Tag Archives: Innovation

What Is Innovation?

So what is innovation? I had already addressed the question in 2015 in Invention, Entrepreneurship and Innovation. My colleague Federico gave me a few days ago another definition of Innovation from MIT’s Bill Aulet.

Innovation = Invention ∗ Commercialization

You will find the video here.

And here some extracts:

So could it have been “Innovation equals invention?” No, often people mistake these two things for the same thing. They are not. Innovation is something that generates value for the world. It makes something faster, better, cheaper. It gives someone some great satisfaction. An invention is an idea, a technology, a patent. In and of itself, it does not generate value. So these two are not the same thing. And sometimes you see them interchange. And that’s not correct.

So innovation equals invention times commercialization. And when we look at this equation of innovation, something of value, it requires a new idea. And then, it requires someone or some organization that is going to commercialize that idea and to make it a value to the world. So it’s important to understand that an idea by itself is not valuable. Ideas are cheap. Is the commercialization when combined with it that makes them extraordinarily valuable. So while sometimes when I used to say invention plus commercialization, in fact, it’s times.

It’s a product because if I don’t have one, then it’s zero. Then, I have no innovation. If I have no new idea, I can’t commercialize anything. Therefore, it’s zero. If I have an invention and no commercialization, I have no innovation as well. So it’s actually a product. It’s, in fact, the commercialization aspect of it that’s very, very difficult.

If you look at the most innovative company in the world today, which I would argue is Apple, the underlying inventions that created Apple, great innovations starting with the Mac, did not come from themselves. It actually came from Xerox PARC. It was windows, icon, mouse, pointer. That invention, they commercialized to create innovation, which created terrific value in the marketplace and for their customers and for themselves, their investors as well. Likewise after that, you look again that the invention for the underlying and enabling idea, technology from the iPod was MP3, which did not come from Apple, again. That came from Fraunhofer. But what Apple was terrific at was commercialization to create innovation and, again, to create great value for their customers and their shareholders. So this definition of innovation we found very, very helpful to make clear that innovation is a combination of a new idea, a new technology. But then, it has to be commercialized and mapped to some customer in the real world where it will generate value.

Thanks Federico 🙂

XXIst Century Utopias according to Libero Zuppiroli

In his latest book, Les utopies du XXIe siècle (The Utopias of the 21st Century) Libero Zuppiroli makes an original presentation of what I call the excessive promises of innovation. I wrote recently a short chronicle about it in Enterprise Romande and Bernard Stiegler makes a much more pessimistic analysis in In the disruption – How not to go crazy? A third very interesting reference is the collective work Emerging Science and Technologies, why so many promises?

Libero Zuppiroli tackles the issue from the perspective of utopias and dystopias, using in the beginning of his book ancient authors of the eighteenth and nineteenth centuries, that show that excessive optimism has always existed and that its realistic, even pessimistic, counterpart has also always accompanied it. Flora Tristan in 1840 mirrors Sadi Carnot’s benefits of the machine in 1824, Marat in 1774 is paralleled to Adam Smith’s economic liberalism in 1776, and Francis Bacon, in 1627, dreamed of never ending scientific and technological progress. The utopian promises are not new!

It is a book that must be read and I will let you discover the analyses of the promises in the fields of information technology, robotics, defense, 3D printers and nanotechnologies, the city and energy, health, and big data. A simple illustration: around 2005, nanotechnologies were seen as an extremely promising market, which would reach 3’000 billion dollars in 10 years. More than 10 years later, the market is around $100 millions…

I fear, however, that Libero Zuppiroli does not have much illusions about the impact of his analyzes. In a note on critical authors (note 119, page 293), he writes, “He is one of these famous intellectual critics whom American society not only tolerates, but also encouraged the birth of. Their critic of the American system is harsh and based on remarkable analyzes, but those who possess the power know that, despite their international reputation, the audience of these intellectuals is limited to a small fraction of people already convinced. Whatever their talent, their influence on the masses of electors will always be much lower than that of teleevangelists.”

But I knew Libero Zuppiroli was playful and his conclusion confirms this to me: this Empire will collapse as previously collapsed the Roman, Napoleonic and Soviet Empires. When? Nobody knows … but it will collapse victim of its Hubris

Virtual Innovations?

I had not contributed to Entreprise Romande for a while, which might be the reason of my somehow tiredness about the never ending flow of (virtual?) innovations. Here is my translation of my latest contribution…

When the editor of your favorite magazine asked me for a new contribution about innovation, offering me to write about bitcoin, artificial intelligence, data protection, GAFAs or China, I was the victim if not of a slight dizziness, at least of a certain weariness. I just had to add to this list Fake news, Trips to Mars or Replacement of Humans by Machines and my ongoing passion for startups and technological innovation turned into a light nightmare. It seems to me that the more we talk about innovation and the less we really innovate.

When I explain my slight skepticism to anybody, they usually start with the mention of replacing the cashier of the Migros (a “famous” chain of Swiss supermarkets) with a machine. I reply that it seems to me that we, buyers, have replaced the cashier. If the media relayed in 2011 Foxconn’s announcement that it wanted to install a million robots in 3 years, threatening the 1.2 million employees, an online search indicates today that it has a ability to install 10,000 robots a year, and still the same number of employees.

