Responsible Innovation

Philippe de Woot

• Publisher: Routledge
• Year: 2017
• eBook ISBN: 9781351283946
• Topic: Business
• Subtopic: Business General
• Index: Business

Economic development is rooted in disruption, not in equilibrium. And a powerful engine of economic development is innovation; but is this innovation always for the common good? The dark side of the extraordinary dynamism of innovation lies precisely in its destructive power. If simply left to market forces, it could lead to social chaos and great human suffering.

To face the challenges of our time, we must create the proper climate and culture to develop strong entrepreneurial drive. But, more than ever, we must give this entrepreneurial drive its ethical and societal dimensions. Responsible innovation means a more voluntary orientation towards the great problems of the 21st century, e.g. depletion of the planet's resources, rising inequality, and new scientific developments potentially threatening freedom, democracy and human integrity. We need to transform our ceaseless creativity into real progress for humankind. In this respect, the rapid development of social innovation opens the door for new methods and practices.

In Responsible Innovation, Philippe de Woot challenges conventional ways of thinking. This book has the power to shift accepted norms in our ways of doing business.

1
Innovation at the heart of the economy

The decisive competitive weapon

The foundations of economic development are innovations, ruptures and destruction. Classical economic theory has sought to ascertain the existence of a general balance in which competition sets the rules of the game through the famous invisible hand. For this, competition focuses on price levels and production volumes. It is through these mechanisms that supply and demand adjusts, sector by sector, pushing everything towards equilibrium. This theory proceeds “in a given state of technique and organization”⁴ and does not take into account innovation or the imbalances it causes. It took Schumpeter (1883–1950) to show that innovation is more important than price and that the movement, rupture and destruction inherent in competitive models, the constantly disturbed equilibrium, could never be more than a trend. If we want the economic and policy analysis that results to be more realistic, it is necessary to put innovation at the centre of the debate.⁵

The competition that really matters is the competition of new goods, new techniques, new sources, new kinds of organization (the control of larger units, for example); competition which commands a decisive cost advantage or quality that affects not just the profit margin or the quantities produced by existing firms, but their foundations and their very existence. This form of competition is much more effective, in the same way as a bombardment is more effective than merely forcing a door. It is so much more significant that it becomes relatively indifferent to whether or not competition, in the ordinary sense, functions more or less promptly; the powerful lever which, in the long run, increases production and lowers the price, is exerted in a different way. The problem that is generally considered is how capitalism facilitates existing structures, while the major issue is to discover how it creates and then destroys these structures.⁶

Schumpeter added, “This process of creative destruction is the fundamental fact of capitalism. This is the essence of capitalism, and every capitalist enterprise must, whether they like it or not, adapt”.⁷

From this perspective, economic development is mainly achieved by innovation, and the agent of this is an extraordinary personality: the entrepreneur. The entrepreneur is a rare personality that has very specific qualities that are rarely combined in a single individual: the vision of possible progress, a sufficient taste for risk to implement, and the energy and power of conviction to obtain the necessary support and resources. The innovative entrepreneur, through their creativity, transforms the nature of competition. Enterprise, instead of being limited to mere price wars, is actually a race for innovation and technical progress.

The scientific and technical advances and changes those impose on society are not new. They are a part of human history. Since prehistoric times, technical innovations have represented the milestones of our evolution: Palaeolithic, Neolithic, Bronze Age, Iron Age ... The transformations of our expertise are seen as major changes for society: stock-breeding, agriculture, writing, printing, ocean navigation, digital . .. and the Internet. Since the Industrial Revolution, the great stages of economic development have not been represented by price changes but by technical advances: steam engines, railways, electricity, the combustion engine, electronics, biotechnology ... It therefore seems difficult to avoid putting innovation at the centre of economic theory, and to reduce the theory to a simple set of prices and quantities produced.

At the end of his life, Schumpeter seemed to believe that the specific role of the entrepreneur was becoming increasingly useless. His view was that, with progress being mechanized, innovation will be replaced with routine and any vision of potential progress will be replaced by calculation; there would be no more resistance to change, and the energy to overcome it would have no raison d’être. However, new barriers to innovation will arise without the entrepreneur having any control over them: social forces, official price controls, the hostility of government bureaucracy ...

We know that this has not been the case. On the contrary, the pace of innovation has accelerated, entrepreneurial capabilities have greatly developed, and routine has not replaced creative initiative. But today entrepreneurial drive is no longer the exclusive prerogative of the individual innovator. This drive has become more collective, and businesses, to some extent, have taken over from individual entrepreneurs. Innovation may be more systematic but its destructive power has not stopped growing.

The collective entrepreneur: increased innovative power

Individual entrepreneurs are atypical and rare personalities. Essentially non-conformist, the entrepreneur–innovator is described as “very visionary”, “bubbling inside”, a “taboo-breaker”, operating “out of the comfort zone”, “inhabited by a passion”, “never giving up”, “working one hundred hours a week”, “demanding, iconoclastic, obsessed with the long term”, “believing that everything he imagines is probably doable”. These individual entrepreneurs still call themselves “rebels”, “breaking with the single-track thoughts of the sector”, “crazy lovers of great challenges”, “transforming the unimaginable into reality”, “ready to shoot the moon (‘moonshots’)”, “somewhat players”, “realisers of their dreams” ...8 They have ultimate confidence in themselves⁹ and are not afraid to “take giant steps”.

