Philosophy of Digital Man and Digital Society - 2024

Creative-Innovative Potential of Enterprises as the Key to Business Survival

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

The formation of a new paradigm of innovative-digital potential for industrial enterprises in the context of globalization is beyond doubt, as globalization dictates new conditions for the survival of enterprises, their integration into the European space, the enhancement of competitiveness, and the restructuring amid crisis, instability, and informational stochasticity. The innovative-digital potential of industrial enterprises in globalization serves as a marker and megatrend, driven by profound transformations and shifts across all spheres of human life, influencing the long-term sustainable development of society.

The creative-innovative potential of an enterprise, as a complex and contentious process, represents an adaptive system composed of numerous interacting parts capable of changing and learning from their experiences. In the late 1940s, Ludwig von Bertalanffy established a separate field known as general systems theory, within which most phenomena in the universe can be viewed as a network of interactions among elements of a particular system. This recognition acknowledged that the relationships among system elements are dynamic rather than static. Accordingly, the creative-innovative potential of an enterprise is analyzed through the lenses of autopoiesis (self-constructing methods by which systems constitute themselves), homeostasis (the ability of a system to maintain itself), and adaptation (the capacity of a system to interact with its surrounding environment).

Cybernetics examines complex controlled systems with goals that interact with their environment through feedback mechanisms. Its task is to study the processes occurring in controlled phenomena, consisting of multiple iterations of actions that induce changes in the environment, aimed at acquiring information about the state of that environment and subsequently informing new actions. For cyberneticians, this cyclical process is fundamental. In the development of the creative-innovative potential of an enterprise as a complex and contentious process, the most crucial factors include information, knowledge, communication, and objectives, as well as the decisive role of feedback in the evolution of the behavior of complex systems.

The theory of dynamic systems, which emerged from applied mathematics in 1960, explores states inherent to a system, some of which are stable while others are unstable. If individual components of a system do not change over time or, when subjected to various disturbances, always return to their initial state, these stable states act as attractors. The theories of dynamic systems assert that the development of the creative-innovative potential of an enterprise as a complex and contentious process necessitates stability, which is formed through components such as knowledge, information, and skilled personnel.

Game theory aims to describe the behavior of systems in situations that require a strategic approach, where the successes of one system partially depend on the developmental models of the creative-innovative potential of an enterprise as a complex and contentious process, leading to stability chosen by other systems and explaining human behavior within these systems, which results in stability.

Chaos theory posits that even the smallest changes in the models of the dynamic system of the creative-innovative potential of an enterprise as a complex and contentious process can subsequently trigger significant consequences. This implies that the behavior of many systems is ultimately unpredictable, where minor difficulties can transform into substantial problems. Additionally, chaos theory introduced the concepts of fractals and scale invariance, demonstrating uncertainty and variability as core characteristics of the creative-innovative potential of an enterprise as a complex and contentious process.

The study of dissipative systems has provided insights into the spontaneous formation of structures within the creative-innovative potential of an enterprise and how the organization or reorganization of a self-organizing system may occur to achieve the goals and outcomes of the enterprise as a singular social organism. The creative-innovative potential of an enterprise as a complex and contentious process must facilitate innovative production and the implementation of scientific innovations into mass production.

Let us provide an authorial definition of the creative-innovative potential of an enterprise as a complex and contentious process. The creative-innovative potential of an enterprise encompasses knowledge, information, technologies, human experience, and material resources necessary for addressing and resolving various challenges faced by the enterprise—be they economic, infrastructural, social, existential, or production-related—aimed at boosting the economy, increasing revenues, and addressing issues of social justice. This potential creates the conditions for the development of new products and enhances operational efficiency, providing greater opportunities for technological advancement and the expansion of resources themselves, thereby improving production efficiency and the well-being of a larger number of enterprise employees. This necessitates substantial changes in production to elevate economic development and enhance the competitiveness of the enterprise, which requires equipping oneself with superior technologies and organizational capabilities, made possible only by the presence of creative-innovative potential. This potential serves as the primary source of the latest technological and organizational discoveries, acting as the engine of the economic mechanism that can foster innovative economic growth.

Thus, the transition from creativity, knowledge, and innovations to innovative production and their implementation in mass production is essential, merging cycles of research and development with production, promoting the mastery of new product types, the implementation of new technologies, and the expansion of enterprise volumes through the introduction of innovations, employee retraining, and the adoption of new technologies.

