From this it is clear that money is a key requirement for transforming an invention into an innovation. Money pays for the people and equipment needed to refine the invention into a practical working prototype, and money pays for manufacturing it.
A key role in providing this vital monetary support is played by the entrepreneur. This is a persuasive individual or group providing the resources and organisation necessary to turn the invention into an innovation.
Entrepreneurs are likely to be involved at an early stage of an innovation's development, either taking the risk of investing their own money or raising money for a project from others. Most people with money to invest will be inclined to wait until it is clearer whether an innovation is going to be successful before investing. Part of the task of the entrepreneur is to persuade them to take a risk. It is often the case that at the early stage of the innovation process an individual inventor or entrepreneur is unable to persuade people to risk investing in a new and untried invention. In the absence of the necessary financial support an inventor can either give up or take on the entrepreneurial role themselves.
Edison was one such inventor-entrepreneur. He used earnings from the commercial success of his earlier inventions – mainly related to improvements to the telegraph – together with some outside investment to build his Menlo Park workshops in 1876 (Figure 12). Edison and his team of technicians and mechanics at Menlo Park produced 400 patented inventions over the next 6 years including the microphone, the phonograph and the vacuum tube, which was later used in wireless telegraphy. This innovative laboratory therefore provided Edison with a firm technical base from which to develop the electric light, and freedom from the monetary pressures that bring down many inventors if they are unable to secure a quick return on investment in their invention. However, Edison was not typical of inventor-entrepreneurs. His reputation for commercially successful inventions was so high that within a few weeks of announcing his intention to develop electric lighting, financiers were queuing up to invest in the Edison Electric Light Company – a situation the majority of inventors can only dream about.
Even Edison, though, could not combine perfectly the creative skills of invention and innovation with the business and managerial skills of the entrepreneur. It is said, ‘he so totally mismanaged the businesses he started that he had to be removed from every one of them to save it’ (Drucker, 1985).