Harnessing the power of innovation

Like all wondrous technological advances, ChatGPT needs careful handling

If creativity is the wellspring of human development, innovation – the theme of this newsletter - is its economic twin. Uninterrupted progress in applying advances in science and technology, sometimes by leaps and bounds, sometimes in baby steps, is the source of gains in productivity and rising living standards that we take for granted. Think of the horizons opened up in recent years by the advent of the personal computer, the internet, the smartphone.

Innovation may be A Good Thing, but making the most of it is easier said than done. We believe that successful innovation cannot be dissociated from an organisation’s business model. Building on that insight, we lay out the five questions we always put to clients seeking to innovate. How, for instance, does innovation fit with the economics and culture of their organisation? A related article also emphasises the need to go back to basics when considering how to deploy artificial intelligence, society’s next Big Innovation, which is already grabbing the public imagination thanks to ChatGPT. Our advice? Work out what you want to use it for, learn by testing, and develop in-house AI guidelines.

In another pair of articles we dive into the role innovation can and must play in achieving net-zero carbon emissions.

Our work in this field shows that innovation can help transform energy systems and reduce the cost of decarbonisation – as demonstrated by rapid technological advances in ever-cheaper renewables. We also look at data policy, a neglected aspect of the fight against climate change, and argue that the systematic application of innovative economic principles and tools could promote more sustainable data usage.

Finally, we explore how high levels of innovation and technological change are posing new challenges for competition authorities, which are generally ill-equipped to evaluate mergers of firms in fast-evolving markets. We argue that they could develop new tools to sharpen their assessment of such tie-ups without either distorting the competitive playing field or stifling innovation.

Team thoughts

If innovation were easy, we’d have invented a better mousetrap by now – or how best to organise the NHS. It’s a difficult, complex process that may involve a light-bulb moment of sudden inspiration or gradual tweaks to an existing product or service.

Kalina Kasprzyk

Manager

The very democratisation of access to AI, and the promise of competition between publicly available models, means that their capabilities will be available both to your firm and to your competitors.

Stephen Heal

Associate

The scientific evidence is overwhelming: global warming poses a potentially existential threat to the planet. Policymakers, businesses and investors need to pull every lever to accelerate the transition to net zero

María Paula Torres

Manager