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.
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
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 ;-)
Innovation is at least as crucial as the three production factors / value
sources that the "classical" economists stated : natural resources, labor
It is only int the last centuries that economists such as Joseph
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
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
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
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 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:
The challenges of the present world mentioned above,
An avalanche of crises (financial, economics, ecological,
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 thatto make the planet
more humanea 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 totest 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
Sustainable 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
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 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
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,
do things differently
(productivity, quality and ...lower costs) by using less
resources while improving their properties.
do different things
(creativity and quest for new potential demand) that respond
to new needs, new satisfactions /utilizations.
prepare to possible external changes
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 rebel", 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 obviouslyknowledge, 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 disruptionfrom 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 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
It does not address only manufacturing
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
It is not just a matter of technological discoveries
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).
It can address as well the nature of the product / service as the
the mode of production.
It is not just invention or discovery, as the challenge is in
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 more than just to incrementally improved what exists.
It is often to question and even destroy what we used to
do, so asto look for new bread and butter. Schumpeter
talked of "creative destruction" in economic development.
It is a mutation, a disruption.
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 "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.
Many innovations do not at the end "emerge" / "percolate"
This is compensated by a minority, that brings huge successes
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),
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
=> 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:
Innovation is not too compatible with
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
To give a chance to evolutions and adaptations, the cursor
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
It entails to accept full-scale initial applications
To prepare scenarios to face hazards is useful, but in case of
totally new situations, it can not replace 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
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.
Of course, the search for innovation cannot be really planned,
but we can dissect what helps it or curbs it,
in relation with various factors: educational, cultural,
financial, political, legal, regulatory, sociological, in
Whether it takes place
* on a given territory, * in a specific profession or sector of activity, * and of course in aninstitution or business.
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
Allow me to add this little extract from a book by Luc de Brabandere, about related
"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!
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
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.