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Occasionally, markets understand this. IBM was a patent powerhouse throughout the 1980s. Alas, Big Blue’s gigantic portfolio of government-certified “intellectual-property” wealth failed to translate into superior investment returns for what had once been the world’s most valuable IT company. Patent productivity is a lousy measure for innovation that matters.

Look no further than the Internet bubble to see the total market disjunction between invention and innovation. The Internet suffered no shortage of truly inventive ideas. Unfortunately, there was a shortage of customers and clients who would actually pay a premium for them. In those halcyon days of 1995 to 2000, dot coms literally gave away the fruits of their inventions in hopes of first capturing business and then, finally, in hopes of staying alive. Even when the new inventions were effectively “free,” most of them failed.

The world is not suffering from a lack of inventiveness. Indeed, Econ 101 teaches that when the rate of supply dramatically accelerates past the rate of demand, supply becomes less valuable; you have a glut. If the U.S. government increased the number of patents it grants by a factor of ten, do we think inventions would-on average-become more valuable? Almost certainly not. Similarly, the romantic belief that dramatically increasing the number of quality inventors will dramatically increase the number of brilliant innovations is to misunderstand both the act of invention and the process of innovation. The real bottleneck isn’t invention; it’s the inability to cost-effectively translate breakthrough inventions into marketable products.

Without belittling the genius of the inventive spirit, I would suggest taking a more Neugebauerian perspective: the technical excellence of an invention matters far less than the economic willingness of the customer or client to explore it. A customer’s readiness to innovate is what makes invention possible. That’s why Technology Review is MIT’s Magazine of Innovation-not Invention. Good call.

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