This post summarizes a great article I found this summer in the Kauffman Foundation Thought Book for 2011. Andrew Hargadon article “Policy Levers for Fostering Innovation and Entrepreneurship in Clean Technology” gives some wonderful insights into fostering innovation. I have simplified the article and made it somewhat more policy generic rather than sector specific.

Photo Attribution: The Spaceship of Tokyo by Stuck in Customs

Key levers for policy levers to foster innovation;
“First, innovation includes both the development and widespread adoption of new technologies and practices. R&D investment does not guarantee success.”

“Second, innovation depends as much on new business models as on new technologies.
Third, new business models tend to come from start-ups and the entrepreneurs who lead them. Incumbent firms drive incremental innovations that fit within their existing business models.”

“Fourth, innovations’ biggest productivity growth and impact come after new technologies are put into practice. The market validation of new business models, technology platforms, and market needs spur investment in complementary innovations up and down the new supply chain.”

In Canada there are plenty of government programs to help with the R&D side of technology adoption but far fewer incentives to support the market adoption of new technologies. A more balanced approach to innovation incentives and policy is important. The number of people a company has working on R&D is quite possibly far less important than the type of innovation the people are working on.

The second and third points provide excellent validation of the importance of start-ups in the innovation process. Start-ups can potentially create the greatest innovation value by introducing new dimensions to a market. Innovative emerging technologies have a greater probability to produce true economic growth.

Therefore a national innovation strategy should seek to;
- Take a holistic view of innovation
- Recognize the importance of start-ups to innovation
- Target specific emerging technologies

Ian Graham

Filed under: Featured, Innovation by Ian
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