What Matters: Nurturing the innovation reef

22 April 2010

Social enterprise: It takes a network

By Raj Kumar

In Social Entrepreneurs

22 April 2010

Teaching the world to change

By Dan Viederman

In Social Entrepreneurs

22 April 2010

Innovating at scale in the social sector

By Jonathan Bays and Marla Capozzi

In Social Entrepreneurs

13 April 2010

The economics of social progress

By Iqbal Z. Quadir

In Social Entrepreneurs

Previous: Innovation: What's your score?

Next: Audio interview with Peter Diamandis

Nurturing the innovation reef

By Mario Morino

4 September 2009

A reef made of silicon

In the early 1990s, a seasoned executive shared a metaphor that has stayed with me ever since: he said that innovation is like a coral reef. Marine biologists don’t fully understand what causes reefs to form, he said, but we do know that human actions can nurture or harm the process. The same is true for innovation—a natural, chaotic, unpredictable process that is hard, perhaps even impossible, for well-meaning outsiders to foster. If we try to control or micromanage innovation, we risk squeezing out the very life forces that give rise to successful new ideas. Instead, we must focus on finding ways to nurture and accelerate the natural processes of innovation once they’ve begun organically.

For almost half a century, Silicon Valley has been the most compelling example of a healthy innovation ecosystem in the United States. Yes, the dot-com implosion and now the global credit crisis have dampened the valley’s exuberant spirits, and the exotic Italian sports cars in the parking lots of Sand Hill Road seem jarringly out of keeping with the somber reality of our times. But even after the deluge, Silicon Valley is the kind of reef ecosystem we should support and nurture across our nation.

It’s important to note that Silicon Valley’s remarkable ecosystem was not the result of a grand plan hatched by a civic or political leader. It developed organically, beginning as far back as the Great Depression, when Stanford University students Dave Packard and Bill Hewlett started tinkering in Packard’s Palo Alto garage. It’s also important to note that there has never been a defined, structured way to connect the dots in the valley. Instead, this organic ecosystem, with its interrelated professional and personal networks, has allowed the dots to connect themselves. A good example of this phenomenon is the remarkable TED conference which brings together the brightest minds in a wide range of fields to advance its mission of spreading ideas.

Spreading the success

Of course, Silicon Valley is not the only ecosystem of commercial and social innovation in America; the other highly innovative centers include Boston/Cambridge, the Potomac River region, Raleigh/Durham, Seattle/Redmond, San Diego, and others. Most of these regions and the nation as a whole, however, default to linear thinking with formal structures to define and control innovation. What we need instead is to turn the forces of innovation loose—to create the right conditions for that reef ecosystem to grow on its own and take hold. These regions need to emulate Silicon Valley’s seamless flow of knowledge, ideas, and people.

If you look, you will find astonishing examples of innovation, even in the unlikeliest places. Take Greenville, Mississippi, one of the most economically depressed communities in the United States and now the test site for an innovative environmental venture of global significance. The community is planting thousands of acres of bamboo, the fastest sequesterer of carbon dioxide, using a new cloning technique that will dramatically decrease the time it takes to produce mature bamboo forests.

But innovators like these are often disconnected, operating in silos, without the financial resources and strategic support they need to bring their ideas to fruition. They do not swim in a teeming, healthy reef ecosystem.

Toward a national innovation strategy

I have come to believe that nurturing innovation at the national level will require two kinds of approaches—top down and bottom up.

First, our nation needs an overarching framework—perhaps it could be called a national innovation strategy—that would define a shared vision, create a clear direction, and identify priorities for innovation. This strategy could be drafted, outside the political process, by a presidential commission made up of the most outstanding innovators and thinkers from a host of relevant disciplines and quarterbacked by a high-profile “innovation czar” appointed by the president.

The priorities might naturally start with the president’s top three, spelled out in his address to the joint session of Congress in January: developing clean, renewable energy; controlling the cost of health care; and making education more accessible. The commission would also have to embrace other needs, such as the enormous challenge of rebuilding our infrastructure and developing more robust emergency response and homeland security systems.

