Innovate or Perish: A Growth Strategy
By: Steve Kingsley, Principal Partner of Hashema Int’l Partners
“There is nothing constant but change” – Heraclitus, ancient Greek philosopher
… and change has historically driven innovation – that is, if a society’s culture favors it.
However…
The nature of change has changed. With the hyper-acceleration of disruptive technologies coming to market, the adoption of innovation has become crucial to national economic policy and the survival of organizations both large and small. The question is, in a world where whole industries transform over seasons and geographic centers of innovation shift between decades, how do organizations encode innovation into their DNA to stay relevant for the long-term?
Change used to move at glacial speed.
Change used to move at glacial speed. From horse-and-plow up until the digital revolution, external forces like resource availability, war for more resources, religious upheaval, and natural disasters would drive innovation. Now, innovation drives change. The corresponding technology race depends on innovation as its vital fuel. Change has accelerated due to the exponential speed of technological growth, enabled by the rate at which humans are able to exchange information. Today, five-year-olds get upset over the slow transfer rate on their smartphones. Even childhood has changed, from making mud pies to downloading apps and checking social media.
But the mechanisms of innovation are changing, too. As geographic innovation centers shift like sand dunes, platforms transcend project management software and accelerate R&D by connecting local demand to globally dispersed innovator talent. Indeed, platform-enabled co-innovation will be pivotal tools for business leadership seeking to stay nimble and accelerate technology abreast the pace of change. The vast, interdisciplinary scope of technology demands a networked approach to innovation.
Ancient history offers insight into a future defined by the systemic cultural embrace of innovation.
Adopting change: a strategic imperative
Heraclitus also said, “Everything flows, nothing stands still.”
Heraclitus also said, “Everything flows, nothing stands still.” Yet certain societies and businesses continue to ignore this fundamental principle of existence. This is understandable. Fear of change and innovation is deeply entrenched in the psychology of many cultures. The unfortunate Prometheus paid a high price for introducing fire to the human race. He was chained to a rock, for eternity, where an eagle devoured his liver every day, according to Greek mythology.
Cultures that resist change and innovation have a good chance of perishing as they are left in the dust of innovative cultures that welcome change. In ancient times, around 2,500 years ago, there were four major centers of innovation. These innovations were not limited to technology and tools, but in ways of looking at our world. The Ancient:
- Greeks in science, philosophy, and arts; Romans in technology later on. These cultures, whose brilliant philosophers posed the fundamental questions of life, were also responsible for many innovations to military technologies, roads, sanitation, and construction.
- Chinese in science, technology, philosophy, and the arts. Gunpowder, paper, printing, and the compass are Four Great Inventions of ancient China. They paved the way for military conquests and invented modern communication.
- Indians in science and philosophy. “We owe a lot to the ancient Indians, teaching us how to count. Without which most modern scientific discoveries would have been impossible.” – Albert Einstein
- Jews in social and moral conduct. The Ten Commandments were a first in written, codified morals and ethics. They introduced a sense of personal and social responsibility instead of imputing everything to the gods and idols.
Today, the pace of change goes beyond what we could even imagine 50 years ago–and its reach is global. New ways of thinking and solving problems–made possible by such advances as the internet–are continuing the process of growth and renewal that is inherent in life itself.
Cultures, whether business, political, or social are destined to meet disaster if they fear innovation. This is because it is against the underlying process of change, growth, and creativity that results in a thriving planet.
At every level for every entity, be it individual, team, organization, culture, and country: “Innovate or Perish!” applies to all. Each entity comprises a link in a chain, and the strength or weakness of one link will affect the integrity of the whole.
Measuring a culture’s innovation quotient – KTI
The Most Innovative Countries
One way to measure a culture’s innovation quotient is to look at the performance of the world’s foremost economies in what’s known as “Knowledge and Technology Intensive Industries (KTI).” KTIs are a country’s most innovative business components.
According to the study by the National Science Foundation, titled “Science & Engineering Indicators 2018, Chapter 6, Industry, Technology, and the Global Marketplace:”
Nearly one-third of the world’s gross domestic product, in 2016, consisted of 15 Knowledge and Technology Intensive Industries, comprising:
- 5 knowledge-intensive services industries
- 5 high-technology manufacturing industries
- 5 medium-high-technology industries
The highest KTIs are divided between the United States and Japan. The US has the highest KTI share of the world’s gross domestic product at 38%, of any large economy. Japan has a 36% share. The KTI share for the European Union (EU) is considerably lower.
