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Innovation: what’s next?

Innovation: what’s next?

When innovation emerged as a concretely defined industry following the close of the Second World War, strong emphasis was placed on the development of new products and services. Therefore, innovation was closely linked with Research and Development. Although innovation is an intuitive practice, many experts felt that this discipline was directly related to the success of previous market launches, thus explaining the trend towards perceiving innovation and R&D as deterministic fields. An excellent example of this concept can be found in today’s economic climate, where many financial analysts continue to measure a company’s innovation capability using benchmarks related to the relationship of R&D investment and net sales.

Companies with increased R&D/Net Sales ratios are commonly thought of as “more innovative”. Of course, this method of evaluation disregards severaR&D as percentage of net salesl fundamental aspects of R&D and innovation, first and foremost being the fact that there are two distinct forms of R&D. One branch of R&D is focused exclusively on developing and launching new products and technologies, some of which may be entirely new, while others follow pre-existing market trends (e.g. after the introduction of the 3D TV, all major players were investing to adopt the technology). There is also another form of R&D which primarily focuses on cost cutting in order to allow for margin protection in markets where price pressure currently exists. This particular form of research and development has very little to do with innovation. Furthermore, even if all R&D investment were to focus on new product development and new services, there is little doubt that not all of these investments would deliver similar returns and pay-offs. Therefore, there is a very clear fallacy when linking innovation to R&D investment and, more specifically, to R&D in general. The problem is somewhat more entrenched, however. Measuring the impact of innovation is quite complex, largely due to the fact that the definition of innovation is becoming increasingly broad. For example, “business model innovation” and “open innovation” both broadly describe a clear departure from internal R&D research into advanced networks of external units, covering pressing issues such as competitor alliances, collaborations with universities and research centers, new markets and product development, among other topics.  With the current status quo in mind, I thought it would be interesting to examine what eminent scholars currently studying innovation predict will happen within the field over the next several years. In particular, I will reference the following book: Fagerberg, Jan, Ben R. Martin, and Esben Sloth Andersen. Innovation Studies: Evolution and Future Challenges. Oxford University Press, 2013. Here, eminent innovation scholars identify 15 contemporary and future challenges related to innovation and innovation studies, of which seven are generally relevant for this blog.

The seven challenges we will address are the following:

1. From Visible Innovation to Dark Innovation

This is directly linked to the issue of measures and reporting. We discuss and explore innovation using a syntax derived from the measures we currently use to observe and quantify the field. However, much of the R&D arena remains closed to observation, focusing exclusively on technology being created to further the pace of innovation across a wide range of disciplines in upcoming months and years. This concept is quite similar to the idea of ‘dark matter’, a physical phenomenon which we currently lack the tools required to measure, yet are able to infer the existence of from its effects on visible matter. Innovation which is being used to further enhance the speed, efficiency and impact of professional organizations whose primary job is, indeed, to innovate, will likely produce substantive results that cannot be measured at this time.

2. From Boy’s Toys to Mundane yet liberating innovations

nereus_vtnhh_69Close your eyes and think of your favorite examples of innovation. Most of us will probably imagine a broad range of consumer electronics, cars, and accessories. When we discuss innovation, we often use products as benchmarks of historical trends, such as the iPhone, iPad, Tesla, Google Glass, etc. According to FastCompany, the top five most innovative companies in 2015 are Warby Parker, Apple, Alibaba, Google and Instagram. In the same list, only one of the top 50 companies is a non-for-profit entity: Color of Change, an organization aiming at empowering black America by driving social change. The bottom-line is this: when we keep benchmarking innovation around “toys for boys”, how are we ever going to develop, perceive, understand and enable innovation that is not product-oriented? How are we going to fix important social issues, such as poverty and water availability?

3. From Innovation for Economic Productivity to ‘Green Innovation’

When politicians discuss innovation, they do so in terms of economic wealth and productivity, with focus typically oriented around making cheaper and more available products. That being said, as the millennials become an increasingly important segment of the voting population, we can expect that focus will shift towards sustainable innovation. Sustainability will likely have equal importance to issues such as affordability

4. From Risky Innovation to Socially Responsible Innovation

We often operate under the assumption that all innovation and technological development is good. We also tend to focus on the positive economic and social changes which are enabled by technological development, almost ignoring the damages caused by some of our technological advances. A more widespread shift to socially responsible innovation will help us assess which innovations are truly damaging as opposed to those which are helping.

5. From Innovation for Wealth Creation to Innovation for Well-being

Historically, we have confused “progress” with our desire to increase consumption. Our notion of progress needs to change, to focus on a consumption paradigm based on the fundamental idea that “enough is enough”.

6. From “Winner takes all” to “Fairness to all”

Traditionally, we focused significant attention on economic growth measures as if they reflected the wealth of a society. We are well aware of how the polarization of wealth has increased over the past 30 years, with the gap between rich and poor widening annually. Innovation is not to blame for the gap, although it has been a catalyst for it. We should expect (and welcome) a shift of innovation towards ideas and initiatives which reduce the wealth divide.

7. From Government as Fixer of Failures to the Entrepreneurial State

Whether we have adopted a liberal or conservative view of the markets, we might all agree that if we let the marketplace “sort itself out”, the pace of development leading towards a greener, fairer and more sustainable nation is not going to be fast enough. Many scholars posit that governments will need to take a leading role in developing paths towards concrete technological trajectories, going beyond their administrative role of financing and taxing certain industries. This entrepreneurial role the state is expected to take will serve as an interim guide until the private sector can take charge of the new trajectory.

In conclusion, we need to redefine our definition of what we believe innovation is and what it can become in order to properly drive sustainable and long-lasting change in the tech, product and economic sectors. First and foremost, we need to allow for a definition of innovation which is less quantifiable (for the time being) and less focused on technology. Moreover, we need to stop benchmarking innovation in terms of mundane “toys for boys” if we are to develop long lasting change in our society. Our motto should be “greener, fairer, more sustainable.” We also need to go beyond the assumption that all technological change is positive (or negative) by embracing the concept of socially responsible innovation.  Finally, we need to start asking our governments to become a proactive driver of change rather than a passive safety net if we expect to develop more sustainable technological trajectories in a convenient time frame.

Growth Adviser, Innovation Catalyst, Branding Architect, International Expansion Consultant. International change agent and leader, launched growth consulting boutique in 2012. We have four principal areas or intervention 1) Branding (e.g., positioning of new brands, re-positioning of existing brands, brand architecture and design) 2) Innovation (e.g., co-creation with consumers and experts, ideation, business planning, concept validation and fine-tuning) 3) International Expansion (e.g., countries screening and development of expansion plan, route to market strategy, portfolio) 4) Route to Market (e.g. marketing and commercial planning, portfolio analysis).