A recent news story about the renovation of Home Depot highlights the difference between renovation and innovation. While Home Depot’s stores probably could use some fixing up, no amount of renovation is likely to return Home Depot’s stock price to its former lofty heights.

The stock market loves accelerating growth stories, but when a retail concept reaches market saturation, it inevitably gives way to the next big thing and no amount of tweaking is likely to change that outcome.

Clearly distinguishing between renovation and true innovation may be critical to success for owner/CEOs of companies in transition.

Innovation involves:

  • Radical change
  • Creating something significantly new and different
  • Dramatically reducing the cost of a product or service

Renovation is more about:

  • Re-enforcing sagging structures,
  • Face lifts, and
  • Other cosmetic changes

A business can only capture value for its shareholders when it creates real value for its customers. Renovation may well improve market value marginally, but true value creation lies in innovation – meeting an unmet need or solving an old problem in a new and more elegant fashion.


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