21st century innovation strategy

At #6 is  MIT Professor Erik von Hippel on Denmark's embrace of "user-centered innovation."

Most countries, developing and developed alike, view innovation as vital to their economic growth and well-being and spend varying portions of their national budgets to support it. That support has typically come in the form of R&D grants for scientific researchers and R&D tax credits for manufacturers. This focus on technology push has not attracted much controversy. But recent research shows that the 70% to 80% of new product development that fails does so not for lack of advanced technology but because of a failure to understand users’ needs. The emergence of user-centered innovation clearly shows that this near-exclusive focus on technological advance is misplaced.

Denmark is taking this sea change in the nature of innovation to heart. In 2005, the Danish government became the first in the world to establish as a national priority, in the words of a government policy statement, “strengthening user-centered innovation. Like other countries, Denmark had traditionally followed a strategy of technology push. But, as a relatively small country with relatively few resources, it had also been resigned to not winning in the research-investment game. By championing a new innovation paradigm, the Danish government is encouraging numerous methodological flowers to bloom—from programs that improve manufacturers’ understanding of users’ needs (through ethnographic research, for example) to techniques for identifying user-developed innovations that manufacturers can produce. Successful approaches will be studied in Danish business schools and shared with interested Danish firms.

One such initiative is the Danish User-Centered Innovation Lab, established in 2005. Hosted by Copenhagen Business School and staffed by professors from both CBS and the Aarhus School of Business, the lab is following an approach pioneered at the Massachusetts Institute of Technology a decade ago. As a government-supported partnership between faculty experts at Danish business schools and innovative firms such as Bang & Olufsen, LEGO, and Novo Nordisk, it comes up with new innovation methods that are then tested in partner companies. Denmark is the first country to bring government innovation policies into line with modern understandings of how innovation really works. If this paradigm shift is successful, many other nations will certainly follow.