Innovation is everywhere – it surrounds us and plays a major role in many of our lives including in our pockets, at our work, and in our homes. Innovation is the driving force that pushes our society into the future where new ideas are increasingly becoming a central theme towards economic prosperity.
In recent years, the term ‘innovation economy’ has been gaining traction amongst both business leaders and scholars. It is the belief that institutions and technological changes are the primary force that drives economic growth.
In today’s knowledge-based economy, we are seeing how the innovation economy is changing the world. Silicon Valley, the most dynamic industrial district in the world, has become a leading hub and startup ecosystem for innovation and scientific development.
Since its inception in the 1980's, the ingenuity of entrepreneurs has undoubtedly been a crucial factor for changing how we communicate, conduct business and the way we live our lives. The products and services that are being created are a perfect example of our contemporary idea of progress.
As we have seen, disruptions are occurring within a variety of industries. Taking a brief glance in the past, we have witnessed the astounding success of companies that pursued a novel idea instead of optimizing or altering, an already existing idea.
For example, Airbnb, the largest accommodation company, does not own any hotels. Uber, the largest provider of passenger transport, does not possess their own fleet of taxi vehicles. Online retailers such as Amazon and Alibaba have been dominating the online marketplace and are constantly threatening the closures of brick and mortar stores.
In recent years, innovation is regarded as the new force in modern capitalism. The term innovation economy encapsulates the idea that it is entrepreneurs and their novel ideas that unleash the ‘creative destruction’, which new job opportunities of the future arise. In other words, entrepreneurship, as a process, results in existing products or methods being replaced with new products/production methods.
The innovation economy is based on the creative ability of citizens to come up with and implement new ideas, products and services rather than the physical attribution to a specific product.
Valuer has continuously been striving to best connect to the innovation economy. Valuer is a data-driven AI platform bridging the innovation gap by connecting corporates with startups that can help them advance their internal innovation through external partnerships.
How is the innovation economy changing the World?
The world has witnessed drastic change which has impacted economic growth. The technology ecosystem is constantly evolving and impacts a wide range of industries.
As such, we need to rethink capitalism, the role of the public and private sector, and to redefine how we measure value in our society.
Mariana Mazzucuto, one of the leading scholars in economics, argues that modern economies reward activities that extract value rather than create it.”
She states that, “These companies’ huge profits and their dominance in their respective markets are claimed to be justified in terms of the value they create”. As a result, pharmaceutical companies have justified extraordinary price costs associated with certain drugs based on their notion of value-based pricing.
This pricing strategy conducted within the pharmaceutical industry has received strong backlash from society where prices of potentially life-saving drugs are marketed at a price that is not affordable to the majority of the population.
Entire societies are now shifting focus. Income inequality is a subject that has been gaining momentum where the new common goal is to increase quality of life for all. This is only made possible by expanding wealth by developing new business models, products and services, and forms of production.
Companies are now finding themselves investing in and leading to innovation by acquisitions and mergers. Some larger companies have used this as a strategic decision rather than investing on their own – mainly for the margin premium. This innovation premium is the golden solution that drives economic growth.
Why waste the time and effort trying to come up with your own solution if one already exists out there?
Redefining economic growth and prosperity
From an innovation economy standpoint, growth domestic product (GDP) measurements were previously quantified from tangible applications and assets.
Today, a significant percentage of GDP growth has been attributed to innovation value and new ideas. This may take the form of patents, copyrights and intellectual property rights.
An example in which the weight of an idea can influence economic growth is market speculations of an upcoming or newly released idea or invention.
This creates new challenges for companies to deliver innovative products to their customers on an on-going basis to maintain customer satisfaction. This can be especially difficult for a single company to constantly produce innovative products within a short time frame and to deliver a profitable return on investment.
Regarding the innovation economy, it is about how value is determined by the ability to generate new ideas that can be then transformed into new products, services, and business models to drive innovation.
