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Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a new or changed entity realizing or redistributing value". Others have different definitions; a common element in the definitions is a focus on newness, improvement, and spread of ideas or technologies. Innovation often takes place through the development of more-effective products, processes,
service Service may refer to: Activities * Administrative service, a required part of the workload of university faculty * Civil service, the body of employees of a government * Community service, volunteer service for the benefit of a community or a pu ...
s, technologies, art works or business models that innovators make available to markets, governments and society. Innovation is related to, but not the same as,
invention An invention is a unique or novel device, method, composition, idea or process. An invention may be an improvement upon a machine, product, or process for increasing efficiency or lowering cost. It may also be an entirely new concept. If an i ...
: innovation is more apt to involve the practical implementation of an invention (i.e. new / improved ability) to make a meaningful impact in a market or society, and not all innovations require a new invention. Technical innovation often manifests itself via the engineering process when the problem being solved is of a technical or scientific nature. The opposite of innovation is exnovation.


Definition

Surveys of the literature on innovation have found a variety of definitions. In 2009, Baregheh et al. found around 60 definitions in different scientific papers, while a 2014 survey found over 40. Based on their survey, Baragheh et al. attempted to define a multidisciplinary definition and arrived at the following definition:
"Innovation is the multi-stage process whereby organizations transform ideas into new/improved products, service or processes, in order to advance, compete and differentiate themselves successfully in their marketplace"
In an industrial survey of how the software industry defined innovation, the following definition given by Crossan and Apaydin was considered to be the most complete, which builds on the Organisation for Economic Co-operation and Development (OECD) manual's definition:Edison, H., Ali, N.B., & Torkar, R. (2014)
Towards innovation measurement in the software industry
''Journal of Systems and Software'' 86(5), 1390–407.
American sociologist Everett Rogers, defined it as follows:
"An idea, practice, or object that is perceived as new by an individual or other unit of adoption"
According to Alan Altshuler and Robert D. Behn, innovation includes original invention and creative use and defines innovation as a generation, admission and realization of new ideas, products, services and processes. Two main dimensions of innovation are degree of novelty (i.e. whether an innovation is new to the firm, new to the market, new to the industry, or new to the world) and kind of innovation (i.e. whether it is process or product-service system innovation). In organizational scholarship, researchers have also distinguished innovation to be separate from creativity, by providing an updated definition of these two related constructs: Peter Drucker wrote:


Creativity and innovation

In general, innovation is distinguished from creativity by its emphasis on the implementation of creative ideas in an economic setting. Amabile and Pratt in 2016, drawing on the literature, distinguish between creativity ("the production of novel and useful ideas by an individual or small group of individuals working together") and innovation ("the successful implementation of creative ideas within an organization").


Types

Several frameworks have been proposed for defining types of innovation.


Sustaining vs disruptive innovation

One framework proposed by Clayton Christensen draws a distinction between sustaining and
disruptive innovation In business theory, disruptive innovation is innovation that creates a new market and value network or enters at the bottom of an existing market and eventually displaces established market-leading firms, products, and alliances. The concept was ...
s. Sustaining innovation is the improvement of a product or service based on the known needs of current customers (e.g. faster microprocessors, flat screen televisions). Disruptive innovation in contrast refers to a process by which a new product or service creates a new market (e.g. transistor radio, free crowdsourced encyclopedia, etc.), eventually displacing established competitors. According to Christensen, disruptive innovations are critical to long-term success in business. Disruptive innovation is often enabled by disruptive technology. Marco Iansiti and Karim R. Lakhani define foundational technology as having the potential to create new foundations for global technology systems over the longer term. Foundational technology tends to transform business operating models as entirely new business models
emerge Emerge may refer to: * '' Emerge: The Best of Neocolours'', the fourth album of Neocolours * Emerge Desktop, a Desktop shell replacement for Microsoft Windows * ''Emerge'' (magazine), a defunct news magazine * Emerge Stimulation Drink, a drink s ...
over many years, with gradual and steady adoption of the innovation leading to waves of technological and
institution Institutions are humanly devised structures of rules and norms that shape and constrain individual behavior. All definitions of institutions generally entail that there is a level of persistence and continuity. Laws, rules, social conventions a ...
al change that gain momentum more slowly. The advent of the
packet-switched In telecommunications, packet switching is a method of grouping data into '' packets'' that are transmitted over a digital network. Packets are made of a header and a payload. Data in the header is used by networking hardware to direct the pac ...
communication protocol TCP/IP—originally introduced in 1972 to support a single use case for United States Department of Defense electronic communication (email), and which gained widespread adoption only in the mid-1990s with the advent of the World Wide Web—is a foundational technology.


