Making Innovation Flourish

Supporting the new class of 'necessity entrepreneurs'

This week is the Global Entrepreneurship Week. It is often said that there are two types of entrepreneurs, those driven by necessity and those driven by opportunity. The current economic climate will create a lot of 'necessity entrepreneurs' who will be looking for opportunites.  This is the time when both necessities and opportunities are immense and governments, in their ‘Neo-Keynesian’ thinking, can play a very important role in stimulating demand by helping the new class of ‘necessity entrepreneurs’ become high-impact ‘opportunity entrepreneurs’.  This will require governments injecting serious amounts of money into 'seed capital' and 'micro-finance' funds to keep unemployment under control, prevent brain drain and brain-waste, and create new supply-chains. or should I say new demand-chains?  

The failure of market failure: Towards a 21st century Keynesianism

This morning saw the launch of a new NESTA provocation by Will Hutton and Philippe Schneider on The Failure of Market Failure: Towards a 21st century Keynesianism.  The provocation updates the age-old debate about the efficacy of state intervention versus laissez faire, and in so doing is fiercely critical of economic frameworks used to inform policymaking in the UK. The primacy of the concept of market failure in policymaking - the view that state intervention can only be justified when it can be demonstrated that free markets cannot do better - comes in for particular criticism.
 
The provocation updates the debate in two ways: first, by reference to developments in institutional economics, psychology and behavioural economics which the authors see as jarring with the behavioural and motivational assumptions traditionally made by policymakers; and second, by interpreting the current financial crisis as prima facie evidence that markets need government ('markets fail more often than they do not'). If the UK is to successfully innovate, the authors argue, policymakers must recognise the importance of the government and the private sector working together, not falsely pitch them at opposite sides.
 
At this morning's policy breakfast to launch the Provocation, Will Hutton argued that a number of crucial policy interventions in the UK have been sacrificed at the alter of market failures. For those working on policies to support future innovation and creativity, where well-defined market failures are by their nature difficult to anticipate and evidence, this is a sobering thought. Will finished his comments with a call to the British academic economics profession among others to respond to the thesis set out in his Provocation. Going ahead NESTA looks forward to playing its role in facilitating the debate.

The fallacy of localised innovation systems

This week we launch two new NPRU reports stemming from the Innovation and Place research programme. One report focuses on the new forms of globalisation characterised by the entrants of new players using new tools to engage in global business, and another focuses on the absorptive capacity of UK nations and regions. Initially, we became interested in the two topics of globalisation and local absorptive capacity from an Emerging Markets perspective, the rise of the BRICS and what does that mean for the UK. While we did cover these grounds pretty well in the globalisation report, the most provocative messages came from the absorptive capacity report (Innovation by Adoption). In this report we came to the following conclusions:

• Knowledge exploitation happens through multiples routes. The routes to moving a new idea, technique or discovery from its birth place to the market are diverse. Exploitation does not always happen through production lines co-located between a university and a firm, but can occur through multiple pipelines of deployment. A new technique can be learnt through formal and informal networks, by a local professor, expert, a firm or a university. Utlimately, a new technique will diffuse widely and become a known practice to a wide sprectrum of users who will pick it up through formal or informal training.

• Creation and exploitation do not always have to be co-located. There is no point for cities, regions, and sometimes not even countries to try create all the components of an innovation system within their boundaries. If your city or region is good at popping out new discoveries and ideas, but bad at exploiting them locally, then your best most optimal option is to team up with another city, region, or foreign country to help you exploit your discoveries and ideas at a massive scale.

• New value is, more often than not, a result of a successful adoption-exploitation process rather than creation-exploitation. The ultimate benefactors of one innovation will always be the wider users who will create more value from it than the original creators. Put simply, you don't need to have invented the computer to exploit it for creating new value for yourself.

• Innovation policies should support the capacities needed to be competitive within global value chains. The obsession with creating all encompassing national and regional innovation systems that seek to function as localised factories of innovation are doomed to failure. It has not worked in the past and there are no reasons to believe that they will work in the future. Instead focus on what you can do best within an innovation system that is intrinsically global.

On Evidence-Based Policymaking

We take it for granted that a solid evidence base is a key requirement for government interventions. The Department for Business Enterprise & Regulatory Reform’s (BERR) five principles of good regulation state that any regulation should be “transparent, accountable, proportionate, consistent and targeted”.

Yet the European Commission – in its proposed Term Extension Directive – is calling for an extension of the European copyright term for sound recordings from 50 to 95 years, which all the independent evidence suggests would be bad news for emerging talent and for consumers.

The theoretical trade-offs are well-known: an extended term of protection, it is argued, provides incentives for musicians to create new recordings, but it also prevents artists from innovating on the back of published music and diminishes the choice of music available on the market. Which effect dominates, and the case for term extension – should rest on a careful consideration of the empirical analysis.

