When considering issues related to the development of innovation within any economy, it is worthwhile to discuss the elements that can create an environment, or innovation ecosystem (1), that nurtures disruptive innovation. As you may recall, disruptive innovation is the ability of seemingly new and “less desirable” alternatives to steal market share or ultimately drive out incumbents from any given market.
The 2014 Abu Dhabi Innovation Index report makes apparent the elements that enable innovation within emerging economies – most especially Natural Resource Rich Economies such as those in the UAE that have a large share of the economic mainstay in natural resources with very little diversification into other industries.
It is well known that radical innovation is dependent on the presence of knowledge and skills. In the Abu Dhabi Innovation Index, key indices used as benchmarks were specific to knowledge, including knowledge access, anchoring, diffusion, creation, and explotation. A further analysis of these benchmarking metrics may be used to identify what this may mean in terms of disruptive innovation.
- Knowledge Access: The ability of an economy to connect and link to local and international networks of knowledge and innovation.
- Knowledge Anchoring: The modification of applied knowledge to suit the context of the local market or region. (Note that knowledge anchoring is slightly different from general education or schools and colleges that teach agile development or business model design.)
- Knowledge Creation: The ability to generate and bring new knowledge to the world in the form of ideas, discoveries, designs and inventions.
- Knowledge Diffusion: The collective capability of an economy to adopt, adapt and assimilate new innovations, practices and technologies.
- Knowledge Exploitation: The ability to utilize new knowledge for social and commercial purposes in order to create value from it.
In an OECD executive report in 2013 titled “Supporting Investment in Knowledge Capital, Growth and Innovation,” the following statement was made in the executive summary, highlighting the importance of “knowledge capital” to innovation:
Today’s firms are looking beyond research and development (R&D) to drive innovation. They invest in a wider range of intangible assets, such as data, software, patents, designs, new organisational processes and firm-specific skills. Together these non-physical assets make up knowledge-based capital (KBC).
Knowledge-based Capital and Innovation
It has been rightly said that innovation leads to a knowledge-based economy (on a macro level). It can also be pointed out that an aggressive drive toward knowledge-based capital (KBC) is an important factor for developing innovation within an ecosystem. Thus, when businesses invest heavily in KBC, there will be a direct (or indirect) impact on the local innovation ecosystem. [Read more...]