We need to measure innovation better. Here’s how

Creativity 2019

(Unsplash, 2019)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: David Gann, Vice President, Imperial College & Mark Dodgson, Professor of Innovation Studies, University of Queensland


Innovation drives productivity, and productivity is what drives jobs growth and the wealth that pays for our health, education, defence and social security systems. In short, innovation really matters. Governments, businesses and academics obsess over it. We need to know what works, what doesn’t and why – and that means turning to measurements and metrics. But can we really measure innovation today? Are we doing it right, or are our metrics more suited to Industry 2.0 and 3.0, rather than 4.0?

In the era of Industry 4.0, all innovation is combinatorial. Leaders from England’s state-run National Health Service to former Google CEO Eric Schmidt recognise this fact. Almost no innovations can be attributed to a single source.

For example, the iPhone may have been the work of Steve Jobs, Jony Ive and their teams of brilliant engineers and designers, but it was also the product of US government-led innovations such as GPS and, of course, the internet. It would be ludicrous to attribute such innovations as the iPhone to the state alone – but at the same time, there are few truly original ideas. Most successful innovations hinge on the execution rather than the idea itself, which many others may be pursuing simultaneously. The aesthetically similar LG Prada came out shortly before the iPhone, and there were plenty of touchscreen PDA-like phones before the iPhone, but none had the iPhone’s industry-defining impact.

However, the complexity of measuring such innovations should not deter us from trying.

 The combinatorial effects of new technology will drive innovation in new and exciting ways - but how can we measure it?

The combinatorial effects of new technology will drive innovation in new and exciting ways – but how can we measure it?
Image: World Economic Forum / Accenture

Measuring innovation matters…

Good metrics can direct better policies. The OECD’s Programme for International Student Assessment (PISA), which measures school pupils’ performance in mathematics, science and reading, has improved policy debates and led to improved outcomes in some countries. It has driven Singapore’s extraordinary educational success. Statistics on the causes of mortality, meanwhile, have been instrumental in shifting health resources towards early intervention, which has improved life expectancies.

But measuring innovation is troublesome.

…but it’s hard

Indicators have to account for many different forms of innovation, with widely differing motivations, processes of development and consequences. In the past it was possible to identify innovation within particular organizations, teams or individuals; nowadays innovation is more often networked among multiple contributors, which complicates its measurement. Collecting data on innovation is hampered by the desire to ensure indicators are simple, easily accessible, comparable across nations, and cheap to acquire and compute. And these requirements do not reflect the complex and often messy realities of innovation, let alone capture whether the innovation has negative consequences, such as putting CFCs in refrigerators.

The move over the past 60 years from products to services to an increasingly experiential economy has changed the nature of research and development (R&D). Traditional measures of innovation, such as R&D investment and patents, were fine when innovation mostly occurred in large manufacturing firms, but are of limited value when much of the action lies in services, business models, and entrepreneurial start-ups. Much innovation does not rely on traditional R&D investment and processes, and many innovations are not protected by formal intellectual property rights, but by the speed of changes and secrecy around them – and this makes them difficult to measure.

A great deal of expertise has been developed around innovation surveys that ask firms whether they innovate, and in what forms. The EU’s Community Innovation Survey (CIS), for example, has coordinated national statistical agencies to collect extensive data on the innovativeness of EU regions and sectors. But self-reported innovations can be subjective and difficult to calibrate. We know of world-leading innovations in infrastructure and resources industries that are not accounted for; conversely, a firm that was recorded as innovative in a government survey turned out to be a hairdresser using a new brand of hair colouring.

Other judgement calls are needed: are innovations new to the world, new to the sector or region, or just new to the firm? Is adapting an existing product or service to a new market an innovation? While these surveys can tell us about the ITALnumbers and ITALtypes of firms that claim to be innovative, they don’t address the more important question of ITALhow firms are innovating and whether this is improving.

The nature and measurement of capital goods – the assets that are put to productive use – have changed significantly in Industry 4.0. In the past, these consisted mainly of investments in large-scale factories and production machinery, and were carefully recorded for accounting and taxation purposes, providing accurate information for governments. Nowadays, intangible investments and activities such as design are much more significant – but these are more difficult to measure. The new digital technologies of Industry 4.0, including AI and Machine Learning, virtual and augmented reality, simulation and modelling methods, and novel, small-scale ways of manipulating matter such as additive manufacturing and genome editing, for example, complicate the recording and classifications of important innovation investments.

The measurement of innovation is changing

Agencies that collect national and international statistics are highly aware of the shortcomings of their approaches and are seeking more relevant ways of measuring innovation performance. The Australian government, for example, which has been a leader in this field, is undertaking a significant review of indicators, including a comprehensive literature review and public consultations.

Important lessons have been learned in these agencies. The shortcomings of input measures, such as R&D, and averages of innovation performance, such as gross expenditure on R&D as a percentage of GDP, can hide skewed distributions and are not helpful. The opportunities for gaming the system at the national and organizational levels are being recognized. And there is awareness of the dangers when poorly determined indicators become targets for governments.

We welcome the improvement in the collection of such information, but believe this needs to be complemented by some radically different approaches.