Silicon Valley, having been at the origin of the major innovations of the last fifty years, is scrutinized more attentively. Of course the GAFAs represent a real threat: the two A become the supermarket of the world while the G and F support them by advertisements based on data that we have kindly given them, putting them in a quasi-monopoly situation. But you read well, supermarket, advertising. And that is what is called major innovations?

And what about globalized venture capital? Softbank has announced the launch of a 100 billion fund, by far the largest ever. In the last two months, 10 internet startups (including Dropbox and Spotify) have announced their intention to go public. The figures are dizzying: they generated 10 billion in revenues and 2 billion losses in 2017, thanks to 4 billion of funds raised since their creation. Venture capital has become an infernal machine that, like China and the GAFAs, seems unstoppable. But the venture capital that financed in 1976 Genentech and Apple with a few millions today massively funds the “uberisation” of the world, new global supermarket, and less and less the “deeptech”. I see in these trends an accelerated globalization but few major innovations.

When I think of the innovations of tomorrow, I think of nuclear fusion that will solve our energy problems, research on AIDS or cancer that will rid us of these disasters as we have been able to get rid of previous diseases, I think of disruptive solutions for water, food, mobility. Tom Perkins, Silicon Valley’s big venture capitalist, thought that the innovations of our time were based on three major inventions, the steam engine, the electricity and especially the transistor that made possible all the technologies that seem to threaten us today. But where is the next invention? I recognize myself in Peter Thiel’s phrase: “We wanted flying cars; instead, we had 140 characters. ”

Do not get me wrong, the innovation flow was exceptional in the 20th century and developments continue. In biotechnology, the Crispr-CAS9 technology [1] is as promising as the genetic revolution of the 1970s. Three startups, Crispr Therapeutics, Intellia Therapeutics and Editas Medicine went public in 2016 and promise to cure 10,000 diseases. But today these three companies represent less than $70 million in revenue and more than 200 million in losses in 2017. We do not yet have gene therapy or personalized medicine. Google’s Alphago beat the best go player, but nasty voices ​​say that it’s only the largest computing power and the largest data storage of computers that has allowed such performance, and no particular invention or intelligence . In more complex contexts, the machine is not able to compete with humans. And what will really bring us the multiplication of Big Data? But the promises of some to politicians and others to their shareholders, amplified by the media, are sometimes an insult to intelligence: why parasitize the human spirit with promises of (virtual) innovations sometimes more “abracadabrantesque” one than the others and ultimately disappointing when the real world is sufficiently complex and exciting?

[1] https://www.investors.com/news/technology/crispr-gene-editing-biotech-companies/

The complexity of innovation policies – the example of Malaysia

I was lucky to meet last week two economists from the International Monetary Fund who are the authors of the working paper The Leap of the Tiger: How Malaysia Can Escape the Middle-Income Trap. It is not directly linked to high-tech innovation and I am not an economist; my expertise is limied to the nano-economics of start-ups. This being said, I was very impressed by the analysis of Reda Cherif and Fuad Hasanov.

In general, I read more about developed countries and high-tech entrepreneurship, Silicon Valley, obviously, but also the example of Israel, Finland, France, Chile… Lerner, Saxenian and Mazzucato have been important authors for me. Hasanov and Cherif explain how Malaysia tried to develop its economy and relatively failed compared to Taiwan and Korea. The reasons are complex and the interested person should read their paper.

They really show the complexity of things and again the recipe needs so much fine tuning, with no guarantee of success. The addition of Chile, Thailand and Norway in their analysis, makes it really rich. I understood that a combination of strong state support (incentives, funding, sometimes protection) and competition in the private sector (so many Korean automotive firms were initially created) with an emphasis on its ability to export is very striking. Why did Nokia succeeded for some time and not Alcatel maybe explained with their arguments. They also put a lot of emphasis in the ability to innovate, a must to enable exportations.

So Mazzucato is right, the state has an entrepreneurial role, but individual initiatives seem to be also important, something I had not necessarily understood in the cased of Taiwan and Korea. The diaspora of engineers who studied and work abroad (in the USA mostly) was instrumental to the economic development and innovation once they came back (sometimes many years later) in their home country…

Les défis de l’innovation

Sorry – this should have been on the French version of my blog. I keep it there and copy it also on the FR side…

C’est en recevant ce matin un lien d’un article du journal de libération en date du 29 juin 2007 (vous lisez bien, 2007, pas 2017) que j’ai décidé de ce post. L’article s’intitule L’iPhone, sans mobile apparent. Il montre de manière presque hilarante la difficulté de prédire. Alors j’en ai profité aussi pour mettre sur Slideshare une présentation que j’ai faite il y a quelques jours intitulée les défis de l’innovation. Désolé car il n’y a pas l’audio, mais il y a quelques données révélatrices… enfin je crois…

Voici donc quelques extraits de l’article. Sur le marché du mobile tout d’abord: “Apple est modeste. Il ne vise que 1 % du marché du mobile, et ne pense écouler que 10 millions d’iPhones d’ici à la fin de 2008. Le marché du mobile, lui, tourne autour du milliard d’unités écoulées en 2006. […] Un créneau que Nokia a l’intention de solidement occuper. Sur les 350 millions de mobiles Nokia écoulés dans le monde en 2006, 77 millions sont des téléphones baladeurs capables comme l’iPhone de diffuser de la musique. Le finlandais a une bonne longueur d’avance…” Sur les chances d’Apple: “De l’avis des analystes, l’iPhone ne va pas bousculer le jeu.” […] «Apple, en lançant son iPhone, est sur le mode défensif. Il n’avait pas vraiment le choix.» 🙂

