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Market Competition and Innovation in the Information Society This is one of three pages summarising the sixth in a series of OECD workshops on "the economics of the Information Society", held at the Institution of Electrical Engineers, London, 20-21 March 1997. Purpose Participation Topics Significant issues Some highlights ETD perspectives (this page) ETD perspectives: targeting and focus of public policies Two main matters arose in the workshop that are central to ETD's perspective on success for Europe in a networked economy. First, the concept that individuals and not organisations should be the main focus of attention.

In particular ETD focuses on "business individuals", because:

1. Although we perceive that organisations (whether companies, governments or other institutions) have policies and make decisions, the reality is that all decisions and policies arise (or are suppressed) because they are championed or opposed by individuals.

   At one extreme of the political scale we have the USA's strategies (for economic leverage through aggressive use of an advanced information infrastructure) being personally championed by the Amercian President and vice-President. At the other extreme we have the manager or professional whose company or government department denies its staff freedom of access to the Internet, but who circumvents this by taking out a private subscription, buying a modem and illicitly "connecting" because he or she perceives that its more important to be connected than to follow short sighted rules.

2. In particular:
   • established organisations have strong natural inertia and are highly resistant to innovation and change, while

   • alert individuals are the initiators of innovation and change.

3. Even though only a small fraction of European managers and decision makers are "actively connected" today (ETD estimates less than five per cent), those who are actively connected include (almost by definition) a higher than average proportion of "movers and shakers". If we can reach these "well connected and energetic business individuals" we can, through them, exert greater leverage than through trying to convert the unconnected.

Among "business individuals" ETD has identified two important categories of people:

• Commercial and/or market innovators - people whose energy, commitment, know how and preparedness to take risks enable them to "make things happen" rather than waiting for the market (or an employer, or the government) to tell them what to do,

  and

• Imagineers - people whose creative imagination fuels innovation but who may not, unaided, have the courage, energy, know how, resources or simply the marketing or commercial or political experience and judgement to see their creative ideas realised in practical terms.

Our conclusion is that Information Society programmes should predominantly consider and target business individuals and that policies should aim to support and assist market innovators and imagineers, regardless of whether they are large firms or small firms, commercial enterprises or public services.

ETD's outreach programmes, centred round the European Telework Online website, are designed to connect the programme with business individuals, to surface commercial and market innovators, and to encourage and assist imagineers.

The second matter of special signficance to the ETD programme is the question of what public policies will enable European success?

The diagram shows ETD's assessment of the stages that a person or organisations has to follow before they can be "successful online" - understanding and doing business in the networked economy. The stages are:

1. Using computers - this may seem obvious but many managers and decision makers across Europe have still not become familiar with the computer as an everyday tool;

2. Using electronic networking on a personal basis - although this is shown as the second stage, for new computer users it is now practicable and often desirable to make "personal electronic networking" their first introduction to computers;

3. Understanding the behaviour of users and organisations in the networked marketplace - this cannot be understood second hand through reading reports or attending conferences, it has to be experienced;

4. Developing networked marketplace skills - this means gaining the ability to reach and work with others online; essential if one is to make the right judgements about who to work with and what tasks to give them;

5. Doing business across networks - which means connecting with others with a purpose in mind and achieving that purpose with a minimum recourse to conventional mechanisms of face to face meetings, letters, faxes etc;

6. Successful market innovation - having gained the insights and experience, the key skill is to do with spotting the gaps and knowing which ones are real opportunities, which are deceptive mirages.

As people and organisations move through the stages it becomes less and less likely that public support programmes will be relevant, since the need is for innovation which, almost by definition, is immensely difficult to identify and support. Indeed at the higher levels, as emerged in the OECD workshop, funding programmes can actually be counter productive. Instead, public policy has to be addressed to the climate in which innovation can take place. The goal must be to create, as Brian Kahin says, "an environment that doesn't inhibit innovation". Note his nice touch of pessimism about the targeting of public policies - not a climate that encourages (the encouragement might be misconstrued and will certainly be misdirected) but one that doesn't inhibit. This suggests the removal of barriers to innovations as the most positive role for public policies!

A salutary story

A business individual who combines imaginative insight with entrepreneurial skills has built a small but flourishing business and now wants to get additional financial support to launch a product he believes can be a real winner. He contacts the local government support service who send round a consultant. After looking carefully at the business and at the new proposition the consultant makes his recommendation:

Unfortunately, though I think you have a good idea, it doesn't quite qualify under the XYZ innovation support scheme. I suggest that instead of . . . . . you modify your plans to do . . . . . . , then you could well qualify.

There's no obvious moral to this tale. Government programmes have to have rules. Innovators and entrepreneurs succeed by breaking old rules and creating rules of their own, not by following rules. The message to policy makers is:

Focus active aspects of policy on the "lower rungs" of the diagram - getting people to use computers and learn the skills of electronic networking. But for success with the higher level activities and especially innovation, focus on improving the climate for innovation, not on the innovations themselves.

Return to OECD Workshop Summary