La app de los 115M de pesos ($8.8M) - 25/11/2013

Estos días hemos estado muy ocupados en ESADE con un workshop con el World Bank, un par de eventos tipo TEDx y Smart City Expo. Todo alrededor de las Smart Cities. Allí hemos tenido oportunidad de escuchar muchas historias de cómo el código abierto, compartir código y metodologías como Living Labs están avanzando en el mundo local. Una de estas historias ha logrado resonar en muchos de nosotros porque es una muestra de la creciente capacidad de las comunidades de desarrolladores en América Latina y por ende de su capacidad de realizar propuestas viables, brillantes y transformadoras.

En Marzo del 2013 el gobierno mejicano abrió un concurso para la realización de una app para el congreso y para ello abrió un concurso que dotó con 115M de pesos (alrededor de unos $8.8M). Este concurso creó sin duda una gran expectación por lo exagerado de su cuantía, de hecho un experto señaló como más adecuada la cifra de $500,000. Sin embargo, a la comunidad de desarrolladores mejicanos liderada por Codeando México  le siguió pareciendo exagerada y vio en este concurso una oportunidad de usarlo como ejemplo de que estos temas se podían y deberían enfocar de una forma diferente.

Para ello lanzó un reto a la comunidad de desarrolladores ofreciendo como premio el 0.01% del premio original, es decir 115.00 pesos, equivalente a unos $880, es decir unas 10,000 veces más barato y un iPad mini de premio. El título del reto fue sin duda sugestivo: "Derrocando a la mexican tech mafia!.

Aproximadamente diez días después (el 23 de marzo- el reto del gobierno se presentó el 13 de Marzo del 2013) se habían presentado más de 100 apps, algunas de ellas de altísima calidad. De ellas se escogieron tres. El congreso anuló el concurso oficial, escogió las apps elegidas y se sumó a la entrega de premios.

Este es un ejemplo más de uno de los temas candentes en la administración. La realidad del mundo del software ha cambiado radicalmente en las últimas décadas. Hoy en día, ésta viene caracterizada por ecosistemas mixtos donde coexisten empresas y desarrolladores individuales, organizaciones for profit y non-for-profit. Apple y Google han entendido perfectamente el mensaje y la App Store y Google Play son una muestra de esta diversidad. Es hora de que desde lo público hagamos lo mismo, la app de los 115 millones de pesos y la reacción de la comunidad de desarrolladores mejicanos es una muestra de ello.

  

Innovation Policy - From monetary incentives to behavioral and experimentation - 10/3/2013

When we think of policies, we inevitably think of taxes or fiscal stimulus. Innovation is certainly no stranger. The promotion innovation is often implemented as a tax relief for investments categorised as innovation.

I guess we are all immediately able to recognise the limitations and shortcomings of this practice. Just to follow with the line of reasoning above, once the tax relief is effective, suddenly many investments are re-labeled as innovation investments or if the implementation is costly and the elasticity of the sector is low ... they fail to attract companies that want to implement it.

We all are aware that monetary incentives go as far as they go and very often backfire. This is particularly true when we deal with a complex system where solutions vary a lot in their effectiveness as a result of small changes in either their design or implementation.

Complex systems are the result of multiple factors interacting together and many agents that try to adapt to them. Markets and particularly innovation, are good examples. As a result of this interaction, excellent solutions are close to the ones that don't work, there is not a smooth path, an incremental way to approach best solutions.

In addition to that, the new all digital world makes more necessary to put in place specific policies. We need to promote apps that use Open Data or innovation in citizenship by developing new participatory systems or the change in business models in the electrical grid allowing co-generation. All this is certainly very specific, very precise to be able to be addressed by generic monetary stimulus.

Therefore leading agencies and leading cities are promoting new types of policies where the monetary incentive takes the backseat.

A good example of this is the use of challenges - competitions - in order to promote innovation in a particular field. This is not new, the XIX century is full of them, but actual IT platforms make it straightforward and global. DARPA competitions or any Open Data or apps4x challenge such as Bigapps, apps4Amsterdam, apps4Barcelona, apps4Finland, etc...

This type of policies draw more on the behavioural aspect than on monetary incentives, and they backfire less. A good example of these policies is the use of the concept of free versus a small payment. Humans don't react linearly between free and small amounts, free always draws more than a proportional level of attention.