Take something as basic as the rebuilding of our highways, bridges, and rail systems. Right now, our stimulus dollars are buying the status quo rather than the smarter, longer-lasting, more cost-effective systems that would provide a quantum leap forward. For example, we now have the technology to embed our roads and bridges with microsensors that, interconnected into a “nervous system,” could reduce traffic congestion, improve maintenance, and enable far better decision making by governments. Similarly, whenever a jurisdiction considers new road projects, it should determine whether it could also enhance its telecommunications infrastructure by laying fiber-optic cable at the same time.

We ought to apply this same “let’s break the mold” thinking across the board—from how we educate our children to how we could have higher-quality health care at lower cost.

To put us on an innovation path, this national strategy would have to identify, to the fullest extent possible, the specific inflection or tipping points (or both) within each of the priority areas. These points would be opportunities where targeted investments in innovation, from the public, private, and philanthropic sectors, could have a disproportionate impact over the long term. On a smaller scale, this approach can be seen in the Bill & Melinda Gates Foundation’s $100 million Grand Challenges initiative. With the help of scientists all over the world, the foundation identified 14 health challenges that, if solved, would dramatically improve life prospects for the world’s poor. Then it offered very large grants to researchers who come forward with innovative approaches to these challenges.

In addition, the presidential commission described above could identify all the ways the federal government can support innovators and remove outdated legislative and regulatory barriers to innovation. The Washington Monthly’s recent special section on entrepreneurship contains several compelling examples of how government policies can stifle progress. One such example involves energy: entrepreneurs are eager to seize the potential of converting our outdated electric power systems to a smart grid but face daunting regulatory hurdles, thanks to a century-old regulatory scheme that rewards inefficiency.

An even bigger and more foolish barrier to innovation is the US immigration system. We invest huge amounts of money in educating the world’s best and brightest foreign engineers and scientists in our top universities—and then kick them out of the country. As a New York Times article documents beautifully, the foreign-born innovators and entrepreneurs who managed to navigate our immigration system have had an enormous impact on the success of Silicon Valley’s innovation ecosystem. We need to reform immigration to attract and retain the kind of top talent and potential innovators that are well represented in Silicon Valley. We should be just as welcoming to those who may not fit the high-profile innovator role, but who have the cleverness, desire and work ethic to create small businesses that, over time, will grow to add to the backbone of our middle class
We’ll need bottom-up approaches. For example, building on the mass-collaboration methodology used by innovative companies and outlined in a New York Times article, the administration could create a federal innovation stock exchange and open it to any of the federal government’s 4.2 million employees who wanted to float out-of-the-box solutions for tough societal challenges or new types of innovations with the potential to fuel our economic engine.

In my business life, I saw firsthand how innovative those who serve in government can be. Every year, the Partnership for Public Service presents the Service to America awards, honoring the contributions and innovations of federal employees—such as the one whose discovery led to the development of a vaccine for the virus that causes a majority of cervical cancers around the world. However, the sad fact is that federal employees are rarely asked to be innovative. The innovation stock exchange could motivate federal employees and provide this significant and relevant pool of talent with the means to express its ideas in a new, more public way. Ideas listed on the stock exchange could also spark additional ideas from inside and outside the federal government. Federal employees whose innovations were adopted could receive some form of bonus, as well as recognition from the president. If this worked for the federal government, one could imagine a network of innovation stock exchanges in which states, metropolitan regions, large universities, hospitals, and civic-minded corporations would put in place similar mechanisms to advance innovations addressing key social and economic needs.

With a national strategy, as well as efforts to seed creative chaos from the bottom up, the Obama administration could put America on the right path for the long term. Unleashing, channeling, and connecting millions of innovative minds across all regions, all disciplines, and all walks of life is the most important form of long-term stimulus the president can provide. It is the key to nurturing our national coral reef.

Comment [42]

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

A “national innovation strategy”? Some advice for the President and Congress:

1. Get the heck out of the way! Too many bureaucrats spoil the reef. Politicians don’t understand the sacrifices entrepreneurs must make to succeed.

2. Rewrite the tax code to encourage intelligent risk-taking, creativity and entrepreneurship.

3. Enforce immigration laws fairly and evenly. Got documents? Join the party! No documents? No entitlements. My grandparents worked 14-hour days for many years with no handouts. Like hundreds of millions of others before and since, they played by the rules and lived and died as proud naturalized citizens who were never a burden on their neighbors.

Keep the know-nothings in Washington away and American know-how will triumph every time.

