Turning Innovation into Value

Abstract

This paper describes the fundamental dynamics through which technological innovations create economic and social value. These dynamics exist at three interrelated levels: The organization, the market, and the institutional context. Selected works in the management of technology, system dynamics, entrepreneurship, and social factors literature are reviewed. The principal dynamics are identified and expressed through a conceptual model. By design, the conceptual model is simple and generic. It is intended to apply to a broad range of products and services – assembled and process-based, complex and simple, physical and digital, business and consumer, early-stage and mature, nineteenth-century and twenty-first-century. That range expresses what is meant by the fundamental dynamics of value creation. In many variations and combinations these dynamics can explain the evolution of most innovations. The availability of role models and mentors, the consequences of failure, the status and quality of venture leaders, and reinforcing network effects are all critical success factors for organizations attempting to turn innovation into value. It is significant that the literature review has highlighted human and intellectual capital as a top priority. Financing, while important particularly for start-ups, appears to be secondary to human and intellectual resources. Obstacles to obtaining critical resources, the development of new capabilities, market entry or exit, the start-up of new companies, the formation of alliances, mergers and acquisitions, the establishment of standards, or the adoption of new technology weaken virtuous dynamics and reduce the likelihood of success.