“Innovation Insight” is a blog series written by SRC’s President Emeritus Dr. Laurier Schramm, which aims to shed light on the importance of innovation in driving economic, societal and environmental growth.
Of the many ways to grow a business, one of them is to convert ideas and knowledge into new and commercially successful products and services: that’s called innovation. Innovative products and services displace old ones: that’s called “creative destruction,” and it is needed for economies to grow. So it’s pretty obvious why industry would care about innovation, but how about the rest of us?
Three Key Concepts of Innovation
- Innovation brings new life into the economy,
- Without such new life, economies stagnate
- With such new life, economies can maintain long-term economic health and grow.
The current market wisdom is that industries that can create and deploy innovation (with all those new and commercially successful products and services) will tend to grow and prosper at the expense of their competitors. When industries grow and prosper, they frequently spend more money, build or expand their operations, and hire more people. That benefits other businesses and allows more people to have jobs. That’s one means by which everyone can benefit from innovation: jobs, but there is another.
When industries in a region grow and prosper, the broader economy in that region tends to grow and prosper. Prosperous companies and employed people both contribute revenue to their governments through various forms of fees and taxes. This is why governments at all levels have become so interested in innovation: more innovation should lead to more and healthier industries and other businesses, which should lead to more jobs, and all of these should lead to increased government revenue. All that new government revenue can then be deployed into the provision of more and/or better services to the public in such areas as health, safety, education, environmental protection, and even support for the innovation system itself. This provides a second means by which everyone can benefit from innovation: increased support for vibrant and safe communities in which people can live, work, raise families, and play.
Have you seen or felt the impacts of innovation in your workplace or life?
Further reading: Capitalism, Socialism and Democracy, Schumpeter, J.A., 3rd Ed., HarperCollins: NY, 1950.