The world of Industry 4.0, the Internet of Things and technologies driven by artificial intelligence, is becoming a reality today thanks to the innovation capacity of companies.
But innovation should not be limited to radical transformations or those that require a high investment. Innovation is basically the generation of business value through a new product, process or service. If it does not produce benefits for the company, then the novelty may even be an invention, but it will not be an innovation.
Companies innovate in business models, processes, services, or products, which may be new to the company, its market, or the world. Companies that innovate are more competitive, tend to pay better salaries, and hire more qualified professionals. Countries known for their innovation stand out in the global marketplace. Therefore, governments adopt innovation policies to improve economic growth and competitiveness.
What is the Concept of Innovation?
Have you ever wondered what the concept of innovation is? To innovate is to create something new, to introduce novelties, to renew, to recreate. Innovation has always been seen as synonymous with changes and/or improvements to something that already exists.
One of the greatest thinkers of innovation, the Austrian economist and politician Joseph Schumpeter, was clear that innovation is the engine of economic growth. He created the concept of “creative destruction”, which can be summed up as the idea of destroying the old to create something new, a process rooted in the dynamics of capitalism.
Peter Drucker, another Austrian writer and university professor who is passionate about innovation in Austria, said that innovation is the ability to transform something that already exists into a resource that generates wealth. He stated in 1987 that “any change in the potential to produce wealth from non-existent resources constitutes innovation.”
But how do we define what innovation is today? According to the Oslo Manual, the Organization for Economic Cooperation and Development (OECD) edition is a world reference on concepts and methodology for analyzing innovation in companies, and innovation can be defined as:
“…a new or improved product or process (or a combination of both) that is significantly different from previous Company products or processes that have been brought to market or used by the Company.”
One of the central components of this concept of innovation is knowledge, be it practical, technical or scientific. Knowledge serves as the basis for the process of solving problems, exploring and creating new businesses or unprecedented improvements in the production process, that is, innovations.
Another crucial element to conceptualize innovation is implementation, since it distinguishes innovation from other concepts, such as invention. That is, innovation is achieved when it is used or made available for anyone to use. It must come out of the paper, to be applied.
Innovation is transforming an idea into a solution with creativity. Innovation is essential for companies of any sector and size, and of course, for any country. Innovation is one of the engines of growth. This is why most countries adopt a series of public policies to stimulate innovation activities, be it in the productive sector, education, government, health, security or infrastructure.
Innovation is a necessity that has been with us since the world began. Innovation in organizations is no different. It is a key element in the development of new products, technologies, methods and ways of working that are related to different audiences that are getting closer and closer to digital transformation. This requires more shifts each day.
Innovation is the focus of the development strategy of the national industry. In this sense, the innovation agenda is urgent and needs to be addressed as a priority for the country, just as the culture of innovation must be part of the business DNA. According to the National Confederation of Industry (CNI), prioritizing innovation is one of the keys to sustainable growth in Brazil.
What are the Types of Innovation?
Despite how broad the concept of innovation is, there is a certain consensus on its main types. Because innovation is possible in different contexts, innovation researchers and policymakers have adopted extracts from the broader concept of innovation to better analyze its characteristics, how often it occurs in firms, and under what conditions. occurs.
Once again, the most widely adopted reference worldwide is the Oslo Manual, specifically its latest edition of 2018. To distinguish between contexts of innovation as a process or as a consequence, the manual adopts the terms innovation (process) and business innovation (result). activities . The definition of these terms is as follows:
- Innovation Activities: Includes all development, financial and commercial activities carried out by the company that aim to achieve innovation for the company.
- Business Innovation: A new or improved product or business process (or a combination thereof) that differs significantly from the Company’s previous products or business processes that the Company markets or uses.
- To indicate an innovation that takes into account its purpose, the guide identifies two main types, product and process. The term product also includes in its definition new offers of services provided by companies. The process includes the production processes, logistics and after-sales activities of the company. Therefore, product or process innovation are key concepts for identifying and analyzing innovation and its results in companies. Therefore, the exact definition of these concepts is:
- Product innovation: A new or improved product or service that is significantly different from the company’s previous goods or services introduced to the market.
- Process innovation: A new or improved business process for one or more functions of the organization that differs significantly from previous business processes that have been used in the organization.
What is the Relationship Between Science, Technology and Innovation?
Innovation exists in different fields, although it is common to associate it with scientific and technological development.
This is because science and technology are two elements that usually accompany innovation. Science, through basic or applied research, provides new knowledge and methodologies that companies can apply. Technology, closer to productive activity, offers tools and solutions to the productive sector, whether in the creation of products or services. In times of digital transformation, as digital technologies are applied to almost all areas of our lives, technology and innovation thrive. In this process, new technologies are created, as a result of technological innovation, to bring more productivity, more value and more benefits to customers.
