Thursday, March 29, 2012

The future geography of breakthrough innovation

From The Guardian (UK): The future geography of breakthrough innovation
What do rankings of the most admired and most innovative companies tell us about the future of breakthrough innovation? John Elkington predicts spikes in some unlikely places

In preparation for a work session on Breakthrough Capitalism, I read three things on a flight to Barcelona this week: Fortune's annual list of the world's most admired companies; Fast Company's ranking of the world's 50 most innovative companies; and several chapters of a new book from the Economist, Megachange: The World in 2050.

Fortune's survey, the 15th in the series, polled 3,855 US executives, directors and analysts. Tech companies lead this year, with Apple taking the No 1 spot. Since the survey began, only three companies – GE, Berkshire Hathaway and Proctor & Gamble – have ranked first in their industry every year. More striking still, a record 30 companies supplanted last year's industry leaders at the top of their categories. The previous record was 2011, when 23 companies elbowed their way into the top slots. Fortune's conclusion? "The tumult in the business world continues."

No question. So, given the critical role of innovation in all of this, let's flip to Fast Company. Here four tech companies compete for the top spot: Amazon, Apple, Facebook and Google. "Yet each company has fallen victim to hubris," the editors note, "causing public relations firestorms and some sloppy products." Apple wins the top slot here, too, despite its supply chain headaches. And the magazine warns that: "In a month or two, one of these firms will surely disrupt everything again."

But what really grabbed my interest was the bubbling-under world. Ranked seventh is the Occupy movement. "Disruptive. Small-d democratic. Transparent. Tech savvy. Design savvy. Local and global. Nimble. Values driven." Indeed, many of the characteristics marking out some of the most innovative companies. A key principle, as Occupy Wall Street's philosopher-in-residence Shen Tong puts it, is "managed chaos."

But for a deeper sense of where breakthrough innovation is headed, move down the rankings a bit. To electric carmaker Tesla at 13, or Airbnb at 19, which turns people's spare rooms into the world's "hottest hotel chain." Then push deeper still and you turn up some of the heavyweights-in-transition that may well have the biggest impact, including Germany's "mammoth" Siemens at 21, developing scalable solutions in such areas as energy, transportation and health care.

Then there are beginning-to-pulse-on-the-radar-screen players, including Liquid Robotics at 31 (which aims to radically cut the cost of ocean acidification monitoring, for example), Bug Agentes Biologicos at 33 (working on ways to spray predatory wasp larvae, rather than insecticides, over large-scale crops), Narayana Hrudayalaya Hospitals at 36 (combining Wal-Mart with Mother Teresa, providing low-cost, high-quality health care to the masses) and Recyclebank at 37 (evolving ways to incentivise behaviour change at scale: interest declared, I am on their advisory board).

Two other organisations, both of which I already knew of, resonated powerfully. One was SoundCloud at 42 ("for giving the Internet a voice," and raising the question how we give the future a stronger voice), and Y Combinator at 50 (which co-founder Jessica Livingston describes as "a supercondensed version of Silicon Valley"). It's hard not to feel impact-envy in relation to all of Fast Company's stars, but Y Combinator is probably the one I most want to emulate.

And then there's Megachange. When I attended the Nesta launch event for the book, co-author John Andrews signed a copy for me, saying: "Happy reading for the next four decades!" I'm sure he says that to all the girls – and I'm also sure people will read the book in 2050 with amazement (the things it gets broadly right) and disbelief (the things it failed to see).

My question for the panel would have been this: given the Delphi Oracle survived for 800-900 years, what future do the Megachange team foresee for forecasting itself? I know what Will Self thinks regarding Megachange, having read his scathing piece in The Observer. Panglossian was one of the kinder adjectives.

In these twittery days, it's harder to read non-fiction books cover-to-cover, so I settled for the introduction (Daniel Franklin) and essays on war (Matthew Symonds), the economist Joseph Schumpeter (Adrian Wooldridge) and more for less (the last essay, by Matt Ridley, that Panglossian of Panglossians). Although I'm sure Ridley would see me as part of what he derides as "the Armageddon industry," on certain assumptions (which we will probe at our 17 April event) I can see a real possibility that 2050 will, as Franklin sums it up, "be richer, healthier, more connected, more sustainable, more productive, more innovative, better educated, with less inequality between rich and poor and between men and women, and with more opportunity for billions of people."

But it's a humongous leap of faith to believe that there is anything inevitable about Wooldridge's last line: "The storms of creative destruction are blowing us to a better place." As a fan of Schumpeter's thinking for almost 50 years, I agree with those who argue that Schumpeter (who died in 1950) could be this century's most important economist.

The future geography of breakthrough innovation will spike in some unlikely places – a point the Economist's Schumpeter column routinely hammers home. In a world where the Megachangers tell us that wine glasses will tell us when we have had too much to drink, Wooldridge sees truly breakthrough innovation increasingly coming from the emerging economies. And by God (sorry Anthony Gottlieb, who believes the world will have more believers in 2050, but that the secular will eventually inherit Earth) we will need it.

The phrase that sticks in my mind came from Oliver Morton, who wrote the provocative climate chapter. At the Nesta launch last week he noted that if you turn up the gas under a saucepan not a lot happens, thanks to thermal inertia, but then it begins to bubble and then boil. Our atmosphere, he concludes, is moving beyond the thermal inertia stage. Yes, a boiling planet will be a great opportunity to sell air-conditioners, but I wonder just how many systemic black swans are shuffling in the wings, just beyond the view of the Megachangers' self-confessedly rose-tinted crystal balls?

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