Current state of innovation

I thought that I would share my post in the Chief Information Officer’s Network group on LinkedIn responding to George Bickerstaff’s question: Can Innovation be Taught?

My response:

Whenever this topic comes up, or related, it helps to differentiate between innovation and invention. There is often overlap, but they are not the same. What almost everyone who isn’t a substantial innovator or inventor misunderstands is just how much work is involved prior to major efforts today even making it to paper, and how much effort, resources, and barriers exist for those innovations and inventions to evolve into usable form.

I have often had the unpleasant task of shattering inventor’s naiveté as it relates to the real world of innovation. Stealing of IP by those in a position to exploit it is the norm today, not the exception. It’s amazing at times that anything makes it to market in our modern system.

Our research and experience has shown that our society is terrible at identifying, incentivizing, and protecting innovative people or their intellectual work — (rather our educational system and corp cultures favors copying– reflected in our technology), and we’ve had a historic negative shift since the commercialization of the web. I agree with Shantanu that almost anyone is capable of innovation — very few however are in a position to put the innovation to work, fewer still are in a position to become an inventor (by today’s definition that requires becoming half IP attorney just to file a patent), and almost none are in a position worldwide to defend intellectual work if it’s sufficiently valuable to be copied or stolen– even if we did not have individual national laws and had one consistent set of IP laws– the average defense in a U.S. case is in the millions of dollars. Even top tier venture firms don’t have sufficient resources to waste on defending IP.

The result is that the vast majority (probably a super majority), never bother to formalize their ideas — increasingly even scientists and engineers, and increasingly fewer and fewer will share them with anyone other than immediate friends and family. And unfortunately we see evidence often — to include theft of my own IP many times, that when copied the ideas are often ruined due to the strategic conflicts or inabilities of the entities or individuals.

We know that innovation can and does occur throughout the organization, but often is the case where billion dollar ideas are rewarded with $100 prizes from an idea box, and that’s in cases where a supervisor has enough emotional intelligence and maturity to give credit where credit is due. This is just one tiny example of many where what we don’t see is far greater than what we do. The further one digs and looks under rocks, the more amazing the voyage becomes. The brain alone is among the most complex systems known in the universe, and it is only one galaxy within the broader constellation of the innovation process in our global economy.

We are developing a dozen hypothetical use cases for decision makers so that they can better understand the issue– in story telling form, primarily in large organizations — from thousands of conversations over the years. Some might be surprised just how poorly even the most innovative companies in the world function in this regard, with even less understanding of the process. My Friend Franz Dill at his blog The Eponymous Pickle pointed us to a Knowledge@Wharton article with a link to a paper that might be of interest: Popularity Contests: Why a Company Embraces One Innovative Idea but Shuns Another.

(See my comment: “Confirmation that many multinationals are employing Fred Flintstone innovation (systems) during the age of the Jetsons”).

Preventing the next Fort Hood tragedy, by design

The recent tragedy at Fort Hood was only the latest in a series of crises that would likely have been prevented if the U.S. Government had adopted a logical holistic system design when I first began making the argument more than a decade ago. Since that time we’ve witnessed trillions of dollars and tens of thousands of lives lost; 9/11 and two wars, Katrina’s turf battles and incompatible communications, the mortgage bubble and global financial crisis, and now the Fort Hood massacre. The current trajectory of systems design and dysfunction isn’t sustainable.

“The care of human life and happiness, and not their destruction, is the first and only object of good government.” – Thomas Jefferson

While this particular tragedy is still under investigation, patterns are emerging that are very similar to previous crises, including 9/11. So let’s take a closer look at this event relative to what is currently possible with organizational design and state-of-the-art technology in order to better understand how to prevent the next crisis, for it will surely occur unless prevented by a logical holistic system design.

Crisis prevention by organizational design

It is true that some crises cannot be prevented, but it’s also true that most human caused crisis can be, particularly those that are systemic, including all cases cited here. In fact many tragedies are reported to have been prevented by intelligence agencies without our detailed knowledge, some of which would undoubtedly help inform our democracy if declassified, but we are still obviously missing preventable catastrophic events that we can ill afford to endure as a nation; economically or otherwise.

“In times of change, learners inherit the Earth, while the learned find themselves beautifully equipped to deal with a world that no longer exist.” – Eric Hoffer.

In each of the cases mentioned here, including Fort Hood, actionable evidence was available either on the Web or within the content of digital files residing on agency computer networks, but were not shared with the appropriate individuals or partners in the decision chain, usually due to careerism, turf protection, and justified fear of retribution.

It is difficult for leaders to understand that members in a hierarchical bureaucracy are often punished by micro social cultures for doing the right thing, such as sharing information or taking action to prevent tragedy. A good report from the field on 9/11 is Coleen Rowley’s Memo to FBI Director Robert Mueller in 2002.

Interests are not aligned: Denial does not a better system make

“The really valuable thing in the pageant of human life seems to me not the State but the creative, sentient individual, the personality; it alone creates the noble and the sublime.…” – Albert Einstein

The reality is that interests of the individual and that of the organization are often not well aligned, so system designs need to include intentional realignment. However, in the case of the Fort Hood massacre, red flags were so prevalent that many of us are asking the logical question: How explicit must a threat be before the systems will require action?

Red flags were hidden from those who need to know

In the case of Fort Hood, as was the case with 9/11, the U.S. Government apparently again experienced a data firewall between agency cultures, supported in previous cases by fear-induced interpretation of regulations and defensive micro cultures within agencies. The Washington Post reported that an FBI-led task force was monitoring emails of the suspect Army Maj. Nidal M. Hasan, some of which were shared with a Washington field office, but were not shared with the military, to include apparently Hasan’s supervisors who clearly were in the camp of ‘need to know’. A properly designed architecture as described in our recent hypothetical use case scenario for the DHS would have automatically alerted those in the decision chain who were pre-determined to ‘need to know’ when certain phrases are present, including the base commander and security officer in this case who may have prevented the tragedy in a manner that did not compromise the subject’s rights to privacy or freedom of religion.

