Tag Archives: Innovation

We need to rethink our economic assumptions

By Isabel V. Sawhill – To defeat Trump in the upcoming election, Democrats are advancing a set of proposals engineered to excite their base: a single payer health system, college for all, a guaranteed jobs program.

All are worthy of debate but perhaps the problems go deeper. Perhaps they go to the core of our beliefs about how the world works, what makes the economy tick, and how this relates to human welfare.

The dominant paradigm right now is what is sometimes called Neoliberalism which I define as a belief in the efficiency of markets. Those on the left believe that a market economy needs more than a little help from government. There are social costs and benefits that markets ignore; economic downturns are not self-correcting; and a lack of competition or transparency can harm consumers.

By addressing these and other shortcomings, government can free the market to do what it does best. Still, the central belief is that markets are the most efficient way to organize a society and by extension optimize individual freedom.

Critics of this paradigm note that it is fundamentally flawed. Human beings are not just consumers, they don’t always behave rationally, and they don’t always maximize their own well-being. They need a sense of community, they care about the welfare of others, and their sense of what matters goes well beyond a larger GDP. They respond not just to economic incentives but to the desire for respect from their peers, to social norms, and to moral or religious principles.

There is an efficient allocation of resources to go with every possible allocation of dollar votes and the distribution of dollar votes should be a communal decision arrived at by democratic means.

At the core of the neoliberal theory – arguably its most influential precept — is the idea that people are paid what they are worth.

If incomes are unequal it’s because skills and talents are unequal. The rich deserve their riches because, for the most part, they earned them. The poor lack income because they have too little education or the other skills needed to get ahead.

There is a lot that’s ignored in the wages equal marginal productivity equation: the asymmetry of bargaining power, the difficulty of discerning who contributes what, the stickiness of established wage norms and employment relationships, and the lack of competition. more>

Why Some Counties Are Powerhouses For Innovation

By Christopher Boone – By my analysis of data from the U.S. Patent Office, Santa Clara County, California, is sprinting ahead of the country. Between 2000 and 2015, more than 140,000 patents were granted in Santa Clara County. That’s triple the number for second-ranked San Diego County.

Four other counties in California – Los Angeles, San Mateo, Alameda and Orange – make the top 10.

These counties are in large metropolitan areas that are known as technology and innovation centers, including San Francisco, San Diego, Boston and Seattle. The other metro areas in the top 10, not the usual tech-hub suspects, are Greater Los Angeles, Detroit and Phoenix.

Besides large concentrated populations, these metro areas share two other ingredients that support innovation. All of them have one or more leading research universities and a large proportion of college-educated people.

Santa Clara County is home to Stanford University, an institution that has become synonymous with the high-tech and innovation economy of Silicon Valley.

Stanford’s rise as a world-class research university coincided with a rapid increase in federal and military spending during the Cold War. The university’s suburban location gave it an advantage, too, by providing land for expansion and for burgeoning high-tech companies. Stanford’s leadership aggressively courted research opportunities aligned with the priorities of the military-industrial complex, including electronics, computing and aerospace.

Another common trait about most of these centers of innovation is the jaw-dropping cost of housing.

Competition for higher-wage talent pushes up housing and other costs in these innovation centers. Although housing prices increased in greater Boston, Phoenix and Detroit, they remained relative bargains compared to the West Coast.

In my view, one way to unleash innovation would be to tap into the rich diversity of students, faculty and communities at two- and four-year colleges beyond the typical top 100 research institutes. more>

Updates from Chicago Booth

Class action lawsuits hit innovative companies the hardest
By Alex Verkhivker – Corporate America has long complained that many class action suits are frivolous and an unfair tax on business. Lawyers have a financial incentive to file meritless suits because companies are often willing to settle—even when allegations are false—to save time, money, and public image. Lawmakers in Congress have wrestled with this issue for years without resolution.