Happily, an international group of 50 leading academics has done just that in the Bournemouth University statement submitted last month to the European Commission.  The academics have carefully reviewed the available independent evidence and have shown overwhelmingly that the proposed term extension would be bad for Europe’s creativity (though good for a relatively small number of long-living performers and their estates).

The academics wrote to The Times earlier this week to call on policymakers to examine the case in light of the evidence.  Three cheers for the academics!

'Do we expect too little from humanity?'

That was Sir Tim Berners-Lee's response to the question 'do we expect too much from the web?'.  It was part of a memorable day for me, culminating in an event to promote NESTA's founder sponsorship of the Web Science Research Initiative, an organisation (supported by MIT and Southampton University) devoted to promoting and disseminating the emerging field of 'web science'.

I owe my career to Berners-Lee, or at least indirectly, to his invention.   It was strangely apposite that on arriving at NESTA's office, he walked past my desk while I was stuck on the phone, arguing with an ISP about a DNS issue relating to our latest collaborative workspace - the Innovation Index. 

My only other opportunity to interact with him was regarding his presentation, as I had the dubious honour of being in charge of our first live webcast from this building.  (In a 'geeks shall inherit the earth' moment I even took a picture of all the kit we'd had to hire in to do the video mixing and encoding).  I vainly tried to help his Mac talk to our plasmas, and tried not to look too panic-stricken as I realised that (a) he was presenting from his own laptop and (b) he had been updating some of the slides earlier that day - so the one I would be linking to on the live feed was marginally out of date.

The event itself was a bit of a blur.  I was operating one of the cameras, attempting to take notes and occasionally popping my head around the door to monitor the vision mixing.  All the technology worked (four overflow rooms with split screen presentations / speakers), live webcast (now archived online), twitter channels from the overflow rooms and the wider internet piling on Roland, doing a thankless task as moderator (you can see him asking questions on their behalf in the Q and A session).

Others have blogged on the content, and mused on the various offerings of both Tim, Charlie Leadbeater and Andy Duncan - the latter two having been asked to respond to elements of Tim's presentation and add some perspective from a sociological and commercial background (in the spirit of web science being a multi-disciplinary approach to understanding the web).

Ultimately, it is Tim's passion for the web, his passion for it to work better, for it to deliver meaning and value to people that will stick with me.  His humility is well documented, but I hadn't expected to him to be so passionate, so articulate and so... right.

Connecting people with information and back again.  That's all the web is.  A series of links at various levels of abstraction.  Because no matter how much or how little technology we use (irony intended), what commercial model web publishers and ISPs use, or what technical standards we use or aspire to, the web should, fundamentally, be about making positive changes - whether it's simply being more efficient or becoming better informed or breaking down geographic/age/racial barriers - in how we interact with our fellow man.

Risk-taking for the future

In the latest of our essays on how best to prepare young people for the future, Donna Miller, Human Resources Director, Europe, at Enterprise Rent-A-Car asserts that the developing the skill of risk-taking in young people is crucial.

She says: “Young people need to understand that risk underpins many facets of life, including workplace skills, creativity, enterprise, decision-making and problem-solving.”

An informed attitude to risk-taking is also fundamental for innovation as it requires experimentation, endeavour, the ability to overcome fear of failure and the competency to weigh up different options and, when necessary, to invent one’s own opportunities. 

NESTA’s Future Innovators programme is currently working with a range of partners on new ways of developing an awareness of risk-taking in young people or those who support them. Our pilots include a project to examine how this skill can be embedded into the curriculum for Design and Technology, a scheme to encourage adults working with young people to manage their own reactions to risk and an online psychometric tool to encourage young people to think about the risks they take and face in daily life.

We’re interested in learning about other projects that aim to develop risk-taking in young people.

Can you teach enterprise?

In the latest essay from our series on ‘Preparing for the Future’, Claire O’Halloran from Microsoft poses the question: “Can you teach enterprise?” Professor Dylan Jones-Evans, Director of the National Entrepreneurship Observatory for Wales argues that “you can’t teach it, but you can learn it.”

What you do think?

Claire goes on to argue that developing entreprenuerial skills requires people to be open to learning and to try to think “more like an entrepreneur”. She believes that, in many cases, this is about giving people confidence.

But how do we learn these skills and gain this confidence?

Coverage of the Innovation Edge conference

Photos from the event are beginning to appear on Flickr, and a reminder that we will publish the video along with the audio later here .

A selection of blog posts covering yesterday's Innovation Edge conference - drop me a note if you spot any others:

Telegraph Technology blog - Claudine Beaumont’s blog and here

NTOUK.com - Jerry Fishenden's Technology Policy blog

Projector Films - This blog is great says Gordon Brown
Nature Network - Editor's blog
Steve Clayton - Blown away by Bob
A work on progress

FreshNetworks
What NESTA’s learnt about innovation

An education system to support innovation?

Are online networks the new cities?

