Philosophy of Digital Man and Digital Society - 2024

Innovation as a Key Strategy for Competitiveness in the 21st Century

Praxeological Foundations of the Philosophy of the Digital Society and the Digital Human

The primary category of innovation is the concept of the innovation itself, denoting any new introduction within a particular sphere of human activity, from which various types of innovations emerge—social, cultural, technical, economic, political, and engineering. The implementation of innovations results from both material and spiritual endeavors directed toward fulfilling specific needs of individuals and society.

The capacity of society to embrace innovation determines the level of its social, cultural, and economic development. Widely recognized criteria for assessing innovations (be they inventions, scientific ideas, or management strategies) include their significance and breadth of implementation, that is, their usage. Various specific aspects of innovation are also studied within the frameworks of economics, social psychology, management theory, and innovation management.

Among the most prevalent forms of innovation are technical innovations (technological), the dynamics of which, as shown by scholars such as N. Kondratiev and J. Schumpeter, underpin the cyclical development of market economies.

The emergence of technical innovations necessitates the creation of several conditions:

1. A societal demand for innovations;
2. A substantial number of potential innovators—energetic participants in the innovation processes;
3. The presence of specific infrastructure, encompassing an education system, a framework for protecting intellectual property (patents, know-how, licenses), and information systems.

The development of innovations within contemporary Ukrainian society is impeded by various objective and subjective factors. Regarding technical innovations, among the primary objective barriers to their implementation are: the gap between the scientific and technological foundations of production; the economic inefficiency of innovations; the insensitivity of research and design centers to the practical needs of production; a lack of personal interest among certain groups of researchers and workers in innovations; inadequacies in management and marketing methods; the educational system's failure to meet the current demands for preparing researchers and production managers; deficiencies in legal protection of intellectual property; and the economic crisis characterized by investment challenges, credit unavailability, and unemployment.

Subjective factors are generally present across all areas of innovation production and include:

1. A lack of adequate understanding of the developmental prospects of key spheres of human activity;
2. A dismissive attitude toward theoretical knowledge;
3. Stagnation in thinking;
4. Rejection of new introductions;
5. Fear of risks.

At the national level, the advancement of innovations is stimulated by state innovation policy, which entails selective approaches in taxation, investment, and credit policies, as well as direct financial support for specific research and technological programs.

The social outcomes of innovations can be decisive yet unpredictable. For countries undergoing stages of catch-up modernization, surpassing a certain "critical mass" of innovations—especially through forceful implementation—has frequently led to social crises. Concurrently, processes of globalization and inter-civilizational interaction are intrinsically linked to innovation management and governance.

In the current context of globalization, innovations emerge as a fundamental strategy for competition in the 21st century, applicable at both national economic levels and within individual enterprises. Innovations serve as the driving force behind more productive economic growth amid the transformation of all sectors in Ukraine. In modern Ukraine, the orientation towards innovative development necessitates the establishment of a national innovation management system, designed to enhance the economy's and society's receptiveness to innovations.

The innovation management that should be cultivated in Ukraine comprises a set of organizational, economic, psychological, and social methods, forms, and approaches to managing all stages of the innovation process—not only at the level of primary entities (firms, companies, corporations) but also across other segments of the economy, including industries, territories, and the societal economy as a whole. This represents a course of action whereby the innovation process is afforded favorable conditions for its development.

Innovation as a key strategy for competitiveness in the 21st century embodies innovation management—it is the governance of change.

In the context of developing innovative mechanisms, it is imperative to cultivate an innovative system as a collection of interconnected elements capable of organizing and sustaining an effective state of the innovation process. This innovative system encompasses both internal and external environments, along with a management system that significantly influences the advancement of innovations.

The elements of an innovative system, regardless of its level, include:

1. Objectives and innovations through which the implementation of innovations is achieved;
2. The innovation process and its participants, who operate according to specific technologies, with relationships and connections organized by an organizational structure;
3. Necessary resources;
4. Management that creates and fine-tunes the innovative mechanism. The innovative environment is characterized by the coexistence of the internal and external settings of the participants in the innovation process.

