Archive for the ‘Innovation’ Category
Tyler Cowan of the Marginal Revolution gloomily suggests the world has reached a “technological plateau”.
The obvious result of this is a plateauing of incomes.
At the moment it’s not clear if new technologies, capable of launching a new rise in incomes (such the bio sciences) that’d match say the impact of electricity, are really mountains or just hills.
Cowan says there’s plenty of innovation around, but most is not geared toward significantly raising the average standard of living. “It seems that we are coming up with ideas that benefit relatively small numbers of people, compared with the broad-based advances of earlier decades, when the modern world was put into place.”
As a result:
• From 1947 to 1973 inflation-adjusted median income in the US more than doubled.
• From 1973 to 2004, it rose 22 percent.
• Over the last decade, it actually declined.
In the BRIC group, and in other rapidly developing second world countries, this chronology is reversed as China and the like play catch up.
I guess Cowan is writing from a US perspective where technology plays a bigger role than elsewhere. Other factors can keep incomes rising, such as demand for low-tech commodities in first-world places like Australia and Norway.
Anyway Cowan reckons the common complaint regarding technology’s efficacy as a driver of economic growth points to a common cause. “…it would seem that a single cause is transcending national borders: the reaching of a technological plateau”.
What about the internet? Cowan doesn’t appear to have a lot of faith that a “new economic growth explosion” will come from this direction.
“…it hasn’t delivered very good macroeconomic performance over the last decade. Many of the Internet’s gains are fun — games, chat rooms, Twitter streams — rather than vast sources of revenue, and when there have been measurable monetary gains, they often have been concentrated among a small number of company founders, as with, say, Facebook.
“As for users, the Internet has benefited the well-educated and the curious to a disproportionate degree, but apparently not enough to bolster median income.”
All the same “sooner or later, new technological revolutions will occur, perhaps in the biosciences, through genome sequencing, or in energy production, through viable solar power, for example.
“But these transformations won’t come overnight, and we’ll have to make do in the meantime.”
The New York Times asked Tyler Cowen, from the blog Marginal Revolution, to pick his “noteworthy” ideas since 2001 (with the benefit of hindsight).
Firstly a couple of “off” ones for a laugh:
• 2001: “The ‘X-Files’ Conspiracy Trope is Dead” – Conspiracy theories seemed in decline, yet now so-called birthers are common, and as of August nearly 20 percent of the US citizenry were willing to claim that Barack Obama was a Muslim, secretly or otherwise.
• 2001: “American Imperialism, Embraced” – American imperialism has hardly remained fashionable, given the widespread scepticism about Iraq and Afghanistan and demands for fiscal austerity.
• 2005: “Forehead Billboards” – Can Work Only Once? A 21-year-old named Andrew Fischer auctioned off the space on his forehead for $37,375 on eBay, thereafter attaching a small temporary tattoo advertising an over-the-counter sleep remedy. The company, SnoreStop, calculates that it received nearly $1 million worth of publicity.
Okay, back to deep and meaningful. Cowan’s top ideas:
• 2001: “Populist Editing.” – Wikipedia has since eclipsed the Encyclopaedia Britannica and Microsoft’s Encarta project, and many of us use it almost every day.
• 2002: “Early-Detection Revisionism.” – We often find extra medical treatment hard to turn down, yet frequently it does us little good or even harm, so sometimes it’s better not to know your condition at all. Prostate cancer is one area in which this idea is having an impact.
• 2003: “Social Networks.” – The New York Times has a Facebook page, a Facebook application and a New York Times News Quiz on Facebook; then there are Facebook’s 500 million users.
• 2004: “Dumb Robots Are Better.” – The days of the Jetsons, and housecleaning robots, are not upon us, so settle for less. Be happy if your robot does anything useful at all.
• 2005: “Touch Screens That Touch Back.” – This pick was ahead of its time, as few people realized that this technology, as seen in the2002 Steven Spielberg movie “Minority Report,” would show up so quickly in the iPhone and the iPad.
• 2006: “Walk-In Health Care.” – We’ll need more of this, as general practitioners are harder to see and emergency-room waits get longer.
• 2007: “The Best Way to Deflect an Asteroid.” – Send satellites with mirrors to reflect the sun, vaporizing one spot on the asteroid, releasing gases and changing its course. If this ever comes in handy, it will be the biggest idea of them all.
