Innovation: The DNA for Growth
Special Summit for the Future Report
by Evalueserve

Amsterdam, April 10, 2006

You can't solve a problem on the same level that it was created. You have to rise above it to the next level - Albert Einstein

This quote by Albert Einstein clarifies the common misconception about innovation. Innovation is not only about developing a product or service from scratch but is also about adding value to an existing product or service. Organisations across the world have focussed on innovation in order to achieve the competitive advantage required for creating and sustaining growth. The effect of globalisation on the world economy has also played a significant role in fostering innovation. Organisations soon realised that without innovation they faced the possibility of extinction.

Research and development (R&D) and innovation go hand in hand; however, R&D is only one aspect of innovation. While innovation is about introducing a new idea or process to the end customer or developing and improving an existing product or service, R&D is about conducting original investigations to gain new knowledge for improving products or services.

Risks and Rewards come in a package

Innovations and the risks associated with them are directly proportional. On the other hand, the rewards of taking these risks are high. All resources employed for successful innovation are subject to some form of risk. These resources vary from the capital employed to the use of raw material, time, manpower and technical skills.

A successful innovation is subject to various external and internal factors.

These factors include government regulations and support, availability of skilled labour, the firm's internal management and its sources of capital. India and China attract large investments in R&D due to the availability of highly skilled manpower. The UK has an average innovation performance as its firms are less inclined to change. Therefore, they lag behind other geographies such as the US in adopting new and innovative business practices.

Collaborations such as that of Tata Consultancy Services in India with Stanford University for research in data privacy are examples of pooling existing expertise. Government involvement is a key factor as it influences all other factors. A government's fiscal measures and macroeconomic policies promote access to capital. It has a role in developing science and technology centres, and associations. It also has a role in encouraging R&D in institutes that provide the support system required for innovation and R&D. The government is also responsible for providing funds for quality education and sourcing the required human capital. This can be seen in the United States where the government has increased the number of H1B visas in order to increase the skilled labour pool for its IT sector.

More information:

Club of Amsterdam
Mr Felix Bopp, KNSM-Laan 15, 1019 LA Amsterdam, The Netherlands, Phone +31-20-419 0254, Fax +31-20-419 0266, summit2006@clubofamsterdam.com
Club of Amsterdam website
http://www.clubofamsterdam.com

Summit for the Future website:
http://www.clubofamsterdam.com/summit2006.htm
Summit for the Future Brochure
http://www.clubofamsterdam.com/contentsummit2006/summit06website/Summit_for_the_Future_2006.pdf Summit for the Future blog
http://summitforthefuture.blogspot.com