The macroenvironment and microenvironment constitute the conditions of any participant in innovative activities, encompassing direct activities unfolding within the context of a composite of macroenvironmental and microenvironmental conditions.

The components of the macroenvironment in the innovation process are:

1. Social, technological, economic, and political spheres;
2. The components of the macroenvironment are understood to include defined strategic zones of economic activity—the market for innovations, the market for pure competition of innovations, and the capital market (innovative investments);
3. Stages of the administrative system directly connected to the participants in the innovation process and links in the innovation infrastructure that serve this process.

By "internal innovative environment," we refer to the intra-firm relationships of the components (firms, organizations, institutions), as well as the connections established by the condition of the elements within the firm’s system, which influence its innovative activities. The innovative mechanism represents the market and/or administrative formation of innovative needs and demands on one side, and innovative supply on the other.

Therefore, in today's market conditions, it is necessary to establish a new field—the "demand-supply" framework—that would cultivate innovative driving forces, thereby supporting a market innovation environment capable of semi-automatically creating and regularly reproducing this field or the corresponding administrative environment. In any case, within the context of innovative activity, there must be a comprehensive array of influences—active and sufficient for the success of the innovative outcome.

Currently, innovative management has developed mechanisms—market, administrative, and mixed—that are being implemented to varying degrees in the practices of market management. In this regard, the influence of three groups of factors on the innovation process must be engaged:

1. a) Stimulating the supply of innovations; b) Enhancing the demand for the results of the innovation process; c) Influencing the conditions that encourage innovations.

To realize the innovative mechanism, the state must engage an innovative strategy and develop a concept for innovative activities aimed at producing stable profits, competitive advantages, and ensuring survival in the long term in accordance with its mission and the dynamically shifting external environment.

The means to achieve these goals, that is, strategies for implementing innovative activities, encompass both the intensive development of all elements of the production and economic system of the enterprise and their innovative growth. While the former ensures a sequential increase in potential and its preservation, the latter provides the opportunity to sharply elevate its level, overcome the accumulated technological gap, and acquire new qualities of potential. An innovative strategy encompasses the means to achieve the enterprise's objectives related to innovation, innovatics, and innovative activities.

Enhancing profit, ensuring survival, strengthening competitive positions, and other corporate objectives can often be realized only through innovative development—for instance, through the launch of new products, the adoption of new technologies, the exploration of new management methods, changes in leadership, or restructuring (replacing an old organizational structure with a new one), and new logistics of financial flows. The innovative sphere constitutes a system of interaction among investors, producers of competitive products (services), and a developed infrastructure.

For the realization of the innovative mechanism, an innovative goal must be established as a collection of strategies for the innovative development of the organization, defined by the types of anticipated innovations: the production and adoption of new products (services), technologies, methods of organizing production, markets, structures, and management systems.

To organize the process of implementing these strategies, the concepts of innovative activities must formulate innovative goals, such as developing and mastering the production of a new product or transitioning to new technology. The innovative goals of the organization represent the long-anticipated outcomes of its activities, achieved based on the implemented innovation within limited timeframes and resources, expressed in the quantitative and qualitative development of the organization and the acquisition of specific new qualities in its operations. The organization of innovative activities for all subjects necessitates the structuring of innovative goals and the construction of a "goal tree," determined by the type of innovation.

Thus, innovatics encompasses the development of innovations, representing the process and outcome of research and development, embodied in new and refined products, technologies, and methods of organizing production, labor, and management. It is associated with technical, organizational, and commercial information, which constitutes the secret of production (know-how).

