Innovators, though, whether in start-ups, large corporations or government agencies, offer tremendous educational and social value even when they fail to meet their financial goals.
Innovation policy and strategies need to be industry specific
Perhaps you’ve heard that 90 per cent of all start-up companies fail in the first five years. Unfortunately, on average this is true. No matter the country, culture or industry, people who try to innovate face long odds.
There’s a dry joke in the aerospace industry, told by veterans such as Norm Augustine as well as by newcomers like Elon Musk, that the best way to make a small fortune in aerospace is to start with a large one. It turns out this applies to all industries, not just aerospace.
Innovators, though, whether in start-ups, large corporations or government agencies, offer tremendous educational and social value even when they fail to meet their financial goals. We all recognise the importance of innovation in creating jobs, diversifying the economy, and training our youth to think creatively and responsibly. Successful innovators transform the world. How can we increase the probability that inventors will also succeed financially and bring us useful innovations?
Last year in Abu Dhabi a group of 200 government officials, entrepreneurs, business executives and academicians gathered to consider this question. The UAE Forum on Innovation and Entrepreneurship, co-sponsored by the Masdar Institute and MIT, provided insight from key innovation stakeholders that are summarised in a recently-published report.
Among the key conclusions and recommendations are the following:
• Innovation is country-specific. Because every nation has a unique array of strengths and constraints, each country must tailor best practices from around the world in establishing an optimum innovation policy and innovation ecosystem.
• Build strength through diversity. Cultural diversity and the willingness to attract workers with necessary skills from abroad can assist many countries in strengthening their innovation ecosystem.
• Regulate just the right amount. Too little regulation threatens social and economic stability, while too much regulation stifles creativity and private initiative.
• Government-funded research is vital to technology innovation. Government is the only stakeholder with the resources to fund exploratory scientific and technology research, which usually has spin-off benefits to society that no private sector organisation can fully capture.
• Improving the UAE innovation ecosystem requires stakeholder coordination. To identify and eliminate weaknesses in the innovation ecosystem, the UAE government should continue to coordinate ecosystem initiatives.
One of the Forum’s most interesting conclusions was that innovation is industry-specific as well as country-specific. Patent policies that help pharmaceutical companies such as Hoffmann-La Roche, characterised by long product life cycles, may frustrate fast-moving IT-based businesses such as Microsoft. Subsidised electricity prices may help aluminium producers but hurt solar power companies. Differences among industries need to be reflected in innovation strategy and policy.
National innovation policy should, in fact, be structured from a coordinated collection of industry-based policies.
To further develop this insight, on April 28 the Forum will reconvene with an industry-based focus. Panels will assess opportunities to accelerate innovation in three industries: energy, aerospace, and higher education. Workshops will then explore cutting-edge innovations in these industries.
Is it better to be a leader, or a follower, when it comes to introducing new products? Leaders may gain an early lead in market share, but followers may learn from the leader’s mistakes and introduce a lower-cost, higher quality product. Is it better to offer incremental improvements, or disruptive change? Small improvements please existing customers, while big changes may draw in very different customers. Answering these questions demands that we understand the industry. Otherwise we run the risk of applying the wrong strategy.
The way we teach entrepreneurship similarly must acknowledge differences among industries. Too often entrepreneurial training and mentorship focus on developing standard skills rather than industry-customised skills.
Taking an industry-based approach to innovation policy, strategy, and education increases the chances of a successful journey.
Dr Bruce Walker Ferguson is the head of the Masdar Institute Center for Innovation and Entrepreneurship (iInnovation) and is Professor of Practice in Engineering Systems and Management
Follow us on Twitter @Ind_Insights