The opportunities ahead

Innovation is not linear, we know that. We know that innovation happens in waves, trigger by the advent of groups of new technologies that open new and many times unexpected opportunities. Why this happens that way, honestly we don't know, but there is plenty of evidence that this is an stable pattern.

The good news is that this is happening and these are the bad news too. After decades of mostly incremental innovation, except in the IT sector, now we are witnessing how in many fields, solar, automobile, lightning, photography, books, ... things are changing and are changing radically.

The solar industry is going from crystal, dominated by Asian companies, to thin film. Automobiles are heading towards the electric car, lightning is progressively going to be led based. Photography stopped the megapixel race and is going to better IQ, especially in low light. Books, well you didn't missed the kindle, did you? anyway you can play catch up with the coming Apple tablet :-). Higher education is becoming more flexible and more on-line.

In general, in almost any sector we can observe how things are changing, but not at the pace of the past decade, they are changing dramatically. Sometimes, because of a technology that has been developing for years, reached maturity to be generally adopted. That is the case of on-line education, electronic books or the 4/3 standard in photography. Others, because external circumstances are pushing a dramatic change, such in automobile, solar, ... Finally others because of its huge promise, like in lightning or again automobile.

It is pretty clear that in moments where innovation accelerates is when winners and losers for the next decade are defined and, as many times, this happens in a recession. The aftermath of the recession normally shows different players in the field, players that were not there before.

This small reflection, leaves us with three questions:

1. Who are going to be the new firms, the losers and the winners of this race?
2. How can countries that invested millions of tax-payers money in R&D capture the return of their investment effectively?
3. What should we do to be in the list of winners?

I don't have a clue about the first question, so I better try to shed some light on the other two.

Capturing value from innovation is a very different game from R&D. Very different in almost everything, from the skill set to its dynamics and the relative importance of basic ingredients.

If we want to answer 2 and 3, we have to take a look at which countries have in place this skill-set and a fertile territory for innovation. The list is long, but not so long. In the previous post we had a ranking for the most innovative countries, rankings can be right or wrong, maybe other factors should be taken into account of weighted differently, but believe me, the overall picture is not going to change that much. Look at that list, you'll find the answer.

Yes, my answer is USA first, the leading Asian nations and the leading European nations. But with a caveat. In order to develop innovation needs to be adopted, there is no innovation without adoption and there is no development of innovation without adoption. Consumers, betting on incomplete, faulty products and services, allow them to develop.

We need to take a look at the market, if we want to understand this process. And the market is USA and Asia. European nations, especially north european nations, lack size in their internal markets and the ability to be good players in external markets. They do well, but not as well if they were American or Asian companies. So, my personal bet, focuses on USA and Asia.

One more factor, who is innovation hungry? we has empty capacity to fill? who needs this leap?who has politicians that are supporting it ? The list of countries is long, but we will all probably agree that one is in the top. This one is USA.

A few words for the losers. Pinpointing the losers is also pretty easy. Basically if you don't aim for it, you'll never get it. Many countries forgot to see this crisis as an opportunity or think that their companies alone can do the whole work and retreat from doing anything. Many countries focused their action only on social policy forgetting everything else (big error --- companies and not governments create jobs!!!). Countries that don't have and are not promoting innovative companies either their own or trying to attract them. Yes, these are the losers.

What is pretty clear, is that a decade from now, the economic world will be a different one.

BW - The failed promise of Innovation

On June 3, Business Week published a really interesting article of Michael Mandel with a provocative argument: we have lived through an innovation shortfall during the last decade, specially in the US, and this is the main culprit of the problems that we face today.

The long and detailed article walks the reader through a decade long series of unachieved promises, pointing out that it has been the gap between expectations and unfulfilled promises what caused the actual financial problems, finally managing to bring down the whole economy.

Data from studies like The Atlantic Century, a benchmark exercise of the degree of innovation of the 40 most innovative countries, where the US shows the least progress of the 40 nations in innovation competitiveness and innovation capacity through the decade (1999-2009) further sustains the arguments providing some concrete evidence.

The article however, convays an optimistic message by proposing that innovations are there, but delayed. And even if they had flourised in the IT sector, in order to be systemic encompassing several technologies and producing a significant impact in our lives, they must flourish in several sectors and combine.

Even if it seems difficult to agree that was an innovation shortfall and not an inadequate regulation of the financial system together with an overly optimistic appreciation of risk what caused the actual downturn, we all probably agree that the article has a point.

In fact we know that innovation is not linear, but has a characteristic S shape that can be rapidly and easily appreciated in technological innovation.

We also know that systemic innovation depends on the diffusion and adoption of technologies in a wide community to flourish.

