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Asia and the elements of innovation

By Eric Drexler

6 August 2009

Asia has strengths that promise to make it a leading center of technological innovation in the 21st century. These strengths are substantial, fundamental, and durable. At their base lie aspects of culture, on both a civilizational and generational time scale. Human capital and the capacity for mobilization build on these cultural advantages.

The term “Asia” is of course a label for a collection of very different societies. I will speak primarily of China, counting Taiwan and Singapore as strongly linked parts of what is almost a whole. South Korea shares similar strengths; Japan and India differ more substantially.

I focus on technological innovation because it drives innovation throughout the global economy, changing what we make, what we use, and what we do. Centers of technological innovation become centers of innovation across a broad economic spectrum for two reasons: innovation in technology is inseparable from the innovations that flow from it, and the regearing of a society for innovation of any kind has effects on law, capital, and business culture that spill across boundaries.

To become a world-class center of technological innovation, a society must have three basic elements:

• drive—a culture that supports change and hungers for it

• human capital—the personal abilities that make world-class technology possible

• a capacity for mobilization—a society’s ability to pursue ambitious new goals

These basic elements are more fundamental than any current performance metric or economic trend, and they are durable.

The drive for change

Cultures can shift between complacency and drive on a generational time scale. Where one generation struggles from poverty to prosperity, the next often treats prosperity as a natural part of life. Where one generation upholds a rigid social architecture, the next may be scrabbling in rubble and building anew. Japan and most Western societies have been stable and prosperous throughout the adult lives of their leaders. Recent history makes much of Asia quite different.

China’s social architecture was smashed in the 20th century, leaving rubble and persistent poverty as the West soared into the advanced industrial era. The rubble, though, was of extraordinary quality—the loosened parts of a high civilization. The drive for change in China is enormous for all the reasons that inspire the poor to strive. These are amplified by a conviction, which history and recent experience support, that China’s natural place in the world is far from the bottom.

The experience of change facilitates further change. People who have gone (and are continuing to go) from villages to skyscrapers in a single generation are prepared to dream of going further.

Human capital for science and technology

Cultures differ radically in their attitudes toward education. In the rising societies of Asia, education is a top priority, far above, for example, sports. During national exam season, when students study for the test that will determine their future in higher education, I found that Indian newspapers carry science and mathematics quizzes that would stump most US college graduates. Recent physics tests given to US and Chinese students entering comparable technically oriented universities produced distributions of scores that had little overlap. In Chinese societies, scholarly students have a status among their peers like that of athletes in the United States and run little risk of being marginalized, ridiculed, or beaten. In India, I found that students chase after the autographs, not of entertainers, but of scientists.

It is routine to note that Asian education relies on drill, which tends to dampen the critical thinking and spontaneous habits of thought that generate innovative ideas. Looking forward, this problem has been recognized by Asian governments, which have undertaken efforts to offset it. These efforts may have some effect. Even now, however, the magnitude of the problem may be in part an illusion. Science and technology programs in US universities are increasingly populated by Asian students and professors. As readers of leading science journals know, an increasing portion of the best research in the United States and Europe appears in papers with authors bearing mainland Chinese names. In effect, the best products of Chinese education have been selectively exported, and their innovations are counted as products of their countries of residence.

This outflow of talent, which skews Western perceptions of Chinese education, may not be permanent; indeed, it has reversed as the appeal of life and careers in China has increased. China’s spending on R&D has risen by 20 percent a year for the past decade. In the United States, the growth rate of R&D spending has been about one-fifth of this level.

The capacity for mobilization

Drive and human capital are applied through organization, by both entrepreneurs and corporations, as well as national leaders and governments. India has been outstanding in its incapacity for reform and for interfering with entrepreneurship, though this is changing. China, however, has been outstanding in its capacity for learning from experience, radically transforming government policy, and unleashing a hyperentrepreneurial business culture.

