March 14, 2010 • 5:20 pm 0
As readers of this blog will know I have been plugging BIG POTATOES: the London Manifesto for Innovation for some time. I’m pleased to announce that the website is now live. Check it out here.
I look forward to your comments, criticisms and hopefully, your support.
Filed under: Innovation , Big Potatoes Manifesto, Bigpotatoes
March 13, 2010 • 7:03 am 2
One of my co-authors of BIG POTATOES: the London Manifesto for Innovation, James Woudhuysen and I have just published an article on government and regulation on spiked-online, titled, ‘How the state is a roadblock to progress’ in which we argue that red tape-obsessed, visionless governments are holding back the kind of big and risky innovation society needs today.
This will be a constant theme we hope to expand upon when we launch BIG POTATOES this month. (Watch this space for an imminent announcement!). We concluded the article as follows:
“Innovation however, means making a persistent stab into the unknown. And the unknown cannot be regulated. We cannot routinise what we don’t yet know. Attempts to render technological change more predictable and ‘responsible’ can only mean closing down experiment and exploration.
“Innovation is a risky business. Technological innovation creates new problems, and can even lead to deaths. On the whole, however, mankind solves those new problems. However, the contemporary impeding of innovation through regulation reflects not just the momentary lapse of a government functionary, but a dyed-in-the-wool cultural malaise, a deep antipathy to taking chances, and a fundamental nervousness about spending money on risky enterprises.
“The over-regulation of innovation has acquired its own dynamic. What is now needed isn’t regulatory reform, but a sizeable – if discriminating – bonfire of controls that is more than merely rhetorical. To move Britain and the world forward, the deregulation of innovation is now an urgent imperative.
Filed under: Risk and Innovation , Big Potatoes Manifesto, regulation, spiked-online
March 6, 2010 • 4:02 pm 1
I was really struck by this article on Amazon’s Kindle from the New Republic website based upon an article on the HBR Blog ‘Is the US Killing its Innovation Machine?’ by Professor Willy C Shih, titled ‘The U.S. Can’t Manufacture the Kindle and That’s a Problem’. It highlights the opposite of what every globalisation guru asserts: namely, that far from innovation being an open playing field, innovation remains intimately tied to the nation-state and the national ecosystems they nurture.
The author details why Amazon’s Kindle cannot be manufactured in the US, despite the fact that it was designed in California and its key innovation — its electronic ink (the tiny microcapsule beads used in its electrophoretic display) — was invented and is being made in the USA by E Ink, a company based in Cambridge, Massachusetts. He reveals that Asian manufacturers are capturing the vast majority of the value added by manufacturing the e-reader itself. Even more worrisome for him, he sees this growing capacity in Asia almost certainly resulting in the loss of control by the US of e-paper display technologies and the future innovations that spring from them.
VALUE ADDED MANUFACTURING
The majority of the value added in manufacturing the Kindle is being captured in Asia. Why? Simply because the key components that make up the Kindle cannot be made in the USA:
Professor Shih concludes that of the total cost of $185, perhaps $40 to $50 is captured in the US and asks if this is a problem. He notes that Amazon is well positioned to capture most of the value of the Kindle and a healthy portion of the profits generated by sales of e-books to Kindle owners including Kindle’s wireless data service, which uses Sprint’s US-based data network.
So why the concern?
Besides the impact this has on the US’s trade deficit the more substantive cause for concern is that ‘when innovations can’t be manufactured in the U.S., the locus of innovation in that area frequently shifts to the countries that can manufacture them’. Even though the electrophoretic beads were the central innovation in the Kindle, E Ink could not control the low temperature polysilicon and the fabrication of the display. It thus could not perform the system integration required for it to capture the majority of the value add. That capability has shifted to Asia. And this is the key development.
VALUE-ADD AND INNOVATION CAPACITY
The issue highlighted by the Kindle example, is the fact that the shift of value-add in manufacturing to Asia has created a newfound innovation capacity there that those without this exploitation platform, will find increasingly difficult to match. Professor Shih remarks that by ‘not manufacturing the electrophoretic display, the U.S. will miss out on the future industries that spring from it — things like large flexible displays, future generations of electronic signage, and plastic electronics’. And these in all likelihood will spawn other innovations and new industries.
