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Cambridge Institute for Sustainability Leadership

Radical innovation and disruption

This project studies the potential for radical innovation to disruptively catalyse the transition to a sustainable economy. The subject of radical innovation and disruption is addressed using an interdisciplinary perspective, bringing together contributions from the fields of complex theory, macroeconomics, dynamic systems and technology/engineering.


 

Applications in practice

  • Future risk and opportunity
  • Business strategies and models
  • Measures, targets and disclosure

 

Contribution to CISL’s core research themes

Net zeroZero carbon

 

Circular economyCircular economy 

 

Protection of natureProtection of nature

 

Inclusive and resilient societiesInclusive and resilient societies

 

 

 

 

 

 

 

About the project

The area of radical innovation and disruption is a well-established field of study, dating back to Joseph Schumpeter and his work on ‘creative destruction’ in the early 1940s. Whilst some scholars have highlighted that innovation, technical transformations and institutional change are strongly correlated with economic development, the discipline of disruptive innovation has been mostly addressed from a business perspective. The evidence shows there is a gap between the disruptive innovation theory that is currently endorsed and the actual impacts of this phenomena in markets, industries, and societies. Aiming to address this gap, this study is an ambitious, interdisciplinary attempt to explore how radical innovation and disruption can catalyse the transition to a sustainable economy.

The project has three main objectives:

  1. Provide an updated theoretical framework for the process of radical innovation and disruption, in the context of a dynamic policy environment.
  2. Identify the main gaps and opportunities to foster radical innovation in strategic technological and business sectors.
  3. Develop a strategy to facilitate radical innovations in key technological and business sectors. The project includes a framework for the co-production of ideas with key stakeholders.

Impact and relevance

Following recommendations from the scientific community regarding the urgency of decarbonising the global economy, a growing number of people, institutions, businesses, cities and countries have expressed their commitment to reach carbon neutrality by 2050. In less than a year, the number of pledges to reach net zero emissions from local governments and businesses has roughly doubled, as climate action routinely features in COVID-19 recovery plans produced by organisations such as the Energy & Climate Intelligence Unit and the UNFCCC (UN Climate Change). Whilst this is positive news, there remains a growing gap between the actual global emission pathways and those required by the net zero emissions trajectory. Moreover, ambitious decarbonisation plans usually rely on the large-scale deployment of negative emission technologies in the next few decades. The evidence shows, however, that a substantial disparity exists between the upscaling and rapid diffusion of negative emission technologies depicted in these decarbonisation scenarios and current progress in innovation and deployment. With so much at stake, we cannot just hope for the right technology to be developed and deployed in time. Instead, we need to build a strategy based on a balanced portfolio of climate policies, technological development, industrial strategies and business incentives that can ensure a resilient decarbonisation pathway.

Workstreams

The main objectives of the research project are:

  1. Provide an updated theoretical framework for the process of radical innovation and disruption, in the context of a dynamic policy environment.
  2. Identify the main gaps and opportunities to foster radical innovation in strategic technological and business sectors.
  3. Develop a roadmap to facilitate disruptive innovations in key technological and business sectors that can accelerate the decarbonisation of the global economy.

Each objective is addressed by a working package (WP), as described below:

WP1 - Updated theoretical framework. An interdisciplinary perspective on the links between radical innovation and policy

The dominant economic paradigm which has shaped the global policy landscape over the last decades follows the ‘rational choice’ approach advocated by the Intergovernmental Panel on Climate Change (IPCC). This approach is rooted in the representation of people (alongside institutions and countries) as rational agents, all operating in perfect markets with full access to information and perfect foresight (efficient market hypothesis). This representation does not allow for well-known behaviours that people are likely to exhibit, nor does it recognise well-documented market imperfections. Most importantly, it must be noted that phenomena such as innovation, learning-by-doing, economic fluctuations, and expectations in finance emerge from interactions among heterogeneous agents under imperfect information and markets, which cannot be captured by reductionist approaches based on agents with perfect foresight.

This project proposes a more realistic representation of radical innovation dynamics in integrated assessment modelling, using an approach based on complexity science. Phenomena such as increasing returns to scale, phase transitions and self-organised criticality—all of them ignored by most economic models—are absolutely crucial for understanding radical innovation. Continuing long-term collaborations on the development of dynamic system modelling tools, this project will work with teams at the University of Exeter, the Open University and Cambridge Econometrics to use the integrated assessment model E3ME-FTT-GENIE for study of the dynamic influences between policy portfolios and radical innovation in various economic sectors. Understanding the connection between policy and innovation is a necessary step towards building policy portfolios that can ensure a resilient decarbonisation strategy.

