17, October, 2017 – BLOG #12
Another way to develop innovation policy?
At a meeting I was at recently, Gandeephan Ganeshalingam, the Chief Innovation Officer for GE Canada, described their view of the business environment using the acronym “VUCA”. This stands for volatile, uncertain, complex, and ambiguous. This is clearly a very challenging environment in which to operate.
Now think about how innovation policy has traditionally been developed. Often there is a commission (such as the Jenkins Report, that studied Federal support for research and development) that studies an issue, and issues a report with recommendation. This is often followed by extensive period of consultation with various stakeholders. Then a policy is announced, sometimes legislation is proposed, and then the policy is implemented. This process often takes many months if not years.
So how likely is it that an innovation policy will work for a company in a VUCA world? Good question!
There is another way to develop innovation policy. In recent years a movement has started (particularly in the UK) to use an experimental approach based on small randomized controlled trials. The approach is straightforward:
- Set up pilots to experiment with new programs. One randomly selected group gets the new program, another randomly selected group doesn’t.
- Evaluate them using rigorous methods.
- Scale up those that work, stop those that don’t work.
Randomized controlled trials (RCTs) have been used in a number of policy areas such as development (by the World Bank), education and social policy. They are the gold standard for evaluating new drugs and medical procedures. In all of these areas the link between an intervention and desired outcomes is uncertain because no adequate theory exists. RCT’s provide empirical evidence whether an intervention actually works or not, and provide a strong evidence base for a new policy. As one of the reports says, it replaces reliance on ‘eminence, charisma, and personal experience’ with evidence of what actually works.
RCTs haven’t been used much for developing innovation or entrepreneurship policy, but there is a large potential for exploring its use in those fields.
RCTs, like all new tools, have their strengths and limitations, and require expertise to be used effectively. They won’t be used across the board, just in a few selected areas. A key strength is that they can provide empirical evidence for a new policy, and minimize influences of ideology or history. One weakness is that they don’t explain why an intervention works, only if it does or not.
It is interesting to note that when randomized controlled trials were introduced in medicine, they were strongly opposed by some clinicians, many of whom believed that their personal expert judgement was sufficient to decide whether a particular treatment was effective or not. However randomized controlled trials are now regarded as the gold standard for medical evaluations.
Nesta – a UK charity that supports innovation – has developed an introductory guide for using randomized controlled trials. It is available at http://www.nesta.org.uk/publications/running-randomised-controlled-trials-innovation-entrepreneurship-and-growth
Governments at all levels in Canada spend a great deal of money supporting innovation and entrepreneurship. Randomized controlled trials can be another tool in the tool kit to make sure that we get the best possible outcomes. There is very significant expertise in the medical community to draw on to assist this endeavor.