Collaboration not cooperation The panel session at the NESTA Innovation Edge event

Geldof and the power of unreasonable people

Vague but exciting

Jonathan Mitchener: A collaborative future?

James Swanston

The Sustainability Opportunity  Is it just about winning?

Cased Gordon Brown in successful speech shocker!

Chamtech: Innovation at the Innovation Edge Conference?

Entreprenurses 20/05/2008: Meeting Bob Geldof at the NESTA Innovation conference

BookTwo: Funding gap, knowledge gap

Benjamin Ellis blogs about the Innovation Edge

Perfect Path Cognitive Surplus at Conferences

Tealady: Innovation Edge

Podnosh: Host written

Nick Temple from the School of Social Entrepreneurs   Innovation Edge: some live blogging from opening plenary at the Innovation Edge

Kevin Davis From Sir Bob to a lighter shade of Brown stuff

Desperation is the father of necessity

Bob Geldof has given a well-received, passionate and compulsive speech on... well, a whole host of things really.  Working without notes, he effortlessly managed to both make sense and re-write history (or perhaps more fairly, look at history through a very specific lens) in equal measures, wrapped up in the kind of eminently quotable phrases that make him a journalist's dream.

He spoke at length about change, and about opportunity.  The changes in him, the UK, and what needs ot happen to meet the challenges of tomorrow, and the opportunities that are presented by the web, collaboration, the developing world and more generally, within ourselves - we are the agents of our own destiny.

His key points (I will revisit this later):

• the UK is becoming more risk-averse
• decisions should be made more locally.  The paradigm must be collaboration, not [edit] competition.  Facebook, widgets, open source - these are the future.
• inter-dependence on almost everything means we need to communicate and co-operate better.
• Enterprise is the attempt at trying.  Failure is nothing.  99% of the things I've tried were failures.  It doesn't matter that I failed.  The manager enables the ideas of the entrepreneur.  The entrepreneur needs to know when to step back.  We're losing the ability to celebrate this.
• we are all connected and increasingly inter-dependent.  'You don't die of droughts, you die of politics'.  We cannot ignore the problems of others.  Why is China investing billions in Africa but 'our guys' aren't?

And he left us with a big challenge.  Where are the ideas going to come from in this new world?

• all change comes from the self.  There must be a commitment to change.

Tim Berners-Lee on the future of the web

Just finished listening to Jonathan Freedland interviewing Sir Tim Berners-Lee live on stage at the Innovation Edge conference.  It's always odd seeing your heroes, and for once, he didn't disappoint.  TBL was charming, self-effacing, and more importantly, made interesting and intelligent points on the future of the web.  NESTA has helped fund the Web Science Research Initiative which he has set up, and he outlined most of his reasons for setting this up in an all-too brief video linkup.

What lessons can be learnt from the way he developed the web?
You need to give people space and time to find solutions.  Give them a chance to try and see the bigger picture, to find the generalised solution where possible.  And if you are asking or funding someone to develop a solution then don't micromanage them.  Specifically, if you tell them what to produce in too much detail  you'll end up with the same old ideas you had. 

And bear in mind that the end destination can come from left field - he quotes a possibly apocryphal story of Einstein's 'if we knew what we were doing it wouldn't be called research.'.

What are his hopes and fears for the 'adolescence of the web'?
Berners-Lee was very keen to point out the distinction between the people who use the web (and therefore the society that this creates or reflects) and the technology, or 'substrate' as he calls it, that underpins the web. 

Fundamentally, he sees the web as 'humanity interacting' or more prosaically, as 'humanity connected'.  Technology should not get in the way or dominate.  So, the web should be neutral, enabling new ways of democracy, new ways of doing science etc...
 
What is the rationale behind web science?
"We found that people doing interesting things tended to fall between various stools - computer science, psychology, economics etc.  The web needs to be thought of less as a series of connected computers to 'humanity connected'.  There are more web pages out there than neurons in your brain.   It's a very big system - one which we rely on - and it is not obvious what its properties are?   Will the blogosphere keep a check on the press?  Or will the blogosphere turn into a rumour mill and spread hatred etc - as part of a cultural revolution?
 
Is the web stable?  TBL is arguing that we need a science to understand this.  And we have a duty to understand it, so that we can take care of it.  He spoke of the unexpected or unintended effects of the micro leading the macro - eg ebay's role in driving down the prices of new items.

How fragile is the web?
Commenting on the 'megalapse' or the potential for the web to meltdown.  TBL argues it's more subtle threat than this.  Will the web be a force for the good?  The web may work fine but the society may not be one you want to live in, eg the use of email has arguably passed the tipping point of spam usage.

Is the future of innovation about collaboration?
The world is full of groups working and making their 'own language' .  The web should be making this more transparent and enabling more people to contribute.  Challenges in medical advances can only be done collaboratively, the problem is simply too big for an individual to keep in their head.  How does this work when one person's head has half the idea and if another has the other half.  How can the web help enable this solution?

Well, how can it?

*Update - podcast now online here