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Top Four Factors Driving Innovation: For Sydney From Jerusalem, via Auckland

Professor Sir Peter Gluckman, the Chief Science Advisor to the New Zealand Prime Minister, gave a talk on Monday, 5th December titled Innovation through science: the pathway to economic prosperity–a conversation with Auckland.

Much of what he has to say about Auckland could very easily be transposed and repeated largely and boldly in capital letters about Sydney.

His talk is about innovation, of the science and knowledge and based variety,  and how it can be used to boost the economy of a particular city or region through the creation of a well-developed ecosystem.

He defines innovation as being about using knowledge, research and experimental data to generate a product or service which has impact, generally by way of producing something to sell.

He points out that there are two myths that need to be overcome when discussing and developing a thorough understanding of innovation.

The first myth is that innovation is achieved by individuals working as backyard inventors. He rightly points out that the bulk of innovation emanates from multidisciplinary interactions. The reason for this is that innovation is first and foremost about doing things differently and as such requires a major shift from reductionist linear thinking. Such shifts mostly take place when disciplinary boundaries are crossed.

He points out that one of the attractions of big science projects is that they can become the nucleus and focal point for disparate disciplines to work together, leading to great new ideas. He uses the World Wide Web and wireless broadband as examples of incredible innovations that came out of such big science projects.

The second myth is that innovation takes place within a linear process moving in an orderly fashion from basic research to applied research to development to sales that is predictable in direction and time and readily divisible into these four categories. He very correctly points out that in science-based innovation, at least half the products that are developed and sold originate in research in an area of activity well away from that that started it.

He points out that science-based innovation requires at least two major components–firstly a sufficiency of ideas flow and secondly an ecosystem that’s allows the market and scientist to get close together. Statistically, he states that the Israelis believe that they need to evaluate at least 100 ideas that are thought to be of value in order to see one that actually justifies investment. As he says, this gives you an idea of the ecosystem we have to build.

And this is where we can start transposing because he points out that the Israelis don’t have any more researchers than New Zealand, just a better linked up system. The same can be said about Australia.

There are, of course, other components required to create a complete innovation ecosystem, as he points out these include access to capital, to professional expertise in capital raising, in IP management, experts in dealing with regulatory affairs and skills in managing an innovation company–as these are markedly different to the skills required to run a property investment company or, equally relevant to the Australian context, a mining, professional services or agricultural company.

He pauses for a moment to reflect on how New Zealand came to be in the position that it is in. He feels that their failure to move as far as other small countries in developing a knowledge economy is  partly a function of their cultural history. Australia has been called the lucky country and he could very well have been speaking directly about this country, as opposed to New Zealand, when he states: we have been a lucky country, able to live off of farming. Of course, in Australia we would add mining to this picture.

He feels that the lack of a sense of crisis and urgency led to an undervaluation of the role of intellectual activity and science, and contrasts this to countries like Israel and Singapore where a real sense of crisis led them to invest heavily in knowledge and science and science-based innovation. They had to use the only natural resource they really had–the combined intellectual horsepower of their well-educated populations.

We do not yet have a sense of acute crisis but things are starting to change. We cannot get rich by carrying on doing what we do now, and yet there are enormous demands for a better social system, for higher wages, for a cleaner environment. Clearly we have to be richer to achieve these things. And what is our unexploited asset–the very asset other small countries have recognised–we have a good education system and we have clever people, we have a stable society, we are corruption free–we are good place from which to make new knowledge, protect it, exploit it and export it. Even if we were in better shape than we are, there is another reason to invest more in the knowledge economy–we need to diversify, since diversified economies are more robust.

Ditto Australia.

He repeatedly used the term ecosystem in his talk. He did this intentionally. In Australia, as in his country, they have a habit of believing in single interventions rather than integrated systemwide approaches.  He notes that in every country that they looked at as a potential comparator and which has done well, that country has both recognised and acted on multiple points across the whole system simultaneously.