Voici donc mes slides. Je vous conseille les slides 6 et 10 de la partie 1, la partie 2 est un recyclage de présentations passées, que j’aime aussi tout particulièrement…

Homo Deus : a Brief History of Tomorrow by Yuval Noah Harari (Part 2 – the Future)

I remember hesitating to buy Homo Deus. I never really appreciated people trying to analyze what the future might be. I have similar concerns with Harari’s book. I am not the only one as the New Yorker was not all positive: Then he announces his bald thesis: that “once technology enables us to re-engineer human minds, Homo sapiens will disappear, human history will come to an end, and a completely new process will begin, which people like you and me cannot comprehend.” Now, any big book on big ideas will inevitably turn out to have lots of little flaws in argument and detail along the way. No one can master every finicky footnote. As readers, we blow past the details of subjects in which we are inexpert, and don’t care if hominins get confused with hominids or the Jurassic with the Mesozoic. (The in-group readers do, and grouse all the way to the author’s next big advance.) Yet, with Harari’s move from mostly prehistoric cultural history to modern cultural history, even the most complacent reader becomes uneasy encountering historical and empirical claims so coarse, bizarre, or tendentious. […] Harari’s larger contention is that our homocentric creed, devoted to human liberty and happiness, will be destroyed by the approaching post-humanist horizon. Free will and individualism are, he says, illusions. We must reconceive ourselves as mere meat machines running algorithms, soon to be overtaken by metal machines running better ones.

If I feel the same unease, I still beleive Harari asks important questions and he might even have been misunderstood in his real motivation… I link this reading to my recent great readings of Piketty, Fleury and Stiegler.

Whatever some more extracts:

“Because science does not deal with questions of value, it cannot determine whether liberals are right in valuing liberty more than equality, or in valuing the individual more than the collective.” [Page 281]

A strange section is the following: The experiment changed Sally’s life. In the following days, she realised she has been through a ‘near-spiritual experience… what defined the experience was not feeling smarter or learning faster: the thing that made the earth drop out from under my feet was that for the first time in my life, everything in my head had finally shut up… My brain without self-doubt was a revelation. There was suddenly this incredible silence in my head… I hope you can sympathise with me when I tell you that the thing I wanted most acutely for the weeks following my experience was to go back and strap on those electrodes. I also started to have a lot of questions. Who was I apart the angry bitter gnomes that populate my mind and drive me to failure because I’m too scared to try? And where did the voices come from?’
Some of those voices repeat society’s prejudices, some echo our personal history, and some articulate our genetic legacy.
[Page 289] Again individual, society and evolution…

We see then that the self too is an imaginary story, just like nations, gods and money. Each of us has a sophisticated system that throws away most of our experiences, keeps only a few choice samples, mixes them up with bits from movies we saw, novels we read, speeches we heard, and from our own daydreams, and weaves out of all that jumble a seemingly coherent story about who I am, where I came from and where I am going. This story tells me what to love, whom to hate and what to do with myself. This story may even cause to sacrifice my life, if that’s what the plot requires. We all gave our genre. Some people live a tragedy, others inhabit a never-ending religious drama, some approach life as if it were an action film, and not a few act as in a comedy. But in the end, they are all just stories.
What, then, is the meaning of life? Liberalism maintains that we shouldn’t expect an external entity to provide us with some ready-made meaning. Rather, each individual voter, customer and viewer ought to use his or her free will in order to create meaning not just for his or her life, but for the entire universe.
The life sciences undermine liberalism, arguing that the free individual is just a fictional tale concocted by an assembly of biochemical algorithms. Every moment, the biochemical mechanisms of the brain create a flash of experience, which immediately disappears. The more flashes appear and fade, in quick succession. These momentary experiences do not add up to any enduring essence, The narrating self tries to impose order on this chaos by spinning a never-ending story, in which every such experience has its place, and hence every experience has some lasting meaning. But, as convincing and tempting as it may be, this story is a fiction.
[Pages 304-5]

At the beginning of the third millennium, liberalism is threatened not by the philosophical idea that ‘there are no free individuals’ but rather by concrete technologies. We are about to face a flood of extremely useful devices., tools and structures that make no allowance for the free will of individual humans. Can democracy, the free market and human rights survive this flood? [Page 306]

The great decoupling

The practical developments might make this belief [liberalism] obsolete:
1. Humans will lose their economic and military usefulness, hence the economic and political system will stop attaching much value to them.
2. The system will still find value in humans collectively, but not in unique individuals.
3. The system will still find value in some unique individuals, but these will be a new elite of upgraded superhumans rather than the mass of the population.
[page 307]

Humans are in danger of losing their value, because intelligence is decoupling from consciousness. [Page 311]

Intelligence is mandatory, but consciousness is optional. [Page 312]

The current scientific answer to this pipe dream can be summarized in three simple principles:
1. Organisms are algorithms. Every animal – including Homo Sapiens – is an assemblage of organic algorithms shaped by natural selection over millions of years of evolution.
2. Algorithmic calculations are not affected by the materials from which you build the calculator. Whether you build an abacus from wood, iron or plastic, two beads plus two beads equal four beads.
3. Hence there is not reason to think that organic algorithms can do things that non-organic algorithms will never be able to replicate or surpass.
[Page 319]

As algorithms push humans out of the job market, wealth might become concentrated in the hands of the tiny elite that owns the all-powerful algorithms creating unprecedented social inequality. [Page 323]

Is there too much story telling with Harari’s new book. Is the cashier replaced by a robot, or by the customer? What about the Google flu tool, that is mentioned page 335. Did it really work?

