There are times when we all have to “up our game”. We are entering one of those periods where we have to relearn how to compete, how to win. The world is in the throes of some dramatic changes and the innovation gloves have to come off. Innovation capacity in many countries needs a new, more robust solution.
I wrote about “The present jobless innovation era we face” raising up the theory that Professor Christensen points towards, that we are working on the wrong types of innovation to create jobs. We are measuring our businesses in financial metrics that were more designed for periods of scarce money supply and not what most of our companies have today, cash in abundance, sitting on their books and a world ‘awash’ of cheap money. Professor Christensen calls this theory of his “the Capitalists Dilemma.”
Risk-aversion is dominating our Western thinking
The present situation is that we are in a period of risk-aversion where the innovation ‘bets’ are more incremental, more short-term pushing for greater utilization of existing assets that are designated by Professor Christensen as “sustaining or efficiency” innovations. He believes we need more “empowering innovation” – those that create jobs and invest capital across longer-term horizons than today.
In Professor Christensen’s original article he had published in the New York Times in November 2012 he believe the solutions are complicated and he has looked to “seed the discussion”. Firstly he rightly points out that the “challenge is not framed properly” as he suggests “even if there is robust growth there won’t be (necessary) job creation”. He argues Governments can’t dictate. I believe there is continued risk of even more exit of the migratory capital to lower cost countries and projects where the conditions seem more attractive unless the ‘dynamics’ surrounding the need for innovation plus jobs can change significantly.
We certainly need “innovation + jobs” and not exported!
In my view and to a large view until we focus on all the factors that need to promote innovation plus jobs, our economies in the West will never recover that sustaining ability. A place where capital is deeply invested again, so it provides growth ‘within our borders’ that can, over time, allow us to return to prosperity.
We need these “sustaining and efficiency innovations” as they liberate capital but it is in providing the right conditions for this capital ,plus all the idle cash today that is simply sitting on businesses books, to be moved towards this “empowering innovation” we need for job creation.
Professor Christensen ‘floats’ three places to start in making changes within our economic systems to allow innovation activity to break free and become job creators. To change the types of metrics we use, to move these into more people orientated ones. Secondly, to change the capital regimes that shift the thinking on investment incentives, where longer term productive investments held can make that horizon shift due to these tax incentives put into place for investing in longer term, bigger budget innovation. Thirdly is changing the politics where consumption has dominated into different “empowering” decisions. I’ll come back to this another time. My feeling is, as these stand they are little too “apple pie” for me – sweet, initially satisfying but not enough.
Getting your jacket off
Let’s firstly go where the jackets have already come off with a far more substantial set of proposals to “win” this innovation race. Rob Atkinson of the Information Technology and Innovation Foundation (ITIF), a Washington DC-based technology policy think tank along with Stephen Ezell have explored this innovation dilemma in their book “Innovation Economics- the race for global advantage” (released in September 2012) and offer a web site on this whole area www.globalinnovationrace.com
Within the book, the web site and ITIF they outline the arguments for significant innovation change and provide many sensible solutions to win the innovation race. They have put these under the eight “Is” needed and cover each one in a chapter. These are under the following (organizing) headings:
- Inspiration. Setting Ambitious Goals
- Intention: Make innovation-based competitiveness a National Priority
- Insight: Improving understanding of innovation performance
- Incentives: Encouraging innovation, production and jobs IN the United States
- Investment: More public funding for Innovation and Productivity
- Institutional Innovation: Doing new things in new ways
- Information Technology Transformation: broaden the IT transformation base
- International Framework for Innovation: Everyone plays by the same rules.
Key digital platform technologies are places for real job creation also
They (ITIF) also suggest there are at least six key digital platform technologies today that need significant longer-term capital investment. These are broadband- the critical enabler, next-generation wireless communications that speeds it all up, health IT for easier access to a comprehensive view of patients, intelligent transportation systems for real-time intelligence, a smart electric grid to ‘sense’ location of power, contactless mobile payments to use their cell (or mobile) to pay across society. They quiet rightly suggest without Government help to catalyse deployment of these platforms progress will be slow.
