Russell Lawson; 9 November 2012
When Japanese shopkeepers needed more shelf-space, Japanese farmers hit upon an innovative solution. By growing melons in tempered glass cases, they were able to modify the shape of the fruit and save on shelving.
If the future of the economy hinges on innovation, how can we inspire companies to innovate? The solution lies in moving beyond the brainstorming meeting to nurturing a culture where innovation flourishes.
The truth is that the failure of new products is well documented: for example, the retail and grocery sector sees an 85% failure of products in the first year. The computer games industry sees around 50% of its sales generated by only 10% of releases.
The failure rate in the music industry is spectacular, with approximately 80-90% of new releases being duds. In the magazine publishing industry, a massive 80% of new publications fail to last more than 12 issues, and in book publishing is a notoriously difficult nut to crack were only a tiny proportion of new releases generate any kind of profit.
New ideas are actually very difficult to come across. Just look at confectionary manufacturers and the way they incessantly bring out bigger/smaller/special edition versions of 60-year-old snacks. This tired old formula has now become the template of product and service development in industries right across the board. There is, of course, one fundamental flaw with this process: the vast majority of things created by it fail.
But innovation is now more important than ever because we are facing a number of key challenges. Globalisation, technological and knowledge revolutions, cultural debate and climate change are issues that face us all at some level. We have to innovate in order to improve a process or product and add value. These issues pose challenges for the private sector, for public services and for governments and policy makers.
A knowledge-based economy is defined as an economy directly based on the production, distribution and use of knowledge. In such economies there is a high degree of connectivity between the agents involved, and knowledge is widely used and exploited in all manner of economic activity.
We have now progressed from the knowledge-based economy to the knowledge-driven economy, emphasising the fact that the current contribution of knowledge is very much seen as the dynamo of our economy.
The knowledge-driven economy brings new challenges for business. Markets are more global with new competitors, product life cycles are shortening, customers are more demanding and the complexity of technology is increasing.
So while the knowledge economy represents new opportunities, certain actions are needed to support and take advantage of these developments.
The knowledge-driven economy affects the innovation process and the approach to innovation. The traditional idea that innovation is based upon research (technology-push theory) and interaction between firms and other actors is replaced by the current social network theory of innovation, where knowledge plays a crucial role in fostering innovation.
In the knowledge-driven economy, innovation has become central to achievement in the business world. With this growing importance, organisations large and small have begun to re-evaluate their products, their services, even their corporate culture in an attempt to maintain their competitiveness in today’s global markets. The more forward-thinking firms have recognised that only through such root and branch reform can they hope to survive in the face of increasing competition.
Everything that has ever been created by humans started with an idea. Ideas are universal – everybody has them. In 2007 America produced $414 billion worth of books, films, music, TV programmes and other copyright products. Copyright became America’s number one export, outselling clothes, chemicals, cars, computers and planes.
Consider this fact; a person normally uses less than ten per cent of their capacity to think. This means there is a lot of room for more creative thinking if only a person can find the right enlightenment or inspiration. It is the challenge for government to encourage, nurture and enable their ideas to come to fruition.
Russell Lawson is Managing Director of The Ideas Distillery, which helps companies tap into new markets through innovation.