“The status quo is the only solution that cannot be vetoed.” – Clark Kerr

One such semantic phrase for example that should probably be immediately shared with base commanders and counter terrorist experts would be: “communicating with known terrorists”. No one in the chain of command, including criminal investigators, should be empowered to prevent that information from reaching those in a position to prevent tragedy, whether a national security threat or localized. Indeed, logic suggests that local surveillance might be necessary in order to define the threat, if any.

Crisis Prevention by Technical Design

Among the many academic disciplines influencing modern enterprise architecture are organizational management, computer science (CS), and predictive theory, which manifests in the modern work place environment as network design, computer languages, and mathematical algorithms. The potential effectiveness of these disciplines depends primarily on three dynamically interrelated factors:

1. Availability and quality of the data

“A popular government without popular information, or the means of acquiring it, is but a prologue to a farce or a tragedy, or perhaps both.”

– James Madison

The problem reflected in the decades-old phrase GIGO (garbage-in garbage-out) used in computer science influenced the holistic semantic design of Kyield more than any other factor. Rather than attacking the root of the problem at the source and investing in prevention, CS in general and consumer search in particular have teetered at the edge of chaos by combining clever algorithms and massive computing power to convert unstructured data (GI) to relevance (GO). While search and conversion of unstructured data has improved substantially in the past decade, it cannot compare to a logically designed QIQO (quality-in quality-out) system. Evolving to a QIQO environment from GIGO in organizational computing requires a holistic solution that is focused on prevention, improving work quality, and enhanced innovation.

It became apparent during several years of extensive applied R&D shortly after the commercialization of the Internet and WWW that embedding intelligence in files would result in far more functionality and efficiency, particularly within enterprise networks.

Without availability of high quality data that provides essential transparency while protecting privacy, the potential of enterprise computing is severely hampered, and in some cases has already become more of the problem than the solution. Once essential data is collected containing carefully tailored embedded intelligence, the task of preventing crises can be semi-automated.

2. Interoperability through data barriers

“It doesn’t work to leap a twenty-foot chasm in two ten-foot jumps.”

– American proverb

Unlike other industries in previous technical revolutions, the U.S. has generally embraced a laissez-faire approach to technical standards, resulting in proprietary standards that are leveraged for market share. Unfortunately, the result in technology has been much like that in finance, although largely invisible with costs of inoperability transferred to customers. Unfettered innovation can have tragic consequences. In the network era, inoperable systems have increasingly contributed to some of our greatest challenges; including crisis prevention, cost and inefficiencies in healthcare, and reduced innovation and productivity in the workplace. So in our case, even though voluntary standards are less than ideal, we’ve embraced the W3C standards for public transactions.

3. Data constructs and analytics

“Our major obligation is not to mistake slogans for solutions.”

— Edward R. Morrow

Once the essential data is collected, many of our current great challenges in organizations become within reach:

• Red flagging can be automated while protecting jobs and privacy.
• Realignment of interests between the individual and organization.
• Accountability and meritocracy is far more achievable.
• Original work by individuals and teams can be protected.
• Information overflow can finally be managed well.
• Creativity and innovation can be enhanced.
• Predictive and ‘what if?’ modeling /algorithms are much easier.
• Formerly essential unknowns about the org become known.
• The organization can become more adaptive to change.
• Cultural management and continuous learning is manifest.
• Rich visual metrics of formerly unknown patterns become routine.

Crisis Review

To his credit Secretary Gates has called for a system-wide review of the Fort Hood tragedy, which will coincide with reviews by the Army, White House, and Congress.

However, it would be irresponsible not to emphasize that the underlying stresses that likely contributed to this tragedy are directly related to failure in preventing previous crises. The result of previous failures to adopt logically functional systems is that our macro-fiscal situation in the U.S. is now so degraded that future prevention requires a much greater effort than would have been the case a decade ago.

Preventing systemic crises and related security (economic and warfare) are the foremost reasons for our government agencies to exist, and was the primary motivation for creating Kyield, even if the holistic design provides many other side benefits. The system problem has now been solved by design; but it has yet to be adopted.

“I am not an advocate for frequent changes in laws and constitutions, but laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change, with the change of circumstances, institutions must advance also to keep pace with the times.” – Thomas Jefferson

Priests of the Past: IT Preservationists

I was reading an interesting two article series at CIO– The Future of ERP, by Thomas Wailgum, which catalyzed many thoughts of the past, present, and future.

The article contains one of the best quotes I’ve seen from CIO in years, which prompted this post:

“There are many things happening here that are good for users, good for the IT profession, good for business. It’s just good, good, good,” Pierce says. “You know, what’s slowing this adoption are all the priests of the past—all the preservationists. All the interests that are built up around the edifice that is enterprise software….

–Todd Pierce, CIO of Genentech

In the context of the article, Pierce is apparently referring to the company-wide installation of Google Apps and integration of iPhones with Genentech’s ERP system, so a bit of clarification is required about the culture of Silicon Valley. Genentech headquarters is located just north up 101 a few miles from Google and Apple headquarters, all leading companies in SV, which is a culture that tends to be biased towards other local companies. So they can be considered part of a regional cartel of their own of sorts; one that unfortunately few other regions in the U.S. enjoy, and even in SV is rarely extended to start-ups these days.

If Pierce had adopted apps from companies elsewhere, it might have been viewed more credible by his peers. That said, the quote itself resonates deeply with me and speaks to Genentech’s own culture as a pioneer in Biotech, which has clearly paved a disruptive path in life science. If more large customers of enterprise software took an innovative, proactive approach, I am confident that many of the world’s greatest challenges would be overcome sooner through a higher level of work quality, crises prevention, and far more innovation. To see how, please review our paper Unleash the Innovation Within, which is now a year old but still among the most popular white papers surrounding the topic of enterprise software and communications.

