I also thought that even if an idea is obvious, it won’t be implemented until someone realizes that they have a need for it.

Dunno if it was all that obvious, but Les Paul said he didn’t set out to be a grand innovator — he just wanted and needed an electrified guitar to make a certain kind of music, and there wasn’t anything around that satisfied the need. So he set about to fill his own need.

Looks like the Supreme Court agrees with your ‘number of smart people who’ve unsuccessfully banged their heads on this problem’ criterion (Graham, KSR). I’m fascinated by the EU’s ‘would/could’ method of determining obviousness, as well as by the UK’s warning to consider the perspective of a ‘skilled but unimaginative’ person.

There are tens of thousands of brilliant biological researchers out there, but only Fleming had the wit to cause penicillium notatum to float in the window.

That’s not to say the state shouldn’t incentivize people to develop the skills that could allow serendipity to reward them. It’s just that the whole scheme bears an uncomfortable similarity to the state lotto much of the time.

I don’t disagree with the categories you’ve distinguished here, but would like to observe that the above is untrue. An awful lot of really unexpected invention happens at the basic research level, which is less solution-oriented or goal-oriented than “anomaly-oriented” – here is an odd fact that doesn’t seem to fit into what we’d predict would happen, so let’s start pulling at it, and pulling and pulling, et voila: a cure for cancer. Or whatever. Obviousness can get tricky here – some particular insight might be completely novel, because no one has ever studied that particular gene pathway, enzyme interaction, etc., but still look completely obvious in retrospect, aside from the fact that no one ever looked there before. In other words, the number of smart people banging their heads against a fundamental scientific problem is not necessarily correlated with the lack of obviousness of the solution, once found.

In this context, the “obviousness” criteria is derived from the social contract. Only if the patent application provides useful information to the public (which would otherwise have been lost to a corporate trade-secrets vault) is it really a good ‘deal’ for the public. A patent for a generic chip-clip, for instance, doesn’t disclose anything that someone else couldn’t have easily figured out without the patent. It’s obvious. The details of a manufacturing process to make an alloy that has superior strength and flexure properties (and could be used as a spring in a chip-clip) is very valuable to the public. In exchange for granting a monopoly on the production of that alloy, the public (and other companies) get to see the details and (eventually) build upon the discoveries.

It seems to me that many ‘bad patents’ could be avoided if this social contract were kept in mind (vagueness and obviousness are immediate disqualifies). Returning to your technological vs. entrepreneurial divide, it’s clear that disclosing details of a technology is valuable. Whereas an entrepreneurial innovation is, as you point out, totally obvious–the value to society is only in the doing.

Seriously, there seems to be considerable scholarship devoted to “developing innovation” — in particular, methods to hothouse and grow the kind of entrepreneurial service innovation that you discuss and keep it within the organization.

When I was getting my MBA, I tried to approach the parallel question: what is required to foster *technological* (scientific, engineering, medical) innovation? In fact, there seems to be less scholarship devoted to this issue, I think because it’s such a thorny problem. Clearly there is money, and facilities, and getting the best minds, and… precious little detail on how to fit them together, except to throw them in a lab and see what happens.