Innovation, a state of mind and
factor of sustainable development

Facing the world challenges via innovation.


We will not solve the problems of economic development and
the social
challenges in our World without intensive innovations.
The opposition to change and openness is sadly very strong.

Various confusions exist about innovation
It cannot be planned but it can be helped, and its brakes be fought.
It is not only a matter of scientific research, but it rests on a state
of mind that favors initiatives.

It is not just to do things better but to put them in question.

bulb The need of innovation

"Not to innovate is to die" goes further than just a slogan.

In a world in rapid mutation (
dynamical system), where uncertainty is
king, thus to foresee evolutions is quite hazardous,
nobody can sleep
on its established rights and assets, as actually nothing is
never established.
Such a conventional introduction, although shocking for those
who
preach a return to the past
, might be seen as a surprising
platitude in an article on innovation,
but please consider that
innovation is also the art of surprises ;-)

The case of econsector the economy

The economic field is among those that experience the most changes.
Innov
ation is more and more an essential factor of economic
development


Innovation is at least as crucial as the three  production factors / value
sources that the "classical" economists stated  :
natural resources, labor
and capital.


It is only int the last centuries that economists such as Joseph
Schumpeter and
Robert Solow, and the management specialist
Peter Drucker, have largely foreseen and theorized this key role
of innovation in the economy.


This becomes nowadays specially crucial, in the spirit of a
"sustainable development" that
changes drastically the
old models of growth, overly
focused on the three other factors
mentioned above that can not alone
feed the economic engine.

Beyond the economy

Without innovation we would not be able to solve the (various and
worrying)
issues that affect this planet and its residents.
Us, human beings, must create not only the future economic
activities and models
, but also new paths in many other
sides of the human and social life.

To take an example among others, the artistic and cultural
aspects
are crucial. Here, creativity, freedom of exchanges and
cross-fertilization are essential in an "information society".


Even more crucial is to renew the social life organization model,
which
deserves the special analysis shown below:
Innovation and democracy
Democracy is not definitively established and needs all the time
to be rebooted.

If it does not evolve, it gets stuck, weakens and gets confiscated
by 
extremists who do not care much about Human rights.

A big innovation work would be to revise fully our forms
of democratic institutions
.

Nowadays, they are clearly slipping, as :
    * distant from citizens (political careerism calcifies power),
         thus
not fully democratic, which brings the danger to replace
         democracy with charismatic gurus who capture all powers 
         by offering to "make
full cleaning" and destroy everything .
    * unable to  tackle the common issues of the planet (as politicians
        focus on their familiar territory where they get their bread and
        butter).


There is a double crucial necessity
    * to re-inject a higher dose of democracy, initiative and
          freedom
,
    * to bring a quantic jump of efficiency to face the magnitude
           of the
challenges, in domains that largely cross the dotted lines

           that delimitate
borders on maps (see
democratic globalization).

Reciprocally, without a democracy open to initiatives, innovation
can only freeze.

Sustainable development entails an intense innovation,

which demands a free society.
Where the aversion to innovation comes from?

fear Fear of the world? Fear to make moves?

Unfortunately we are seeing the spreading of theses promoting  

* protectionism / corporatism (aversion to competition by 
  
falling back on illusive self-sufficiency, under the belief that to
   shrivel would preserve the future
. There is here a  denial of
   networks
, as the new type of
economic organization.

*
and precautionism (belief that we can and must avoid the
    least risk by excessively applying the precautionary principle,
    making of it a poison
that deters most innovations).

Two factors explain this overcautious orientation, this kind of cocooning:
An avalanche of crises (financial, economics, ecological, cultural...)
changes
dramatically the situations and prospects.

Those hardships of a world in transition, are often attributed to
globalization
.
The theory  of "deglobalization" (undoing the World?) pushed by
activists, shows the lack of understanding that
to make the planet
more humane
a true globalization would materialize the
idea that we can and must work together
 
.
a mental conservatism that advocates a status quo, a resistance to
everything new.
This fall back reaction, this precautionary dogma deprives of the
possibility to
test the potential advantages of new
initiatives.
It tries to justify its rejection by focusing
on hypothetical risks. We
would thus never know if they are just fantasies as we will not
have accumulated
 
"returns of  experience", through a gradual
but sizable enough utilization.


The risk / uncertainty aversion, understandable between if kept
under limits, might
create a major risk: to get stuck in
inaction.

Adds to it a "loss aversion", a strong resistance to abandon obsolete
activities just because
we invested materially and intellectually in
them.
Sustainable plancalend plancalend development?
It shows the need to shift to speed up innovations.

Often this status quo bias is hidden by the moral disguise of the quest
for
a sustainable development to save the environment and preserve
precious
resources.
In this respect, it would be quite OK that an over-use of physical resources 
be invoiced to the related economic players.
That would incite them to use a better resource, their neurons, to invent
more "frugal"
practices (but without renouncing to look for new physical
resources).