The quote by Pierce was not the only sliver of interesting perspective in this series however, so I hope that you will take some time to read the articles. For example, Thomas refers to the “MISOH” cartel (Microsoft, IBM, SAP, Oracle, and HP) in an unusually frank discussion about market consolidation in an essential industry with a “systems’ turtle’s pace of innovation” (ERP). I can clearly recall moderating discussions in our GWIN network more than a decade ago and writing pieces for our Lookout! and Convergence Zone publications saying essentially the same thing; which included members who were senior reps from each of these companies and most of their large customers, so the debate is long overdue as is progress generally in enterprise software.

One of the main themes found in this article is a move towards simplicity and away from complexity, something I have been pushing for years across research and architecture to management philosophy.

Communicating preferences to an ERP sales rep with the hope that one’s concerns will be embraced in the next release does not ooze leadership or reflect the market farming responsibilities of large customers. Enterprise software architecture is far too important to the future of organizations to leave to those whose interests are often misaligned with the mission of the organization CIOs represent.

Crises prevention, innovation, differentiality, security, productivity, creativity, interoperability, simplicity, and adaptability are the topics constantly on my mind as an enterprise architect. With Kyield we’ve worked long and hard to design a platform that provides the benefits of holistic design with the adaptability of modular apps, and the cost effectiveness of interoperability and universal standards.

Our philosophy is much different than that of the status quo by design. We just need a few brave customers and partners who want to be part of the future, rather than just supporting the priests of the past….

SFI 25th Anniversary Celebration

It certainly wasn’t planned, but our decision to relocate to Santa Fe earlier this year combining with many years of work that included overlapping interests with SFI, several shared relationships, and the ‘invisible hand’ of chance all apparently had something to do with my attending this year’s annual conference at the Santa Fe Institute (SFI). I’m glad I was able to attend for a number of reasons.

The conference celebrated a convergence of related events in time — 25th anniversary of SFI, with a theme of evolution in a nod to the bicentennial of the birth of Charles Darwin (Feb 12, 1809), but the underlying theme and lecture by the conference organizer — David Krakauer, chair of faculty — was the evolution of evolutionary theory, and I would add semantics of evolution (meaning), which is where the conference debate itself evolved by the end. Today’s use of the word ‘evolution’ seems to be limitless, although no other English word seems appropriate to describe a similar process in economics, sociology, technology, etc. etc. etc. One can certainly argue that everything man caused is by extension evolutionary, as we are biological life forms, but it doesn’t do much good when drilling down for learning.

Among the lectures for this two + day conference were: Darwin and Turing (Daniel Dennett), Malaria (Caroline Buckee), agent based paradigm (Robert Axtell), conflict (Jessica Flack), 2009 response to the H1N1 pandemic (Laureen Ancel Meyers), evolution of evolutionary theory (David Krakauer), web engineering (Graham Spencer – Google), evolution of human languages (Murray Gell-Mann), and a group led by J. Doyne Farmer on whether economics is a branch of evolutionary theory, or something else entirely.

I made a comment on the economic question that went something like the following… I moderated a very similar forum (in our GWIN Pro network) virtually a decade ago that included some of the participants cited (Krugman’s paper of a decade ago for example– I exchanged a few emails comparing biology and economics with Krugman during that era), and I have since come to the conclusion that economics is more like God, and biological evolution more like nature. The income and cost disparities were widely known (financial crisis was near the core of the debate), so from a crises prevention perspective– the financial crisis appeared intentionally self-destructive (aggregate). Before markets can work and behavioral economics can be credible, participants must have a choice (Alluding to the earlier comments by Doyne that implied a correlation between monopolies and crises – at least I took it that way).

Please understand the context in which I used the word God here; taking from Stewart Brand’s opening lecture when speaking about managing the world’s ecology — similarly in economics (directly interconnected to ecology), we are essentially acting as a God and so had best become good at it. I am not speaking here in the spiritual sense, but rather power and intent. I was surprised at the positive response to my comment.

I also attended the business network meeting, which was a much smaller sub-group primarily of reps from corp giants who are willing and able to pay the substantial annual subscription. SFI has gone through a change in management and reevaluation during the past year, including the business network. SFI was intentionally founded as an ongoing experimental work in progress, and has apparently gone through an important period of evolution itself recently.

From my perspective there are three primary strengths of SFI, which I have followed for 15 years or so off and on, consuming much of what is made publicly available.

1. The model is a very small core supported by external faculty around the world, and an independent institute that intentionally explores areas that are overlooked by academia, which tends to herd towards trendy science. So SFI is neither conventional nor large and bureaucratic– for that reason alone they attract many of the world’s leading scientists. Most of the big contributions to science, including Darwin, were largely outcasts of the academic mainstream at the time.
2. The interdisciplinary focus allows researchers to learn from each other and work together on many of the really big problems facing the planet, often temporarily so that they maintain their long-term job — usually at a major university. I have invested a great deal of time and design on this issue.
3. The location now on top of a small hill overlooking Santa Fe with the southern Rockies staring down provides an excellent mix of culture, nature, solitude, and peers.

It’s not by accident that LANL scientists enjoy the area so much. A long rich history combined with modern art, culture, and excellent food doesn’t hurt, and importantly what everyone cites over and over again — 15 minutes to anywhere in town is actually more like a half hour, but certainly influences me. It has always seemed obvious to me that smart people attempting to get things done cannot enjoy long commutes, raising many questions….. did I mention climate?

The conference wound up on Sat. (11/14/09) night with a VIP dinner of the combined SFI and SF Symphony Orchestra, which is also celebrating its 25th anniversary this year, and like SFI and most other non-profits, no doubt experienced some tough times in the past year with funding.

It turns out that Felix Mendelssohn (a German music prodigy who found success in England) was also born in early Feb of 1809, so after dinner at the Eldorado Hotel, everyone walked a block down the street to the Lensic Theatre to enjoy a concert of Mendelssohn’s music with actors playing Darwin and Mendelssohn.

It was the first time I had been in the Lensic or attended a concert by the Santa Fe Symphony — very impressive for a city of any size. As if nature were conspiring with the synchronization of the events, when the concert ended we walked into the street to find it snowing; beautiful with the lights of SF and a fitting end to an enjoyable few days for many.

HBR debate … Think U.S. Tech Isn’t Healthy?

