John Kao – Innovation Nation – America in Decline.

September 23, 2008

in general

John Kao is kicking off KMWorld 2008 with the initial keynote on Innovation and Knowledge Management. His basic premise is Innovation is now part of a Global competition and America is falling behind. It reminds me in themes and similarlies with Michael Porters “Competitiveness of Nations” some 20 years ago. I’ve paraphased many of his comments. I won’t claim they are all perfect quotes. America the country has no real Stewardship for Innovation and the candidates aren’t talking about it. We don’t have a “face” or way to focus innovation in the US at a national level. Have we lost our innovation edge? What do you think?

Three basic questions about innovation… comments this audience “traffics in innovation” useful to address

Innovation Nation:
How America is Losing it’s Innovation Edge, Why it matters and What can be done to get it back?

Innovation Nation:
1. What is it?

It’s not a well defined process. I started off with a perspective of innovation at the individual level and then later moved into how it works with teams. Then how does innovation work in the Enterprise. Of late have looked at innovation from the POV of large scale, society, country, global level. The solution set to these problems are global and must be owned by all of us. How do you look at stewardship, investment etc?

The tools that we use to look at an individual or enterprise level innovation don’t transfer to a global system.

He’s now saying that innovation tends to come out in the space in between traditional silos. He’s providing the example he refers to as the Finish Innovation University which brings tech/science, design, business processes all together. You need actors across all stages and the right culture in order to make it happen. Innovation comes from conversations across these disciplines. The notion of a value chain for innovation. Many countries are contributing to the global economies. Innovation is non linear on a global scale. It’s why a number of hot spots are relatively small countries. Finland, Singapore like the greater Bay Area. Even Viet Nam is now known as a place to do certain types of testing in a global market place.

2. Why should we care?

Countries are now focused on innovating at the global level. Example on the outskirts of Shanghei is a 3million sq ft Innovation University about to be opened. By 2020 China’s goal is to become an Innovation Society. There’s an innovation system there. There’s a stakeholder strategy. In Sweden there is a Govt Agency that has 300 people that manage and have a long term POV on where Innovation strategy is going. Contrast this with the US. Is there such a department? There is no strategy. The assumption that we can muddle through flys in the face of what is happening with the rise of innovation capability in the rest of the world. In the US we have taken our foot off the gas.

Models that were invented in the US. Venture Capital, WallStreet etc. Now VC’s are global, Universities are running global programs by opening in other countries. At the national level support of innovative ideas is becoming globally distributed. Today living in Shanghei or Mumbai can be very rational choices. The whole notion today is that there is high cosmopolitan live style in any of these places. The so called American dream exists in many parts of the world. I’d certainly agree with this.

At the end of 1945 the US was leading the world of innovation. In 1957 Sputnik launched. Eisenhower earned his salary that month by pointing to study science and math. NASA and DARPA got started. Sadly that is the last time the US had an innovation agenda. Now fast forward to 2008. In all the ratings the US comes out as number one. Based on the current installed base the US is probably the leader. What I’m talking about is long term, something more catatrophic that might happen down the road. How do we get a more expasive view on innovation. Who’s the talent, Whats the resources?

You can make talent or seduce it. K1-12 education is stressed; spend more than anyone and aren’t even in the to 20 in math and science. Lots of reasons and the report card says 1/3 don’t finish high school in the US. The jobs that they may have done years ago.. many of these are now offshored. At the higher level we graduate a lot less engineers than China, India. They want millions of engineers. The exceptional end of the bell curve will continuously improve and grow. So making the talent is a big issue. Asks why don’t our youth ever want to work out how to make an iPhone?

How can you acquire talent? The serial kidnapper. Imagine you are an imminant life scientist in the US. I have a proposition. You apply 50% of your time applying for grants. In my system you just get the money and we will build you a new lab and get you lots of graduate students. Oh and we will pay you 4 times as much. What does this lead to? Our National Institue of Cancer Research … gone to Singapore. That’s been done many times. What you need is a handful of the right people rather than lots of people. William Gibson said 20 years ago that wars will be fought over the rights to employ the brains / talent. If you are Singapore now do you attract the global creative class. Flip it around America is losing it’s luster. Over in China everyone will support my work. Now the US is in the talent attracting business.

Look at resources. Eg new Universities in Finland or China. Our economy is now trillions of dollars poorer, we have a geopolitical situation that is a drain on funding. Public infrastructure roads, highways, dams etc. gets a grade of a D. To bring it up to an acceptable level will take 1.3 trillion dollars. Pretty soon it adds up to real money. The money you bring in vs spend is Free Cash Flow. China has lots of FCF. The US is in a bind and the problem is daunting.

3. How to do it?
National strategies. Countries are adopting differentiated strategies. Singapore is a focus strategy. For the US and the Bay Area the future probably lies in the Systems Integrator role. We are in the position to continue to be the originators. Where do we sit. Friend started a travel related business. The way he started this company this time is spent a year in his office with 300 contractors all located outside the US. He had smart ways of finding them. He never met any of them. He didn’t incorporate until a year after he incorporated. The strategy was born global. He’s the systems integrator. Another friend in the life science area. Today no laboratory work done in the US with it today. Again systems integrator model. These people mix and max from a global market of innovation inputs. It is fundamentally transforming how things get started. That’s also true for big companies. Oh they have a user centered design system in Finland. As the unit af action decentralizes to the individual you have the opportunity to mix and match from a global array of resources. You are basically all Citizens of Innovation Nation.

Go out and contribute! Take on the challenge!

I’m a little dissatisfied with the end. I’m concerned that saying we will be the systems integrators will let the system off the hook. This is a problem that needs addressing. As someone who’s seen it work and studied it in New Zealand I’ll also say it is very different to measure the impact on a short term basis.

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