Why does innovation create jobs?

An earlier post on how innovation create jobs is rather popular. However,people seem to have questions about the “why” in the link of innovation and jobs. Why should creating a new product or service result in new jobs?Where in the process of innovation are these jobs created? 

The answer to these questions lie in the process of innovation or the stage gate model. Let’s look at the five stages of developing a new product and why some of these stages create jobs.

  1. Opportunity or idea generation invariably is either by entrepreneurs (eg Chegg.com) or by companies. The latter tend to think through their strengths and weaknesses and try to take up projects that appear on the face-doable. No jobs at this stage.
  2. Concept generation tries to articulate multiple concepts that tap into the same customer needs  based on above. This also is an inside the company activity but with some look at the market and its needs. No jobs at this stage as well
  3. Concept evaluation has two parts (a) marketing evaluation  that involves market research and concept testing with potential customers and (b) a number crunching sales and financial forecast of the concept. This would include skeptical or at least conservative estimates of sales volumes and prices. It’s really important to get this part right and champion winning concepts forward while killing the projects that either do not seem to fly with customers or where the sales numbers and margins don’t make sense. Also, not many jobs at this stage.
  4. Development involves a whole lot of work  and is full of job opportunities for the right skills. Thus a pharmaceutical company has many clinical trials going on that require co-ordination management and data gathering. Similarly any engineering project needs considerable drawing, pilot production  etc. that require fresh employees. While lots of jobs happen at this stage , globalization does tend to outsource many of these high end knowledge tasks to low-cost locations globally. So someone,somewhere gets a job!
  5. Launch and Commercialization is the last stage and if the previous stages were done well the product should succeed in the market. If it does succeed then production needs to be ramped up and that requires employees and creates jobs.Successful innovations need to produced and create jobs across the supply chain.

No matter how successful the product the “if it ain’t broke don’t fix it” principle does not apply to creating the next innovation. Because standing still does not prevent technology, other countries on the globe  from moving forward and consumers changing their tastes. As soon as consumers change preferences the back end supply chain and B2B scrambles for the next innovation and thus the innovation cycle continues. About Stratoserve.

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