The Innovation of Innovation

The next economy requires new innovation strategies: the potentials of the postal growth economy can be tapped by means of exnovation, renovation and imitation.

There is a lot of talk about innovation, especially in times of upheaval. Understood as a vehicle that carries technical progress into the markets and to consumers, however, innovation has a difficult status. This is shown by Robert J. Gordon’s productivity research: Productivity growth is slowing not only in the USA, but the end of an economic “long wave” is in sight. We are moving towards a next economy that requires new innovation strategies.

Joseph Schumpeter, the father of modern innovation theory, used Nikolaj Kondratiew’s understanding of the long economic cycles to point to the importance of basic innovations brought into the economy by creative and courageous companies. The last major basic innovation was semiconductor technology and the associated computer and Internet revolution. Such an innovation is currently nowhere to be found. This does not mean that there are no new products that find their markets. But there has been no new boost in productivity that would enable new industries and companies.

Will this lead to the end of innovation? The economist Niko Paech points out that our understanding of innovation today is very narrowly defined: “It is fixed on the creation of new, additive effective possibilities – new products, processes, technologies. According to Paech, however, “novelty”, understood as an extension of the scope of possibilities, is only one of four types of innovation. The three other types of innovation are particularly exciting for companies in the Next Economy: exnovation, renovation and imitation.

Exnovation: innovation through substitution

In addition to the classical innovation approach – the expansion of production and consumption possibilities through novelties – there is also a complementary variant: exnovation – as a reduction in the number of possibilities. This refers to new options for action in the economy and society that have a strong substitutive effect.

The energy turnaround is a prime example of a major exnovation project: the growth of renewable energies is destroying the market for fossil fuels. Innovations in sharing and commons economy such as car sharing, ridesharing and bike sharing have a similar effect: the own car is exnovated by such solutions. In another context, Wikipedia can be seen as a gigantic exnovation in the field of printed encyclopedias.

Exnovation in the Next Economy targets growth-dependent, energy- and CO2-intensive products and business models.

Renovation: Innovation through inventory conservation
Renovation is a special form of innovation: in contrast to new possibilities of extending or reducing spaces for action, it focuses on existing possibilities for extending the space for action. The re-design of existing products such as the ICE 2 of Deutsche Bahn or the well-known remanufacturing are such quantity-neutral innovations that are primarily aimed at extending the product life cycle.

During renovation, innovation activity is shifted to the product utilization phase in order to stretch this phase and thus ensure the longest possible, uniform cash flow. At the same time, renovation can help to establish a link with the do-it-yourself movement. The results of the Makerspaces and Repair Caf├ęs are nothing more than renovating activities.

Imitation: Innovation through reactivation

Finally, there is a fourth possibility, which at first seems a little strange. Existing, but inactive options for action can be used to reduce the overall space for action. This refers to imitation: a type of innovation that has a similar substitutive effect to exnovation, but uses solutions that have fallen into oblivion or are out of fashion.

The advantage of imitation comes to bear when inactive solutions from a time before the great expansion of the last 60 years are reactivated and thus imitated. The entire boom in organic farming is nothing more than an imitation – over 150 years ago there was only organic farming. The exchange rings of the Local Exchange Trading Systems (LETS) are also an imitation of exchange systems that existed after the war and in the interwar period – although a technologically very sophisticated variant, with far-reaching economic implications up to the development of alternative economic cycles.

Exnovation, renovation and imitation open up a new innovation space for companies in the next economy.

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