I'm giving a brief outline of some research at the
Beyond the Crisis: Debating the role of Innovation event tonight, and one of the things required is to put it up for everyone attending to
see and react to - one option is to but it up on a blog, so here it is.
To recap, the issue is that:
During and after the economic downturn, innovation and transformational change will be more important than ever. The sooner far sighted strategies are developed and implemented by government, business and other agencies the better life will be for ordinary people – in the UK and beyond. But to date most discussion has focused on fixing the failings in the financial system in the short term. But this is not the cause, only a symptom of underlying economic stagnation. Rather, we should be laying the foundations for a new economy for the long term.
The question being, what do those foundations look like. Themes addressed are:
- How can we explain the causes of the crisis: Financial system failure? Greed? Lack of productive locations for investment?
- To what extent is the crisis a product of lack of innovation?
- Where and how is value created today?
- What role can government play in facilitating innovation and value creation (or getting out of the way)?
- Does fundamental research need to be championed?
- Where do ordinary people’s interests fit into debates about the future?
- Is the crisis a basis for taking on more ambitious challenges?
- Are networked tools a key to dealing with the recession?
- What are the contemporary barriers to innovation?
- Is there untapped potential in the design and creative industries?
A brief synopsis of my discussion:
The crisis is not a product of a lack of innovation (if anything its a product of unchecked financial innovation, though that is not the primary cause). The key issue to address is question two - "where is value created" as that to an extent drives the rest of the discussion.
Firstly, two general observations:
- In good times, the pressure on innovation is lower as the Old Models are seen to be succeeding, so there is considerable force to go with what ain't broke.
- In hard times, the "stuff wot worked" palpably doesn't anymore and can thus be overhrown more easily.
Secondly, what does Innovation in tough times look like? In all periods there are two main types of innovation:
- incremental innovations in what exists already
- disruptive innovation - seizing of new innovations to deliver high impact changes
In hard times, by and large capital is more constrained, and the future is uncertain so longer term investments are harder to justify - so innovation tends to occur, initially incrementally, where there is arbitrage between Old Ways which no longer work, and adopting new methods that will. Again, in general, it is harder to make things happen in hard times, but if one can then the way is more open (whereas in good times every successful idea will be more rapidly copycatted)
If we look at the Great Depression, there were a number of interesting innovations that are worth investigating:
(i) Business Innovations where companies set up with new business models - companies like Texas Instruments and Hewlett Packard emerged in the great depression, harnessing cutting edge technology in older industries.
(ii) Infrastructure Innovation - the US government built basic infrastructure that no one part could afford to build or was motivated to (dams, fast roads) but that all would benefit from when finished
(iii) There were a number of social innovations around welfare, giving people more confidence about their futures, which allowed them to release more spending, thus creating more demand.
Adapting these observations to today's world:
(i) We need to let small, innovative businesses thrive - reducing red tape, unfair contractual conditions (eg to large state contracts), endemic late payment. Nearly all reserach shows small businesses drive employment out of recessions, so as much friction as possible needs to be removed.
(ii) Government needs to fund the pieces of next generation infrastructure that the commercial / local authority cannot. In the UK, funding the building out of broadband to the 1/3rd of the population that are commercially unattractive is an example of this.
(iii) The Welfare systems will need reform - as Juan Enriquez pointed out at TED, today most of them are unfair (or at least highly gameable), reward the wrong behaviours in many cases, and - most seriously - are no longer affordable. There will need to be radical Innovation in redesigning services to both cost less and reach the critical parts in far more targeted ways than before. This will require some tough decisions around "things we don't do"
This allows one to look at some of the other questions:
Are networked, social media technologies part of this future - absolutely. Are they the whole solution? No!
Are there untapped opportunities in the creative industries? Absolutely - there is a whole new creative content market, new service market and new device market emerging.