Some of them are even “serial” entrepreneurs. Elon Musk, for example, has successively created Zip 2 (an online directory), PayPal (an online payment service), Tesla (an electric car), SpaceX (a space transport service), Solar City (solar energy systems) and Hyperloop (a propelled capsule on a cushion of air inside a tube elevated above the motorway). Richard Branson set up Virgin Records, the airline Virgin Atlantic and the Virgin Galactic space tourism agency. Bertrand Piccard is the initiator of Breitling Orbiter projects (non-stop round-the-world balloons) and Solar Impulse (a solar plane). There is also Steve Jobs, Apple’s creator, Mark Zuckerberg, the creator of Facebook, and Larry Page, the founder of Google.

Belgium has a long entrepreneurial tradition. Since the late Middle Ages, its towns were cradles of commercial, industrial and financial innovation, a tradition lauded by historians.10 In the 19th century, after Great Britain, Belgium took the lead in the Industrial Revolution on the continent. This was conducted over more than a century by leading entrepreneurs such as John Cockerill, Gustave Boël, André Dumont, Ernest Solvay, Évence Coppée, Édouard-Louis Empain, Émile Francqui, Jean Jadot, Léon-Léandre Bekaert and many others such as the wool entrepreneurs of Verviers and the cotton makers of Ghent.¹¹

Today, there are still many entrepreneurs in Belgium but they are often in more specialized “niches”. For instance, there is Paul Janssen (Janssen Pharmaceutica), Thomas Leysen (Umicore), Jean Stéphenne (RIT and GSK), Laurent Minguet (EVS), Yves Jongen and Pierre Mottet (IBA), Emmanuel Prévinaire (Flying-Cam), Thierry Bogaert (Devgen), Joseph Martial and André Renard (Euro Gentec), Pierre De Muelenaere and Jean-Didier Legat (I.R.I.S.), Jean and José Zurstrassen (Skynet and Keytrade Bank), Didier de Callatay and Godefroid de Wouters (banking and finance software), Eric Domb (Pairi Daiza), Urbain Vandeurzen (LMS), Marc Nolet (PhysiOL) Jean-Jacques Sioen (Sioen Industries), Marc Coucke (Omega Pharma) ... University science parks are the start-up incubators in cutting-edge sectors, and there is a host of key players. The main problem is achieving global scale.

A central theme of this book is to show that it is not only the individual entrepreneur who creates innovation.¹² Companies now provide economic creativity in a collective and systematic manner. To survive in the long term, the company has become a collective entrepreneur. The reality of economic and technical development is that major innovations are often first implemented by individual entrepreneurs, and then swiftly adopted, expanded and developed by collective entrepreneurs that are companies. The names Ford, Campbell, Nestlé, Solvay, Bekaert, Lafarge, Michelin, Renault, Dassault, Tata and Honda no longer refer to the individual entrepreneurs who founded them but to the companies that have developed the same qualities of vision, boldness and conviction as their illustrious founders. The most recent examples confirm this reality. Formidable individual entrepreneurs such as Steve Jobs, Bill Gates, Larry Page, Mark Zuckerberg and Elon Musk have quickly transformed into collective entrepreneurs under the names Apple, Microsoft, Google, Facebook and Tesla, respectively.

The company thus takes the baton from the original innovator and tends to multiply its creative capacity. It can only survive by innovating. Driven by competition and technological developments, a high-performing company not only produces and distributes goods and services but is constantly renewed, evolved and created anew. If successful companies are observed over a period of five or ten years, their key characteristic is that they have adapted, transformed and renewed. All have evolved and all have innovated, either in their products or in their markets or in their processes or organization. The intensity and pace of this renewal will obviously vary from one sector to another but no company subject to competition can stop being creative or it will run the risk of disappearing. In a market economy system, the enterprise is the very agent of economic and technical progress. The enterprise drives that progress and leads it to its most concrete form. It does not just imagine or describe innovation, it makes it happen, it creates.¹³

Whether we are dealing with breakthrough innovations (new technology, new products, etc.) or incremental innovations (increasing the quality of products and creating the top of the range),¹⁴ this is where the competitive advantage of high-wage countries with strong currencies lies.

Is there an economic sector that has remained motionless without declining or disappearing? All successful economies have been creative and they are all constantly transformed. As previously discussed, innovation is not necessarily technical. It may result from a new organization or a new concept. The example of distribution illustrates this well. In less than 50 years, we have seen the most varied forms of distribution emerge: convenience stores, department stores, supermarkets, hypermarkets, discount stores, shopping centres, specialized shops, e-commerce and, tomorrow, distribution drones. In the field of catering, innovations by McDonald’s and Burger King introduced the new concept of fast food. In the field of holidays, innovation has come up with new deals: Club Méditerranée, boat cruises, Airbnb ... We should also mention the example of Pairi Daiza: its creator, Eric Domb, transformed the concept of a zoo into an animal, floral and cultural park; without this new vision, it would not have become Belgium’s leading tourist destination and probably would not have got the Chinese pandas denied to most traditional zoos. The transformation, by Benoît Coppée, of the Libramont Fair, a useful centre for the dissemination of innovation in the agricultural world, is relevant to this type of vision. The agricultural sector is not immune to this innovation imperative: after intensive agriculture has developed out of chemical innovations, it now seems on the verge of a revolution. Today, we see a new dawn for agriculture that is based on a better knowledge...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Introduction
• 1 Innovation at the heart of the economy
• 2 Innovation, fairness and the common good
• 3 Responsible innovation
• Main works by Philippe de Woot