Then we have “Innovation Economics” as a growing doctrine
The book and Wikipedia I would think have the same source but the Wikipedia source does provide a terrific outline of this growing doctrine that is suggested should reformulate conventional economics theory so that knowledge, technology, entrepreneurship and innovation become positioned at the centre of a model, and not independent forces trying to influence it.
This Wikipedia source goes through historical origins, offers the innovation doctrine as a more advanced theory, provides evidence and the geography associated with many successful innovation efforts, that are deliberate concerted efforts by combining markets, institution and policy-makers and use the geographical space. This then finishes up with worldwide examples and countless references.
Competitiveness and Innovative Capacity
In January 2012 a report came out from the U.S Department of Commerce in association with the National Economic Council entitled “U.S. Competitiveness and Innovative Capacity. This report may be a long read of 160 pages but lays out many ways of “Moving Forward” across a well laid out set of the parts that make up the innovation context
These steps suggested include 1) rising to the challenge, 2) the keys to innovation, competitiveness and jobs, 3) Federal support for research and development, 4)Educating our work force, 5) Infrastructure for the 21st Century, 6) Revitalizing Manufacturing, 7) The Private Sector as the Engine of Innovation to offer a fairy comprehensive evaluation of the issues, challenges and investment opportunities to bring about a more “empowering innovation”.
Again within this report in their “Moving Forward” suggestion lies ten recommendations or factors that are suggested as ways for the United States (or even Europe) to regain a pre-eminent capacity within innovation.
It is a race each country engaged in innovation activity will want to win as this building of innovation capacity is the bedrock of economic growth and future prosperity. Otherwise, if we fail to grab this fully, we will face continued decline, short-term disruption and long-term stagnation.
Jobs can be created; our skills need adapting and refining
Of course everyone will continue to need a basic education or knowledge but they will need sharpening the skills and their motivation more. When we lack motivation, we lack that curiosity that becomes so important to innovation. The intrinsic parts of being curious, persistent and willing to take risks needs to be instilled far more into our education and thinking.
The call for education reform is gathering but we need to be careful in the rush to ‘reform’ we don’t “throw the baby out with the bath water” in our haste.
I was reading and storing away for future reference an article “What 100 experts think about the future of learning” that again places learning into its multiple parts: of using technology, sharing education openly and differently, where creativity and innovation fit to foster a new spirit, the internet and new media and its potential impact on teaching and learning, leadership, educational technology , the brain and psychology, technology education, different teaching methods and our institutions. The list does provide a fairly comprehensive view for the impact of learning in the new ways we need to move towards.
Need a job? Invent It.
Thomas L Friedman offered a view in a New York article piece “Need a job? Invent it” suggesting these are dangerous times where high-wage, middle-skilled jobs – those sustaining our past economies – are in the past. These have become only high-wage, high-skilled to recalibrate this middle-class and their dependency.
The article further explores the view of Tony Wagner, a Harvard education specialist, that we need to send out every child as “innovation ready”, ready to add value to whatever they do. Wagner argues “the capacity to innovate – the ability to solve problems creatively, or bring new possibilities to life – needs these skills of critical thinking, communication and collaboration and are far more important to meet today’s challenges than academic knowledge”.
So who is doing this right out there in the world? “Finland is one of the most innovative economies in the world,” Wagner said, “and it is the only country where students leave high school ‘innovation-ready.’ They learn concepts and creativity more than facts, and have a choice of many electives.
Who is putting in place those stronger foundations within this innovation race?
I finish here on the competition and it is everywhere. Not just in a region of one country, or on one continent but across the world. The race is truly on, on who organises the relevant conditions to allow innovation to thrive, to offer the place where “empowering innovation” and where jobs are part of the equation.
There are examples in Europe- not just in Finland, Norway, Sweden but in Switzerland, parts of Germany, regions of Italy, Spain, France, Ireland and the UK. They benefit but equally suffer from centrally driven policies ‘handed down from Brussels at the EU level or constrained in “restrictive” thinking at National level. Many of these “selected” places are simply “pockets of innovation” and lack this cohesiveness and coordination to really accelerate innovation into far more “empowering”to benefit society as a whole.
