Technological innovation is what pushes us forward—and it’s what makes some of us rich beyond our wildest dreams. As a consumer, tech innovation is fascinating because it’s what grants us access to the latest devices and software products. As an entrepreneur, innovation or the lack thereof will make or break your tech company; if you can create a new product that truly changes the landscape in some key way, you could make a fortune and build a legacy for yourself. As an investor, learning to sniff out the businesses and areas with the highest potential for tech innovation could help you win big on your long-term plays.

Of course, for technological innovation to occur, the conditions have to be just right. So what are the conditions that give rise to innovation?

A Healthy Economy

First, you need to have a relatively healthy economy in place. This isn’t to say that innovation can’t happen during an economic downturn, but it’s much more likely to occur. Good economic conditions mean that more people have time resources, and the confidence to start their own businesses. Investors are more willing to take risks, and people are more willing to spend money on new technologies. In harsh economic conditions, money is much tighter, and entrepreneurs and inventors have a harder time getting the things they need to continue pushing forward.

Minimal Regulations

It also helps for an environment to have minimal regulations to contend with. Laws and regulations can be a good thing; for example, strict regulations in the medical field prevent consumers from having their information shared unnecessarily, and prevent novel solutions from entering the market too soon.

However, excessive regulations can also make it difficult to innovate. For example, let’s say that in order for a new solution to enter the market, it needs to be tested over the course of two years, and needs to be tested by thousands of people. Suddenly, the costs of development are much, much higher, and the earliest you can start generating revenue is much further away; entrepreneurs see this, and consider going after much lower-hanging fruit.

This is why we often see more tech innovation in areas with looser regulations. For example, early in the development of self-driving cars, Arizona offered practically unlimited reign of its streets for autonomous vehicle testing. Many companies flocked to the state to develop their self-driving vehicles there.

Strong Leadership

For a company to innovate new technology, it needs to have strong leadership. A good leader will serve many functions, including:

  • Establishing a vision. Good leaders are capable of setting the tone for the organization, and creating a high-level vision for everyone to follow.
  • Setting priorities and directing the workforce. Similarly, leaders will be capable of directing the workforce with the right priorities and assignments. This will prevent wasted time, and ensure the right projects get the most attention.
  • Motivating the team. Tech innovations come from teams who are excited and enthusiastic about their work. A strong leader will provide the team with energy and motivation, so they can continue doing their best work.
  • Pushing the limits. Leaders also know how to push their teams to get the best possible results; they might set more aggressive deadlines and/or push for tricky-to-develop features to get the best possible finished product.
  • Refining the output. Finally, strong leaders will treat the finished product with a scrutinizing eye, ensuring the best possible quality and returning to the drawing board if it doesn’t meet expectations.

Raw Talent

Sometimes, the leader is also the raw talent; occasionally, you’ll hear of inventor-entrepreneurs who start their own companies and create their own products from scratch. But more often, innovation emerges as the perfect union between a strong leader and immense raw talent. But, innovator beware: there are often major differences between freelance developers and agencies. 

Within a team, you need people who know what they’re talking about, and who have many years of experience in their respective field. Only with this experience and knowledge will they be able to push beyond what’s already been developed.


In the business world, competition is often seen as a threat. A competitor is a business or individual who stands to gain some or all of your market share, and who has the power to undermine your earning potential. But for technological innovation, some competition is a good thing.

Having a strong competitor in the market already can help you in three important ways:

  • Ideas and inspiration. First, you can look to them to see how they’ve run their business in the past. What things have they done right? What is it that their customers love about their technology? Can you capture this feeling in a technology you develop on your own?
  • Point of differentiation. Second, you can figure out what they’re missing, or what they’ve neglected, and develop it for your own tech products. For example, they may be failing to reach a certain target audience, or their core product may be missing a key feature that their audience craves. This is your opportunity to differentiate your business from theirs; in other words, your competition serves as an inspiration point to one-up them.
  • Motivation to proceed. Competitors also serve as excellent motivators. Many genius inventors never move forward with their ideas because they don’t feel any pressure; there’s no reason to rush, so they never take action. But with a competitor threatening to close the gap on you, you have no choice but to continue taking action.

Access to Resources

Countless promising startups have floundered simply because they didn’t have access to ample funding or resources. They didn’t have a lucrative VC deal, or didn’t have the backing necessary to afford them all the materials, hires, and conditions they needed to succeed.

This can also be a byproduct of financial management. A startup could have access to millions of dollars of capital, but if it doesn’t spend that money wisely, it may still lack the tech products, staffing, and other resources necessary to innovate.


You might think that innovation is more likely in an open environment, where people are allowed to do whatever they want. But in reality, most innovation emerges from environments with a handful of important constraints. In fact, some major tech companies (including Google) have developed environments that offer a balance of specific constraints and open freedom; for example, you may be required to put in 30 hours a week on specific projects, while you have 10 hours to work on personal projects or initiatives you personally prioritize.

Constraints are also helpful for motivation. For example, if you give an engineer a tight deadline to accomplish something, they’ll be more likely to accomplish it than if you give them more flexibility in their delivery.


It should come as no surprise to learn that many tech innovations are the product of experimentation. Their inventors were tinkering with different approaches, different settings, and different circumstances, and eventually stumbled upon the perfect combination. This is why it’s important to test things in a multitude of different environments, and try out many novel approaches when attempting to create new products. Experimentation is what is driving innovation in AI–the oft touted job killer of the new technological revolution. 


Some degree of adaptability is also required, since technological innovations are rarely perfect on the first try. You need to spend time refining your idea, tweaking it to see how it works in a number of different circumstances, and you need to be prepared to move on if it doesn’t work. Too many inventors and entrepreneurs get fixated on a singular idea of what their product is supposed to be, or how it’s supposed to work, and they end up blinded to its true potential.

It’s also important to be adaptable on a business level; merely having an innovative technological product is no guarantee that it’s going to be well-received by the public. You need to be willing to adapt your messaging, marketing, and distribution to fit market needs.

Understanding the recipe for technological innovation and putting it together for your own business are two entirely different things. No matter how experienced you are, or how well you understand the course of innovation, tech development is elusive, and you’ll need to be persistent if you want to find success.

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