“The lesson: Sometimes when you let your capabilities get away, you give up not only one industry but all its progeny.”
Professor Shih notes how years ago the U.S. lost the vast majority of its infrastructure, or “commons,” in precision optics to Japan. Again it was not simply value add that was problematic: ‘The Japanese used those capabilities to grab the lead in producing lithography tools for semiconductor manufacturing, which, in turn, drove most American semiconductor manufacturers out of the DRAM business. The Japanese also employed those capabilities to expand into lithographic tools needed to manufacture flat panel displays’.This same story has played out in high-tech industry after high-tech industry.
This example reveals that innovation capacity is not something that can be turned on and off at will but develops over time across an ecosystem that fosters exploration, engagement and exploitation. This is a symbiotic relationship which encompasses a set of critical relationships from the education system to government industrial policies; from the regulatory environment to longer term investment commitments to R&D etc.
Above all else, the Kindle example is only one of the latest that demonstrate that innovation capacity is rooted in the nation-state. We now begin to see the consequences of the financialisation of Western economies and where the short-term, risk-averse instrumentalism underpinning Western business culture is leading: the shift in manufacturing from West to East, what some define as globalisation, has given rise to a similar shift in the capacity to innovate. Innovation capacity remains firmly rooted in the nation-state and until such time that a sense of ambitions is revisited upon Western economies, this is a trend that will only intensify in the 21st Century.
This is what BIG POTATOES: The London Manifesto for Innovation is attempting to address.
Filed under: Economics of Innovation , Big Potatoes Manifesto, innovation capacity, Kindle
February 6, 2010 • 5:17 pm 0
As a preview to the launch of Big Potatoes: The London Manifesto for Innovation, here is the first principle concerning reclaiming ambition in innovation.
The full entry of China and India into the world economy doesn’t just mean billions more consumers aspiring to Western lifestyles. It also means that the world can benefit from billions of innovating brains. It’s a moment to broaden horizons, expect much more, and expand every kind of ambition.
First, though, Britain and the West need to recover a sense of what innovation is and just how much it can do.
Innovation cannot be reduced to technology: while it embraces improvements both in process and in product or service, these often accompany changes in organisation. [1] However today technological innovation is weak in private services, weaker still in public services, and takes second place to changes in business model – different ways of taking money from customers. In particular, business expenditure on research and development (R&D), taken as a fraction of GDP, has been stagnant in America and Europe for 15 years or more. [2] In that faltering context, where the Organization for Economic Cooperation and Development talks up what it calls ‘the central importance of non technological innovation’, [3] it’s essential to uphold the powerful improvements, above all in productivity, that new techniques can bring.
When Adam Smith published The wealth of nations in 1776, he didn’t know that the title to his famous passage, ‘The division of labour in pin manufacturing (and the great increase in the quantity of work that results)’ would be on the back of every £20 note. Nor could he have realised how much bigger, with China and India, is the stock of ingenuity that mankind can now mobilise. [4] Yet today all corners of the Earth can rightly hope to move on toward a global division of labour far in advance of what we can imagine. By itself, that won’t lead to more time for leisure or more equality. But with more than one billion people going hungry for the first time in 40 years, [5] the need for productivity step-changes just in agriculture, irrigation and food distribution has seldom been greater.
In innovation there can be no skipping over the need for professional expertise. Still, with the opening up of Asia, more people can now specialise more deeply in particular lines of work – something that will also allow multidisciplinary initiatives in innovation to be more successful. The Internet and machine translation make international collaboration easier. So, after all today’s ignorance about the whereabouts of toxic assets, the world now has a chance finally to move toward the much vaunted, prematurely announced ‘knowledge economy’.
Of course, Britain will not make digital cameras any time soon. Conversely, China will not forever build coal-fired power stations unequipped with carbon capture and storage. But between the nations of the world there is now an opening to share profound insights, agree on vaulting objectives, and take wealth to a qualitatively higher level: to provide more growth, and a better kind of growth.
The first principle of a new, innovatory global division of labour for the 21st century is that scale is beautiful, not smallness. In mobile telephony and electronics, miniaturisation has its place; but to lower the cost of handsets enough for world’s poor to be able to afford them, still larger, more automated production lines are needed. To make the most of sources of renewable energy, which are very diffuse, demands scale undertakings, not David Cameron’s kind of roof-mounted home windmill. Even without attacking the world’s deteriorated and substandard housing, UN estimates suggest, the world must build no fewer than 4000 houses an hour – if its increasing population is to be housed and its slums replaced. [6] More than a third of a century after Ernst Schumacher’s Small is beautiful (1973), it’s time to wave goodbye to humility, parochialism, and the dogma of ‘act local’.