Therefore the use of small payments is useful in situations such as traffic congestion. Because traffic congestion is also not linear, a proportionally small reduction of it produces a more than significant impact, the use of small payments can lead to this small reduction and therefore to solving a problem that looked insolvable. A good example of this is Stockholm, where this small tax was introduced, taken away and reintroduced, producing a kind of natural experiment. And by the way, surveys show that the population is happy about the tax (it is important that the tax doesn't limit the behaviour of a sector of the population because of affordability ... this is certainly not the case of Stockholm).

Therefore it looks like this kind of problems are better solved by using behavioural policies. However, if this is a complex system how can we be sure that they are appropriate?

The easy and complex answer is that you cannot. In complex systems is very difficult to predict the REAL outcome without trying, therefore experimentation is a must. Experimentation can we implemented in multiple forms but it is the only way to really learn about colateral effects and overall effectiveness and experimentation has to lead to getting rid of the policies that don't work, modify and perfect the ones that are promising and strength the ones that work.

Policies have to be easily understood and known by the actors in order to be effective. Nothing more useless that an unknown policy or one that only tax-experts are aware of. This is the reason why they must be simple, limited in number and easy to understand. Attention, particularly now, is scarce.

Summarising, the future of innovation policy is headed towards simple, limited in number, behavioural and experimentation enabled by IT and IT platforms that aim to address specific sectors and needs. This is certainly a dramatic change and we look at the reality of our legislation system and the organizations that implement policy ... a long way to go. However, I suspect that it is the only effective one ...

Three years ago ... and why now, why again - 03/10/2013

It has been three years since my last blog. In these three years many things happened both in my personal life and in innovation, the subject of this blog ...

As Bill Gates once said, Innovate or Die is the logic behind in the market we are in, or if we want to express it in other words, most of market now competes on innovation and this is probably more true than ever.

However, the way in which this competition occurs is changing fast. Innovation is no longer well represented solely by the interchange of new technologies or product/service/business models developments between two firms.

Innovation doesn't even have to be incorporated in your company for being able to use it in competition. In ecosystems, you align your strategy with the ones of other companies allowing the whole ecosystem to compete with the innovation of others without internalizing it, benefiting from the externalities of it.

The Public Sector, particularly Cities, is also changing fast. From Open Data to Urban Labs or Code Sharing through efforts such as Code for Europe, Code for Africa or Code for America, is poisoned to change the way cities are managed, at least the leading ones. Efforts where, in some of them, I have the fortune to participate.

Therefore, plenty to talk about, where hopefully I could contribute to the general discussion on Innovation and Innovation Policy.

One last thing, Dear Reader, thanks a lot for being there, your comments and discussion are always welcome. Please let's enjoy it !!!!

esteve almirall

My predictions for 2011

This thing of predicting is difficult, especially when your predictions are situated in the future. However, let’s give it a try :-)

Here are my predictions for 2011 !!!

1.- Facebook will surpass Yahoo and enter China. Yahoo and in general Social Networking sites offer more than search, offer connection with real people, something that we all want and the reason behind its growth. Facebook is not yet established in China. This will be the year when Facebook enters China.

2.- Innovation will become a priority in China. Well, this is not a real prediction, Innovation is one of the two important priorities in the current draft of the next 5 year plan in China. However, for a country that competes on price and productivity, this change towards competing on innovation is a big change.

3.- We’ll see a number of technological advancements and market pitfalls. Among them, batteries will double its capacity and  3D TVs are not going to make it. But probably one of the most interesting ones will be the addition of NFC (Near Field Communications) to the iPhone and other mobile phones, it will allow us to pay (replacing credit cards), open doors (replacing keys), etc... and will make possible different kinds of business models. Apple will probably launch iPhone 5 with NFC on summer and they can move the market (updated on 1/1/11).

4.- Open Innovation will enter the Public Sector. Open Innovation has been confined to the private sector until now, 2011 will be the year for Open Innovation in the Public Sector.

5.- Android phones will break the $50 barrier and will become mainstream. Recently they broke the $100 barrier, 2011 will see how they break the $50 and become mainstream. The iPhone will be close to $100.

