Innovation and Globalization Nov 8 2007

Egils MilbergsCenter for Accelerating Innovation

11-8-2007 Center for Accelerating Innovation 2

The Innovation EconomyCapital

Land

LaborKnowledge

& Intangibles

AgricultureIndustrialKnowledge


Good News


https://www.e-elgar.co.uk/web/action.lasso?-database=ElgarTitles.fp5&-layout=lay_select&-response=../search/Selection.lasso&CDM+SerialNo=3538&-search


Elephants and Dragons: The New Economic Superpowers?

China Overtakes the G3; India is Close Behind

Source: Goldman Sachs, Report 99

Germany

20000

50000

25000

2010 2020 2030 2040 2050

US

China

India

Japan

GDP ’03US$bn


Competitiveness

THENJapan:• High-cost, high-wage,

advanced tech - “just like us”• We have Entrepreneurial

advantage, they have Industrial Policy advantage

• Rule of Law• IP Protections• Subsidized currency, buying

our debt• National Security: allies

NOWChina: New Mix• Low-cost, low-wage,

advanced tech• Entrepreneurial• Using Industrial Policy• Limited Rule of Law• IP Theft model – FBI:

$300b/year• Subsidized currency, buying

our debt• Nat’l security – peer

competitor


U.S. R&D Investment the World’s Largest, But Others Increasing Their Investment Faster

Source: OECD Data, Council on Competitiveness

High %R&D/GDP


Disintermediation of Value ChainResearchInventionProduct Dev.DesignCreativity

EngineeringPrototypingProductionManufacturing

BrandingMarketingDistributionServices

INNOVATION VALUE CHAIN

VALU

E C

APT

UR

ED

AdvancedEconomies

Developing Economies


PDA

Cell phone

PC

Percent of U.S. households with:100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%0 10 20 30 40 50 60 70 80 90 100 110 120Years since product invented

Television

Radio

ElectricityTelephone

Air Travel

Automobile

Innovation is Accelerating

Sources: J. Gerry Purdy’s presentation “The Next 50 Years in Mobile and Wireless” at Silicon Ventures, Trade press, Industry sources

Internet

Center for Accelerating Innovation


Continuous Improvement PathDesign to x…

Customer SatisfactionCost Optimization

EntrepreneurshipNew Products and Services Globalized Business Models

Emergent/Disruptive Technologies Organic Innovation Structures

Real Time/Self Configuring Enterprises

short medium long

PotentialActivated By

2 – 3 % annually

5 – 10 %

20 – 30 %

30 – 40 %

Time

US Innovation PotentialInnovation G

ain


Innovation Model Is Shifting

Development

Linear Model Ecosystem Model

Research

Commercialization

• Single discipline• Hierarchical governance• Closed system• Internal talent• Controlled process• IP hoarded• Product centric• Forecasting demand

• Multidisciplinary• Self organizing

relationships• Open innovation • Access talent everywhere• IP commons• Customer centric • Sense and respond


ROCKFORD INNOVATION ECOSYSTEM

Creative Class Meets to Develop a Global Innovation Hotspot

Graphic Illustration of the forum


How Innovation Ecosystems Evolve

Growth Node

InnovationEcosystem

Nascent Relationships

Virtual Cluster Trajectory

None or few firmsGrowth potential

Few to many firmsFast growthKey linkages

Virtualized functionsAccelerated collaboration

Many nodesDense linkagesNetwork to Network


New Learning Systems

FlexibleSupply Chains

Increased Efficiency

Higher Quality Goods & Services

Better Decision-making

UniqueBusiness Models Larger Markets

Robust ResearchTools

Less EconomicVolatility

Adaptive Workforce

AcceleratedProductivity

Innovative Products& Services

INFORMATION AND COMMUNICATION TECHNOLOGY(hardware, software, applications, networks and telecommunications)

Tax Revenues

CompetitivenessLower CostsMore Job

Opportunities

Revenues

More Profits

Higher Standard of LivingGDP, Quality of Life

Higher Wages

More ChoicesLower Prices

Modified chart from: ITIF


Innovation Vital Signs

Joint Initiative:

