How We Create the Wealth of Nations
Chapter 3: B-Innovation and C-Innovation
This chapter compares common innovation (C-innovation) to business innovation (B-innovation). We shall see that one important difference between the two types of innovation is the objective of the innovator in each case. In business innovation, there may be a separation between those who devise the innovations and those who are the ultimate users. Business innovators are concerned with the performance of their business, and only indirectly concerned with the welfare of those who use the innovations. In short, the interests of the innovator and the interests of the user are not the same. In common innovation, on the other hand, that separation is much less pronounced, and often the users and the innovators are the same people. In that latter case, the interests of the innovator and the user are naturally the same. And there is another important difference between business innovation and common innovation. If the former can be described as Schumpeter’s ‘perennial gale of creative destruction’, the latter is usually much more like a ‘gentle and benign breeze’. Indeed, we shall see in Part II of the book, that some business innovations have substantial ‘destructive’ power which can cause dysfunctional side-effects. This happens because the innovator accounts for the benefits to his business, but does not account for the damage done to other interests. In Part III of the book, we study common innovation, and there such destructive power is unusual. The interests of the innovator and the user are close, and the innovator is unlikely to pursue projects that are against the interests of the user.
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