6.- Netflix will come finally to Europe and provide a real alternative for consumers to websites that offer movies and series without respecting copyright. It will be a big success.

7.- Open Data as a policy will become mainstream. Governments will begin to think that making websites that nobody sees and maps that nobody uses is not a decent way to use taxpayers money and will endorse massively Open Data and platforms.

To all of you --- HAPPY NEW YEAR 2011 !!!!

Policy Analytics

First of all let me apologize, there is not such a thing as Policy Analytics, at least not yet. However, as I will argue, it will be worth to invent it.

Policies are derived from frameworks that represent our understanding of a field. They cannot exist isolated without this reference.

For example if we understand Innovation in terms of economic growth, our policies will probably focus in the creation of capacities and on providing incentives to the different actors to use these capacities.

If, on the contrary, we understand innovation as the result of complex interactions among many agents, we will be busy trying to ease bottlenecks, optimize flows and maximize capacities.

This small example illustrates an important phenomenon, as our understanding gets more complex, the associated policies get also more complex.

However, in this path that otherwise looks natural, there is an important gap. The indicators that we use are still static and most of the times cannot match the objectives of the new policies derived from theoretical insights.

For the sake of the example, let’s continue with the case of Innovation Policy. In order to ease bottlenecks you have first to detect them and in order to optimize flows you have to be able to measure them … capacities is probably the easy part of the equation.

Why is that happening? There is really no data available? Well, yes and no. Certainly the instruments traditionally used in policy modeling are cannot provide this type of data. Nevertheless, there is a growing trend in the private and public sector to tap into the wealth of data lying in web 2.0 portals.

One good example is computer-savvy traders, also known as quants, according to Aite group, a financial services company, about 35% of quantitative trading companies are exploring whether to use trend and sentiment mining compared to about 2% two years ago (http://www.nytimes.com/2010/12/22/technology/22trading.html?_r=2) .

We can find similar examples in public policy, such as the use of Crowd-Sourcing  by the Obama administration (challenges.gov) or the FCC (broadband.gov) among others.

Closely looking at the different strands we can witness to kind of objectives that nevertheless intermingle one with another. On one side we have the ones that go for Policy co-creation with potentially large constituencies. Here good example are all sorts of Crowdsourcing or Innovation exercises.

On the other we find the development of novel indicators aimed at tapping into the wealth of data available on-line. Here we can find the very active field of trend and sentiment mining.

Therefore, it is clear that there are new opportunities lying ahead, however, what are the problems that could justify this new field or this new understanding?

Basically, as policies get more complex, policy makers have to dealt with two new situations.

We can characterize the first one as the asymmetry of knowledge. In fact, it is very difficult to foresee the impact, the level of adoption or the problems of a certain policy if you are not an insider. Exactly the same in the case of detecting bottlenecks, missuses, insufficient flows or institutional governance problems. Policy makers are at a clear disadvantage when they have to deal with the micro-level, with the detail and implement in concrete terms general frameworks.

Policy co-creation involving large groups of constituencies in exercises like crowd-sourcing could certainly alleviate this problem.

There is however, another kind of information asymmetry that we have to solve. The one of the citizens. They lack the macro data that informs the framework. Here Open Data could have, rendering available to everybody this specialized data.

However, policy design is only half of the problem. Complex policies demand detail monitoring and for that real-time indicators that could tap into the micro-level are needed. Technologies such as trend and sentiment mining also in groups or constituencies can probably help in determining what is not working and needs to be cancelled, what has to be modify and what is working well.

We are in the early beginnings of this understanding. Today there is certainly a gap between the ambitions of our policies and our frameworks and the capacities of our instruments to measure and control them. The good news is that  there are insights on how to close this gap.

Why don’t we name it? Policy Analytics is my proposal for a name. 

Smart Cities – Beyond IT

Last week I was in Ghent attending the Future Internet Conference and the assembly of the ENoLL (European Network of Living Labs). I had a presentation of our project Open Cities and I also was invited to participate in a panel on Smart Cities.

Curiously enough even when the concept of Smart Cities speaks of Innovation, there was little talk about this aspect. Mostly most of the speakers focus on technology.

