Innovation Has No Value Without Entrepreneurship

It's absolutely critical that leaders understand this: An innovation has no value until an ambitious entrepreneur builds a business model around it and turns it into a product or service that customers will buy. If you can't turn an innovative idea into something that creates a customer, it's worthless.

But first, a quick but important distinction between innovators and entrepreneurs. An innovator is first and foremost a creator, a problem solver with a deep passion for improving something. Innovators are thinkers. But an entrepreneur is driven to act, to build. This includes building the businesses that make and sell the things that innovators think up, because entrepreneurs are doers.

Of course we need innovators. And we need tons of their ideas and innovations. But we need to ask the right question about every single one of those ideas: "Can we sell it?" Every time an inventor has a new idea, we should ask, "Exactly who is the customer?" "What miracle does it provide the customer?" "What is the business model?" "How many customers will love this?"

Putting tens of billions more dollars into innovation is like stacking a woodpile higher and higher with no matches to strike the fire. That is the current strategy of virtually all American leaders, national and local -- just piling the stack of valueless innovation higher and higher. We mean well, but it isn't getting us where we think it will.

Thought leaders often ask me: Aren't innovation and entrepreneurship like the chicken and the egg? Which really comes first? My answer is: That's the wrong analogy. The right one is the cart and the horse. Entrepreneurship is the horse, and innovation is the cart. In putting innovation ahead of entrepreneurship, our thinking has been dangerously off. It doesn't matter how brilliant the innovative idea is if there's no one to create a business that sells it.

Because America's core economic premise is based on new ideas rather than on new businesses, the country just keeps loading the cart with more and more innovation. What the U.S. needs instead is a team of horses to pull the best ideas into the marketplace.

Almost no one in Washington understands this. Innovation, discovery, breakthroughs, ideas and creativity are valuable and necessary -- we can't get enough of them. But they create little to no economic energy in and of themselves until an almighty customer appears. The car, the light bulb, flight, the transistor and the Internet created little to no economic energy until each invention was successfully commercialized -- until customers appeared.

So our real problem is not that there isn't enough innovation. It's that there aren't enough entrepreneurs starting new businesses.