69. The innovation engine: SMEs or government?

Dear Gerard

You have your company well organized. The best people and the best selection of customers is not easy to achieve. In addition, it is also important to monitor your information sources well. And this is not easy, even the NSA and the Dutch security service has had its problems with this! Well done, it deserves great respect.One of the first articles I wrote for ReplyWithHistory was about Jugaad, the Indian-inspired movement where the main driver of innovation is scarcity and poverty. The creative mind needs to be permanently fed if it is to survive.

I recently read an article in a financial newspaper written by the American economist, Mariana Mazzucato, who has strong opinions about what acts as the engine of innovation, in her opinion, the government. At first I avoided reading this article as I considered it to be a priori nonsense. I have a natural aversion to anything that has to do with government and see it as a frequent major retardant of development in many areas. But I see now that the government can be a key factor for stimulating innovation in certain areas. For example, state health investment in the battle to fight disease by the development of new medicines (U.S. government investment: €32 billion in 2013 in pharmaceutical research and biotechnology). Similarly, last year the Dutch government was an important factor in stimulating the development of the energy efficient car. Even though there are certainly questions about certain subsidies (e.g. Mitsubishi Outlander), this morning I read that the Dutch fleet in 2013 has had the greatest impact as regards renewal and lower emissions in Europe. In a country like China, the government is also the major driver of innovation, which will help to ensure that in a few years’ time the U.S. will be overtaken as the largest economy in the world.
The criticism of Mazzucato in the Netherlands revolved around the fact that the Netherlands has too many bureaucrats who promote and invest too little in research and development to help the country to emerge rapidly from the crisis. Her work focuses not on special sectors, but rather on challenges, such as putting humans on the moon and encouraging achievement. In my opinion, the latter can only succeed if finance is readily available. In countries where money is scarce, this will not work and innovation will only come from SMEs. So are governments or SMEs the real engine of innovation? As ever, the truth lies somewhere in the middle.

Now my question to you Gerard: how do you stimulate innovation in your company, and do you have a mechanism which is embedded in your organization to encourage innovations permanently?

Regards,

Jan Stam