There is certainly nothing wrong with technology. The application of new technologies is a key ingredient that makes possible to think of Smart Cities. However, nobody that needed to transform a company from competing with productivity alone to compete with innovation will think that the addition of technology will solve by itself the problem.

This, probably naïve vision of the transformative power of technology, seems however to lie behind many of the proposals around Smart Cities, from the “Smart City in a box” solutions of large vendors to Future Internet proposals of advance research groups.

Cities have been through history the locus of invention and innovation. From this melting pot, from this dense network of connections between people and ideas is from where many ideas first and trials later have been transform into innovations that changed the world.

This heavily contrasts with City Management, mostly focus on finding effective, proven ways of providing services to citizens. My guess is that in the last decades, the proven part has been enforced, giving little room to experimentation and hence to innovation.

Can we build the Smart Cities of the XXI century that way?

To the despair of the Smart-City-in-a-box vendors, I think we shouldn’t and let me give you three reasons why.

My first argument is about competition. Cities and their hinterlands have become instruments for competition in the territory. Cities compete by attracting talent, companies, industries or developing specialized clusters. And probably this competition is increasing and becoming more global. There are in fact views out there that portray a future where nations will have an increasingly diminishing role (except the small nations in Europe that can be easily identified with Cities or a federation of cities, such as Denmark, Holland, etc…). Therefore if cities need to compete, buying the standard box, is probably not always a good idea and on the contrary developing unique capabilities and being in the forefront of innovation seems to be the path to follow.

Nevertheless the second argument addresses the nature of the proposed solutions. Everybody that knows a bit the field is pretty aware that Smart Cities is a term in-construction. There is not a precise definition of what it means and there are not proven solutions that can be safely applied. Smart Cities will be in years to come the result of a process of co-creation and evolution between technology, citizens, meanings and business models among other factors.

These days of global knowledge and intense connectivity are also the days of Open Innovation because nobody can think that an internal group of experts has the best ideas or the clue for the most appropriate solutions. This is even truer, more evident when we deal with something that is in-construction.  

Therefore, Smart Cities need to be address taking into consideration not only ideas coming from the expertise in the City Hall but also taking advantage of the large base of knowledge outside the City Hall.

My third argument has to do with the special nature of Public Services. In fact in public services maximizing is not about profits, but about a social function and it is certainly odd that you can do that without taking into account the suggestions, the ideas, the desires and the lives of your citizens. This fact provides a different meaning to Open Innovation mechanisms such as Crowdsourcing, there it is not only a  purpose of getting more and different ideas, but also connecting with the feelings, needs and points of view of your citizens.

Therefore, given this framework, it is clear that technology is not enough. Cities have to deal with Innovation Management, but not only that, they have to deal with a new way of relating and engaging their citizens and their communities.

Certainly the private sector is a place where to look for inspiration on how to manage innovation and how to engage users. However, this cannot be a direct translation, cities have to reinvent new ways of engaging users and managing an innovation process that probably won’t be able to do alone anymore, cities will have to begin to collaborate with … other cities.

-- Open Cities is the name of the EU project that we are coordinating that explores all these issues.

Manifiesto “En defensa de los derechos fundamentales en internet”

Manifiesto “En defensa de los derechos fundamentales en internet”

Ante la inclusión en el Anteproyecto de Ley de Economía sostenible de modificaciones legislativas que afectan al libre ejercicio de las libertades de expresión, información y el derecho de acceso a la cultura a través de Internet, los periodistas, bloggers, usuarios, profesionales y creadores de Internet manifestamos nuestra firme oposición al proyecto, y declaramos que:

