communities, customers, suppliers, entrepreneurs, partners and other businesses can contribute to innovation, and why open innovation processes simultaneously place new demands on organization, knowledge sharing and the ability to realize value.
What is actually changing when we talk about innovation?
Innovation can affect the product or service itself, the way the business works, how it meets the customer, how it organizes its activities or how it creates and realizes economic value.
The article examines key types of innovation and how their classification has developed, including through the OECD's Oslo Manual .
Innovation does not necessarily occur in a research department or in the manager's office.
Customers and users know problems, needs and usage situations.
Employees encounter work processes, customers, technology and
practical challenges every single day. This knowledge can be a significant innovation resource.
Based on Eric von Hippel's research on user innovation and Teresa Amabile's research on creativity, the article examines how people inside and outside the organization can contribute to innovation.
Here, the subject universes of Innovation and the Customer meet directly.
Why do some businesses manage to innovate again and again, while others have great difficulty moving away from what they already do?
Innovative ability is about more than ideas and technology.
Organizations must be able to learn, experiment, prioritize, collaborate, and simultaneously operate existing businesses.
The article examines James March's distinction between exploration and exploitation , Michael Tushman and Charles O'Reilly's research on the ambidextrous organization, Peter Drucker's systematic innovation, and research from Teresa Amabile and Amy Edmondson, among others, on creativity, work environment, learning, and psychological safety.
Here we also examine businesses that over time have attempted to make innovation an organizational capability rather than a stand-alone project.
The last article brings the threads together.
When does innovation actually turn into value creation?
We investigate how innovation can create economic, organizational, human and societal value – and why innovation can simultaneously displace existing businesses, expertise and solutions.
From Schumpeter's creative destruction to modern innovation ecosystems, we examine the relationship between knowledge, people, capital, businesses, the public sector, customers and society.
Innovation is therefore not the end of the value creation process.
Innovation is one of the mechanisms that can turn new knowledge, new ideas and new combinations into values that people can actually use .
From theory to practice
Research is the foundation for this course series. But innovation is also understood through the meeting between theory and practice.
The work on innovation at The Invisible Capital is therefore also based on a professional learning journey through Innovation and Commercialization at BI , international professional seminars in Oxford and study trips and seminars in San Francisco .
These experiences do not represent documentation for the theories presented in the articles. The research does. But they provide a practical perspective on how the theories can be understood, discussed and applied when academic models encounter businesses, technology, people and real-world issues.
Innovation is connected to the rest of the business
Innovation rarely happens in isolation.
Customer insights can uncover problems and needs that provide a basis for new solutions. E-commerce can change how products are distributed, presented and purchased. Digitalization can fundamentally change existing processes or enable services that previously could not exist. Artificial intelligence can affect how businesses develop knowledge, analyze problems, experiment and create new products and services.
Therefore, Innovation is connected to several of the disciplines at Invisible Capital :
Value creation examines how economic, human and societal values arise.
The customer examines how needs, experiences, relationships, satisfaction and customer insights affect the business.
E-commerce and customer experience shows how technology, commerce, and customer behavior have evolved together.
Digitalization and artificial intelligence examines technology as a tool and how new technological opportunities affect people, organizations and society.
Together, these disciplines point towards a fundamental point:
Innovation is not just about inventing something new. Innovation is about making knowledge, ideas and opportunities applicable – and through application, creating new or better values.
Recommended literature
Innovation is a comprehensive field of research that has developed through contributions from economics, strategy, organizational theory, entrepreneurship, technology, and research on people and organizations. For those who wish to delve deeper into the theories and concepts covered in this series, there are a number of key original works and textbooks.
Among the most important contributions are Joseph A. Schumpeter's work on innovation, entrepreneurship and creative destruction, Peter F. Drucker's research and writings on systematic innovation, Clayton M. Christensen's theory of disruptive innovation and Henry Chesbrough's work on Open Innovation. Eric von Hippel's research on user innovation and lead users provides important perspectives on the role of users, while James G. March, Michael Tushman and Charles O'Reilly have had a major impact on the understanding of exploration, exploitation and organizational ambidexterity.
