In the marketplace, incremental innovation — trial and error rather than invention — is often what separates the winners from the losers.
In 1945, an American self-taught engineer named Percy Spencer was building high-voltage electron tubes for radar sets when he noticed that the chocolate bar in his pocket was starting to melt. He soon figured out the reason: the candy bar was absorbing energy from the electromagnetic radiation generated by one of the radar magnetrons.
Eureka: the microwave oven was born.
Spencer’s invention, however, was hardly an overnight success. His employer, the US defence contractor Raytheon, quickly filed a patent application and introduced the world’s first commercial microwave oven in 1947, but sales of the so-called “Radarange” were disappointing. Customers were skeptical and the unit itself was enormous — almost six feet tall and weighing 750 pounds. The price, $5,000, was roughly twice the average US worker’s salary at the time, not including the cost of a plumber to rig up the special water cooling system that was required to keep the machine from overheating.
It was not until the early 1970s, a full generation later, that the microwave oven finally caught on with consumers. After many years of trial and error, the turning point came when another US defence contractor, Litton, adapted Raytheon’s concept for home use by making it smaller, lighter and more affordable. By 1975, Americans were buying a million microwave ovens a year, with Litton’s models leading the way.
The moral of the story? We can think of two that would be familiar to most innovators:
- Many important and influential inventions are actually accidental spinoffs of work on other projects.
- No matter how big the potential market, being first out of the gate with a new product or service is no guarantee of commercial success.
We need to keep both of these lessons in mind when considering what governments can do to encourage more innovation and commercialization of new technologies. The path from the laboratory to the marketplace is, more often than not, a random walk rather than a straight line — and a pretty long walk at that. Serendipity and smart marketing — understanding what consumers want and how they behave — typically matter every bit as much as the original idea. As Malcolm Gladwell pointed out in a May 2011 New Yorker article titled “Creation Myth,” victory often belongs not to the inventor but to the entrepreneur who takes an existing idea and improves it, which in many cases means adapting it for a mass audience.
Gladwell cites Apple co-founder Steve Jobs as an example of an entrepreneur who has succeeded, brilliantly, in popularizing other people’s inventions. “He wasn’t first with the desktop computer, wasn’t first with the laptop, was way late with the MP3 player and…he was six years late to the smartphone business [well behind pioneer Research in Motion of Waterloo, Ontario]. And yet now he has this dominant position,” Gladwell said in a recent National Public Radio interview.
All of which raises an interesting question: To what extent can public policy drive more private sector innovation and commercialization of new technology? If marketing often matters more than invention, might an emphasis on achieving scientific and technological breakthroughs be at least somewhat misplaced?
A recent report by the federal Science, Technology and Innovation Council (STIC) ranks Canada near the top of the OECD, and number one in the G7, in terms of R&D spending by universities and other post-secondary institutions as a percentage of GDP. Indeed, funding to higher education is the largest single component of federal R&D expenditures and has increased in real terms almost every year since 1997.
Canada, it is often pointed out, is a world leader in public sector investment in research and development. A recent report by the federal Science, Technology and Innovation Council (STIC) ranks Canada near the top of the OECD, and number one in the G7, in terms of R&D spending by universities and other post-secondary institutions as a percentage of GDP. Indeed, funding to higher education is the largest single component of federal R&D expenditures and has increased in real terms almost every year since 1997.
In addition to a robust public research capacity, STIC found that Canada has a strong science and technology talent pool. Among other indicators, the number of students enrolled in and graduating from science-based doctoral programs in Canadian universities has been increasing steadily since 1999. Canadian 15-year-old students are ranked near the top in the OECD in reading, mathematics and sciences. Canada is also one of the top destinations in the world for skilled immigrants and top-ranked foreign students.
In short, Canada performs well when it comes to the supply side of the innovation equation. But those supplyside indicators speak only to the capacity of our economy to innovate. They tell us that Canada has the talent and the resources to spur discoveries and develop new knowledge. What they do not tell us is whether those discoveries and that knowledge have any immediate commercial application — whether they are capable of being translated into something of value.
To be sure, basic research is vital and deserves continued strong public sector support. In science and technology, it generates the seeds from which industries of the future will grow. In the social sciences and humanities, basic research contributes to the development of critical thinking, imagination and informed ethical judgment. As Mike Lazaridis of Research in Motion puts it, we not only need to fund our researchers imaginatively, we need to have faith that what they are doing is going to be important 20 or 50 years from now — whether or not we understand its relevance today.
But by the same token, it is a mistake to assume that we can solve Canada’s innovation deficit simply by pumping up university research and hoping that the resulting inventions and discoveries will find a market.
In the debate about Canada’s “receptor capacity,” it is often suggested that business owners and managers must do more to make use of the breakthrough ideas coming out of our post-secondary institutions. Unfortunately, that is not how most successful businesses innovate. A company will typically start by identifying a need or a market opportunity — for example, a desired improvement in the cost or functionality of an existing product. This kind of incremental, market-driven innovation is generally not reflected in the official statistics measuring business expenditure on R&D, yet in the marketplace it is often what separates the winners from the losers. “Incremental innovation does not conform to the classic and somewhat naive linear model of innovation that takes an invention from the R&D center and brings it to market,” SECOR, an international strategic management consulting firm, said in a recent white paper titled How Next Happens: Building Our Economy through Incremental Innovation. Incremental innovation, the paper added, “is about staying competitive and responding to signals from the market place and learning by trial and error…often with little contribution from R&D.”
The story of the microwave is one of incremental innovation, and we should bear it in mind as we search for ways to improve Canada’s record of innovation and commercialization. Our organization, the Canadian Council of Chief Executives, put forward a number of specific suggestions in its brief to the federal Independent Expert Panel on Research and Development. We recommended that the federal government simplify the application process for the Scientific Research and Experimental Development tax credit program, introduce a system of pre-approvals for business research projects and rationalize the wide variety of direct support programs for business R&D. Of equal importance is the need to strengthen Canada’s system of intellectual property rights protection. We have no doubt that the panel will make a number of important and useful recommendations when it reports this fall.
But no government program can mandate serendipity or substitute for the marketing instincts of a brilliant entrepreneur. Sometimes all it takes is a melting chocolate bar — that and 25 years of trial and error.