The Progress Economy

This content will be a rewrite of this article: https://solvinnov.com/innovation-problem/

today

Back in 2013, Edison, bin Ali and Torkar (2013) studied innovation in the software industry and found 41 (!) separate definitions of innovation. Where typical definition includes three aspects. Innovation:

• is a process and an output
• that creates something new/novel (where that something could be products/ goods/ services/ processes)
• that has value

Typically value focusses on value embedded by the maker. Over at Idea2Value.com, they summarise 15 innovation experts’ definitions, finding only 40% noted value to customer.

Even the OECD’s definition focusses only on the supplier/creator.

An innovation is a new product or process (or combination thereof) that differs significantly from the unit’s previous products or processes and that has been made available to potential users (product) or brought into use by the unit (process)

The Oslo Manual (OECD, 2020)

ISO 50009 – Innovation Management – Fundamentals and Vocabulary

Now if we look at the International Standards Organisation definition from 2020, they define innovation as:

3.1.1 Innovation: new or changed entity¹, realizing or redistributing value²

¹anything perceivable or conceivable. Example: product, service, process, model, method, or combination thereof.

²gains from satisfying needs and expectations, in relation to the resources used. Example: revenues, savings, productivity, sustainability, satisfaction, empowerment, experience, engagement, trust.

note: innovation is an outcome. If used referring to activities and processes, some form of qualifier is required, e.g. ”innovation activities”

note: novelty is relative to, and determined by the perception of the organisations and interested parties

ISO 56000 (2020) – Innovation Management – Fundamentals and Vocabulary

So we could perhaps say innovation is “a new or changed service mix and/or series of proposed activities, realising gains in progress in relation to resources used”. But ISO then go on to clarify that:

value can be created, realized, acquired, redistributed, shared, lost, or destroyed…value is relative to, and determined by the perception of the organisations and interested parties

Sadly, we’re back to the old school value-in-exchange thinking.

invention vs innovation

Also missing from many definitions is the difference between inventing and innovation. That’s to say coming up with ideas (invention) and implementing them (innovation). Back to Idea2Value.com, they found only 60% of definitions they looked at include “having or executing the idea”.

roots are in manufacturing

Another finding worth considering is from Gallouj and Weinstein’s “Innovation in Services“. And it is that we base most of today’s innovation theory on technological innovation from within manufacturing companies. Which is exactly what we see in the 2020 ISO definitions around value.

The problem with this is it risks driving us to be short sighted.

When we think in terms of manufacturing, we immediately think in terms of goods and their features. Often in a manner Kottler shows us in his ”Principles of Marketing”.

And so we embark on feature innovation. Convincing ourselves that user needs are found behind them. We’re all familiar with the ”add another razor blade” syndrome. Where shaving technology innovation over the last few years has really been constrained to adding yet another razor blade to the razor head.

Of course we can be disciplined and not let feature innovation lead us. But does innovation in progress propositions (service) work the same as innovation in manufacturing? And does it matter?

service vs manufacturing innovation

From a traditional goods-dominant view of the world we can say that service is eating the world. And in Chesbrough’s “Open Innovation” he nicely captures the perceived shift to a service economy. From predominantly agricultural, through goods and towards today’s predominantly service economy. Which I recreate in the left hand of the slide image below.

Whereas our underlying service-dominant logic informs us that everything is, has, and will be a service. So the shift we see is actually in skills and competence sought. You can compare both these views above.

These shifts can also be seen through the lens of the service-service continuum.

Where on the left we have enabling propositions. Which can be loosely seen as enabling self service. Through to relieving propositions on the right. Which is where the seeker hands all responsibility for progress to a helper.

But why do we see such a shift? the reasons for this shift in skills sought are numerous. I categorise them as: economic, user behaviour, asset and value in data.

Noting that these reasons are sources of innovation to move along the service-service mix from enabling towards more relieving propositions.

But, are there differences between manufacturing and service innovation? This is something Coombs & Miles take up in “Innovation, Measurement and Services: The New Problematique”. They offer three potential views: assimilation, demarcation and synthesis.

assimilation, demarcation or synthesis?

With Coombs & Miles introducing these three views, Witel et al (2016) provide a worth reading and comprehensive literature survey around them in “Defining Service Innovation: A review and Synthesis”.

In the progress economy, we see goods as one equal level component in the service mix. Therefore, we can’t say innovation is different between goods (manufacturing) and service. That leads us, by definition, to reject the demarcation view – where manufacturing and service innovation are seen as different.

That leaves the assimilation and synthesis views. Where the assimilation view tells us innovation is the same for service and manufacturing. However, that causes us a problem, since innovation in manufacturing is seen as driven by value-in-exchange – the basic belief in goods-dominant logic. See table 7 in Witel et al (2016).

And, value-in-exchange is opposite to our underlying service-dominant logic – where we see value-in-use. So the assimilation view can also not be the correct view.

Thus, the synthesis view is appropriate. That is to say:

innovation in the progress economy is essentially similar to, yet has aspects that are not as important, if at all, in manufacturing innovation.

With the caveat that service-dominant logic informs us that goods are transportation mechanisms for service. And therefore also follow value-in-use rather than value-in-exchange.

Why did we look at this? Isn’t it comforting that we can build on existing theories as long as we’re careful?

And actually, the progress economy’s repositioning of value, focus on progress, and the introduction of the service mix as well as the service-service continuum, ha