The success of innovations can occur only through the development of a clustered approach, where the accumulation of a critical mass of specialists, knowledge, and information achieves a synergistic effect, propelling the enterprise’s economy toward innovative development and the advancement of high-tech production sectors, identifiable by their exceptionally high efficiency and mastery of technologies—an evident cause of collective wealth, as they are an integral part of numerous industries. The main criteria for this are: 1) scientific intensity (high ratio of scientific professionals to the total number of employees); 2) significant expenditure on research and development relative to total expenses; 3) maximum advancement and accessibility; 4) production of high-quality competitive products; 5) high levels of risk and profit.

The development of the creative-innovative potential of enterprises captures a specific process of cultural creativity, encompassing the conditions of its flow, materialized in the form of artifacts, while also reflecting a broader socio-cultural context associated with the very changes in the process of existence. This is due to its role as a system-forming factor and the foundation of innovative key business products, a driving force behind scientific-technical and technological processes, characterized by a high proportion of knowledge-intensive products, rapid implementation, structural reorganization of the economy, and the formation of organizational and managerial frameworks for science and production (business), all of which presupposes the creation of new enterprises and impacts society, the economy, and individuals.

The new paradigm of innovative-digital development is currently the most powerful and significant, as it holds the potential to guide a nation out of crisis toward sustainable digital growth. To achieve this, it is essential to formulate strategies and priorities for innovative digital development that encompass large-scale digital sectors. The contemporary enterprise's innovative-digital potential—spanning economics, management, governance, information science, and programming—entails the intensive advancement of information and communication technologies (ICTs) and anticipates substantial contributions from them towards new technological breakthroughs aimed at fostering sustainable development within the digital domain. Only a digital innovative economy can forge new conditions for a breakthrough in advanced digital technologies and facilitate economic innovative growth, necessitating at least disruptive technological innovations.

The innovative-digital potential of modern enterprises, in the context of globalization—encompassing robotics, artificial intelligence, the Internet of Things, biotechnology, Big Data, 3D printing, and manufacturing—comprises a set of technological innovation processes capable of altering the nature of labor, highlighting emerging professions in light of the disappearance of many existing ones, and fostering new digital competencies within a digitized society as part of the Fourth Industrial Revolution.

This new paradigm of innovative-digital potential amid globalization is intrinsically linked to robotics. Robots are increasingly equipped with additional features such as high-quality cameras, sensory devices, and laser rangefinders, all integrated and controlled through computers. Significant advancements in robotics are largely attributed to the "smartphone revolution," as these machines rely heavily on computer chips, batteries, and sensors akin to those found in powerful mobile phones.

Within the evolution of this new paradigm for the innovative-digital potential of industrial enterprises in the era of Globalization 4.0, new trends are observable:

1. The widespread deployment of distributed systems;
2. Integration with mobile (cellular) and satellite communication systems, giving rise to IP telephony;
3. The integration of the global network with media platforms, resulting in the development of interactive television and electronic publications;
4. The implementation of predictive self-learning systems based on neural networks and genetic algorithms (the fourth generation of artificial intelligence).

The innovative-digital potential of industrial enterprises in the context of globalization transforms all management processes, as cryptocurrencies, blockchain technology, fintech, and megatrends of the Digital Era emerge at an unprecedented pace, revolutionizing the economy, management, and marketing within industrial enterprises. All stakeholders—business leaders, governmental officials, and everyday individuals—must adapt to the speed of change. This rapid evolution indicates that production is increasingly reliant not on material assets but on digital technologies, which represent intangible assets grounded in intellectual components, organizational and human capital, innovation, and innovative processes. Concurrently, the "primary economic indicator, GDP, no longer fully reflects the development of innovations."

The computational power of standard computers is perpetually increasing every thirty years, doubling approximately every eighteen months, a phenomenon known as Moore's Law. For the advancement of a digital economy characterized by innovation and creativity, enterprises must enhance the computational capacity of standard computers, while the state should serve as the principal source of funding for innovative endeavors.

A crucial factor in elevating the innovative level of Ukraine's digital economy is the application of progressive technologies and knowledge-intensive products, without which the digital economy cannot be innovative or developed. Today, the digital economy permeates all spheres of societal life: from demographics, biospheres, and climate change to the future of medicine, genomics, and genetic engineering, synthetic biology, and transhumanism; from cloud technologies and the Internet of Things to artificial intelligence; from quantum computing to smart materials, energy, transportation, and robotics—all contributing to the evolution of the Internet economy as an integral component of the digital economy.