At 35%, China, though still considered a developing country despite being the world’s second largest economy, has the largest KTI share of any country. It is the world’s dominant producer in medium-high-technology industries, with 32% global share. China’s global share nearly tripled over the last decade. It surpassed the United States in the late-2000s and the EU in the early-2010s.
KTI industries are essential to any economy’s well-being and competitiveness. They employ a lot of people. We know this is especially true for high-technology manufacturing industries, which employ 1.8 million workers in the US. They also fund nearly half of US business research and development. Medium-high-technology industries employ 3.0 million workers.
“The times they are a-changin'”
Our situation today is different from that of the ancient innovation centers. Those were dependent on privileged leaders exercising absolute power over individuals, including slave labor. Current innovation centers are not for the special few. They:
- Expect the individual to be responsible for innovation. It is simply not enough to be productive anymore. You may be productive in an old, uninspired way. It is even more productive to be innovative.
- Nourish creative processes as part of the organizational structure: Develop new ideas instead of doing what has always been done. State that innovation is an objective upon hiring new employees.
- Go beyond creating mere products and enter into new channels of service and marketing relationships–such as Zappos, which went beyond just selling shoes into social networks and customer satisfaction models, to create the best customer experience.
- Fund innovation and enable creative, high reward growth. This is especially important when a business or country is in an economic downturn or stagnation. Benjamin Netanyahu started Israel off on this road in the late 1990s as Finance Minister. Israel is now globally recognized as the “Startup Nation.”
The geography of innovation is shifting. It’s no longer concentrated in Silicon Valley and the US.
The geography of innovation is shifting. It’s no longer concentrated in Silicon Valley and the US. Businesses and governments can now access dispersed innovators and organizations in these burgeoning innovation centers, via platform networks. Future centers of innovation will include some or all of the above incentives, with more emphasis on training in how to be innovative at every level of employment or project work.
Some day we will be able to use virtual spaces to exchange ideas through shared sensory experiences that free the imagination. The emphasis will be on meaningfulness vs. just working to survive. Consciousness and mindfulness will be the focus, rather than just productivity, shareholders’ quarterly earnings, and profitability at all costs. This will be the necessary, innovative, global approach that transforms innovation into a global tide that truly lifts all ships. As we rise collectively, we must work together to keep from destroying the planet.
Now let’s discuss the three most common misconceptions about innovation…
- Innovation will overcome internal inertia. Technology is not a magic bullet. If an organization or country is stuck in an outdated culture hostile to innovation, no shiny new gizmo will have any real, lasting effect. There are many examples of companies and countries investing in a technology and then letting it languish and fail due to innovation-retardant cultural practices.
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- Inertia of corruption: At the national level Mexico, for example, faces major obstacles for the advancement of science and technology due to political misappropriation of funds. This retards innovation at the organizational level. There is a divorce between local R&D activities and the educational and production systems. Consequently, whatever knowledge is produced domestically is used neither for the improvement of the quality of education nor for production purposes. We can propose a science and technology strategy for underdeveloped countries that includes modern scientific institutes. In most cases they won’t work as they are alien to the prevailing culture; they are imposed on it.
- Inertia of infrastructure: India has for years been the testing ground for high-tech tricks on old, entrenched problems. The failure of India’s government to provide basic services to its 1.2 billion citizens offers many tantalizing problems to solve for the nation’s globe-trotting tribe of successful coders and tech-company executives. Their deep faith in the power of innovation has made India a hotbed for ideas.
That should work, right? Every year another group of tech crusaders spreads the good news with a pilot project in India launching the latest gadget, software or app. But few of these solutions stick. “Game changing” technologies cannot do their magic if the players and the playing fields remain the same.
A $40 tablet that was supposed to revolutionize education did not get the government orders it expected. The national networks of Internet kiosks that were supposed to empower farmers have largely shut down. The $2,000 Tata Nano minicar that was supposed to allow millions of people to upgrade from the dangerous family motorcycle was not popular. The anti-rape apps that were supposed to use mapping and automatic SMS to protect women were never connected to the country’s police force.
Kentaro Toyama, part of a special team at Microsoft that tried to find high-tech solutions to India’s woes in education, governance and healthcare problems, came to this conclusion about technology in such countries: Not only doesn’t it work, but the unwavering belief in the power of technology can get in the way of finding true solutions. In his book Geek Heresy he says,
“It’s a false God. Technology necessarily requires good human institutions to have a positive impact.”
