The innovation game has migrated downstream – from the point of invention nearer to the point of consumption. So how does Ireland now measure its innovation capabilities?
UNLESS WE CAN measure it properly, innovation is like the dotcom boom – lots of investment but a lack of clarity about value and a danger that the investment is misdirected. Traditionally (references to the word innovation appear as early as the 1600s), innovation is measured by patent filings, the number of maths and engineering graduates, RD investment and, less scientifically, the existence of industry clusters.
The problem with these measures is that they are very upstream – near to the point of invention – whereas the innovation game has migrated downstream, nearer the point of consumption. Traditional measures are close to the old industrial labs model of innovation rather than today’s Apple-style design-led or highly consumer-engaged innovation.
How do we measure national downstream innovation capabilities, and how does Ireland perform?
There are many innovation indexes. Boston Consulting Group, for example, produces the NAM Global Innovation Index, where Ireland is placed seventh, ahead of the US (ninth), in a list headed by Singapore.
In the UK the National Endowment for Science Technology and the Arts (Nesta) started a new innovation metrics project in 2009 and concluded: “The UK invests more heavily in innovation than RD measures would suggest. Private sector businesses invested £133 billion (€151.6 billion) in innovation in 2007 (the most recent year covered by the index), representing 14 per cent of private sector output.”
That sounds promising. But in a 2010 study, MIT professor Eric von Hippel found consumers in the UK actually invest twice as much in product innovation as firms do – through DIY, by improving and customising products they buy, and through their own creations.
Whichever way you look at it, this downstream activity is important. To tease out one element of downstream national innovation culture, I used Google’s Insights for Search – the tool marketers use to see what people are searching for. Insights for Search provides data on search patterns for just about every term people put into the Google search box. Somewhere in here, surely, is a way to reflect people’s interests in innovation.
But innovation is not straightforward. Our world is still dominated by old industrial interests. It is likely that people will still search for RD-related terms. Six Sigma is an innovation methodology. Design is a new downstream innovation method, as is service design. Triz, the formal innovation method, shouldn’t be ruled out. Open innovation is becoming very important. The fact is, any of these terms signal an interest in innovation. But, critically, they signal a different type of interest.
To get at national innovation culture, along with a colleague, Nick Vitalari of Moxie Insights, a US-based think tank, I devised a lexicon of 26 innovation terms and then looked at the way people use those terms around the world.
The results are complex and interesting. For example, across all terms combined, India is far and away the culture where people are most actively engaged in seeking out information about innovation (one important caveat – China is excluded, as Google does not operate there). That fact does not necessarily make India the most innovative country but it does signal a high level of interest in innovation among ordinary Indian people.
The US comes second, but the innovation interests of Americans are quite different. Whereas Indians are vivaciously searching for terms like innovation management, ideas management, Six Sigma, and product design, Americans tend to search more for Six Sigma ; in other words, for a term that signals incremental cost-based innovation.
In fact, global interest in innovation is dominated by Six Sigma but in the US more so. Triz, a popular formal innovation method, is also very important globally and in the US. In fact, tools-based approaches to innovation are far more important than looser concepts like open innovation. However, open innovation is extremely important to Finland and Switzerland and is growing in importance in the US as Six Sigma and Triz lose their grip.
The US can best be described as a laggard in these new terms. Even though open innovation was first developed by Proctor Gamble, it is far more popular in Europe and most important in South Korea.
So, what about Ireland as an innovation culture? Ireland doesn’t make it onto the league table of countries concerned with open innovation. Where do Ireland’s innovation interests lie?
Like every country, we reviewed Six Sigma features more heavily in Ireland than other innovation-related terms and, even then, it is in relative decline.
From a peak of 100, on an indexed basis, in 2005 relative interest in Six Sigma has declined to a current level of around 15. But that is still more than open innovation or ideas management which score zero over the same period with a brief rise in interest to 4 and 5 respectively from mid-2009 to mid-2010. Design thinking simply does not feature in Irish search interests.
Six Sigma can’t be described as a true upstream interest – it’s possible to apply Six Sigma to all areas of innovation. But it does belong to a cost-focused incremental innovation tradition.
Over the same period (2004-February 2011) Irish search interest has been almost as high in RD (22 compared with 38) and in the 2010-2011 period was occasionally neck and neck (18:21). Technology transfer is also on the map (5 on the index). Terms such as “customer co-creation”, “customer-led innovation”, “user-led innovation” and “innovation and creativity”, however, are not. In fact, signals of downstream innovation interest are notably absent.
In a world increasingly influenced by downstream innovation, this could mean one of three things. Irish internet users are already so familiar with these terms and approaches that they don’t need to find out any more, or they find their information offline – or that interest is simply low.
What to do about it? Step one is to recognise that downstream innovation is now as important as upstream and to acknowledge that Ireland’s policies are predominantly upstream policies: invest in science and maths grads, fourth-level research excellence, technology transfer, and high-growth startups. That strategy was a reasonable approach for a specific era.
In western economies, we have gone from an industrial model to something else we struggle to define – for a while it looked as if we were becoming a service economy. The science-to-market innovation approach seemed to fit that period. But over the past four years, constant exposure to the ferocious winds of globalisation is forcing most countries to reappraise the future. Ireland also needs a rethink.
There is a new innovation toolset that involves reverse innovation, platform and ecosystem businesses, open innovation, technology scouting, user-led innovation, design thinking, open-service innovation, crowdsourcing, ideation, ideas management, and more.
For people to do their best for Ireland they need to know about this change. And policy needs to match up. Irish innovation strategy is in still built on the old upstream model, despite claims to the contrary. Nobody wants to take a dime off the science branch, but we do need to see innovation as a tree with new branches in need of attention. In fact, the evidence shows these branches are barely green shoots here. How about a national downstream innovation conference?