Posted 8 September 2009, 12:12 by Bennett Zucker
There’s innovation and there’s sustained innovation. Given that you are espousing doing something on a national scale, let’s assume you are trying to create sustained innovation which is a process that survives and grows as it introduces new ideas over a succession of business cycles. I’m not sure that planting bamboo in Mississippi qualifies as innovation – it’s the application of an existing and well-established idea in a new market.

To borrow from Porter, sustained innovation (vs. one-shot wonders) creates, and supports, clusters which require that several pieces be in place. The most important is productive capital. Capital is more productive if it comes from connected sources that understand how to create traction for their investments. Good venture capital – a rare thing in the world – is the must-have for sustained innovation.

Along with capital, innovation clusters typically include academic or other thought centers that know how to generate and spin first-generation innovations out to the market (e.g., Stanford University/Google). Those centers create communities of innovators and innovative companies that refine and scale up the ideas so they meet commercial application requirements and spawn more of their own kind.

Innovative clusters also typically have B2B or B2C markets that are willing to adopt worthy technologies, providing market traction and initial revenue.

Finally, sustained innovation requires a resilient culture – one with people who are willing to risk it all, lose it all and try again. This requires that innovators bounce back from a “failure”, dust themselves off, glean what worked from it and take those lessons to the next situation. Doing this on a national scale is an admirable goal but, like anything, innovation is most successfully done by those who have either practiced it or have the patience, resources and resilience to learn it. The replicable model has a number of moving pieces that need to be nurtured together, yet in different ways, and tracked as on a spider chart.

Posted 8 September 2009, 11:21 by Robert Friesen
I share your point of view, but feel the hypothesis is missing a key ingredient for “reef building,” which is capital. When we sink old ships so organisms can begin the process of coral formation, and create the reef, which in turn allows an environment to develop, on the surface world you could describe that old ship as capital. Advances that may come from the Gates Foundation is accumulated capital, being used to generate (fund) ideas that will help control disease. The Federal bureaucracy for the most part is not engaged in activities which produce any product or service that attracts capital. It’s like sinking ships made from toxic elements; nothing grows there. They exist only to provide defense of our country and enforce laws that allow our republic to operate in the most effective manner. The interpretation of that concept “most effective” has been distorted over the last ~100 years and today is unrecognizable and stifles innovation.
The entrepreneurs who battle the regulations you speak of, are regulations created by that bureaucracy. It’s getting bigger, taking more capital out of people’s hands and creating an environment, rules, ways of thinking and acting and creating an environment where nothing will grow. Our ever increasing government bureaucracy has poisoned our 200+ year old reef.
Our immigration laws don’t force good people out. Our immigration process allows others time and opportunity to understand our culture, language, and key rules of law to start a life here. It’s a process that is open and fair, but not followed or enforced, which causes the Fed to spend more for more rules that make it harder.
H&P were in an environment that allowed them to capitalize on their idea, and achieve their personal goals. This attracted capital which they wisely used to build their “reef.” Our government has since put together many new rules that won’t allow another HP.
Your idea that you champion would work in a free marketplace. Something we haven’t had since before the Depression (the last one, not this one). The reef of the USA is dying and the current administration, with TARP, Cap and Trade, and a host of other toxic regulations, and increasing the number of bureaucrats, will push us to near extinction. We will survive, but the island will shrink in size and importance in relation to the world and to innovation in the world.

Posted 8 September 2009, 10:53 by MarcAnthony Salvatini
The proposal for the global community to contribute to the R&D strategic plan looks in principle very good, but how can this approach protect the intellectual imagination and initiative property of who is suggesting new R&D area to cover ? How does this approach merge with the enterprises own initiatives for R&D done accordingly with their own specific enterprises culture and strategic plan ? And how does this guarantee that the collected suggestions and requests are complying with a sound market estimate ?
The idea is good because it collects the desires and the likely needs of the community but it needs also to resolve the distribution of the indicated initiatives in the R&D projects to the enterprises according to their actual industrial status, industrial plan and cultural backgrounds. Last but not least how is going to be compensated the people who provides the suggestions ?

Posted 8 September 2009, 10:46 by Ezio Pacchiardo
It is a good article but the societal bottle neck is one-size-fits-all regulation that conflates risk and uncertainty to frustrate the entrepreneurial process.