Four types innovation model

Another framework was suggested by Henderson and Clark. They divide innovation into four types; * Radical innovation: "establishes a new dominant design and, hence, a new set of core design concepts embodied in components that are linked together in a new architecture." (p. 11) * Incremental innovation: "refines and extends an established design. Improvement occurs in individual components, but the underlying core design concepts, and the links between them, remain the same." (p. 11) * Architectural innovation: "innovation that changes only the relationships between them
he core design concepts He or HE may refer to: Language * He (pronoun), an English pronoun * He (kana), the romanization of the Japanese kana へ * He (letter), the fifth letter of many Semitic alphabets * He (Cyrillic), a letter of the Cyrillic script called ''He'' ...
(p. 12) * Modular Innovation: "innovation that changes only the core design concepts of a technology" (p. 12) While Henderson and Clark as well as Christensen talk about technical innovation there are other kinds of innovation as well, such as service innovation and organizational innovation.


Non-economic innovation

The classical definition of innovation being limited to the primary goal of generating profit for a firm, has led others to define other types of innovation such as: social innovation,
sustainable innovation Specific definitions of sustainability are difficult to agree on and have varied in the literature and over time. The concept of sustainability can be used to guide decisions at the global, national, and individual levels (e.g. sustainable livin ...
(or green innovation), and
responsible innovation Responsibility may refer to: * Collective responsibility * Corporate social responsibility * Duty * Legal liability * Legal obligation * Legal responsibility (disambiguation) * Media responsibility * Moral responsibility, or personal responsibilit ...
.


History

The word "innovation" once had a quite different meaning. The first full-length discussion about innovation is the account by the Greek philosopher and historian Xenophon (430–355 BCE). He viewed the concept as multifaceted and connected it to political action. The word for innovation that he uses, 'kainotomia', had previously occurred in two plays by Aristophanes ( – BCE). Plato (died BCE) discussed innovation in his ''Laws'' dialogue and was not very fond of the concept. He was skeptical to it both in culture (dancing and art) and in education (he did not believe in introducing new games and toys to the kids). Aristotle (384–322 BCE) did not like organizational innovations: he believed that all possible forms of organization had been discovered. Before the 4th century in Rome, the words ''novitas'' and ''res nova / nova res'' were used with either negative or positive judgment on the innovator. This concept meant "renewing" and was incorporated into the new Latin verb word ''innovo'' ("I renew" or "I restore") in the centuries that followed. The '' Vulgate'' version of the Bible (late 4th century CE) used the word in spiritual as well as political contexts. It also appeared in poetry, mainly with spiritual connotations, but was also connected to political, material and cultural aspects. Machiavelli's '' The Prince'' (1513), discusses innovation in a political setting. Machiavelli portrays it as a strategy a Prince may employ in order to cope with a constantly changing world as well as the corruption within it. Here innovation is described as introducing change in government (new laws and institutions); Machiavelli's later book ''The Discourses'' (1528) characterises innovation as imitation, as a return to the original that has been corrupted by people and by time. Thus for Machiavelli innovation came with positive connotations. This is however an exception in the usage of the concept of innovation from the 16th century and onward. No innovator from the renaissance until the late 19th century ever thought of applying the word innovator upon themselves, it was a word used to attack enemies. From the 1400s through the 1600s, the concept of innovation was pejorative – the term was an early-modern synonym for "rebellion", "revolt" and " heresy". In the 1800s people promoting capitalism saw socialism as an innovation and spent a lot of energy working against it. For instance,
Goldwin Smith Goldwin Smith (13 August 1823 – 7 June 1910) was a British historian and journalist, active in the United Kingdom and Canada. In the 1860s he also taught at Cornell University in the United States. Life and career Early life and education S ...
(1823-1910) saw the spread of social innovations as an attack on money and banks. These social innovations were socialism, communism, nationalization, cooperative associations. In the 20th century the concept of innovation did not become popular until after the Second World War of 1939-1945. This is the point in time when people started to talk about ''technological'' product innovation and tie it to the idea of economic growth and competitive advantage. Joseph Schumpeter (1883–1950) is often credited as the one who made the term popular - he contributed greatly to the study of innovation economics, In
business Business is the practice of making one's living or making money by producing or Trade, buying and selling Product (business), products (such as goods and Service (economics), services). It is also "any activity or enterprise entered into for pr ...
and in economics, innovation can provide a catalyst for growth in an enterprise or even in an industry. With rapid advances in transportation and communications over the past few decades, the old concepts of factor endowments and comparative advantage which focused on an area's unique inputs are outmoded in today's
global economy The world economy or global economy is the economy of all humans of the world, referring to the global economic system, which includes all economic activities which are conducted both within and between nations, including production, consumption, ...
. Schumpeter argued that industries must incessantly revolutionize the economic structure from within, that is: innovate with better or more effective processes and products, as well as with market distribution (such as the transition from the craft shop to factory). He famously asserted that " creative destruction is the essential fact about capitalism". Entrepreneurs continuously search for better ways to satisfy their consumer base with improved quality, durability, service and price - searches which may come to fruition in innovation with advanced technologies and organizational strategies. A prime example of innovation involved the boom of Silicon Valley start-ups out of the
Stanford Industrial Park Stanford Research Park (SRP) is a technology park established in 1951 as a joint initiative between Stanford University and the Palo Alto, California, City of Palo Alto. It has more than 150 companies, including Hewlett-Packard, Tesla Motors, TIB ...
. In 1957, dissatisfied employees of
Shockley Semiconductor Shockley Semiconductor Laboratory was a pioneering semiconductor developer founded by William Shockley, and funded by Beckman Instruments, Inc., in 1955. It was the first high technology company in what came to be known as Silicon Valley to wo ...
, the company of
Nobel laureate The Nobel Prizes ( sv, Nobelpriset, no, Nobelprisen) are awarded annually by the Royal Swedish Academy of Sciences, the Swedish Academy, the Karolinska Institutet, and the Norwegian Nobel Committee to individuals and organizations who make out ...
and co-inventor of the transistor William Shockley, left to form an independent firm,
Fairchild Semiconductor Fairchild Semiconductor International, Inc. was an American semiconductor company based in San Jose, California. Founded in 1957 as a division of Fairchild Camera and Instrument, it became a pioneer in the manufacturing of transistors and of int ...
. After several years, Fairchild developed into a formidable presence in the sector. Eventually, these founders left to start their own companies based on their own unique ideas, and then leading employees started their own firms. Over the next 20 years this process resulted in the momentous startup-company explosion of information-technology firms. Silicon Valley began as 65 new enterprises born out of Shockley's eight former employees. Another example involves business incubators – a phenomenon introduced in 1959 and subsequently nurtured by governments around the world. Such "incubators", located close to knowledge clusters (mostly research-based) like universities or other government excellence centres – aim primarily to channel generated knowledge to applied innovation outcomes in order to stimulate regional or national
economic growth Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of ...
. In the 21st century the Islamic State (IS) movement, while decrying religious innovations, has innovated in military tactics, recruitment,
ideology An ideology is a set of beliefs or philosophies attributed to a person or group of persons, especially those held for reasons that are not purely epistemic, in which "practical elements are as prominent as theoretical ones." Formerly applied pri ...
and geopolitical activity.