Laura D’Andrea Tyson contributed to the HBR debate with an article titled:  Think U.S. Tech Isn’t Healthy? Look at the Data.

A rich comment section followed. This is my contribution:

A very constructive debate that is no doubt having a broad positive impact, so you should all be proud of your public contributions — it’s badly needed from my perch. Many leaders have been having these discussions privately for years where I fear it did little good.

I believe Gary Pisano has it correct when he focuses on the trade imbalance. If all other theories to include promoting outsourcing were valid for the U.S. as a nation — rather than just global corporations and other nations, then the disequilibrium would surely have eased long ago.

I’m afraid what we have is a classic conflict between the fiduciary responsibility of leaders in publicly traded corporations on U.S. markets, and the reality of global economics with dysfunctional global regulatory bodies that lack the structure and ability to resolve such conflicts.

Some of the questions in these comment sections reveal a deep confusion that is prevalent in our society — many don’t understand how one can embrace global trade, yet complain about the results. The truth as I see it is that although we have a global medium with few restrictions, and we certainly have an interconnected global economy; we all still live in nation states, complete with an extremely complex web of trade law, currency policy, taxation, IP law, and wildly differing enforcement levels. We also have still quite different cultures, radically different cost of living, debt levels, environmental laws, subsidies….

Taken to its logical end state — the trade imbalance reflects structural impediments to market forces; otherwise markets would correct. One can argue that we are experiencing just such a correction now, and would have earlier if not for manipulation by the FRB, but then they have no control over the currencies of others, and we have little control over the silent barriers to market access. I believe that is why we are seeing intentional downward pressure on the dollar, which is at best a temp measure.

Higher educated and better trained workers in healthcare and house building does not balance the trade deficit — alt energy can help, but until we see common policy in currency as well as subsidies, and equal access to markets, it would require a remarkable miracle indeed for technologies deployed globally to correct one nation’s imbalance, particularly when that nation has much higher costs, yet the workers use the same automation, with unequal currency values.

Competitive taxation is a no brainer — an arms race type of investment with borrowed money very risky. A trade war would be foolish and self-destructive, but is a great concern to me given the scenario. We cannot spend our way out of this situation, and I see no technology on the horizon that has the potential to reverse the imbalance, particularly given that it would surely be deployed globally almost immediately today, thereby neutralizing any nationalist affect, even when the U.S. continues to pay most of the bill for global basic research.

This is not a happy situation. I did not complete my own book on global economics and innovation precisely because I could not foresee a transition that works for the U.S. given the challenge, short of magical enlightenment by trading partners, combined with a willingness to significantly downsize U.S. liabilities, and quick transformation of our learning ecosystem and culture. Quite a bit to ask even of an optimist — even if possible.

Patterson gets personal at HBR

In response to David A. Patterson’s commentary directed at me in the HBR debate: Is the U.S. Killing Its Innovation Machine? He is Pardee Professor of Computer Science at the University of California, Berkeley. This blog debate is in response to his article: Revamping DARPA Is Vital to Preserving the U.S. Lead in IT.

My response to professor Patterson:

Resistance to change, fear of criticism, spinning results, avoiding accountability, clinging to past models — these are all symptoms commonly found in failing institutions. I wish I could claim to be the first to make such an observation, but actually the same can be found in the writings of the Founding Fathers of the U.S. among many others.

Actually my personal view is closer to my friend who sadly passed this past year who was deeply involved in tech transfer and commercialization at Berkeley for many years. Jay Morrison quite often shared his frustrations with me on just how challenging his job was with tech transfer at Berkeley, even if his professional passion and deep love of his community provided a regional bias.

In our many communications, I never recall Jay claiming that start-ups were natural at UCB…, rather we talked about heavy lifting — nor has it been in the few I reviewed at UCB — or the thousands of cases I have observed worldwide, to include Google. One thing nature does not have is self-serving bureaucracies, although certainly the actors are conflicted… although insufficiently evolved to claim otherwise.

It requires no courage to promote the university system, or to call for more R&D– certainly not here, nor does it lead to a better system. I certainly gain nothing from it. The power of universities in our society is indeed impressive, which is why so few dare cast a deserved stone on the pristine surface of academia. Tough love is an accurate description of my intent and role. I believe strongly in learning– institutions should (must) earn their credibility on a case by case basis– not just from peers, but those who support them. I have audited too many institutions for blind admiration, and consumed far too many dissertations with wildly inconsistent levels of quality awarded with the same degree, yet am still often impressed and amazed at the quality of a few.

I am free from both emotional and career bias, so on this topic I am more credible than a product of a university, and certainly any official.

I’ve been spending quite a bit of time reviewing Peter Drucker’s work in celebration of his life and contributions, having shared with my own personal network that we could have well used his advice and thought leadership over the past few years.

Rather than provide quotes, I would invite others to revisit his work as well– for your own learning opportunity– I share his view on life long learning rather than a one time event that lasts a lifetime… look closely at his observations on decentralization, bureaucracy, measurement, and accountability. It might also be worthwhile to review his and many other’s work on the natural inclination of entrenched organizations and cultures to protect the past rather than create the future.

My opinion based on thousands of cases in one of the more active careers in small and emerging businesses, to include counseling many university leaders on same, is to embrace diversity and competition. Small independent labs free from conflict, bureaucracy, and bias are simply that — they provide an advantage in some technologies that we would be foolhardy to ignore, particularly today with networked computing. Small and emerging business create most of the jobs, most of the wealth, and the vast majority of competition. Universities are not at all effective at creating businesses. Many are tragic. Too claim otherwise simply ignores an enormous wealth of brutally earned truth. Entrepreneurs deserve much better.

My own Kyield emerged from a self-funded lab, and served hundreds of university thought leaders who benefited from our pro-bono work and contributions, including the editor of this publication (MM: HBR — speaking of late ’90s) and most others worldwide. Would you have me be dishonest in what we learned? What purpose would that serve? What religion? What master if not the truth?

I’ll stand firmly by my position, even if (especially when) surrounded by those with direct conflicts of interest, yet still provided the podium — precisely how this debate was born, which threatens the very engine that supports governments and universities.