WP2 - Identifying the main gaps and opportunities to foster radical innovation in strategic technological and business sectors

Aiming to complement the scenario analyses described in WP1, WP2 will identify the gaps and opportunities which foster radical innovation and disruption. Specifically, this workstream will search for potential niches where radical innovation can take place, and the sectors where radical innovation has particularly high potential for disruptive decarbonisation strategies. This includes:

  1. Identification of the technological and business sectors with the highest potential for generating drastic changes through radical innovation. Among others, potential foci might include geoengineering, artificial intelligence, big data, green/development finance, and food production.
  2. Characterisation of the main global markets and supply chains where the aforementioned technologies and businesses operate. In this regard, current and future supply of labour and availability of natural resources are of particular relevance
  3. Establishment of the main market players (public and private entities) within these sectors, followed by classification of the most relevant links between them. Trade, supply chains and policy will all be examined.

Based on information collected in WP2, this project will be able to identify relevant players that can influence radical innovation in strategic areas. Some will be market players—such as international corporations—that may play a leading role in the development of new technologies and business models. Others—including R&D funders and government departments—will be facilitators that can generate conditions for others to innovate.

WP3 - Develop a strategy to facilitate disruptive innovations in key technological and business sectors

Combining a clear understanding of how disruptive innovation works and the ways in which it is influenced by policy (WP1) with the identification of key players and sectors (WP2), this research project will synthesise a long-term strategy to foster radical innovation in relevant strategic areas (WP3). Building on the work developed in WP1 and WP2, WP3 will create a roadmap to facilitate disruptive innovations in key technological and business sectors, with the intention of accelerating decarbonisation of the global economy.

Outputs

The outputs of the Fellowship can be grouped in three main categories:

  1. Publications: The core of scientific work developed under the Fellowship will be submitted to top academic journals. In addition to peer-reviewed literature, whose publication often takes considerable time, this project will also aim to reach relevant audiences through other types of outputs—including policy-briefs, technical briefs and working papers—which are typically produced at a faster rate.
  2. Workshops: A number of workshops for academics and policy-makers are in development, aiming to gather relevant inputs that feed into the research process and disseminate the results to specific audiences. For the next two years, resources have been allocated to develop technical and policy-oriented workshops in China, India, Brazil, the EU and the UK.
  3. Broader engagement events: Aiming to reach audiences beyond academia and policy-making, a broader set of engagement events will be developed for people working in specific industrial sectors. Taking advantage of initiatives such as the Cambridge Science Festival, the research will also be presented to the general public.

Collaborators and funding

This work is supported by a philanthropic gift from Paul and Michelle Gilding.

The main research collaborators include:

Prof. Jorge Viñuales and Prof. Laura Diaz Anadon, University of Cambridge

Dr Jean-Francois Mercure, University of Exeter

Prof. Neil Edwards and Dr Philip Holden, The Open University

Hector Pollitt, Cambridge Econometrics

Additional sources of funding

Complementary research activities, connected with the Fellowship but funded through different research projects, include:

Project FRANTIC - Financial Risk and the Impact of Climate Change (funded by NERC)

Project EEIST - Economics of Energy Innovation and System Transition (funded by BEIS and CIFF)

Funding from the Scottish Environment Protection Agency (SEPA)

Contact

Dr Pablo Salas

Dr Pablo Salas

The Prince of Wales Global Sustainability Fellow in Radical Innovation and Disruption, supported by Paul and Michelle Gilding

Email: pablo.salas@cisl.cam.ac.uk

“We are living in a pivotal age in human history, where our actions can influence the state of our planet for hundreds, if not thousands of years. The time to act is now.”

Dr Pablo Salas

“I’ve always believed it takes a crisis to trigger real change and this well sums up where the world is now - we are facing multiple, global, existential crises. The change required to address these crises is fundamentally an economic transformation. Through this Prince of Wales Fellowship I could see an opportunity to rigorously research economic transformations and take the lessons learnt into both the business and policy making communities to help drive faster action on sustainability.”

Paul Gilding