Process of innovation

An early model included only three phases of innovation. According to Utterback (1971), these phases were: 1) idea generation, 2) problem solving, and 3) implementation. By the time one completed phase 2, one had an invention, but until one got it to the point of having an economic impact, one didn't have an innovation. Diffusion wasn't considered a phase of innovation. Focus at this point in time was on manufacturing. All organizations can innovate, including for example hospitals, universities, and local governments. The organization requires a proper structure in order to retain competitive advantage. Organizations can also improve profits and performance by providing work groups opportunities and resources to innovate, in addition to employee's core job tasks. Executives and managers have been advised to break away from traditional ways of thinking and use change to their advantage. The world of work is changing with the increased use of technology and companies are becoming increasingly competitive. Companies will have to downsize or reengineer their operations to remain competitive. This will affect employment as businesses will be forced to reduce the number of people employed while accomplishing the same amount of work if not more. For instance, former Mayor Martin O’Malley pushed the
City of Baltimore Baltimore ( , locally: or ) is the most populous city in the U.S. state of Maryland, fourth most populous city in the Mid-Atlantic, and the 30th most populous city in the United States with a population of 585,708 in 2020. Baltimore was ...
to use
CitiStat CompStat—or COMPSTAT, short for COMPuter STATistics, is a computerization and quantification program used by police departments. It was originally set up by the New York City Police Department in the 1990s. Variations of the program have since b ...
, a performance-measurement data and management system that allows city officials to maintain statistics on several areas from crime trends to the conditions of
pothole A pothole is a depression in a road surface, usually asphalt pavement, where traffic has removed broken pieces of the pavement. It is usually the result of water in the underlying soil structure and traffic passing over the affected area. Water ...
s. This system aided in better evaluation of policies and procedures with accountability and efficiency in terms of time and money. In its first year, CitiStat saved the city $13.2 million. Even
mass transit Public transport (also known as public transportation, public transit, mass transit, or simply transit) is a system of transport for passengers by group travel systems available for use by the general public unlike private transport, typical ...
systems have innovated with hybrid bus fleets to real-time tracking at bus stands. In addition, the growing use of mobile data terminals in vehicles, that serve as communication hubs between vehicles and a control center, automatically send data on location, passenger counts, engine performance, mileage and other information. This tool helps to deliver and manage transportation systems. Still other innovative strategies include
hospital A hospital is a health care institution providing patient treatment with specialized health science and auxiliary healthcare staff and medical equipment. The best-known type of hospital is the general hospital, which typically has an emerge ...
s digitizing medical information in electronic medical records. For example, the U.S. Department of Housing and Urban Development's HOPE VI initiatives turned severely distressed public housing in urban areas into revitalized, mixed-income environments; the
Harlem Children’s Zone The Harlem Children's Zone (HCZ) is a nonprofit organization for poverty-stricken children and families living in Harlem, providing free support in the form of parenting workshops, a preschool program, three charter schools, and child-oriented ...
used a community-based approach to educate local area children; and the
Environmental Protection Agency A biophysical environment is a biotic and abiotic surrounding of an organism or population, and consequently includes the factors that have an influence in their survival, development, and evolution. A biophysical environment can vary in scale f ...
's brownfield grants facilitates turning over brownfields for environmental protection, green spaces, community and
commercial development Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct excha ...
.