Teresa Amabile's research on creativity and organizations and Amy Edmondson's research on learning and psychological safety contribute to the understanding of the human and organizational prerequisites for innovation. The OECD and Eurostat's Oslo Manual is also a key international reference for how innovation is defined, classified and measured.
Through the individual articles in the Innovation series, relevant literature and research are presented in more detail. The goal is to return to key original sources where possible, while also using more recent research to show how the theories have developed, been challenged, and are applied today.
Authors: Clayton M. Christensen and Michael E. Raynor
Short review
In this sequel to The Innovator's Dilemma, Clayton Christensen shows how businesses can translate innovation theory into practical strategy. The book explains how companies can identify new growth opportunities, develop disruptive innovations, and build organizations that thrive in rapidly changing markets.
Why we recommend the book
While The Innovator's Dilemma explains why established businesses are often challenged, The Innovator's Solution provides concrete advice on how to meet the challenges. The book is therefore a natural next step for anyone who wants to understand innovation, strategy and long-term value creation.
Authors: Jeff Dyer, Hal Gregersen and Clayton M. Christensen
Short review
What characterizes people who create groundbreaking innovations? The authors identify five key skills – observation, questioning, experimentation, networking and association – that are common to the world's most innovative leaders and entrepreneurs.
Why we recommend the book
This book shifts the focus from organizations to the people behind innovation. It shows that creativity and innovation can be developed through deliberate training and experience. The perspectives align well with the philosophy behind Invisible Capital, where human competence and curiosity are the most important drivers of development.
Authors: Clayton M. Christensen, Taddy Hall, Karen Dillon and David S. Duncan
Short review
In this book, Clayton Christensen further develops the theory of Jobs to Be Done – the idea that customers do not primarily buy products, but "hire" them to solve specific needs. Through practical examples, the authors show how businesses can develop products and services that address customers' real-world challenges.
Why we recommend the book
For anyone working in customer experience, service design, and innovation, this is one of the most insightful books ever written. It reminds us that value creation always starts with understanding the people we are developing solutions for – a fundamental principle of Invisible Capital.
Author: Clayton M. Christensen
Short review
The Innovator's Dilemma is considered one of the most influential books on innovation and technological change. Clayton M. Christensen introduces the theory of disruptive innovation and explains why even the most successful businesses can fail when new technologies and business models challenge established markets. Through a series of examples, he shows how companies often focus on today's customers and incremental improvements, while overlooking innovations that later change entire industries.
Why we recommend the book
This is one of the books that has had the greatest impact on modern innovation thinking. When I first read it, it gave me a whole new perspective on why some businesses succeed in transformation, while others lag behind – even when they are well led. The insight has been an important part of my own understanding of digitalization, innovation and change management, and many of the reflections in The Invisible Capital build on the ideas Clayton Christensen presents in this classic. The book is as relevant today, in the face of artificial intelligence and digital transformation, as it was when it was published.
Author: Henry Chesbrough
Short review
Henry Chesbrough introduced the concept of Open Innovation and changed the way many businesses think about research and development. He shows how companies can create more innovation through collaboration with customers, universities, start-ups, suppliers and other external partners.
Why we recommend the book
Open Innovation has had a major influence on modern innovation thinking and was also an important topic during the seminars in Oxford and San Francisco. The book shows why future value creation occurs in the interaction between people, businesses and knowledge environments – not within closed organizations alone.
Authors: W. Chan Kim and Renée Mauborgne
Short review
Blue Ocean Strategy challenges businesses to shift their focus away from fierce competition and instead create new markets with little or no competition. The authors present strategies and models that help organizations develop innovative products, services, and business models.
Why we recommend the book
This book has inspired leaders around the world to rethink strategy and innovation. Instead of competing for the same customers, it shows how businesses can create new value through creativity and differentiation. The perspectives align very well with the themes of innovation, digitalization, and long-term value creation in Invisible Capital.