Surveyed 52 Public Reports, 3126 Indicators– 18 Global Reports – 10 National Reports – 15 Regional Reports – 9 Enterprise Reports

Industry Indicator Survey – variety of sources and data types available

Center for Accelerating InnovationCenter for Accelerating Innovation


BusinessModels

ValueOutputsImpacts

MarketDemand

Macro-EconomicConditions

National Mindset

Innovation Ecosystem Major Subsystems and Linkages

Public Policies

Infrastructure

Talent

Networks

Capital

R&D

Source: Egils MilbergsInnovation Framework


Global Indicators


National Indicators


Regional Indicators


Enterprise Indicators


Innovation Indicators Are Evolving (slowly)

1st GenerationInput

Indicators(1950s-60s)

2nd GenerationOutput

indicators(1970s-80s)

3rd GenerationInnovation Indicators

(1990s)

4th GenerationProcess

Indicators(2000 + emerging

focus)• R&D expenditures

• S&T personnel• Capital• Tech intensity

• Patents• Publications• Products• Quality change

• Innovation surveys

• Indexing• Benchmarking

innovation capacity

• Knowledge• Intangibles• Demand and

outputs• Clusters and

networks• Management

practices• Risk/Return• System Dynamics

Source: Milbergs and Vonortas, Measurement to Insight, a paper prepared for the National Innovation Initiative


What Did We Learn?• Like human health no single indicator captures innovation’s

changing nature and multiple features.• And report frameworks differ widely, no consensus• Measures are for manufacturing not service sector• Available indicators dominated by input R&D and Talent factors • Connection between inputs to outcomes is weak and non-linear • Output indicators focus on economic measures, not quality of life• Sparse “hard” indicators for industry management practices• Limited “soft” indicators on knowledge content, culture, intangibles,

global innovation patterns, creativity, skill requirements• Timeliness, accessibility and presentation format needs

considerable improvement


Measurement Issues• Knowledge as assets• Global trade in tasks• Service sector innovation• Entrepreneurship• Intangibles • Linkages (beyond geographic clusters)• Innovation management practices• Relationship of indicators to policy• The national mindset and media


Commerce Advisory Committee Measuring Innovation in the 21st Century

INNOVATION DATA COLLECTION· Improvements in service sector data · Improvement in measurement of intangibles (including intellectual property) · Leverage understanding of innovation through expanded sharing of and access to existing

data in firms STRUCTURE OF THE NATONAL INCOME AND PRODUCT ACCOUNTS· Development of annual, industry-level measures of total factor productivity · Creation of a national innovation account by BEA as a satellite account · Publish economic data based on data on firms as well as establishments to provide more

meaningful estimate of employment in innovation occupations NEW INNOVATION OUTCOME MEASURES· Development of a firm level measure of innovation intensity such as the ratio of annual

revenue from products launched in the last three years to total annual revenue · Development of a market share based measures · Development of a national index of innovation aggregating different measures INNOVATION RESEARCH· Assessment of the effect of collaboration and partnerships on innovation · Analysis of administrative records and survey data to identify entrepreneurial start-ups and

study their early life cycle · Easier access to and analysis of publicly available firm data · Identification of drivers of and impediments to innovation


Innovation Competitions• Demand side incentive• Expands range of ideas

(e.g. Solar Decathlon)• Attracts innovators

around the world • Inspires students• Empowers entrepreneurs• Raises public awareness

of exemplary designs, products and services

Aachen Innovation Prize

http://en.wikipedia.org/wiki/Image:John_Harrison_Uhrmacher.jpg

http://www.googlelunarxprize.org/


Concluding Points• US innovation policy is an incomplete

cocktail—boosting inputs not outcomes.• National Innovation Dashboard: toward the

right metrics and value creation• Solve “wicked problems” with innovation

ecosystems• Innovation President essential to lead at

national and global level.

Questions, comments and insights

Egils MilbergsCenter for Accelerating Innovationwww.innovationecosystems.com

[email protected]

http://www.innovationecosystems.com/

http://www.innovate.typepad.com/

Innovation and Globalization Nov 8 2007

Documents

Transcript of Innovation and Globalization Nov 8 2007