But research suggests more reason to address it: the costs of such litigation weigh disproportionately on the most innovative US corporations, according to Chicago Booth’s Elisabeth Kempf and Tilburg University’s Oliver Spalt. Using data on more than 40,000 lawsuits filed between 1996 and 2011 against 6,111 companies, the researchers find that frivolous lawsuits tended to focus on highly innovative businesses, which represented juicy targets—and cost the average company in this group $1.1 million a year, or about 4 percent of annual profit gains. more>

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American power at stake in great innovation race


By Peter Engelke – Americans like to think of themselves as the most innovative people in the world. At least since 1945, they have had good reason to believe so. During the Cold War, the United States built the most formidable technology-producing innovation system the world has ever seen.

Coordinated action by the U.S. government, the private sector and academia, combined with America’s unique postwar culture, crafted this system.

But the American system has seen better days. America’s leaders, at federal and state levels, have failed to maintain this system much less upgrade it.

As a result, America’s long list of difficulties includes falling public investment in research and development (R&D, a critical and under-appreciated factor in national innovativeness), an under-skilled workforce, flagging support for public higher education, decaying infrastructure and much more.

The global tech-innovation economy therefore is more than a just crowded place. It is also crowded where it counts: at the very top, where it no longer can be said that the U.S. stands alone. Several of the countries listed here, plus others, routinely score higher than the United States in global innovation rankings.

The U.S. will not long remain the global leader in innovation unless it takes decisive action across several fronts. more>

Think Like a Gambler: Innovation Is About Making Bets

BOOK REVIEW

Thinking in Bets, Author: Annie Duke.

By Alan Pentz – As humans we are often overconfident in our decision-making and even if we are unsure, we become more confident after a decision has been made. Studies of confirmation bias show that we seek information confirming our views and filter out evidence to the contrary. That’s a great strategy to feel good in the short term but isn’t going to lead to the best outcomes for your organization in the long term.

Thinking in bets (or thinking probabilistically) forces us out of that framework. Duke points out that people who are asked probabilistic questions are less sure and tend to hedge. It’s easy to say, “I’m 100 percent sure about this,” when nothing is really on the line, but if I ask you how much would you bet that you are right, suddenly the calculus changes.

So how does this impact government innovation? more>

What Is Strategic Agility?

By Steve Denning – As I suggested here and here, the subject of Strategic Agility is important because it’s central to the key business issue: how to make money from Agile? If the Agile movement is only about creating great workplaces for software developers (also important!) but doesn’t generate better business outcomes, its life expectancy won’t be long. Since I continue to get questions about the meaning of the term, “Strategic Agility,” a few more words about it are in order.

To begin with, it’s useful to recognize that “strategy” in management is contested territory. The term is used in different senses by different practitioners and writers. I am not suggesting that one sense of “strategy” is right and all the others are necessarily wrong. So long as we make clear how we are using the term, we can go on having a useful discussion.

Much of what I see in the world of Agile software development is, by my definition, operational Agility. i.e. making the existing products better, faster, cheaper and so on for existing customers.

Operational Agility is a good thing, and even essential, but it has a drawback. It usually doesn’t make much money.

That’s because in the 21st Century marketplace where competitors are often quick to match improvements to existing products and services, and where power in the marketplace has decisively shifted to customers, it can be difficult for firms to monetize those improvements. more>

Forget The Insight Of A Lone Genius – Innovation Is An Evolving Process Of Trial And Error

BOOK REVIEW

A Tale of Seven Scientists and a New Philosophy of Science, Author: Eric Scerri.

By Edward Wasserman and Eric Scerri – Scientific discovery is popularly believed to result from the sheer genius of intellectual stars such as Darwin and Einstein. Their work is often thought to reflect their unique contributions with little or no regard to their own prior experience or to the efforts of their lesser-known predecessors.

Setting aside the Darwins and Einsteins – whose monumental contributions are duly celebrated – we suggest that innovation is more a process of trial and error, where two steps forward may sometimes come with one step back, as well as one or more steps to the right or left.

Instead of revolution, think evolution. This evolutionary view of human innovation undermines the notion of creative genius and recognizes the cumulative nature of scientific progress.

Plenty of other examples show that, in many realms of human endeavor, fresh advances can arise from error, misadventure and serendipity. Examples such as the Fosbury Flop, Post-It Notes and the Heimlich Maneuver all give lie to the claim that ingenious, designing minds are responsible for human creativity and invention. Far more mundane and mechanical forces may be at work; forces that are fundamentally connected to the laws of physics, chemistry and biology. more> https://goo.gl/aKnP2r

ARPA-Ed: What would it take?