The BRICS of Brazil, Russia, India, China and South Africa are the emerging group are all developing or newly industrialised countries, distinguished by their large, fast-growing economies. These are the emerging new superpowers where they are experimenting but laying in the necessary building blocks to support and accelerate innovation. They are sucking in the capital and provide the horsepower in people, both those that have gained from a focus in high skilled areas and those with basic education. These combine in that drive to move up the social scale. Ambition is a highly motivating force and those within the BRICS have it. They are searching for advancing their global innovation advantage and know what it means to them personally and collectively.
Coming back to Professor Christensen he suggests the Chinese and Taiwanese in one interview. “Because they measured return on invested capital, every semiconductor company in the U.S. except Intel decided to outsource their microchip production. All that production went to Taiwan. Morris Chang [who pioneered the $28 billion semiconductor foundry industry] now owns half the chip production in the world”. When Professor Christensen asked him why he wanted chips on his balance sheet, he said, “Because I measure profitability in cash, not ratios.” I don’t see why American companies can’t think that way.”
Technology Convergence – What’s your plan?
Lastly in our lightening round-up of emerging innovation power spots, one that we all really need to take seriously, South Korea. This came from Rohit Talwar, CEO of Fast Future under Technology Convergence – What’s your Plan?
I leave it in its entirety, as it states so clearly the organizing power of a country that is determined to win a larger part of the innovation race and is intent to achieve it:
“I have just returned from South Korea where I was delivering a keynote speech to a cross-industry forum on how to prepare for and benefit from the opportunities arising from industry convergence. South Korea has made a major strategic commitment starting with government and running through the economy to be a leader in exploiting the potential opportunities arising from the convergence of industries made possible by advances in a range of disciplines.
These include information and communications technology, biological and genetic sciences, energy and environmental sciences, cognitive science, materials science and nanotechnology. From environmental monitoring, smart cars, and intelligent grids through to adaptive bio-engineered materials and clothing-embedded wearable sensor device that monitor our health on a continuous basis – the potential is vast.
What struck me about the situation in Korea was how the opportunity is being viewed as a central component of the long-term future of Korea’s economy and how this is manifested in practice. Alongside a national plan, a government sponsored association has been established to drive and facilitate cross-industry collaboration to achieve convergence. In addition to various government-led support initiatives, a range of conferences are being created to help every major sector of the economy understand, explore, act on and realise the potential arising out of convergence.
I am fortunate to get the opportunity to visit 20-25 countries a year across all six continents and get to study and see a lot of what is happening to create tomorrow’s economy. Whilst my perspective is by no means complete, I am not aware of any country where such a systematic and rigorous approach is being taken to driving industry convergence.
Those who study Korea know that this approach is nothing new for them – long term research and strategic planning are acknowledged to have played a major role in the evolution of its knowledge economy and rise of Korea and its technology brands on the global stage. Coming from the UK, where it seems that long-term thinking and national policy are now long-lost relatives, I wonder why it is that so few countries are willing to consider – or capable of taking – such a strategic approach.”
To sum up our need for Innovation Job Chasing
Until we see a change that indicate a longer-term view of profitability and start measuring innovation differently we are stuck far more in the present jobless innovation era I outlined in my last article
Yes, we do have a “Capitalist Dilemma” but it runs deep in its fault lines and its many weaknesses nicely highlighted by Professor Christensen but for me, any current dilemma needs deeper evaluation today, not in 12 or 18 months’ time. We need to look far more boldly at the Innovation Solutions and the economics and knowledge creation within this. In all real honesty, it is urgent and vital for each countries race for global advantage and future prosperity we become organized and see that “empowering innovation” and job-creation become more central in our thoughts and future decisions.
Can we really overcome the barriers to innovation we have, as each of our developed countries are so mired in old style legacies. We need ones that can still take making profit into the equation but in different ways to ‘release’ capital funding that does bring jobs fair and square back into the innovation solution we actually need, to solve growing societal challenges? Ones that seek collaboration across all sectors of society, who recognize much needs real change.
These need long-term investments and all the relevant parties working on solutions. At present far too many are playing the waiting game and that has to change. It does seem many are also simply “re-arranging the deck chairs on the Titanic” who will be overtaken by events and not providing real solutions of a current problem.