As science and technology grow in importance, it becomes increasingly important for leaders to have a good understanding of these disciplines. Among US legislators, though, a background in science and engineering is exceedingly rare. In France, it is common. In Taiwan, many legislators have doctoral degrees in science or engineering. In China, of the nine members of the standing committee of the Politburo (the ruling body, which includes the president, the vice president, and the premier), one recently appointed member has an education in law. Previously, all nine had been trained as engineers.

A leading indicator

Perhaps the most robust indicator of change in the distribution of innovation potential is a change in the distribution of corporate research laboratories. Companies are opening new labs in China at an astounding rate. In software and electronics, NEC, Hitachi, Sony, IBM, and Microsoft all have established R&D centers in China; in pharmaceuticals, Roche, Pfizer, AstraZeneca, Novartis, and Eli Lilly have done so. This list is not exhaustive. Recently, I read news of the groundbreaking ceremony for a $70 million research center being built by ExxonMobil Chemical in the Zizhu Science-based Industrial Park, in Shanghai.

Any system can fail, often for unexpected reasons. The future political and economic stability of China and Asia as a whole are matters for speculation. Nonetheless, the trends, the durable fundamentals, and the leading indicators all suggest that Asia, led by China, will be a leading force in the innovations that transform the world in the 21st century. The stronger global integration becomes, the better the odds of a smooth and broadly beneficial outcome.

Comment [64]

Agree? Disagree? Let us know what you think. Please include your full name with your comment. Comments may be edited.

Living in China for years, I have to agree with the statements related to culture and environment as determining factors to true innovation.

You can have as many engineers as you want (China / India) this still does not mean you have the source of creativity. Many are engineers taught straight line thinking and creative problem solving is a big issue, I see this on a daily basis.

Life here is still quite shallow and non-creative. Yes people are eager, however this is most of the time eagerness for money, not curiousity. Having many engineers (at the top) will not necessarily create a creative community.

To be fair, the article does say 21st century, this is still a pretty long period. Looking back at “the west” a lot of the innovation spawned after the industrial revolution, something that has happened in Asia at a much faster rate / in fewer years.

Looking back 10 years when I arrived, a lot has changed, infrastructure, buildings, technology. However people did not change as much as you would think when you look around.

Despite having all the material things, people are searching to find their true identity. Innovation, and creativity could well be one of the elements that can fill this void.

Posted 18 August 2009, 01:08 by Ruud
Want to respond to the previous post by Lydia Yuen. I want to narrow down to China instead of Asia, since I am more familiar with it than other part of Asia.

I have read about the puzzles of many western economists regarding the Chinese economy. Over the years, they said China had many major barriers for sustainable growth from government policy to corruption to the lack of freedom in a market-driven economy. Today, China is still doing OK, although it continues to have issues, both old (e.g., corruption) and new ones (financial crisis). One thing that is fundamental to this success, if we can call it that way, is that China has displayed an exceptional adaptability in this fast-changing environment. From survial or success standpoint in a dynamic environment, adaptability is the key.

From what I understood, Lydia is mainly talking about the present, or the static part of the issue (7 years is not that long. People have lived there for decades and still could not understand today’s China well), while Eric focuses on the long-term or the fundamental view. China is like a big construction site that is not as pretty as a well-finished building on 5th Ave. But all buildings have gone through a construction phase.

Will or Can china make even bigger success in the future? It seems that China has not made fatal mistakes in the past 30 years. Some problems such as education and environment need more time to evaluate. China needs to keep up with the principles, such as keeping low profile and focusing on economy, it has been following in navigating through the turbulence ahead. On top of that, maybe some luck.