1. Los derechos de autor no pueden situarse por encima de los derechos fundamentales de los ciudadanos, como el derecho a la privacidad, a la seguridad, a la presunción de inocencia, a la tutela judicial efectiva y a la libertad de expresión.
2. La suspensión de derechos fundamentales es y debe seguir siendo competencia exclusiva del poder judicial. Ni un cierre sin sentencia. Este anteproyecto, en contra de lo establecido en el artículo 20.5 de la Constitución, pone en manos de un órgano no judicial -un organismo dependiente del ministerio de Cultura-, la potestad de impedir a los ciudadanos españoles el acceso a cualquier página web.
3. La nueva legislación creará inseguridad jurídica en todo el sector tecnológico español, perjudicando uno de los pocos campos de desarrollo y futuro de nuestra economía, entorpeciendo la creación de empresas, introduciendo trabas a la libre competencia y ralentizando su proyección internacional.
4. La nueva legislación propuesta amenaza a los nuevos creadores y entorpece la creación cultural. Con Internet y los sucesivos avances tecnológicos se ha democratizado extraordinariamente la creación y emisión de contenidos de todo tipo, que ya no provienen prevalentemente de las industrias culturales tradicionales, sino de multitud de fuentes diferentes.
5. Los autores, como todos los trabajadores, tienen derecho a vivir de su trabajo con nuevas ideas creativas, modelos de negocio y actividades asociadas a sus creaciones. Intentar sostener con cambios legislativos a una industria obsoleta que no sabe adaptarse a este nuevo entorno no es ni justo ni realista. Si su modelo de negocio se basaba en el control de las copias de las obras y en Internet no es posible sin vulnerar derechos fundamentales, deberían buscar otro modelo.
6. Consideramos que las industrias culturales necesitan para sobrevivir alternativas modernas, eficaces, creíbles y asequibles y que se adecuen a los nuevos usos sociales, en lugar de limitaciones tan desproporcionadas como ineficaces para el fin que dicen perseguir.
7. Internet debe funcionar de forma libre y sin interferencias políticas auspiciadas por sectores que pretenden perpetuar obsoletos modelos de negocio e imposibilitar que el saber humano siga siendo libre.
8. Exigimos que el Gobierno garantice por ley la neutralidad de la Red en España, ante cualquier presión que pueda producirse, como marco para el desarrollo de una economía sostenible y realista de cara al futuro.
9. Proponemos una verdadera reforma del derecho de propiedad intelectual orientada a su fin: devolver a la sociedad el conocimiento, promover el dominio público y limitar los abusos de las entidades gestoras.
10. En democracia las leyes y sus modificaciones deben aprobarse tras el oportuno debate público y habiendo consultado previamente a todas las partes implicadas. No es de recibo que se realicen cambios legislativos que afectan a derechos fundamentales en una ley no orgánica y que versa sobre otra materia. 
    

Sorry for the dealy - I've been pretty busy these days :-)

Where is the next Nokia & the next Finland?

Last year things weren't rosy for the big Taiwanese manufactures like TSM who were operating at a fraction of their capacity.

True is that this year things look much better, Acer became n. 2 PC manufacturer, only after HP and companies like Amtran (Vizio) are really making inroads in US markets. HTC is embracing Android, proving that was nothing wrong with the split strategy of Win-Handset manufacturers.

However, Taiwanese companies seem to be taking very seriously last year decline, realizing how fast things can turn south. And, for a change, they are doing something about it.
We have witnessed how companies like TSM are shifting their production and their strategy from low margin , capital intensive products to new ones such as LEDs and solar cells, trying to conquer a market, a market that in the next decades could be huge. A similar process is happening with HTC or Acer or in general all over the island.

While this is happening, Taiwan is learning that innovation nowadays is not solely technological innovation and the limitations of the cluster and the industrial complex model (although they have been hugely successful with Hsinchu (maybe the only really successful artificial cluster ...). You can see, almost everywhere that iniciatives around creativity, involving users, market based innovation are beginning to be explored.

Innovation has its share of macroeconomics and methodologies, but having said that, one must recognize the huge importance of cultural factors and knowledge flows. This is now, more relevant than ever, putting together a bunch of diverse industries of building mass, has never been, but in this connected world it is not a guarantee of success. If you are not convinced, just took a look at all the European efforts and try to name 3 - only 3 - world class innovations (products/services in the market making money) that came out of them.

Asia has a problem in this aspect. Recalling a nice lunch a few days ago with a colleague, talking about Asia, he was explaining his experience: You establish a collaboration project with them and then you begin the first meetings, you always face somebody in front asking you: well tell me! - you get puzzle and tell your partner that it is not about that, it is about collaboration, then, again, you face, ok... so, tell me!
We all had this experience. However, Taiwan is somewhat different, with a sizeable class educated in America and political leaders with advance degrees and working experience outside Taiwan (how different from my country where political leaders don't even speak English and in the case they do it is completely indecent ... and of course you can be very happy if they have a bach degree ...) they are in a unique position to leverage a new brotherhood relationship with China.

