Innovation is often associated with laboratories, patents and scientific breakthroughs. Yet a growing share of innovation today emerges outside classical research and development activities.
A recent study on New Innovation Models in Switzerland, commissioned by the Swiss State Secretariat for Education, Research and Innovation examines how companies innovate across different industries.
One of the key insights is that innovation models vary significantly between sectors.
This shift highlights the increasing importance of non-R&D innovation, particularly in sectors where digital technologies, data and new business models play a central role.
Innovation Models Differ Across Industries
The study shows that industries such as pharmaceuticals, biotechnology, ICT and advanced manufacturing remain heavily R&D-driven. These sectors frequently develop new technologies and introduce radical innovations, often supported by strong collaboration between science and industry.
In other sectors, however, innovation follows a different path.
Industries such as financial services, food production or parts of the medical technology sector rely more heavily on incremental improvements, service innovation and process innovation rather than large research programmes.
In these environments, innovation often emerges through the application and integration of existing technologies rather than through the invention of entirely new ones.
Innovation Does Not Necessarily Require an Invention
This observation reflects an important distinction that is often overlooked in discussions about innovation: the difference between invention and innovation.
As discussed in a previous BICon Insight on innovation vs. invention, an invention creates a new technical solution, while innovation refers to the successful introduction of a market novelty that creates value.
- An invention creates a new technical solution.
- An innovation, by contrast, refers to the successful introduction of a market novelty that creates value.
Innovations therefore do not necessarily require a preceding invention. Frequently, innovation results from the creative combination of existing technologies, processes and organisational capabilities to address a market need.
A good illustration is the emergence of exchange-traded funds (ETFs), a major financial innovation that emerged from the combination of existing elements such as passive investment mandates and electronic exchanges, addressing a significant market demand for low-cost diversified investment exposure.
Many companies do not invent new technologies themselves. Instead, they innovate by applying and integrating existing technologies in new ways, embedding them into products, processes and operating models.
Non-R&D Innovation in the Digital Economy
The growing importance of non-R&D innovation becomes particularly visible in the digital economy.
Technologies such as cloud computing, artificial intelligence and advanced analytics are typically not developed by the companies that ultimately generate economic value from them. Instead, innovation often occurs when these technologies are integrated into business processes and customer interactions.
Examples include:
- Data-driven decision making
- Integration of AI into existing systems and workflows
- Automation of operational processes
- Personalization at scale
- Creation of new digital services
- Development of new business models
A well-known example is ride-sharing platforms such as Uber, which combine smartphones, GPS, digital payments and platform software to create a new mobility service without inventing the underlying technologies.
Another illustration is mass personalization in digital services. Platforms such as Netflix or Spotify combine data analytics, recommendation algorithms and cloud infrastructure to tailor content and services to millions of individual users simultaneously.
A similar pattern can also be observed in financial markets. Electronic market makers such as Citadel Securities combine high-speed connectivity, automated trading algorithms, large-scale data processing and sophisticated risk management systems to provide liquidity across global markets. Their model interacts with retail broker platforms such as Robinhood, which route customer orders to these market makers. The arrangement is often enabled by payment-for-order-flow mechanisms, which allow brokers to offer commission-free trading while market makers monetize retail order flow.
In such cases, the innovation lies not in the technology itself, but in how it is applied, combined and embedded into business processes and operating models.
Innovation Is Increasingly About Business Model Design
The findings of the study therefore suggest a broader understanding of innovation.
While research-driven invention remains essential in many industries, an increasing share of innovation today emerges from the application, integration and recombination of existing technologies.
In a digital economy, innovation therefore often happens less in laboratories and more in the design of business models, platforms and operating models.
Understanding this distinction is important for companies and policymakers alike – because supporting innovation increasingly requires not only scientific research, but also digital capabilities, organisational transformation and the the ability to integrate technologies into scalable operating models.
This article was written with the support of AI (ChatGPT)