Innovation is for more than just start ups and tech businesses—it can be as simple as adding wheels to a suitcase. But the overuse of the word ‘innovation’ has some businesspeople scratching their head at what successful innovation really is. Antony Funnell searches for an answer.
Mark Dodgson has spent a significant chunk of his career studying the concept of innovation.
He’s written extensively about it, lectured all over the world on its application and spent many a long hour puzzling over why some organisations are more innovative than others.
Innovation affects everybody and it really should be on the agenda for everybody to think about.PROFESSOR MARK DODGSON, UNIVERSITY OF QUEENSLAND
And at the end of all that effort, he still thinks it’s a pretty crap term.
‘It’s a terribly vague word,’ he says.
‘It’s an act and a fact. It’s a noun and a verb. I’ve heard it described as an “aerosol” word which you spray in the air and everyone smells it and it smells great and lovely but you can’t grab hold of it.’
Dodgson is the director of the Technology and Innovation Centre at the University of Queensland and a visiting professor at Imperial College Business School in London.
‘I go for a simple definition, and that simple definition is new ideas, successfully applied,’ he says.
In other words, the secret to successful innovation, Dodgson theorises, is in the application as much as the invention.
‘It’s about putting ideas into practice [and] making them useful,’ he says.
Innovation affects everybody
The Brookings Institution’s Scott Andes agrees, and he bemoans the term’s overuse.
‘It seems every conference or article about technology or the economy employs the term, and usually to different ends,’ he says.
That lack of clarity, says Dodgson, makes it difficult for ordinary people to see the relevance of innovation in their daily lives. Too often, he says, it’s simply associated with ‘start-up’ firms and new gadgets.
‘It’s used very loosely, but it is incredibly important because it really underpins economic growth,’ he says.
‘We live longer and healthier lives as a result of innovation. We have information at our fingertips. Innovation is removing repetitive and dangerous work.
‘Innovation affects everybody and it really should be on the agenda for everybody to think about.’
Crucial to that change, according to Professor Dodgson, is the need for an attitudinal shift on the part of government and business. The corporate sector in Australia talks a lot about innovation, he says, but their record of investment in research and development is low by world standards.
Australian managers are not particularly adventurous. Our boards of directors are much more concerned with cost-cutting, efficiencies, rather than investing for the future,’ he says.
‘Often in this whole area of innovation and R&D, it’s not a question of how much you spend, but spending it wisely, astutely.’
That also includes a role for government. Dodgson points to Silicon Valley as a good example of strategic government practice.
Contrary to the arguments put forward by economic rationalists, governments in the United States have long played a central role in fostering the phenomenal success of America’s high-end technology sector.
‘The iPhone, which is perceived as being an invention that came out of Apple laboratories and research—if you trace back where those ideas came from, it was government-funded research,’ he says.
‘If you look at the venture capital industry in America, the largest investor in early-stage venture capital in America is the government. The government puts twice as much money into the venture capital industry at early-stage than the private sector.’
Getting government on board
Andes argues governments and other funding bodies also need to be far more sophisticated in the way they think about the innovation process.
He says most economists and policy makers are focussed on what he calls the ‘formal’ model of innovation—one that starts with a research institute or university at one end of the line, and ends with the commercialisation of their discoveries at the other end.
But that linear approach, says Andes, no longer reflects the reality of modern innovation-increasingly industry specific, often not connected to a laboratory, and usually involving a variety of actors.
‘There is a lot of research that shows that companies actually learn from each other, they learn from partnerships, they learn from suppliers, and they learn from customers, through feedback and other mechanisms,’ he says.
‘And this really drives a nontrivial amount of innovation in the economy.’
Added to that, he says there’s often a failure to understand that the process of innovation isn’t always radical, that it can be incremental.
‘Consider a car manufacturer learning from the company that makes wheels for them how to use a lighter metal,’ Andes says.
‘It’s a small, incremental innovation, but it may save a lot of money, it may save energy, it may reduce manufacturing costs. These are the types of things we see through informal and incremental innovation, and often they are just as important or more important.’
In that vein, economist Jason Murphy warns against the popular political view that all modern innovation should in some way be digital or have a high-tech component.
Murphy nominates the “wheel-a-board” as one of his favourite examples of successful recent innovation.
‘Trunks and suitcases had been invented for millions of years along with the wheel, and it wasn’t until the 1980s that the two concepts were brought together,’ he says.
‘Now of course, everyone in the airport is dragging along their luggage on little wheels. It goes to show that yes, you can make an incremental improvement to a product that has been out there for a very long time and make a big, big difference.
‘There is a great deal of really economically important innovation that doesn’t really have anything to do with invention … Innovation is important when it is adopted broadly, not just when it is invented.’
The downside of innovation
Dodgson says it’s crucial to acknowledge that the process of change always brings losers as well as winners.
As an example, he points to the automation of transport. The self-driving car promises far fewer road deaths and less environmental damage, but, he cautions, it will not transform everybody’s life for the better.
‘When you think about all the people who are employed presently driving trucks and vans—it’s the largest employment section in the United States,’ he says.
‘These tend to be unskilled workers, and what’s going to happen to them if they lose their jobs?
‘The great economist Joseph Schumpeter called innovation a process of creative destruction-it creates and destroys at the same time. We have to celebrate and accentuate the creative side and we have to be very, very careful in managing the destructive side.’
Antony Funnell, Future Tense, RN ABC, Friday 26 August 2016