This is a point I have repeatedly made about Australia as well. We have had some great programs over the years but these have been provided from the stance of a single intervention strategy rather than viewing the ecosystem as the complex system that it is.

MULTI-LAYERED INNOVATION ECOSYSTEMS

This part of his talk is music to my ears:

Key to all of what I have been saying is a need to have a multi-layered innovation ecosystem. It has many components. It has to have local government committed to promoting, encouraging and if necessary, part-financing an “innovation city”. It needs the development of technology parks clustering academia and entrepreneurs along with support services. It needs institutions–hospitals, universities, technical institutes–to cooperate rather than compete. It needs venture capital. It needs a commitment to work together and to attract the best and brightest to want to live in Auckland (transpose SYDNEY). We cannot leave it all to central government even though their role is critical–the evidence is clear, local government must play a role.

 We have several academic precincts and we need to work out how to integrate and use each to maximal advantage without destroying their individuality.

WHAT WILL DRIVE MORE INNOVATION?

Four things matter, according to the Israeli experts he has spoken to, in driving more innovation. These are education, basic research, a holistic approach and a risk-taking attitude.

He goes on to talk about the Israeli model for incubators that are owned jointly between investors and the local authority or between the local authority and the local university. He points out that this model is based on a high ideas flow, and aggressive culling, high levels of investment and international management and technology input from the start. New ventures are supported with loans, not grants, to encourage entrepreneurial activity – written off if the product does not make it. Auckland has to work as “Auckland Inc.” to attract more risk capital to Auckland. It is uniquely placed to create an environment for this type of innovation.

Again, ditto Sydney.

KEEPING IT LOCAL

Much like Sydney, and the rest of Australia for that matter,  Auckland suffers from a major brain drain. All too often  we/they lose great entrepreneurs and scientists to other parts of the world. Recognizing this he highlights that while it’s one thing to build knowledge-based businesses, it’s quite another to keep them locally. Essential to doing that is to create an environment that keeps the R&D function in our city.

We have to build a city and a country that really values knowledge and science and entrepreneurship. We need technology parks, we need an intertwining of researchers, in the public and private sector, we need a world-class university and a vibrant knowledge-based ecosystem.

Spot on, and ditto Sydney.

The investment needed is partly fiscal, but so much more of it is psychological and motivational. Let us do the things that enable Auckland to brand itself as a city of innovation; a smart city in a smart nation.

Well said, Sir Peter!

At one point Sydney seemed to be heading in the right direction. We had a focus on brand Sydney, but I think we’ve lost the way – let’s focus laser-like on Sydney Inc or we will soon be shown up by our southerly neighbours!

Living in a Post-Geographical World: Address is Approximate (Hat Tip to Steve Jobs)

My family has been travelling since the 1670′s when two Du Toit brothers left France as part of the great French Huguenot movement. They went to Holland, which had recently begun colonising the tip of Africa. Recognising opportunity, they led a movement of settlers and arrived in Cape Town in 1676. The result was a wonderfully rich cultural mix (and some great wines) in the Franschoek region of the western cape of South Africa.

Fast forward a few hundred years and we dispersed to the UK and Australia when crime became all too pervasive. I’ve since also lived in the United States, and regard Sydney and Palo Alto as the closest things to home.

Like many others who have had similar experiences I consider myself post-geographical. It’s not where I am physically that matters, but what my mindset is, who I am interacting with and what I am aiming to achieve.

That’s why this video by Tom Jenkins resonates so much with me.

I love the vision he portrays and his message also talks to what Steve Jobs said many years ago in an interview, namely that the world we live in is made up of man-made constructs and constraints. That the people who created them are no smarter than you are and once you realise this you need never be constrained by them – create your own world, wherever you are!

Address Is Approximate from The Theory on Vimeo.

Singapore: Paving A National Framework for Research, Innovation and Enterprise

In July 2009 I was compelled to write a paper on how I saw the Australian Federal government could assist in creating a ecosystem for research, innovation and entrepreneurship. At the time they had announced that they were going to set up a Commonwealth Commercialisation Institute. I wanted to give them some of my insights after more than a decade in the space in Australia and the US.

