Heading toward a digital innovation economy

The world has a hunger for growth and one of the most important vehicles for growth is innovation. With the new digital platforms from which data-driven innovation can be extracted, major parts of analogue workflows will be replaced by digital workflows. Subsequently, the field of innovation will eventually reap the benefits of digitalization. In a world where start-up creativity and activity have never been higher, the hope that the innovation behind a start-up will become something big remains as strong as ever. Entrepreneurs still dream of becoming rich. Likewise, highly skilled engineers who work in R&D departments hope to “invent” the new innovation. The new digital platforms allow for many entrepreneurs and R&D departments to collaborate and, thereby, reach a higher level faster. With the advent of the new digital platforms, (successful) innovation becomes more predictable, purpose-driven, profitable, and probable.

Connectivity and the digital innovation economy

We are living in a digital world. In fact, the digitization of Western societies started more than 50 years ago. Notably, the telecommunications networks in some countries were already fully digitized in the 1970s. Broadband is now widely available in most countries, often at relatively low prices, which incentivizes customers to substitute physically demanding work patterns with virtual work processes and remote/external access to knowledge. In this context, the important thing is not to focus on the technology as such but on whether adequate applications are in place to deliver attractive products and services.

Interestingly, we can distinguish between an old or existing innovation economy and the new digital innovation economy. In the existing economy, we often measure the degree of innovation in a given country in terms of R&D’s percentage of GDP. We assume that more innovation takes place if this ratio is high. Moreover, we assume that if the ratio is high, then growth will also be higher as the level of innovation is higher. These assumptions may not be correct. They were more likely to be correct in the “old” economy where innovation was tied to traditional R&D activities that heavily relied on analogue workflows. Somewhat surprisingly, the field of innovation has been characterized by analogue workflows and, at least at the micro level, by a failure to utilize data-driven innovation and Al.

However, several preconditions for these causalities are beginning to change and create a new picture. One salient discovery is the fact that innovation is not just created in large, incumbent R&.D organizations. It may be even stronger in start-up communities. This means that assessing, for example, a country’s level of innovation will become far more difficult, as it is no longer just a matter of measuring R&D’s percentage of a national, regional, or global GDP.

In the new innovation economy, it is more a matter of quickly finding pieces of innovation that are already developed. Therefore, we need a more advanced means of measurement in order to understand these new processes. One such measure may be the degree of connectivity between start-ups and corporations, and connectivity within these sub-segments. At the micro level, we return to the importance of data-driven innovation from digital platforms as their footprints seem to grow quickly and in accordance with the shift from primarily analogue to primarily digital innovation workflows.

The world has a hunger for growth, and one of the most important vehicles for growth is innovation. With the new digital platforms from which data-driven innovation can be extracted, major parts of analogue workflows will be substituted by digital workflows. Subsequently, the field of innovation will eventually reap the benefits of digitalization.

 
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