– Kentaro Toyama
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- Inertia of inequality: My wife was instrumental in enabling Saudi Arabia to adopt a cell phone infrastructure when she worked for Lucent Technologies. At that time, the country did not have a landline system and was going directly to cellular. But she was not allowed to assist her team on site in Saudi Arabia because women were not allowed to work without permission from a guardian, such as a brother or husband. This policy remains today, although new laws on international travel were introduced in August, 2019. It seemed amusing at the time that the office buildings were not equipped with women’s restrooms because it was assumed women would never work in them.
- Organizational stability is more important than disruption, even when it’s warranted.
Kodak invented digital imaging/photography; shelved it; and went out of business some 20 years later.
Kodak invented digital imaging/photography; shelved it; and went out of business some 20 years later. Their antiquated organizational structure and leadership did not allow for the exploitation of their own revolutionary technology. What a first-mover advantage to waste!
This is a form of inertia. Fear of change is why people stay in jobs they hate, marriages that torment them, and business practices that are unprofitable and fail. It’s hard-wired into the human psyche. That’s why it’s so hard to think differently, change basic culture and effect innovative strategy and policy changes.
Saudi Arabia, for instance, is beginning to follow fellow oil-producer Norway’s lead. They invest in their own capacity for innovation, in anticipation of a time when their own reserves dry up and when energy demand will have shifted to renewables. But despite heavy investment by the Kingdom, results have been mixed, as they’ve focused on technology while largely neglecting culture and their core ability to innovate and adopt technology.
- Change can always be managed in an orderly fashion.
It is unrealistic to think that the unknown can be managed in a completely perfect and organized way. Furthermore, it has never really been done. All change brings with it the stragglers that resist losing their investment in time, money, or social status.
Resisting change is completely delusional. Actually it is much worse — it is self-destructive.
For as the wise old Heraclitus said, “There is nothing constant but change.”
From this point of view, people, cultures, and governments that resist the natural order of life itself, which is change, are immature and even infantile. They will not thrive. They do not have the mindset and inner resources for sustainable growth. They want to keep everything the same because, “If it ain’t broke, don’t fix it.”
The ancient Romans came up with one military innovation after another to extend their empire. They did this by institutionalizing innovation with an engineering corps and legion architects, along with battlefield doctors and logistics experts. In this vein, countries like Norway and Finland today create government departments and fund programs that cultivate innovation. At the corporate level, some companies are embracing change by installing a fully-funded director of external innovation.
Misconceptions are essential to know. How can we rise over and beyond them?
Insight #1: Innovation must be built into the DNA of the organization.
Steve Jobs knew this. “The cure for Apple is to innovate its way out if its current predicament.” Jobs said that when he returned to Apple after a 12-year absence. Apple was close to bankruptcy. They were doing “The Same Old, Same Old.” Jobs insisted on a culture of originality and discouraged average thinking. He cultivated big ideas and rapidly tested them. By always thinking one or two product generations ahead, he created ecosystems of disruptive value through hardware and software vertical alignment. The results were one innovation after another after another. His business revolutionized computers, entertainment, music, ecommerce, retail, mobile, and telecommunications. CNBC named Steve Jobs the #1 most innovative and transformative business leader of the past 25 years.
The Chinese government spends 20% of its budget on education.
This is extremely hard to do today completely in-house. With so many transformative technologies coming online all the time—and too few experts available locally to help businesses adopt them—collaboration with a strategic innovation partner is vital. Even if a company has the resources, it takes significant time and expertise to hire and manage successful teams that build new departments leveraging technologies like AI. Rather, a dynamic environment for innovation via collaboration must be established.
China is a good example of a low-tech country adopting new technologies and producing even more innovative spins on them. Chinese industries are not only getting closer to the technological frontier in conventional areas such as electronics, but are also driving technological innovations in advanced ones.
Since 2008, the Chinese government has allocated massive fiscal and financial resources towards expanding R&D, hiring overseas Chinese experts as well as foreign experts in strategic sectors such as advanced material, electronic chips and computing, aviation, bio-tech, A.I. and robotics. They also acquired, legally or otherwise, foreign technologies, patents and licenses; merged with or bought out foreign high-tech companies; and made, with mixed success, state-owned companies much more competitive.
Today, China has attained the status of the world’s factory.
The Chinese tradition of emphasizing education is also crucially important for its technological rise. The government spends 20% of its budget on education. Chinese households also invest heavily. Globally, China has the highest number of students studying overseas, who upon returning, can work with newly introduced technologies. They also have the R&D capability to innovate on top of existing tech.
For innovation, the biggest need is the freedom to access and communicate well-defined scientific and technological information, knowledge, and ideas to inspire innovation and technological progress.
