Innotrends: Rethinking financial ecosystems for innovation

Innotrends highlights innovation trends as explained by innovation analysts covering common expert insights. This article provides a view of financial analysts and investors concerns for innovation.

As economic conditions keep predicting unstable environments for the launch of new businesses, products and services, financial analysts and economics experts describe how micro and macro changes are forcing innovation to reach targets that go beyond profitability. Instead, new initiatives show that creating higher value through policies, optimized margin management and a smart approach to data and analytics enable to fuel new ideas for change. As a result, economics experts shape a new reasoning scheme that enables innovators to come up with new ecosystems and models that reinvent our approach to economic growth.

Innovating beyond profitability targets

WAI Beyond Profitability

Finance and economics experts highlight initiatives aiming at maximizing the rise of high value businesses and models by avoiding biases throughout venture capital process.

” Founders Factory, a U.K. startup accelerator, has developed an AI platform that identifies high-potential entrepreneurs. The hope is to avoid the unconscious bias that normally privileges some demographic groups and backgrounds, and prevents others from getting ahead.”

Read more:This AI engine takes common biases out of the venture capital process“, Ben Schiller, Fast CoExist

According to financial analysts, most successful initiatives are driven by values that go beyond profitability target.

“In fact, some not-for-profit multisided platforms — hardly household names — have helped drive the major technological revolutions of the last several decades, including the internet and mobile. “

Read more:Some of the Most Successful Platforms Are Ones You’ve Never Heard Of“, David S Evans and Richard Schmalensee, HBR

Business and firms are seen by finance and economics experts as being more successful under privately owned structures.

“But firms today are no longer looking out at endless opportunities. Instead, they have to struggle for their very survival in an intensely competitive world of slower growth, lower returns, and more frequent economic crises. In this brave new world, public companies are losing their dominance: their share of America’s GDP, workforce, and assets has fallen by 50% over the last quarter of the 20th century.”

Read more:Why the 21st Century will belong to family businesses“, Josh Baron, HBR

This is one of the reasons why financial experts highlight the need for tax incentives to revive innovation as a economic driver for growth.

“California’s economy is the seventh-largest in the world. However, from a longer-term perspective, although the state retains many competitive advantages, the study says some indicators suggest its innovative capacity is declining, or will unless preventive steps are taken. “

Read more:Tax credits can boost California innovation based economy“, Nitin Dahad, World Economic Forum

As a result of changing economic conditions for innovation, global leadership in innovation spendings is rapidly evolving, showing rise of new powers in regions driving business growth.

“According to its estimates, China in 2015 become the region’s largest tech spender at US$209 billion, bypassing Japan–which spent US$203 billion–for the first time. In 2014, Japan spent US$229 billion, compared to China’s US$192 billion.”

Read more:China bypasses Japan as biggest APAC tech spender“, Eileen Yu, ZD Net

Fueling new ideas for change

WAI Fueling new ideas

New business are tackling key social needs such as handicap access, while generating new mobility services.

“«À terme, le concept est largement applicable à la mobilité personnelle ou au handicap, ce qui ouvre des opportunités d’évolution vers le marché grand public. Notre ambition est de créer et d’imposer un standard de la roue électrique, une solution universelle pour motoriser n’importe quel engin à roues», indique Antoine Juan, bien décidé à positionner ez-Wheel comme un leader de la mobilité de demain.”

Read more:Levée de fonds: plus de 5 millions d’euros pour la tous électrique autonome ez-Wheel“, Entreprendre

New initiatives are also being developed to anticipate the rise of ecosystems and business models which will require changes in interactions and stakeholders management.

“We have three goals : promote the sector in France and abroad, facilitate dialogue with the regulators, public administrations and government and bring closer the Fintech community by networking and exchanging best practices.”

Read more:Fintech has not failed taking off in France and let me tell you why.“, Anaïs Raoux, Medium

As their experience grow, financial experts specializing in startups are now coaching entrepreneurs to make the most of their financial infrastructure through data and analytics software.

“Le modèle dynamique des startups en fait des entreprises “à part” qui nécessitent d’être suivies de près pour assurer leur croissance. Il en résulte que la gestion financière d’une startup s’affranchit en partie des usages habituels. Explications.”

Read more: “Start-up: les secrets d’une bonne gestion financière”, MB and Scott

The use of data is indeed underlined by economics and financial experts as a key differentiator for future market growth.

“The Financial Services market has undergone a fundamental change since the 2008 recession and organizations that pro-actively leverage technology are going to outperform in today’s reduced return on equity environment.”

Read more: “Financial Services”, Prevedere Software

Thinking finance through new systems

WAI New financial systems

Financial experts underline the need to rethink financial objectives towards higher value generating systems.

“Although it is uncertain whether the new investors have the ability to foster growth in the long term, they have delivered outsized near-term shareholder returns. Few management teams will be able to match the new benchmarks solely by cost cutting, and few are positioned to deliver enough growth to meet the challenge without also significantly improving their profit margins. In fact, the industry needs to change its trajectory, transitioning from slow, margin-dilutive growth to faster, margin-accretive growth.”

Read more:The Shareholder Value Triple Play“, Strategy and Business

This objectives should be supported by changes occurring at financial policies level.

“This obsession with monetary policy explains why what passes for economic growth policy in the United States is in fact little more than business cycle stabilization policy. It is past time for this obsession to change. If the U.S. is going to flourish again, it must put technology-driven productivity first, which requires restoring robust public and private investment in the drivers of growth: research, infrastructure, and investment in new machines, software, and skills.”

Read more:Our approach to Economic Growth Isn’t Working“, Robert D. Atkinson, HBR

At the same time, finance and economics experts remind that widely used economics indicators do not necessarily reflect a daily business reality.

” Stocks more than doubled between the spring of 2009 and the middle of 2015, a period in which the underlying economy only grew about 18 percent. Meanwhile, according to Gallup, only about 55 percent of Americans in 2015 owned stocks in some form, down from 62 percent in 2008. The declines in the stock market are happening largely in isolation from other things that happen when the economy shrinks.”

Read more:The stock market is not the economy“, Daniel Gross, Strategy and Business

As a result, strategic thinkers and innovators joining forces to invent new concepts where improved ecosystems could contribute to build more intelligently driven economic growth.

“With support from this broad ecosystem, pioneering THNKers delivered wildly varying insights and opportunities for public/private partnerships, digital platforms, and on the ground efforts: an app that allows people in need to locate and access housing, food or medical services using controlled digital currencies; a property management approach that specializes in efficiency upgrades, allowing owners and renters to enjoy reduced costs and an opportunity for earned equity of low-carbon housing; and a specialized agency that matches well-resourced “Corporate Leapers” with vetted high-impact social ventures to amplify engagement and outcomes.”

Read more:THNK Vancouver releases Future of Capitalism Challenge Report“, Kaz Brecher, THNK

 

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