Innovation: How important is it realy?

Innovation is and has been the locus of the most meaningful progress in the history of the world; innovation of products and services, of social norms and legislation, health, and politics. Innovation is the introduction of new things or methods or both, for doing something. Innovation is improvement and progress.

Nothing is so difficult but that it may be found out by seeking.

Terence

Sometimes this means that we need to switch over to new methods, replacing the old ones, or to replace old products with new ones. Joseph A. Schumpeter called this "creative destruction". Now, most of the innovative ideas and inventions are the outcome of long and laborious research that takes place in universities, private companies, and the military. Not all of this effort bears fruit, and truth is that a significant part of it fails, ending in finding nothing. It might strike you as a surprise, but even that "nothing" is worth a lot in the world of scientific research. Finding "nothing" where you were looking, helps the rest of the scientific community to avoid doing the same and look elsewhere for answers. Moreover, other researchers who were doing some work on a similar topic might have an idea of how to improve a method or model to make it work.

If you are not failing every now and again, it's a sign you're not doing anything very innovative.

Woody Allen

Some research projects will surely be fruitful. The literature on biotechnology research, for example, shows that only ten out of a hundred ideas will progress to the research level, and about eight out of ten will fail. Those two that will ultimately succeed will become a new or improved medicine or therapy, that will not only compensate for the cost of all the failed ones, but create advances in medicine, contribute to general public health, and increase the production and wealth of the country.

Innovation and technology have been proven to be considerable drivers for growth. Innovations that materialise as products and services that become economically valuable create new markets or challenge existing ones. Moreover, the original objective of a research is many times not the same as the commercial product that materialises out of the process. For example, the laser reader that so many businesses use every day to scan product codes (e.g. supermarkets) was not invented with the retailers in mind.

Albert Einstein did not have the automated checkout systems in mind when he was completing his discoveries on the law of photoelectric effect.

The externalities of the effect of cross-fertilisation of ideas in innovation and technology create the pre-conditions for further advances of directly linked or less so fields of research. Innovation creates further innovation and that is an undeniable reality. Of course, not all innovations creates direct social gains, and many commercialised innovations lead only to wealth increases of their inventors and innovators (i.e. firms or individuals). It is also very hard to quantify the beneficiary externalities of social gains. Another undeniable reality is that state funding of research and development (R&D) plays a most significant role in making all these innovations we enjoy today actually happened. Many research projects do not have immediate visible commercial use and thus, private companies are not likely to undertake the research of such ideas on their own cost. This is the case where governments usually step into nudge researchers and firms to undertake R&D activities with long-run social benefits, even if in many cases, it is the private firms that benefit the most from state-funded.

Every technology that makes the iPhone so ‘smart’ was government funded: the Internet, GPS, its touch-screen display and the voice-activated Siri.

Mariana Mazzucato

State funding is not without its own inefficiencies, and many economists and politicians have criticised government spending on R&D in terms of its returns as excessive or wasteful. The problem lies in the compare & contrast of private "applied" R&D and state funded "basic" R&D. Commercial success is something tangible, visible, while social benefits like cleaner air or improved health care are long term, less directly quantifiable issues.