New opportunities for measurement and insight

There is value in including insights from behavioural science. Ideas for new services, the largest component of modern economies, occur at the point of consumption. This means the behaviours of consumers and ‘user-innovators’ matter more and more. Furthermore, as AI and automation replace repetitive work, and human attributes such as creativity, intuition and empathy become more important, understanding behaviours around innovation becomes crucial. By changing the behaviours of individuals and populations, behavioural science is starting to be used to address significant global issues such as the environment and health. Governments and organizations wishing to improve innovation performance need increasingly to bring insights from behavioural psychology and economics into their metrics. By applying behavioural science to, for example, the adoption of good innovation practices and better risk management, we may get insights into future performance.

 

Data and digital science provide new opportunities for developing useful innovation metrics. Innovation statistics agencies are exploring the ways in which new sources of data can complement and supplement their work. Analysing social media sites and electronic marketplaces for ideas and employment, such as InnoCentive and LinkedIn, can provide valuable insights. While there are concerns about the self-selecting and potentially unrepresentative nature of the information collected, data-scraping and analytical tools can be used to provide useful new and real-time insights into innovation activity.

Companies such as Digital Science are using AI tools for mapping the trajectories of science, and these could be used for mapping innovation. Scientists have created algorithms and used machine learning to study complex and emerging phenomena such as health and weather forecasting, and these could be repurposed and applied to measuring innovation. Real understanding of innovation requires a deep dive into what goes on within organizations. It has to take into account how risks are assessed, decisions are made and implemented, and how the rocky roads of internal politics and organizational battles over resources are navigated. If government policy is to be informed, quantitative indicators of innovation performance must be complemented with qualitative case studies. For these case studies to be valuable they have to comply with formal research method protocols to ensure they are relevant, accurate and can be compared.

Government innovation policies have to be based upon, and directed towards improving, the performance and practices of the new industrial era. The way innovation occurs is changing – and so the indicators that measure it must respond to this new reality.

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

How tech companies compare at protecting your digital rights

The German automotive industry under the Trump spell

Why Indian students are going abroad to become Doctors?

EU is now giving Google new monopolies to the detriment of European citizens and Internet companies

Writing a greener story in Asia and the Pacific amidst COVID-19 outbreak

Century challenge: inclusion of immigrants in the health system

The G7 adopted dangerous views about Ukraine and Greece

The EU learns about fishing and banking from tiny Iceland

‘Virtual Biopsy’ device detects skin tumours in 15 minutes

Migration and rule of law on next ACP-EU Parliamentary Assembly agenda

Food choices today, impact health of both ‘people and planet’ tomorrow

“C’est la vie”? French recession and unemployment to linger in Eurozone

‘Multi-generational tragedy’ in Israel and Palestine demands political will for two-State solution

EU Commission challenges Berlin by proposing breakthrough legislation on banks

Fresh airstrikes kill dozens in conflict-ravaged Syria

Asylum seekers in Sri Lanka fear for their safety, in wake of Easter Sunday terror attacks

High level political talks didn’t break the stalemate in Ukraine

There is no greater sorrow on earth than the loss of one’s native land

Urgently address ‘defining challenges of our time’, to empower youth worldwide, top UN official tells forum

OECD sees global growth slowing, as Europe weakens and risks persist

Parliaments can be pillars of democracy and defenders of human rights, says UN chief on International Day

Our idea of what makes a company successful needs to change. And it starts with making waste expensive

The EU Commission vies to screen Chinese investment in Europe

Sweden gives all employees time off to be entrepreneurs

CHINA: five letters that could mean…

5 ways to #BeatAirPollution

“Leaked” TTIP document breaks post 8th negotiations round silence and opens door to critics

Bacterial resistance: the significant worldwide problem

Youth2030: UN chief launches bold new strategy for young people ‘to lead’

UN chief welcomes formation of unity government in Madagascar

Will the French let Macron destroy their party political system?

Why we need a blockchain bill of rights

With Caribbean island life under threat, UN chief pushes to face ‘headwinds together’

Yemen agreement to end southern power struggle ‘important step’ towards peace: UN Special Envoy

Two peacekeepers killed in an attack against UN convoy in Mali

The UN has a 17-point plan to save the world. So how’s it doing?

Finance for SMEs: Alternative supply mechanisms do exist

Climate emergency: City mayors are ‘world’s first responders’, says UN chief

Anti-vaccination: a private choice leading to collective outcomes

Christmas spending: Who can afford not to cut?

Colombia: ‘Terrible trend’ of rights defenders killed, harassed; UN calls for ‘significant effort’ to tackle impunity

Global immunization is having its annual check-up. What can we learn?

5 ways for scientists and clinicians to double up on healthcare

Transparency is key to inclusive employment and government integrity

EC v Samsung: A whole year to compile a case

‘No hope’ global development goals can be achieved without women, says UN Assembly President

EU helps tackle air pollution in Kosovo with €76.4 million

‘Every ventilator becomes like gold’ – a doctor’s stark warning from Italy’s Coronavirus outbreak

Predicting two more years of economic stagnation

The EU Commission to fight unemployment tsunami with a…scoreboard

These Indian fishermen take plastic out of the sea and use it to build roads

This is how attitudes to vaccines compare around the world

Deaf advocate voices importance of sign languages as UN marks first commemoration

Force used against protestors in Gaza ‘wholly disproportionate’ says UN human rights chief

In this Tokyo cafe, the waiters are robots operated remotely by people with disabilities

Greek-Turkish border: MEPs reject Turkey’s pressure, demand common asylum rules

Who and why want the EU-US trade agreement here and now

Cash-strapped cities must look to private partners

End fossil fuel subsidies, and stop using taxpayers’ money to destroy the world: Guterres

Banning out-of-hours work emails could make some employees more stressed, research finds

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s