Drucker on long term values

“Whether a business should be run for short-term results or with a focus on the long term is likewise a question of values. Financial analysts believe that businesses can be run for both simultaneously.

Successful businesspeople know better. To be sure, every company has to produce short-term results. But in any conflict between short-term results and long-term growth, each company will determine its own priority.

This is not primarily a disagreement about economics. It is fundamentally a value conflict regarding the function of a business and the responsibility of management.” — Peter Drucker, HBR 1/2005

HBR debate… pleasing Wall Street

Ed Catmull posted an article in the Harvard debate: Pleasing Wall Street is a Poor Excuse for Bad Decisions.

My comment on Ed’s article is as follows:

It’s been clear to us for 15 years that misalignment between compensation incentives and the long-term needs of organizations, investors, communities, and individuals were increasingly competing for the prize of chief cause in systemic crises.

Let’s not forget the impact of stock options — both negative and positive, and the interconnected relationship with markets — from regional housing markets to Wall Street brokers to the formation of bubbles.

What we’ve found in our long-term effort, which trust me was far more difficult in my small private lab than the challenges discussed here and by my peers, is that to deal effectively with the highly complex issue of alignment of interests in large organizations, several other issues must be dealt with simultaneously, creating an exceptionally high bar for resolution in the digital work place environment that is infamous for incremental improvement at best. A few of the key issues I found in our research:

1) A holistic systems approach was essential, without which it may require dozens if not hundreds of years in an incremental model– my best guess is never.

2) Privacy / IP protection and transparency must be tailored by mandate in the vast majority of organizations; even those not required by regulation to do so.

3) The system must be interoperable so that it can be integrated with partners, to include in many cases public and private, R&D partners; without which new adoption is probably impossible anyway.

4) The system must be adaptable to quickly changing forces in the global economy, with the ability to tailor down to the individual.

5) A substantial menu of compensation models (psychological and financial) is required for tailoring to specific needs (for example the model described by Charles) — one size or model that normally dominate debates on motivation and compensation is based on either conflicts or ignorance– having nothing to do with the variety of cultures out there. Wall Street is a tiny minority culturally, despite the global impact.

6) Alignment of incentives is but one very important consideration in overcoming a host of interconnected issues facing large organizations today, all of which influence the other, requiring embedded intelligence on the individual worker, original work, communications, project teams, business groups, and organizations, among others.

Unfortunately, despite humbling interest in next generation intelligence systems, particularly in the past year, when we approach industry leaders we have been faced with a similar response to that by Vint Cerf when he and his partner presented their DARPA project to the then CEO of AT&T: “It’s impossible, and even if it were not….”, which is almost like saying survivability is impossible — from what I’ve observed in looking at our ever growing series of man caused crises — it may not be possible not to adopt far more intelligent systems design. Fortunately it is quite doable and far more strategic to the interests of many than they apparently understand.

After many conversations with decision makers in the private and public sector, I can confidently share that each needs to look at a mirror when it comes to adoption policies of long-term R&D in their own organizations, for that is the problem, assuming of course we want others to take the often brutal long-term approach to overcoming the most difficult problems, particularly in a manner free from conflicts that can actually lead to solutions. Thanks again for the contributions.

Mark Montgomery
Founder & CEO
Kyield
markm@kyield.com
Santa Fe, NM

HBR continued.. Capitalism or Wall Street

Andy Rappaport posted an article to the HBR debate on U.S. competitiveness: Outsourcing, the Culprit is Capitalism, not Wall Street

My comment:

Valuable comments. One of my primary criticisms of Wall Street in the past decade, and some of their largest clients, has been an enormous unproductive use of capital.

While Alan Greenspan has earned his criticism, at least his ideology was based on a belief that large investors would choose self-preservation over systemic suicide, rather than the more cynical view that has so often been rewarded in recent years. I long ago tested self-regulation in micro markets, so was not surprised, however sickening. But the FRB did not direct the fire hose of gasoline even if they provided much of the fuel, and refused to manage the blaze, much less prevent it.

At precisely the time when the U.S. badly needed to redirect investment — both public and private — to improve upon future competitive pressures already well under way, instead Wall Street elephants brokered trillions in unproductive, counter productive, and self-destructive assets.

At the early stages in technology venturing, deployment of capital wasn’t much better as a similar misguided philosophy of activism and emotional dysfunction ruled.

I personally find the excess in outsourcing to be sourced in a similar failed ideology — that somehow the end justifies the means — that to kill the golden goose is somehow justified. The convenient emotional delusion aligning with short-term greed and peer pressure within careerism simply doesn’t mesh with the math — my 8th grade math teacher hobbling on two crutches from his WW2 contributions knew better.

Jeffrey Liker raises a very interesting point — we developed a state of the art holistic system with a global leader in mind, and when I presented it to the chairman of the board — he said that their internal scientists had looked at the issue (for the sake of this point let’s call it knowledge systems), and deemed it impossible. Of course the same was said of his founder decades earlier, and neither were accurate fortunately, but I agree Jeffrey — the only reason I have been able to find at all for those in government and global companies in refusing to adopt holistic systems makes me very uncomfortable indeed — which is that they don’t want to prevent crises, improve performance, and increase both meritocracy and accountability.

One final comment that I haven’t seen raised here, and it should be raised. I firmly believe that one of the key drivers of excessive outsourcing has been what is largely invisible protectionism; that is the implication by governments in a few of the highest growth markets that goes something like this: if global companies want access to these markets — representing the vast majority of growth worldwide — and don’t want to face a government backed if-not-owned competitor, then we best see not only factories dotting the skyline, but research centers as well.

While the U.S. is certainly far from pure in trade, I do believe that the comparison to the NZ experiment in free trade is valid. We all know that trade is rarely free, but to ask (demand) that U.S. tax payers subsidize the exportation of future competitors whether through R&D deals with global corps, universities for decades, and/or tax incentives — is well beyond acceptable for this son of a lifer in the military who sacrificed in two wars, bringing his grief home to his family.