The Ocean of Consciousness

The new religions are unlikely to emerge from the caves of Afghanistan or from the madrasas of the Middle East. Rather, they will emerge from research laboratories. Just as socialism took over the world by promising salvation through steam and electricity, so in the coming decades new techno-religions may conquer the world by promising salvation through algorithms and genes. Despite all the talk of radical Islam and Christian fundamentalism, the most interesting place in the world from a religious perspective is not the Islamic State or the Bible Belt, but Silicon Valley. [Page 351]

The humanist revolution caused modern Western culture to lose faith and interest in superior mental states, and to sanctify the mundane experiences of the average Joe. Modern Western culture is therefore unique in lacking a special class of people who seek to experience extraordinary mental states. It believes anyone attempting to do so is a drug addict, mental patient or charlatan. Consequently, though we have a detailed map of the mental landscape of Harvard psychology students, we know far less about the mental landscape of Native American shamans, Buddhist monks or Sufi mystics. And that is just the Sapiens mind. Fifty thousand years ago, we shared this planet with our Neanderthal cousins. They didn’t launch spaceships, build pyramids or establish empire. They obviously had very different mental abilities, and lacked many of our talents. Nevertheless, they had bigger brains than us Sapiens. What exactly did they do with all those neurons? We have absolutely no idea. But they might well have many mental states that no Sapiens had ever experienced. [Page 356]

Techno-humanism faces an impossible dilemma here. It considers the human will to be the most important thing in the universe, hence it pushes humankind to develop technologies that can control and redesign our will. After all, it’s tempting to gain control over the most important thing in the world. Yet once we have such control, techno-humanism would not know what to do with it, because the sacred human will would become just another designer product. We can never deal with such technologeis as long as we believe that the human will and the human experience are the supreme source of authority and meaning.[Page 366]

The Data Religion

[Dataism] is very attractive. It gives all scientists a common language, builds bridges over academic rifts and easily exports insights across disciplinary borders. Musicologists, political scientists and cell biologists can finally understand each other. […] Dataists are sceptical about human knowledge and wisdom, and prefer to put their trust in Big Data and computer algorithms. [Page 368]

Capitalism won the Cold War because distributed data processing works better than centralised data processing, at least in periods of accelerating technological changes. [Page 372] The Industrial Revolution unfolded slowly enough for politicians and voters to remain one step ahead. […] Technological revolutions now outpace political processes, causing MPs and voters alike to lose control. [See Stiegler again] […] The Internet is a free and lawless zone that erodes state sovereignty, ignores borders, abolishes privacy and poses perhaps the most formidable global security risk. [Here see Beaude] […] The NSA may be spying on your every word, but to judge by the repeated failures of American foreign policy, nobody in Washington knows what to do with all the data. [Page 374]

Dataism is also missionary. Its second commandment is to connect everything to the system, including heretics who don’t want to be connected. And ‘every-thing’ means more than just humans. It means every thing. My body, of course, but also the cars on the street, the refrigerators in the kitchen, the chickens in their coop and the trees in the jungle – all should be connected to the Internet-of-All-Things. […] Conversely, the greatest sin is to block the data flow. What is death, if not a situation when information doesn’t flow? […] Dataism is the first movement since 1789 that created a really novel value: freedom of information [Page 382] which has Harari correctly explains in neither freedom nor freedom of expression.

Humanism thought that experiences occur inside us. Dataists believe that experiences are valueless if they are not shared. Twenty years ago Japanese tourists were a universal laughing stock because they always carried cameras and took pictures of everything in sight. Now everyone is doing it. […] Writing a private diary sounds to many utterly pointless. The new moot says: ‘If you experience something – record it. If you record something – upload it. if you upload something – share it.’ [Page 386] Should I blog?

Dataism is neither liberal nor humanist. It isn’t anti-humanist. [Page 387] By equating the human experience with data patterns, Dataism undermines our main source of authority and meaning, and heralds a tremendous religious revolution. […] ‘Yes God is a product of the human imagination, but human imagination in turn is the product of biochemical algorithms.’ In the eighteenth century, humanism sidelined God by shifting from a deo-centric to a homo-centric world view. In the twenty-first century, Dataism may sideline humans by shifting from a homo-centric to a data-centric view. The Dataist revolution will probably take a few decades, if not a century or two. But then the humanist revolution too did not happen overnight. [Page 389]

A critical examination of the Dataist dogma is likely to be not only the greatest scientific challenge of the twenty-first century, but also the most urgent political and economic project. Scholars in the life sciences and social sciences should ask themselves whether we miss anything when we understand life as data processing and decision-making. Is there perhaps something in the universe that cannot be reduced to data? Suppose non-conscious algorithms could eventually outperform conscious intelligence in all known data-processing tasks – what, if anything, would be lost by replacing conscious intelligence with superior non-conscious algorithms? Of course, even if Dataism is wrong and organisms aren’t just algorithms, it won’t necessarily prevent Dataism from taking over the world. Many previous religions gained enormous popularity and power despite their factual mistakes. If Christianity and communism could do it, why not Dataism? [Page 394]

Humans relinquish authority to the free market, to crowd wisdom and to external algorithms partly because they cannot deal with the deluge of data. [Page 396]

As a conclusion, Harari ends his book with the 3 following questions:
1. Are organisms really just algorithms, and is life really just data processing?
2. What is more valuable – intelligence or consciousness?
3. What will happen to society, politics and daily life when non-conscious but highly intelligent algorithms know us better than we know ourselves?

