5 things we have learned about innovation

5 things we have learned about innovation
Published: 
May 2018

Innovation has never been more important or moved so fast. Here Professor Mark Dodgson, an internationally renowned innovation expert from The University of Queensland (UQ) Business School, outlines the latest thinking on innovation, based on current research and insights from the technology revolutions in the past.

“Over the past 250 years, innovation has been responsible for almost all economic growth. Yet it is only in the past four decades that we have started to gain a better understanding of it,” says Professor Mark Dodgson.

Mark has studied innovation since 1974 and later this year will publish his 15th book on the subject. He says that while the pace of change has quickened, disruption is nothing new: “All the past revolutions in technology – in steam power, electricity, automobiles, information and communications technology – have required enormous adaptation in industry and society.”

Fears of the social impact of technology have also been a recurrent theme over the years. Karl Marx believed technology could potentially liberate humans from repetitive tasks, but in his book Capital, published in 1867, he warned that under the capitalist system, workers were subordinated to machines. In the 1940s, economist Joseph Schumpeter coined the phrase 'creative destruction' as a reminder that while innovation can bring new industries and employment, it can also destroy established firms and jobs.

Models of innovation have changed too. After the Second World War, when many people believed the development of the atom bomb had curtailed the war in the Pacific, scientific research was seen as a way to tackle even the most intractable problems. Innovation was viewed as the automatic outcome of research.

By contrast in the 1950s and 1960s, market demand was considered the main driver for innovation. With the advent of the baby boom generation, corporates were using market research to predict demand and using innovation to create new products for the growing army of consumers.

In the 1970s researchers recognised that innovation was not a linear process but more of an iterative loop, where insights from research and the market were combined.

A decade later the remarkable success of Japanese industry attracted worldwide attention, with one study showing that their car manufacturers were twice as efficient as their competitors. Unlike the Henry Ford model of mass production – ‘you can have any colour, so long as it’s black’ – the Japanese lean production system allowed greater flexibility and a broader range of products, as well as improved quality. ‘Just-in-time’ delivery of components also reduced costs and allowed rapid response to market changes.

Observers compared the Western model to a relay race, with innovation being handed from one department to another, and the Japanese to a rugby team with all players working together to achieve the goal. Japanese firms collaborated with customers and suppliers, and later competitors – an approach that was adopted in the IT sector in Europe and in semiconductors in the USA.

However, times have changed. While previous models of innovation centred on manufacturing, services dominate the modern economy and as the Global Financial Crisis shows, we live in an era of continuing and widespread turbulence and uncertainty. So what have we learned and what is the situation today?

Mark says: “While we have to remember the lessons of the past, today innovation has never been so important, and the ways we innovate have never changed so quickly.” He outlines five key lessons:

 

1. It is not just about products

One of the biggest changes is the appreciation that innovation occurs in all aspects of organisations, not just in products and services, but in organisational structures and practices, in supply chains, routes to market and business models.
 
 

2. Innovation means collaboration

“You can’t innovate unless you effectively collaborate internally and externally,” say Mark. Big firms no longer rely solely on their own research and development, but draw on innovations from smaller partners and universities, and technology itself is making it easier for companies to connect.

 

3. Digital is changing innovation

The digital revolution is not only producing amazing innovations, but also changing the way we innovate. Technologies such as artificial intelligence and rapid prototyping are increasing the speed and decreasing the cost of innovation, allowing customers to become increasingly involved in designing the products and services they want. “We’re heading to an era of bespoke products at mass production prices,” says Mark.

 

4. The USA no longer leads the way

In the past, we may have looked to the USA, Europe and Japan for the best innovation practices. Mark suggests that some of the most advanced now are in countries such as China and Korea. “Look out for Latin America!” he adds.

 

5. Responsibility and creativity are key

Innovators have to become ever more responsible for the consequences of what they do – for the environment, for people’s well-being and privacy, and for giving employees secure and rewarding work.

“As machine learning becomes more ubiquitous, replacing repetitive tasks, there will need to be greater focus on creativity in management, design and the actual performance of jobs,” says Mark.

 

“The language of past decades is changing, with ‘control’ and ‘efficiency’ giving way to ‘collaboration’ and ‘effectiveness’. Ethical behaviour, cooperativeness, intuition and judgement will be amongst the most prized management skills in the future.”

Professor Mark Dodgson’s latest book, The Playful Entrepreneur, will be published by Yale University Press later this year.