Sources of innovation

Innovation may occur due to effort from a range of different agents, by chance, or as a result of a major system failure. According to Peter F. Drucker, the general sources of innovations are changes in industry structure, in market structure, in local and global demographics, in human perception, in the amount of available scientific knowledge, etc. In the simplest
linear model of innovation The Linear Model of Innovation was an early model designed to understand the relationship of science and technology that begins with basic research that flows into applied research, development and diffusion It posits scientific research as the ...
the traditionally recognized source is ''manufacturer innovation''. This is where an agent (person or business) innovates in order to sell the innovation. Specifically, R&D measurement is the commonly used input for innovation, in particular in the business sector, named Business Expenditure on R&D (BERD) that grew over the years on the expenses of the declining R&D invested by the public sector. Another source of innovation, only now becoming widely recognized, is ''end-user innovation''. This is where an agent (person or company) develops an innovation for their own (personal or in-house) use because existing products do not meet their needs. MIT economist
Eric von Hippel Eric von Hippel (born August 27, 1941) is an American economist and a professor at the MIT Sloan School of Management, specializing in the nature and economics of distributed and open innovation. He is best known for his work in developing the ...
has identified end-user innovation as, by far, the most important and critical in his classic book on the subject, ''"The Sources of Innovation"''. The robotics engineer Joseph F. Engelberger asserts that innovations require only three things: # a recognized need # competent people with relevant technology # financial support The Kline chain-linked model of innovation places emphasis on potential market needs as drivers of the innovation process, and describes the complex and often iterative feedback loops between marketing, design, manufacturing, and R&D.


Facilitating innovation

Innovation by businesses is achieved in many ways, with much attention now given to formal
research and development Research and development (R&D or R+D), known in Europe as research and technological development (RTD), is the set of innovative activities undertaken by corporations or governments in developing new services or products, and improving existi ...
(R&D) for "breakthrough innovations". R&D help spur on patents and other scientific innovations that leads to productive growth in such areas as industry, medicine, engineering, and government.Mark, M., Katz, B., Rahman, S., and Warren, D. (2008
''MetroPolicy: Shaping A New Federal Partnership for a Metropolitan Nation''
Brookings Institution: Metropolitan Policy Program Report. pp. 4–103.
Yet, innovations can be developed by less formal on-the-job modifications of practice, through exchange and combination of professional experience and by many other routes. Investigation of relationship between the concepts of innovation and technology transfer revealed overlap. The more radical and revolutionary innovations tend to emerge from R&D, while more incremental innovations may emerge from practice – but there are many exceptions to each of these trends. Information technology and changing business processes and management style can produce a work climate favorable to innovation. For example, the software tool company Atlassian conducts quarterly "ShipIt Days" in which employees may work on anything related to the company's products. Google employees work on self-directed projects for 20% of their time (known as
Innovation Time Off Side project time is a type of employee benefit constituting a guarantee from employers that their employees may work on their personal projects during some part (usually a percentage) of their time at work. Side project time is limited by two stip ...
). Both companies cite these bottom-up processes as major sources for new products and features. An important innovation factor includes customers buying products or using services. As a result, organizations may incorporate users in focus groups (user centered approach), work closely with so-called
lead users Lead user is a term developed by American economist Eric von Hippel (). His definition for lead user is: #Lead users face needs that will be general in a marketplace – but face them months or years before the bulk of that marketplace encounters ...
(lead user approach), or users might adapt their products themselves. The lead user method focuses on idea generation based on leading users to develop breakthrough innovations. U-STIR, a project to innovate Europe's surface transportation system, employs such workshops. Regarding this user innovation, a great deal of innovation is done by those actually implementing and using technologies and products as part of their normal activities. Sometimes user-innovators may become entrepreneurs, selling their product, they may choose to trade their innovation in exchange for other innovations, or they may be adopted by their suppliers. Nowadays, they may also choose to freely reveal their innovations, using methods like
open source Open source is source code that is made freely available for possible modification and redistribution. Products include permission to use the source code, design documents, or content of the product. The open-source model is a decentralized sof ...
. In such networks of innovation the users or communities of users can further develop technologies and reinvent their social meaning. One technique for innovating a solution to an identified problem is to actually attempt an experiment with many possible solutions. This technique was famously used by Thomas Edison's laboratory to find a version of the incandescent light bulb economically viable for home use, which involved searching through thousands of possible
filament The word filament, which is descended from Latin ''filum'' meaning " thread", is used in English for a variety of thread-like structures, including: Astronomy * Galaxy filament, the largest known cosmic structures in the universe * Solar filament ...
designs before settling on carbonized bamboo. This technique is sometimes used in pharmaceutical
drug discovery In the fields of medicine, biotechnology and pharmacology, drug discovery is the process by which new candidate medications are discovered. Historically, drugs were discovered by identifying the active ingredient from traditional remedies or by ...
. Thousands of chemical compounds are subjected to high-throughput screening to see if they have any activity against a target molecule which has been identified as biologically significant to a disease. Promising compounds can then be studied; modified to improve efficacy and reduce side effects, evaluated for cost of manufacture; and if successful turned into treatments. The related technique of A/B testing is often used to help optimize the design of web sites and mobile apps. This is used by major sites such as amazon.com, Facebook, Google, and Netflix.Why These Tech Companies Keep Running Thousands Of Failed Experiments
Fast Company.com (21 September 2016). Retrieved 16 October 2018.
Procter & Gamble uses computer-simulated products and online user panels to conduct larger numbers of experiments to guide the design, packaging, and shelf placement of consumer products. Capital One uses this technique to drive credit card marketing offers.


