1.2 From (Product) Innovation to Multiple Value Creation

The Development Of Thinking About Innovation

Government considers innovation a necessity for achieving economic growth, the driving idea being that the traditional European production industry is not competitive in world markets. Research into innovation is in a constant state of flux. Innovation policy and research have developed from linear to circular systems thinking. In addition, we see a broadening of the research field into the public domain and increasingly attention is paid to innovation of services. A brief outline of these developments is provided below.

Research on innovation is mainly aimed at the private domain. However, in the last few years there has been increased attention on innovation in the public sector

Until the 1990s, the linear model was dominant in innovation policy. The focus was on building a sound R&D infrastructure, providing financial support for companies for innovation, and the transfer of technology. The policy focused on supporting instruments aimed at output. There was little attention to behavior and to management and organizational bottlenecks, in particular in small and medium-sized enterprises. 

This also applied to the specific demand for support for innovation in the regions. In response to this the systems approach was developed, whereby innovation was seen as an evolutionary, non-linear and interactive process. 
This process required intensive communication and cooperation between various departments in companies, as well as between companies and other organizations such as universities, educational institutions, financial institutions, and government and regulatory authorities. 

Within the systems approach there is a distinction between hard and soft factors. Hard factors, for instance, are the physical infrastructure, educational level, and economic structure. Soft factors are, among others, network activities, the willingness to cooperate, and entrepreneurship. In addition to national and sectoral factors, the regional dimension receives more and more attention when systems for innovation are being researched. The use of raw materials and dealing with outdated technology are also factors. 

Research on innovation is mainly aimed at the private domain.

Shifting Focus
At the end of the 19th and at the beginning of the 20th century innovation was mainly aimed at technique and technology. From the 1930s until the 1980s, the focus shifted to the organization and to marketing. The economist Joseph Schumpeter distinguished between new or improved products, new production methods, new markets, and new ways for companies to organize themselves. At the end of the last century, the concepts 'social' and 'political' were added. In the Netherlands the Social Innovation Taskforce (in 2005) uses the following definition for innovation: the renewal of labor organizations in making maximum use of competences aimed at improving business results and developing talent.

However, in the last few years there has been increased attention on innovation in the public sector but literature on this is still fairly limited. Hartley outlines a number of differences in innovation in the public and private sector. First, the drivers for innovation differ. 

In the private sector, market pressures determine the extent of innovation. In the public sector innovation happens in a dynamic and political environment, and it appears that the catalyst for innovation can operate bottom-up, top-down, and laterally (by disseminating best practices, for example). 

Furthermore, the unit of analysis differs. In the private sector, this unit is often the individual company while in the public domain the sector is the central objective. Lastly, it is interesting to note that government plays an ever-larger part in the private sector where innovation is concerned. It has a facilitating and at times even an initiating role. 

Copy and paste is not an option. For example, the knowledge developed in the private sector often concerns product innovation. One cannot automatically apply this knowledge in the public context where services are the main focus. 
The innovation process no longer occurs as a 'stand alone' in an organization or a department. The starting point is joint innovation, also referred to as open innovation.