Challenges of innovation in organizations
Unfortunately, some companies have suffered from the impacts of the changing economy and shifting market preferences. This may be the result of the companies’ failure to embrace the Innovation Economy within their company’s strategy.
Digital transformation is increasingly becoming a high priority for companies to adapt to the changing market conditions. However, there are a multitude of reasons why companies continue to fail even after attempting to introduce digital solutions.
In Andrew Hargadon’s book titled, ‘Sustainable Innovation’, he puts forth three important obstacles that act as a barrier for companies and executives of setting bold new strategies:
1. Hesitant to act when facing uncertainties – most companies avoid acting when faced with uncertainty. They tend to wait to circumvent these uncertainties only to find out later that someone else has capitalized on an innovative solution
2. Copying what other companies are doing – “seeking safety in the herd”. In the past, we have witnessed many companies attempt to create a façade or publicity stunt incorporating current trends but not changing their core business practices
3. Lack of distinct vision leading to competing products – companies developing new products to satisfy the demands of customers seeking innovative and sustainable solutions but end up conflicting with their own existing products. This creates confusion and a burden throughout the whole supply chain and corporate vision
These three obstacles highlight some of the barriers involved in companies and executives pursuing innovative solutions and strategies.
By taking a unidirectional approach to include innovation in the strategy, such as making the switch to digitalization, alone, it is insufficient to be able to embrace the Innovation Economy successfully.
Therefore, it is imperative to rethink the organizational structure within a company at all levels to be able to pursue innovation effectively and as a priority.
Rethinking how innovation is conducive within a company
Given the recent changes underway in the global marketplace, many business leaders and executives are recognizing their company’s need to embrace the innovation economy - to see the changing conditions of their market, identifying emerging threats and opportunities, and to develop new strategies in response.
There is no quick and easy solution to adequately prepare for what to expect in the future. Many companies across various sectors will feel the effects of innovation at least to some extent.
These changes in the market may be the result of indirect influences, such as shifting market preferences, newly released technologies, regulatory policies, and other market forces.
Companies must be able to adapt to these changing circumstances. By companies having an organization structure capable of responding to these market forces, such as a digital workflow, will they then be able to adequately respond to opportunities and threats through innovation.
As economist and venture capitalist, Willian H. Janeway argues, “One of the biggest challenges towards innovation is recognizing the convergence of technologies, market trends, and regulatory shifts taking place, in connecting and developing those ideas into functioning innovations, and in delivering them to the market at the right time and at the right scale”.
No one is safe from the continuous onslaught of shifting market preferences across all industries. Few leaders and companies are prepared to make the strategic investments required to respond to these threats.
By embracing the Innovation Economy, a company's organizational structure and thought process will be better prepared for such challenges that will inevitably arise.
Valuer and the innovation economy
We strongly believe in the potential challenges posed by disruption across all markets. Our vision is embracing the Innovation Economy to help companies connect and drive their success from innovation. Valuer’s provides companies the tools and resources to harness the Innovation Economy.
Valuer empowers businesses to completely rethink how innovation strategy is conducted from the ground up. We believe in the importance of how various institutions of research, government and society as a whole, play a critical role in economic growth. This is in stark contrast to individuals and firms conducting business within a vacuum.
Valuer provides an easy to implement, workflow solution for employees at all levels within a company to assess potential solutions to successfully advance their mission and goals.
By providing a workflow solution for businesses to easily identify new business models, technology and ideas, Valuer redefines how communication is conducted – by ultimately encouraging collaboration across teams, forming new partnerships to drive future growth, and to circumvent disruptive challenges.
In other words, we are empowering companies to foster innovation as a grassroots-like campaign. Instead of relying on solutions that are not initiated from within the company, or perhaps relying on time-consuming innovation scouting methods, Valuer provides real-time data for companies to make rapid and informed decision-making based on the latest data and trends.
Here at Valuer, we believe that the current transition towards the Innovation Economy to have a large impact on any company’s future and success.
We share the same vision and passion that many companies also pursue. Whether it be focusing on improving the lives of everyone across the globe, or helping companies achieve their Sustainable Development Goal commitments.