• 2008: “Carbon Penance.” – “ . . . a translucent leg band . . . keeps track of your electricity consumption. When it detects, via a special power monitor, that electric current levels have exceeded a certain threshold, the wireless device slowly drives six stainless-steel thorns into the flesh of your leg.” Satire is an idea, too. The slightly more practical anti-global-warming idea from 2008 was to eat kangaroos, since they, unlike cows, do not produce methane gas.
• 2009: “Music for Monkeys.” – We still don’t know which of the ideas from last year will pay off, but the idea of generating music that monkeys enjoy (and humans don’t) was the most fun of the bunch.
Among the random links I have saved up was one to a post headed: Does Beauty Drive Economic Growth?
Now can’t find where it came from, so sorry no Hat Tip to whoever led me to it.
Anyway, does it? Is there a connection between beauty and economic growth?
Umm a little bit I think. However, it does make a good headline. Sucked me in.
But behind this beauty myth are some solid ideas about what drives economic growth. And some good news for NZ.
Where there is a connection is between our passion (or attachment) for a community and growth.
And yeah, some of that passion relates to beauty – to the splendour of the parks, the majesty of a harbour, the leafiness of neighbourhoods etc.
But it’s not all about beauty. There’s lots of innovation and rapid growth springing out of less than beautiful surroundings – from inner city warehouses and lofts through to Silicon Valley.
The evidence for all this a Soul of the Community study, commissioned by the Knight Foundation covering 26 US cities.
What the study actually showed was that there are three main qualities that drive people’s attachment to place:
• social offerings, such as entertainment venues and places to meet,
• openness (how welcoming a place is) and
• the area’s aesthetics (its physical beauty and green spaces).
You’ll notice that money, materialistic-type qualities are missing here.
“Instead, attachment is most closely related to how accepting a community is of diversity, its wealth of social offerings, and its aesthetics. This is not to say that jobs and housing aren’t important,” say the authors.
“Residents must be able to meet their basic needs in a community in order to stay. However, when it comes to forming an emotional connection with the community, there are other community factors which often are not considered when thinking about economic development.
“These community factors seem to matter more when it comes to attaching residents to their community.”
Attachment is “an important metric for communities, since it links to key outcomes like local economic growth (GDP)”.
The survey found the places with the lowest levels of attachment were car-wreck cities like Detroit and Gary, Indiana, while they were highest in places like Boulder, Colorado.
So you’d think, if the above is true, that countries and cities looking to attract investors, talent and skills should concentrate on their boosting their social offerings, their welcome mats and travelogue posters.
Paula Ellis, a Knight Foundation vice president says the significant ‘takeaway’ of the survey is “to design interventions to increase residents’ attachment to the place they live”.
“Our theory,” says Jon Clifton from the pollsters Gallup “is that when a community’s residents are highly attached, they will spend more time there, spend more money; they’re more productive and tend to be more entrepreneurial”.
And the good news for NZ? We are a place where the people of the world want to live because we have an open and friendly society and a beautiful and relatively clean environment. Though we are a bit of a cultural and entertainment backwater.
So all this is further reason to protect our clean green image. Also we need to be more worried about stories in the international media that indicate we are not a welcoming society.
And please find some way of delivering us more great live music.
The difference between world-wide fame and nothingness can often be pretty mundane.
For Dick Fosbury – of Fosbury flop fame – it was having a pile of chopped up mattresses, a bit of straw and some netting to dive into rather than a heap of wood chips.
As an interview in yesterday’s Sunday Star Times tells it, wood chips were the norm for high jump landing pits back in the mid 60s when Fosbury was starting out in the sport. If Fosbury’s school hadn’t supplied a proper landing pit, the Fosbury flop – its head-first jumping style calls for a soft landing – would probably have never been conceived.
A bit of athletics innovation would have succumbed self preservation.
Like Bill Gates, Fosbury was in the right place at the right time.
In Gates’ case he got access to a school computer as a kid pretty much before anyone else. The fact the school had a computer was not part of any great plan. The school just had some spare bucks.
And that was just the first of a number of bits of luck for Gates.
As Malcolm Galdwell says in his book “Outliers” success is often the product of “history and community, of opportunity and legacy.
“[Gates and others] success is not exceptional or mysterious. It is grounded in a web of advantages and inheritances, some deserved, some not, some earned, some just plain lucky – but all critical to making them who they are.”
Which is a bit like an innovation system – “…the interaction between the actors who are needed in order to turn an idea into a process, product or service on the market.” (Wikipedia).