Fast forward more than two years. My paper was largely ignored. Instead the Federal government set up Commercialisation Australia, which is essentially yet another granting body. It does little more than hand out staged grants, there is no hint at the matrixed ecosystem this country so desperately needs to move itself forward.

In contrast let’s take a look at one country that is powering ahead: Singapore. Note that there are others doing great things too, but let’s just focus on one, that’s close enough geographically to really show off how far behind Australia is lagging.

Set up as a department within the Prime Ministers Office in 2006, Singapore’s National Research Foundation sets the national direction for research and development by putting in place policies, plans and strategies for research, innovation and enterprise, funds strategic initiatives, builds up R&D capabilities and capacities through nurturing Singapore’s talent and attracting foreign talent, and co-ordinates the research agenda of different agencies focused on transforming Singapore into a knowledge-intensive, innovative and entrepreneurial economy. One of the NRF’s aims is to make Singapore a talent magnet for scientific and innovation excellence.

In March 2008 Singapore’s Research, Innovation and Enterprise Council, which is chaired by the Prime Minister, approved the establishment of a National Framework for Innovation and Enterprise (NFIE). This framework was set up to encourage universities and polytechnics to pursue academic entrepreneurship and turn their R&D results into commercial products for the marketplace, while also assisting entrepreneurs to start-up technology based companies.

Currently the NFIE has a budget of $360 million, which is used to support a range of ecosystem creating initiatives, namely:

• Early Stage Venture Funds – the NRF invests $10m, on a 1:1 matching basis, to seed VC funds for investing into Singapore-based early stage high-tech companies. The VCs can buy out the NRF’s share within 5 years by returning NRF’s capital with a nominal interest;
• Proof of Concept Grants – grants of up to $250,000 are provided for technology proof of concept development projects, both for researchers and companies;
• Disruptive Innovation Incubator – this scheme supports a business incubator which invests in Singapore-based start-ups with disruptive innovation;
• Technology Incubation Scheme – the NRF invests up to $500,000 in Singapore-based start-up companies that are incubated by selected technology incubators;
• Translational R&D Grants for Polytechnics – the provision of development grants of up to $500,000 to researchers to carry out translational research;
• University Innovation Fund – the provision of funding to the Singapore universities for approved innovation-related activities;
• National Framework of IP Principles – a framework designed to speed up the licensing of IP from universities and research institutes to industry;
• Innovation and Enterprise Institute – the Institutes objective is to help develop the innovation and enterprise ecosystem by providing the necessary information, research methodology and relevant networks to galvanise innovation and enterprise activities in Singapore;
• Global Entrepreneur Executives – this scheme is aimed at attracting high-growth and high-tech venture-backed companies with global entrepreneurial executives in ICT, medtech and clean tech to relocate to Singapore. The NRF invests up to $3 million in matching funding to eligible companies via convertible notes; and
• Innovation Vouchers Scheme – local enterprises are give vouchers under this scheme that are redeemable for R&D and technical services from universities and public research institutes.

Using Science Fiction Prototyping To Break Through The Consensus Innovation And Get Big Things Done Barrier

One of my favorite science fiction authors, Neal Stephenson, has written an article titled Innovation Starvation, in which he discusses how science fiction can be used to spur scientists on to make big breakthroughs. I want to extract a few comments from his article before exploring the exciting world of Science Fiction (SF) Prototyping.

Neal worries that our inability to match the achievements of the 1960s space program might be symptomatic of a general failure of our society to get big things done. My parents and grandparents witnessed the creation of the airplane, the automobile, nuclear energy, and the computer to name only a few. Scientists and engineers who came of age during the first half of the 20th century could look forward to building things that would solve age-old problems, transform the landscape, build the economy…

Yet fast forward to today and where are we? Neal uses the example of energy:-

We’ve been talking about wind farms, tidal power, and solar power for decades. Some progress has been made in those areas, but energy is still about oil. In my city, Seattle, a 35 year old plan to run a light rail line across Lake Washington is now being blocked by a citizen initiative. Thwarted or endlessly delayed in its efforts to build things, the city plods ahead with a project to paint bicycle lanes on the pavement of thoroughfares.