Yes, cultural factors count in innovation, now they count a lot, but of all the Asian countries (India is a different story) Taiwan seems to have the hunger, the willingness, the capacity and the political will not only to talk the talk but to walk the walk.

Clusters - A necesary investment or a Waste of Money?

So much has been written about clusters that is rare to find not  a novel approach but an approach that excites our curiosity. 
The term was introduced and popularized by Porter in the 90's in The Competitive Advantage of Nations (1990) and since then has enjoyed tremendous success among governments and innovation agencies, specially in Europe and Asia.
Many of us suspect that this success is related its ability of being operationalized or put in other terms, the temptation to try to build artificial clusters.
Anyway, governments form France, Germany, Korea, Japan, Brazil and Spain have embraced the concept fiercely. And just to illustrate what fiercely means, France spent last year €1.5B in cluster development.
Therefore the question if this is a well spent money is clearly hugely relevant.
A recent article from Philippe Martin, Thierry Mayer and Florian Mayneris from Université Paris1 and Paris School of Economics, Natural Clusters: Why policies promoting agglomeration are unnecessary tries to shed some light on the subject.
We have to say first that the title is a little bit misleading. Industrial clusters as described by Porter, and exemplified with Silicon Valley are not the result of policy intervention but emergent result of a natural process. The article refers to the question of if there is a market failure in this process and therefore it should be supported by public money in order to compensate for it, and not to the question if natural clusters exist or not.
However, the findings are pretty interisting. They model cluster advantage as providing Marshall-Arrow-Romer (MAR) externalities, namely:

1. Input externalities. Concentration of offer increasing efficiency.
2. Labor externalities. Concentration of labor offer.
3. Knowledge externalities. Knowledge spillovers, etc.

Even if you may find Porter's analysis more complete because it introduces a dynamic vision, I am confident that in order to answer the question and asses to what extend this advantages are internalized by companies when making their location decisions, this is good enough.
The study finds, not surprisingly that companies do pretty well, very close to what their model finds as optimal.
This is not the first time that we find this result and to be fair, we must say that not all policy interventions in clusters are directed to localization. For example in Barcelona 22@ is creating a cluster inside the city instead of letting the market decide where, because of urban planning reasons and in my opinion this is pretty reasonable. Also you have many cluster interventions that in reality aim to build capacity (normally research) provide infrastructure, etc. not necessarily location based but supporting existing market decissions.
This same week we have in Finland the Assembly of Competitiveness where many institutions gather to work on these issues. 
Cluster policies are in the category of innovation policies acting on the offer, together with science parks, infrastructure, technological centers and collaborative projects. 
We all know how limited these interventions are, an example of this limitation is the so called European Paradox refering to the gap between Science and Innovation in Europe or put in more simple terms, our inability to produce innovation even if we are pretty good at science.
Revisiting the research like this one and aiming at the demand side could improve, in my opinion, our chances of success because as the article says, the market does pretty well in incorporating location decisions. 

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.

Global Indexes - What do they tell us?

These days the World Economic Forum released its Global Competitiveness Report. The big news is that USA is no longer number 1 and this privileged position has been taken by ... Switzerland.

Let's take, first of all a look to the first positions. After all rankings are built for that for knowing who are the winners and who are the losers ....

Global Competitiveness Index 2009-2010
Switzerland	1	5.60
United States	2	5.59
Singapore	3	5.55
Sweden	4	5.51
Denmark	5	5.46
Finland	6	5.43
Germany	7	5.37
Japan	8	5.37
Canada	9	5.33
Netherlands	10	5.32
Hong Kong SAR	11	5.22
Taiwan, China	12	5.20
United Kingdom	13	5.19
Norway	14	5.17
Australia	15	5.15
France	16	5.13
Austria	17	5.13
Belgium	18	5.09
Korea, Rep.	19	5.00
New Zealand	20	4.98
Luxembourg	21	4.96
Qatar	22	4.95
United Arab Emirates	23	4.92
Malaysia	24	4.87
Ireland	25	4.84
Iceland	26	4.80
Israel	27	4.80
Saudi Arabia	28	4.75
China	29	4.74
Chile	30	4.70
Czech Republic	31	4.67
Brunei Darussalam	32	4.64
Spain	33	4.59

