It has been estimated that over 20% of the annual gross domestic product in the United States is the result of innovation backed at some point by venture capital investors. But what is innovation? One traditional view of innovation is that it is a systematic business process occurring within an organization required to secure ongoing financial growth. But much of the most acclaimed and influential innovation has started with an individual's idea and only somewhat later followed with an organization to execute on that idea, so the organizational definition is of limited relevance.
A more practical definition of innovation is that it is the creation of anything new intended to be commercialized. Under such a definition, the efforts of a lone individual developing a radical idea and those of a department within a large company to explore a new adjacent market are both examples of innovation. This somewhat loose definition, however, fails to address explicitly what makes an innovation truly new, successful, or authentic, although it may imply that all innovation is equally valid in a sense. Otherwise, the oft-repeated challenge to uses of the term innovation may put too little emphasis on the activity and too much on its results. Quite possibly, 80% of the value of innovation has been contributed by 20% of the activity, but whether that 20% of activity could have manifested itself without a culture and economy to support the whole is less clear. In this regard, policy- and strategy-oriented attempts to refine this loose definition of innovation further are without merit.