Who innovates?

Organisations of all stripes innovate, but which ones really drive change?

Who do you see in your mind’s eye when you picture an innovator? A scientist in a lab coat? A tech boss with a turtleneck? Iron Man? Elon Musk?

And what type of organisation do they work for? An august university? A coffee-fuelled startup in a trendy workspace? A corporate lab with a shiny, chrome research campus?

By the numbers

Providing a serious answer to the question of who innovates is not straightforward as defining innovation is itself a nuanced task. In a separate article (which you can read here), we put forward a somewhat philosophical answer. But to get quantitative data, you need more structured metrics, and there are formal attempts to define what these should be. For example, there is the Oslo Manual 2018 – which provides international guidelines for how innovation should be measured.

The UK government is one of many global organisations that use this manual for their definition of innovation. In line with this, the UK innovation survey classes businesses as ‘innovation active’ if they have engaged in any of a set list of activities. The full definitions are wordy and technical, but in essence they include introducing a new product, developing new processes to deliver goods or services, engaging in innovation projects, or investing in internal R&D, new equipment, training, or the acquisition of external knowledge.

Another metric you can look at is intellectual property statistics. The European Patent Office (EPO), for example, publishes data on patent applications.

Approach the question from these two angles and the answer of who innovates is clear: large businesses. The UK Innovation survey found that during the period 2020 to 2022, 50 per cent of large businesses were ‘innovation active’ compared to 36 per cent of small- and medium-sized enterprises (SMEs). The EPO meanwhile reports that 69 per cent of patent applications come from large businesses compared to 23 per cent for SMEs and individual inventors, and just 8 per cent for universities and public research organisations.

Does this ring true?

Big business as the driver of innovation may not sit comfortably for those accustomed to seeing incumbents as lumbering leviathans, with startups the agile and hungry wolves snapping at their heels. But on one level this is all just common sense.

Profitable big businesses have ample resources to invest in expensive technologies that are out of the reach of leaner upstarts. In cleantech, for example, you can see big business’s fingerprints on key technologies. It was Bell Labs that pioneered silicon solar cells in the 1950s, and Asahi Chemical, Sony, and Exxon all played roles in the development of the rechargeable lithium-ion battery. 

Is this the full picture?

While big business looms large when you look at innovation purely quantitively, this does not tell the full story. A lot of the activities that can be defined as innovation for the purposes of statistics are incremental in nature. And large businesses sometimes dip their toe in the water of innovation just to see what’s out there, returning to the comfort of their core business when times get tough.

Startups, by contrast, often have disruption as their core purpose. And, without profitable existing product lines, they are more likely to seek to take an industry apart and re-build it from first principles. This type of disruptive innovation is crucial today as we seek to decarbonise hard-to-abate sectors. And even the most conservative industries with the highest barriers to entry are seeing startups enter the fray. Sweden’s H2 Green Steel, for example, has raised funds to build the world’s first large-scale green steel plant.

Similarly, universities are free to pursue disruptive ideas that can then be commercialised at a later date, whether through licencing, partnerships, or spinouts. In Canada, for example, Nfinite Nanotech is commercialising eco-friendly nanocoatings for food packaging based on technology developed at the University of Waterloo.

Meanwhile, even though the numbers suggest that large organisations are good at coming up with new products and processes, many still lack an innovation mindset or a central innovation function. Instead, the onus of innovation often falls on employees who already have a busy day job.

Perhaps, though, the best solution is not to separate out types of organisation when answering the question of who innovates. Instead, we should acknowledge that collaboration between organisations with different strengths is key to driving positive change. The Springwise Library contains many examples of this. H&M Group and Vargas, for example, have set up and funded a separate impact company, called Syre to deliver hyper-scale polyester recycling.  And there are many more that you can browse today.

A key benefit of the Springwise Library is that it acts as a bridge between big business and the world of universities and startups. Become a member today to browse over 14,000 innovation case studies that could provide partnership opportunities.

Written By: Matthew Hempstead