The problem isn’t capitalism — the problem was the scum that too often rose to the top of firms feeding off of capitalism, creating a culture that would not allow cream to rise to decision levels across their sphere of influence. I was so ashamed that I almost relocated permanently in protest. It has been a disgrace.

HBR Debate: Revamping DARPA

Professor David Patterson from UC Berkeley enters the HBR debate on U.S. competitiveness: Revamping DARPA is vital to Preserving the U.S. Lead in IT.

My comment on the blog:

David,

I appreciate your frustration, having heard much the same from many.

However, I would suggest that we have larger issues at work here than just failed tweaking of the DARPA model.

Our economy is suffering not from insufficient centralization, but rather lack of diversity. While I am one that agrees that DARPA can and should play an important role, it is a very minor issue in the grand scheme of things.

What we need is an entirely new research model that is less dependent upon DoD funding, and frankly less dependent upon universities and federal labs. Many if not most of the essential innovations that can benefit society I see on the horizon would be best served by smaller independent labs free from institutional conflicts.

The world has changed dramatically since DARPA was envisioned. Given the systemic failure all around us, we should be debating the fundamentals of the systems, and designing all new models tailored to the current environment.

Mark Montgomery
Founder & CEO
Kyield

Alternatives to the CKO

My response to Dave Snowden’s blog post on alternatives to the CKO:

Thought provoking and refreshing; rarely have found fresh thinking on this topic– we could have benefited greatly from your view over the past few years David as we struggled through our design work, which forced us to deal with these issues.

I came to some similar conclusions after years of R&D and thousands of discussions with organizations at the top, bottom, and in-between– might be of interest.

1)  We found that in most orgs the philosophy, process, and functions (intent of KM) need to be distributed, but each situation was different — at times radically different for pragmatic and necessary reasons (legal, security) — frankly causing the software architect some grief (me) until we over came the adaptability issue in an affordable manner (a recurring theme here and elsewhere).

2) Given that an enterprise or organization exists for a mission (albeit questionable at times), is a legal and economic entity, with management sometimes held accountable for policy and decisions, centralization of the CKO role is necessary. But like David suggests — we made a mistake even calling the module a CKO module — revealing the buzzword definition problem in KM circles — some took it the wrong way — did more damage than good in many cases. However, we were able to automate sufficient tasks that the centralized role is very much a part time position on the computing side, need not be conducted by a titled person (we know of a few dozen CKOs), and in many cases shouldn’t be– in some orgs that are so blessed to have capable leadership– I like the CEO taking that role as much as he/she is able. Again the need for adaptability, particularly in the digital work environment which is historically rigid– was a key.

3)  The system design should include some centralization functions (in digital world or real– security, policy, legal, meritocracy), but also have a similar function enabling large business units, project team leaders, and last but certainly not least the individual, where most of the future value lives in modern organizations. From a KM perspective, dealing with how the org and individual personalization interact was among the most interesting of our design process.

I am agnostic on the revolving CKO issue, except that agree that whatever label one puts on it– everyone should be exposed to the learning organization philosophy — in order to convert that philosophy to reality however, we had to employ a deep systems approach to organizational design.

The primary challenges not only had to overcome the organizational challenges, but also the many — in some cases more difficult– in computing.

–allowing adaptability without needing to reprogram– essential for differentiality and affordability

–dealing with interoperability issues

–providing the ability to align interests between the individual/project/unit/ and org

–prevent empire building and all that comes with it — easier said than done

I worked on our system design for many years.. after two leading online learning networks. One key was interoperability between units and orgs, which required either a fairly predatory approach with entrenched vendors — very expensive integration, or adoption of ‘universal’ standards.

In the end I embraced the W3C standards for the semantic web– followed for years and they moved in the direction we needed to go, eventually providing most of the functionality we needed. Several start-ups embraced early and finally Oracle offered a major product, making it more doable — slowly but almost surely, adoption is occurring. Google just embraced a video standard for example.

An interesting related article by Jenny Zaino discusses two important benefits of a good semantic design– meritocracy, and crisis prevention.

http://www.semanticweb.com/news/could_semantic_technology_help_get_your_next_raise_139143.asp#top

Realize you are speaking organization and not only computational here, but given the intrusion of the beast into virtually every organization, unlike many in KM, I found these issues necessary to address in computing. Thanks for the discussion – MM

Alternatives to the CKO, continued….

This post is a continuing discussion (Chief Knowledge Officer, or CKO) in response to Franz Dill’s post on his blog; The Eponymous Pickle.

There is so much history surrounding this issue (CKO) that I would write a book series about it if I had time. After years of running a management consulting firm, which we then converted to a knowledge systems lab and incubator, I found myself working increasingly as a citizen volunteer attempting to convince the U.S. Government to adopt advanced knowledge systems. The conversation began in the mid-1990s and then reached decision levels when so many of the world’s leading thinkers and analysts joined our online learning network from ‘97 to 2000. Among dozens of other topics, we offered a high quality global news filter on KM, complete with intel briefs, and companion discussion list. With each major crisis since that time we’ve been able to confirm that with a state of the art semantic system in place those crises could have been avoided, and most probably would have been. The result is that if the U.S. had invested tens of millions a decade ago, we may have saved trillions of dollars by now, and thousands of lives.

KM started as a sincere early science that combined the research in learning organizations with information technology, which became far more complex for everyone with the commercialization of the web. Unfortunately, KM became a trendy buzz phrase and consulting practice before the majority offering services could even define it. Global self- accredited organizations sprouted up and many universities began offering PhD programs in KM before it had matured into a professional practice. In fact, of the many doctoral theses I reviewed on related topics in the1990s, a work in progress by Michael Sutton then at McGill University was among the most interesting, for it looked at the university programs themselves, which required deep consideration of the science and practice. I recall a pleasant meeting with Dr. Sutton and his wife when they visited Sedona, AZ during this time. Dr. Sutton is now assistant professor at Westminster in SLC — his completed thesis is available here (5+ MB pdf – a must for serious students and practitioners) .