It could perhaps better called an innovation web to capture how organic the process is.
A enduring Kiwi myth is that we are a particularly innovative bunch – we love the whole ‘number 8 wire and we don’t have much money so we have to think’ thing.
Part of the myth is that we are this way because we are small, isolated country. Well maybe not.
But myths have lives of their own and we just lap up stories about Kiwis with smart ideas because it fits our image of ourselves – you know, clever do-it-yourself thinkers who lead the world. This often gets called innovation, but it ain’t.
Innovation turns ideas and invention into a goods and service people will pay for.
Kiwis are good at the first bit; not so good at the second.
Anyway getting back to size and isolation, it may be that these qualities, far from being good for innovation, are in fact bad.
Hong Shangqin, Philip McCann and Les Oxley in a University of Canterbury paper say a survey of Kiwi businesses suggests that “in a small and isolated local market such as NZ, smallness in terms of firm size may not be an advantage for innovation.
“The reason appears to be that the notion of ‘small’ itself may have an absolute minimum threshold, below which translating entrepreneurship into innovation becomes problematic.”
Which the trio says is at odds not only with our Kiwi myth, but also economic text books.
“NZ is a small and isolated economy which, at least in a textbook sense, is institutionally almost ideal for promoting local entrepreneurship and innovation.”
However NZ’s innovation performance of is poor (or maybe mixed). Back in 2007 the World Economic Forum ranked us only 27th in the world in terms of our overall capacity for innovation, the fourth lowest ranking for any advanced economy.
The authors say our underperformance is particularly noticeable compared to other small isolated countries such as Israel and Finland. “The reasons for this poor performance are as yet unclear.
“It may be that the awareness of best-practice and state-of-the-art thinking on innovation issues is less in NZ than might be hoped. This scenario would call for better training and human capital development.”
Marketing and management skills would be classic examples.
“Alternatively, there may be grounds for believing that some of the structural determinants of innovation in NZ are different to those in other countries. In this case, some of the recipes for promoting innovation which are adopted in other countries may not necessarily be appropriate in NZ.”
How come we are so bad?
The authors believe part of the answer may be related to the role size plays in the innovation process, that is the size of businesses, local markets and cities.
Much international evidence suggests that small businesses (along with large ones) are inclined to innovate more. “Yet, translating these arguments to NZ may not be so straightforward because what is meant by large and small may be very different in different contexts.”
As well as clustering around small firms, international evidence is that innovation likes large and diverse cities.
“Combining this observation with the above observations from the international literature regarding small firms suggest that that large concentrations of small firms in large cities should promote innovation,” the authors say.
“While urban areas are regarded as being beneficial for innovation promotion, absolute scale may also be critical. As such, once again there may be an urban population threshold above which being located in a city is advantageous for fostering innovation.”
Patenting is a classic example. As MacDiarmid Institute deputy director Shaun Hendy has pointed out, the difference between Australia and NZ’s patenting rates (we’re 40% below Australia’s) is down to the relative size of the two countries’ cities.
Specifically we can’t match the grunt of Sydney (population 4.5 million) and Melbourne (4m plus). Bigger cities generate higher rates of patenting. Where our cities are of a comparable size – Auckland and Adelaide – patent rates are much the same
The three authors believe market size may be important. “NZ is the third smallest national market in the OECD, with a total national market which is only equivalent in scale to a medium sized urban market in the USA.
“Yet, in terms of its accessibility to other national markets, NZ is also one of the two most geographically isolated countries in the world. Many other small countries, and particularly those in the EU, are part of a much larger market, such that exporting increases the returns to innovation.
“The fact that the net benefits of exporting diminish as distance costs increase implies that the positive effect of exporting on innovation may therefore also be smaller in NZ than for many other small countries.
“Finally, the small scale and isolation of the New Zealand economy means that there is always a higher risk premium attached to the NZ dollar than for almost all other currencies. The result is that interest rates are consistently amongst the highest in the world. As such, the optimal investment portfolio for businesses may be rather different in NZ than in other countries with a greater relative preference for labour over capital investment.”
Foreign Policy magazine says aspirations for a less oil-dependent world, and for a more prosperous one, are colliding in a global race for a better battery.
The battery could be part of a half trillion US dollar electric-car industry capable of spawning companies on the scale of ExxonMobil, General Electric, and Toyota.
