Disruptive Innovation Policy

In recent weeks the newsletter Re$earch Money which covers all things to do with innovation and research funding and policy in Canada published an opinion piece by me on innovation policy.

Here is a taste of what I said.

While traditional innovation policy remains fixed on the production of knowledge and technology it focuses on the creative Schumpeter, not the destructive Schumpeter.  Innovation policy needs to be Schumpeterian and Rogerian (Rogers – Diffusion of Innovations). When the longed-for innovations disrupt industries and employment patterns, they become the responsibility of ministries of health, human resources, employment, industry etc across federal, provincial and municipal jurisdictions. When governments are controlled by the neo-classical economic worldview which assumes technology with appropriate transitions, and a legal profession that works on the basis of precedence – it is hard to craft legislation and policies for disruptive innovations.  

The point is; in a world that is increasingly being disrupted by innovation we can no longer expect that transitions will be smooth.

The recent economic crisis was as much triggered by conventional macro-economic variables (poor lending and risk practices by banks) as it was technological and innovation related. he banks didn't understand the innovations in risk 'management' and oil prices had hit $150 per barrel which appears to be some sort of trigger point. Yet, the conventional media continues to treat the whole GFC (Global Financial Crisis) as conventional macro-economics. Where are the innovations who can talk in broad terms about what is happening technologically.

I am more and more convinced we need to take Keynes' comment seriously.


•   The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again. John Maynard Keynes, A Tract on Monetary Reform (1923) Ch. 3 English economist (1883 - 1946) http://www.quotationspage.com/quote/38202.html

•   Neo-Schumpeterians (innovationists) set themselves too easy a task if they say that the maximisation of the production of innovation will be good for growth and competitiveness in the long run but can give no guide to governments on transitions in periods of disruption (Brian Wixted)


We need an macro-innov-nomics that worries about transitions – that is the destruction in Schumpeter’s creative destruction equation.