Transformative Innovation Policy: An Analytical Review of Key Methods and Challenges

Systems such as energy, food, and mobility are currently organized in unsustainable modes of production and consumption, with negative consequences on social justice and planetary health. Disruptive and systemic innovations are required, beyond solely improving technologies or financial instruments, to address wicked and complex societal and environmental challenges. Transformative innovation policy (TIP) is a new generation of innovation policy that promises to enable just transitions in these socio-technical systems. The promise is to be able to tackle wicked problems and polycrisis of inequities, social injustices, environmental degradations, and accelerated impacts of climate change through new policymaking approaches that support, nurture, and scale transformative socio-technical innovations. We review emerging TIP literature to discuss key elements in TIP design and implementation, such as experiment, monitoring, and learning through formative evaluation; codesigning a systemic theory of change; enhancing policy capabilities; building knowledge infrastructure; and empowering communities of practice. Two cases in Spain and Indonesia illustrate key aspects of the TIP method. Our major contribution lies in articulating what an alternative innovation policy could look like to mitigate transformational failures observed in current system change efforts and explore how directionalities such as being democratic, elevating decolonial sensibilities, enhancing well-being, and navigating futures can make innovation policies more transformative. Policymakers must adopt new ways of thinking and acting on persistent challenges, beyond the traditional way of setting social and climate targets at the beginning of policy process and a summative policy evaluation at the very end. TIPs of the future should incorporate multiple directionalities negotiated among diverse actors and knowledge systems and by learning from failure in context-sensitive ways.