Nurturing Innovation: Does
Geography Matter?
Hardly
a day goes by without a company or regional government announcing an innovation
center. But this may not be the best way to kindle creativity, writes Roopa
Unnikrishnan. Unnikrishnan is the founder of Center10
Consulting,
which focuses on innovation, strategy, talent and organizational change. She
has more than 15 years’ experience in roles at Fortune 500 companies. Find her
on Twitter @roopaonline.
On
October 29, Johnson & Johnson (J&J), the New Brunswick, N.J.-based
pharmaceutical, medical devices and consumer goods giant, announced the launch
of its Asia Pacific Innovation Center. Located in Shanghai with satellites in
Singapore, Australia and Japan, this unit extends the J&J innovation
network beyond its original chain of facilities in London, California and
Boston. While laudable, J&J should think more innovatively about how it
might source innovation. Some of the more interesting consumer and digital
plays continue to come from unexpected places. In today’s age, it is time to
start thinking about virtual networks rather than centers that require
personnel and capital-intensive investments. Instead of a chain of pearls, a
more appropriate metaphor might be a net of diamonds — with links in Africa,
Asia and the Nordics, underpinned by a big data center that leverages customer
data and the web.
A
report from the Boston Consulting Group (BCG) on the most innovative companies
shows an increasing vitality around innovation investment in rapidly developing
economies (RDEs) such as China, India, etc. In addition, two-thirds of
breakthrough innovators surveyed by BCG said that they often generate new ideas
for products and growth from social media and big-data mining. Innovators who
have introduced distinctive products have been identified as casting a wider
net and building a culture more attuned to breakthroughs than incremental
innovation.
What
we’re seeing here is a paradigm shift that goes beyond the current approach
that looks for hotbeds of creativity. Why does geography feel less critical
to innovation these days? Twitter The reason, in part, is that all elements of innovation —
the innovation value chain, as it were — are slowly decoupling from their
traditional physical underpinnings. The innovation value chain — insight,
inspiration, design, development and implementation — is shifting to become
increasingly virtual and personal.
Traditionally,
universities and large companies were seen as the seats of capability building
and insight development. This view has been the core of much writing, such as The
Geography of Innovation by academic Maryann Feldman, which asserts that
product innovation forms clusters in regions that provide access to knowledge
and commercialization tools. But a lot has changed in the two decades since
this work was published. While traditional centers of innovation such as
Silicon Valley or the Route 128 corridor near Boston continue to draw upon the
resources of institutions such as Stanford University or MIT, and the
entrepreneurial ecosystem that has grown up around them, today that bedrock of
knowledge is shifting.
For
example, MOOCs (massive open online courses) allow free access to training from
the world’s top universities. As these courses proliferate, they will rapidly
increase the geographic reach of cutting-edge thinkers and teachers
traditionally bound by the high walls of academia. At last count, 2.7 million
students used Coursera’s technical courses worldwide. Partnerships have emerged
that bow to the power of these tools — for example, Georgia Tech, Udacity and
AT&T have teamed up to offer an online master’s degree in computer science.
This is a whole new way to advance knowledge and skills. More importantly,
there is an emerging group of players who are much more focused on specific competency building — data management,
data security, etc. — and they are set to change the paradigm of learning.
Rather than front-loading education (getting that master’s degree), will more
talented young students opt to build their capabilities along the way through
these resources? In a fast-changing world where new paths emerge and old ones
wither away almost every day, wouldn’t that seem to be the more rational
option?
The emergence of reverse innovation
and big data is about finding new spaces for breakthrough innovation.
The emergence of reverse innovation
and big data is about finding new spaces for breakthrough innovation. Of
course, they take work; it’s not as easy to identify unmet needs as with tried
and tested consumer research efforts — shadowing buyers in London department
stores, for example. In fact, it’s getting much more interesting to go back to
the method’s anthropological roots — to follow the community health worker in
India. This is what inspired the insight that it would be best to equip
community workers in India with tools to treat patients locally rather than try
to transport them to far-away hospitals. Similarly, as data becomes more
accessible and diverse, insights are no longer the stronghold of R&D
departments.
Design and development have also
drifted into the virtual space of the web. For example, collaborators from
Chile and Germany engaged with data and insights virtually to create a very
real product that addresses the needs of premature infants and their mothers.
BabyBe UG created a product that is brilliant in its use of data, sensors and
new materials. It consists of three modules: a bionic mattress with a skin-like
gel surface that takes on the temperature and gentle shapes of the mother; the
“turtle” that rests on the mother and captures her breathing rhythms and
heartbeats, and the control module that makes the connection between the turtle
and mattress. Neither of the co-founders of BayBe hail from the health care
industry; they have sourced their expertise from a virtual network and built
from insights generated by data and a deep knowledge of materials. They have
spanned the globe as they’ve designed, developed and implemented their product.
Challenging Barriers to Entry
Similarly, outsourced development
shops, whether factories-for-hire in China and India or sites like Quirky.com,
have challenged traditional barriers to entry. Quirky.com evaluates, selects
and funds innovation production based on the wisdom of the community. Thousands
of creative people around the world have submitted their ideas to be evaluated
by Quirky, and participants can vote for those with the most potential.