Authors: Patricia B. Seybold
Short review
Patricia Seybold shows how businesses can create better products and services by actively involving customers in the innovation process. The book describes how dialogue, co-creation and close collaboration with users can provide better solutions and stronger competitiveness.
Why we recommend the book
Customers often hold the most important insights into how products and services can be improved. This book emphasizes the importance of listening, involving, and learning from users – a perspective that is echoed in many of the articles on The Invisible Capital. Innovation rarely happens alone; it is created in the interaction between people.
Authors: Philip Evans and Thomas S. Wurster
Short review
This book analyzes how digital information is changing competitive conditions, markets, and business strategies. The authors explain how the internet is disrupting established structures and creating new opportunities for businesses that are able to think differently.
Why we recommend the book
Although written early in the internet revolution, the book describes many of the developments that still characterize business today. It provides valuable perspective on how digitalization affects value chains, competition, and innovation – themes that are central to Invisible Capital.
Authors: Don Tapscott and Anthony D. Williams
Short review
Wikinomics shows how openness, sharing and collaboration across organizations create new forms of innovation and value creation. Through a number of international examples, the authors describe how digital networks make it possible to develop products, services and knowledge together.
Why we recommend the book
This book was groundbreaking when it was first published, and many of the ideas have since become a natural part of everyday digital life. The perspectives on collaboration, knowledge sharing, and open innovation processes align very well with the philosophy behind Invisible Capital, where people and networks are at the center of value creation.
Author(s): Author: Michael E. Porter
Short review
Competitive Strategy is Michael E. Porter's classic work on how companies can understand the competition they find themselves in and develop a position that provides a basis for long-term profitability. Porter shifts the focus from the individual competitor to the structure of the entire industry and shows how competition is affected by customers, suppliers, new entrants, substitutes and the rivalry between existing companies. This forms the basis for what has later become known as Porter's Five Forces. The book is also about how companies can choose a competitive strategy on the basis of this analysis. It thus established an analytical language for strategy that has gained great importance in both research, teaching and practical strategy work.
Why we recommend the book
We recommend Competitive Strategy because it provides the analytical foundation for much of the thinking Porter later develops in What Is Strategy?. If a company is to choose a unique strategic position, it must also understand the competitive forces, the industry structure and the factors that affect the ability to create and retain value. The book is particularly useful because it reminds us that strategy is not just about internal goals, plans and ambitions. Strategy must be developed in the face of customers, competitors, suppliers, technology and structural changes in the market. Together with What Is Strategy?, the book therefore provides a much richer picture: First, the company must understand the competitive arena. Then, it must choose how to be different.
Author(s): Author: Michael E. Porter
Short review
In Competitive Advantage, Porter moves the analysis from the industry to the business itself. The main question is how competitive advantage is actually created. One of the book's most important contributions is the value chain, where the business is understood as a system of activities that collectively develop, produce, market, deliver and support a product or service. Competitive advantage cannot therefore be understood only through products or overall strategies; one must examine the activities that create costs, differentiation and value. This understanding later becomes central to Porter's argument about strategic fit: the activities must not only be good in isolation, but also fit together and reinforce each other.
Why we recommend the book
We recommend Competitive Advantage because it brings strategy right down to where value is actually created: in the activities the business performs. This makes the book particularly relevant together with What Is Strategy?. When Porter argues in 1996 that strategy consists of performing different activities than competitors, or performing similar activities in other ways, this builds on the thinking he developed here. For our perspective on value creation, this is particularly interesting. Value does not arise because the business has formulated a strategy on a document, but through people, expertise, technology, processes, collaboration and activities that together enable the business to create something that customers value. The book therefore provides an important connection between strategy, competitive advantage and actual value creation.
Author(s): Author: Michael E. Porter
Short review
In The Competitive Advantage of Nations, Porter raises the perspective from business to countries, regions and business environments. The book is based on extensive studies of the competitiveness of ten leading trading nations and examines why certain countries and business clusters are particularly successful in certain industries. A central premise is that national prosperity is not simply something a country inherits through natural resources or other given conditions. It is created, and productivity, innovation, competence, competition and the quality of the environment in which businesses operate are crucial. Here, Porter also develops the well-known diamond model to explain how different national and regional conditions can interact and stimulate competitiveness.
