As the economist Paul Krugman once said, “productivity is not everything, but in the long run, it is almost everything”. Productivity is among the most important sources of social and economic welfare, but innovation is also the most important source of productivity growth. The difficulty with the innovation processes is that they are evolutionary; we do not know exactly where they are going, and we cannot predict them. To understand how innovation works, the Systems of Innovation approach has emerged – a perspective with strong roots in the Schumpeterian and Austrian schools of economics. Putting this approach into practice, however, has been difficult. One of the most recognised experts in this field, Dr. Charles Edquist from Lund University, has worked on a model that could provide guidance: the holistic view of the innovation policy. In this podcast, we ask Charles about how this approach to innovation can enable us to understand innovation better, what are the determinants of innovation processes and how they can strengthen innovation systems, especially as the basis for good policymaking.