Posted 15 August 2009, 16:52 by Jeff
Having worked in China as an expat for over 7 years, I think this article has lacked several critical points on innovation in China:
1) Education system (there might be thousands of coders trained in the population, but these people are trained in a way lacking creativity and basically asking questions or challenging certain concepts and theories are not encouraged in school. So I can’t see how innovation is nourished?)
2) Innovation and creativity. Look at the web 2.0 development in China. All the social media websites are copy cats. For example, this is a total direct translated Chinese version of Facebook. http://www.kaixin001.com/
3) Intellectual property rights. If you may take some statistics, how many companies are not using pirated software. They all have the cracking codes. Buying authentic ones means that you are a joker. So if you are software developer, where do you find commercialization process and a viable business model?
4) Culture and values. People are rushing to invent and develop and hoping to get rich overnight. Do you think this attitude really nourish innovation? Can you really hire good people and make them stay? As small start up, it would not be easy to hire good and dedicated people looking into the longer term prospects and interest of the Company.
5) Intellectual skills – In US, the universities are working with corporations on innovations and inventions. But a high percentage of population in China are not having any intellectual capability. If you give them theories and models, most of them have problems to understand those models and implement.
6) Lacking the sense of professionalism. I could go on and on.
7) Legal system – they made the laws and rules so complicated and subject to their own interpretation. Whenever there is incidence, like the most recent Tibet riots, you can’t get onto Facebook nor Twitter in China. While freedom of speech and publicity is limited, how do you nourish innovation?
So the above is my experience that innovation is still a question, esp in the value added technologies.

Posted 12 August 2009, 13:22 by Lydia Yuen
Interestingly enough, we see products developed in Asia, accordingly with Asian economical purchase power standards, now sold in Europe and North America. GE, for instance, experienced that with an ECG device costing a fraction of the price of similar products in Western countries.
And what about the Tata Nano ? The cheapest car in the world could shake the whole automotive sector. Asian companies can test new kind of very low cost business model that they can transplant afterward in developped countries.
That is another side of “Innovation coming from Asia”.

Posted 11 August 2009, 17:11 by Jean-Yves Huwart
I want to respond to Rick B’s comment of Aug. 6. He points out that this article conflicts with work published earlier on the McKinsey Quarterly website. Just to be clear, What Matters is a separate venture. Our purpose is to present a range of opinions from interesting thinkers. McKinsey is not necessarily endorsing those opinions, even those written by McKinsey insiders. Our purpose is to provide a forum for diverging views and to provoke debate. In that spirit, it’s great to see such thoughtful responses to Eric’s article.

Mary Kuntz
Managing Editor, What Matters

Posted 11 August 2009, 08:57 by Mary_Kuntz
Thank you for your paper, which I support….in reverse.

I think you have accurately identified the barriers to effective innovation in Asia (particularly India and China) by western standards. However this does not mean that these barriers are the “basic elements” that encourage and enable innovation. Nor does it mean that those standards are relevant.

As other commentators have noted, in western terms, you have ommitted the cultural infrastructure that encourages risk-taking, the social infrastructure – the community conditions that enable and value non-productive work, the capital infrastructure that facilitates those things the social and cultural infrastructures encourage, the physical infrastructure – the tools that enable it all to happen, and the market environment that enables and encourages leadership and difference.

And more importantly, the way these factors interplay in cause and effect chains.

As each culture is different, and creates different conditions, innovation should be measured relative to the culture itself. Any other measure is meaningless….and probably self-serving.

India and China might not make the grade if we take a USA view. But they excel at enabling the USA model to operate. Like the Japanese and Koreans before them they have innovated in production systems which the world would not be the same without.

Their achievements would not have been possible without their cultural environments.

We should remember…if all the jigsaw parts were the same we could not solve the market puzzle.

Michael Ross

Posted 10 August 2009, 04:44 by Michael Ross
Re intellectual property in China: IP laws are not always good for innovation. Software patents in the US have been a disaster – I think we were more innovative before software patents existed (the mid-1980’s). (The Web was built on networking hardware advances and European innovation.)

Re innovation in China vs. Silicon Valley: I visited several nanotech labs in China in 2004 when I went to speak at a nanotech conference there. My background is software engineering. It seemed to me that the labs had much the same feel as a startup company: not “Let’s see how to advance this arcane field incrementally,” but “Let’s see how we can solve this problem most efficiently.”

