Will innovation save us? Not necessarily

I have a problem with innovation.

That’s not a sentiment you will hear very often. Innovation is the darling of businesses and governments alike, a lovely concept that covers improvements of all types. It is the key to success and the solution to all our problems. How could I possibly reject it?

My problem is that innovation is morally neutral, or to be more specific, it is morally ambiguous. There is nothing necessarily “good” about innovation. An innovation, to be sure, is always better than what it replaces in some way, usually because it will grab market share from an incumbent or enable a more profitable business. But that does not mean it will be better for the general public. If you’re struggling to think of examples of undesirable innovations, let me help you – how about land mines that are so robust they can still rip apart a child 40 years after a war has ended; how about the Nazi death chambers, they were innovative too; or perhaps you prefer something closer to home like the “Collateralised Debt Obligations” – irresponsible and incomprehensible financial innovations that have helped to bring the world’s economy to its knees.

Of course it would be stupid to argue that we should avoid innovations for these reasons. We cannot afford to be luddites. Innovation is the route to a better future for us all; striding straight ahead towards the oncoming precipice is no solution.

Innovation can, and must, be a powerful force for the betterment of society. The challenge of innovation is not just to create more of it, it is to channel it. We need more of our best minds turned towards the task of re-imagining our technologies, our economic models and our way of life.

There is an important role for governments here. Businesses, with few exceptions, find it very difficult to make moral judgments unless specifically pressured to do so.  They are conceived and structured as profit-making entities. It is up to society – individually, through social organisations, and most importantly through our governments – to create the impetus necessary for the right business activity and the right innovations to be encouraged.

To understand how we can do this, I can do no better than to quote the academic Fred Steward from his paper “Breaking the boundaries: Transformative innovation for the global good”. Steward lists five principles for reconfiguring innovation policy for sustainability:

1. Long-term visions – short-term action
The policy goal should be radical incrementalism – short-term action with real prospects of translation into radical long-term change.

2. A sociotechnical approach – bridging the arenas of new technology and behavioural change
Successful innovation embraces a complex mixture of technical and social elements. Radical change is unlikely to be achieved through just one or the other…
It will require a reorientation from technology or product focused approaches to broader functional provision in terms of mobility, shelter, food and communication.

3. The global and local – reconfiguring national innovation policy
In spite of the emergence of international agreements on sustainable development and climate change, the focus for most policymakers remains resolutely national in scope. Yet we are all embedded in a global system.


4. Invention and imitation – being realistic about novelty
It is a mistake to overemphasise pure technical novelty. Reinnovation can also deliver radical results. It is therefore essential that the innovation policy domain is not overdetermined by the priorities of the basic science community.

5. Incumbent and emergent – recognising the contradictions within the business world
A sustainability oriented innovation policy needs to be much more discriminating and supportive of entrepreneurial firms whose mission is complementary to public environmental objectives…
[T]argeted policy initiatives are required which deliberately favour some firms over others…
[G]overnment must adopt a portfolio investment strategy that would recognise the need for a variety of prospects with an acceptance that some will fail.

Of all of these points, the last is possibly the most controversial, and also in my view the most important. Part of the process of innovation is what Joseph Schrumpter called “creative destruction” – the process by which innovative newcomers overtake and destroy the value of existing companies.

Not everyone would accept that this is the best way forward, least of all the established companies that are in line to be overtaken. The companies that are currently the most successful also tend to be very successful at lobbying governments. And with good reason. They are vital entities that provide jobs, income, and the goods and services that we demand. But they are also replaceable. If they don’t learn to adjust to changing priorities and circumstances, they won’t survive. There is no reason for us to listen to, and endlessly support, companies simply because they are big and important today. They will nearly always argue for business as usual, because that is what made them successful in the first place.

My point is that innovation – the right innovation – is too important to leave to entrepreneurs and companies operating in a free and undirected market.  I am arguing for greater governmental intervention in markets (something that would have seemed ridiculous 12 months ago to most policy wonks but is now the stratégie du jour). But we have to be smarter than simply “picking winners” and letting buearocrats control the levels of production. I’ll explain what I mean in the next post.

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