Driving strategic learning for transformative innovation

Over the last year, the Innovation Growth Lab (IGL) has been collaborating with the UN Economic Commission for Europe as a core member of its Transformative Innovation Network (ETIN). ETIN was created to provide a forum for discussion and peer learning about the ways in which policies and practices may increase competitiveness and accelerate a sustainable systems-level transformation of societies across the UNECE region and beyond. ETIN brings together organisations from the public and private sectors, as well as researchers, to generate evidence-based insights on different aspects of ‘transformative innovation’ - looking from the perspectives of what has happened in the past, what is happening now, and what may happen in the future.

In March 2023, IGL and Vinnova (Sweden’s innovation agency) co-designed and ran a pair of linked policy dialogue events for ETIN. These sessions considered different approaches being taken with respect to transformative or ‘mission oriented’ innovation policies (terms that are often used interchangeably but that do have some important distinctions), and then looked at the capabilities and skills required by governments to bring them to life. While there was general agreement about the value of mission-led approaches, and recognition of the traction these ideas have gained internationally, there were also some difficult-to-answer questions about how transformative missions can be embedded and their impact evaluated. 

We dove deeper into these questions at the end of September at an event in Montenegro convened by ETIN and the Regional Cooperation Council, with the support of the German Federal Ministry for Economic Affairs and Climate Action. The gathering brought together representatives of innovation agencies from across the Western Balkans with policymakers, researchers and civil society organisations from countries including Estonia, Germany, Israel, Sweden and the UK, to consider the role that transformative innovation policies could play in this region. We returned to these topics, with an emphasis on the need for strategic learning, in November 2023 at a meeting of the UN Team of Specialists on Innovation and Competitiveness Policies.

It’s worth pausing briefly on the question of definitions. For ETIN, ‘transformative innovation’ refers to the series of ideas, technologies, and experimentation that leads to system-shifting developments such as the railway, electricity, and computerization. An ‘innovation mission’ (if going by the kind of definition that is currently dominating policy thinking and practice) is similar in some ways. Achieving a mission requires coordinated action by a number of different actors that bring their respective skills, resources and expertise to bear on solving a challenge. A mission aims for an ambitious outcome - e.g. restoring the health of the global water system - but one which can be clearly articulated and measured. You’ll know when it has been achieved. 

The mission model has to date been overwhelmingly top-down, with the theme of missions usually determined by governments (either individually or collectively) and the desired outcome specified in advance (even if the route to getting there is not). In contrast, transformative innovation feels somewhat more emergent and fluid, resulting from a complex (and often unpredictable) interplay between ideas, behaviours, funding, technologies and policies. It involves risk and experimentation, adaptation and constant learning at the systemic level. These are all things that governments and large multinational institutions have historically struggled with, but must continue to lean into and ‘build their muscles’ for. 

Our discussion of these issues in recent events surfaced some valuable insights and ideas to take forward:

Three key insights: updating systems, navigating tradeoffs and learning strategically

1. Governance systems need to be fit for the current environment 
   There is a mismatch between structures and systems built in an earlier era (based on linear understandings of how innovation happens and a focus on designing and executing multi-year plans), and the realities of today. What is needed now is more agile, adaptive programming with learning built in. There is inspiration to be had from institutions that have had to start from a ‘blank slate’ - for example, the Estonian government took a bold approach in the early 1990s after declaring independence, building strong public-private partnerships that has helped it become a pioneer in the field of digital transformation. When the weight of history can be released, what room for innovation and change is created?
2. There are tradeoffs inherent in transformative innovation that need to be managed
   The agenda of societal transformation contained in the Sustainable Development Goals (SDGs) rests on an assumption that there is a shared desire to work towards outcomes linked to the collective global good. Yet our discussions have highlighted some of the different motivations and tensions that might exist. Competition is, and has always been a driver of innovation, and this must be taken into account in thinking about the roles of different stakeholders. In the way the global economy currently works, businesses need clear incentives to innovate in ways that will address challenges like the climate crisis. Governments have a vital role to play here - their policy choices can either help or harm the direction of transformation. But businesses and researchers - the drivers of innovation - must also be part of the process.
3. We need to expand the way we understand and practice learning 
   Most often, learning in a policy context is thought of as analysing and making sense of past events or programme outcomes. The results of these ‘summative’ evaluations may or may not shape choices that are made about how to act going forward - this depends on institutional priorities and political will. Sometimes there is an attempt to learn while doing, and ‘formative’ evaluations can be valuable in informing changes to policies and programmes while they are still being designed and implemented. Yet this rarely looks at dynamic events happening at a systemic level. And while we can’t gather evidence from events that haven’t happened yet, we can use tools such as scenarios and strategic foresight to prepare for a range of possible or plausible futures that might be coming for us. This kind of learning can and should be more deeply integrated into the traditional processes employed by governments to improve the quality of strategic decision-making. 

Three ideas to take forward: building new partnerships, challenging assumptions and learning strategically

Many participants at the event in Montenegro called for a ‘just do it’ approach - getting on with things and then adjusting course as needed, rather than spending too much time deliberating and refining plans. So here are suggestions for three things we can get on and do to advance the transformative innovation agenda:

1. Bring significant (but often overlooked) actors into the movement for transformative innovation
   Representatives of industry and business, entrepreneurs, and those with the economic power to make change happen (such as finance ministries or investors) are not always included in policy dialogues on these topics. Yet transformative innovation will not happen without these groups, and so they must be included in any discussions and actions relating to this agenda, alongside policymakers, researchers, and civil society organisations.
2. Create scenarios for transformative innovation policy designed to challenge assumptions
   We are all prone to making plans and designing strategies to fit the future we want to come about. However, events rarely unfold just as we have predicted or would desire. It would be wise for those leading the transformative innovation agenda to develop scenarios that can test assumptions about what might happen in years to come, identify blind spots, and present contrasting visions of the future that can help us to make wiser strategic decisions in the here and now.
3. Embed strategic learning at the level of systems
   The dynamic nature of the environment we are operating in calls for an agile and systemic approach to learning. There is value in ‘just doing it’, but even more so in learning about the impacts of what we are doing and using this to inform decisions. At the Team of Specialists meeting in Geneva we discussed how to bring directionality to this process. Within the transformative innovation agenda there is scope for testing and learning in a structured way in order to find out and scale up what works, and tweak or abandon what doesn’t. There are many ways to do this - some of the key ideas and practices that IGL supports through its work includes using tools such as experimentation funds, and embedding an experimental approach in mission-oriented policies and initiatives.

As the ‘strategic learning’ strand of ETIN unfolds, we will continue to share insights and reflections, and would welcome input and discussion with others engaged in this agenda.