The index is built on the base of 12 pillars:

Global Competitiveness Index 2009-2010
Basic Requirements
	1. Institutions (25%)
	2. Infrastructure (25%)
	3. Macroeconomic stability (25%)
	4. Health and primary education (25%)
Efficiency Enhancers
	5. Higher Education and Training (17%)
	6. Goods and Market efficiency (17%)
	7. Labor Market efficiency (17%)
	8. Financial Market Sophistication (17%)
	9. Technological readiness (17%)
	10. Market Size (17%)
Innovation and Sophistication Factors
	11. Business Sophistication (50%)
	12. Innovation (50%)

What is wrong with this view is that for a particular country pillars don't weight the same. Indeed if some countries can still rely on price differentials of availability of cheap labor in order to compensate for other parts of the index, developed countries mostly cannot.

Therefore, for these countries we should pay special attention to what is becoming a key element left to them in this competition, the one that can establish winners and losers, regardless of price.

Yes, we are talking about innovation. And yes, there, where matters for developed countries, USA is still number 1.

However, we can go a little bit deeper. Let's take the case of Taiwan.

In the Global Competitiveness Index, Taiwan is number 12, but in Innovation and Sophistication factors subindex, is number 8 and in the Innovation index (a subindex of the previous one) is number 6.

Of course, there are countries with just the opposite track record. For example one that I know very closely: Spain, number 33 in the Global Index, down to 35 in the Innovation and Sophistication Index and further down to 40 in the Innovation subindex.

The same day, we got the news that the Spanish government wants to slash the R&D budget for a full 37% because of the crises - really bad news with this track record.

But, as my friend Ulises Cortes says, 37% of very little is ... very little. So in absolute terms it doesn't change the picture that much.

Innovation and Sophistication Factors			Innovation
United States	1	5.71	United States	1	5.77
Japan	2	5.70	Switzerland	2	5.56
Switzerland	3	5.68	Finland	3	5.53
Sweden	4	5.53	Japan	4	5.51
Germany	5	5.47	Sweden	5	5.39
Finland	6	5.47	Taiwan, China	6	5.28
Denmark	7	5.28	Germany	7	5.11
Taiwan, China	8	5.25	Singapore	8	5.09
Netherlands	9	5.17	Israel	9	5.06
Singapore	10	5.15	Denmark	10	5.04
Austria	11	5.00	Korea, Rep.	11	4.84
Canada	12	4.96	Canada	12	4.80
Belgium	13	4.95	Netherlands	13	4.79
United Kingdom	14	4.92	Belgium	14	4.62
France	15	4.90	United Kingdom	15	4.60
Korea, Rep.	16	4.88	Iceland	16	4.55
Israel	17	4.87	Norway	17	4.53
Norway	18	4.83	France	18	4.50
Iceland	19	4.70	Austria	19	4.46
Ireland	20	4.63	Australia	20	4.43
Australia	21	4.61	Luxembourg	21	4.31
Luxembourg	22	4.58	Ireland	22	4.29
Hong Kong SAR	23	4.53	New Zealand	23	4.10
Malaysia	24	4.43	Malaysia	24	4.06
United Arab Emirates	25	4.41	Czech Republic	25	4.01
Czech Republic	26	4.40	China	26	3.93
New Zealand	27	4.37	United Arab Emirates	27	3.87
India	28	4.24	Hong Kong SAR	28	3.86
China	29	4.23	Slovenia	29	3.83
Slovenia	30	4.23	India	30	3.73
Puerto Rico	31	4.21	Puerto Rico	31	3.70
Cyprus	32	4.18	Saudi Arabia	32	3.70
Saudi Arabia	33	4.15	Portugal	33	3.69
Italy	34	4.15	Costa Rica	34	3.68
Spain	35	4.14	Cyprus	35	3.68
Qatar	36	4.10	Qatar	36	3.65
Costa Rica	37	4.08	Estonia	37	3.64
Brazil	38	4.08	Tunisia	38	3.64
South Africa	39	4.05	Indonesia	39	3.57
Indonesia	40	4.03	Spain	40	3.55