The Importance of Cultural Innovation

When we invest, we often evaluate factors like the team behind the company, how innovative is the product, the size of the total addressable market, do they have a reasonable burn rate, and how clean is the cap table. What we often overlook is the broader societal cultural context and insights that lay the groundwork for an innovative product or service to succeed.

Scientific Research Shows How Vital Cultural Innovation is to our World

 

Photo: Dids

The impact of societal culture on technological, industrial and economic innovation has been well established in academic research. Similar or identical innovations can succeed or stall simply due to differing cultural contexts(1). Culture isn't just a fertile medium for innovation, it's also an important catalyst. Studies have also shown that intentional cultural engineering was a significant factor in successful technological transitions(2). All of this is to say that an important and complex interplay between culture and innovation has been widely observed and documented.

Yet culture is most often ignored or dismissed as irrelevant or too difficult to control within technological, business, and financial environments. Instead, measurable characteristics like speed, scale, technological & financial advantage are focused on and optimized within models that assume logical, predictable, and linear cultural behavior and adoption. This is especially dangerous considering the ever-increasing pace at which culture moves and evolves. A startup could be perfectly positioned one year and on the fringe of relevance the next.

 

 

Cultural Innovation is the new Evolution

 

Photo by Petr Ganaj from Pexels

This cultural problem is not new; but today's innovations require a magnitude of cultural change for widespread adoption that is unprecedented. The next decade will force (is already forcing) us to confront transformative redefinition around fundamental ideas like employment, work, companies, money, food, health and humanity.

And this is where culture has yet another role. In several recent studies, culture has also been observed to fulfill the role of a second inheritance mechanism(3). A way that we (and other animals) through the transmission of important ideas, values, and behaviors, extend the reach of our biology. In other words, today culture has supplanted evolution as the primary vehicle for advancing our species.

Taken together, culture is at once medium, catalyst and enabler for the necessary evolution we will need to undertake for many of the most important innovations to succeed. In our view culture has an outsized role relative to the underlying technological innovations themselves.

Cultural Innovation & Investing

 

As an investor, you need cultural insight and the ability to shape culture as an integrated part of your skillset. Cultural awareness and the ability to shape culture is vital to the success of your investments and portfolio. To that end, cultural understanding and awareness features prominently in how we evaluate trajectories, innovations and entrepreneurs. We believe that the companies who will succeed will be those that recognize the essential role of culture and the complex interplay of culture and technological innovation, and bring value to both.

If you'd like more information about our trajectory planning process that helps us connect culture and business opportunities, or would like to speak about how culture is impacting a specific category, let's talk.

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