Renewal and Innovation

Firms and organisations, indeed whole nations, have to adapt fast to changing situations and demands. That means constant renewal. Everyone can succeed, some more than others, as long as they bear in mind the following key organisational principles.For a nation to be healthy requires an ability to renew itself constantly. This applies to companies, organisations, governments, indeed everyone. The need to innovate is obviously not new.

The fathers of management, be it Frederick Taylor, Henri Fayol or Joseph Schumpeter, wrote volumes on how innovation affects production and economics. And managing innovation has been central to management studies since the early work by Tom Burns and George Stalker on innovation management, the SAPPHO studies in the UK comparing successful and unsuccessful innovations, or the work carried out for the Apollo and Gemini space projects in the early 1960s. But innovation has become an even bigger imperative than it used to be in OECD countries, and this is for at least three reasons.

First, the economic landscape is changing. Globalisation, the rise of China and India as economic powers, and the geographicalrelocation not just of production, but R&D too, pose a major challenge for the “industrialized” world. There are new technology leaders, like Korea in the applications of broadband, or Singapore in biotechnology.

Second, customers for new products, systems or services, and citizens as clients of government have become far better informedand more demanding about both design and quality.

Thirdly, the possibilities offered by information and communication technologies enable a much faster diffusion of innovation worldwide, so much so that the sources of innovative ideas crop up in places where we do not necessarily expect them. Take SMS(short messaging systems), some of whose best innovations come out of Manila, or the Indian movie industry. Or consider Ireland,which has emerged as a hub of activity in IT and pharmaceuticals, much to the surprise of many economists.

The trouble with innovation is that while it is becoming ever more important for success, it is a very risky enterprise. The traditionalliterature exploring the subject all draws discouraging conclusions: the prospects of the innovator “making it” are slim. Overall itappears from most research that the probability of economic success from innovation is between 20% and 30%. The implication is simple: we need to have the guts to live with risk if we want to innovate for our health!