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Innovation: More than just a good idea

| Text: By Bjørn Gustavsen, Research Director

European employment policy has, in recent years, turned more and more strongly towards innovation. For high cost countries, the continuous cost-cutting improvements of existing products, services and processes is no longer sufficient to maintain employment and income. On this, there is little disagreement.

It is when we turn to the practical issue of how to promote innovation that the perspectives tend to move apart.

Historically, innovation is linked to “new ideas”, “big jumps”, “paradigm shifts” and similar concepts that underline the trend-breaking, dramatic aspects of innovation. Against this background, the link between innovation on the one hand, and science and research on the other, is well established. For many countries, the more or less automatic reflex in developing an innovation policy has, consequently, been to look at ways in which to in-crease such forms of research as can lead to innovation and, secondly, to develop mechanisms that can link research more strongly to businesses and enterprises. 

If we look at innovation statistics, and take as a point of departure that it is those countries that spend a significant part of their gross national product on innovation-oriented research that have an innovation policy, the population is small: Sweden, Finland, Switzerland, the United States, Japan, Germany and a few more, depending on how the boundaries are drawn. For the rest of the world, innovation must be seen either as a dream for the future, or as something that has to rely on other mechanisms than the intensified use of research as the spearhead in the process. But what other mechanisms are available? 

The question is, of course, not new, nor are the answers. Recent analyses show, for instance, that even among the group of neighbouring Nordic countries – Denmark, Finland, Iceland, Norway and Sweden - innovation patterns differ (1). 

It is Finland that constitutes the most clear-cut example of the science-driven approach to product innovation, with Nokia as the most well-known case. Although Sweden shows much the same pattern, there is a stronger focus on continuous improvement of existing products and processes, and more of the innovation resources are used in the borderland between innovation and improvement. 

Although with a lower total level of innovation investments, Denmark is the country that brings forth most new products, relative to the size of the economy. These new products are distributed, however, across a number of industries and branches, and each product is gene-rally of a limited economic significance. It is the sum total that makes the Danish economy innovative, not the economic impact of each innovation.

Norway generally comes out with low scores in comparative innovation studies, but performs fairly well in terms of productivity development, and associated processes of continuous improvement. With a broader concept of innovation, Norway would appear higher on the list, although still below the other Nordic countries.

Even Iceland, which is even more of a raw materials economy than Norway, has increased its innovation efforts.

Recently, the Danish pattern has attracted increased attention; one reason is that it seems to be less expensive than the Swedish- Finnish one. With many small innovations across a broad front, the innovations primarily rely on existing knowledge and competence within the enterprises, and not on major external investments in, say, research. When the innovations are spread across a substantial number of industries, they are less exposed to ups and downs in specific branches – such as telecom – and less exposed to the strategies of the large, globalised enterprises, such as moving production around the globe according to shifts in costs and markets. 

However, a broad based innovation policy – a line which is, by the way, more and more strongly adapted also by Finland and Sweden – does not come free. It is, in fact, quite demanding, not least in terms of organisation: 

The small and middle sized enterprises, that are generally involved, need to work together and pool their resources in what is often referred to as “innovation systems”. To establish this kind of networking between enterprises is often a complex and demanding process. 

An enterprise that relies on networking to strengthen its own resources can, however, not only rely on broad mobilisation outside itself, it also has to bring its own employees into the process. The now classical notion of “participation” re-emerges, but under a new heading. Networking between enterprises, where SMEs constitute a major part of the members, generally needs a local-regional platform. It is not least the recognition of this point that has brought forth the now widespread interest in “regions” as core economic units. A broad-based innovation policy consequently needs a fruitful policy for regional development. 

Although a broad-based innovation policy relies more on work experience, and less on such a resource as research, research is not absent, nor are other support actors. The point is that they have to be present in forms, and with contributions, that do not necessarily focus on spearhead developments, radical product ideas and similar objectives, but rather on inputs that are adapted to the specific local situation. While it is often the enterprises themselves that come up with the ideas around which the innovation processes are built, research is often called in to contribute on themes like materials technology, computer based steering mechanisms, logistics- and production chains, and much more. A research input of growing significance pertains to the organisation of the innovation system as such (2). 

Drawing upon the Danish example, it is seen that an innovation policy that initially relied largely on work experience within the enterprises utilises research to a growing extent; whereas few products or services originate with research, there is almost no product, service or process that does not contain research inputs before the market is reached. 

The creation of spearhead products in a modern branch like ICT-technology, wireless communication or medical technology generally demands a highly sophisticated strategy for the mobilisation of the most advanced scientific and technological research around one single “hot spot” in the contemporary intellectual landscape. The development of a broad-based innovation policy demands a less sophisticated strategy in each single innovation point; instead it is the overall pattern that constitutes the challenge: the bringing together of a range of different actors in a large number of meeting places, the mixing of enterprise resources and public resources, the continuous adaptation of research to handle a broad range of themes and issues in parallel, rather than the focussing on one single issue, and much more. This is the point where most efforts at national innovation policy tend to fall short, not in the ability to mobilise highly focussed spearhead research, as soon as enterprises that can actually use this research are in place. 

The challenge is not unrecognised; in, for instance, Sweden a specific state authority – Vinnova – has been established for the prime purpose of creating innovation systems, and in practically all countries parallel efforts can be found, although seldom as clearly expressed in one single authority. 

Even when considering the point that nation states as well as regions show a different picture in the development of a broad-based innovation policy, the area as such is still in an early phase. Much remains to be established in terms of mechanisms for initiation, co-ordination and learning, but there is little doubt that future success belongs to those societies that can master an innovation policy, with the creativity of the workplace actors themselves as the core resource. 

On the other hand: when the innovation policy becomes oriented towards a broad range of enterprises and actors, it can no longer be kept separate from policies within other areas, such as participation in the workplace. 

Nobody will benefit from a situation where major parts of the European trade union movement turn their back on innovation policy, on the argument that it constitutes just a new effort at promoting meritocracy and blocking participation. 

Notes: 1: Mariussen, Å. 2004. Building the third generation Nordic innovation systems. Oslo: Step Centre of Innovation Research 2: Gustavsen, B. , Finne, H. Oscarsson, B. (eds) 2001. Creating connectedness: The role of social research in innovation policy. Amsterdam: John Benjamins


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