Finally, centers of influence have
been crafted around access to capital, technology and talent — the building
blocks of implementation. Capital access is being transformed. The extreme case
is, of course, Kickstarter. This is not just a way to get the recording of a
new song financed. In 2013, a record $10.3 million was raised by the Pebble
smartwatch, which caught fire due to its design and compatibility with multiple
platforms, including Android and Apple’s iOS. Not only did this peer-to-peer
financing approach deliver the capital, it built a following as evidenced by
the fact that Best Buy began selling the Pebble in July 2013, and was sold out
in five days.
At the more sophisticated end of
peer-sourced capital, Sand Hill Exchange is an aggregating marketplace for
users to trade startup futures. Sand Hill allows investors and non-investors
alike to participate in the growth of emerging companies. By crowdsourcing
sentiment, they provide transparency to the startup valuation process. The
exchange also clumps similar startups together, creating a view of where
transformative efforts are focused. Additionally, it provides a new mechanism
to funnel capital to startups, rather than tapping the usual suspects — venture
capitalists and institutional investors.
As for company investments, BCG’s
study shows that firms in emerging markets are outpacing those in other nations
at increasing R&D and innovation funds; almost three-quarters of companies
located in RDEs expect to increase spending on innovation next year, compared
with only 57% of companies in developed countries.
Technology is increasingly
accessible through software as a service, and cloud computing is redefining the
“company.” End-users access cloud-based applications through a web browser or
mobile app while user data is stored on servers at a remote location. So,
one-member or small organizations now have professional management,
communications, CRM and financial systems that were hitherto the realm of large
enterprises. As a result, more than a third of all Americans are classified as
freelance or “independent” workers.
As for talent, when the New York
Federal Reserve Bank named Freelancers Union founder Sara Horowitz last year to
its board of directors, it sent a signal that the ranks of the self-employed
are growing in the halls of big finance. In this new world, these young
innovators remained in their milieu, met online, designed a concept,
prototyped, produced and got a product into production without the supply chain
management issues or billing conflicts that often plague larger enterprises.
So, where does that leave us?
Practically, of course, large
companies tend to be key drivers in the economy. Their genius lies in reach
(scale), governance (regulation) and operations (manufacturing, brand-building
and sales). But more and more, as the “big whales” of innovation get rarer, and
as innovations become more dependent on weak signals, entrepreneurs are the
innovators of the economy. Large companies may provide for 99% of the economy’s
actual wealth and productive work. However, the 1% of entrepreneurs who succeed
has the potential to set new directions.
A Portfolio Approach to Innovation
Environments that provide
entrepreneurs with access to the capital, infrastructure and policy support
they need are in essence putting into place their version of a portfolio
approach to innovation. Entrepreneurs are the test balloons for future growth, and
they are rarely sticking to specific geographies. UNESCO sponsors an innovation
observatory called Netexplo, a network of more than 200 journalists, scientists
and academics who detect outstanding initiatives in the Internet and digital
technology. Since 2008, this group has recognized 100 digital innovators, who
it says have spurred some of the most significant changes in their environments
or in changing the assumptions of an industry. The top six are recognized with
awards, and the top of that list is proof positive that geography may be
replaced by platforms and networks.
Entrepreneurs are the test balloons
for future growth, and they are rarely sticking to specific geographies.
For example, the non-profit Ushahidi
was born to address a specific crisis –the violence that broke out after
Kenya’s disputed election in 2007. Co-founder Ory Okolloh called for a simple
tool to map violence anonymously and hence help to prevent it. Post-crisis,
Ushahidi set out to build a product that solves the problems created when
digital infrastructure is spotty. Ushahidi’s robust, beautifully designed BRCK
wireless network generator isn’t the only sensation, however. Ushahidi has come
to represent the people behind a platform that powers the collaboration of
Kenyan citizen journalists. The website has 45,000 users in Kenya. Since early
2008, Ushahidi’s efforts have grown from an ad hoc group of volunteers to a
focused organization of individuals with a wide span of experience ranging from
human rights work to software development, as well as a strong team of
volunteer developers primarily in Africa. This ecosystem of innovators has
developed seven innovative products and services that are focused on doing
good, but are also easily leverageable commercially.
Other Netexplo award winners come
from emerging innovation ecosystems, such as the justice crowdsourcing site and
app Social Cops from India, or the digital taste generator called the “digital
lollipop” from Singapore. The former has a global advisory board, and the latter
was developed at the National University of Singapore by Sri Lankan researcher
Nimesha Ranasinghe.
What’s the next iteration of the
Innovation Center?
Lately, I’ve spent at least some
time each morning on a small number of websites that get the juices flowing.
Producthunt.com and Sandhill.Exchange are two examples of a whole new
generation of innovation ecosystems.
Product Hunt is a curation of the
best new products emerging every day. It helps you discover the latest mobile
apps, websites and technology products that are in early stages, and the magic
in the system lies in the insights that the founders of these startups get from
functional and industry experts who are invited to be contributors in the
system.
These are the types of innovation
ecosystem disrupters and platforms that allow a lone Icelandic innovator to
dream global thoughts. Maybe Silicon Valley and Silicon Alley should consider
how companies and individuals the world over are using the tools these firms
have developed in past decades to create a network of innovation that is
sensitive to the inspiration and innovation happening across the globe. Open up
your minds and purses, I say. More importantly, don’t keep trying to get these
amazing enterprises to come to you — find a way to get to them.
http://knowledge.wharton.upenn.edu/article/nurturing-innovation-geography-matter/
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