OK then, frugality is a form of elegance, of efficiency and preservation of

of species and ...wallets.

In emerging countries, and now developed countries where economic
growth and  purchasing power
reach a threshold, "frugal innovation"
efforts try to re-adapt drastically various products and services so as to
reduce strongly their cost.


On the other hand, this should not prevent the creation of totally new
things
for totally new uses.

Above all,
going backwards cannot bring sustainable growth,
whether such a fallback be brutal, or planned in gradual doses, or results
from just a freezing of development initiatives ("who does not progress
regresses").

Sustainability needs on the contrary to speed up
drive innovation.
A sustainable development is a better one, based on a more powerful,
efficient
and robust engine.

Sustainability cannot be  "degrowth"
, a simplistic solution that
abandons
the creative expression of the individual. Such a regression
is advocated by the Georgescu-
Roegen's adept, under a mental
confusion with thermodynamic notions.


To fight innovation, to propose an Holy Inquisition (*) against innovation
and 
growth would be a dramatic mistake.
(*) no, this is not an exaggeration, the XXIst century sees a rebirth of
fanaticisms, on this topic or other ones, with as a common vector, the
craving
to control totally the people.


Actually, we need more than ever to innovate
to solve the global issues
, while leaving enough
freedom of choice
to people
.

It would be arrogant to decide for them, except maybe in cases of
emergency
characterized by extreme shortages or dangers
, what
their
needs, satisfactions and preferences should be, and then to
make those needs uniform.

What innovation is, and what it is not

knowledge To learn or to delearn

A matter of knowledge, of planning, of research?

Or of culture and state of mind directed to creation? 

Innovation entails not only careful attention to avoid stalling, but above
all a
desire, a  "dissident" will to, at the same time,
(productivity, quality and ...lower costs) by using less
resources
while improving their properties.
(creativity and quest for new potential demand) that respond
to new needs, new satisfactions /utilizations
.
by investing a dose of money and knowledge into "real
options", other scenarios, plans B, to be ready to apply
quickly other solutions in case the future takes new turns.


This attitude of "
constructive rebelrebel", let us not fear paradoxes,
gives at the same time
creativity
and, with the same necessity, the
pugnacity to
implement the innovations.

To test and improve has to be done until the result satisfies the user
and an
efficient production system is found.
Yes, even Leonardo da Vinci made a big use of its dustbin, Gutemberg
polished up its printing press for years and Edison threw away 1000
prototypes
to perfect the electric bulb (*).


(*) this is true for products, but also for the creation of services.


Innovation uses obviously knowledge, another key "soft" factor, of
economic development (cf.
production factors).
But it differs by putting to test if, need be, some existing
knowledge
that could be revealed to be false, incomplete, undapted
to evolutions (obsolescence and
rotation of paradigms).
cf.
prospective financial analysis

Innovation goes beyond the limits of frozen and conventional knowledge,
it can not
only improve what is known but also go beyond it, or even
create a
disruption from it.
=> It is  at the same time learning and delearning.


Also, successful innovation is not something you fully decree or
schedule
, but you can promote it.

It does not rest on just scientific or technological research.
It  brings new knowledge, but is not enough as disruptive innovation
is also a practical  state of mind, not always
originating from the great
research centers with standardized programs
and protocols.

As for the "great projects" (remember the men on the Moon) their
advantage
is to be attractive and bring positive fallouts, but they should
not monopolize all
the means by diverting it from humbler actions.

Back to the economic case

And of course, although crucial for the economy, innovation is not just
related, far from it, to sous economic activities
.
It can address all the problems to face and all the activities of individual
people as well as of society.
Let us take anyway this economic aspect as a relevant example to
understand innovation.
it starts more and more from services (the Internet is
teeming with them) which does not mean that it can be
expected only from them, this would be a risky mono
culture)
It can be just the satisfaction of human and social needs
that are emergent
or were not detected before.

Whence the important role of marketing, design, and of an
understanding of people behaviors and, generally, of the
evolutions of society in its local as well as global
aspects
(for example the
emergence and disruption phenomena).
the mode of production.
The implementation.
The practical phase is of course the one in which everything
is at play,
in which one must find all the necessary material
and human resources, not only devoted to production but
also to
commerce and finance.
Resources rarely fall from the sky, even for a project which
prospects
are deemed outstanding !
It is often to question and even destroy what we used to
do, so as
to look for new bread and butter. Schumpeter
talked of "creative destruction
" in economic development.
It brings, as business strategists say, a change of
economic model
.

If you made vacuum cleaner bags, the day they don't
use any more
bags
, your little "consumption" racket
went to the dogs
.

What does it entail?

Here are three paths, of course non limitative, to develop innovation:

1) Accept uncertainty, initiative, betting 

To innovate creates disruptions, changes, to stray from past paths.
This
makes it seen as taboo, as a menace for those with vested interests.