Although the adoption process is now much faster than before, the lenght of the S shapes depends mostly on the translation of high level knowledge onto low-med level knowledge. This translation depend mostly in the percieve capacity of value transformation in a 3-5 year period range, which rules out many technologies where transformation is not so straighforward.

This is for example, a significant difference between Asian's and American's innovation system and probably accounts for part of the shortfall. Companies simply focused too much in innovations where value could be obtained faster. In the time of fast growing Internet and Financial companies this will rule out many sectors and effectively postpone or delay many innovations being a clear disadvantage.

A second reason that can explain this perception of shortfall is that in times of big changes, old companies agonize while new ones, even if being there, are still not recognized as their successors. This is perceived with clarity in the early stage of disrupting technologies, even if the sales of traditional lamps is low, leds still don't take a significant portion of market share.

Finally, systemic innovation, depending on a wide diffusion and adoption of the technologies that are going to constitute its building blocks, can take a significant amount of time to appear.

However, even if the US innovation system has significant problems when dealing with a) long term innovatons, b) systemic innovations and c) multi-stakeholder innovations and this 3 areas should be addressed by the administration if America wants to maintain its lead, it seems bizarre to portray the decade of Internet as an innovation shortfall.

Having said that, it is true that there is no better time for addressing the problems than the one where the need to do so appears more compeling, and this time is now. Let's therefore salute the contribution of Mandel maybe not for its capacity of explaining what has happened but for its ability in pointing out fast and future problems that could stagnate our innovative capacity and by doing so prevent growth.

--- Written after listening to the podcast

The podcast provides a better explanation than the article. Mandel did look at companies that really tried hard beyond the 3-5 year boundary and his thesis is not that the innovation shortfall is responsible for the actual crises, but that without this shortfall this crises wouldn't have existed, thesis on which we all can probably agree.We will live in a different world.

Mandel doesn't find anything fundamentally wrong in the way innovations were pursued, just that they were harder to achieve than expected. This dissonance between what we anticipate and reality has always been there, but now is probably amplified by the advent of Internet.

If that is true, the next ten years we all will have a flood of innovations.

El primer CIO de los Estados Unidos

Hoy hemos conocido el nombramiento y las primeras declaraciones de Vivek Kundra, el primer CIO de Estados Unidos. Vivek Kundra tiene 34 años, nació en Delhi, sus padres emigraron a Tanzani y el Swahili es su primera lengua. Pero más allá de estos datos de por si reveladores, es interesante lo que nos cuenta y lo que ha hecho. En sus primeras declaraciones nos habla de la Admnistración debe dejar de pensar que es algo especial y que necesita una tecnologia especial y comprar off-the-shelf como todo hijo de vecino. Nos habla también de incorporar IT en la administración y dejar a un lado esa situación extrana que tienen algunos funcionarios cuando en sus casas hay más y mejor tecnologia que en su lugar de trabajo. En definitiva su discurso es un discurso de adopción de la tecnologia en las empresas y en la administración, y de adopción de tecnologias comunes. Pero Kundra habla de más cosas, habla de estandares abiertos, es un firme partidario de cloud computing y entiende la IT como una herramienta de innovación. En este sentido debemos destacar algunas cosas como su concurso de innovación Apps for Democracy, un concurso de mush-ups destinado a promover la innovación en los usuarios (aquí aún en algunos despachos "Sociedad de la Información"="Acceso a Internet + Enseñar a Navegar + Investigación de Telecos" ... una pena). ... como con bastantes de las decisiones de la nueva administración americana ... pues ... sana envidia!!!

Solving the last mile problem - Privately owned Fiber

Tim Wu from Columbia and Derek Slater from Google just published a working paper about Internet deployment in the New America Foundation, a think tank aiming at providing ideas for America’s future that has in the board people like Eric Smith, etc..

The idea is simple and straightforward. The last mile has been always the problem for Internet development. It has been said that is too costly, that not enough incentives exist for telcos to build a fiber infrastructure, etc… So --- let’s shift the ownership of this last mile to the customer (broadly speaking, the authors present a model where municipalities, condos, cities, etc… could have the ownership).

The paper revises the situation in Asia, where governments heavily invested in the infrastructure and in Europe where an increasing separation between the ownership of the fiber and Internet services is actively pursued by policy makers.

The authors state that this will finally solve the last mile problem and bring the dawn of fiber and with it really advanced applications (e.g. holography is discussed).

This model is not that different from the one being proposed by muni or free wifi communities where diversity of ownership in the last mile is also proposed. Obviously this will spur the development of fiber because there are enough communities in the world that already not only can afford it but that are eager to have it.

It also will spur innovation allowing new applications, services to be deployed and a new market segment to emerge.