Thus, the new paradigm of the innovative-digital potential of industrial enterprises is being shaped in response to the challenges of civilization—globalization, technological advancement 4.0, Enlightenment 2.0—impacting the emergence of digital management, digital economy, Internet economy, and the determinants of ICTs. Innovations, as the key to the survival of competitive enterprises, must focus on creativity and advanced human potential. "In an era where contemporary technologies consistently lower the cost of iterations, enterprises across numerous industries can increasingly compete in the realm of innovation."

Innovation occupies a central position in the study of complex systems. Researchers have discovered that complex adaptive systems actively seek their positioning between order and chaos, as innovation and adaptation occur when systems exist "on the edge of chaos." The theory of complex systems posits that innovations can only emerge as unforeseen results, impossible to plan in advance. For something new to arise, a foundation is necessary upon which it can be built.

It is noteworthy that a close relationship exists between innovations and information workers, including developers, designers, architects, analysts, testers, and other professionals in software creation. Peter Drucker coined this term to emphasize that many professions today are fundamentally rooted in information work. The notion that knowledge serves as fuel for innovation has been subsequently supported by numerous business experts, notably Ikujiro Nonaka (2008).

Knowledge enables the creation of new software products for clients, yielding business values previously unattained. The creative-innovative potential of an enterprise lies in its ability to organize and transform production activities, converting knowledge into innovations. Knowledge is cultivated through the continuous acquisition of information from the external environment via education and training, while inquiries, specifications, measurements, and feedback must emerge from direct experiential accumulation. The software development team becomes a system that consumes and transforms information, generating innovations.

The knowledge utilized within enterprises is largely tacit (undocumented and difficult to transfer), necessitating interpersonal communication for its transmission during collaborative work. Software developers convert information into knowledge and subsequently into innovations, echoing Robert Glass’s assertion in his work "Facts and Fallacies of Software Engineering": "80% of software development efforts involve intellectual activity, with a significant portion being creative, while only a small fraction is purely technical."

Research conducted by R. Glass revealed that 16% of the intellectual tasks faced by developers require creativity. This further corroborates the thesis that creativity plays a crucial role in transforming information into innovations. As all devices within enterprises gain Internet access and begin exchanging data, they will significantly enhance logistics, operational efficiency in supply chain processes, energy consumption, customer service, and overall productivity.

The Metcalfe's Law asserts that the value of a network increases exponentially with the addition of nodes or computers. The McKinsey Global Institute, one of the leading analytical centers in business and economic research, predicts that innovations available only in select sectors of the Internet of Things will contribute to an increase in the total value of the global economy by $6.3 trillion by 2025.

Many organizational innovations in the manufacturing sector have transitioned from other industries, particularly to the service sector, thereby enhancing their productivity—such as fast-food restaurants, kaiten sushi establishments, supermarkets, online stores, and even agriculture—through the application of organizational knowledge from manufacturing, which has led to increased productivity in animal feeding via computer management.

Innovative development enables us to create more effective renewable resources; however, despite the rapid advancement of technologies and the implementation of innovations in production, the quantity of non-renewable resources remains limited. This limitation extends even to certain minerals that have yet to be classified as resources. Developing countries need to enhance their production potential to address the consequences of climate change—a process referred to by experts as climate adaptation. To be prepared, impoverished nations must equip themselves with superior technologies and organizational capabilities that can only emerge through economic development.

The process of creating innovation, as noted by Everett M. Rogers in his book "Diffusion of Innovations," encompasses all decisions, actions, and their consequences that unfold from the moment a need or problem is recognized, followed by the exploration, development, commercialization of the innovation, its diffusion, and implementation by users, leading up to the resultant impacts of the innovations. Thus, it is imperative to identify the stages and components of the innovation process as a variety of social change that can lead to its adoption.

Rogers delineates four primary elements of diffusion: innovation, communication channels, time, and social system. At the core of knowledge are new meta-ideas that embody innovations, which most effectively support the creation of new ideas. Digital innovations are recombinatory innovations, each enhancement serving as a constructive element for future innovations, enabling them to transform into an increasing number of devices—from door handles to greeting cards. In the early stages of development within an enterprise, growth is limited by the number of new potential ideas, but eventually, it is constrained only by the capacity to process them. Innovation is the factor through which productivity growth occurs.