Goals and failures

Programs of organizational innovation are typically tightly linked to organizational goals and growth objectives, to the business plan, and to market competitive positioning. Davila et al. (2006) note, "Companies cannot grow through cost reduction and reengineering alone... Innovation is the key element in providing aggressive top-line growth, and for increasing bottom-line results".Davila, T., Epstein, M. J., and Shelton, R. (2006). "Making Innovation Work: How to Manage It, Measure It, and Profit from It." Upper Saddle River: Wharton School Publishing. One survey across a large number of manufacturing and services organizations found that systematic programs of organizational innovation are most frequently driven by: improved quality, creation of new markets, extension of the product range, reduced labor costs, improved production processes, reduced materials cost, reduced environmental damage, replacement of products/ services, reduced energy consumption, and conformance to regulations. Different goals are appropriate for different products, processes, and services. According to Andrea Vaona and Mario Pianta, some example goals of innovation could stem from two different types of technological strategies: ''technological competitiveness'' and ''active price competitiveness''. ''Technological competitiveness'' may have a tendency to be pursued by smaller firms and can be characterized as "efforts for market-oriented innovation, such as a strategy of market expansion and patenting activity." On the other hand, ''active price competitiveness'' is geared toward process innovations that lead to efficiency and flexibility, which tend to be pursued by large, established firms as they seek to expand their market foothold. Whether innovation goals are successfully achieved or otherwise depends greatly on the environment prevailing in the organization. Failure of organizational innovation programs has been widely researched and the causes vary considerably. Some causes are external to the organization and outside its influence of control. Others are internal and ultimately within the control of the organization. Internal causes of failure can be divided into causes associated with the cultural infrastructure and causes associated with the innovation process itself. David O'Sullivan wrote that causes of failure within the innovation process in most organizations can be distilled into five types: poor goal definition, poor alignment of actions to goals, poor participation in teams, poor monitoring of results, and poor communication and access to information.


Diffusion

Diffusion of innovation research was first started in 1903 by seminal researcher
Gabriel Tarde Gabriel Tarde (; in full Jean-Gabriel De Tarde; 12 March 1843 – 13 May 1904) was a French sociologist, criminologist and social psychologist who conceived sociology as based on small psychological interactions among individuals (much as i ...
, who first plotted the S-shaped diffusion curve. Tarde defined the innovation-decision process as a series of steps that include: # knowledge # forming an attitude # a decision to adopt or reject # implementation and use # confirmation of the decision Once innovation occurs, innovations may be spread from the innovator to other individuals and groups. This process has been proposed that the lifecycle of innovations can be described using the ' s-curve' or diffusion curve. The s-curve maps growth of revenue or productivity against time. In the early stage of a particular innovation, growth is relatively slow as the new product establishes itself. At some point, customers begin to demand and the product growth increases more rapidly. New incremental innovations or changes to the product allow growth to continue. Towards the end of its lifecycle, growth slows and may even begin to decline. In the later stages, no amount of new investment in that product will yield a normal rate of return. The s-curve derives from an assumption that new products are likely to have "product life" – i.e., a start-up phase, a rapid increase in revenue and eventual decline. In fact, the great majority of innovations never get off the bottom of the curve, and never produce normal returns. Innovative companies will typically be working on new innovations that will eventually replace older ones. Successive s-curves will come along to replace older ones and continue to drive growth upwards. In the figure above the first curve shows a current technology. The second shows an emerging technology that currently yields lower growth but will eventually overtake current technology and lead to even greater levels of growth. The length of life will depend on many factors.


Measures

Measuring innovation is inherently difficult as it implies commensurability so that comparisons can be made in quantitative terms. Innovation, however, is by definition novelty. Comparisons are thus often meaningless across products or service. Nevertheless, Edison et al. in their review of literature on innovation management found 232 innovation metrics. They categorized these measures along five dimensions; i.e. inputs to the innovation process, output from the innovation process, effect of the innovation output, measures to access the activities in an innovation process and availability of factors that facilitate such a process. There are two different types of measures for innovation: the organizational level and the political level.


Organizational-level

:The measure of innovation at the organizational level relates to individuals, team-level assessments, and private companies from the smallest to the largest company. Measure of innovation for organizations can be conducted by surveys, workshops, consultants, or internal benchmarking. There is today no established general way to measure organizational innovation. Corporate measurements are generally structured around balanced scorecards which cover several aspects of innovation such as business measures related to finances, innovation process efficiency, employees' contribution and motivation, as well benefits for customers. Measured values will vary widely between businesses, covering for example new product revenue, spending in R&D, time to market, customer and employee perception & satisfaction, number of patents, additional sales resulting from past innovations.