Innovations, as the process of advancing scientific and technical activities within innovatics, comprise several stages:

1. Marketing (identifying and shaping demand for innovations based on an analysis of problems faced by consumers);
2. Exploratory research (discovering and describing patterns and phenomena for practical use);
3. Applied research (establishing the technical feasibility, socio-economic viability, and methods of utilizing the results of exploratory research to meet the demand for innovations);
4. Technical and economic development (creating project-construction, design, technological, and organizational documentation, manufacturing and utilizing samples necessary for the application of applied research results);
5. Technical assimilation of innovations (integrating into the production system and achieving its projected capability, producing a primary industrial sample or series according to technical specifications);
6. Commercial implementation of the innovation (the recovery of costs and generating profit based on achieving projected cost-effectiveness, profitability, and sales volume).

In the market for innovations, the subject of transactions primarily consists of the results of creativity (intellectual property).

Included among the objects of intellectual property are computer programs, databases, typologies of integrated circuits, and the effects of innovations, which may be economic, social, ecological, informational, or radical, thereby necessitating innovative and market evaluations. Alongside traditional criteria (profit rules), discounting investments and various non-monetary assessments (scientific-technical, social, and economic potentials and production levels) are employed.

Innovations, or novelties, in the context of the development of innovation as the foundation of a digital society and economy, refer to newly created (or mastered) technologies, types of goods or services, as well as organizational and technical solutions of a productive, administrative, commercial, or other nature that influence the advancement of technologies, goods, and the market implementation of innovations. The activities that ensure the creation and realization of innovations are termed innovative activities.

Depending on the objects of innovative activity in production, one can identify the following types of innovations:

1. Product innovations (new goods and services);
2. Marketing innovations (new markets, methods of promoting goods to market, and sales activities);
3. Technical innovations—new or more advanced types of tools;
4. Technological innovations—new materials, technological processes, techniques, and methods of work;
5. Organizational innovations—new solutions in the organization of production, management, and labor;
6. Social innovations—those that enhance the level of social development and social security for production workers;
7. Complex innovations—new solutions that ensure a comprehensive approach to the development and improvement of various elements of the production system.

Depending on the significance of innovations for production, they can be categorized into large, medium, and small innovations:

1. Large technical innovations are based on discoveries and significant inventions, forming a new generation of technology;
2. Medium innovations serve as the foundation for creating new models and modifying existing technology, as well as expanding their application;
3. Small innovations improve the production or consumer parameters of existing technology through the use of minor inventions and rationalization proposals. Like any production process, innovative activity requires effective management for its successful execution.

Innovation management in modern production is a crucial component of managerial activity overall, intimately linked to the development of production and the enhancement of all its elements and subsystems.

Innovation management involves the formation of an appropriate management system, that is, forms and methods of managing innovative activities, which are largely determined by the nature of the innovations undertaken. Among these, product innovations occupy a central position, ultimately defining the content of work involved in creating other types of innovations. At the same time, innovations in other areas, particularly social innovations, are gaining increasing significance, connected with the necessity of creating a "potential for success" to address problems that may arise in the future.

Simultaneously, the realm of innovation as a key strategy for competitiveness in the 21st century faces various risks:

1. Macroeconomic risks, associated with the possibility of deterioration in external conditions, economic slowdowns, levels of investment activity, high inflation, crises in the banking system, and the COVID-19 pandemic;
2. Financial risks, related to the emergence of budget deficits and inadequate levels of budget funding;
3. Technogenic and ecological risks, associated with global climate change, technological and ecological disasters, and man-made risks;
4. Geopolitical risks, influenced by the overall political situation in the country, military actions, and terrorist activities that threaten contemporary human life;
5. Informational risks, inundating us with an endless flow of information, leading to "information overload";
6. International risks, based on the development of international relations with specific countries, as tourism firms must continuously launch new product assortments each year to remain competitive.

Analysis has demonstrated the need to bolster innovation as a key strategy for competitiveness by studying the experiences of other countries that have developed and implemented new concepts of innovative activity, which have become a driving force and systematic process of competitiveness.