FT CEO Breakfast 10 min

 

 

November 2010

Image: fabmoraes.cgsociety.org/

 

1. Why do we talk about growth and innovation?
 

I feel that the way we are talking about growth and innovation are quite similar: both seem to have become an end in themselves rather than being the means to an end. But are we wanting growth for the sake of it? Are we wanting innovation for the sake of it? I believe not – I hope not! Both are measures for something else that is more difficult to measure otherwise.


I believe that we started using ‘growth’, and GDP and such like, as a measure as it seemed to be an indicator for the improvement of standards of living. This in turn, so could be argued, is supposed to reflect people’s wellbeing. So therefore I would argue that when we are talking about innovation for growth we are, really, talking about innovating to improve people’s standard of living, and ultimately their wellbeing. The question in today’s world is, should we really be focusing on growth as measure for wellbeing?


Let me quote a few voices against this; the first is over 40 years old when no lesser than Robert F. Kennedy criticised GDP arguing that the “GDP is not measuring that which makes life worthwhile.” A 2007 paper by the European Parliament stated that: “GDP does not properly account for social and environmental costs and benefits. It is also difficult to achieve sustainable decision-making aiming at sustainable progress and wellbeing if welfare is being considered from a purely financial point of view.”


The third voice I’d like refer to is no lesser than the current prime minister, David Cameron, who commented in 2006 that “…there is more to life than making money, arguing that improving people's happiness is a key challenge for politicians” which is why he promoted replacing GDP with measuring the GWB (general wellbeing) instead.


I also agree with a point raised by on Herman Dalys, author of ‘Beyond Growth [the economics of sustainable development] in which he says, “The concepts 'growth' and 'development' are not necessarily the same.” Funny enough, we talk about developing and developed countries, not about growing and grown up countries… I also rather like Dalys’ statement that “Uneconomic growth occurs when increases in production come at an expense in resources and well-being that is worth more than the items made.”



The final and in my view most convincing argument to focus on innovation for wellbeing rather than innovation for growth is the one planet we have. Given the state of our planet I find it increasingly irresponsible to promote innovation for growth. It is hard to deny that having one planet and one planet only provides rather unmovable limits for growth. If on the other hand we talk about innovation for development - of the human race as part of, contributor to and beneficiary of a wider system – or innovation for wellbeing, the only limitations there are arise from the limits of our imagination. And it is imagination – seeing what others don’t see – possibilities, needs, opportunities - making connections that have not existed before, making real what does not yet exist – that drives

innovation.


If we have measured growth because it was relatively easy to measure and seemed appropriate at the time, and if the wellbeing of humankind is really what we are interested in, then we should ask questions about what government and business – we as society – need to do in order to support and encourage innovation for wellbeing.





2. What is it that we know about innovation generally?



Let me start by sharing my take on innovation. Having thought about innovation, what it means and how it happens (or not) for the past nearly 20 years I have arrived at the following, “Innovation is choosing the path of change to create value.” I could talk at length about how and why I have arrived at this statement but believe it would not really contribute to the debate here. Perhaps only that much, clearly, ‘value’ is not only of the monetary kind. Ideally, the value is created by balancing profit, yes, but also people and planet. If we do not do that all we achieve is Dalys’ ‘uneconomic growth’.


I would like to pick out 3 aspects that support innovation that I think are perhaps most relevant to the debate this morning; – there certainly are more (which, by the way, is part of the problem …)


We know that innovation happens when connecting different bodies of knowledge – what can
government and business do to support that?


G: I believe that research grants that are tied to multi-disciplinary teams from a number of different departments point the right way; science parks are another vehicle to foster the collision of different bodies of knowledge;


B: businesses are increasingly working around projects with multifunctional project teams, ensuring that the multitude of requirements as well as expertise are brought to play at the outset of a project rather than creating a costly and time consuming need to rework things – or deliver sub-optimal results – by considering some requirements only later in the development of a project.

A quick word of warning though – do not expect that people with different mind or knowledge sets to get along swimmingly – different personal and professional preferences and priorities ensure plenty of potential for conflict. As beneficial as working across mindsets is from an innovation perspective it should not be forgotten that essential preconditions are trust, respect and appreciation of diversity. There are a lot of good things happening, not all of them supported sufficiently to truly create the possible benefits – so what are things that government and business can do to support such ‘collision’? As a matter of fact, what are you doing in your organisation to enable ‘collaboration across communities’?





