In Anna Karenina, Leo Tolstoy cautions that “happy families are all alike; every unhappy family is unhappy in its own way”. The “Anna Karenina Principle” suggests that reasons for failure are manifold and complex and cannot be generalised, unlike success which can be attributed to a set of factors. We can apply this idea to success and failure in business.
The Community Innovation Survey, the largest single international survey of its kind, has pointed to cost, lack of qualified personnel and government regulations as top barriers to innovation. While the absence of such impediments can be used to explain the success of business people in certain instances, they cannot be used to explain failure even in their absence. Borrowing from Tolstoy, each unhappy innovator is unhappy in their own way.
For example, when a young GCC entrepreneur I am familiar with created an innovative device designed to prevent closed spaces such as warehouses catching fire, he found out, tens of thousands of dollars later, that it could not be deployed due to a lack of regulation around its use. I have heard other similar stories from the region, including a foreign company that wanted to set up a research and development lab, only to discover that the law did not recognise it as a formal economic activity, and, therefore, could not be registered. In another case, an innovator-entrepreneur once had to wait six months for a utility company to assign a business account for a new multipurpose building.
Possible roadblocks abound. Common ones include troubles with imports and exports. Should someone need to bring in equipment across international borders, customs inspections and import licence regulations are often both cumbersome and out of date. Commonplace technologies such as drones and cameras can be viewed as military tools, making special permits necessary. The entire innovation process will have to be put on hold until such matters are resolved. And should the innovator be importing a perishable product, holding up merchandise at the port, even for a short time, will risk it spoiling.
Hidden barriers are not unique to one region. In Germany, Holger Frommann of the German Venture Capital Association, once said: “If Bill Gates had tried to start Microsoft from his father’s garage in Germany, it never would have worked … Among other things, the government would have said that the garage didn’t have enough windows to be a proper working environment, nor enough emergency exits.”
Fortunately, governments are increasingly aware of such hidden barriers to innovation and some improvements have taken place. But other hurdles are deliberate, such as export controls on certain technologies and equipment. These are arguably meant to hold back innovation in other countries, and not everyone agrees with them. The US Semiconductor Industry Association states on its website that: “Excessive and unilateral export restrictions stifle the ability of American companies to compete with foreign competitors that do not bear the same export-related administrative and bureaucratic burdens.”
Hidden barriers for innovation remain largely invisible, detected only through analysing bumps in a product’s journey towards fruition. We do this already with consumers and users. Over the past decade, design-thinkers and consumer behaviour experts have risen in popularity as businesses and governments are beginning to recognise the importance of understanding innovators' journeys. A key objective was and remains to uncover their hidden needs. An entire craft has emerged, deploying many processes and techniques.
Yet when it comes to the creators of innovations, governments continue to rely on large-scale surveys that overlook outliers. These surveys tell us what are the main barriers to and main drivers of innovation according to a significant number of respondents. Innovation, however, is fundamentally about the success of outliers. It is about engineers who succeed where others fail; scientists who achieve breakthroughs under the same roof where others are lamenting a lack of resources; entrepreneurs who succeed where others shut their companies down.
Policymakers need to recognise that the routes towards successful innovation are varied. People working at start-ups experience the process in a different way to those operating within a multinational company. The size, type and sector in which an innovator operates influences their creative process.
This also applies to civil servants. Around the world, public administrations are deploying digitalisation, cloud technologies and artificial intelligence to transform the way they are organised, their services and the channels through which they are delivered. The experiences of these civil servants needs to be captured, mapped and analysed so that government innovation becomes more efficient and effective. Without a better understanding of innovation journeys in government, governments risk wasting lots of resources and potential.
Innovators' journeys remain poorly understood by both governments and corporations. The creative process is artificially streamlined and conceptualised. Policymaking, therefore, will benefit from a greater use of design-thinking and analysis of behavioural science. This needs to be better understood both by government and the private sector if we are to see the technological revolutions mankind is capable of realising.
