Monday, July 14, 2008

Lessons from History on Breakthrough Innovation

Here is an article from Wired that talks about the concerns of the breakthrough technology innovation artists of the 20th Century. Mr. Gordon Moore (Intel Co-Founder) was awarded the lifetime achievement award by The Marconi Society in 2006. An excerpt from the above article states:

"Silver-haired and graciously unassuming, Moore voiced concern that corporate R&D is moving away from the kind of fundamental research that wins Nobel Prizes and toward a narrow focus on business goals. "That's great for the company," he said, "but somebody has to fill the gap."

I believe the gap is being filled slowly but surely in the emerging and frontier markets. Simply because the desperation for innovation does not seem to exist in the developed world anymore or does it?

Satiated people do not innovate!

Update - See an example from a 3rd world country here.

Sunday, July 13, 2008

Copy and Paste Knowledge Creation?

Finland is the popular destination of educators from across the globe these days. Its school system has been rated #1 by Organization of Economic Co-Operation's Programme for International Student Assessment. They are coming to Finland to learn why it is so incredible and then replicate it in their own nation, or perhaps find out why they themselves are unsuccessful. Click here for details on the PISA testing and results.

This begs the question whether one can duplicate the academic excellence of Finland or any other leader in this space? Can one copy Stanford or MIT by merely putting up a campus of such institutions? Can one copy the breakthrough Georgia Institute of Technology has achieved through its Advanced Technology Development Center? Or let’s make it easier, could a nation copy the syllabus and organizational structure of MIT (it is all available online) and achieve the same? What I have learned and seen of the world, duplication is flattery yet self effacing in academia.

Click here for an article from The Economist that explains why the lineage of the people, the environment, history and culture all come to play a role to push academics to excellence.

The trend of copy and paste knowledge creation stations continues across the globe. For example, if ever in Dubai, one must visit what I have come to call the mall of universities i.e. the Knowledge Village. It is over 300 universities from across the world with literally a store front like setup. At the same time though, the American University in Dubai has built a large and open campus that creates a sense of being in an education institution in comparison to the Knowledge Village.

Georgia Tech’s, MIT’s, etc. cannot be duplicated. For the nations that desire such should consider creating an environment first where the knowledge worker and the knowledge creator feel compelled to come and stay. Next, they should work on needs and issues that cannot find solutions from the developed world or existing solutions that must be supplanted to create new paradigms. And finally, for the knowledge creators to perpetuate they must build association to the land – America leads the world in this, it offers the most incredible opportunity in the world to do what one wants while offering the individual to become its citizen. It encourgages competition while rewarding the winners on merit. This is the foundation of a globally diverse society coming together building a nation and continuing to make it great. Otherwise, they will come and then… they will leave. See here an excellent article on America's supremacy in knowledge creation.

I am specifically discussing Finland's leadership in the early education versus USA's leadership in higher education for one specific reason - prior experience is not a guarantee of future success.

Probably one of the most important aspects for the success of the institution is the realization of the knowledge created into a business venture. For example, Georgia Tech’s ATDC enables the intellectual property from the school to incubate and explore the commercial arena. There is a community of funding providers and mentors to further support these ventures.

Lastly, and most importantly, the knowledge creator must be allowed to fail. I am afraid that the large corporate culture of incremental innovation and avoiding or not recognizing failure may creep into the academic institutions, where risk taking is encouraged to create breakthroughs. More on this topic in the near future.

I will discuss how incremental innovation has provided above 10% growth to multi-nationals in the 20th Century while the same recipe may not lead to the same results in the 21st Century in the next few weeks.

See my previous blog on related topic - Academic Capitalism.

The Global Entrepreneur and Frontier Markets

A friend in Atlanta was having furniture manufacturing outsourced in early 1980s to China with supply to North America. A Danish friend at the age of 29 was negotiating in 1980 with a Chinese manufacturer in Hong Kong to out source shoe manufacturing and setting up the supply chain for Europe. Another friend in Atlanta was on his first annual trip of one month in 1984 to design ceramic pottery for the North American market. These trips continue to this day for him.

