Governments could be making a big mistake by accruing more education, more scientists, assuming that automatically leads to more innovation and prosperity.
Innovation is an essential strategy for sustaining prosperity and coping with globalization, maintains Amar Bhidé, business professor at Columbia University, in the preface of his book, "The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World." Innovators set the pace in global markets, as followers copy and adapt to compete.
Yet Bhidé contends that the definition of innovation has become too narrow among many policymakers, admitting "The difficulty of defining technological innovation reveals the great diversity of its forms." For him, innovation goes far beyond piling up high-level products, patents or advanced degrees - but also covers ground-level techniques by ordinary workers, small discoveries often taken for granted by customers and business owners alike.
Innovation is an elusive and ambitious goal for book topic, let alone for policymakers to pursue, yet Bhidé tackles the challenge, expanding the definition along with the type of strategies that lead to an innovative business culture. He concludes that perhaps attitudes - especially passion - are more vital than tax breaks or training: Curiosity, altruism, quests for efficiency and a sense of adventure are better motivators than prosperity, personal or collective.
Bhidé busts some common misconceptions of innovation: Fewer PhDs do not necessarily mean less innovation. Subsequent applications, rather than an initial invention, spur prosperity and radical social change. Increased proportions of college graduates in a society may not necessarily herald economic benefits. And enthusiastic immigrants - not just high-level researchers - can increase employment opportunities and wages for domestic science and engineering workers.
Countries are not locked into a "winner-take-all" contest for technological leadership, Bhidé argues, and advances in any one nation spread to others.
Attempts at exclusivity by techno-nationalists, including the tightening of immigration, trade in services or intellectual-property rights, neglects what Bhidé regards as a major driver for innovation, and that's a willingness among users to demand and try technology. The resourcefulness of common work people who reshape tools or processes by using them, everyday folk who struggle through pages of technical directions or trial or error to make a make a product work for their needs, is priceless for any society. "One of the notable features of the modern innovation system lies in the great many individuals and organizations who are willing to be so persuaded," Bhidé notes.
There's more to innovation than cutting-edge research. Pursuing and funding a single challenge, like a moon-landing program, can reduce opportunities in other areas. Innovators at mid or lower levels discern user desires everyday and make adjustments, adding features or streamlining procedures.
Conversely, though new technologies and better management reduce the proportion of scientists needed in a nation. "Public policies should stop trying to rob mid- and ground-level Peters to pay high-level Pauls," Bhidé writes. "A proper appreciation of the complexity and elusiveness of the modern innovation systems does not lead to new interventions, but rather suggests the removal of a long-standing bias in favor of high-level research and the use of lower-level innovations."
Bhidé compares Norway and Japan as evidence that "in an advanced economy, the effective use of IT in the service sector as important as - if not more important than - the capacity to develop new products": Norway, not a leader in technology development, has the highest labor productivity in the world, whereas Japan has low productivity growth despite strong IT investment and many patents. "To achieve commercial success, innovations have to be effectively and widely deployed," Bhidé concludes.
He warns that prescriptions to "improve" on innovation can do more to hurt than help - and that there are no tried-and-true patterns that produce an innovative employee base: Google started with venture capital while Microsoft did not; some new products or initiatives, like the US lunar program, emerge amid competition and conflict; others like the internet do not.
Attempts to target investment funds or policy on new technology - predicting the next big thing - is tricky, perhaps even foolhardy, because much is unknown about future needs or circumstances. Bhidé reminds that economist William Nordhaus pointed out that only 30 percent of goods and services used in 1991 bear resemblance to those of the 19th century.
Innovation often centers on substitution, sometimes displacing products but also creating new wants: The invention of the automobile ended carriages, but the computer did not end the need for pencils, pens or telephones.
Creating and satisfying new wants - nondestructive innovation - provide more attractive returns than breakthrough products. He writes, "As long as the new want-machine hums smoothly, the jobs that innovation takes away (through efficiency improvements and expanded opportunities for offshoring) more than give back."
Bhidé ponders the value and purpose of college, noting it can "improve the ability - and equally importantly the confidence - to learn new things." Learning how to learn and a love of learning should not be dismissed as tired clichés. More science and engineering diplomas doesn't necessarily lead to more patents. Instead, education must create workers who resist fears of the big or the strange, shared knowledge or opportunity, openness or change.
In devising policies to advance innovation, businesses and governments must recognize ongoing interactions between education and business, producers and users, effective applications and marketing. "Modern innovation is sustained by a system of interconnected elements rather than through the simple addition of causal factors," Bhidé notes.
The message threaded throughout this book - anyone can innovate - is inspiring and needed during a time of economic downturn. This book could be a bestseller had Bhidé been more concise and playful, selecting the most intriguing anecdotes from history and his research on high-growth startups, addressing distinctions of firms backed by venture capital - perhaps pairing cases of innovation with missed opportunities, focusing on the odd contradictions among the tales of innovation. Some jargon-laden academic style may deter a few readers, but those who seek to understand the multiple layers of the mysterious process called innovation won't mind sorting through study findings, background research and footnotes.
In any quest for innovation, a logical next step for Bhidé's readers would be delving into the kind of parenting, early-education programs or resources that stir the curiosity, risk and elusive venturesome spirit in communities or individuals.
But Bhidé's book would suggest that policies grounded in anxiety about immigration, education, competition and wages are not part of the cure. "Complacency is dangerous, but jumpy reactions to false alarms can also do real harm," Bhidé concludes. "Today's conditions allow nations to gain from one another's advances, and our challenge lies in making the best of this good fortune."