NESTA Connect

Long live the networked (& reputation) economy

They say "It's not what you know, it's who you know." I've always disliked that phrase, not necessarily because I disagree with it, but simply as it doesn't seem fair or right. This response reflects my background which is originally academic where ideas are, in principle at least, the primary currency.  However I am increasingly of the view that relationships and networks are increasingly the currency upon which our economy and society is based.

With increased mobility of people, capital and information, it becomes more difficult to create value or competitive advantage through knowledge alone. All major economies trying to capture the higher value jobs/functions and create knowledge economies, however with information becoming increasing ubiquitous, any slender market advantage achieved through creating/developing/secretively hoarding exclusive information can be very quickly eroded.

I believe that we are moving from a knowledge economy, if indeed we ever were one, to being a networked economy, where organisations and individuals create value primarily through their relationships and networks. This is a world where reputation is increasingly crucial but also increasingly permanent. Of course people will try to influence perception but will be less able to control it. This networked reputation economy applies to multinational corporations as much as individuals. The best idea in the world will go nowhere if the originator is unpleasant or impossible to work with, as all innovation is fundamentally collaborative. And interestingly, our reputations are cumulative, so bad deeds done by an individual or organisation in the dim and distant past are less likely to 'go away' so the optimist in me hopes that this will lead to greater responsibility percolating through the networked economy.

So what do you think? Is this right? Is this a good thing? What are the impacts upon our economy and society? I'd be very interested for comments or thoughts.

Industry Tunnel Vision

Hot-foot from the latest workshop in our 'Corporate Connections' project I was inspired to read the latest briefing from trend hounds Springwise:

The light at the end of an (industry) tunnel is a train....

This short article sets out three reasons why looking outside your industry's boundaries to innovate is a productive exercise.  Firstly 'your competition could be anyone'.  Not only are shoes competing for short breaks for the money in consumers' pockets,  other new competitors are likeley to leap sideways into your space.  Secondly 'consumers' expectations are being set outside your industry'.  Reliability, design standards and brand attitudes are all developing fast and people who demand ethics for example don't care if you're making coffee or cars.  Thirdly 'copying competitors is a race to the bottom' and Springwise come down against so-called smart followers.  Perhaps not so smart?

As particants in our Corporate Connections project already realise, (all members of the H-I Network, set up to faciliate this kind of x-industry open innovation perspective) stepping outside of your particular tunnel can be illuminating.  This open innovation project is cross-fertilising the pharma, FMCG, telecomms, airline, F1, electronics and energy industries and more.  We hope to be able to prove some of Springwise's observations with real innovations in 'the spaces in between'.  I will keep you posted either way...

Measuring research output

Last night John Denham, the Secretary of State for Innovation, Universities and Skills gave a speech at the RSA in which he called for scientists to engage more fully with policy-makers and the public. He saw this as a key enabler for meeting the challenges of the next century.

This call in itself is not new, but Denham went further in actually considering some of the reasons why the research community are often reluctant to leave their ivory towers.

He stated "My concern is there may be disincentives in the system that emphasise published and peer-reviewed work over public policy advice. The work that some scientists and academic departments do to support policy makers can be undervalued.
"The Research Assessment Exercise (RAE) is currently being reviewed by HEFCE and as part of this I feel we need to have a discussion on whether there is more to ensure that this essential work is properly recognised.”

I think many will welcome this statement but will want the minister to look further at how the RAE has affected other parts of academic culture.

The RAE has been a reality of academic life for the last 20 years and few would doubt it has had a positive impact on the quality of academic output in the UK – but it has also narrowed the focus of what it means to be a researcher, particularly in science and technology subjects where as Denham concedes, the system is weighted towards publishing as much as possible in high impact-factor journals.

Another area that may suffer from the pressure of the RAE is interdisciplinary and risky/adventurous research. The argument goes that such research will not be published in traditional high impact-factor journals and that it is more difficult and takes longer, reducing published output.

As part of the consultation mentioned by Denham, HEFCE published a piece of statistical research by Evidence Ltd which indicated that using publication metrics (relative numbers of citations) to assess the quality of research will not disadvantage interdisciplinary research, as has been widely believed.

This is interesting, but in many ways does not solve the problem as there is still a widely held perception that such research is at a disadvantage. Whilst the perception exists, some department heads will still steer their younger colleagues into ‘safe’ well established areas of research.

And before we jump to condemn such behaviour it worth remembering that the RAE holds the key to significant amounts of funding which can make or break an academic department.

Going back to John Denham’s original concerns regarding policy and public engagement, I wonder if he is opening a wider debate on exactly what should be the role of the academic and indeed academic institutions in society? Can we develop an academically excellent but more innovative and outward looking ‘Academy’ with links between disciplines and to industry, policy makers and the wider public?

Our present system, whilst paying lip service to all these wider relationships does not provide the right structure of incentives. This is the challenge for HEFCE in planning its new model to assess research.

The Power of Collaborative Innovation

The main focus of the World Economic Forum at Davos later this month is The Power of Collaborative Innovation. Obviously I'd love to attend but alas my own personal networks don't extend that far, but I'll certainly be watching the podcasts. The fact that they have chosen this topic does however give me significant encouragement that we are onto something interesting with the Nesta Connect programme which is underpinned by the concept of supporting extreme collaboration across disciplines, organisations and places.

Since we launched in June 07 we've refined our narrative about what we do and why, and I wanted to get it down in writing here as it has evolved and invite comment and discussion, perhaps even from the eminent delegates at Davos (you never know!).

1. All innovation is fundamentally collaborative - If you look at any major innovation from nanotechnology to NHS direct, they all involve collaboration. Invention may be a solitary act though frequently isn't, but implementing those ideas/inventions commercially or socially, require collaboration, either explicitly or implicitly to make them succeed.