Innovation is enabled through the free flow of knowledge and information



The easier it is for people to access knowledge and information the easier it is for them to connect the previously unconnected. The internet has unlocked doors to unheard of quantities of knowledge and information, changing entirely the game of who has access to what, thereby enabling large numbers of people to connect bits of information and knowledge that would have been impossible to get hold of before. Again I can see things happening to support this at both government and business level.



G: One of the initiatives aiming to make knowledge easier accessible are knowledge transfer
partnerships (KTPs)

 

G/B: An example from the boundary of government and business are Ordnance Survey which, by government remit, has made large parts of its intellectual assets available to the outside world – and has even opened its doors to hackers, finding ways to create mutual benefits rather than taking them to court. Their latest challenge (Geovation) is inviting the crowds to help find ways of ‘how can Britain feed itself’.
 

B: and the there are companies that make part of their patent portfolio available such as IBM and GSK; Within such tremendous new opportunities also lay new challenges: with the floodgates of information having been opened it is easy to drown: new skills are needed to sift through all information to synthesise and make sense, and separate the relevant and trustworthy from the white noise and misinformation out there. What role can and should government and business play here?





Without visionary, committed leadership, by example, there is not much hope for truly innovative organisations



Time and again I have seen it in organisations: if the leaders truly understand and support
innovation, innovation will happen, it will become part of the organisation’s fabric. However, sadly it is also true that an innovation culture is like a good reputation, it is quite hard to build and all too easily destroyed. I could talk for hours on this topic, but don’t worry, I won’t just now.


One of the biggest challenges here is ‘to truly understand what it takes to create innovative
organisations’. Who here has innovation in their annual report, in their values or as one of their top 3 priorities? Are you satisfied with your organisation’s innovation performance? Do you feel you know what it takes to cerate a truly innovative organisation? If your innovation director comes to you and talks about values, behaviours, leadership styles, a holistic approach that touches all aspects of the organisation in addition to wanting to spend money on things where outcomes are uncertain, how do you react?

 

There are other things such as understanding that idea generation and other processes are
supporting but not making happen innovation and that neither ideas nor creativity equal innovation – I could go on; perhaps just two more points on what is needed beyond the above in order to support innovation for wellbeing.





3. Beyond that, what is needed to support innovation for wellbeing?

We certainly need to move away from a view of innovation that centres around R&D, technology and patents; let me emphasise that I am not saying innovation is not about R&D and technology; it clearly is, but it is also about much more, particularly in the context of improving wellbeing; Let me share an example of where real value has been created through innovation – which would not be captured by looking at technology, R&D or patents. It stems from a US-based chemical company, specialising in pesticides. Prior to their innovation the company’s sales people were incentivised to sell as much of the pesticides as possible – the more their sold, the greater the profit – but, one can argue, the worse for the environment. Their innovation lay in a shift of business model: they thought about what their customers really wanted – which was pest-free fields. So that is what they starting selling them! They were guaranteeing pest-free fields – which meant that the pesticide became a cost to them, which meant they were trying to use as little as possible. Winners all around. It is this kind of business model innovation, and switches from products to services, that can really make a difference.





We need to establish sustainability considerations as the starting point for innovation



Given the challenges we are facing as humanity I don’t think we have much of an option but use sustainability as a driver of the innovation agenda. Do you ask questions about sustainability as part of your stage gate process? Do you do so at the end, to ensure no law suits are threatening, or at the outset to drive your innovation agenda?
 



Conclusions


I strongly believe that we need to shift from ‘innovation for growth’ to ‘innovation for wellbeing’. I believe that such a shift will carry much more inspiration – a fundamental ingredient for successful innovation. With this shift goes a broader understanding of innovation, beyond R&D and technology. And just because it might be more difficult to measure does not mean that it is less important. 
I also strongly believe that sustainability has to be the driving force at the outset, not a secondary consideration or a tick box at the end.

Finally, I propose that this shift will lead to different questions and request, to government as well as business. But somehow ‘government’ and ‘business’ are rather far removed and it is all too easy to ask them to change, or even talk about ‘we need to change’. In the end, the only thing we can truly change and that is our own behaviour and actions. I am all with Mahatma Ghandi who said, “you need to be the change we would like to see in the world.” What is it that each of us can do personally to encourage and support innovation for wellbeing.