The FINANCIAL -- In the late 1800s, men across the United States worked to improve the way people received their mail, according to The University of Texas at Austin.

They plotted and tinkered and eventually came up with a system in which the fastest horses were paired with the smallest men in order to speed up the process: the Pony Express.

Only a short while later the telegraph was invented, effectively putting the Pony Express out of business and dashing the hopes of these men. What should they have done differently?

Butler, professor of management and society and director of the IC2 Institute and the Herb Kelleher Center for Entrepreneurship and Small Business, emphasized the importance of factoring in innovation when developing a business. He described the ideas of the economist Joe Schumpeter's model, which provides a mathematical equation for profit.

Butler also explained that in modern times innovation models and research have grown significantly. Current innovation is taking place in universities and public labs, which are then transforming the nature of business.

Austin, Silicon Valley, and Boston are all "clusters," which Butler described as areas in which certain factors allow innovation to truly take place. These clusters have a strong science base, entrepreneurial culture, ability to attract staff, etc.

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