Political-level

:For the political level, measures of innovation are more focused on a country or region competitive advantage through innovation. In this context, organizational capabilities can be evaluated through various evaluation frameworks, such as those of the European Foundation for Quality Management. The OECD Oslo Manual (1992) suggests standard guidelines on measuring technological product and process innovation. Some people consider the
Oslo Manual Oslo ( , , or ; sma, Oslove) is the capital and most populous city of Norway. It constitutes both a county and a municipality. The municipality of Oslo had a population of in 2022, while the city's greater urban area had a population of ...
complementary to the
Frascati Manual The Frascati Manual is a document setting forth the methodology for collecting statistics about research and development. The Manual was prepared and published by the Organisation for Economic Co-operation and Development. Contents The Frascati M ...
from 1963. The new Oslo Manual from 2018 takes a wider perspective to innovation, and includes marketing and organizational innovation. These standards are used for example in the European
Community Innovation Survey The Community Innovation Surveys (CIS) are a series of statistical survey, surveys executed by national statistics, statistical offices throughout the European Union and in Norway and Iceland. The harmonized surveys are designed to give information ...
s. Other ways of measuring innovation have traditionally been expenditure, for example, investment in R&D (Research and Development) as percentage of GNP (Gross National Product). Whether this is a good measurement of innovation has been widely discussed and the Oslo Manual has incorporated some of the critique against earlier methods of measuring. The traditional methods of measuring still inform many policy decisions. The EU Lisbon Strategy has set as a goal that their average expenditure on R&D should be 3% of GDP.


Indicators

Many scholars claim that there is a great bias towards the "science and technology mode" (S&T-mode or STI-mode), while the "learning by doing, using and interacting mode" (DUI-mode) is ignored and measurements and research about it rarely done. For example, an institution may be high tech with the latest equipment, but lacks crucial doing, using and interacting tasks important for innovation. A common industry view (unsupported by empirical evidence) is that comparative
cost-effectiveness Cost-effectiveness analysis (CEA) is a form of economic analysis that compares the relative costs and outcomes (effects) of different courses of action. Cost-effectiveness analysis is distinct from cost–benefit analysis, which assigns a monetar ...
research is a form of price control which reduces returns to industry, and thus limits R&D expenditure, stifles future innovation and compromises new products access to markets. Some academics claim cost-effectiveness research is a valuable value-based measure of innovation which accords "truly significant" therapeutic advances (i.e. providing "health gain") higher prices than free market mechanisms. Such value-based pricing has been viewed as a means of indicating to industry the type of innovation that should be rewarded from the public purse. An Australian academic developed the case that national comparative cost-effectiveness analysis systems should be viewed as measuring "health innovation" as an
evidence-based policy Evidence-based policy is an idea in public policy proposing that policy decisions should be based on, or informed by, rigorously established objective evidence. The implied contrast is with policymaking based on ideology, 'common sense,' anecd ...
concept for valuing innovation distinct from valuing through competitive markets, a method which requires strong
anti-trust Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust l ...
laws to be effective, on the basis that both methods of assessing
pharmaceutical innovations Pharmaceutical innovations are currently guided by a patent system, the patent system protects the innovator of medicines for a period of time. The patent system does not currently stimulate innovation or pricing that provides access to medicine for ...
are mentioned in annex 2C.1 of the Australia-United States Free Trade Agreement.


Indices

Several indices attempt to measure innovation and rank entities based on these measures, such as: * Bloomberg Innovation Index *"Bogota Manual" similar to the Oslo Manual, is focused on Latin America and the Caribbean countries. *"Creative Class" developed by Richard Florida *
EIU Innovation Ranking EIU may refer to: * Eastern Illinois University, in Charleston, Illinois, United States * Economist Intelligence Unit, a British research and advisory company * Eurasia International University Eurasia International University (EIU) ( hy, Եվր ...
* Global Competitiveness Report * Global Innovation Index (GII), by INSEAD * Information Technology and Innovation Foundation (ITIF) Index
Innovation 360
– From the World Bank. Aggregates innovation indicators (and more) from a number of different public sources *Innovation Capacity Index (ICI) published by a large number of international professors working in a collaborative fashion. The top scorers of ICI 2009–2010 were: 1. Sweden 82.2; 2. Finland 77.8; and 3. United States 77.5 * Innovation Index, developed by the Indiana Business Research Center, to measure innovation capacity at the county or regional level in the United States *
Innovation Union Scoreboard The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body o ...
* innovationsindikator for Germany, developed by the Federation of German Industries (Bundesverband der Deutschen Industrie) in 2005 * INSEAD Innovation Efficacy Index * International Innovation Index, produced jointly by The Boston Consulting Group, the National Association of Manufacturers (NAM) and its nonpartisan research affiliate The Manufacturing Institute, is a worldwide index measuring the level of innovation in a country; NAM describes it as the "largest and most comprehensive global index of its kind" *Management Innovation Index – Model for Managing Intangibility of Organizational Creativity: Management Innovation Index * NYCEDC Innovation Index, by the New York City Economic Development Corporation, tracks New York City's "transformation into a center for high-tech innovation. It measures innovation in the City's growing science and technology industries and is designed to capture the effect of innovation on the City's economy" * OECD
Oslo Manual Oslo ( , , or ; sma, Oslove) is the capital and most populous city of Norway. It constitutes both a county and a municipality. The municipality of Oslo had a population of in 2022, while the city's greater urban area had a population of ...
is focused on North America, Europe, and other rich economies * State Technology and Science Index, developed by the Milken Institute, is a U.S.-wide benchmark to measure the science and technology capabilities that furnish high paying jobs based around key components * World Competitiveness Scoreboard