Drexler has written elsewhere about the contrast between science and engineering, and a few comments below this one, he writes about the difference between scientific breakthroughs and system-level technology development.

There have already been enough scientific breakthroughs to, for example, develop some forms of molecular manufacturing. Whatever country applies those breakthroughs, to solve the engineering problems suggested by well-established theory, will have a very powerful general-purpose technology.

Chris

Posted 9 August 2009, 18:40 by Chris Phoenix
Thought provoking, but one can challenge some of the logic. Why is there such an abundance of innovation in Silicon Valley, even though much of it is coming from the minds of Indian engineers? There must be something in California that brings out the best in the best – freedom, fun, yet in an organised setting with functioning infrastructure? Enablement, rather than authoritive business structures? Either way, a very interesting perspective that engineers, rather than, say, investment bankers, will lead the way to future wealth creation. A perspective worth trying for a decade or more.

Posted 9 August 2009, 05:23 by eric van der meer
It is a pleasure to see that my article has stimulated such a wealth of informed and insightful commentary, and regarding China, I would like to respond to some of the major themes.

Several commenters note that China has shown more strength in incremental than in breakthrough innovation, and some identify breakthroughs with fundamental scientific discoveries. This difference is real, and although the gap relative to the US is narrowing, I wouldn’t expect their positions to be reversed in the next few decades. An important question, though, is the practical significance of this gap.

My remarks were written from a strategic perspective that places the focus on systems-level technology development, an area crucial in both the economic and military spheres. Here, scientific breakthroughs can be important (with a considerable lag), but where they occur matters little. The challenges in systems-level technology development are much closer to the incremental end of the intellectual spectrum — the challenges of putting parts together and making them work. In this task, the elements of drive, human capital, and capacity for mobilization take center stage. Bold vision and implementation capacity are critical, far more so than the generation of new conceptual seeds.

My sense of the trajectory of the quality of research in China is strongly influenced by my early and ongoing role in the field of nanotechnology. China has made this area a priority, and science metrics indicate steep exponential rises in both research quantity (number of papers) and quality (number of citations and, with noisier statistics, share of publications in the top journals). The numbers can be found here: “The Emergence of China as a Leading Nation in Science” (http://www.leydesdorff.net/ChinaScience/ChinaScience.pdf).

This rise in quality may in part reflect the ongoing cultural shift toward independent thinking among researchers. To quote an editorial in the journal Nature (http://www.nature.com/nature/journal/v454/n7203/full/454367a.html),

“Many outside scientists have been surprised to find that Chinese graduate students and postdocs are now quite willing to challenge their professors. Exaggerated deference to authority is clearly on the wane in China’s younger generation of scientists — and who knows how far that pragmatic liberalization will go?”

Posted 8 August 2009, 16:33 by Eric Drexler
I really like the anthropological approach of understanding innovation as a force rooted in our very nature.

Seems to be China’s government is using a pragmatic approach for policies’ development that will ultimately allow the existence of basic environmental conditions to bring sustainability to the innovation process. South Korea in ’92 with G-7 project is a great example.

Otherwise, the need self realization will be damped by the lack of rule of law, and the innovators will continue to fly to the safest places and keep using china for low cost labor.

What if the scale of business in China ends up bringing a deeper change of IP rules, worldwide? What if it ends up being more than just a change of players and the IP rules evolve dramatically to open source-like approaches or dramatically shorter duration of IP rights? I don’t see how China can evolve to a country where there’s has comparable respect for IP as in the US. Not at least in the same time frame of their increased role in innovation. But they will write new rules. Their scale allows them to do it.

Will these new rules foster or alienate innovation? The inevitability of doing business with China will be a tough balance of interests and pressures to protect the right of their business partners (US&EU).

Posted 8 August 2009, 15:54 by Edgardo Ceballos

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