INNOVATION FOR THE 21st CENTURY

The main driving force of society during the 20th century was rising citizen´s standard of living. Never throughout the history of production had society reached such level of standard of living measured in terms of GDP per capita. This large economic output was achieved on both societal and technical levels. Development at the technical level supported the next development of the organization at the the societal level. This way technical development created the basis through which society was shaped and vice versa. At the end of the 20th century a New World Order was announced as a result of technical progress and economic impact. Much larger markets comparing to national markets were formed supported aggresively by development of IT technologies, like internet and mobile communications.

Innovation is a special and very important part of a society’s technical progress. Among many different definitions the basics of innovation can be expressed as a process through which economic added value is created. And it doesn´t matter whether the economic added value is created on the market via extended sales, or due to reduced cost achieved within internal or external processes of supplier. Enhanced sales can be achieved by enhancing features or cost reduction of product or services provided.

Observe constantly that all things take place by change, and accustom thyself to consider that the nature of the Universe loves nothing so much as to change the things which are, and to make new things like them.

Marcus Aurelius


Life cycle of the product and knowledge line

The so called knowledge line of the product life cycle differentiated processes between basic research, applied research and innovation. From the knowledge line it is a given that basic research and applied research need some investment and the research processes per se do not bring direct economic reward. In order to evaluate the reward of basic and applied research it is necessary to include it into innovation and answer the following questions:

  1. How many basic new ideas need on average to be generated in order to convert one into a successful product?
  2. What is the dynamics of the process of basic research- development- innovation in terms of time span and number of basic ideas?
  3. What is the impact of the dynamics of the research and innovation process on society?
  4. What is the driving force of this research and innovation process?

Pierce and Robinson reported that during the seventies on average about 60 basic ideas needed to be evaluated in order for one to be converted into successful product (Pierce II, 1988). We also know that risk capital operates with a 1:5 probability of success which means that it represents the border between applied development and innovation. However at the the end of the

first decade of the 21st century analysts found that today we need almost 300 basic ideas in order to reach the market with one successful product (Koulopoulos, 2009). Taking linear approximation it can be be said that the dynamics of the innovation process, attached to the process of basic and applied research can be estimated as 7,5 ideas per year. Innovation should reach the economic breakeven point where return of investment starts. There are only few important basic questions:

  1. When will investment return?
  2. How many times will the investment be returned during the product life cycle?
  3. How is it possible to extend the product lifecycle and enhance the return of investment?

What does European history reveal, how does it relate to the dynamics of innovation and individual freedom?