Tuesday, October 21, 2008

The end of the Orthodoxy …

Just a few months ago we were convinced that we knew a few things. Nobody, even in his wildest dreams will ever think that the American government could nationalize the financial system or part of it. Companies were responsible for experimenting in the market; they bear the risks and the rewards of their endeavor.

All that, has suddenly finished.

 The same happened in Innovation. If a sector was badly bleeding, the hopes were on the same market to restore its integrity.  This way, America has lost one sector after the other against other nations that were investing enormous sums of money targeting technologies in the best of cases and market opportunities in others. However, sentences like “industrial policy” were clearly outside the orthodoxy. We have seen how, because of this type of policy, American companies were progressively focusing in the short term, research and production were shipped abroad and companies were doing mostly marketing and innovation in America.

However, that was yesterday … Hopefully in a few months America will have a democrat for president and in control of the Senate. A democrat that has a strong support in the technology sector and aims for objectives as high as ending the dependency from petrol. And, for the first time in many decades, free to experiment, free from the orthodoxy.

Looking back at Europe, we can witness the results of our tries to imitate Silicon Valley. Lots of money poured in reproducing conditions and closeness in the hope of getting similar results. Most of the times results were mixed to say the least. Venture capital was not readily available, opportunities lacked the size to spur and ignite entrepreneurs, technology was just not there … Most of the times we have a body that tries to resemble but lacks the soul.

However, there have been deviations from these types of policies. We are all familiar from the deviations coming from the East, the conglomerates from Japan or Korea or the “let 1000 flowers flourish” experimentation of Chinese. In Europe there were many too, among them the long tradition on collaboration and setting objectives together of Germans or Finish.

I don’t think that nobody can believe that after such an intervention in the financial sector, Detroit will be approached in a way similar to the one in the past. Or, opportunities in solar energy and batteries won’t be pursued with a long term vision. Yes, obviously things will change in Innovation policy and will probably change fast.

Nobody knows the way, however if you want some clues, in my opinion we should look at operations like the one of AMD in Germany or if you want something closer to America … just look at the AMD operation in Albany. In fact, the brightest period for Innovation in America was the one just after the war, fueled by the arms race and a world of opportunities and optimism. And, this period was one of huge State intervention in concrete programs and even in concrete industries.

Of course, many things have changed and lessons learned then don’t apply in a world where Information Technologies have changed so many things, but probably some of the main vectors of that period are at least worth to examine.

We are certainly entering a period of pragmatism, a period without orthodoxy and this will unleash many possibilities that were, until now, not even explored. This will be good for America and we could see there a new gold era, this will be also good for the European countries that were trying to conduct innovation in ways that didn’t fit with the “laissez faire” paradigm. And this will be also good for countries like Spain, where the old paradigm never fitted, however these ones … will have to … innovate more.

No matter if it is a white cat or a black cat; as long as it can catch mice, it is a good cat

Deng Xiao Ping   


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