Economists often debate, yet they agree on the fundamental importance of innovations for growth and prosperity through knowledge. Most specialists concur with the views of Joseph Schumpeter, a leading scholar and researcher in the field, who argued that innovations represent a significant phenomenon in the economic history of digital society and are largely responsible for much of what we initially associate with innovation.

Economist Bob Gordon concluded that innovation has slowed over the past 150 years and emphasized the critical role of technologies in ensuring economic growth. According to Gordon, the steam engine marked the first truly significant event in the economic history of the world, driving rapid advancement for 200 years. The “great inventions” of the second industrial revolution were so important and far-reaching that it took a full century for them to achieve their primary effect, which he regards as the invention of powerful technologies for economic progress, essential for accelerating the pace of economic development. Economists liken innovations to steam power and electricity as general-purpose technologies (GPTs), possessing the potential for substantial impact across many sectors of the economy.

Moreover, scholars have reached a consensus on the criteria for identifying general-purpose technologies: they must be widespread, improve over time, and have the capacity to lead to new innovations. The authors align with the perspectives of foreign scholars who categorize information and communication technologies (ICT) alongside steam and electricity, which ushered in a new golden age of innovation and growth. For instance, the first industrial robot introduced by General Motors in 1961, the airline ticket reservation system that emerged in 1970, and the widespread adoption of barcode scanners and ATMs in the retail and banking sectors by 1980 all exemplify this trend. The initial personal computers that appeared in the early 1980s popularized text processing and spreadsheet functionalities, while the subsequent rapid development of the Internet and e-commerce post-1995 effectively culminated around 2005.

When several general-purpose technologies emerge simultaneously or in close succession, we can observe sustained growth over an extended period. However, if there is a significant gap between major innovations, economic growth will eventually decline. True innovation does not invent something entirely new and grand; rather, it recombines existing factors. As Brian Arthur states in his book "The Nature of Technology," to invent something, one must find it among what already exists.

For many enterprises, innovation is driven by five factors:

1. Teams require knowledge for successful operation.
2. Original and useful results cannot be achieved without creativity.
3. Employees attain exceptional results through motivation.
4. Diversity enhances the resilience and flexibility of the enterprise.
5. Leaders must possess fundamental qualities that enable them to be productive.

Economists refer to innovations akin to steam power and electricity as general-purpose technologies (GPTs). In recent years, numerous enterprises have adopted NASA's strategy of utilizing technologies to discover their innovative ideas and realize innovative opportunities. This strategy is known by various names, including "open innovation" and "crowdsourcing," and can be extraordinarily effective in preventing enterprises from reaching a dead end while assisting in problem-solving and achieving success.

Creativity is a critically important component in the process of creating value based on knowledge, which involves the ability to deviate from conventional approaches while generating the new; therefore, it necessitates proposing novel responses based on existing information and perceiving solutions where none have been previously recognized. The significance of knowledge as the raw material for creativity is now widely acknowledged by researchers. There is evidence that creativity is grounded in individuals' knowledge and their ability to combine disparate concepts, resulting in new ways of perceiving reality, manifesting in the capacity to generate original and simultaneously useful ideas.

To foster creativity, a certain accessibility to knowledge and information is essential, as well as a group of motivated managers equipped with a broad set of knowledge, skills, and practical abilities necessary for generating creative ideas. However, managers can take additional measures to stimulate the creativity and initiative of employees, which requires conducive conditions for the development of creativity. There are numerous strategies to encourage creativity. Some creative methodologies—such as creative problem-solving techniques, models of productive thinking, synthetic thinking, and synectics—represent complex processes through which various creative solutions to problems are generated, potentially employing other specialized creative techniques.

The contemporary information-investment component serves as a technological breakthrough for the nation and the construction of the state, accelerating economic development and growth. It is imperative to overcome the infrastructural gap by all means to achieve growth akin to that of China, but this necessitates that education and infrastructural potential grow simultaneously. In models that describe these processes, variables are categorized into two types. One group of variables is determined by the model itself—these exist within the system (endogenous)—while the other comprises a set of factors outside its boundaries (exogenous). Exogenous variables increasingly cause everything else, indicating that they are mutually determined. Exogenous variables (that is, those external to the system) should be regarded as causes or necessary conditions for growth. Economic exogenous variables describe phenomena such as state policy, investment in the public sector, and the conditions of the digital economy.