Scientific and technological innovation has transformative power, as can be seen around the world in the wake of the COVID-19 pandemic. Producing new vaccines in record time required laboratories and companies in the pharmaceutical and manufacturing sectors to direct their activities towards research, development and innovation. According to the Organization for Economic Cooperation and Development, in its Science, Technology and Innovation 2021 publication, it was through science, technology and innovation that the countries that best responded to the Covid-19 crisis were able to protect their citizens and economies. .
In addition, companies and people are increasingly connected through innovations in the field of communication, and this has profoundly changed our way of life and corporate culture. Companies have embraced new technologies, implemented innovative processes and, as a result, interpersonal relationships have also suffered. Remote work has acquired unimaginable proportions and messaging applications, video calls and various programs have begun to occupy a relevant part of workers’ time.
In the process of technological innovation, whether in large, medium or small companies, or even in start-ups, research and development activities capable of producing new knowledge are carried out. But innovations don’t necessarily come from research and development. Innovations considered more incremental may be the result of a new use or a new “clothing” that is given to something known. These innovations are often considered incremental, since they do not require large investments in research, although they can generate significant returns for companies. .
Despite much talk about these awards, many companies say they don’t know how to innovate. And many still see innovation as complex and expensive.
According to a survey carried out with 100 CEOs of Brazilian companies in 2019 and released by the National Confederation of Industry (CNI), only 6% of them considered that the national industry was highly innovative. For 49% of those surveyed, the degree of innovation in the Brazilian industry is low or very low.
In this scenario, it is necessary to disseminate knowledge about how to innovate and what kind of support is available to companies that carry out innovative projects. Another priority is to bring science and technology (ICT) companies and institutions closer together, combining science, technology and innovation, to stimulate all types of business innovation, from incremental to radical.
Why is it Important to Invest in Innovation?
Investing in innovation is essential for companies around the world. The companies that innovate the most grow the most. In addition, it is necessary to keep the company aligned with new technologies and trends so that it is possible to develop better products, reduce costs, improve operations, increase productivity, make work environments safer and improve customer relations, in addition to increase profits. . and social benefits.
Creating solutions that can meet or even anticipate the demands of an increasingly interconnected and global world prevents business from becoming obsolete.
Investing in innovation not only improves the competitiveness of companies, but also the competitiveness of countries. With more innovative companies, countries like Brazil can reduce the distance to the technological frontier and in relation to the leading countries in the global market, thus increasing the generation of internal wealth. Therefore, investment in innovation is an investment in economic growth with the objective of social development, since there is no development without growth.
According to the UNESCO Institute for Statistics, a United Nations (UN) development agency, in 2017 (latest year available), Brazil was among the ten countries that most in invested in research and development (R&D). While investment in research and development is one of the drivers of innovation, Brazil still needs to improve its innovation rankings.
Source: UNESCO Institute for Statistics, June 2020
- Gross Domestic Expenditure (GERD)
** Amount for 2017
*** Purchasing Power Parity ($PPP)
The relationship between economic development and innovation becomes clearer if we look at the leading countries in the global market. While Korea, in 2018, invested more than 4% of its GDP in research and development and Germany invested more than 3%, Brazil invested just over 1%.
Brazil in the World Ranking of Innovation
Brazil ranks 62, out of 131 countries, in the Global Innovation Index (IGI), according to the latest survey published in 2020 by the World Intellectual Property Organization (WIPO), in partnership with Cornell University (https:/ /www..cornell.edu)./) and Inside (https://www.insead.edu/).
Mobilizing Business for Innovation (MEI), a CNI initiative, has been a promoting partner of IGI since 2017.
Switzerland, Sweden, the United States, the United Kingdom, the Netherlands, Denmark, Finland, Singapore, Germany and South Korea were the best in the latest edition of the Innovation Ranking.
Despite an improvement of four places between 2019 and 2020, the 62nd position does not correspond to the fact that Brazil is the ninth largest economy in the world. In an interview with the CNI news agency at the time the study was published, CNI president Robson Braga de Andrade said Brazil was still far below its potential. “We need to improve financing for innovation, strengthen alliances between the government, the productive sector, and academia, structure long-term policies, and prioritize the training of qualified professionals,” emphasized the CNI leader.
Even so, according to the Global Innovation Index, Brazil ranks as the fourth most innovative country of the 37 countries in Latin America and the Caribbean analyzed. It comes after Chile (54), Mexico (55) and Costa Rica (56). Latin America appears in the report as one of the worst ranked regions in the world.
The IGI methodology consists of 80 indicators that are used to calculate three measures of innovation: a) innovation inputs; b) innovation products. c) General classification of the GII: simple average of the subindices (a) and (b). These three measures consist of several pillars that constitute the strengths and weaknesses of the countries analyzed.