10 Realities to Face for Technology and Innovation Policies

Technology innovation has the potential to open endless frontier of wealth creation. Although science and technology competence, creativity, risk capital and entrepreneurial drive of individuals are important, in absence of enabling policies such potential remains untapped. It’s often beyond the reach of an individual or a firm in creating the market of technology development and commercialization. Policies are about to provide incentives, catalyze investment, and build institutions to acquire capacities in dealing with the realities for increasing the supply and creating the demand for technology and innovation. Here is a set of realities, which should be taken into consideration in designing policies to leverage technology and innovation potentials.

1. Science and Technology competence in isolation of local demand for their integration to productive activities does not create wealth

In pursuing the mission of creating wealth from science, technology, and innovation, often we emphasize the expansion of science and technology education, and the funding of research for developing intellectual assets, increasing publications and receiving a growing number of patents. But in absence of the scope of profitable integration of them into products and processes, such capacity expansion ends up into wasteful investment. Providing incentives in developing both domestic supply and demand capacities for absorbing and integrating global knowledge and intellectual assets into whatever products are being produced, and into processes in producing them, for increasing quality, reducing cost, and decreasing environmental damage could be useful policy intervention.

2. In absence of intellectual asset base, start-up and innovation do not progress

 There has been growing inspiration in start-ups and innovation, across the globe. Of course, we must nurture such inspiration. But a great idea backed by strong inspiration often does not succeed. A flow of ideas originating from intellectual assets is required for making a great idea to succeed. Moreover, intellectual property rights should also be supportive for taking benefit from global scale. Policies in providing incentives and building institutions to increase the supply of intellectual assets (IA) are quite essential to leverage start-up potential. But it should be noted that supply capacity improvement of IA should be linked with potential demand. Often policy support is needed to stimulate that potential demand to turn the supply into revenue.

3. Technology import driven competitiveness does not support sustainable growth

Technology import is a useful means to take the advantage from the global competence base. The installation, operation, and maintenance of such technologies do not lead to sustainable higher value-added production. Such import should be followed by the absorption of the imported technology and further improvement, leading to next level innovation. Acquisition of such local capacity is vital for both creating high paying jobs and also for improving the competitiveness of local productive activities by taking the advantage of such innovation. Moreover, in absence of such capacity development, a firm or a country cannot acquire higher-level productive knowledge to produce higher value knowledge-intensive products. Providing incentives for local integration of physical and biological science, often through software, into products and processes for increasing competitiveness could be a smart policy option.

4. Protection does not create technology absorption and advancing capability for competitive industrial capacity

 Protection through taxes and other means does not encourage local producers to acquire, also expand, the capacity for generation and integration of IA into products and process. As a result, such producers keep losing competitiveness. Not only they keep increasing dependence on preferential treatment, but also they keep failing in exploiting the potential of creating high paying jobs for research and innovation. As opposed to protection, incentives should be given to acquiring technology capability for accelerating the growth of quality improvement and cost reduction.

5. Technology is a dynamic phenomenon—affecting the value of raw material, and labor

With the growth of intellectual assets we find increasing means of improving existing technology, and also developing new technologies. With the growth of technologies, we innovate better means of getting the job done. As a result, the market value of labor and also material keep changing. Technology growth should monitor, predicted and fueled; accordingly investment priorities should be continuously adjusted. Policies should support incentives for improving technologies and transferring investment towards next-generation technologies.  

6. Technology increases risks and insecurity—creating overall gain as opposed to benefiting a few is a challenge

 Technology progression transforms the way we get things done. As a result, job market changes; some jobs get lost, and other being created. Such transformation creates uncertainties and insecurity. Policies should increase the capacity for such readjustment. Often changing the role of technology also necessitates a new set of laws and regulation to deal with security and risk issues. Moreover, technology progression naturally does not create equal opportunities for all. Policies should look upon such reality to support equitable and inclusive growth. Technology also supports the evil intentions of individuals and even Governments. Technology powers the capacity to violate privacy, civil liberty, and security.

7. Technology intensifies market monopolization, but technology-enabled competition is more powerful than regulation

 With the growth of technology, firms are gaining the capacity for increasing the quality, reducing the cost, and expanding the minimum efficient scale. Particularly, zero cost of copying software, increasing scope of delegation of roles to software, and also the externality effect of the networked economy are expanding such ability, without facing virtually any limit. As a result, invisible hands are getting weaker in governing competition. On the other hand, competition is far more powerful than regulation to maximize befit from technology. Such reality poses significant challenges to policies and regulation in governing the market.

8. Technology procurement, adoption, and usages do not have a natural correlation to transfer leading to innovation led wealth creation

 Often we are under the impression that outright purchase of technology and license of IPRs will lead to the transfer of technology capability between firms and nations. Initially, it brings some benefit, but very limited. The larger benefit lies in absorbing tech technology leading to further enhancement and higher-level innovation, the creation of a market for it, and building complementary assets. Policy support in this regard is highly beneficial. The focus should gradually shift from procurement to fusion of available component technologies for developing higher-level technology leading to more complex technologies and products.

9. Technology led wealth creation—by harnessing the mental capacity—is a long-term, often a risky proposition

 Although start-ups and innovation are tempting to us, it’s a long-term engagement in accumulating productive knowledgebase, building relevant intellectual assets including patents, and creating addressable demand. The challenge is to develop them in a profitable manner. Due to the time-limited value of these capabilities, often it’s a quite policy challenge in having appropriate synchronization of their formation at right time.    

10. Stepwise progression, as opposed to leaf frogging, from process to product innovation offers a manageable path

Despite the temptation of pursuing breakthrough ideas, to keep the journey at a manageable level it is often wise to make progression in a stepwise fashion. Although process innovation does no sound to be the charismatic thing to do, often-such capability underpins the success of many product innovations. Process innovation should lead to incremental improvement of the product, leading to pursuing disruptive innovation. Policies in providing incentives and creating the market should take into consideration of such a stepwise progression. Providing support for the improvement of all local, often indigenous products and processes to produce them for increasing the competitiveness, often by taking the advantage of fusion of commercially available component technologies, may be found effective policy option.