What Matters: What’s next in the knowledge economy?

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: The innovator next door

Next: Nurturing innovation

What’s next in the knowledge economy?

By Irving Wladawsky-Berger

26 February 2009

Think Venice and Florence in the transition from the Middle Ages to the Renaissance, or think London and New York in the transition from the agricultural age to the industrial one. Throughout history, certain cities and the regions around them have been the major centers of innovation in a variety of different fields, as a result of their unique accumulation of talent and wealth.

What we had then, and now, is largely the workings of network effects — that is, the more talented people you have in close proximity, the more their ideas and their work influence each other and stimulate them to innovate. While talent is necessary to becoming an innovation hub, you need wealth in order to support the talented people and bring their work to market. You also need an open culture that values a diversity of ideas and experiences. Eventually, these innovation network effects become formidable barriers to entry for competing regions.

Given the prominence of information technologies in the transition from the industrial to the knowledge age, over the last 30 years we have seen the rise of Silicon Valley and a few other technology-based innovation hubs, like Boston, built around the great engineering universities in their midst—think Stanford University, the University of California at Berkeley, and the Massachusetts Institute of Technology (MIT).

But something interesting is now happening. While information technology is very much the engine driving the knowledge age, the bulk of future innovation and ensuing economic growth is less likely to be driven by the technologies and products coming from labs than from their applications outside the laboratory. Activities that involve people, either as providers or consumers of services, will be particularly significant.

This means that the biggest opportunities for innovation, productivity, job creation, and economic growth can now be found as we apply the huge advances in IT, the Internet, and related technologies to address problems in the marketplace and society at large, in industry after industry, from health care to finance to distribution, entertainment, and media. I believe that such IT-based marketplace and societal transformations are going to be the essence of the knowledge economy.

In principle, cities like London and New York—with strong talent bases and economic positions in key industries that IT is now transforming—should do quite well if they welcome technology and engineering into the mix. And it may be Silicon Valley, the Boston area, and other key technology-based innovation hubs that have to play catch-up. While their open cultures and ability to generate a culture of opportunity will continue to attract talented people and investors from all over the world, they may need to become more urban-like —more complex and diverse in their cultural and industrial base—in order to capture the kinds of innovation that will be driving the most growth and societal benefit in the years ahead.

In other words, it may not be enough to build social networks of techies and entrepreneurs. The economic and cultural palette may need to be broader.

Comment [5]

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

The article describes exactly the difference between research and innovation. Research is transforming money into products and innovation is transforming products into money. Neither of them can work alone but they work in unpredictable sequence. Sometimes research pays off with a great innovation and sometimes an innovation fuels up further research. New York or London wouldn’t be the same without Boston or Silicon Valley, neither the latter would have the money to do research if the former didn’t exist. The strenght of a network effect is not only in the same-side network but also in the opposite-side so I would argue that Boston or Sillicon valley don’t need necessarily to become more urban-like.

Posted 14 July 2009, 13:31 by Andy
This article reminds of a debate I once enjoyed with colleagues in the computing science and engineering faculties. They argued that liberal arts are a interesting distraction but the lions share of academic funding should be directed towards the hard sciences.

I suggested that may very well be the case but reminded them if the most brilliant engineers built the world’s most advanced television set, without liberal arts there would be nothing to watch.

We’re still in the early stages of understanding how current technological advances will ultimately be utilized by society. And it will likely be the end users, not engineers, that uncover the most innovative and beneficial uses.

Posted 5 April 2009, 11:34 by Bob Macdonald
The discourse shows one major flaw: if it is true that innovation will increasingly depend on “IT, internet and related technologies” more than what happens inside the innovating firm labs does it really make sense to emphasize the importance of cities like New York and London. Is the author making a point for innovation based on virtual networks (which should benefit everybody with access to the net, regardless of where they reside)or is he going back to a more “geographically centered” notion of innovation? I am confused.

Posted 26 March 2009, 12:54 by john wyse
I agree with Irving’s point that ‘activities involving people’ will be particularly significant in the ‘knowledge age’. It is precisely because of this point that we and many others, have set up World Knowledge Cafes; Knowledge Cafes and communities of practice around the world to share and harvest the ‘knowledge’ of others. These ‘open cultures’ are powerhouses of ‘know how’, and connect us to like-minded people around the globe.

Posted 4 March 2009, 01:49 by Dr Helen Paige
The development towards a society where the take-up and rapid application of new technologies is as important as their development has been described as the move to the “post-scientific” society (e.g. C.T. Hill. Although traditional research and thus also IT research will continue to be important sources of innovation, the application of novel IT to more traditional areas is perhaps more critical for harvesting the major advantages of IT. Still, research in IT and communication technologies will not stop and will remain of importance to many developed economies. This may require new strategies to make sure that both – new technologies from research – and their application flourish.

Posted 3 March 2009, 04:06 by Erich Prem

Commenting is closed for this article.

Previous: The innovator next door

Next: Nurturing innovation

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.