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WHAT WE CAN LEARN FROM SINO-US INNOVATION?

Posted by Ayesha Patel 22 November 2017 Innovation Consultancy

Both fierce competitors, at times out-right rivals, and yet also with fates entwined as the two biggest players in the global economy, China and the USA continue to transform the international marketplace and push the boundaries of innovation.

So what can we, as innovators, learn from Sino-US innovation relations? Here are some key takeaways that can be employed any organisational level, wherever you may be in the world:

COOPERATION IS KEY

Although relations can sometimes be fraught between China and the USA in political, economic and ideological spheres, finding common ground on which the basis of cooperation can be built is a key insight that organisations can learn.  

According to the online newspaper Global Times, which reports on all aspects of news, business and politics from China, ‘China and the US have bilateral cooperation in many fields, and in the future, cooperation on innovation will be of greater significance.’ By teaming the US’ innovation heavyweight status with China’s initiatives as a ‘new innovative engine’, Global Times believes the pair will ‘steer the overall development of global innovation and entrepreneurship.’

While acknowledging that there are vast differences in outlook and approach between the two superpowers, Global Times believes that it is this difference which is in fact the biggest strength in the partnership. Suggesting that ‘learning and sharing among human civilizations relies more and more on knowledge, technological innovation and the overall improvement of human quality,’ organisations can build on this trend in collaborative innovation and use it to their own advantage.

R&D SPENDING NEEDS TO BE TARGETED

Conventional wisdom teaches us that research and development (R&D) departments are both necessary and desirable if large organisations are to innovate effectively. From universities to global corporations, this practice has become so entrenched that huge sums of money are poured into R&D each year and justified by the need to respond to change and keep pace with competitors.

Yet spending more in R&D doesn’t necessarily lead to better innovation outputs, and in fact a lack of targeted spending could be doing more harm than good when it comes to driving effective innovation. According to USA Today, the case of China and the USA is a good example of such misdirected spending. In the case of the US, the article reports that:

 ‘the country is still the global leader in “basic and applied” R&D, which makes early discoveries and further refines them. About a third of the $500 billion the country spends on R&D is funneled to those activities. But while two-thirds of the total goes to later-stage “development” R&D, China invests 84% of its R&D money on advances that yield commercial products. For the past decade, “development” R&D has been growing 20% a year in China, versus 5% in the U.S.’

This huge discrepancy in the growth levels of R&D between the USA and China demonstrates that it is not simply a case of spending more, but investing money into R&D wisely in order to bring about specific outcomes. For organisations, this is a lesson worth learning when budgets are tight and every outgoing counts, as increasing spending efficiency by cutting down on wasted investment can make your processes more streamlined for the long term.

While China is unlikely to overtake the USA as the world leader in innovation in the near future, there is little doubt that its differing approach and continued growth poses both a challenge and an opportunity for the industry as a whole. Despite the political differences and tensions between the two powers, wise investment, collaborative approaches and a willingness to learn could prove crucial to future success. These are wise lessons for any organisation to learn regardless of the geographical context in which they operate and so innovators should be keeping a close eye on Sino-US innovation relations.

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