[2] See Organization for Economic Cooperation and Development (OECD), Main Science and Technology Indicators (MSTI): 2009-1, 13 July 2009, on http://www.oecd.org/dataoecd/9/44/41850733.pdf
[3] OECD, Policy Responses to the Economic Crisis: Investing in Innovation for Long-Term Growth, June 2009, p16, on http://www.oecd.org/dataoecd/59/45/42983414.pdf
[4] On top of the populous East, a mere billion people in the West now have, in their leisure time and their widespread access to the Web, an opportunity to volunteer to collaborate on innovation for between two and six billion hours a day. See Yochai Benkler, The Wealth of Networks: How Social Production Transforms Markets and Freedom, Yale University Press, 2006, p55.
[5] United Nations, The State of Food Insecurity in the World 2009, October 2009, on ftp://ftp.fao.org/docrep/fao/012/i0876e/i0876e.pdf
[6] Figure derived from United Nations Human Settlements Programme, Financing Urban Shelter – Global Report on Human Settlements 2005, 2005, Tables 1.2 and 1.3, p5, on www.unhabitat.org/pmss/getElectronicVersion.asp?nr=1818&alt=1
Filed under: Innovation , Big Potatoes Manifesto, think big
February 2, 2010 • 12:10 am 4
Without doubt, the launch of Apple’s iPad was another over-hyped media circus. Yes, it provoked some debate about the nature of innovation today. (For example see this piece in the New York Times in defence of ‘elitist and individual’ innovation versus this piece in the Guardian which attacks Apple’s proprietary approach as ’stifling open innovation’). Interesting, but this is small potatoes. What is notably absent is a serious public debate about innovation and the future of economic growth. Which is precisely what Big Potatoes: the London Manifesto for Innovation aims to do and which will be publicly launched at the end of this month.
The Credit Crunch has so far failed to spur any major innovations. Worse, there is no public debate on innovation. Instead, our political leaders focus on symptoms — ‘greedy bankers’ and the parallel financial universe, lack of ‘consumer confidence’. They also prefer dying business models to the great and necessary challenge of creating new industries. What we have is a great evasion – a systematic failure to face up to the innovation crisis that threatens to rob future generations of economic growth.
This is why a group of us decided to come together to create a new 14 point Manifesto for Innovation which we hope to make a key issue in the forthcoming UK general election. Beyond that we hope to make this a global debate, for innovation is an issue that faces humanity. The Manifesto authors are: Nico Macdonald, Alan Patrick, Martyn Perks, Mitchell Sava, James Woudhuysen and myself.
We believe innovation is an indispensable premise for improving the quality of life. It is first, a means to a better life; but it also dignifies human beings, and sets them apart from animals. In innovation, humans find uses for things that seemed useless, and new uses for things they thought they knew the uses of.
During today’s economic downturn, innovation will be more important than ever. The sooner far-sighted strategies are developed and implemented by government, business and other agencies, the more a better world will be within humanity’s reach.
It is not innovation that creates inequality, but the social choices of institutions. We distinguish innovation from fiscal, regulatory, legal and cap-and-trade responses to today’s challenges. Unlike these technocratic measures, innovation has the potential, at least, to increase wealth and opportunity for everyone: it is not a zero-sum game.
The Big Potatoes Manifesto is call to arms: for leadership and risk taking, for accepting failure and unexpected outcomes as the necessary and inevitable path to success, for bold and ambitious experimentation and an end to the instrumentalist short-termism which has institutionalised a culture of limits. This Manifesto is designed to improve the climate for innovation and represents a clarion call for a new generation of leaders that can inspire new gymnastics in the mind and new ingenuity in the lab and factory floor.
The Manifesto consists of the following 14 points:
The Manifesto will be publicly launched at the end of this month. If you are interested in reading the Manifesto and/or getting involved, or attending the public launch, please visit us here and register your interest.
Filed under: Innovation , Apple, Big Potatoes Manifesto
