Innovation Governance -
its role in leadership
Why Innovation matters
Background Comments
Innovation Dimensions
Appropriating Value
Supportive Challenge
Open Innovation
Rigorus Gates
Engaging Users
Innovation Skills
Innovation Governance Checklist
Implementing Innovation Governance


Innovation has a variety of definitions, but all relate to the successful achievement of something new, usually in a way that creates value somewhere in the supply or consumer chains. Innovation is different from Invention (but often dependent upon it), and can relate to new ideas in:

  • Scientific discovery
  • Technology (ie solving problems with science and engineering)
  • Process
  • Business models
  • Marketing and Brand
  • Behaviour, ‘lifestyle’ or skills

or very often from a combination of all of these.

The literature is full of examples of how innovation has generated wealth and profit, enhanced quality of life, changed the way we live, and also of cases where failure to innovate has had disastrous consequences. Many books have been published documenting businesses that became leaders through innovation, those that died by not innovating, and businesses that had a good track record of innovation but then lost the knack on the way.

There is plenty of evidence that innovation thrives as much in large organisations as in high-tech startups, for example the notable instances where new businesses have been formed by a team splitting out from an established company (look at the history of many Silicon Valley companies) and the way many large companies have led advancement in technology in their fields (Rolls Royce, Bosch, JCB, Proctor & Gamble to name just four), but it seems many large organisations prove too inflexible to take such ideas to fruition.

Yet many start-up businesses only come to create their greatest value once acquired by a larger player. There is a case to answer that the relationship between new ideas, small high growth companies and large companies is a complex and synergistic one, but that this is an aspect not well addressed in economic policy or business strategy.

In the public sector, innovation contributes to:

  • meeting citizen expectationss within tight budgets (doing more better for less)
  • preparing for known trends, shifts and discontinuous risks
  • creating the environment for private sector innovation through regulation, standards and being an early adopter
  • stimulating capacity in the private sector that will create future wealth, especially where investment and return are disjoint in market sector or in time (ie where the economic benefit occurs in a different business segment to where investment is needed, or where time lags are too great for the risk implied)

Innovation in public sector organisations is just as important as in business in generating overall economic and societal success. Innovation in government activity is equally strong, albeit less well documented and driven as much by policy and economic ideas as by technology. The advances from innovative thinkers such as Adam Smith or Keynes, through to novel ways to assign radio spectrum through auctions, demonstrate how significant innovation in the public sector can be.

Governments stimulate value creation through innovative regulation, such as the role the EU had in sponsoring the definition of the GSM standard. Governments play a role in wealth creation by being early adopters of new technology at a stage where commercial opportunities are too diffuse, driving maturation of new ideas into a practicable form, for which the US DARPA has the most impressive track record, having successfully accelerated application of technologies through visionary demand-led programmes and demonstrators.

Innovation is an important 'antidote' to external shifts, providing a richer understanding of the range of options from which to adapt strategic direction against the knowable twists and turns of events, build the means to respond with agility to the unknowable ones, or respond progmatically to events as they occur. 

In this regard, investing in innovation can be likened to taking an 'Option' in the futures market, making subsequent substantive investment more accessible and affordable. Techniques such as scenario analysis and broad scanning are an integral part of the innovation landscape.

Innovation is not easy, does not happen by chance, the vision and influence of top-level leaders matters, and organisations can easily lose innovative prowess. Errors in strategic judgment have caused savage business downturns by not responding to innovative discontinuities, for example where technology renders a product line or business model obsolete (eg Polaroid, watch making, music royalties). 

An interesting and readable historical summary of the impact of innovation is to be found in "Innovation A Very Short Introduction" by Dodgson & Gann (OUP) which describes a collection of iconic innovation story lines and what made them succeed or fail.

Further background on innovation and its role in creating value in the economy can be found here.

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