The four innovation archetypes
When assessing an economy's capacity for innovation，it is common to use a macro view that focuses on metrics of capabilities.The most common metrics focus on data such as R＆D spending，numbers of PhDs granted，annual patent applications，and research papers published.While these metrics may indicate increasing capacity and capabilities，they do not address innovation in its broadest sense，which includes not only scientific inventions，but also successful commercialization of ideas and technologies，novel business models，and innovations in production processes.Nor do these measures of capacity provide any information about how successful a nation is at innovation.For example，China scores highly on R＆D spending，PhDs，and patents，but Chinese companies in fields where innovation involves lengthy research efforts and scientific breakthroughs are not yet globally competitive.
The four innovation archetypes have different innovation processes and different requirements for success.For example，in the science-based innovation archetype，innovation involves the commercialization of basic research，conducted by companies and academic institutions，often in collaboration.Industries in the science-based archetype spend heavily on R＆D.By contrast，industries that fit the efficiency-driven archetype are more laborand capital-intensive.The innovation process in efficiency-driven industries involves scaling up quality improvements or cost reduction techniques.Customer-focused innovation requires a deep understanding of consumer needs and behavior.
Science-based innovation involves the development of new products through the commercial application of basic research.Industries such as branded pharmaceuticals，biotechnology，semiconductor design，and specialty chemicals rely on scientific innovation and may spend 15 to 33 percent of revenue on R＆D.The innovation process can involve basic research—discovering a new drug molecule or material，for example—and might take ten to 20 years from initial investigation to commercialization.Science-based innovation often involves collaboration among companies and academic researchers within a nation or across borders.Having a supportive environment for the long-term efforts that scientific innovation required is essential.This includes tax policies that reward long-term investments in R＆D，and rigorous intellectual property protections to ensure that innovators reap the profits generated by their discoveries.Highquality universities play a central role in science-based innovation by conducting basic research，training talent，enabling academic collaboration and exchange，and spawning new companies.Nations that are strong in science-based innovation generally provide government funding for basic research and fund science education as“public goods”.Global competition plays a significant role in shaping science-based innovation.Products such as semiconductor chips are heavily traded，and incumbents have accumulated large patent portfolios that help them retain market share and enter new markets.
Engineering-based innovation involves the design and engineering of new products and often involves the integration of technologies from suppliers and partners.Industries that rely on engineering-based innovation include commercial aviation，auto manufacturing，and communications equipment.These industries have moderate to high R＆D intensity，typically spending 3 to 13 percent of sales on R＆D，and can have product life cycles of five to ten years or longer.Engineering innovations are often protected by patents.Knowledge in these industries is typically based on accumulated learning that is acquired over time through experimentation and learning by doing.Knowledge can be transferred via employee-to-employee interaction within an organization and through dealings with component suppliers and technology partners.For companies to succeed in engineeringbased innovation，they need access to professionally trained talent and a supportive environment that provides strong intellectual property protection.Engineering-oriented companies benefit from strong industry clusters，and policies that increase access to global sources of technology，talent，and knowledge.
Customer-focused innovation involves solving consumer problems through advances in products，services，and business models.Industries in this category include Internet software and services，appliances，and consumer packaged goods.These industries are characterized by high marketing intensity and short development cycles，with rapid iterations of new concepts.Because many products and services in these industries tend to be tailored to local needs and regulations，local innovators often have advantages.However，some customer-focused businesses，such as appliances，are globally traded.The innovation process in customer-focused industries depends on understanding and addressing consumer“pain points”and needs，and identifying underserved markets and niches.Access to large consumer markets is important for understanding customer needs as well as for scaling up innovations rapidly.Companies in customerfocused industries benefit from large local demand，easy access to capital，and policies that support entrepreneurism.
Efficiency-driven innovation is aimed at improvements to reduce cost，shorten production time，and enhance quality in manufacturing.Efficiency-driven innovation is particularly relevant in capital-and labor-intensive industries，such as commodity chemicals，textiles，electrical equipment，and construction machinery.These industries are capital intensive，with investments in plant，property，and equipment equivalent to about 30 percent of sales，but they have low marketing intensity.The innovation process depends on in-depth knowledge of production processes and materials to reduce cost while maintaining or improving quality.This involves novel approaches in product development，supply-chain management，manufacturing，or service delivery.A strong cluster ecosystem promotes collaboration among suppliers，manufacturers，and customers.