A few important takeaways on The Economist’s recent special report on innovation. Worth reading for anyone interested in economic development, global competitiveness, and entrepreneurial activity in the world. And for the Friedman ‘the world is flat’ crowd and Richard Florida’s ‘creative class’ disciples, there’s something here for you too (emphasis added).
The debate between idea creation and execution isn't as important as you think, more critical is the filtering process between ideas and execution
Failure is good but fast failures are key (the U.S. has an advantage here, e.g. the ease of declaring bankruptcy and starting a new business endeavor without any baggage)
Radical innovation and disruptive innovation are different and the two are often conflated
User-driven Innovation: Listening to only your best (high value, etc.) customers can skew your innovations towards the niche and erode your market share with the mighty middle. Kenneth Morse of MIT's Entrepreneurship Center advocates firms should keep closer watch on new and dissatisfied users, who are much more likely to be source of disruptive ideas.
Richard Lyons of NBER and Goldman Sachs argues that “commoditisation often occurs even faster in services than in physical products because innovations are easier to copy, patents can provide less protection, upfront costs are lower, & product cycles are shorter
For businesses that use open, networked innovation, it matters less where ideas are invented and more about extracting value from ideas wherever they come from.
[This seems to fly in the face of Michael Porter’s work on innovation clusters and Richard Florida's new book/research that location does matter (listed to his keynote from the Human Capital Institute conference last April, podcast here, where his new data shows that it's still job satisfaction, job challenge and responsibility, and relationships with coworkers BUT that it's also about your community's openness to new ideas and people.]
Sergey Brin insists that “Silicon Valley doesn't have better ideas and isn't smarter than the rest of the world' buthas an edge in filtering ideas and executing them(there's that filtering idea between innovative idea creation and the execution of those creative ideas, no. 1 above). Or put another way, domineering bosses and governments can only drive innovation so far because 'creative people like to challenge constraints and authority.'
So what does all of this mean? Or why are these takeaways worth mentioning?
I studied International Political Economy in school and combined with having worked in economic development for the city of Colorado Springs, I like to read and study about economic development, innovation, competitiveness, and globalization for the long-term, macro reasons.
At a more personal level, I want to know how where the economy and business world is going in the next five to ten years and how this will affect entrepreneurs: given the changes we’re seeing above, how can new companies or business models develop that harness the knowledge and implications of these insights above?
And just so you or I can make a buck (which there’s nothing wrong with) but also so society in general can enjoy an expanding economic pie. Improving our own lot can, should, and does improve the lot of others.
I’ve been listening to KCRW’s Left,
Right, and Center for awhile because it offers a balanced but impassioned (yet rationale and intelligent) discussion of national and world politics and news. The podcast hasn’t been updating in iTunes and given the election results last week, I wanted to hear LRC’s analysis and commentary.
Matt Miller, the host of the show had a great comment from the 11/10 episode and although related to the election results, it’s about globalization, an idea much closer to my heart than politics (emphasis added).
Dems should be setting the tone for the future, for the 2008 election, to make it possible for progress on the chief domestic issue, how to cope with globalization (minute 8:15), mollify its anxiety and protect/help the middle class of those who are at risk in this global economy; nothing will get done seriously on this front in the next two years because there’s no consensus on the issues BUT if they frame these issues for 2008 then the center of gravity could be tipped so that these issues can be publicly discussed.
I’m paraphrasing here but you get the idea. Economics, the study of making decisions about the proper allocation of scarce resources, really does drive politics and most other public policies. Globalization was the major thrust of my major during college and I truly believe that it is a major force for good in the world, bringing more people out of poverty than any other governmental or non-governmental force in the world. But the Doha round of trade talks has stalled and globalization seems to have been temporarily grounded.
Living in D.C. and being surrounded by so many federal government, NGOs, and public policy institutions, I remain faithful that promoting globalization is the way to improve economic equality. Will Matt's comment above resonate with the Democrats, Republicans, and others who run this town and can we get globalization back on the docket for 2008? And I mean getting the topic back into the public sphere where a serious debate around the issues of globalization can occur, rather than he-said/she-said crap surrounding the the topic of outsourcing from a few years ago. Remember Lou Dobbs and the "Exporting America" rhetoric?
Globalization is a weighty and intellectual topic that needs proper discussion and it would be nice, as Matt suggests, if we're able to discuss a topic that economically and politically affects us so much more significantly than most of the domestic and foreign policies that we typically argue over.