What Is Innovation? Part IV (Uncertainty in Innovation)

Uncertainty in innovation processes has been one of the most complex topics for innovation departments to deal with in recent decades. Every innovation process must aim to find a successful application in the market so that the innovation has value. Bringing an innovation to market carries a great deal of uncertainty, tied to not knowing what will happen in the future and will therefore make that innovation succeed or not.

Several factors create uncertainty in innovation processes, although depending on the area where it is applied or the type of innovation being carried out, these factors will have a greater or lesser impact. Although the factors that create uncertainty can be many and very varied, here are 8 factors that are likely to create uncertainty in innovation processes[1]:

1. Technological Uncertainty
2. Market Uncertainty (Perhaps the most important one)
3. Institutional Uncertainty
4. Political-Social Uncertainty
5. Acceptance or Legitimacy Uncertainty
6. Managerial Uncertainty ("Managerial Uncertainty", which sounds better in English)
7. Temporal Uncertainty
8. Uncertainty about the consequences of innovation

On the other hand, and unlike the factors that create uncertainty, it is important to highlight the sources of uncertainty in innovation processes, which are the “entities” (people, companies, etc.) that generate both information and uncertainty about the innovation. Several authors have described and listed these sources, for example Freeman and Soete (1997) [1], who define 3 sources of uncertainty: technological, commercial and organizational. Souder and Moenaert (1992) [1] define 4 sources of uncertainty: consumers, technology, competitiveness and resources. Finally, Bessan (2008) [1], although he does not define a specific set of sources of uncertainty, states that uncertainty arises within technological and market environments and regulatory frameworks.

So one of the jobs of innovation departments is to know as much as possible about all these factors that generate uncertainty and to make the most of all the information that the sources of uncertainty generate in order to minimize risk when launching their invention to market, so that it becomes an innovation and therefore succeeds and generates profits for the company. As already mentioned in previous posts ("Social model of technology adoption" and "Types of Innovation"), and hence its importance, innovation departments must assess the type of innovation they want to apply ("Incremental Innovation", … , "Radical Innovacion") and know the audience their product is aimed at (especially "Innovators" and "Early Adopters") so that uncertainty is as low as possible and risks are reduced as much as possible.

Regarding the market-based uncertainty factor, three categories have been defined that significantly influence market uncertainty: customer needs, competitor behavior, and the price of the materials needed to develop the invention [1]. These three categories are the ones you have to take into account and study to reduce market uncertainty.

In summary, what I wanted to emphasize in this post is that in innovation there are 8 well-defined factors that can generate uncertainty in innovation processes, and there are a number of sources of uncertainty (each author defines different ones) that give us information to reduce, to some extent, the risks in innovation processes.

References:

[1] “The Uncertainty of Innovation: A Systematic Review of the Literature”, by Harri Jalonen

[2] Part of this knowledge was given in the course “Innovation as a tool for Software product development” of the Master’s in “Computer Science and Technology” at the UPM, taught by Professor Juan Garbajosa.