Effective innovation: What drives or constrains its adoption, scaling and spread?

New ideas and technologies drive growth and better living standards, but they don’t create value on their own. Businesses must adopt it, use it productively, scale it and spread it more widely. This new study, commissioned by ICC, looks at what it takes for businesses to adopt, scale and spread innovation. Drawing on case studies of six organisations, it offers policymakers a practical way to pinpoint why innovation stalls and to target their support where it will make a real difference.

Why do or don’t businesses adopt and scale innovation?

Diagnose before you prescribe. Policy often starts with a ready-made answer: more research, easier access to technology or bigger financial incentives. Each can help, but none guarantees that a new idea will actually be developed into an innovative solution. Policymakers should first analyse what is truly holding back the innovation and target their support accordingly.   

Using the Incentives, Capabilities and Financing (ICF) Framework the report sets out three conditions needed by businesses:

1. Incentives: a good reason to innovate
2. Capabilities: the skills, equipment and know-how to do it
3. Financing: money to sustain the innovation activity until returns materialise

What questions should policymakers ask themselves before suggesting solutions?

When innovation stalls, policymakers should ask themselves three questions:

1. Where is progress getting stuck? Is it in development, adoption, absorption, scaling or diffusion?
2. Why has progress stopped? Is it due to a lack of incentives, capabilities or financing?
3. Where does the constraint originate from? Is it inside the or external to the business, or is it in the weak links between the two?

Learn how effective innovation works on the ground

Six company case studies bring the analysis to life.

• Polymateria, a developer of biodegradable-plastic technology, got access to specialised equipment through publicly funded research facilities due to finance constraints. Once the technology worked, the bottleneck shifted to credible testing and protecting the intellectual-property of their formula.
• Google Research Africa shows that an AI model may cross borders instantly, but productive use still depends on local language, data, skills and partnerships.
• Scientists at a South African public research institute were reluctant to leave secure jobs to start TokaBio. That changed when a scheme let them try for up to four years with the option to return. Risk-tolerant public funding and regulatory pilots also helped public research reach rural markets.
• Bayer had money, regulatory expertise and manufacturing strength but partnered and shared resources with a smaller firm with promising science.
• Novonesis had more ideas than it could pursue and involved customers early to decide which were worth backing. Its biggest hurdles were that what works in a lab doesn’t always work in a factory and that rules on biotechnology differ from country to country.
• In Brazil, a research institute backed by the mining company Vale had both the science and finance. Yet some promising inventions stalled because they fell outside the company’s core business, were too disruptive to test or lacked a clear route to market.

Across these cases, one lesson stands out: the bottleneck moves. Early research may require shared infrastructure or risk-tolerant finance; adoption may depend on training and technical support; scaling may need specialised facilities and adaptive regulation; and diffusion may rely on predictable approvals, common standards, market access and intellectual-property protection.

Eight lessons for policymakers

1. Focus on productive use, not access alone
2. Invest in capabilities that firms cannot efficiently provide themselves
3. Enable micro-, small- and medium-sized enterprises to innovate and grow
4. Help promising research reach market
5. Match finance to the stage and risk of innovation
6. Use regulation and standards to reduce uncertainty without prescribing the technology
7. Protect intellectual property, confidential know-how and trade secrets
8. Keep business involved in policy design