If reading is not for you, you can still listen to Harari in a recent Ted Talk: Nationalism vs. globalism: the new political divide.

Homo Deus : a Brief History of Tomorrow by Yuval Noah Harari (Part 1 – the Past)

I wrote here how much I enjoyed reading Sapiens. Harari’s new book, Homo Deus: A Brief History of Tomorrow, is just as good.

In Death Is Optional, the exchange between Daniel Kahneman and the author, which summarizes many of Harari’s most original ideas, here is one of the most interesting ones – in relationship to start-ups: “in terms of history, the events in Middle East, of ISIS and all of that, is just a speed bump on history’s highway. The Middle East is not very important. Silicon Valley is much more important. It’s the world of the 21st century … I’m not speaking only about technology.” One may not like it, but it is interesting.

As usual, a few extracts:
“Most studies cite tool production and intelligence as particulararly important for the ascent of humankind. […] Humans nowadays completely dominate the planet not because the individual human is far smarter and more nimble-fingered than the individual chimp or wolf, but because Homo Sapiens is the only species on earth capable of co-operating flexibly in large numbers.” [Pages 130-1]

“Animals such as wolves and chimpanzees live in a dual reality. On the one hand, they are familiar with objective entities outside them, such as trees, rocks and rivers. On the other hand, they are aware of subjective experiences within them, such as fear, joy and desire. Sapiens, in contrast, live in triple-layered reality. In addition to trees, rivers, fears and desires, the Sapiens world also contains stories about money, gods, nations and corporations. As history unfolded, the impact of gods, nations and corporations grew at the expense of rivers, fears and desires. There are still many rivers in the world, and people are still motivated by their fears and wishes, but Jesus Christ, the French Republic and Apple Inc. have dammed and harnessed the rivers, and have learned to shape our deepest anxieties and yearnings.” [Page 156]

If we invest money in research, then scientific breakthroughs will accelerate technological progress. New technologies will fuel economic growth, and a growing economy could dedicate even more money to research. With each passing decade we will enjoy more food, faster vehicles and better medicines. One day our knowledge will be so vast and our technology so advanced that we could distill the elixir of eternal youth, the elixir of true happiness, and any other drug we might possibly desire – and no god will stop us. […] Modern life consists of a constant pursuit of power within a universe devoid of meaning. [Page 201]

Interesting comparison between the Scientific revolution, where Knowledge = Empirical Data X Mathematics, and the Humanist revolution led by Knowledge = Experiences X Sensitivity. In medieval Europe, Knowledge = Scriptures X Logic. [Pages 235-7]


Humanist revolution according to Harari [Pages 232-3]

Harari is sometimes too long in the development of his ideas, but it is worth following him. On pages 247-76, he explains how humanism is not a coherent view of the world. Three schisms have occurred: liberalism (where liberty is the most important value), socialism (where equality is first) and evolutionary humanism (where conflict is the raw material pushing evolution forward).

“By 1970 the world contained 130 independent countries, but only thirty of these were liberal. […] And then everything changed. The supermarket proved to be far stronger than the gulag. […] As of 2016, there is no serious alternative to the liberal package. […] China is the most promising ground for the new techno-religions emerging from Silicon Valley. […] God is dead. […] Religions that lose touch with the technological realities of the day lose their ability even to understand the questions being asked.” [Pages 264-8]

“Numbers alone don’t count for much in history. History is often shaped by small groups of forward-looking innovators. […] In 1881, Muhammad Ahmad bin Abdallah, […] meanwhile in 1875, Dayananda Saraswati in India, […] Pope Pius IX, in Europe […] or thirty years before, Hong Xiuquan […] Hundreds of millions clung to their religious dogmas. […] Hong led the deadliest war of the nineteenth century, the Taiping Rebellion. From 1850 to 1864, at least 20 million people lost their lives.” [Pages 270-1]

“Most societies failed to understand what was happening, and they therefore missed the train of progress”. [Page 273] Ask yourself what was the most influential discovery, invention or creation of the twentieth century? That’s a difficult question […] antibiotics, […] computers, […] feminism. […] What did religions bring? This is a difficult question too because there is so little to choose from. [Page 275]

And as a conclusion of chapter 7: “Since humanism has long sanctified the life, the emotions and the desires of human beings, it’s hardly surprising that a humanist civilisation will want to maximize human lifespans, human happiness and human power.” [Page 277]

Sapiens – A Brief History of Humankind by Yuval Noah Harari

Sapiens: A Brief History of Humankind is an extraordinary book. Very similar to Guns, Germs, and Steel: The Fates of Human Societies by Jared Diamond. It may not be directly related to innovation and start-ups, but below are some extracts I found striking. This is a must-read book…


By It is believed that the cover art can or could be obtained from the publisher.
Fair use, https://en.wikipedia.org/w/index.php?curid=48907980

“Consider the following quandary: two biologists from the same department, possessing the same professional skills, have both applied for a million-dollar grant to finance their current research projects. Professor Slughorn wants to study a disease that infects the udders of cows, causing a 10 percent decrease in their milk production. Professor Sprout wants to study whether cows suffer mentally when they are separated from their calves. Assuming that the amount of money is limited, and that it is impossible to finance both research projects, which should be funded?

There is no scientific answer to this question. There are only political, economic and religious answers. In today’s world, it is obvious that Slughorn has a better chance of getting the money. Not because udder diseases are scientifically more interesting than bovine mentality, but because the dairy industry which stands to benefit from the research, has more political and economic clout than the animal-rights lobby.

Perhaps in a strict Hindu society, where cows are sacred, or in a society committed to animal rights, Professor Sprout would have a better shot. But as long as she lives in a society that values the commercial potential of milk and the health of its human citizens over the feelings of cows, she’d best write up her research proposal so as to appeal to those assumptions. For example, she might write that ‘Depression leads to a decrease in milk production. IF we understand the mental world of dairy cows, we could develop psychiatric medication that will improve their mood, thus raising milk production by up to 10 percent. I estimate that there is a global market of $250 million for bovine psychiatric medication.’ […] In short, scientific research can flourish only in alliance with some religion or ideology.” [Pages 304-305]

So how science developed in apparently useless fields?

“The key factor was that the plant-seeking botanist and the colony-seeking naval officer shared a similar mindset. Both scientist and conqueror began by admitting ignorance – they both said ‘I don’t know what’s out there.’ They both felt compelled to go out and make new discoveries. And they both hoped the new knowledge thus acquired would make them master the world.

European imperialism was entirely unlike all other imperial projects in history. Previous seekers of empire tended to assume that they already understood the world. Conquest merely utilized and spread their views of the world. […] European imperialists set out distant shores in the hope of obtaining new knowledge along new territories.” [Page 317]

Ignoramus

[Page 279] “Modern science differs (mention Steve Weinberg here?) from all previous traditions of knowledge in three critical ways:
a. The willingness to admit ignorance. Modern science is based on the Latin injunction Ignoramus – ‘we don’t know’. It assumes that we don’t know everything. Even more critically, it assumes that the things we think we know could be proven wrong as we gain more knowledge. No concept, idea or theory is sacred and beyond challenge.
b. The centrality of observation and mathematics. Having admitted ignorance, modern science aims to obtain new knowledge. It does so by gathering observations and then using mathematical tools to connect these observations into comprehensive theories.
c. The acquisition of new powers. Modern science is not content with creating theories. It uses these theories in order to acquire new powers, and in particular to develop new technologies.”

[Pages 320-2] “The first modern man was Amerigo Vespucci.” [And not Columbus who contrarily to this lesser-known Italian sailor, was always convinced he had arrived in India and not on a new continent.] […] “Columbus stuck to this error for the rest of his life.” […] “There is poetic justice in the fact that a quarter of the world, and two of its seven continents, are named after a little-known Italian whose sole claim is that he had the courage to say, ‘We don’t know’. The discovery of America was the fundamental event of the Scientific Revolution.”

[This reminds me the day of my PhD oral presentation. A colleague of mine was surprised I dare answering ‘I don’t know’ to a question of a member of the jury. My colleague had also missed the point, I think…]

Chapters 14-16 describe how science, politics and economics are interconnected. They may be less surprising but are as convincing. Here is a disturbing extract: “Conversely, the history of capitalism is unintelligible without taking science into account. […] Over the last few years, banks and governments have been frenziedly printing money. Everybody is terrified that the current economic crisis may stop the growth of the economy. So they are creating trillions of dollars, euros and yen out of thin air, pumping cheap credit into the system, and hoping that the scientists, technicians and engineers will manage to come up with something really big, before the bubble bursts. Everything depends on the people in the labs. New discoveries in fields such as biotechnology and nanotechnology could create entire new industries, whose profits could back the trillions of make-believe money that the banks and governments have created since 2008. If the labs do not fulfill these expectations before the bubble bursts, we are heading towards very rough times.” [Page 352]

The Nobel Prize for Thomas Piketty?

I have already said here how much I liked Thomas Piketty’s Capital in the Twenty-First Century (see Has the world gone crazy? Maybe…). In finally ending my reading of the French edition of this 970-page book, I could not help thinking that the author would soon have the Nobel Prize in Economics, even though I have no competence to judge.

capital_in_the_twenty-first_century_front_cover

When reading his conclusion, I found in the author’s words one of the reasons for my respect regarding this work: “Let us repeat it: the sources gathered in this book are more extensive than those of the previous authors, but they are imperfect and incomplete. All the conclusions I have reached are inherently fragile and deserve to be challenged and debated. Research in social science is not intended to produce ready-made mathematical certainties and to substitute for public, democratic and contradictory debate” [Page 941].

He adds further on: “I see no other place for the economy but as a sub-discipline of the social sciences. […] I do not much like the expression “economic science”, which seems to me to be terribly arrogant and which could lead one to believe that the economy would have reached a higher scientific specificity, distinct from other social sciences. […] One can, for example, spend a great deal of time demonstrating the indisputable existence of a pure and true causality, by forgetting in passing that the question treated is sometimes of limited interest.” [Page 945-7].

