Researchers call for new approach to innovation

Wednesday, 04 May, 2011

Leading British and Australian researchers have critiqued the way western governments encourage innovation and have called for fundamental change.

In a controversial new report they argue that while innovation policy is a major preoccupation of governments in the UK, Australia and the west generally, it does not work as well as it should because it fails to address the biggest hurdles faced by innovators.  The report, entited ‘State of Uncertainty’, was written by Hasan Bakhshi, a director at Britain’s National Endowment for Science, Technology and the Arts (NESTA), Dr Alan Freeman and Dr Jason Potts from the ARC Centre of Excellence for Creative Industries and Innovation (CCI). In it, the authors say: “The broadest barrier to effective entrepreneurial action that drives innovation processes, we argue, is good, timely information about relevant opportunities and constraints.” Innovators are often hampered by not knowing what opportunities may exist for their ideas or what regulatory and other barriers lie in their path, the team argues.

“Innovation policy would work better, we suggest, if modelled on experimental science and directed to the task of minimising the uncertainty that entrepreneurs face in the discovery of opportunities and constraints ... effective innovation policy should work by fostering entrepreneurship in the discovery and exploitation of opportunities.” Despite almost every western government having a large department badged Department of Innovation or Department of Enterprise, and numerous reviews such as the Dyson Report (UK) and Cutler Review (Australia) of existing innovation policies in Britain, Australia and other western countries are still being run largely as an extension of long-established industry policy.

“The problem is that much innovation policy remains rooted in industry policy, and has inherited many of its presumptions, such as a focus on planning, targets and sectoral programs,” they say.

‘State of Uncertainty’ proposes a new model of innovation policy that focuses on overcoming the information problem that envelops and restricts the innovator.

“We challenge the idea, implicit in much existing practice, that governments operate levers that affect innovation in predictable ways, and argue that innovation policy should  instead be regarded as a process of discovery,” the researchers say.

“This calls for an institutional role we term ‘the experimental state’, where experimental processes are embedded in publicly supported innovative activity - without constraining the innovators within the rigid, preordained coordinates of a traditional industrial ‘plan’ or ‘growth strategy’. The authors argue that there should be less emphasis on tax and spend to support innovation, and more on experimental development, clusters, demonstration projects and strategic innovation funds.

In this, public activities could be directed at ensuring that private discoveries are documented and made public to the innovation community, helping to reduce the uncertainty in which the developers of new ideas and new products now operate.

“Our proposal suggests this is both a more powerful strategy and potentially also a more cost-effective one than the traditional approach. But it will require that innovation policy be introduced, and applied, in a scientific (learning-focused) rather than political (influence-based) frame of mind. “Experimentation underpins our modern civilisation; it should be the basis of innovation policy too.” Such an approach will actually be cheaper for the taxpayer, as well as more helpful to the entrepreneur or innovator, the team argues.

Their report is published by NESTA and is available for download.

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