It is to capital market governance that I have written the forthcoming book entitled “We’re All Screwed: How Toxic Regulation Will Crush the Free Market System” http://www.w-apublishing.com/Shop/BookDetail.aspx?ID=D6575146-0B97-40A1-BFF7-1CD340424361 . The book provides a blue print for fundamental change to the legacy one-size-fits-all deterministic governance regime. The book describes what needs to take place to do the right things for governance effectiveness and how to do things right for governance efficiency.

The legacy governance system for the US capital market is in disrepair. If you want real regulatory reform, policymakers have to move beyond turning a comma into a semicolon. Unless experimentations to the legacy, one-size-fits-all deterministic regime take place, our capital market will be caught in a recursive loop of errors of commission (boom-bust bubble inefficiencies) and errors of omission (externality market inefficiencies). Such inefficiencies will eventually render our source of economic wealth ineffective. Then “we’re all screwed.”

Steve Boyko

n2keco@bellsouth.net

803-644-7295

Posted 8 September 2009, 10:29 by Stephen A. Boyko
The author is talking about innovation but is silent about how this innovation is created. In my opinion curisioty leads to creativity, and creativity leads to innovation. If curiosity is so much important, we should discuss how we can improve curisioty. We improve curiosity by
1. Observation
2. Asking questions
3. Having confidence
4. No negative judgement

It is my fervent hope that this article will spark lots of productive conversation that leads to action. I hope that the ripple effect of these conversations will encourage us to enhance the culture of innovation that promotes organic growth.
Khaja Ansari
949-748-9584
Lean Consultant

Posted 8 September 2009, 10:06 by khaja ansari
Great article with some interesting ideas. 2 thoughts:

1. Doesn’t the idea of creating a reef contradict the notion that the best networks evolve organically?

2. Check out this video by Daniel Pink: http://www.ted.com/talks/dan_pink_on_motivation.html. He makes some great points about intrinsic vs. extrinsic motivation vis a vis work you’re asking folks to do. In this case, intrinsic rewards like recognition from the President may have much larger impact than a cash bonus

Posted 8 September 2009, 10:00 by bill
Dear McKinsey and Company,

Mr. Morino is right on track but the reality of it all is that corporations are collisive in nature and look at collaboration as a necessary evil rather integral moving part of innovation. The premise of an organization rests on the fact that EPS and shareholder wealth take precedent over innovation and nurturing of talent. That leads employees to cut costs and drive sales without regard for the future.

The smaller enterprise that directs innovation as an elemental part of the process from the factory floor to the head office will prevail. That “company” also follows through on innovation by identifying those employees who are engaged in the process and foster them. But that is not usually the case especially in the mass food industry where the status quo follows the lead of bigger business.

The overall situation in this country is not to rewardthe investment in innovation, that is a tax break, but rather to punish it. Couple that with the fact that transparency is considered a strategic weakness and empowerment is a nice thought, the change for the positive will be tough climb

Posted 8 September 2009, 09:58 by Morris Hoover
I agree with you that America needs a way nurture innovation. But an Innovation Czar can not be the way. This is another attempt by our Socialist President to take power away from the people and to centralize with the bureacrats (reminds me of Animal Farm). Government must stay out of the way but provide economic incentives and training to allow Capitalism to work. The more Obama tries to move closer to failed policies of UK, France, Russia, etc. the greater the failure!

Posted 8 September 2009, 09:54 by Kevin Popis
Mr Marino has some good ideas herein, but I believe he overcomplicates the innovation process. We have been teaching people the innovation process for many years. Unfortunately our most creative people believe that the benefits of their ideas should be self evident. Then when we tell them that to make an ideas happen (innovation), you’ve got to sell it. To many
“selling” is demeaning. These are the losers. Those that take our advice and our training turn out winners. This need not be complicated or organized on a national basis. Each individual needs to learn persuasion skills. We will be talking about this at the Innovation Philadelphia event on October 6th.

Norbert Aubuchon
610-444-5440

Posted 8 September 2009, 09:50 by Norbert Aubuchon

Commenting is closed for this article.

Previous: Innovation: What's your score?

Next: Audio interview with Peter Diamandis

Send an e-mail to let us know how we can make our site better.

Will Asia become the center for innovation in the 21st century?

Comment on the debate

Where innovation creates value
Is the United States on the verge of being pummeled by a technological hurricane? Professor Amar Bhidé says no and explains why the US is able to stay ahead.