Today, my friends are high net-worth individuals who could write the book on how to conduct business in burgeoning markets… if only I could persuade them.

All these folks have two things in common (1) They are global entrepreneurs, (2) They predicted a trend of the future and captured it. They were seizing the Frontier markets of the early 1980s.

Today’s Frontier markets like South Africa, Tanzania, Pakistan, Morocco, Egypt, Israel, Jordan, Tunisia, the Gulf Nations, Vietnam, Thailand, Indonesia and a few more including the Eastern European countries, offer the Entrepreneur the opportunity of outsourcing that has been previously captured as stated above.

Yet I believe that a new prospect has emerged. I believe the Frontier markets are comprehending that without adopting innovation they will become emerged and deployed (pun on developed) while facing the same old pains of developed countries. This comprehension must understand that breakthrough innovation is the domain of the entrepreneur. This is where the global entrepreneur engages, the individual who is defining Globalization 3.0 per Thomas Friedman:

... around the year 2000 we entered a whole new era: Globalization 3.0. Globalization 3.0 is shrinking the world from a size small to a size tiny and flattening the playing field at the same time. And while the dynamic force in Globalization 1.0 was countries globalizing and the dynamic force in Globalization 2.0 was companies globalizing, the dynamic force in Globalization 3.0-the thing that gives it its unique character-is the new found power for individuals to collaborate and compete globally ..."

This article here from Arabian Business provides a few interesting insights.

Speed is a property of essence in Frontier markets. Here is an example – New York took say 75 to 100 years to come out of the ground and become what it is from financial to infrastructural standpoints. Dubai is knocking at the door of doing the same in 10 years. If the infrastructure pieces, for example, Information and Communication Technologies can be implemented at exponential speeds,  the business of doing trade and commerce can begin at a far rapid pace than previously imagined. The same old models of conducting business do not apply. As a result, the emerging and frontier markets conduct business in Free Trade Zones with new ones being developed across Asia. FTZ’s allow removal of bureaucratic and taxation barriers for conducting global business – a perfect environment for a G3 entrepreneur. Click here to see an example FTZ - Ras Al Khaimah Free Trade Zone. RAK is the Norhtern most Emirate of United Arab Emirates.

Coming back to the entrepreneur let’s look at ICT as an example, parts of which are in itself becoming the entrepreneur’s domain and belay comprehension by the old regime tied to the wire. Why would a large communications company want to spend money on researching and building out WiMax? They have too much invested in the co-axial or fiber network. They do not have the agility nor the speed and definitely not the desire of companies such as AirBand to fail quickly, recover, rebuild, go and capture new markets.

This is the domain of the G3 entrepreneur who exists independent of borders, can conduct business anywhere, can solve the needs of multiple demographics with varied solutions and who will find business in non-local geographies.

This makes me wonder whether my friend at AirBand has expanded to Tianjin or Mumbai. And if not, then why not?

Friday, July 11, 2008

Frontier Markets

A new kind of market awaits the hype cycle and inflow of capital - the Frontier markets. Developed, developing, emerging, emerged... now Frontier!

The BRIC (Brazil, Russia, India, China) financial markets are now fluctuating with theUS markets and in some cases their peaks and valleys seem to have a larger spike and dip, respectively. Having seen the growth numbers of some of the BRIC countries, I have to confess I do find myself scratching my head because their is no reason for those markets to fluctuate like the US, perhaps some... but by no means go to the extremes. Here (2007 Report to Congress of the U.S.-China Economic and Security Review Commision) is an interesting read that may shed light on my head scratching.

In comparison, the Frontier markets such as Middle East (a few Gulf region nations and Israel), Africa (South Africa, Eqypt, Morocco) seem to be holding their own. I predict that soon the financial media outlets and the investment analysts will be touting the unprecedented growth to be had from the Frontier markets and we will see a mass exodus of funds from the BRIC equity markets and other retail investment vehicles.

I will restrain myself from giving specific examples, yet as proof I guide the reader to look at ETFs and Mutual Funds portfolios built of the Frontier countries mentioned above and compare to the DOW Industrial Ave. The strength will be obvious.

