Are Trends = Innovation?
INNOVATION = TECHNOLOGICAL NOVELTIES & MARKET PENETRATION

There are many meanings and definitions for the word innovation. The Austrian economist and former professor at Harvard University, Schumpeter defined innovation as "the successful implementation of a technical or organizational innovation. He puts it in a nutshell: broad market penetration is key for a true innovation. The path from invention to innovation starts with commercial implementation, i.e. bringing the idea or new technology to market, and continues when the idea or new technology really becomes established on a broader and longer-term basis. Of course, this depends on competing developments or further new releases. In the biotech sector, too, there are some examples of how even supposedly groundbreaking innovations failed to catch on. Drugs or therapies did not reach predicted peak sales. Some technological innovations were too early, the market was not really ready for broader diffusion or they were not yet technologically mature.

Trends can arise quickly. In the negative case, this is also referred to as hype. This often develops out of a herd instinct, which can be observed again and again on the stock market. In part, this is based on hot biotech recommendations by supposed experts.

Buzzwords on current biotech trend topics include: Personalized medicine, gene therapy, CAR-T therapies, immuno therapies, microbiome, cloud biology, mRNA technologies, gene silencing, synthetic biology, bio-energy, bio-printing, precision fermentation, CRISPR/CAS (gene editing), AI (artificial intelligence) in biotech and pharma and so on. All "omics" are not to be neglected either.

The classic methods for evaluating companies, projects or technologies are quantitative-monetary methods based on figures from cost, revenue and earnings accounting. The assessment of trends does not really seem to work with these methods.  In order to at least approach the identification of trends in a systematic and well-founded way, it is possible to use other methods from technology and innovation management.

We are talking here about more qualitative-heuristic methods such as: Technological Forecasting, Morphological Box, Megatrend Analysis, Trend Extrapolation, Expert Interviewing or Delphi Technique. In addition, there are portfolio-based and holistic methods.

The term "megatrends" was coined by futurologist Naisbitt (1929-2021) in the 1980s.  Horx, the founder of the German Future Institute, developed four parameters as conditions for a megatrend: (1) they have a duration of at least several decades, (2) they show effects in all areas of society, in the economy, in consumption, in changing values, in the way people live together, in the media, in the political system, etc., (3) they are global phenomena, and (4) they are multilayered and multidimensional.

In addition to megatrends, the economist Pfeiffer (1933-2019) included in his teachings so-called factual trends such as: integration, quantitative and qualitative performance improvement, know-how intensification respectively de-materialization and miniaturization as well as extreme or engineered properties. Biotech contributes to both types of trends.

In order to generate real breakthroughs, it might be key actually not to formulate answers to questions that have been known for a long time. Rather, a so-called technology push can create completely new questions or needs and thus markets (best exemplified by Apple). In order to systematically grasp the great potential of biotechnology and biological systems and their individual components, it is worth taking a look at the functions they fulfill.

This requires a certain abstraction to basic technical elements: Material, energy and information in combination with transformation, transport, storage, state change and conservation. Based on this, predictions can be made about theoretically possible and possibly completely new applications. 

The biological cell represents a highly integrated and interconnected structure of molecular functional systems, whose diversity of performance is supported only by four macro-molecular structural classes, which have a by evolution optimized and complex structure with high functional specificity.  In the bacterium Escherichia coli alone, for example, there are about 7,000 different organic substances, including about 3,000 proteins and more than 3,000 nucleic acids. In animals, there are about five million different proteins.

In addition, basic biological molecular principles enable processes such as "self-assembly", molecular recognition respectively interaction, conformational changes, electron and proton transport as well as the formation, splitting or regrouping of chemical bonds. Synthetic biology aims to exploit these capabilities.

Classic quantitative valuation methods often reach their limits in biotech because the industry has its own special rules. Here, developing "suitable" approaches is still a major challenge. The former Life Sciences Commission of the DVFA (German Association for Financial Analysis and Asset Management) has already thought about specific qualitative valuation criteria in a publication from 2005 (only available in German language).

Even if this was aimed at the valuation of entire companies on the capital market, it is also applicable for an assessment of trends or technologies. The criteria unique position & attractiveness of the technology as well as degree and strength of innovation would be applicable here. The latter could be classified via further sub-indicators (basic principles) using scoring models.

Assessing what would ultimately be truly innovative or even revolutionary in technological innovations or trends is no easy task. Defining the "right" criteria and evaluation variables is crucial. It is true that purely technological criteria ("scientific breakthrough") are not sufficient to assess the desired economic success.

The unique position and attractiveness of a technology can also be determined via sub-indicators and with the help of scoring. Based on the considerations and the Technology Portfolio Model (TPF) of the economist Pfeiffer (former Chair of Industrial Management at the University of Erlangen-Nuremberg), I have dealt with applying this to the biotech sector in my dissertation.

This approach appeals to you? Even if it seems rather theoretical? We could discuss suitable methods for your questions. In addition, we continuously observe and "evaluate" technologies and the market. Identifying trends aims at searching and finding early and broad technologies or trends with potential for development and penetration.

This is done in our Biotech.Maps project. If you would like to learn more, please contact us.