Incubating Innovation: Turning Ideas into Action | World Bank Institute (WBI)

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July 26, 2010—In these times of economic turmoil, the need to think outside the box has never been greater. Unprecedented challenges to economic growth call for new policies and products. In a recent McKinsey & Company survey, more than 50 percent of the respondents said that innovation is more important to growth now than it was before the economic and financial crisis.

What is Innovation?

Innovating means transforming useable knowledge into new and better products or services, or more efficient, less costly ways of producing, delivering, or using that product or service.

According to Jean-Eric Aubert, co-author of the Innovation Policy Guidebook for Policy-Makers in Developing Countries, innovation is also relative: "It may be new to the world as a whole, new to a country, new to a sector, or new to an individual," says Aubert. And even modestly innovative ideas can make an enormous difference: for example, mosquito nets to fight malaria, information technologies, including mobile phones for trade services, health care, and business management. Developing new sectors can also be innovative. Textiles in Tunisia, cut flowers in Kenya, computer components in Vietnam, and ecotourism in Costa Rica have led to job growth and wealth creation.

open-quotesInnovating means transforming useable knowledge into new and better products or services, or more efficient, less costly ways of producing, delivering, or using that product or service.close-quotes

What Makes it Work?

Governments can help makes things happen by providing incentives and facilities for innovative projects; and it can "get out of the way" by reducing bureaucracy and unnecessary regulation. "The government can act like a gardener who cultivates a plant," says Kurt Larsen, from the World Bank Institute's Growth and Competitiveness group: "He waters it, removes weeds and pests, and applies fertilizers." The right policies can help develop creative and skilled people, while tax and investment incentives can promote technical education, and networks that connect people with creative ideas. Business plays an important role in promoting innovations, for example, through the development of technologies that will create value for the company.

Reducing Poverty through Inclusive Innovation

At a recent WBI course: Introduction to Innovation Policy, Dr. Ramesh Mashelkar, President of the Indian National Science Academy (INSA), explained that, "through inclusive innovation we achieve more from less for more and more people." He pointed to India-based Aravind Eye Care, which uses a revenue model that treats thousands of blind poor for free and only 30 percent of the patients pay. Yet the operating profits are more than 40 percent with 300,000 surgeries taking place every year.

Innovation, said Dr. Mashelkar, can be transformative. He cited the Computer Based Functional Literacy (CBFL) program conducted by the Tata Consultancy Services. This is a self-learning computer application that teaches the poor to read with animated graphic patterns for visualization and audio appreciation. With this system, an illiterate person can start reading in 8 weeks at a cost of $2, while a standard program require 80 weeks and $250.

No Overnight Results

Building a dynamic innovation policy takes time, normally at least a decade. It can take 3 to 5 years for innovation projects to bear fruit; and 7 to 10 years before seeing significant job creation or income generation.

Innovation policy will most likely be a key component of 21st century development strategies. Even in poor countries where institutions may be weak, opportunities exist for practical innovations solutions to take hold. But to succeed, innovators must be supported by high-level central and local government policy makers who have the vision, pragmatism, and the ability to work creatively in institutional contexts.

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