is still missing pieces,
Innovation in Economics
It’s apparent to most thinkers that innovation should connect with economic
growth. But Economics is incomplete. It defaults to a proxy called Factor
Productivity - a principal outward manifestation of Growth Theory - whose
sufficiency remains conjectural, and within which innovation is a remainder.
Or it puts innovation into intellectual capital - an intangible stock - from
which future technology and products are presumed to develop without
enumerating when or how. Neither helps understanding the digital economy.
Such shortfall invites explanation - and excuse. The excuse occupies the
next two paragraphs; the explanation the next six pages, and a hundred of
supporting scholarship.
Economics has missed an industry standard, the Innovation Funnel, which
controls output to commercialization. The mechanism for successful passage
through this funnel is an essential consideration on which Economics remains
silent. That's a consequence of what the perceptive economist Zvi Griliches
once called its 'data constraint'. He exhorted economists to overcome it, but
only outsiders could do so.
That's because business lore is systemically out of academic reach. It's hidden
away from campuses; within factories, corporate offices and especially in
technical centers. And most of it relates to successful funnel passage. Access
to tacit knowledge allows Innovation Professionals to use these resources to
serve commercial purposes. Incorporation of Economics is a natural extension,
contingent only on the de-fragmentation of neglected data.
The outcomes address two well-known knowledge gaps in Economics. What
economists have identified as Economics' 'Quality Change Problem' is one. The
other is the long sought never found numerical link between current innovation
spending and future GDP.
When armed with these missing elements the dominating factor for economic
growth clearly emerges. Innovation metrics control the funnel through which
any technology must pass to become commercial. Its products then overcome
market incumbents by the process called creative destruction. Growth can be
calculated upwards from first principles. Such capability bestows global economic
advantage.
