What is innovation, exactly? There is an unresolved tension whether the source of innovation comes from big firm R&D or small firm entrepreneurship. I'm particularly fascinated with the question whether breakthroughs or incremental innovations matter more to growth. And there are unresolved questions about what policies would enhance technology-based growth: industrial targeting or ecosystem optimization or research subsidies.
A May 2008 research paper (available at SSRN) written by Roger Miller and Marcel Cote titled The Faces of Innovation offers an exciting synthesis of many of the issues, and directly challenges the popular notions of "best practices" for business innovation and centralized public innovation polcies.
To be honest, at first glance this paper struck me as it may strike many of you - another glib mumbo-jumbo framework on innovation with buzzwords and checklists. On the contrary, the six-part framework is both insightful and well-organized. The authors define innovations along two axes: (1) market-creating versus in-market (MC and IM) and (2) the typology of product, process, or platform (my own abbreviations). Here's a graphic showing the six faces or "games" (as the authors describe them) of innovation from the paper:
I've copied three interesting paragraphs from the paper, adding my own bolding:
[N]ew entrants displacing complacent incumbents and rendering old ways obsolete, is still a central theoretical tenet. There is also an almost mythical belief in the critical role of entrepreneurs as agent of rejuvenation, and by extension, in venture capital supporting them. But as Schumpeter argued late in his life, large firms with R&D are significant innovation agents, as scale matters when it comes to R&D. That view led to a strong association in public policy between R&D and innovation. Indeed, the most popular indicator of national performance on innovation seems to be Business expenditures on R&D as a percentage of GDP, (BERD).
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A central feature of the synthesis that came out of the MINE survey is thus that innovation has many faces, each representing a distinct logic of innovation, requiring different strategies and practices. This view goes against the widely held belief that there are universal best practices to stimulate innovation. Indeed, the generalization of a unique set of "best practices" could trap entire sectors in negative-sum competition with low innovation, low growth, and low profit.
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Government innovation strategies tend to focus on a limited number of areas strongly supported by special interests: university and industrial research, university-industry collaboration, intellectual properties, venture capital, etc... Looking at innovation from the perspective of the six games suggests different priorities, and more importantly, a much more parcelled approach.
Very highly recommended.
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