Rankings

Common areas of focus include:
high-tech High technology (high tech), also known as advanced technology (advanced tech) or exotechnology, is technology that is at the cutting edge: the highest form of technology available. It can be defined as either the most complex or the newest te ...
companies, manufacturing, patents,
post secondary education Tertiary education, also referred to as third-level, third-stage or post-secondary education, is the educational level following the completion of secondary education. The World Bank, for example, defines tertiary education as including univers ...
,
research and development Research and development (R&D or R+D), known in Europe as research and technological development (RTD), is the set of innovative activities undertaken by corporations or governments in developing new services or products, and improving existi ...
, and research personnel. The left ranking of the top 10 countries below is based on the 2020 Bloomberg Innovation Index. However, studies may vary widely; for example the Global Innovation Index 2016 ranks
Switzerland ). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...
as number one wherein countries like South Korea,
Japan Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
, and
China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
do not even make the top ten.


Rate of innovation

In 2005
Jonathan Huebner Jonathan may refer to: *Jonathan (name), a masculine given name Media *Jonathan (1970 film), ''Jonathan'' (1970 film), a German film directed by Hans W. Geißendörfer *Jonathan (2016 film), ''Jonathan'' (2016 film), a German film directed by ...
, a physicist working at the
Pentagon In geometry, a pentagon (from the Greek πέντε ''pente'' meaning ''five'' and γωνία ''gonia'' meaning ''angle'') is any five-sided polygon or 5-gon. The sum of the internal angles in a simple pentagon is 540°. A pentagon may be simpl ...
's Naval Air Warfare Center, argued on the basis of both U.S. patents and world technological breakthroughs, per capita, that the rate of human technological innovation peaked in 1873 and has been slowing ever since. In his article, he asked "Will the level of technology reach a maximum and then decline as in the Dark Ages?" In later comments to '' New Scientist'' magazine, Huebner clarified that while he believed that we will reach a rate of innovation in 2024 equivalent to that of the Dark Ages, he was not predicting the reoccurrence of the Dark Ages themselves. John Smart criticized the claim and asserted that technological singularity researcher Ray Kurzweil and others showed a "clear trend of acceleration, not deceleration" when it came to innovations. The foundation replied to Huebner the journal his article was published in, citing Second Life and eHarmony as proof of accelerating innovation; to which Huebner replied. However, Huebner's findings were confirmed in 2010 with U.S. Patent Office data. and in a 2012 paper.


Innovation and development

The theme of innovation as a tool to disrupting patterns of poverty has gained momentum since the mid-2000s among major
international development International development or global development is a broad concept denoting the idea that societies and countries have differing levels of economic or human development on an international scale. It is the basis for international classifications ...
actors such as DFID, Gates Foundation's use of the
Grand Challenge Grand Challenges are difficult but important problems set by various institutions or professions to encourage solutions or advocate for the application of government or philanthropic funds especially in the most highly developed economies Gould, M. ...
funding model, and USAID's Global Development Lab. Networks have been established to support innovation in development, such as D-Lab at MIT. Investment funds have been established to identify and catalyze innovations in developing countries, such as DFID's Global Innovation Fund,
Human Development Innovation Fund The Human Development Innovation Fund (also known as HDIF or HDIFtz or the Human Development Impact Fund) is a UKAid financed 40 million British Pound challenge fund providing grants to businesses, NGOs and research institutions for scaling innov ...
, and (in partnership with USAID) the Global Development Innovation Ventures. The United States has to continue to play on the same level of playing field as its competitors in federal research. This can be achieved being strategically innovative through investment in basic research and science".


