Jonathan Hopfner | July 22nd, 2021

A fresh ranking of the world’s most promising technology centres has driven home something we’ve suspected for a long time: the tech sector has an innovation problem. Not a problem with the act itself, necessarily, but with the term, which now not only pops up in most references to the technology industry, but has become virtually synonymous with it.

It’s not just KPMG’s list of leading ‘global technology innovation’ hubs (where it was nice to see multiple N/N locations make the top 10); the world has been busy creating ‘innovation and technology’ agencies and institutes, and programmes designed to support the ‘technology and innovation sector.’ Anecdotal evidence suggests there’s a growing, and slightly disturbing, trend to drop ‘technology’ completely and just refer to the ‘innovation sector,’ as a catchphrase for all things tech or digital.

One could argue this is no cause for concern. Innovation, after all, has generally positive associations, and at a time when there’s basically a revolving door of business leaders being blasted off into space, it’s difficult to deny the tech industry does a lot of it. But it’s an issue because words function like currencies – use them too much, and their value is distorted, even lost.

There are already clear signs knowledge workers in some of the world’s most (ahem) innovative economies are increasingly uncomfortable with the term. Another way to look at it is that as ‘innovation’ becomes interchangeable with technology, it is also evolving into shorthand for a lot of the negative forces technology has unleashed or accelerated, from artificial intelligence-driven bias to invasions of privacy, contributing to unfavourable perceptions of the industry. The backlashes that result can force technologists to retreat, and stop pursuing the ‘innovation’ they’ve become inextricably identified with.

A tale of two words

So what’s the answer? From our point of view it could start with a renewed focus on the real meaning of the word, and when it applies. Both could be endlessly debated but we like the definition attributed to influential Austrian economist Joseph Schumpeter, and highlighted in an aging but excellent piece by Emma Green in The Atlantic.

Essentially, Schumpeter tried to differentiate between invention – which he characterised as a fundamentally creative act, embarked on with little or no consideration of economic consequences – and innovation, which is when inventions are translated into tangible, “constructive changes” in a business model. This foreshadows a more contemporary and increasingly accepted definition of innovation as not simply a bold new idea, but a bold new idea that generates some form of measurable value.

Some of the current confusion could be rooted in the way ‘innovation’ is now commonly tossed around to describe anything remotely new, from groundbreaking inventions to not-so-groundbreaking packaging improvements. It’s certainly crowded out a lot of other vocabulary over the last few decades, with this chart from Google’s (forgive us) innovative Ngram Viewer, which parses how frequently words appear in its Google Books database over time, suggesting ‘innovation’ has swallowed ‘invention’ whole:

Breaking the tech sector’s innovation addiction

If trajectories are any indication, it’ll be a long time before innovation goes out of fashion, or until invention makes a comeback. But to ensure innovation remains something worth celebrating, there’s a strong argument for narrowing the definition of the term, and applying it more judiciously.

At the very least, we should acknowledge that technology doesn’t necessarily equal innovation. In one recent ranking of the world’s most innovative companies the consumer goods, healthcare and retail sectors all managed a strong showing – and the winners clearly delivered on the value definition, with the top 50 on the list collectively outperforming the MSCI World Index by over 3% annually on average over the last 15 years. Innovation may be the lifeblood or the ultimate goal of the tech industry. But tech can’t have a monopoly on the word.

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