Systemic innovation

Linear or systemic model of innovation

Twenty-five years seem like a long time ago. You could buy an Apple share for a dollar and a Microsoft one for eight dollars. Google and Facebook were not even listed on the stock market. Much has changed in those 25 years. Yet the scholarship on sustainable development at the time, was already advocating the kind of thinking that is emerging today. One that caught my attention was a paper by Chris Freeman¹ in 1996.

Professor Freeman argued for a new systemic model of innovation to enable large-scale techno-economic transitions. He claimed that in a systemic model of innovation, “feedback loops and interdependencies are important at every stage so that networking between research institutions and firms should be continuously encouraged.” Today these interdependencies are also discussed in the ‘systems approach’ to leadership and change management. In contrast, a linear model of innovation focusses on discovery in basic science, an invention and ends with a new process or product, i.e. the innovation. Both models require significant R&D (Research and Development) expenditures.

Although not explicitly mentioned in the paper, the notion of a circular economy was evident in the articulation of the steps needed to avoid catastrophic environmental damages. Presciently, Professor Freeman referred to the potential impact of information and communications technologies (ICT) on work patterns:

They offer even more radical possibilities through “telecommuting”, enabling people to work at home, avoiding the journey to work for at least some days in the week.”

Back then, Professor Freeman further observed, “It must be said, however, that these possibilities have been slow to materialise.” There were such high expectations from ICT. There are a lot more interesting insights in the paper.

After reading the paper, I find myself questioning why transitions take so long to happen? What are the essential factors that must interact with each other promptly to support significant large-scale change? Of the many factors, I believe that leadership (personal, organisational) has a strong influence on the direction of change, but by itself is insufficient.

R&D expenditure is another necessary ingredient in the soup of required factors to support large-scale transitions. Professor Freeman pointed out in 1996, “ despite the important advances in wind power and solar power, it( meaning the renewable energy transition) will not be possible either without some far greater R&D commitment in the public and private sector as well as procurement policies.” Between 2000 -2017, the R&D intensity ( R&D per unit of GDP) has been mostly flat for the US, France, and the UK. In contrast, China and South Korea have steadily increased R&D spending relative to their GDP.

A systems approach to change is arguably more likely to result in the effective management of the complex relationships between elements that are required to drive a sustainable transition. Yet it is not clear whether countries such as China and South Korea are using a linear model of innovation rather than a systemic model. Perhaps a combination of approaches is required with elements from both the linear model and the systemic model of innovation.

There is much uncertainty over the path of sustainable development over the next 25 years; keeping an open mind to a multitude of strategies seems like a good bet. One thing is sure to happen though: you will not be able to buy a share of Apple for a dollar.

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[1] Freeman, C. (1996). The greening of technology and models of innovation. Technological Forecasting and Social Change53(1), 27–39. https://doi.org/10.1016/0040-1625(96)00060-1

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