Re-thinking Engineering Economics of Innovation

Last Updated 13 years ago by Kenya Engineer

Article by Prof. Michael O. Kachieng’a

The rate of technological change makes our economical heads spin with magical amusement. We think of our generation as the most innovative and more competitive than ever before. We have the super information highway, the internet, e-mail, smart phones and super computers, big data system, nanotechnologies, cloning technologies, gene therapy, stem-cell transplants, and above all, we have potential capacity to manufacture human body parts in our high-tech labs. The performance of human prosthetics is rapidly catching up with that of natural limbs.

The advances in genetic technology may give the parents opportunity to have ‘designer babies’ with modified intelligence and disease-free bodies. These advances will empower parents to make their children tall, well muscled with fat-free body parts and beautiful; and empowered by genetic technology not to transfer their stupidity to their children! Many people believe that the future of health care services lies in technology. Already miniaturization of technology has given us cameras to unlock the body’s innermost secrets. The next possible frontier may involve swallowing modular nanobots that will perform diagnostics monitoring, drug delivery and even surgical operations at the molecular level.

Yet our real techno-intellectual problem is that in recent years no-one has come up with an innovation like the toilet seat (WC). The toilet seat is a well thought out innovation – it promotes body structure convenience and biological functionality to make the ‘pooh process’ relieving and enjoyable. It is ergonomically designed for correct human body positioning to facilitate efficient disposal of biological ‘shit’. The innovation in the toilet design embodies the genius of engineering simplicity with imbedded user friendliness. The small space of the toilet has become a place of personal solitude and a sanctuary for generation of thought and ideas. That explains why intelligent women pack their toilets with motivational magazines to psychologically jump-start their mental happiness.

The business of innovation is about generation of economic and social values. Therefore, any technological innovation must generate economic wellbeing of the citizens and enhancement of social happiness.
With simplicity of design and optimized user interface, the humble ‘loo’ has hygienically impacted the lives of billions of people. Its positive impact on sanitation-related diseases is equal to none. The simple loo has given the world happiness beyond money measurements. Better sanitation promotes to better health for all.

Globally, governments, research firms and institutions spend around $1.4 trillion a year on research and development projects. Technically, the future of medicine, health care services and industrialization resides in technology. Technological development leads to economic development, when all other things remain equal. We admire new technological innovations. We praise the inventors and innovators, because they define our future.

Modern technological innovation has failed to come up with a simple gadget with imbedded engineering ingenuity and high social impact like the loo. We live in an open global society with too much information but have no intellectual brain power to process the information to make economic and social sense of it. The world needs new innovations with high economic value and social happiness. Life without happiness is death. Innovations generate prosperity.

Some academics have been questioning the value of scientific discoveries, inventions and innovations in the real economic and social terms. They are asking for measurable benefits from innovation investments. Although business economics claims that smart phones, e-mail systems, flat screens and other similar technologies have made positive contributions to prosperity, the business failed to assess their impacts towards reduction of global poverty. The real question is: How will society balance the mathematical equation of the Super-rich and the Super-Poor with future technological innovations? For now, warnings on slow innovation by intellectual pessimists seem to make an economic sense, because innovation has failed to address the principle of economic scarcity.

The implications of slow rate of innovations are huge. Economies generate growth by introducing new innovations (radical innovations) into the economic development value-chain, and reworking old technologies and systems (incremental innovation) to spread economic values and social impacts to the society. However, sustainable increase in economic growth demands increase in productivity from the population, which will facilitate increase in incomes and social welfare. This entails the promotion of both radical and incremental innovation. The rate of innovation determines the rate of economic growth and prosperity, all other things being equal. The roadmap to prosperity is through serial innovation.

In the past, human ingenuity has saved the world in bad times. It is debatable whether ingenuity is a product of circumstance or luck. Fundamentally, it is our humanistic task to design and manage our future. The global life expectancy is still improving, demanding for better economic growth. Historically, most technological innovations add value to human development. Innovations in electrical power industry lead to industrialization and economic development. Many technological innovations have added value in many sectors.

In the 21st century, the generational contribution to technological progress resides mostly in information technology. As electrification changed everything by transporting electricity to be used far from where it was generated, information communication technologies (ICT) transform lives and enterprises by allowing people to assess computerization and connectivity far beyond their technologically unaided capacity. ICT innovations will probably take another decade or two to reach economic maturity and generate broad-band social impacts in the society.

The road to prosperity is dotted with technological innovations. Ever since the wheel was invented in Mesopotamia in 3500 BC, technological innovations have continuously advanced our lives. New equipment, devices and processes of production have assisted us to enhance our productivity with less labour inputs; therefore, prices fall, real wages rise and we are better off as a people. The real free lunch in the innovation economics is productivity. Engineering economics of innovation tell us that it is noble to invest in innovation because it provides the highest development returns to the nations. Testimony from emerging economies like Brazil, China and India confirms innovation as an empowering factor in industrialization and economic growth.

In the knowledge-based global economy, innovation is the game changer in the development value-chain. More brain power is needed in the innovation arena to dig deeper into science and technology behind innovations. To derive more benefits from innovation, there is need for public-private sector partnership. There is need for investing in innovation generation and development from research labs and their transformation into prototype products. Thereafter, there is need to invest in transformation of prototypes into commercially marketable products. To sustain and maintain production, we need to invest in enterprises development. Enterprises form industries and industries create jobs and economic development. If we stop investing in innovation, then technology will lose its power to drive economic growth and development. Innovation will transform Africa from a developing continent to an emerging continent. Without investment in innovation, new technologies will not have competitive invigorating effect on the African economies of the future.

But are some of the latest innovations really productivity-enhancing or just pure wasteful economics of prosperity? For example, innovations in ICT and interconnectivity systems have made teenagers addicted to texting. In the near future, it is predictable that social engineers (sociologists and psychologists) will be writing research papers on teenagers of today who will be having difficulties relating to each other because connectivity is a technological relationship, not a humanistic relationship. Adults dating sites promote efficient access to love partnerships, but fail to warn clients of ‘quick dumping mechanisms’ of purportedly loved ones offered by the same websites.

Technological connectivity does not amplify romantic frequencies between lovers in resonance with their heart-to-heart sensitivities. When we replace humanistic connections with technological ones, humanity disappears. Technological innovation without humanity is valueless. For example, dating sites promote the ease of finding loved ones, but silent on the ease of dumping the loved ones. The internet dating is nearly the opposite real dating with human signature.

What we urgently need is agile insights into engineering economics of innovation to assist us balance the equation prosperity versus poverty. Good innovation must have economic and social merits. The problem with innovation investments is that our new world is not standing still. Neither is our future. The real dilemma for all innovators is: Prediction is hard, especially about the future.

About the Author
Professor Michael Ogembo Kachieng’a is the Deputy Vice-Chancellor in-Charge of Research, Innovation and Enterprise Development at the Technical University of Kenya. Professionally, Professor Kachieng’a is a Chartered & Registered Electrical Engineer, Biomedical Engineering Scientist and Business Financing Expert.  He holds a MSc. (Cum Lauden) in Electrical Engineering and PhDs in Biomedical Engineering from both MTU and the University of Cape Town. He is a member of several international professional organizations in Engineering and Business Management, including New York Academy of Sciences. He lectures in Engineering and Finance at Post-graduate levels.