In short, China’s rise in technological capability is taking a path that is drastically different not only from the Soviet Union, but also the newly industrialized Asian economies. It is driven by a mix of the strong will of the state, which supplies both guidance (in the form of policies); resources; and allows capitalist business practices. China is now a mixed economy with more billionaires than anywhere else.
In this case, instrumentally, the solution has come from an internal change of thinking and way of viewing life.
Insight #2: Organizations must be so nimble, they can “turn on a dime.”
To surmount uncertainty, companies must become intelligence-driven. How? By acting with agility. Agility is not a speedy, reactive response. That is the old-school way — endlessly putting out fires. “Agility” means a quick and effective response, not just toward current circumstances but also to events that we cannot predict. It’s a strategic response, not a quick fix. This means looking two or three steps ahead and continuously redefining your goals and markets. For example, IBM thought it was in the mainframe business. But it was really in the Information Technology business. The problem was, they didn’t realize this and lost their momentum, along with the heart of the PC business, which was its operating software.
Another good example also comes from the 1980s. DEC, or Digital Equipment Corp., showed us how companies can just die, even if they’re huge. DEC was a $14 billion minicomputer company, with offices in 95 countries. It was second only to IBM. But in six to seven years it folded, because it didn’t anticipate the birth of the PC — or capitalize on it, like IBM. It was bought by Compaq Computer, which, ironically, was absorbed by Dell Computer later on, the pioneer in hardware ecommerce. So, R.I.P. DEC. What a classic case of a company that was not nimble and paid the ultimate price!
Insight #3: Companies must have the financial and organizational strength, not just to adapt to, but capitalize on change.
In my four years of having engaged with Xinova and its predecessors, I’ve seen something truly transformative.
Spun out of a very large organization, Intellectual Ventures, and having mastered change management, it is now becoming a lean, highly productive company that can drive and capitalize on change. It is achieving this by switching over to the highly automated and extended X-platform and securing additional funding to accelerate growth.
This is all made possible — shall I say inevitable? — by the truly inspiring leadership of Edward Jung, its CEO. With over a thousand patents and a series of successful enterprises to his credit, I consider him and the whole team at Xinova amazing examples of successful and impactful innovators.
Businesses must be built on the very concept of change
In ancient Hindu mythology, time was conceived as a wheel. It would continuously spit out new iterations of people fated to march along their mortal coils toward pre-ordained conclusions. Seed to sprout, girl to woman, high-born to master, peace to war, Chicago Cubs to heart breaking failure. Today, the wheel is broken. The days of business as usual are over. Companies rise only to watch the technical and business landscape around them crumble and reform. Businesses have the freedom—and the immense pressure—to determine their fate by innovating day in and day out. Survival, and long-term success, requires baking innovation into one’s culture and long-term strategy, and finding the right tools and partners to execute that strategy.
Peter Drucker made this prophetic, controversial, and thought-provoking statement: “Business has only two functions: Marketing and Innovation.”
If the purpose of business is to find and serve a customer in a profitable way, it must embrace the flux of life. But not just embrace it — build on it. Innovation is based on anticipating what the customer wants and needs, to increase the company’s financial success and social value. Thus, businesses must be built on the very concept of change. That change no longer happens over a period of centuries, or decades, or even years. In only a few months things can totally change.
With time turning into the most limiting factor, a global innovation platform like Xinova, powered by human swarm intelligence, is emerging as the most inspiring solution.
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Bio:
Steve Kingsley is a change agent – a serial inventor and entrepreneur on the loose. Originally from the land of Attila the Hun(gary), Steve arrived in the US with an MS in Food Science, which afforded him the opportunity to work at General Foods as a research food technologist. Subsequently he co-founded two food companies to commercialize my inventions, which are showcased on gastroplex.com.
He became interested in information technology in 1984, while working on hypertext and other software projects and got his MBA in Information Systems from Pace University in NYC subsequently.
Today I use both disciplines as an inventor for Xinova and consultant to other companies; also to develop and bring to market new products like Sugarlesse, CannaMallows and CreamMallows.
**Image Credits
- Glacier photo by Amar Adestiempo on Unsplash
- Heraclitus photo by Raphael – [1], Public Domain, https://commons.wikimedia.org/w/index.php?curid=84185
- Globe photo by Juliana Kozoski on Unsplash
- Leaving Silicon Valley illustration by artist David Parkins, image sourced from The Economist.
- Kodak Film Camera photo by Jean Gerber on Unsplash
- Chinese Students Graduating photo by Poodar Chu on Unsplash