Early on I found that the members of the Special Librarian’s Association (SLA) were among the most skilled at the functions organizations actually needed as the web grew exponentially; particularly those specializing as digital librarians. It may not be surprising then that Dr. France Bouthillier was Michael Sutton’s Dissertation Advisor. Dr. Bouthillier is a professor in Library Science and Information Studies at McGill University, which is one of the stronger programs worldwide. Academic KM programs have improved substantially in the past few years, although significant overlap still exists in KM, Organizational Management, Library Science, and CS, among others. It became obvious to me in our small pioneering lab that not only did we need better educational programs, skills, and tools, but more importantly we needed much improved system design.

When I joined the U.S. Gov CIO WG on KM, I quickly discovered an enormous difference in competency and culture within the agencies, some of which were predominantely focused on turf protection, careerism, and agency power rather than their true mission; as was clearly evidenced in the Katrina experience. I also discovered that some of the CIOs were focused on hardware, with very little if any understanding of the many other areas affecting organizational management, learning, productivity, and innovation; so it was foolhardy in many cases for the CKO to report to a CIO, which was the case for the entire U.S. Gov effort.

I then learned that any multi-agency effort — where the real need existed, must be placed on the WH agenda for any actual movement. After Katrina revealed blatant flaws in the system, I wrote a business case and submitted to agency heads, members of Congress, and many other leaders. We finally succeeded in achieving a mention for a generic KM system in the Katrina report, making the WH agenda for the first time, but nothing happened. Meanwhile, most other leading countries have adopted some variation of a national knowledge system, with the EU now leading the world in related investment. Australia recruited me a decade ago to discuss designing and managing their national system; an impressive $200+ million effort that was more advanced in many ways than the U.S. now — particularly in human systems, cross agency, and community-wide efforts. Australia has a smaller population, but is similarly dispersed and happened to sail through this global recession better than most — as did Canada — even given the more commodity based economies this connection is probably not a coincidence, based on my understanding.

So we continued to advance our own applied research, which includes a module that performs the functions of a CKO in the digital work environment we deemed necessary in what has been frankly a very chaotic working environment (a virtual CKO of sorts, although it does require a human to operate, set policy and security issues, and approve business unit modules.). Rob Neilson is one of our advisors — he was grandfathered in and approved by the DoD because he joined when he was consulting — now KM advisor to the Army. Rob was a pioneer in the CKO role where he held the position at NDU — although a decade old now and not nearly as deep as we have gone with functionality in the design since – his paper on the role of the CKO is still popular.

To say that it was challenging to overcome the design challenges in knowledge systems is a vast understatement; technical standards, meritocracy, alignment of interests, behavior, propogation throughout the organization, security issues, IP, rating systems, metrics, and more; each of which had serious challenges, and all interconnected both in terms of technical and organizational architecture. Did I mention culture?

We are focused on the corporate market now, where interest has been strong, particularly since the financial crisis provided ample motivation for smarter systems, but I am hoping that the Gov and Edu markets will finally embrace the state of the art and focus on their true mission rather than constructing barriers to improvement. There has been an effort to create a CKO for the U.S. Government, similar to the new CIO and CTO roles. I’ve been told by senior U.S. staffers that the CIO doesn’t have budget authority, which is the point where most of the turf problems are created — decisions on standards, silos are created, etc. I am not certain how effective a person with a title can be if they have no budget authority, if architecture is very poorly designed, and the tools are primitive relative to need. My position has been that far more can be accomplished by enterprise design.

A well designed architecture not only encourages departments to ‘talk’ to each other, but provides the opportunity and functionality within system parameters (regulations), improves on economic efficiencies/sustainability, improves innovation, and enhances security substantially. When properly designed such a system can actually manage the learning yield curve of an organization with ‘valves’ for quality and quantity, and provide rich metrics to visualize the process and results in the entire organization. That’s what is possible today. It seems to me that the recent evidence is abundantly clear justifying such a system, as we have been saying now to all who would listen for over a dozen years.

A very important topic that deserves a brighter light with a deeper explanation and historical background. – MM

SCENARIO 3: Roger the electrician at the hydro dam

Semantic Scenarios for the Intelligent Enterprise
A Kyield Hypothetical Use Case
October, 2009

SCENARIO 3: Roger the electrician at the hydro dam 

A hypothetical yet plausible scenario is presented that demonstrates the value of a state-of-the-art knowledge system deployed in a highly tailored, mission-specific environment, resulting in a very high triple bottom line ROI.

Summary: An energy industry employee normally unassociated with the term ‘knowledge worker’ proves essential to his employer, community, and national security. On a routine task in the field, Roger notices something odd, which initiates a series of data transactions. A ‘near miss’ between personal mobile phones has potentially catastrophic consequences.  The data reaches the appropriate team member in the decision chain, who begins the investigation. Fortunately for downstream residents, the facility was included in a test of the DHS prototype; a highly defined mission-oriented system with precision semantic intelligence embedded in every file entered into the system. The fully automated DHS system embraces interoperable standards, allowing less costly integration with powerful programs, essential allies, and global partners.  A classic case of well connected dots along a data trail with short cuts made possible only by highly relevant semantic intelligence embedded within a logical, holistic design.

Register here to access the full use case, as well as future cases as they become available.

MM: Is the U.S. Killing Its Innovation Machine?

Harvard Business Publishing has shared an intriguing series on U.S. competitiveness that frankly overlaps many of the issues we discovered early on in the Kyield voyage, much of which I think we’ve addressed in the architecture. The series is certainly worth your time regardless of where you live, work, and conduct business.

One of the articles in the series is ‘The U.S. Can’t Manufacture the Kindle and that’s a Problem‘, by Willy Shih. I agree with Willy generally, although I wanted to make a further point on cause, so I posted in the comment section and am sharing here as well:

MM: The Kindle is in good company. I have often compared the U.S. cultural view on globalization to the New Zealand experiment with a purist view of free market economics. In the case of the U.S., the prevailing view in business schools and media was heavily influenced by investment banks on Wall Street that had a bit too much skin in the game of M&A.

While I too am a purist at heart within my fantasy land, I am a realist in business and economics. The question by a poster here is one I hear often within global corps where managers often find careers ending prematurely if they question the religion: What difference does the country make?