Frustrated by our far broader inability as a society to execute on the big stuff, Neal has turned to the tools of his trade – science fiction writing for a panacea. He believes that science fiction as hieroglyph-maker has relevance in this area:-

Good SF supplies a plausible , fully thought-out picture of an alternate reality in which some sort of compelling innovation has taken place. A good SF universe has a coherence and internal logic that makes sense to scientists and engineers. Examples include Isaac Asimov’s robots, Robert Heinlein’s rocket ships, and (another of my favorites) William Gibson’s cyberspace. As Jim Karkanias of Microsoft Research puts it, such icons serve as hieroglyphs – simple, recognizable symbols on whose significance everyone agrees.

Neal continues to define the problem and how SF can address it:-

Researchers and engineers have found themselves concentrating on more and more narrowly focused topics as science and technology have become more and more complex. A large technology company or lab might employ hundreds or thousands of persons, each of whom can address only a thin slice of the overall problem.

I agree that this ‘specialisation’ is an issue. However, I also believe that a culture of consensus is greatly affecting our ability to focus on and get big things solved. Much research is being driven by consensus innovation – academics are recognized and rewarded for publishing highly cited papers. Controversy does not increase citation count, nor does publishing in areas that fall outside the scientific vogue of the day.

Neal notes that many researchers and engineers have a fondness for SF, which reflects, in part, the usefulness of an over-arching narrative that supplies them and their colleagues with a shared vision.

The imperative to develop new technologies and implement them on a heroic scale no longer seems like the childish preoccupation of a few nerds with slide rules. It’s the only way for the human race to escape from its current predicaments.

This meme that we should all be working on solving big stuff that matters is something of a bug bear for me. I’ve written, for example,  about harnessing the power of social to solve big problems like the obesity pandemic. Others are echoing this – Tim O’Reilly recently tweeted:

…someone else makes the appeal for entrepreneurs to work on stuff that matters…

He pointed to an article in which Alyson Shontell picks up on the meaningful innovation meme over at Business Insider. She writes that young founders seem to be enthralled with building fun but meaningless apps. She quotes VC Mark Suster as saying, “The auto industry alone is a $1.6 trillion industry, and you want to f*ck with bars and restaurants?”

But how do we inspire researchers, engineers and entrepreneurs to break out of the consensus innovation mould?

This is where SF prototyping as a means of exploring Hieroglyphs and providing inspiration for big products to solve big issues can come to the rescue.

Just as Neal Stephenson is calling for SF writers to think big and bold and inspire generations of researchers, engineers and entrepreneurs to tackle projects that can allow us to escape our current problems, so SF prototyping provides a useful tool to harness science fiction, the playground of our imaginations, tethered to science fact to both imagine our future and enable the development of new technologies and products.

Intel futurecaster, Brian David Johnson, has written a book on the interesting arena of “Science Fiction Protyping: Designing the Future with Science Fiction” in which he explores the use of three publishing genres to create SF protyptes – short stories, movies and comics.

For anyone involved in exploring the boundaries of possibility and charting the trendmaps of the nextnow and the distant future, SF prototyping can be an extremely useful tool. I’ll be writing more on this area in due course.

Think big, think ahead and let’s solve for the future.

It’s Obvious: A Rising Tide LIFTS All Boats

As followers of my posts will well know, I am a big fan of Ev Williams and the Obvious team, from the days when Twitter was a side project all the way through its massive growth.

So when they announce a new partnership I take notice – big time. Lift sounds really interesting and I’m looking forward to hearing and exploring it in more detail in due course.

My main inspiration for this post, though, were the comments made by Obvious regarding their ongoing journey in crystallising out their engagement model. In my view, these terms should be adopted by all companies as their core mission statement:

It’s important never to delude ourselves into thinking that technology changes the world. People are responsible for change – technology just helps out. At Obvious, our goal is to foster systems that help people work together to improve the world.