USA's International Investments Vs. Foreign Investments in the USA

The "U.S. Net International Investment Position at Yearend 2007" report here is a fantastic read published by U.S. Dept. of Economics' Bureau of Economic Analysis. It is short and gives specific numbers, while the conclusions are left to the reader.

Tuesday, July 8, 2008

Tail Spike

Amazon stated (I believe) when it began that they sell books you cannot find. EBay I believe was similar, something to the affect that you could sell the hard to sell stuff.

This is the Long Tail story. Yet, as I look through the history I have seen a pattern emerge that I call Tail Spike - when a niche is cpatured in the long tail, the adjacent areas of the tail (to the captured niche) start to ebb while the niche starts to spike, creating what I call the Tail Spike.

Proof is Amazon, EBay, etc. that today are nothing close to what they began as. The Tail Spiked businesses are mostly online businesses that are unencumbered by the physical shelf that must hold the few products that will sell. The unlimited, ondemand virtual shelf can hold infinite products and services.

More to follow in the next few days.


Computers have been linked across the world through the Internet. Yet the CPU is nothing more than a brute force mechanism of pushing massive amounts of data to search for patterns, evaluate and analyze through algorithms, etc.

I am extremely excited about the very early stages of what I am calling Mind-Meshes coming into being through the Internet across the globe. A Mind-Mesh is a grid of human brains working on a very large and complex problem. Even more so, it the subconscious working of these brains where the problem is read into and forgotten by the conscious mind.

An example of what I am calling a Mind-Mesh is Galaxy Zoo - the project which harnesses the power of the Internet - and your brain - to classify a million galaxies.

I read (need citation) that the conscious mind works at approximately 2 mega bits per second, while the subconscious mind works at 4 giga bits per second. A Mind-Mesh could produce breakthroughs unimaginable.

I have been tempted to lump Mind-Meshes into the phenomenon called "the wisdom of the crowds" by James Surowiecki. Mind-Meshes are distinct in that the individual brains may not interact with each other at all. The independent brain may after background processing realize a breakthrough and publish it that then becomes input through one of the five senses back into the meshed minds. I believe it is the ruthlessly efficient background processing power or the subconscious mind's ability that is the essence of Mind-Meshes. Click here for the blog "Polling the Crowd Within" by Wray Herbert appearing on Psychological Science.

Click here for a similar article on The Economist discussing a study conducted recently. Excerpt below:

"The two researchers asked 428 people eight questions drawn from the “CIA World Factbook”: for example, “What percentage of the world’s airports are in the USA?” Half the participants were unexpectedly asked to make a second, different guess immediately after they completed the initial questionnaire. The other half were asked to make a second guess three weeks later.

Dr Vul and Dr Pashler found that in both circumstances the average of the two guesses was better than either guess on its own. They also noticed that the interval between the first and second guesses determined how accurate that average was. Second guesses made immediately improved accuracy by an average of 6.5%; those made after three weeks improved the accuracy by 16%.

The quest is how to output the continuously improving outcomes and results in a Mind-Mesh and feed them back into the mesh for the rest of the minds to use it as a leap forward, discard a course of thinking, learn from the method used to develop the outcome, etc. We must not think of the Mind-Mesh in standardized grid model. The best part of the Mind-Mesh is that the brain that is doing the processing is continuously receiving input on many other subjects. It is the couldron of adjacencies - see my blog on adjacency in innovation here.

Perhaps this is the difference between the CPU that can develop some-thing given specific or semi-specific instructions while the mind can create, can induct or deduct, based on learnings over a period of a lifetime. I believe I will have an interesting discussion with my friend Dr. Manuel Aparicio - Co-Founder and CEO of Saffron Technology on Mind-Meshes. Dr. Aparicio's solutions use memory based entity analytics driven by matrices and memories.

This reminds me of Mr. Bud Whitmeyer's company NuTech Solution's and Dr. Thomas Back's work on evolution based agent based modeling. I believe the human brain cannot be trumped yet due to its massive consumption and retention of information gleaned through the five senses while processing that information based on previous experiences to extract knowledge and facts that become the decision processing algorithm for the mind.