Davenport, Leibold, Voelpel: Eight Drivers of the Innovation Economy

A common denominator of the drivers of the innovation economy is that each draws on information and communications technology (ICT) advances that enable universal access to knowledge that previously was dispersed and difficult to reach. This connected knowledge system, based on accepted compatibility standards, enables the real-time coordination of dispersed organizational activities and groups, the management of cross-functional processes, and the synchronization of the myriad points of customer contact that are integral to the new dominant economic logic.

1. New Global Infrastructure for Wealth Creation.

Networks, enabled by the Internet and mobile communications, are becoming the basis of economic activity and progress. This is not unlike how railroads, roads, power grids, and the telephone supported the vertically integrated enterprise in the industrial economy.

2. New Sources of Value .

In the innovation economy, value is mainly created by knowledge and intellectual capital, not physical assets. These resources provide increasing returns and not decreasing returns, if rightly applied. Innovations in services, processes, business models, and management approaches become as important as innovations in physical products.

3. New Ownership of Wealth.

In the industrial economy, wealth was owned by powerful individuals (tycoons) and groups. Today stock ownership is more dispersed, and growth in wealth comes especially from new entrepreneurs.

4. New Educational Models and Institutions.

The model of pedagogy and knowledge- enabling is changing to interactive, dispersed, self-paced learning. Physical location is less important than nodes of learning communication networks. Knowledge and learning are not separate activities, but are embedded into the work process as needed.

5. New Business Models.

The possibilities of significant disintermediation of traditional vertically integrated enterprises and their value chains have enabled a plethora of new business models (new configurations of the business concept of value creation, value capture, and value sustainability) to arise. The value engineering focus has shifted to value innovation.

6. Empowered Customers.

Knowledge-empowered customers are driving innovations in many industries and enterprises. Customers co-create value along with the companies that serve them. Customer knowledge management (CKM) is a rich source of new value creation (beyond CRM).

7. Leveraging of Global Supply and Demand Chains.

Globalization of the world economy, and network-integration of supply and demand chains enable innovative value configurations. Value innovation shifts from the supply chain to the demand chain, with focus on brand equity development.

8. New Governance Structures.

Industrial-age bureaucracies are transforming into network-driven governance structures, with performance measures shifting to network scorecards for knowledge, innovation, and sustainable value creation and capture.

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