Government policies

Given its effects on
efficiency Efficiency is the often measurable ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without ...
, quality of life, and productive growth, innovation is a key driver in improving society and economy. Consequently, policymakers have worked to develop environments that will foster innovation, from funding
research and development Research and development (R&D or R+D), known in Europe as research and technological development (RTD), is the set of innovative activities undertaken by corporations or governments in developing new services or products, and improving existi ...
to establishing regulations that do not inhibit innovation, funding the development of innovation clusters, and using public purchasing and standardisation to 'pull' innovation through. For instance, experts are advocating that the U.S. federal government launch a National Infrastructure Foundation, a nimble, collaborative strategic intervention organization that will house innovations programs from fragmented silos under one entity, inform federal officials on innovation performance metrics, strengthen industry-university partnerships, and support innovation economic development initiatives, especially to strengthen regional clusters. Because clusters are the geographic incubators of innovative products and processes, a cluster development grant program would also be targeted for implementation. By focusing on innovating in such areas as precision manufacturing, information technology, and clean energy, other areas of national concern would be tackled including government debt,
carbon footprint A carbon footprint is the total greenhouse gas (GHG) emissions caused by an individual, event, organization, service, place or product, expressed as carbon dioxide equivalent (CO2e). Greenhouse gases, including the carbon-containing gases carbo ...
, and
oil dependence Energy independence is independence or autarky regarding energy resources, energy supply and/or energy generation by the energy industry. Energy dependence, in general, refers to mankind's general dependence on either primary or secondary energ ...
. The U.S. Economic Development Administration understand this reality in their continued Regional Innovation Clusters initiative. The United States also has to integrate her supply-chain and improve her applies research capability and downstream process innovation. Many countries recognize the importance of innovation including Japan's
Ministry of Education, Culture, Sports, Science and Technology The , also known as MEXT or Monka-shō, is one of the eleven Ministries of Japan that composes part of the executive branch of the Government of Japan. Its goal is to improve the development of Japan in relation with the international community ...
(MEXT); Germany's Federal Ministry of Education and Research; and the Ministry of Science and Technology in the People's Republic of China. Russia's innovation programme is the Medvedev modernisation programme which aims to create a diversified economy based on high technology and innovation. The
Government of Western Australia The Government of Western Australia, formally referred to as His Majesty's Government of Western Australia, is the Australian state democratic administrative authority of Western Australia. It is also commonly referred to as the WA Government o ...
has established a number of innovation incentives for government departments. Landgate was the first Western Australian government agency to establish its Innovation Program. Some regions have taken a proactive role in supporting innovation. Many regional governments are setting up innovation agencies to strengthen regional capabilities. In 2009, the municipality of Medellin,
Colombia Colombia (, ; ), officially the Republic of Colombia, is a country in South America with insular regions in North America—near Nicaragua's Caribbean coast—as well as in the Pacific Ocean. The Colombian mainland is bordered by the Car ...
created
Ruta N Corporation Ruta N (better known as Ruta N) is a public joint venture between the mayor's office of Medellín, UNE y EPM. Founded in 2009, Ruta-N was created in order to inspire and encourage innovation in the city and create favorable condition ...
to transform the city into a knowledge city.


See also

*
Communities of innovation Communities that support innovation have been referred to as communities of innovation (CoI),Grimaldi, M., and F. Rogo. 2009. Mindsh@re in Fimmecanica: An organizational model based on communities of innovation. Proceedings of the European Conferen ...
* Creative problem solving * Diffusion (anthropology) * Ecoinnovation * Hype cycle *
Induced innovation Induced innovation is a microeconomic hypothesis first proposed in 1932 by John Hicks in his work ''The Theory of Wages''. He proposed that "a change in the relative prices of the factors of production is itself a spur to invention, and to inventi ...
* Information revolution * Innovation leadership * Innovation system *
International Association of Innovation Professionals The International Association of Innovation Professionals (IAOIP) is a professional association for innovation professionals with 4,000 members in more than 100 countries as of 2021. IAOIP is also a certifying body for innovation professionals. U ...
* ISO 56000 *
Knowledge economy The knowledge economy (or the knowledge-based economy) is an economic system in which the production of goods and services is based principally on knowledge-intensive activities that contribute to advancement in technical and scientific inno ...
* Obsolescence * Open Innovation * Open Innovations (Forum and Technology Show) *
Outcome-Driven Innovation Outcome-Driven Innovation (ODI) is a strategy and innovation process developed by Anthony W. Ulwick. It is built around the theory that people buy products and services to get jobs done.Anthony Ulwick, ''What Customers Want: Using Outcome-Driven In ...
* Participatory design * Product innovation * Pro-innovation bias *
Sustainable Development Goals The Sustainable Development Goals (SDGs) or Global Goals are a collection of 17 interlinked objectives designed to serve as a "shared blueprint for peace and prosperity for people and the planet, now and into the future".United Nations (2017) R ...
(Agenda 9) * Technology Life Cycle *
Technological innovation system The technological innovation system is a concept developed within the scientific field of innovation studies which serves to explain the nature and rate of technological change. A Technological Innovation System can be defined as ‘a dynamic networ ...
* Theories of technology * Timeline of historic inventions * Toolkits for User Innovation *
UNDP Innovation Facility The United Nations Development Programme (UNDP)french: Programme des Nations unies pour le développement, PNUD is a United Nations agency tasked with helping countries eliminate poverty and achieve sustainable economic growth and human dev ...
* User Innovation * Virtual product development


References


Further reading

* Bloom, Nicholas, Charles I. Jones, John Van Reenen, and Michael Webb. 2020.
Are Ideas Getting Harder to Find?
, ''
American Economic Review The ''American Economic Review'' is a monthly peer-reviewed academic journal published by the American Economic Association. First published in 1911, it is considered one of the most prestigious and highly distinguished journals in the field of ec ...
'', 110 (4): 1104–44. * * {{Authority control Design Innovation economics Product management Science and technology studies