Innovation and R&D by John Hagel:
I would argue innovation can be related to productivity improvement or it can be completely unrelated. A company could innovate with an ideas like the remote control for televisions (or microlending or air bags). That innovation may not contribute in any way to manufacturing televisions more productively.
Other innovation may be related to improving the productivity alone and add no additional functionality to the customer. Many innovations will provide a combination of both benefits. Both innovation and productivity improvement are important.
Quoting Michael Schrage's article:
John Hagel then states:
I agree with the weakness of using research spending and patents to measure innovation. I do not believe they are worthless as measures, however. Are there better measures? Outcome measures? If so, what are they? From the post I might guess productivity improvement might be such a measure. While that might be a useful measure it is hardly a sufficient one. I agree people should understand the weaknesses with the measures but I still believe they are useful in understanding where things stand and how things are changing.
The Innovation/Productivity Quotient by John Hagel III and John Seely Brown: