Tag Archives: Innovation

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:

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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…

The crazy ones. The misfits. The rebels. The troublemakers.

How is possible I never used this great quote when I talk about what is needed in innovation and entrepreneurship. What a moron, I am (sometimes…)

Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. While some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.

Of course it’s very likely that you know what this is. And if not, no worry either. Here is the video:

And if you want to know more, check Think_different on Wikipedia.

Listen to the other voice too:

Start-Up, a culture of innovation

I just published a very short essay. A summary of my activity in the start-up world: “Almost 10 years ago, I wrote a book entitled Start-up, what we may still learn from Silicon Valley. If I had to do a second edition, I don’t think I’d change much despite all the flaws and blunders of the exercise. Yet one morning in February 2016, I had a look at ten years of supporting start-up entrepreneurs and decided to send again old and also new messages to those that the world of innovation and high-tech entrepreneurship puzzles or interests.”

It is also available in French. If you wish to obtain a pdf copy of the books, just send me an email!

Startup-A_culture_of_innovation_Amazon Startup-A_culture_of_innovation_Kindle
Startup-Une_culture_de_l_innovation_Amazon Startup-Une_culture_de_l_innovation_Kindle

Emerging Science and Technologies, why so many promises? (Part 4)

This is my final post about what I have learned from Sciences et technologies émergentes, pourquoi tant de promesses? (For the record here are the links to part 1, part 2 and part 3).

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The last chapters of this excellent book try to explore ways to solve the problem of excessive promises that have become a system. In Chapter IV.2, it is question of “désorcèlement” (the closest term I found would be “disenchanted”); I read it as a critical analysis of the vocabulary used by those who promise. The chapter speaks at length of the transhumanist movement, the promise of promises! “[…] Describe how these actors certainly produce, but especially divert away, reconfigure and amplify these promises […] in front of passive and naive consumers.” [Page 261] and later “[but] transhumanists are first activists, mostly neither engineers nor practitioners […] attempting answers to questions not asked or badly expressed, […] hence a really caricatural corpus,” to the point of talking about a “cult” (quoting Jean-Pierre Dupuy), “a muddled, often questionable thinking.” [Page 262]

In Chapter IV.3, the authors explore unconventional approaches, a possible sign of disarray to “scientifically” react to the promises. For example, they have contributed to the creation of a comic book to answer another comic which wanted to popularize and promote synthetic biology.

Adventures_Synthetic_Biology

The final chapter explores scenarios that may follow the explosion of promises, like the idea of ​​increasing the number of Nobel Prize. New promises?!! More concretely, the author shows that the initial promises are not followed in practice: “The wait & see phenomenon in investment, or lack of innovation, is less known, though widespread: the effect of general and diffuse promises maintains the interest of players but too much uncertainty holds back investment in cycles of concrete promises-requirements.” [Page 297] “A game is at work which continues as long as the players follow the rules, […] they are prisoners of the game. […] They may also leave it if the right circumstances occur and then the game collapses.” [Page 298]

In conclusion, beyond a very rich description of many examples of scientific and technical promises, the authors have shown how a system of promises was built through interactions between the various stakeholders (the researchers themselves, the (political, social and economic) decision makers who fund them, and the general public which hopes and feels anxiety). The relationship to time, not only the future but also the present and the past, is beautifully described, in addition to a desire for eternity. And finally, we mostly discover that the promises have led to numerous debates that were perhaps, if not entirely, useless, as we could have known that the promises can not be kept, even from the moment they were created…

Emerging Science and Technologies, why so many promises? (Part 3)

This is my third article about the book Sciences et technologies émergentes, pourquoi tant de promesses? After the general considerations on the system of promises, the book presents contributions describing specific areas:

I.3: nanotechnologies
II.1: semiconductors through Moore’s Law
II.2: big ata
II.3: digital Humanities
III.1: neurosciences and psychiatry
III.2: The Human Brain Project (HBP)
III.3: personalized medicine
III.4: biodiversity and nanomedicine
IV.1: assisted reproduction
IV.2: regenerative medicine

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Each chapter is interesting for the curious reader as it shows the dynamics between promises and expectations of stakeholders (researchers, politicy makers, general public). The chapter about the HBP is particularly interesting in the description of the disconnection between content and form. “How was it possible that the HBP “won the competition” despite the lack of evidence to establish pragmatically the scientific relevance and the legitimacy of its ambitious organizational goals? We develop the hypothesis that this deficit, criticized afterwards, was both hidden and compensated by the production of promises shaped to anticipate and / or respond effectively to the political, economic, social and health-realted stakes on the agenda of the “challenges to come”. [Page 166] The credibility of the HBP sealed by this decision has been built […] following an adaptation process and reciprocal validations in the double register of the politicization of science and the scientification of politics. In other words, we show that one of the important conditions of this credibility was the successful co-production of a strategic congruence between [scientific] promises and the agenda of policy issues. [Page 171] The connection between knowledge of the brain and forms of social life took place mainly in the domain of discourse. […] In this contrasting situation, discursive inflation around the brain and neuroscience seems to be the consequence of a lack of evidence, as if it had overcome, positively or negatively, the differences between the present and the future, the proven and the possible, the absence and the desire. This regular feature of big science projects has resulted in the development and implementation of a prophetic rhetoric that seeks to anticipate the possibility of a better future by borrowing to the notions of hope and promise.” [Page 176-77]

I come back to a quote from chapter 3 that is essential to me as a conclusion to this new post: The real progress of techno-science will less come from their ability to keep promises than from their ability to do without them, to inherit critically from the era of great technological promise. This is not to break an idol, but to learn how to inherit. [Page 111]

Emerging Science and Technologies, why so many promises? (Part 2)

(A word of caution: my English is reaching its limits in trying to analyze a demanding book, written in French. I apologize in advance for the very awkward wording…)

So just one day after my article describing Chapter 1 of Emerging Science and Technologies, why so many promises?, here comes an analysis of the second chapter, where the relation to time is analyzed, as well as presentism, futurism and the role of time in the promise system. There is the nice following passage:

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Since The New Atlantis, futuristic speculations have accompanied the development of modern science. And in the twentieth century, Jean Perrin has sealed a new alliance between science and hope. But for him, it is science that preceded and provoked hope while now, it is rather hope that drives research. Technosciences reverse, in fact, the order of the questions that was following the three critiques of Kant: “What can I know?” – the issue addressed in Critique of Pure Reason – then the question “What can I do?” – treated in the Critique of Practical Reason – finally the question “What can I expect?” – discussed in the Critique of Judgment. In contrast, in the current scientific policies, one determines what to do and what we can possibly acquire as knowledge by identifying the hopes and promises. (Page 50)

Yet there is a paradox already expressed in the first chapter between futurism with the terms of promise, foresight and prophecy that project us and presentism particularly marked by the memory that freezes the past and transforms the future as a threat that no longer enlightens neither the past nor the present. To the point of talking about a future presentification…

The chapter also deals with the question of the future as a shock, a time “crisis” due to the acceleration. To the feeling of the misunderstanding and helplessness, is added the experience of frustration and stress caused by the accelerated pace of life, the disappointment of a promise related to modernity, where techniques were supposed to save time, to emancipate.

Another confusion: the features of planning and roadmap which are typical of technology projects slipped into research projects where is used the term of production of knowledge, while in research, it is impossible to guarantee a result. But the author shows through two examples, that this development is complex.

In the case of nanotechnology, there has been roadmap with the first two relatively predictable stages of component production followed by a third stage on more speculative systems crowned by a fourth stage which speaks of emergence, and all this by also “neglecting contingency, serendipity and possible bifurcations,” not to predict, but to “linearize the knowledge production”. The roadmap predicts the unexpected by announcing an emergence, combining a reassuring scenario of control which helps in inspiring confidence and with at the same time an emerging scenario, to create dreams. (Pages 55-56)

In the case of synthetic biology “despite a clear convergence with nanotechnology,” the rapid development occurs without any roadmap. “A common intention – the design of the living – gathers these research paths.” And it is more to redo the past (“3.6 billion years of genetic code”) than to imagine the future. The future becomes abstract and it comes as proofs of concept. And the author adds that in normal science in the sense of Kuhn, these proofs of concepts would have fallen into oblivion. The paradox is that there is no question of right or wrong, but of designing without any needed functionality.

In the first case, “prediction or forecasting are convened as the indispensable basis for a strategy based on rational choice”, “the future looks to the present. “In the second case, there is the question of “towing the present” and “fleeing out of time.” We unite and mobilize without any necessary aim. The future is virtual, abstract, and devoid of culture and humanity; the life of the augmented human looks more like eternal rest …

Ultimately, the economy of promises remains riveted on the present either by making the future a reference point to guide action in the present, or it is seeking to perpetuate the present.

Chapters three and four are less theoretical, describing on one hand new examples in the field of nanotechnology and on the other, how Moore’s Law became a law when it was initially a prospective vision of progress in semiconductor. Perhaps soon a follow-up about the next chapters…

Emerging Science and Technologies, why so many promises? (Part 1)

Sciences et technologies émergentes, pourquoi tant de promesses? (Emerging Science and Technologies, why so many promises?) is the title of a book (in French only) from a group of authors under the direction of Marc Audétat, a political scientist and researcher at the Sciences -Society Interface of the University of Lausanne. This is not an easy reading book, it is quite demanding, but it raises important questions.

I have already reported on this blog about books that speak of a certain crisis of science, for example in The Crisis and the American model (in French), about the books “La Science à bout de Souffle” or “The University bubble. Should we pursue the American dream?” or in The Trouble With…, a book by Lee Smolin, not to mention the most violent criticism of the promises of technology by Peter Thiel in Technology = Salvation.

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This new book explores the promises related to science and technology to the point of talking about an economy of promises. This is a collective work which does not make it an easy reading, but the diversity of points of views is certainly an asset. I have not finished reading it and I will certainly come back to it. In the first chapter, P.-B. Joly describes the system of techno-scientific promises. He begins by introducing the concepts of Imaginary and Vision [Page 33] This “couple of concepts takes into account how various sources of inspiration are involved in the technical creation. […] The Imaginary gives an almost tangible appearance to concepts and ideals that are a priori devoid of it … [and becomes] a common sense that founds the action into society. […] The concept of Vision is close to that of Imaginary, but on a smaller scale. It is akin to that of “rational myth” used to analyze the dynamics of collective action in changing contexts. […] Coalitions of actors form around these visions of a prospective order and contribute to their dynamics. […] If we accept this conceptual distinction between Imaginaries (at large scales – the Nation – and in the long term) and Visions (at a level of coalitions of actors and active over periods of medium length) then comes the question of the interaction between the two.”

“Unlike Visions and Imaginaries, for which the content of technical arrangements is essential, what is essential for the techno-scientific promises is the creation of a relation, as well as a time horizon of expectations. […] Promises are essential in technology creation, because they enable innovators to legitimize their projects, to mobilize resources and to stabilize their environment. […] Any techno-scientific promise must convince a large audience that it determines a better future than the alternatives, even if the realization of the promise requires major, sometimes painful changes.” (The author mentions the history of electricity or the green revolution as the solution to world hunger)

“Our concept of techno-scientific promises has been systematized and became in the last forty years the governance of the new techno-sciences (biotechnology and genomics, nanotechnology, neuroscience, synthetic biology, geo -engineering, etc.) The construction of a techno-scientific promise meets two conflicting constraints: the constraint Radical Novelty and that of Credibility. […] (And I interpret that) for this request to be credible, one must disqualify alternatives. [Furthermore] For a scientific theory to be credible, its validity is neither necessary nor sufficient. […] The techno-scientific promises must have the support of a circle of specialists. Otherwise, they cannot resist the opposition manifested either in scientific arenas, or in public arenas. An extreme version is observed when the specialists refer to natural laws to justify the inevitability of technological change. (Examples are Moore’s Law and Gabor’s Law.) Thus, in principle, generic promises are not subject to validity tests.”

Finally, this intensification is reinforced by three complementary elements [page 39]:
– the future is more a threat than a source of hope;
– research and innovation are often presented as the only way to solve problems;
– the research stakeholders should demonstrate their societal impacts.

This leads to pathologies [pages 40-43]:
– the myth of a public victim of irrational fears and to be educated becomes an intangible scheme;
– the promises turn into bubbles;
– the radical novelty and uncertainty create conflicting discourses, sources of mistrust because the effects of such radicalism is not predictable so that through experimentation, the technologists become sorcerer’s apprentices and society, a laboratory;
– finally promises lead to endless discussions on fictions, on issues that may have nothing to do with the reality of research.

In conclusion Joly thinks this promises system is one of the enemies of the future because of the clear separation it creates between those who make the promise and those who are supposed to accept it. The recognition of this regime and therefore these problems is a prerequisite imperative.

After reading the first chapter, I remembered the societal concerns of Cynthia Fleury, about whom I have already said a few things in a digression in the article On France Culture, Transhumanism is Science Fiction. Our democratic societies are in crisis, and the distrust of politics as well as of experts has never been stronger. The issue of research and innovation is a component of this crisis. I am eager to discover the rest of this very interesting (and important) work …

Ten Ideas to Innovate in Uncertain Times

Following my post yesterday about Invention, Entrepreneurship and Innovation, here is a short presentation I made yesterday about the culture of innovation. I had already mentioned it in a previous post (without the slides) entitled Can the next google come from Europe? An answer by Fathi Derder. Derder, a Swiss politician, has written a book explaining what Switzerland needs to change in the general framework conditions. It is an important book. When I talk to students and young entrepreneurs, I focus more on the importance of culture. Which is what you can read in the slide below. Enjoy!

Invention, Entrepreneurship and Innovation

“Anything that won’t sell, I don’t want to invent.” – Thomas Edison

This article arouse from a discussion with colleagues about what innovation really is. I have to admit the conversation helped me in clarifying and correcting a few misconceptions I had. So let me try to explain how the three concepts of Invention, Entrepreneurship and Innovation differ and how they are related. At least these are my views.

Invention - Entrepreneurship - Innovation

So let me begin with definitions:

Invention: something new, that did not exist previously and that is recognized as the product of some unique intuition or genius. A product of the imagination. Something that has never been made before. “Something new under the sun”. A discovery pre-exists the discoverer, by opposition to the inventor and her/his invention.

Innovation: the successful implementation and adoption by society of something new. So an innovation is the succesful commercialization or use (if non-profit) of an invention.

Entrepreneurship: it is the process of designing a new business (wikipedia). The entrepreneur perceives a (new) business opportunity and gathers the resources to implement it, ideally successfully. When the entrepreneur succeeds in implementing something new, (s)he is an innovator. But (s)he does not need to be an innovator, (s)he can also be an imitator.

So this makes a clear difference between an invention and an innovation. There is always an invention before an innovation, but an innovator does not have to be an inventor. It also shows that an entrepreneur does not have to invent, neither to innovate.

My biggest mistake was to say “big companies do not innovate anymore”. I was wrong, Though most established companies imitate, many do innovate. They rarely invent and not many are entrepreneurial. But in order to innovate, it is better to be established. Let me clarify.

Let me come back to my favorite topic: “A start-up is an organization formed to search for a repeatable and scalable business model.” This is the best definition I have found so far and it comes from Steve Blank. This beautifully explains that all companies are not start-ups (for example when they have a clear business model from day one and/or if they do not try to scale). It also explains when a company is not a start-up anymore. Then it can innovate.

Another misconception is to confuse Research and Development (R&D) with innovation. Research deals with inventing or discovering. Development follows. Innovation comes afterwards. Patenting belong more to the invention side than to the innovation side of the equation. All this explains also why I have so many doubts about innovation metrics. They measure inputs (such as inventions or R&D) more than what innovation really is, an output.

Invention - Innovation

So how are these three concepts related? Read again, Edison’s quote above. In the past, large innovative firms such as IBM or Bell Labs were inventing. They had big R&D labs. Xerox was famous for its inventive capability and low innovation output. So Apple “stole” many of its inventions and innovated instead. Today, many established companies go to universities to find inventions they license. Or they collaborate with partners (i.e. “open innovation”). However, the risk and uncertainty linked to inventing as well as finding a market for new things makes innovation difficult without entrepreneurship…

Entrepreneurship - Innovation

Entrepreneurship is a great way to enable innovation. Entrepreneurs see an opportunity and accept the uncertainty and risk taking. When it is done in-house. It is called intrapreneurship. Nespresso is one example (even if Nestle did not initially encourage its intrapreneur – who by the way was also the inventor). (Indeed because of the definition given above) corporations stop being start-ups when they innovate! Indeed they are often acquired (M&A) by big, established companies who know better how to commercialize – innovate.

Invention - Entrepreneurship

I had to add the intersection between invention and entrepreneurship. But does this make sense? I am not sure. There is however one industry which has combined both without a real need for innovation: the biotechnology industry is mostly an entrepreneurial activity which develops invention thanks to clinical trials. Biotechnology firms seldom innovate (Genentech and Amgen were exceptions – with a few other firms which managed to commercialize their molecules) because they are often acquired by large pharmaceutical firms or at best license their products to the bigger players. In fact many start-ups are in the same situation. But the truth is companies very seldom invent. Inventions occur before firms are established, at least in the high-tech field.

The following extract from Science Lessons: What the Business of Biotech Taught Me About Management, by Gorden Binder, former CEO of Amgen is interesting:
Biotech Model

Inventors, Entrepreneurs and Innovators

Inventor - Entrepreneur - Innovator

For the same reasons as explained above, individuals have seldom the three attributes. At Apple, Wozniak was an inventor. Jobs was an entrepreneur and an innovator. But Bill Gates or Larry Page and Sergey Brin, the Google founders, were rare cases of inventors, entrepreneurs and innovators combined. However Brin and Page invented at Stanford and then created Google to implement succesfully their invention.

So let me finish with a great definition of innovation given in How Google Works [page 206]: “To us, innovation entails both the production and implementation of novel and useful ideas. Since “novel” is often just a fancy synonym for “new”, we should also clarify that for something to be innovative, it needs to offer new functionality, but it also has to be surprising. If your customers are asking for it, you aren’t being innovative when you give them what they want; you are just being responsive. That’s a good thing, but it’s not innovative. Finally “useful” is a rather underwhelming adjective to describe that innovation hottie, so let’s add an adverb and make it radically useful, Voilà: For something to be innovative, it needs to be new, surprising, and radically useful.” […] “But Google also releases over five hundred improvements to its search every year. Is that innovative? Or incremental? They are new and surprising, for sure, but while each one of them, by itself is useful, it may be a stretch to call it radically useful. Put them all together, though, and they are. […] This more inclusive definition – innovation isn’t just about the really new, really big things – matters because it affords everyone the opportunity to innovate, rather than keeping it to the exclusive realm of these few people in that off-campus building [Google[x]] whose job is to innovate.”

Innovation is complex. Do I need to remind you of the challenges that Clayton Christensen – The Innovator’s Dilemma – Geoffrey Moore – Crossing the Chasm – or Steve Blank – The Four Steps to the Epiphany – have brilliantly described to explain why innovation remains somewhat magical…

Innovation Challenges

PS: can you be an entrepreneur without inventing and innovating? Sure! Not just small companies and craftmen who use their know-how for a decent living. You just need to imitate. Telecom operators such as Vodafone or Bouygues Telecom compete without a need to invent or innovate. They copy other telecom operators. (OK sometimes, they innovate, too). In the start-up world, the Samwer brothers have been famous for copy/paste American success stories and adapt them to the European market. You can find many references about this online and the clones they created include Alando (eBay), Zalando (Zappos, EasyTaxi (Uber), Pinspire (Pinterest), StudiVZ (Facebook), CityDeal (acquired by Groupon), Plinga (Zynga), and Wimdu (Airbnb). See also When Samwer was not Samwer yet but was writing a book – way before Rocket Internet and its clones.