This, as Foreign Policy points out is the stuff of creating or remaking whole economies and the rebalancing of political power.
As you’d expect the Chinese are on to it.
FP says that China, starting virtually from scratch, wants to become the world’s largest producer of battery-powered vehicles within the next few years.
This is based on the recognition that “the world doesn’t just need a better car — it also needs a better means of building and sustaining economies”.
And as usual you need to take Chinese ambition seriously – very seriously.
Similarly with the Singapore Stock Exchange’s A$8.1 billion offer to buy its Australian counterpart, the ASX.
As the Sydney Morning Herald points out “The real issue is ambition”.
I’ve been reading through the NZ Trade and Enterprise’s Investment Ready Guide - a must for anyone considering raising cash for their business.
It has a great line – “there are many ‘brilliant ideas’ in the world, but far fewer business teams capable of executing those ideas.”
You could replace ‘in the world’ with ‘in NZ’.
We love the ideas stuff because it fits our image of ourselves – clever do-it-yourself thinkers who lead the world. This often gets called innovation, but it ain’t.
An innovation definition: Process by which an idea or invention is translated into a good or service for which people will pay.
Kiwis are good at the first bit, but too often crap at the second.
What’s ever come of all of our ideas and invention over the last 30 or so years? Stuff all from a national economic perspective.
Lord Rutherford’s quote – “We [Kiwis] haven’t got the money, so we’ve got to think!” – is really bullshit.
Thinking has delivered lot of great ideas, but little else…and that’s why we have no money.
As business commentator Rod Oram says a lot of innovation in NZ is done “in a vacuum – it’s by people who are not plugging into any kind of commercial reality”.
A big part of that reality is marketing and selling. Unlike our strong national drive around ideas, there’s a cultural gap around salesmanship. (See the “slow sell nation” series of posts).
The Investment Ready Guide points out businesses often seek to invest in ideas and patents believing these will be valuable.
“…in fact creating sales and being first to market would be a better way of spending the money. It’s often been said that only one in a hundred patents makes back more money than was spent in development and patent protection, and that 10 percent of the hard work is in the development and patenting, whilst 90 percent of the hard work is in creating sales.
“Remember, sales generate revenue, patents in themselves don’t.”
[Photo credit - Naked_Eyes via Flickr]
There’s an interesting story in today’s Sunday Star Times on the state of invention and commercialisation in NZ.
Basically BigCake is with Rod Oram on this. He says alot of innovation in NZ is done “in a vacuum – it’s by people who are not plugging into any kind of commercial reality”.
Not sure if Rod is nailing these guys, but the story mentions Rex Bionics’ exo-skeleton that enables paralysed people to walk and the Martin Jetpack.
But I reckon the story puts to much emphasis on the need to be first, not “reinventing the wheel” which looks to the ‘thing’ of Kristian Slack whose ideas drive the story.
Being first can be a big advantage in commercialising a product, but it’s not everything by a long shot. It’s not even a matter of being best.
Ask Sony. In the the videotape format war of the 1970s and 80s Sony’s Betamax lost to JVC’s VCR, even though Betamax was first to market and was in many ways the better product. Essentially, according to Wikipedia “Sony believed that having better quality recordings was the key to success.
“…Consumers would be willing to pay the higher retail price for it (the Betamax), whereas it soon became clear that consumer desire was focused more intently on recording time, lower retail price, compatibility with other machines…” (Things that VCRs were good at).
As I’ve posted before, NZ business skills in marketing (including identifying markets) and selling is a bit of a blind spot. (There’s a series of posts on this theme – check out the ‘selling’ tag).
Let’s hope Rex Bionics and the Martin Jetpack have their eyes open.
BigCake’s not sure how scalable these businesses are, but NZ’s track record for turning what looks to be world-beating technology into businesses that register on a national economic scale ain’t that great.
I’ve also posted before on the lack of size of our high-tech companies compared with those of other smaller nations.
There’s a disjunction between our high levels of inventiveness and entrepreneurial drive, as shown by the above two companies, and our relatively poor overall economic growth performance.
The media during the last week or so have highlighted two bits of great Kiwi technology that are definitely not ‘me too’ products that clutter the world’s market places.