Valuer provides a bridge connecting these new ideas and to help bring them to fruition.
Redefining corporate decision making
Valuer is redefining how we communicate.
We are connecting with the Innovation Economy in order to provide a strategy for companies to incorporate innovation within their everyday tasks.
It is imperative for companies to have an organizational structure in place that incorporates innovation as part of their work culture.
Specifically, we see the value of being connected within a company where the drive towards innovation is shared among the company employees.
It is about enabling organizations to involve and unite all team members to be part of the innovation agenda rather than leaving the decision making to just a small group of individuals, third-party entities, or one that is relationship-based.
Katherine Redeka, executive director of the Rapid Learning Cycles Institute, highlights the important components required for any company’s team in order to create ‘pull’ to accelerate innovative ideas to market.
She argues using the term ‘high velocity innovation’, a concept to rethink the organizational structure of companies to help deliver successful products to market faster before it is too late. It is this notion of speed that is especially important when it comes to companies being able to innovate effectively.
Time is of the essence - it is up to companies to come up with solutions and to implement them as soon as possible in order for innovation strategies to be successful.
Pillars of the innovation economy
Businesses are constantly adapting to new economic realities, which is expressed in their desire to embrace innovative solutions. However, the effectiveness of such changes can be hurdled from both the macro- and micro level of innovation.
From a macro perspective, much of the attention has been focused on domestic innovation policy and modern economic realities. In order for countries to help companies increase the level of innovation, it is necessary for government institutions to create a favorable environment for them.
This may take the form of the presence of a system that combines education, science and technology, and business, the ease of which knowledge is communicated, allowing for greater foreign investment and business development, and for an environment that allows for the creation of new ideas that can be shared throughout the business and academic community.
From a micro perspective, the way in which businesses conduct their business to fully embrace innovation must be done is such a way that allows employees at all levels to engage in the innovation process that includes hatching, vetting, prototyping, and testing new ideas.
It is also important to implement this strategy so that company leaders and dedicated innovation teams are part of the collaboration and not to resent their own peers’ input.
Taking risks and developing a tolerance for failure is also an important hurdle that relates to the challenges of innovation within a company, as discussed previously.
Baba Shiv, a leading scholar within neuroeconomics at Stanford University, stresses the importance of companies shifting from a type 1 mindset, fearful of making mistakes, towards a type 2 mindset, the fear of losing out on opportunities.
It is understandable as to why companies are hesitant to make decisions that could end up being a total failure. That said, the main takeaway is to make risk-taking decisions quickly and cheaply as possible and to learn from your mistakes along the way.
Lastly, it is important for organizations to stay informed and anticipate any threats that may emerge in the future. This can take the form of new innovations, competitors, regulatory changes, and other external pressures.
Much of the discussion towards innovation is seeing what organizations can do to improve, but it is just as important to always be on the lookout for external forces and new ideas that threaten a company’s future.
Where Valuer can help
Valuer provides companies a competitive edge to easily identify relevant products and services that will add value to their existing or future products for their customers in real time.
Specifically, we provide your company a data-driven aspect to your team’s decision making using concrete data. Furthermore, we use data-driven processes to navigate the plethora of opportunities for companies to stay connected to your industry technology landscape to help maintain your positioning in the competitive marketplace.
By integrating a workflow solution in companies that can be accessed virtually anywhere, allows for people and organizations to unite and share a common vision that will drive future growth.
Here at Valuer, we consider the Innovation Economy as a central theme towards companies’ future success.
In such a competitive and constantly-evolving marketplace, Valuer considers the Innovation Economy a critical driving force for economic prosperity – not just within individual companies but also on a global scale.
We are currently witnessing a historic transition away from mainstream neoclassical theory of economics, which views capital accumulation as the primary driver of economic development.
Now, new innovative ideas are constantly disrupting the marketplace, and it is up to companies to be adequately prepared to capitalize on important opportunities and to circumvent the many threats that await them.