Piketty also summarizes his work in a few lines [Page 942]:

“The general lesson of my inquiry is that the dynamic evolution of a market economy and of private property, left to itself, contains within it important convergent forces, linked in particular to the dissemination of knowledge and qualifications, but also powerful forces of divergence, potentially threatening for our democratic societies and the values ​​of social justice on which they are based.

The main destabilizing force is related to the fact that the private rate of return on capital r can be strongly and permanently higher than the growth rate of income and output. The inequality r > g implies that the heritages of the past recapitalize faster than the rate of increase of production and wages. […] The entrepreneur tends inevitably to become an annuitant. […] The past devours the future.”

And the solution is clear: “The right solution is the progressive annual tax on capital. […] The difficulty is that this solution requires a very high degree of international cooperation and regional political integration” [Pages 943-44].

All is said.

I can not help ending this brief article by recalling a striking example among the multitude of data analyzed:

t12

Challenges and Opportunities of Industry 4.0

I must say that last week I did not understand very well the “Industry 4.0” concept. And after a brief stay in Munich this week – where I had an explanation by E&Y – see below – but especially after reading the text of a speech entitled “Smart Industry 4.0 in Switzerland” (see pdf) given by Matthias Kaiserswerth, the “Business and Innovation Forum Slovakia – Switzerland” in Bratislava on June 20, I fully understood the importance of the subject. I also found out this morning two excellent reports: “Industry 4.0 – The role of Switzerland Within a European manufacturing revolution” (see pdf) by the firm Roland Berger and the “Digital Vortex – How Digital Disruption Is Redefining Industries’ (see pdf) published by Cisco and IMD. I got permission from Matthias Kaiserswerth to publish his speech here (I thank him for this) and this speech is an excellent introduction to the subject with many interesting ideas to solve the challenges ahead…

Smart Industry 4.0 in Switzerland

Matthias Kaiserswerth, Business and Innovation Forum Slovakia – Switzerland, 20.06.2016, Bratislava

In this brief input speech, I want to talk about some of the challenges and opportunities that the on-going digitalization has for the Swiss economy, our labor force and the education system.

Current State and Challenges

Unfortunately, Switzerland is not yet a leader in digitalization. When we compare ourselves with other OECD countries, we play at best in the middle field. From a policy point of view, we are behind the European Union. This month, June 7, our Ständerat, the smaller parliamentary chamber representing the cantons, has asked our government to analyze what economic effect the emerging EU single digital market will have on our country. Our current president, the minister for economy, education, and research in his response admitted that until the beginning of this year Switzerland had underestimated the 4th industrial revolution and now is trying to catch up with various measures[1].

ICTSwitzerland, the association of the Swiss ICT industry, earlier this year launched a scorecard [2] digital.swiss in which they rate Switzerland’s state of digitalization in 15 dimensions. While we have excellent basic infrastructure and rank highly on a generic international competitive index, we don’t yet sufficiently leverage digital technologies in the various sectors of our economy.

Scorecard
SI4.0-SwissScorecard

The scorecard reflects a classic Swiss paradox. Because of our very direct democratic system, built on subsidiarity, we provide good infrastructure and general economic framework. When it comes to leveraging these foundations, we leave it to private initiative as we don’t pursue an active industrial policy – certainly not at the federal level. So far our companies – mostly SMBs, 99.96% of our companies have less than 250 employees – have excelled at incremental innovation. Incremental innovation can be good for a long time, but it impedes dealing with major technology shifts that can disrupt an entire industry.

This happened in the 70s and early 80s when the “Quartz Revolution” almost extinguished Swiss watchmaking. Now again history may repeat itself as the watch industry missed or were too slow to embrace the trend towards smartwatches. Apple within the course of only one year managed to surpass with their watch-related revenues all Swiss watch companies even Rolex [3].

With the digital revolution, driven out of Silicon Valley, we compete with an entirely different innovation model, namely disruptive innovation.

Just look at examples from the sharing economy such as Airbnb and Uber.

But it doesn’t stop there. Consider computer companies now building the future self-driving electric car – Google being a prime example. While European OEMs had experimented for a long time with self-driving cars putting all the intelligence into the car, Google took an entirely different approach. Because of their maps, their work with Streetview, they already have very precise information about where the car is going and thus can leverage the power of connectivity and the cloud as well.

While we would strive to build the perfect battery for an electric car, Tesla took what we would consider inferior laptop batteries and leveraged IT to make them useful in their cars.

Opportunities

With the long Swiss tradition of bringing foreign talents into the country and allowing them to succeed, we have an outstanding opportunity not to miss out on the current industrial revolution. Many of our successful international companies got started by foreigners – just think of Nestle, ABB, or Swatch.

Businesses have now realized that meeting the pressures of the strong Swiss Franc with only cutting costs is insufficient. They are looking for different forms of innovation leveraging IT. About a year ago, various Swiss industry associations launched an initiative “Industry 2025” to change the mindset in our machine industry and alert them to the new opportunities [4].

Some companies though have seen these chances already long before our national bank stopped pegging the Swiss Franc to the Euro.

For example in 2012, Belimo a company producing actuator solutions to control heating, ventilation and air conditioning systems launched their “Energy Valve”. It consists of a 2-way characterized control valve, volumetric flow meter, temperature sensors and an actuator with integrated logic, that combines the five functions of measuring, controlling, balancing, shutting and monitoring energy into a single unit with its own web server as IT interface. The intelligent valve can be used to optimize water flow in heating and cooling systems and yields significant energy savings for its customers [5].

