Innovation economics depends on two tenets: the first one says that one of the primary goals of economic policy is to spur greater innovation and higher productivity. The second one says that relying on smart public-private partnership is more efficient than relying on price signals alone in leading to greater innovation and higher efficiency.
Innovation economy places technology, innovation, entrepreneurship and knowledge at the center of the model of economic growth. For there to be economic growth, innovations and not higher capital accumulation, is required. Adaptive and productive efficiencies are major drivers for economic growth.
Difference between Neoclassical and Innovation Economics
Neoclassical economics focuses on how societies produce valuable goods by using scarce resources and distributing them among different people. Innovation economics deals with how people create new products, business models and forms of production to improve the quality of life and to increase wealth.
The neoclassical approach relies on predicting the price signal right to efficiently allocate the scarce resources. Innovation economics spurs economic actors (organization or firm, individual, industries, nations) to be more innovative and productive.
Leadership Concepts for Creating Innovation Economics
Innovation economics relies on the leadership skills that the leader employs. Some of the ways to ensure innovation economics include;
- Initiating a cross-collaborative culture: A leader is responsible for bringing his employees together to form a collaborative culture and to be better situated for the changes to come. This process requires both creative and analytical culture and talent. The behavior and skills of the team members influence how people in the organization interact. There are three kinds of teams in an organization; learning team, organizing team and building team. Learning teams keep the organization from being too trapped and internally focused within their comfort zones. Organizing teams bring the innovation to the market. They navigate politics, red tapes, and processes to deliver the innovation. Building teams connect the learning and organizing teams. They make new things by applying insights from the learning team and channeling the empowerment from the organizing team.
- Repeatable processes: To enjoy long-term economic innovation, leaders must establish repeatable processes that enhance the processes. One of the processes is to continuously identify innovation opportunities which can be assets, people, and processes for success, markets, guidelines and knowledge of the capabilities. The leader should also design and enhance future scenarios with interconnected blueprints. Lastly, they need to ensure they realize preservation and value creation through ongoing performance.
- A leader’s Emotional Intelligence: A leader should influence and inspire the employees under him. When employees are inspired, they strive to make sure the work is done; no one pushes them. The impact of innovation economics needs to be continuous for it to be felt. For that reason, then the leader should be futuristic when setting goals. Setting futuristic goals ensure that the company thrives and strives in innovative and creative economy. To achieve the goals, the leader has to create an ecosystem inside and outside the organization. An ecosystem has people with unique skills and perspectives and together the company can overcome challenging times.