To innovate supposes to accept that we live in an uncertain
world, which future is largely unknown
. Thus there is no other
choice than to do dice"bets"
or, let us say the word, "speculations",
another taboo word.
=> Innovation entails entrepreneurial spirit and risk taking,
Prevision for its part can hardly rest on paradigms of linear evolutions
and Gaussian probabilities.

Therefore:
(cf. dynamical system article).
in the sense of giving a not just temporary competitive
advantage.

It will always be time to react if this degenerates into a
monopoly
(economic rent-seeking) that paralyzes future e
volutions.

Even those great innovations obey a "life cycle":
taking off
phase, thanks to a few first adepts, popularization phase
resulting in strong growth, cruising speed (saturation),
gradual decline.

Thence a  "project portfolio strategy" as follows:

* To create the larger possible number of projects as "real options",
   which,
like the financial options will be "exercised" or abandoned
   according to their
prospects.

* Watch them quite closely.
* Add more means (and adapt the strategy) if the Bayesian probabilities
   of success increase.

* On the other hand be selective and abandon them without regret if
   they clearly
dwindle.

* Creative destruction: Not hesitating to cannibalize some old products /
   services and ancient technologies instead of leaving other players
   exploit the new approaches and make us look old hat.

2) A financing that is adapted to risk-taking

At the difference of research and development that focus on classical
activities, 
innovation do not always need huge funds. But even so:

* The preparation phase when revenues are still in waiting, when for
   for example
conceiving a complex software or a sophisticated product,
   needs often
to work for months before being able to launch it on the
   market.

   This might need important funding.

* Should not be underestimated either the commercial launching costs.

* Also, to implement an innovative process or product, even in a running
    business
but that need to obtain a competitiveness jump, and
    then maintain this advance
, needs often heavy investments.

Whatever the objective, to finance innovation, although quite profitable
in case
of success is quite risky when we look at the percentage of
failures
.
=> For this reason the "innovation capitalism" demands a good
      proportion of
equity financing that bears the risk,
      more than loans
.
Even in a territory, with a level of excellence in research, but that lack
a proper
financial network to assemble those investors who bring
"risk" capital, is hardly favorable
to economic innovation.

3) An open policy

On the political aspect:
closed economies / societies
or those obeying a "precautionary" dogma.

Autarchy is suicidal in an economy organized more and more as
a
network that is encompassing the World

Also, mental conservatism and innovation are not an happy couple.

If we do not want to end up - it is the true risk - in a comatose
economy, a  society stuck in dead ends and obsolescent institutions,

the "
innovation initiative and responsibility principle"
must at least balance
the a priori decreed sacrosanct
precautionary principle
.


To give a chance to evolutions
and adaptations, the cursor must
be placed
nearer to this dynamical principle than to the one that
fosters failure to act.


To oppose an innovation that could bring benefits and solve problems
should
not be done without serious motives nor without real scale
implementations
(see above) that allow to make an evaluation. 
To prepare scenarios to face hazards is useful, but in case of
totally new 
situations, it can not replace
action action, and the
following evaluation of its outcome
.


This application in the real world must be sizable enough, beyond
simple tests
in close cells.
This is the principle of the "return of experience" that requires
a gradual but sizable (full-scale if possible) and long enough
utilization.


Here lies a perversity of the "precautionary principle", 
mentioned
above, that condemn any experiment, other than
sporadic and in close circle (this goes to the extent of seeing
research as a transgression).  This 
dogma based on inaction
is most often more dangerous and harmful than useful
.

in relation with various factors: educational, cultural,
financial, political, legal, regulatory, sociological, in
communications...

* on a given territory,
* in a specific profession or sector of activity,
* and of course in an institution or business.
Additional reading:

The commentary thread "value of ideas" seen below initiated by
Jean-Marcel
DIZES shows the crucial importance in management and in
financial analysis
, as survival condition for a business, to anticipate,
and above all to be active in disruptive innovations. This supposes a less
self-centered, more open
vision  by that entity of what is its business or
function.


JMD
Allow me to add this little extract from a book  by Luc de Brabandere, about related
topics:

"A computing technology giant like Google, a world leader in publishing could have
imagined
Amazon, a great TV channel could have launched You Tube, the distribution
sector conceivde eBay. Even so, none of them did it. Why?

Because most often, a business future is thought in a incremental way, a little more of
the same thing. But a portion of the future of that business is not driven by continuity,
a piece of the
future will come from something else."
(La Valeur des idées - De la créativité à la stratégie en entreprise, Paris, Dunod, 2007).

It might not be useless to multiply the ways with which this questioning is formulated!

PG
Peter Drucker, the pioneer of management theories, stated that efficiency for a stage
coach manufacturer was not primarily to make better stage coaches than to propose
new modes of transportation.

He was seeing a broader definition of the job done by a business, a definition that
focuses on the
service it brings and not in the way it is brought, that is outward and
not inward-oriented, as a crucial condition of its survival. .

Also an article in my site on prospective analysis shows what factors are to be
taken
as an integrated part of any financial analysis.


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