Other companies in the Swiss machine industry have started to think about how they can leverage Internet of Things (IoT) to create new businesses based on the data that their machines generate. A good example is LCA Automation, a company in the business of building factory automation solutions. They want to offer predictive maintenance based on dynamic condition monitoring of their installed factories. Leveraging existing information like current and position from frequency converters in their drives help understand how the machines are used. In select cases they install additional sensors to measure vibration, acoustic noise to allow their clients to schedule maintenance instead of running their installations to failure [6].

In my opinion, the challenges in addressing more of these opportunities are (1) cultural, (2) an IT skills gap, (3) finding and realizing new business models that best exploit the digital opportunity and finally (4) creating an environment where collaboration with external partners can let you innovate with speed.

Contrary to software, industrial products cannot be easily updated in the field, they are engineered to last 10 to 20 years. The mindset of the computer scientist: “we can fix it remotely with an update,” requires the mechanical and electrical engineers to rethink how they construct their systems. When Tesla had issues in 2013 with one of their cars catching fire because its suspension at high speeds lowered the car too close to the road, they did not issue a massive recall but instead remotely overnight changed the software in the cars to guarantee a higher distance between car and road.

Getting these diverse cultures to collaborate requires respect among the different professional disciplines and would call for the occasional computer scientist to serve on the board of industrial companies to challenge their established way of thinking.

The skills gap, finding enough software engineers interested to work in industrial companies is significant. Current predictions are that by 2022 Switzerland will lack 30’000 IT experts. Considering that industrial companies compete with the better paying finance industry for the same talents, means that industrial companies need to become very creative to address this shortage.

Implementing new business models that exploit the digital opportunities is a significant challenge for established industrial companies. If a company whose core business is selling industrial machines, wants to start offering value added subscription based services to optimize the industrial process realized by their products, they get into an entirely new business. They will need to decide whether these services are only available for a process realized by only their machines or whether they want to offer it also on competitors’ installations. They need to devise a new sales incentive scheme based on a recurring revenue stream. They need to build a support infrastructure that matches the optimized process and no longer consists of experts that only know about their own machine. In short, they need to build an entirely new business. Doing so inside an established large company is extremely hard maybe even more so than doing it in an external startup.

Finally, creating a collaborative environment with external partners to innovate with speed is not something unique to the age of digitalization, however it will be key for industrial companies to capture the opportunity. In spite of the good examples from large industrial companies like Procter and Gamble around Open Innovation, a concept coined 13 years ago, many firms still have a strong sentiment of doing everything themselves or with their established supply chain partners. In the case of digitalization, however, new partners from outside the traditional industry need to be involved and made part of the solution. “Rather than using their own R&D budget, enterprises can leverage venture capitalist investments and integrate a technology solution in an accelerated timeframe” [7].

Education

Before I close, let me get back to education, a topic of particular importance in this new era. Switzerland has an excellent education system. However, we have a significant shortage of students that pursue a career in the Science Technology Engineering and Mathematics field (in short STEM) in addition to a skills gap in STEM for all the other students.

In 2014, the German speaking cantons launched a new common competence oriented curriculum “Lehrplan 21” (LP21) to address the skills gap by putting more focus on STEM subjects. For example, by introducing a new subject called Media and Informatics, the cantonal education ministers have accepted the notion that all students need basic skills in computer science to succeed in the professional or academic education system. As we speak, this LP21 is being implemented in the German speaking part of Switzerland, albeit not fast enough for my taste.

To succeed with LP21 we also need to qualify the teachers to competently teach these subjects in a way that keeps all students motivated. Specifically female students have a significantly lower self-perception in how they master technology and what they can use technology for [8]. The consequence is that we lose the female talent also in our workforce. So for example, in IT there are only 13% women in the Swiss workforce.

Promoting women in technology as role models and broadening specific programs to get girls interested in technology at a primary school age will hopefully help to bridge the gender gap in the long run.

Summary

When we look at the system of the Federal Polytechnic Schools (ETH Zurich and EPF Lausanne), the universities and specifically also the universities of applied science, government funding for research then we have an outstanding foundation upon which we can build to effectively compete in this 4th Industrial Revolution. It now requires a new mind set for our industrial companies to embrace the emerging IoT, Big Data, and artificial intelligence trends and the courage to experiment with the new business models that they enable.

You don’t get disrupted because you don’t see the technological shift and opportunity, you get disrupted because you chose to ignore it.


1: http://www.inside-it.ch/articles/44100
2: http://digital.ictswitzerland.ch/en/
3: http://www.wsj.com/articles/apple-watch-with-sizable-sales-cant-shake-its-critics-1461524901
4: http://www.industrie2025.ch/industrie-2025/charta.html
5: http://energyvalve.com
6: http://www.industrie2025.ch/fileadmin/user_upload/casestudies/industrie2025_fallbeispiel_lca_automation_2.pdf
7: https://www.accenture.com/ch-en/insight-enterprise-disruption-open-innovation
8: http://www.satw.ch/mint-nachwuchsbarometer/MINT-Nachwuchsbarometer_Schweiz_DE.pdf

Postscript: I mentioned above the presentation by E&Y, here is the slide that struck me…