Digital models of societal development are simplified constructs employed to understand the significant driving forces and interactions. Their exogeneity and endogeneity are matters of choice, as in the realm of political economy, traditional exogenous variables have long been transformed into endogenous ones. A lack of infrastructure and appropriate technologies in the public sector and enterprises contributes to a persistent lag in productivity and the emergence of the phenomenon of impoverished populations. Structural innovative shifts, coupled with innovation, stimulate stable growth. Without them, productivity and growth will experience stagnation. The strategy and innovative policy of growth are aimed at implementing and sustaining structural shifts and accompanying training by avoiding barriers and structural obstacles, and investing in necessary human capital, knowledge transfer, and infrastructure. Stable growth and structural changes go hand in hand, stimulated by price changes and market driving forces.

The primary task of the government is to facilitate structural changes by investing in human capital, protecting people during the transitional period through income support and ensuring access to essential services, while promoting market drivers and the effectiveness of investment incentives. Research into thirteen economies with consistently high growth indicates that investments should exceed 25% of the total GDP. Key sectors for public investment include education and infrastructure, which form the foundation for catch-up growth. It is essential to build partnerships with private investors (both national and foreign) who can help finance and construct the necessary infrastructure, thereby facilitating stimulation and adaptation to change. The establishment of institutional infrastructure is as crucial to the development process as the economy itself. The most common reasons for low economic performance include a lack of openness to the global economy and government underfunding of critical resources—primarily infrastructure and education. Due to excessively low investments, their effectiveness in producing goods from a certain volume of raw materials diminishes. In impoverished countries, immediate daily needs exert political pressure, ultimately displacing investments with long-term returns. This situation has led to the assumption of the existence of a "poverty trap."

For instance, China encourages direct foreign investment by companies, as it is accompanied by a knowledge transfer effect. Until recently, this type of investment benefited from favorable tax regimes, including special export zones with supportive infrastructure and tariff exemptions on imports of intermediate goods that were subsequently re-exported. A comprehensive set of investments and reforms in the public sector is necessary to support long-term growth in infrastructure, education, and programs aimed at creating incentives to invigorate the export sector and enhance competitiveness. It is worth referencing China, where the stimulus package was primarily directed toward investments, particularly in infrastructure and education, resulting in a swift transition to high growth rates. People live in an environment where the physical infrastructure, by the standards of a developed country, is lacking.

Building this infrastructure will require many years, but the gap in knowledge, information, transactions, and connectivity in the virtual world is closing faster than anyone could have imagined even a decade ago. The reality is that our economies and ways of life rely on a set of resources, not only conventional ones, like infrastructure but also a much broader spectrum that encompasses the ecology of the planet and the knowledge base upon which we operate, supporting development and achieving sustainable growth. If we squander these resources, our material welfare and quality of life will inevitably suffer, compromising the opportunities of future generations. Most of us are convinced of the existence of a moral imperative that forbids such actions.

The complex transformations that await us in the next fifty years demand more than mere warnings against the degradation of "balance," and sustaining future growth will require more than the routine maintenance of the status quo. To adapt to the immense changes in the global economy on the horizon, the old institutional and intellectual resources will no longer suffice. We will require new elements: governance structures, technologies, incentive systems, institutions, and even values. We must develop the ability to address new challenges, some of which we can discern from our current perspective, while others will emerge later, remaining just beyond our sight. In this regard, the experience of developing countries is relevant. These nations have recognized the significance of decentralization, market incentives, and entrepreneurial innovative dynamics, alongside the growth of the information-investment component as a factor in the technological advancement of the nation.

It is perhaps fair to say that we stand on a steep and lengthy learning curve, with a long road ahead. The problems we discuss are complex because they are global and novel. Past experiences and conceptual methods will be helpful, yet we and future generations must forge our own path while navigating obstacles along the way.

Thus, it is essential to:

1. Develop information technologies, which are among the most powerful factors driving growth and expanding economic activity in the global economy.
2. Anticipate innovative progress in international markets, global supply chains, and access to information and services, integrating into the international space while promoting a new convergence developing in a rapidly changing world that fosters economic growth for both developed and developing countries.
3. Promote the growth of the information-investment component as a driver of the nation’s technological progress, focusing on developing innovative directions—robotics, artificial intelligence, biotechnology, and nanotechnology—which will contribute to technological breakthroughs and diversity in the technological landscape.