When people talk about innovation and entrepreneurship, they often use the terms synonymously. The challenge is that the two activities are quite different – and misrepresenting the two terms can lead to confusion or a misunderstanding of how to support each activity appropriately.
Innovation is simply introducing a change of some kind that adds new value – to an organisation or to a person. You might find a new way to travel to work that saves you time or money; this is innovation in its simplest form. When it comes to innovation, it’s about ideas not just commercial outcomes. In fact, a lot of innovation begins because someone wonders, ‘What if I do this?’ or ‘What if we change that?’
Entrepreneurship, on the other hand, is more commercially driven. It typically refers to a person who has a drive to build or make something that delivers commercial benefits to them, while also adding value to the broader world. Entrepreneurship can involve introducing new products, services and even processes. Entrepreneurship leverages innovation to create value.
Here in Australia, we’re starting to recognise the importance of both innovation and entrepreneurship. To create a successful innovation economy, you need both the capability to create new value and the ability to take that value into the business environment and commercialise it. Without both sides of the equation, you can end up with innovations that never become commercially viable.
Think back to VHS and Betamax. While Betamax was considered by many to be the superior technology, VHS was backed by entrepreneurs better able to take their technology to market. As a result, VHS became the standard in home video for many years.
Every day, innovative technologies are introduced that provide significant value to society. However, if they aren’t backed by entrepreneurial talent or awareness, those innovations will never achieve their commercial potential.
To support an innovation economy, countries and companies need to focus on the intersection, on bringing together both innovators and entrepreneurs, creators and potential users. One of the activities Australia is best known for globally is our research ability whilst we have continued to struggle in driving collaboration to commercialise research. Recently though steps have been taken to foster collaboration between research, academia and businesses – and between large corporates and startups. We have established numerous hubs to support the intersection and cross-pollination of ideas. One star example is Stone and Chalk – a fintech hub that drives collaboration and connectivity between Fintech entrepreneurs, corporates, VCs and the government.
Other incubator and accelerator programs here in Australia also target various aspects of the intersection between entrepreneurialism and innovation. For example, River City Labs offers co-working space to support and foster early stage companies and entrepreneurial activities, while BlueChilli focuses on connecting corporates with innovators and startups, and PushStart fills perceived gaps in the startup ecosystem in the country while encouraging and supporting other organisations providing services to startups.
Whether in Australia or anywhere around the world, you can’t succeed without both entrepreneurs and innovators. The most successful jurisdictions and companies will be those that can foster both mindsets and bring them together to harness the true power of innovation.
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James is the head of KPMG Innovate in Australia. He also actively worked to establish Sydney’s first industry led Fintech hub called Stone & Chalk, and collaborated with industry participants, government and industry associations to co-author a landmark piece of thought leadership into financial services technology startups, titled: “Unlocking the potential: The Fintech opportunity for Sydney”. James is also the key sponsor for elevate61 within KPMG, a rapid growth entrepreneur program delivered in partnership with Advance, to help enterprise B2B startups scale and grow their businesses globally.
Quarterly global report on VC trends published by KPMG Enterprise.