If you aren’t improving the world, get out of the way and let those who are do their work!!!

Entrepreneur’s Rule Numero Uno: Value First

In a wide ranging interview with Kevin Rose, Silicon Valley venture guy Chris Sacca unveils how he became so well connected into the Valley’s machinery.

The video is an hour long, but it contains some real nuggets of entrepreneurial wisdom.

The part that resonates most for me is when he talks about creating value, before you ask for value back. That for me is the number one rule for entrepreneurs: VALUE FIRST!

Chris continues this meme, “If you are insightful and helpful, people will gravitate to you.”

Foundation 07 // Chris Sacca from Kevin Rose on Vimeo.

Beyond Zynga (and Twitter): Social Gaming With Purpose

Don’t get me wrong, I’m a huge fan of game mechanics and social games – in fact one of the companies I’ve chaired (Creative Enclave) launched the first truly massively multiplayer social game on the Facebook platform in 2007. Back then, Zynga consisted of no more than a handful of staff. Back then people didn’t take social games that seriously.

Today, however, it is a totally different story. Social games are BIG business. Take a look at some of the stats emerging from the S-1 Zynga filed as it catapults towards an IPO: 38,000 virtual items are created within their game portfolio a second. Yep, you read that right – a second!

Zynga has 60 million DAUs (daily active users) and here’s the kicker for me: they conduct 2 billion minutes of play a day!!!

What is that telling you?

Some relatively privileged folks have a ton of idle time?

Play is really pivotal to the human psychi?

But are we at the point in our development as a species and as custodians for our planet where we can afford that much ‘down time’?

We still have people starving by their millions, we still have diseases that could be cured or prevented. Surely, we owe it to ourselves to focus on solving these issues before we embark on such wholesale frittering away of our time?

Yes and no.

YES, playing games like Farmville doesn’t progress humanity.

But also NO: I am not advocating that we do away with play altogether. Far from it. As I said at the outset, I am a huge fan of play.

What I am in favor of is social gaming with a purpose.

What if, in the course of having fun within a game, a user wasn’t only growing their capabilities as a mafia boss or trainmaster, but they were also (or instead) using their brains to help solve seemingly intractable disease puzzles?

Social gaming should help people come together to improve the world we live in. If we are playing games, let’s ensure they have a higher purpose. Let’s ensure they enable us to make greater insights into our pyschi, improving our understanding of our emotions, of our bodies and ultimately moving us to the point where we are not bounded by disease and scarce resources.

Aligned with this insight I want to draw your attention to the move by some of the Twitter co-founders back into The Obvious Corporation. I’ve written a fair amount about Obvious and product factories, but what is really interesting (especially in the context of this post) is the mission statement of the new Obvious:

The Obvious Corporation makes systems that help people work together to improve the world.The proliferation of technology can seem superfluous, but with the right approach, technology can benefit individuals, organizations and society.

It seems that others, like Ev, Biz and Jason are thinking along similar paths.

[As a footnote, I do recognize the great work Mark and the Zynga team are doing in supporting disaster relief. What I am advocating extends far beyond that focus.]

Y Combinator: Accelerating Start Ups, Recursively

Over a decade ago, back in the day of the initial tech bubble, I ran an early precursor to Y Combinator. In a similar vein we took on board nascent start ups in batches, with little more than an idea, and actively worked with the entrepreneurs to progress to the point where they were able to attract further investment from us and other investors.

And so I’ve been watching very closely over the years as Paul Graham has tweaked the Y Combinator model. There have been two excellent touch points recently for those of you interested in what YC does, how they choose which startups to work with and their model for success:

1. A comprehensive article in Wired – Y Combinator Is Boot Camp for Startups; and

2. Charlie Rose interviewing PG at TechCrunch Disrupt – see below.

One of the most amazing points PG makes in the interview is that the total value of YC companies is now around $3 billion. This is off the back of YC having invested a total of around $5 million. Now that is excellent validation for the model!

