Innovation Europe > News > Innovation EU Vol1-1 > New perspectives on innovation

Innovation is about change and nothing changes faster, it seems, than our understanding of innovation itself. The traditional linear view of innovation – that science leads to technology leads to marketable products – has long since been abandoned. Such a model totally fails to capture the complexities of innovation processes – the importance of entrepreneurship, of networks, of co-location, of regulatory systems, and much else besides.

Thus, the history of innovation is one of continual re-examination and refinement. This reappraisal continues today, reflecting an evolution both in our understanding and in the ways firms innovate in the face of global competition.

Evaluating the effectiveness of innovation support

To gain insights on these questions, in spring 2009 the European Commission launched a consultation on the effectiveness of innovation support in Europe. Addressed both to companies and to business support organisations, the consultation enquired into the direction of future innovation support policies in Europe. It aimed, above all, to shed more light on which types of support would create the most impact on companies’ capacities to innovate.

As well as improving the effectiveness and accuracy of European initiatives, the Commission will use the results to advise member states on how to better focus their innovation support measures to meet companies’ requirements. At the same time, it should result in a better understanding of the right “division of labour” between the EU, national and regional levels.

The sectoral dimension

During the 1980s and 1990s, innovation researchers drew attention to national and regional variations in firms’ innovative performance. They attributed these variations to differences in how firms access and assimilate knowledge, and to the wider business and regulatory environments in which firms operate, the so-called national/regional “system of innovation”.

There are, however, also major differences in the rate of technical change and the organisation of innovation activities across industries. In some industries technical change happens at a fast pace, whereas in others it is slow and gradual. In some industries innovation is carried out by a small number of actors, whereas in others it is distributed across a wider population of firms, including end-users. This suggests that despite the high variation of innovation activities at the firm level, each sector shows specific patterns of behaviour as well.

Hence, the sectoral perspective in innovation is also recognised as increasingly important. Sectoral patterns of innovation are not independent of the national or supranational situation, however, and the innovation behaviour of a specific industry varies also across countries. Thus, there is a complex interplay between innovation drivers at the firm, sectoral and national levels which needs to be better understood. Innovation Watch, a strand within the Europe INNOVA initiative1, is undertaking various studies here that provide important insights for policymakers and businesses.

“New” forms of innovation

Some commentators stress the importance of “new” forms of innovation, such as creativity, design and service innovation. In reality, these are all forms of innovation that have always existed; we are just better aware of them and their place within the innovation process. Our understanding of these innovation drivers and their policy implications are, however, still relatively underdeveloped compared to conventional R&D.

Creativity and learning in the workplace, for example, show a strong correlation with innovation performance at national level but are virtually absent from innovation policy. Design is a holistic and visionary method for solving complex problems and ensuring new products and services truly reflect human/societal needs. And companies are increasingly open to ideas from outside, including the user (so-called “open innovation”). Innovation by the end-user is more frequent than most manufacturers or policy-makers assume, and in some sectors is the norm. Yet few programmes exist to support such user-driven innovation.

We need to diffuse good practices as regards nontechnological drivers of innovation, especially to those firms, industries and countries further down the innovation ladder. We also need better ways of measuring user innovation, and to learn from existing knowledge and research in these areas (eg on non-R&Dperforming innovators).

Broader measures of innovation

This latter point is symptomatic of a more widespread problem: how to measure innovation effectively and set appropriate targets? Innovation surveys show that more firms innovate than do R&D. If this is the case, how do firms acquire and combine knowledge in order to create value?

Measures such as the EU’s “3 percent target” are too crude to capture the true picture. We need to broaden the target, for instance by measuring the number of companies that are high growth, that are introducing innovations (whether from R&D or not), and that are adopting major new technologies. Expenditures on higher education and ICT, and the mobility and creativity of employees could also be included as critical inputs of innovation.

Innovation around societal challenges

Another emerging theme is to use so-called “societal challenges” as rallying points for innovation efforts. Societal challenges are “big picture” problems – such as climate change, the ageing population, and escalating demand for healthcare – requiring radical solutions. Such areas offer opportunities for major innovation – and in the longer term major new markets – but require focused systemic actions to kick-start the process.

This approach has great potential to mobilise the larger players and interest groups in society (international companies, NGOs, the young, and so on) and is already an emerging trend in countries such as the US, Japan, the Netherlands and the UK. It can help break down the “silos” frequently found between different policy domains.

The secret here appears to be in finding the right balance between “top-down” and “bottom-up”. High-level objectives and targets are needed to achieve focus, but these have to exist alongside and be compatible with lower-level objectives and targets to make the approach operational.

A broad sectoral approach requires a new type of horizontal innovation platform (eg the much-quoted “public-private partnership”) that brings together all relevant players, including those who would not normally meet through market interaction.

The public sector as a catalyst for innovation

The public sector plays an important role in innovation, both as a sponsor and funder of research and as a purchaser of innovative products and services. It can act as a catalyst for innovation, with potentially significant spillover effects. However, there are also considerable, and well-documented, barriers for innovation in the public sector.

With government budgets under pressure, it is essential Europe has a modern and efficient public administration. We need a more entrepreneurial public sector that thinks innovatively and takes risks.

More could be done to share experiences on successful innovation initiatives and help replicate them across Europe’s public sector. Public-private partnerships could be developed as a focus for public-sector innovation. Voluntary organisations could also be better involved than at present.

A new Innovation Plan for Europe

Thus, many new perspectives on innovation are emerging, some well developed, others more nebulous. Certain of these, at least, are likely to be reflected in the EU’s next innovation strategy, which is currently under preparation. The Commission is consulting widely on the strategy and listening to the views of stakeholders, including companies themselves.

Business inputs here have come through the Business Panel on Future European Innovation Policy, a group of leading business people from across the EU. The Panel held an online debate – Innovation Unlimited – during July and August 2009 to share and help develop its ideas.

We must re-invent Europe through innovation, the Panel says, turning it from a knowledge society to an innovation society. This requires that we broaden the concept of innovation by reorienting around social challenges and engaging everyone in society, from the young to the old. Similarly, we need to promote new places for new types of collaborations to reflect the way innovation works today.

The Panel also proposes Europe should foster innovative financing models, including an EU-wide market for trading and sharing intellectual property; and invest in future infrastructure, such as very high-speed broadband and smart electricity grids.

The Commission will set out its response in a new European Plan for Innovation, expected around the end of the year.