Monday, June 14, 2010

Technology Innovation and Enterpreneurs

By Bill Wicksteed, Institute of Manufacturing, Cambridge University

Technological innovation is often thought to be the province of clever scientists and engineers who generate new products or ways of doing things from their curiosity-driven research. There are two misunderstandings inherent in such a view: first, it confuses invention with innovation; and, second, it suggests that innovation is pushed out from the science base (supply push).

Breakthrough inventions and incremental advances in knowledge arising from scientific research do make an important contribution to national wealth creation. However, there is a crucial intermediate step before they do so. Innovation transforms inventions into economic growth by bring an imaginative understanding of what firms and consumers are willing to pay for i.e. a market perspective. Indeed an insight into the unfulfilled needs or desires of firms and consumers may identify the challenge which research and development needs to solve (demand pull).

Understanding the market potential of inventions and identifying market opportunities which research converts into business is the business of entrepreneurs. Sometimes they are talented individuals but increasingly working within a team and networking with others is the norm. Inventive scientists and engineers sometimes play the roles of both entrepreneur and inventor; themselves taking their work through to market through spin-out companies which they found and develop.

Where front-end capital investment requirements are low (e.g. which can be true for software and in areas where a “soft” start is possible) this is a realistic possibility and may be an excellent way of ensuring a full interplay of understanding between the technological possibilities and the market potential. In other cases the route to market is likely to be through licensing; and there is a growing number of technology transfer specialists who help to identify where inventions can best be applied and which firms are likely to most effective as partners. They are contributing “first stage” entrepreneurship and the firms they identify bring the resources and market connections to complete the process.

Technology transfer specialists are part of national and regional systems of innovation. Other key actors in these systems are:

  • the research institutions (whose policies and incentive structures can encourage or hinder innovation)
  • incubators, innovation centres and science parks (which can nurture individual tenants and act as nodes for wider networking)
  • seed and venture capitalists
  • specialist business advisers
  • established firms that are keen to adopt new processes and develop new products
  • regulatory bodies (regulation plays a crucial role in stimulating and facilitating innovation)
  • other public bodies (which, through their purchasing policies, can greatly assist in creating new markets – by taking the risk of being an early adopter).

The links between the various elements of an innovation system are vital for its effectiveness; providing positive responses at all levels to entrepreneurial individuals and firms. A culture of trust, a willingness to share and engage actively in networks all help to generate a creative “Buzz” which helps firms already in the system, encourages new ones to form and attracts others to move in.

Not all innovation systems are focussed on particular areas, there are sectoral systems of innovation which cross national boundaries, but many of the best known ones are identified with specific places. These are the competitive clusters identified by, amongst others, Professor Sebastiano Brusco and Professor Michael Porter.

The best performing clusters are to be found in places that are ambitious in their development goals and offer a lifestyle and functionality which retain and attract able people who are keen to “make a difference|”.