2.2.1 Innovation The purpose of discussing innovation is to outline its importance as the foundation for socio-technical transitions, which can be understood as the social changes that result from an alignment of innovations (Geels 2002). Innovation is the basis for dynamic economies and competitive advantage in business and also between nations and regions: it is a vehicle for change and transformation (Hospers 2005; Fagerberg 2018). It is important to set out the differences between inventions, innovations and how they contribute to sociotechnical transitions. Fagerberg (2018, p. 6) provides definitions and distinguishing features: Invention is the first occurrence of an idea for a new product or process, while innovation is the first attempt to carry it out into practice. Innovation emphasises social and economic aspects of the adoption of technology, it is the “development of technology in interaction with the system in which the technology is embedded” (Hekkert et al. 2007, p. 414). Schumpeter identified five forms of innovation, providing an early recognition of innovation being more than technological development: new products, new methods of production, new sources of supply, the exploitation of new markets, and new ways to organise business (Hospers 2005). Much of the subsequent research into innovation has focused on the first two, referred to as ‘product innovation’ and ‘process innovation’; distinctions are also made between technical process innovations and organisational process or business model innovations (Fagerberg 2018). The different types of innovation indicate how new ways of working are as important as technology in market competition. Business process and technological innovation regularly occur in tandem, as technologies can require or allow new organisational structures and institutions to be implemented. For example, Tesla combines new automotive and battery technologies with innovative methods of marketing and distribution (Shipley 2020; Wright 2020) and as usage increases transport taxation systems are adapting (VicRoads 2020). As innovation includes implementation, it occurs over time and is a process that may require trial and error. As Kline and Rosenberg (1986, p. 283) warn: …it is a serious mistake to treat an innovation as if it were a well-defined, homogenous thing that could be identified as entering the economy at a precise date—or becoming available at a precise point in time… The fact is that most important innovations go through drastic changes in their lifetimes—changes that may, and often do, totally transform their economic significance. The subsequent improvements in an invention after its first introduction may be vastly more important, economically, than the initial availability of the invention in its original form. Innovation is a process and the result is an outcome of the organisations and social structures within which it occurs, providing the basis for the extensive literature on innovation systems. The use and uptake of technologies are linked to social, political and economic systems and structures. This is a key reason for the slow rate of the take-up of innovations (Hekkert et al. 2007). This also means the ways we consider it possible to provide a service, or imagine an alternative, are based on our past experiences. This also means that current market operators have the advantage of having responded to and shaped market demands over time, both in quality and production efficiencies, as well as the system aspects such as “accumulated knowledge, capital outlays, infrastructure, available skills, production routines, social norms, regulations and lifestyles” (Kemp 1994, p. 1027).
Transforming energy productivity through value chains
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