However, there is an effect that is not discussed in the paper and I would like to comment. The core argument is the high cost of the deployment. Let’s for the sake of the example compare it with the history of the PC. Wasn’t this also the core argument against the deployment of the personal computer? What happened? The PC brought a new industry with new economies effectively reducing its costs because of scale and competition acting together. Now PCs are taking on supercomputers, the last niche (see the new offer from Dell).  

Exactly the same can happen in the telecommunications market if regulators agree on opening it!!  

Porter, Corea y la Estrategia de los paises

Se quejaba Porter en un podcast de Business Week reciente - del que no he podido encontrar el artículo y por eso no pongo el enlace - de la enorme diferencia en cómo se hacían las cosas en Corea o en los países nórdicos en Europa y en Estados Unidos.

Contaba que había asistido hacia poco a una seria de reuniones con el gabinete del primer ministro de Corea donde se había discutido cúal debería ser la estrategia del país en estos momentos de crisis. Se había hablado parece de sus ventajas competitivas y de qué y cómo deberían potenciar para hacer frente de la mejor manera posible a los retos que se avenicinan. Tambíen comentaba que había no hacia mucho, asistido a sesiones de trabajo similares en Dinamarca y finalmente se preguntaba por qué eso no era posible en Estados Unidos. Por qué los Estados Unidos seguían dominados por políticas atomizadas, pendientes de que surjan de la iniciativa privada elementos que tiren del país.

Cómo todos sabeis, Porter no es precisamente un amigo del intervencionismo estatal, es un republicano confeso - aunque de Boston, lo que quiere decir que es un republicano liberal, sea lo que sea eso. Porter no creo en un estado grande y fuerte y cree en la iniciativa de las empresas y la libertad de los agentes económicos para llevar a cabo iniciativas de peso. 

Sin embargo Porter también creen en la coordinación y en la necesidad de establecer prioridades y de sumar fuerzas y voluntades. Y es cierto, que el actual sistema en los Estados Unidos propicia mucho más políticas a corto plazo que solucionen los miles de problemas concretos que todos y cada uno de los lobbys presentan que una política real de país.

Mientras escuchaba el podcast no pude por menos que pensar en nuestro país. Muchas de las quejas de Porter las ves reflejadas cada vez que hablas con un responsable político de temas como innovación y te menciona y detalla la larga lista de prioridades que debe afrontar. Es cierto que hay elementos que nos acercan a la manera de funcionar de los paises nórdicos o Asiáticos, como muestra el - por muchos denostado - plan de I+D+i catalan que coordinó Alfons Cornella, un plan que sin duda tiene muchas deficiencias, pocos acuerdos y aún menos concreciones pero que se hizo con mucha gente, no con toda, pero con bastante y eso es un paso.

Estos días estoy evaluando la entrada en la European Network of Living Labs de los nuevos candidatos, más de 100 han pedido su entrada. Este es una de los ocasiones en las que tienes la oportunidad de comprobar las diferencias en la organización de la innovación en los diferentes paises y si, haberlas hailas! Probablemente las más notables estan entre Europa y los paises asiáticos. Los paises asiaticos presentan candidaturas integradoras, arropadas por el Ministerio de Innovación e Industria de turno, con todos los actores relevantes, con realidades y con presupuestos detrás. En cambio las Europeas son mayoritariamente atomizadas, sin soporte gubernamental, sin infrastructuras y sin un plan definido. 

A medio camino está la de Cataluña, donde si que estan todos los actores, si hay un soporte claro del gobierno, si se han trabajado objetivos y si que hay alguna infrastructura. Lo del presupuesto, bueno ... vamos a dejarlo. 

Visto el panorama, repasando las candidaturas, a uno le quedan de verdad pocas dudas de quién van a ser los países más innovadores en 20 años. No, no vamos a ser nosotros, no.

P.S. Me comenta Alfons Cornella que Infonomia no coordinó el Plan de I+D+i catalan, sinó que solamente organizó y sintetizó el debate de unas 20 mesas redondas de expertos a petición del PNRI, y extrajo las las ideas y propuestas más relevantes que posteriormente fueron utilizadas por los responsables del PRNI. 

Agradezco la corrección, ésta es la tarea a la que intentaba referirme en el post, que por concreción acabé denominando "coordinación", totalmente inexacto pero que espero que no haya llevado a ningún lector a un malentendido.

Alfons Cornella e Infonomia es una de las personas - organizaciones que más han hecho por la innovación en este país y que mejor conocen su realidad (en mi modesta opinión él es quien mejor la conoce, nadie como él ha estado en tantos municipios en tantas empresas y ha recolectado tantas experiencias)