Why we recommend the book
We recommend The Competitive Advantage of Nations because here Porter extends the strategy perspective to the ecosystem surrounding the business itself. Value creation does not occur in a vacuum. Businesses develop in societies with education, research, infrastructure, capital, suppliers, demanding customers, competing businesses and public institutions. This makes the book particularly interesting for understanding value creation as an interaction between people, businesses and society. It also provides an important corrective to the notion that a country's competitiveness can mainly be understood through low costs or access to natural resources. Innovation, productivity and the ability to continuously develop are far more central to Porter's explanation.
Author: Joan Magretta
Short review
Understanding Michael Porter brings together and explains the most important parts of Michael Porter's strategic thinking in one accessible whole. Joan Magretta herself worked on strategy at the Harvard Business Review and organizes Porter's ideas around two fundamental questions: What is competition, and what is strategy? She explains, among other things, the Five Forces, competitive advantage, the value chain, value creation, trade-offs, fit, and strategic continuity. This makes the connection between Porter's various works clearer than when the concepts are studied separately. The book also includes an interview with Porter.
Why we recommend the book
We recommend Understanding Michael Porter because it helps the reader see the whole picture of Porter's understanding of strategy. Porter is often reduced to the Five Forces or a few models used in isolation. Magretta shows why this is too simple. Competition, value creation, strategic positioning, trade-offs, activity systems, fit and continuity are interconnected. This makes the book a particularly good supplement after reading What Is Strategy?. It makes it easier to understand why Porter does not view strategy as a plan or a collection of goals, but as a coherent system of choices about how the business will create value and compete over time.
Authors: Harvard Business Review, Michael E. Porter, W. Chan Kim, Renée A. Mauborgne and more
Short review
HBR's 10 Must Reads on Strategy brings together some of Harvard Business Review's most influential writings on strategy. The original collection from 2011 features Michael E. Porter's What Is Strategy? as its main article and combines it with works on competitive forces, Blue Ocean Strategy, the organization's vision, business models, strategy execution, and the Balanced Scorecard, among others. The result is not one unified theory of strategy, but multiple perspectives on how organizations can develop, formulate, and execute strategy.
Why we recommend the book
We recommend HBR's 10 Must Reads on Strategy because it places Porter in a broader strategic context. After reading What Is Strategy?, it will be interesting to encounter other central perspectives and see how they complement, challenge, or extend Porter's understanding. The collection also shows why strategy cannot be reduced to a single model. Competitive position, choice, innovation, business model, execution, priorities, and measurement must be seen in context. For the reader who wants to move on from Porter and into the strategy discipline more generally, this is therefore a very good introduction.
Author: Joseph E. Stiglitz and Bruce C. Greenwald
Short review:
Creating a Learning Society examines how knowledge, learning, and technological development contribute to economic growth and long-term value creation. Joseph E. Stiglitz and Bruce C. Greenwald challenge the notion that economic development is primarily about accumulating more physical capital. They argue that society’s ability to create, disseminate, and apply knowledge is crucial to productivity growth and improved living standards. A key point is that learning does not only occur in schools and universities. It also occurs in businesses, through work, production, innovation, and the interaction between people and organizations. Knowledge can also spread from one business and one part of the economy to others.
The book thus provides an important perspective on why human capital, competence, innovation and learning must be understood as central parts of a society's ability to create value over time.
Why we recommend the book
We recommend Creating a Learning Society because it expands the understanding of what lies behind economic value creation.
Machines, technology and financial capital are important, but they do not create productivity growth alone. Behind the development are people who learn, develop knowledge, improve work processes, share experiences and find new solutions.
This makes the book particularly relevant to Invisible Capital and our perspective on value creation: A significant part of society's value-creating capacity is found in the knowledge, competence, and learning ability of the people who participate in the economy.
