The Calculus of Innovation
January 24, 2024 EA Editor

“What is the calculus of innovation? The calculus of innovation is really quite simple: Knowledge drives innovation, innovation drives productivity, productivity drives economic growth.”

William Brody (born 1944), Scientist

The concept of innovation is complex and has widespread confusion surrounding its definition. It is important to clarify the term, especially given its current popularity and the impact it has on society’s well-being and economic growth.

In the concept of calculating or measuring innovation, there are various frameworks and models used to assess and quantify it within organizations.

These frameworks often consider factors such as:

  1. Inputs and Resources: The resources allocated to innovation, including funding, talent, and technology.
  2. Processes: The methods and procedures employed for generating and implementing innovative ideas.
  3. Outputs: The tangible outcomes of innovation, such as new products, services, or processes.
  4. Impact: The effects of innovation on the organization, industry, or society.
  5. Risk and Uncertainty: The level of risk and uncertainty associated with innovative endeavors.
  6. Collaboration: The extent to which collaboration and knowledge-sharing contribute to innovation.

Different organizations may use different metrics and key performance indicators (KPIs) to measure and evaluate innovation based on their specific goals and contexts.

The nature of innovation involves combining existing elements in new ways, with knowledge playing a role in driving innovation.


The distinction between creativity and innovation, however, is that creativity is about coming up with the big idea, whereas innovation is about executing the idea.

There is a common misconception that only startups are innovative, and that innovation must involve groundbreaking technological inventions. This is anything but true! Companies of any and every size and age can and must innovate continuously to stay relevant in an ever changing market.

Successful innovations can range from business models to process improvements. Not every innovation must be revolutionary, but only provide an understanding to customer needs. Innovation is very diverse in nature, and includes both marketing and business model innovations.

The (brief) process of innovation:

problem identification -> first principles thinking -> continuous improvement.

In the management of innovation, making innovation happen in organizations may require a systematic approach.