2. Most support/infrastructure/funding for innovation is targeted at individual people or organisations. - Innovation support seldom effectively recognises the network/community/space between the individual people or organisations and it is typically focussed upon the stimulation or development of new ideas rather than demand for them. This may be symptomatic of our individualistic economic and political world view of the rationale and enlightened self interest.

3. Collaborative projects are higher risk, but potentially higher reward. - Projects within a single discipline or organisation are more likely to result in evolutionary/incrementally innovations whereas more collaborative projects across multiple organisations or disciplines are more risky but can result (if managed/structured well) in more disruptive, higher impact innovations.

4. The world is increasingly specialised or compartmentalised. - This is especially true in education and academia (we have one of the most specialised education curriculums in the world) but also applies to business and government. I have worked professionally as both a physicist and a musician but now find myself in the rather bizarre situation of being a specialist in non-specialisation. Having said that, I am a firm believer in the need for expertise and specialists, after all the world is a complicated place and required thorough investigation to gain real insight.

5. Diversity or difference drives innovation. - By this I don't just mean ethnic or gender diversity. I really mean diversity or skills, experience, expertise etc.  After all, perspective is worth 50 points of IQ (so says Alan Kay, father of the personal computer).

6. We need to create more space (both physical and virtual) to cross fertilise ideas across disciplines. - An over emphasis upon productivity in all walks of life has resulted in some incredible advances and improvements. However, in much the same was as Google allow their staff 20% of their time, 1 day per week, to work on outside interests/projects, we all need some space to experiment, play, take risk and share ideas. This needs to be supported and encouraged. I currently think that Google's 80/20 rule here is probably about right and I don't suggest this would ever form the majority mode of operation, but I reserve the right to change my mind.

7. Successful collaboration doesn't usually happen by accident - the right type of leadership and facilitation is critical. Jimmy Wales attributes the success of Wikipedia to one part anarchy (anything goes), one part democracy (people can vote on a disagreement), one part aristocracy (people who have been around for a long time get listened to), one part meritocracy (the best ideas win out) and one part monarchy (on rare occasions the buck has to stop somewhere).

So, these seven points are roughly my version of the Connect the narrative as it stands in mid Jan 2008. These are hypothesis that we are trying to understand and prove or disprove through our projects, research and discussions. The narrative will change with time but I would welcome your input and suggestions now on how it can be improved. In the meantime, it will be interesting how the Davos delegates interpret the theme of this year’s forum.

"Entrepreneurs are artists armed with technology..."

"...and social networks are the new cities." Or at least so says Julie Meyer, founder of the First Tuesday network and now MD at Adriane Capital, at yesterday's grandly titled World Entrepreneurship Summit.

Sometimes the best conferences are the least well organised and the summit was certainly chaotic in both good and bad ways. Most on the discussion in the plenary talked about the challenge of combining social and commecial outcomes which musn't be seen as an either or decision. However the highlight was definitely Kevin Spacey who lit up the room and talked about his work at the old vic. He argued sincerely that arts are a necessity not a luxury in our society. He also talked about his own debt to his mentors and reminded the room not to "forget to send the elevator down no matter what level you are on."

A poorly attended yet fascinating breakout session asked whether the internet represents a new economy or not? The most interesting element of this discusion for me was of the art of unlearning (or re-learning).

Firstly JP Rangaswami of BT and the excellent blog confused of calcutta talked about an emerging we verses i culture, and that we have to unlearn 1000 years of history of becoming more individualistic and are now being forced to become more collaborative in order to survive and thrive. Also he talked about the need for creating business models around abundance rather than scarcity which was interesting.

Pat Kane, musician and author, followed and talked about how the music industry is unlearning too. It has gone full circle from it's live origins to making most money from selling recordings, and back to live business models again. Prince and Radiohead were both cited as major artists who have recently given music away for free and the bulk of their earnings coming from their concerts.

Madhuban Kumar discussed the implications for education were discussed given that the time you graduated from a 4 year computer science degree, arguably the first 3 years are obsolete! (My physics degree starting in 1992 presented modern physics as beginning in 1900!)

I guess if there is a common thread of all of the above, it is that adaptability is the key as always and needs to be instiled early through education, arts, business and policy. If we can instill that into our culture and society we will be onto something.

The curse of knowledge (or "how can you not know that!")

A recent article in the New York Times, referred to the curse of knowledge summarised nicely by the example below:

This so-called curse of knowledge, a phrase used in a 1989 paper in The Journal of Political Economy, means that once you’ve become an expert in a particular subject, it’s hard to imagine not knowing what you do. Your conversations with others in the field are peppered with catch phrases and jargon that are foreign to the uninitiated. When it’s time to accomplish a task — open a store, build a house, buy new cash registers, sell insurance — those in the know get it done the way it has always been done, stifling innovation as they barrel along the well-worn path.

Elizabeth Newton, a psychologist, conducted an experiment on the curse of knowledge while working on her doctorate at Stanford in 1990. She gave one set of people, called “tappers,” a list of commonly known songs from which to choose. Their task was to rap their knuckles on a tabletop to the rhythm of the chosen tune as they thought about it in their heads. A second set of people, called “listeners,” were asked to name the songs.

Before the experiment began, the tappers were asked how often they believed that the listeners would name the songs correctly. On average, tappers expected listeners to get it right about half the time. In the end, however, listeners guessed only 3 of 120 songs tapped out, or 2.5 percent.

The tappers were astounded. The song was so clear in their minds; how could the listeners not “hear” it in their taps?

I certainly know that experience and as Chris Tarrant says on Who Wants to be a Millionairre "It's only easy when you know the answers". Indeed.