By Saro Mohammed – In short, DARPA is a very well-funded, highly flexible, research and development agency that was created to minimize the red tape that usually slowed defense R&D, while simultaneously maximizing innovation and results. Beyond its funding, which is approximately 377 times greater than the national educational research budget in 2016, DARPA operates under the following unique design principles, outlined in detail at a 2012 national education R&D meeting:

  • Risk: DARPA can take bigger risks than more traditional federally funded R&D projects.
  • Flexible projects: DARPA can choose to fund partial proposals, or projects solely focused on brainstorming or “mindstorming” a problem. In addition, it can fund possible solutions to problems across proposals.
  • Flexible partnerships: DARPA can work with or fund whichever entities it chooses, including private, for-profit, entities, and it can put partners together for projects (including across multiple sectors) that may or may not have applied for funding as partners to begin with.
  • Flexible solutions: DARPA can also fund purchase orders for solutions or products that do not yet exist, and can fund “performance-based” contracts that allow their grantees to retain intellectual property and other proprietary rights to profit after their contractual obligations with DARPA are complete.
  • Flexible timelines: Finally, DARPA can defund, increase funding, or extend project funding at almost any time, and for almost any reason. This allows funding to be quickly ramped up when successes are discovered, and ramped down when projects don’t pan out, taking some of the risk out of very risky bets.

One of the ideas is the possibility of an Advanced Research Projects Agency for Education (ARPA-Ed).

One of the ideas that was discussed was the possibility of an Advanced Research Projects Agency for Education (ARPA-Ed). more> https://goo.gl/H4igik

Innovation Is Not Enough

By Dani Rodrik – We seem to be living in an accelerated age of revolutionary technological breakthroughs. Barely a day passes without the announcement of some major new development in artificial intelligence, biotechnology, digitization, or automation.

The debate is about whether these innovations will remain bottled up in a few tech-intensive sectors that employ the highest-skilled professionals and account for a relatively small share of GDP, or spread to the bulk of the economy.

The consequences of any innovation for productivity, employment, and equity ultimately depend on how quickly it diffuses through labor and product markets.

The economic historian Robert Gordon argues that today’s innovations pale in contrast to past technological revolutions in terms of their likely economy-wide impact.

Electricity, the automobile, airplane, air conditioning, and household appliances altered the way that ordinary people live in fundamental ways. They made inroads in every sector of the economy.

Perhaps the digital revolution, impressive as it has been, will not reach as far.

On the supply side, the key question is whether the innovating sector has access to the capital and skills it needs to expand rapidly and continuously.

In a world of premature deindustrialization, achieving economy-wide productivity growth becomes that much harder for low-income countries. It is not clear whether there are effective substitutes for industrialization. more> https://goo.gl/XAB6Ti

The Secret to Innovation Is Our Collective Brain

BOOK REVIEW

The secret of our success: How culture is driving human evolution, domesticating our species, and making us smarter, Author: Joseph Henrich.
My Life: A Record of Events and Opinions, Author: Alfred Russel Wallace.

By Connair Russell and Michael Muthukrishna – Innovations occur when previously isolated ideas meet. From the innovator’s perspective, it’s an independent discovery, but from the perspective of the collective brain, it is an inevitable consequence of spreading ideas that converge across an entire social system—a veritable “marketplace of ideas.”

Three key factors driving the rate of innovation:

  • sociality:
    Sociality refers to the degree to which society facilitates connections between people. Larger, more interconnected societies will have higher sociality, resulting in everyone being exposed to more people and more ideas.
  • transmission fidelity:
    Higher transmission fidelity means more information is transmitted when people learn from each other.
  • cultural variance:
    Cultural variance refers to the variety of ideas that are created and tested.

From blue collar to white collar jobs, from the media we consume to expectations for self-presentation, the processes of cultural evolution are making society more complex. The modern educational institution emerged as a response to the Industrial Revolution; we are currently going through the Information Revolution—a revolution of at least equal importance.

All the while, the collective brain is making each of us smarter. more> http://goo.gl/JVcNfd