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Innovation is the application of better solutions that meet new requirements, in-articulated needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society. The term innovation can be defined as something original and, as a consequence, new, that "breaks into" the market or society. A definition consistent with these aspects would be the following: "An innovation is something original, new, and important in whatever field that breaks in to a market or society".[1] While something novel is often described as an innovation, in economics, management science, and other fields of practice and analysis it is generally considered a process that brings together various novel ideas in a way that they have an impact on society. Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself. Innovation differs from improvement in that innovation refers to the notion of doing something different rather than doing the same thing better.

In business and economics, innovation is the catalyst to growth. With rapid advancements in transportation and communications over the past few decades, the old world concepts of factor endowments and comparative advantage which focused on an area’s unique inputs are outmoded for today’s global economy. Economist Joseph Schumpeter, who contributed greatly to the study of innovation, argued that industries must incessantly revolutionize the economic structure from within, that is innovate with better or more effective processes and products, such as the shift from the craft shop to factory. He famously asserted that “creative destruction is the essential fact about capitalism”.[2] In addition, entrepreneurs continuously look for better ways to satisfy their consumer base with improved quality, durability, service, and price which come to fruition in innovation with advanced technologies and organizational strategies.[3]

One prime example is the explosive boom of Silicon Valley startups out of the Stanford Industrial Park. In 1957, dissatisfied employees of Shockley Semiconductor, the company of Nobel laureate and co-inventor of the transistor William Shockley, left to form an independent firm, Fairchild Semiconductor. After several years, Fairchild developed into a formidable presence in the sector. Eventually, these founders left to start their own companies based on their own, unique, latest ideas, and then leading employees started their own firms. Over the next 20 years, this snowball process launched the momentous startup company explosion of information technology firms. Essentially, Silicon Valley began as 65 new enterprises born out of Shockley’s eight former employees.[4]

Google made a big move Monday, announcing plans to acquire Nest Labs for $3.2 billion. With Nest on board Google continues to position itself to change the world on a grand scale.

1. They now have a key player behind the iPod and iPhone on their side.
Before he was CEO of Nest, Tony Fadell led the Apple team that developed the iPod. He’s sometimes called “the Podfather” and had a hand in the iPhone as well. This is huge for Google, a company that has lacked a hip, aesthetic touch. Google Glass looks like something for cyborgs. Apple has long had talent for making beautiful objects that can win mainstream acceptance. Take one look at the Nest Thermostat or Nest Protect and you’ll be struck by its looks. With at least 100 former Apple employees now joining Google, a lack of elite design instincts is addressed.

2. The Internet of Things is exploding, and Google has its hottest products.
Not long ago, a phone was something you simply placed calls on. Now, a smartphone can be used as flashlight, alarm clock, pocket watch, calculator, GPS, camera and more. The gadgets smartphones don’t kill off will be reinvented too with computer chips and online access. We’re realizing the potential of the Internet of Things, in which everyday objects harness the power of digital chips and Internet access. Nest’s two products — a thermostat and smoke detector — have received near universal praise. Fadell’s team has a secret sauce and an advantage over everyone else in this space. Whatever unloved household device they seek to reinvent next will likely be a hit.

3. Google is quietly building a telecom network.
Google controls more than 100,000 miles of fiber-optic cables around the world, according to the Wall Street Journal. For comparison’s sake, that’s more than twice the size of Sprint’s network. They’re experimenting with Google Fiber, which brings uncommonly fast Internet to a nation that is lagging behind the world in Internet speeds. While Google Fiber’s current reach is limited, its existence is a reminder to consumers and rival Internet providers that better service can and should exist. If the country that invented the Internet is going to lead the world in Internet speeds, Google Fiber will nudge us forward.

These are but a few of the many projects at Google, the No. 1 company on our 2014 list of the Most Innovative Companies in business. Here's what else Google is working on these days, and some of its recent milestones.

Clever $35 bridge that beams web video to the TV screen.

ChromeOS runs the best-­selling laptops from Acer, ­Samsung, Asus, and others.

Makes YouTube mobile-friendly, adding offline viewing and support for hundreds of devices, driving 40% of total viewing time.

Creates Comedy Week, its own music awards show, and builds out state-of-the-art studios around the world.

Any YouTube channel can now broadcast live.

Reportedly $5 billion in 2013.

Will bring broadband to Internet-challenged Kampala, Uganda (pop. 3 million.)

The Moto X and Moto G devices—surprisingly nice!

Integrates content from your calendar and other Google apps.

Traffic-incident reports from tens of millions of Waze users get woven into Google Maps just two months after buying the Israeli mapping startup.

Now depicts the insides of airports and train stations; users can add their own images.

Debuts plans to build wireless networks in sub-Saharan Africa and Southeast Asia.

Invests in more than a company a week—from Uber to Nextdoor, the “Facebook for neighborhoods.”

Funds such companies as Flatiron Health, which uses big data to find oncology insights.

The high-end laptop shows off Google’s gadget prowess.

Can ID image-searched pics (It’s a dog! It’s a Coca-Cola logo!)

Click the query-box microphone icon, say, “What is the Knicks’ record?” and Google reads you the answer. Then ask, “Why are they so bad?” and it knows what you mean.

It’s acquired robots that can walk and run, and smart-­appliance maker Nest to advance the art of intelligent machines.

A same-day delivery experiment with both national and local retailers.

Intends to create interactive showcases of its products—on barges in coastal ports.

Slickly lets users group chat via video, voice, GIFs, and emoji.

Woos celebrities such as the cast of the Hunger Games sequel to engage with fans

Educational institutions such as the American Museum of Natural History use Hangouts to host virtual tours.

A patented temporary tattoo (not for sale—yet?) can be a microphone for a mobile device.

A spin-off company called ­Calico states its awesome mission: combat aging. People can run a lot more Google searches if they’re immortal.

Most Innovative Companies 2014: Google The most successful Internet company of our time turns 16 this year. Much like a teenager trying on various identities, it's determined to be more than a search engine, although Google is best known for that deceptively simple function, and more than an advertising platform, although the vast majority of its revenue comes from ads.

As the cost per click--the rate advertisers pay for an online ad--continues declining, Google is pursuing projects that could reinvent the company--and society. For its breadth, ambition, and relentless spirit to keep creating the future, Google tops our 2014 list of the Most Innovative Companies in business. This is the second time that Google has earned the No. 1 spot. The last time was in 2008.

Many of its current projects or milestones are life-changing, or aim to be:

Calico, a spin-off company, working to extend the human lifespan.

Google’s autonomous vehicles, which reached the 500,000 driver-free mile benchmark--incident-free.

Google Fiber, which is bringing gigabit Internet service to Austin, Texas, and Provo, Utah, inspiring Los Angeles and Louisville, Kentucky, to follow.

And much of Google’s work changes our daily lives through shear convenience:

Glass, which is making wearables the next computing trend.

Shopping Express, an experiment in same-day delivery with national and local retailers.

Google Now, which reminds users when their favorite band or author has a new release and when the last train is leaving--before it's too late.

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