Stiglitz and Greenwald thus provide an academic foundation for one of the most important relationships in modern value creation:
Author: Mariana Mazzucato
Short review
In The Value of Everything, Mariana Mazzucato asks a fundamental question: What exactly is value – and who creates it? Mazzucato returns to the historical discussions of value in economics and shows how the understanding of value creation has changed. She challenges the notion that high income, high prices or large profits necessarily mean that correspondingly large values have been created. One of the book's most important contributions is the distinction between value creation and value extraction . Mazzucato examines the financial sector, the pharmaceutical industry, innovation and the public sector, among others, and argues that we must become better at distinguishing between activities that actually create new values, and activities that primarily extract values that have already been created.
The book also challenges the traditional notion that the private sector creates value while the public sector mainly consumes or redistributes it. Innovation and economic development often arise through a complex interaction between public investment, research, businesses, capital and people.
Author: Philippe Aghion, Céline Antonin and Simon Bunel
Short review
The Power of Creative Destruction is about one of the most important drivers of long-term economic growth: innovation.
Philippe Aghion, Céline Antonin and Simon Bunel build on Joseph Schumpeter's classic idea of "creative destruction" – the process by which new technologies, businesses, products and ideas challenge and replace existing solutions.
But the book is not just about the disappearance of the old. The authors examine why some economies manage to create continuous innovation and productivity growth, while others stagnate. Competition, entrepreneurship, research, education, institutions and public policy thus become important parts of the explanation.
Creative destruction also comes at a cost. New technologies and businesses create opportunities and jobs, but can also make existing skills, tasks and business models less relevant. The challenge is therefore to create societies that both promote innovation and enable people to participate in the transition.
Why we recommend the book
We recommend The Power of Creative Destruction because it shows why innovation is a fundamental driver of value creation .
Value creation is not just about producing more of what we already produce. It also occurs when people develop new ideas, technology, and ways of working that enable us to solve tasks better than before.
This makes the book particularly relevant to The Invisible Capital. Behind innovation are people with knowledge, expertise, creativity and experience. But Aghion's perspective also shows that human capital must be part of a larger system where competition, institutions, research, investment and policy create the conditions for new ideas to actually turn into economic and social development.
The book thus provides an important context in our understanding of value creation:
Knowledge → new ideas → innovation → productivity growth → long-term value creation.
Author: Philippe Aghion, Céline Antonin and Simon Bunel
Short review
Institutions, Institutional Change and Economic Performance is one of Douglass C. North's most important works on why some societies are more successful than others in creating economic development over time.
North shifts attention from traditional factors of production such as capital and labor to the institutions that shape how people, businesses, and governments act and cooperate. Institutions are society's formal and informal rules of the game – including laws, regulations, norms, traditions, and established ways of organizing interaction.
These rules of the game affect the incentives that people and organizations face. They also affect investments, knowledge development, cooperation, transaction costs, and which economic activities emerge.
North also shows that institutions develop over time. History therefore matters: Today's economic opportunities are influenced by institutional choices and development paths that can stretch far back in time.
Why we recommend the book
We recommend Institutions, Institutional Change and Economic Performance because it explains a crucial aspect of value creation that easily becomes invisible:
Value creation needs good rules of the game.
People may have knowledge. Businesses may have capital. Entrepreneurs may have great ideas. A society may have natural resources and advanced technology. But outcomes are also influenced by the institutions that determine how people can collaborate, invest, compete, make deals, and develop businesses.
This makes North particularly interesting for our understanding of trust as part of invisible capital. Trust is not the same as institutions, but stable rules of the game, credible agreements, and well-functioning institutions can reduce uncertainty and make economic interaction easier.
North thus gives us another important part of the value creation picture:
Institutions → predictability and incentives → cooperation and investment → productive activity → long-term value creation.
© 2025 - 2026 Portico Publish | The invisible capital Privacy and use of the website | Developed and operated by Magne Bjella | Powered and secured by Wix
Comments