High hopes abound.
o PowerTread which turns the energy of vehicles passing over judder bars into electricity. The company behind the technology, Enervate – a couple of Auckland Westies – has hooked up to some Singaporean Government cash to help get its PowerTread system from prototype to commercial release. Enervate says one PowerTread unit could generate enough energy to supply power to up to three typical New Zealand homes.
o Rex, the Robotic Exoskeleton a pair of robotic legs that enables some wheel chair users to stand up, walk, move sideways, turn around, go up and down steps as well as walk on flat hard surfaces including ramps and slopes. Rex Bionics is finishing off tests needed to put Rex on the market in Europe and Australia. It will also seek FDA approval so that Rex can be put on the market in the US.
As far as BigCake knows there is nothing exactly like either of these products on world markets.
The big question is what happens next.
These guys look to be doing the right things:
o Getting outside investment (VC firm No8 Ventures has backed Rex Bionics)
o Bringing expertise on board (Enervate hooked up with AUT University’s Business Innovation Centre)
o Getting boards of directors
o Setting up international advisory boards (BTW – Rex Bionics’ one includes Frank Gardner, the BBC’s Security Correspondent who wrote one the all-time great journalism books Blood and Sand)
BigCake’s not sure how scalable these businesses are, but NZ’s track record for turning what looks to be world-beating technology into businesses that register on a national economic scale ain’t that great.
I’ve posted before on the lack of size of our high-tech companies compared with those of other smaller nations.
There’s a disjunction between our high levels of inventiveness and entrepreneurial drive, as shown by the above two companies, and our relatively poor overall economic growth performance.
A NZ Trade and Enterprise report identified the following management traits that may explain this:
o The struggle between creating more wealth and pursuing leisure tends to be won by leisure at a lower threshold of wealth creation in New Zealand than in most other countries.
o We tend to view the world from a distinctly Kiwi perspective and easily make the mistake of thinking for our customers. That results in us being judged as being quite different to how we think about ourselves.
o We are fiercely self reliant and reluctant to rely upon others for success. As a result we feel compelled to do things that we would be better off delegating to others.
o The Tall Poppy Syndrome which causes us to under-perform, to have a profound reluctance to give and receive feedback, and a similar reluctance to use specialists, preferring instead Jacks of all trades.
o We under value and struggle to recognise the intellectual assets that we create through our inventiveness.
So, yeah, judging by what Enervate and Rex Bionics have done to date, some Kiwi companies have moved on.
As an aside. When Campbell Live did a piece on Enervate the other week it played up the Kiwi inventiveness, No8 wire, DIY, mangled prototypes, overcoming the odds angle – all set in a West Auckland backyard.
This goes down well with the way we like to see ourselves, but it’s a crap picture for any international investor.
See my posts on the ‘slow sell nation’.
The things you write without thinking.
I’d tapped out something along the lines of there being a lot of examples of Kiwi companies who’d invested heavily in research and development and as a result were doing nicely in various international marketplaces.
Okay, it’s true because there are heaps of little businesses that fit the bill, but try to name more than a couple that are household names.
Hamilton Jet and Fisher & Paykel Appliances maybe. The Gallagher Group? F&P Healthcare?
The thing is, the largest of these innovation-led, exporting businesses is under the radar resin maker Nuplex which comes in as NZ’s 21st largest business (by revenue). Then comes F&P Appliances (24th ).
The rest are nowhere though F&P Healthcare is steaming up the rankings.
If you have a look at these Kiwi companies’ counterparts in other small countries we get:
o Israel – Teva Pharmaceuticals #1
o Finland – Nokia #1
o Denmark – (drug company) Lundbeck # 3
o Ireland – (technology focused food group) Kerry Group #6
Australia’s list is full of finance and mining companies, but you get the picture.
If Kerry is there as an innovation-led exporter, why not Fonterra for NZ?
Well here’s Kerry describes itself:
“…a leader in the global food industry. We develop, manufacture and deliver technology based ingredients flavours and solutions for the food and beverage industry worldwide.”
Technology is all over the Kerry’s market positioning.
And Fonterra:
“Dairy is our life’s work and our strategy is to lead in dairy. We’ve built strong partnerships with other leading global dairy companies and we are co-operatively owned by 11,000 New Zealand dairy farmers.”
Mmmm.
I’ve posted before on Fonterra’s lack of commitment to research and development.
This is not pushing the idea that we need a multi-billion dollar high-tech exporter to match the size of Fonterra – a big bunch of companies doing $100 – $200 million will do just as well, and this is more feasible.
But these comparisons show how far NZ has got to go for the economy to escape the clutches of a commodity-focused export sector.