But newness by itself is not innovation - it only becomes innovation when it yields market value. Successful innovation is a never-ending process and firms must continually innovate to retain their competitive edge. Innovation policy is not the same as research policy. Research policy is aimed at advancing scientific knowledge, whereas innovation policy is aimed at helping businesses innovate successfully, that is helping them to get new products and processes onto the market. To put it another, perhaps overly simplistic but none the less graphical way, research is a process which converts money into knowledge and innovation is a process which converts knowledge into money.
Innovation is therefore what provides the return on the investment in knowledge generation.
It is also important to note that there are two different types of innovation. Firstly there is what I call incremental innovation, which is when an organisation makes an incremental improvement in the efficiency of an existing technology. The concept of continuos improvement that was common a few years ago is really about incremental innovation. An example of incremental innovation is the continuos improvement that has occurred in the efficiency of solar power cells since their initial creation. This is because businesses are continually seeking to improve their competitiveness either through lowering the costs of production or improving the quality of their products.