Top Five Angel Insights From An Entrepreneur in Residence at AngelLoft

The following is a guest post from Pete Sanders, the CEO of BrixHQ and an Entrepreneur in Residence at AngelLoft:

In March we were privileged to be accepted into the AngelLoft  Entrepreneur in Residence program. In summary, AngelLoft’s mission is to provide angel investors and entrepreneurs with the ideal environment within which to have a meeting of the minds. The group is based in Sydney and is open, by invitation, to angel members and entrepreneur pitches from anywhere in the world.

We’re ecstatic to part of AngelLoft and the Entrepreneur in Residence program.

We attended our first Angel Loft dinner in late March and introduced ourselves and BrixHQ to the group which included a seriously impressive range of angels and other entrepreneurs.

The evening was a fantastic opportunity to meet the angels, understand their backgrounds and start to build a relationship with some of the angels, even if only for feedback at this early stage. The feedback and comments that we’ve received from a range of angels & VC’s that we’ve spoken to since the first dinner include the following;

* Who are you competitors?

* How are you different to your competitors?

* What’s your business model (i.e. how do you make money)?

* How are you currently funded? and so on.

There are always two sides to these conversations however and some of the key questions that we’ve sought to understand from the angels are;

*What types of businesses do you typically invest in?

* What are the key things you look for when you are considering investing in a business?

* Do you have any feedback or comments for us?

The first question is crucial, it is important to firstly qualify what sort of businesses the angels are interested in. Plus, if you are time poor and want to have a meaningful conversation and future relationship then it is best to get off on the right foot or you can be wasting everyones time.

From our experience the top 5 key things angels are looking to invest in are;

1. a solid business idea that is being executed on,

2. the business has to be scalable (i.e. how big can it become?),

3. revenue – the business has to be on the right trajectory with revenue and growth, it’s great to have a lot of customers but if you dont have revenue then you don’t have a business.

4. management team – who are they, what experience do they have and have they done this before.

5. how long can you keep funding yourself through current funding sources.

The great thing about angels is that they will have feedback and comments for you, it might just be that it’s not for them and they’ll explain why or give specific comments or advice or direction that can help to move your business forward.

There’s nothing new or different in these 5 points above, but all serve as a fantastic litmus test for any business which is in start up mode or looking to raise funding in the future.

Also know your business intimately, be able to speak at a high level about your vision and your market, but be prepared to dive deep into the detail when appropriate.

Kevin Rose, Evan Williams and the Rise and Rise of the Product Factory

Sarah Lacy has written a great post on Kevin Rose’s new company. The former Digg founder is setting up Milk, a closed innovation shop that, counter to the current Silicon Valley driven incubator-trend, will focus internally on developing up a small number of big hairy audacious game changing products that use the mobile Internet as their enabler.

Firstly, I’d like to congratulate Kevin – I believe he has hatched an awesome plan. Why? He isn’t reliant on bringing on board a steady flow of ‘quality’ entrepreneurs and then melding them to create winners, instead he is using his nous and that of a hand-picked team of coders, thinkers and innovators to quickly iterate ideas and test their viability, pivoting and repurposing when necessary, but always moving forward with a portfolio of potential winners.

Secondly, I’d like to highlight that Sarah has quite rightly picked up on the similarities between Kevin and Evan Williams.

A few years back, Evan and I were having a series of discussions (here, and here)  around product factories – I was infusing product factory magic into a major research lab in Australia and he had set up Obvious along similar lines.

Fast forward four years and his “side project”, Twitter, ended up subsuming everything else in the Obvious pipeline to the point where Obvious fell by the way side. Twitter achieved massive traction and in many respects has been a game changer.

In contrast, I managed to get a number of projects out of my factory – one of which, Open Kernel Labs, has achieved major traction with its virtualization software on 1.1 billion handsets around the world – and more to come. Although we both moved on from our respective organisations, Evan has come full circle recently and is again building up a product factory.

I look forward to seeing how both of them iterate on the product factory concept, how this influences a counter-incubator culture and what they both bring to market next.