In macro economics, which all companies ultimately depend upon, should therefore be keeping a close eye on, and in my view should have a proactive program to ensure functioning markets beyond the next quarter; unsustainable trade imbalances are not a good thing, particularly when the world’s largest economy becomes the world’s largest debtor nation. Even those benefiting the most from growth in Asia should be far more concerned than they have been — I am thinking of one board in particular and the damage done from their voice.

However, innovation is a much different story — culture matters, but location matters not. We released our white paper ‘Unleash the Innovation Within’ almost a year ago, which became among the most popular in our history within a short period of time. We concluded a few years ago that a holistic approach was needed to address the many structural issues in the modern organization relating to innovation, which by the way also affects crises prevention, governance, information overload (productivity), and continual learning.

Perhaps the real question that should be asked is: why is it that the U.S. cannot adopt state-of-the-art systems that would improve innovation and reduce crises?

Mark Montgomery
Founder & CEO
Kyield
http://www.kyield.com

PWC on innovation

An exceptional article by PWC worth your time, particularly for large organizations:

Getting beyond novelty

How discipline and failure foster innovation

By Christoper Wasden

MM: Wasden spends quite a bit of time discussing the tension in the process of innovation, particularly the need for failure and how successful innovators quickly move beyond failures. I especially found the focus on discipline and markets to be refreshing, which is almost entirely missing in the U.S. policy of large scale R&D investments, for example; and big pharma which has a similar culture.

Some of the suggestions here are not universal — for example the quick failure model we and others employed in the mid 90s worked well for e-commerce and software applications, but it didn’t work for Thomas Edison, nor has it worked for Kyield.  Many of the best inventions and innovations require a long-term effort, and if killed off quickly — would never be born. Kyield’s key patent for example wasn’t even filed for nearly a decade after some of the lessons were learned from the predecessor; speaking to many issues, not least of which include the persistence often required for revolutionary innovation to hatch, rather than the incremental innovation promoted by entrenched vendors who were leading innovators during their own revolutionary times. While the ‘kill quickly’ formula isn’t applicable for every situation, there is a great deal of value here for almost anyone involved with innovation.

HBR- U.S. innovation continued

This is my post in a continuing debate on U.S. competitiveness and innovation found here at the Harvard blog.

The current trajectory leads eventually to a much larger global crisis than we are still currently experiencing. The total liabilities will catch total net worth (should have been asset value) in the U.S. at some point in the future — a junction that jumped forward a decade or more in the past 18 months– this means the U.S. will be in a crisis until the balance sheet provides at least a small measure of solvency given future liabilities. We’ve been playing a game of chicken for far too long between socio-economic ideologies, neither of which frankly are credible from an economic perspective.

Shall we discuss (advertising) editorial influence on mass media? Economic diversity? The real cost of social elitism? Root causes of bubble economics — pension funds and endowments chasing 30% returns with 20% of the world’s investment capital rather than historic levels in the single digits? How many economists understand what that does to markets? If we want to discuss protectionism elsewhere, can we avoid discussing the cost of ancient guilds? Were you as shocked as I when the ACM announced university ratings and only one U.S. school made it in the top 10– Russia and China with 2 each, no doubt achieved at a fraction of the cost? Anyone game for predicting the future cost of system-wide moral hazard that has been realized? Unbroken monopolies? Predation? Cultural management?

The worst case scenario is that entrepreneurs stop innovating– many of the best have already taken that route, some by choice, most by markets– I deal with them daily. The reaction has been to institutionalize the entrepreneurial function in an attempt to make MBA grads VCs and entrepreneurs out of scientists; and we wonder why our economy is challenged?

In order to do this topic justice and deal with the root causes– everything else is noise, we’ve got to look at what creates the trade imbalance– part of which is certainly outsourcing, but more importantly are the barriers to innovation in the U.S. — as is often the case the most valuable data is not visible. I do agree with those who suggest that outsourcing contains a high probability of losing key IP, but then frankly that threat dominates the lives of innovators everywhere now, or should, certainly to include the U.S. where the cost of defending IP has not been viable for small shops or individuals for many years– unaffordable justice is as comparatively destructive to the economy as unaffordable health care or failed education; perhaps more so. Outsourcing is necessary in a global economy, and does have many benefits, not least of which is a higher probability of peace, but inability to protect original work and take to market is already having catastrophic consequences. Where would the U.S. be today without the tech giants of the previous generations?

The innovation conversation needs to begin with the very frank understanding that the U.S. dominated tech innovation and venturing for decades — from seed to maturity — but in the past decade it has quickly become hyper-competitive globally. We’ll need to disperse with dogma and comfortable assumptions such as ‘data collected has sufficient embedded intelligence to make wise decisions’, particularly within the time frame required to make those decisions, even assuming that those making the decisions are sufficiently unconflicted and able. It is with some irony that we realize while drowning in a sea of data that none of us are necessarily even in the loop on some of the more important trends occurring, which is why first hand experience is so important. All venture capital data for example is voluntary — the sector is hidden by confidentiality for good reason, but the secrecy also does great harm in spreading ignorance –politicians and the social elite combine with the guy on mainstreet who think wrongly that some brilliant scientist at a university will partner with an entrepreneur to correct decades of very bad behavior.

In the late 90s when we were operating a global learning network for thought leaders, the most eager to learn about venturing and economics were not from the U.S. at all — even when we pleaded for regional professors to engage, but rather almost everywhere else– Mongolia to Thailand to South Africa to Brazil. In the U.S. and much of Europe everything we and others did in our incubators was perceived as a threat to entrenched interests. Most of the world lacking those same type of entrenched interests saw only opportunity.

A decade later the FRB was quite comfortable with its assumptions regarding systemic risk in financial institutions, yet even after it had become obvious that their strategy (and many others) was clearly wrongheaded (after Ben B became Chair), a public liaison informed me that he “wasn’t allowed to elevate information on systems designed to prevent systemic crises”. In other words, it was the policy of the FRB apparently to remain ignorant of knowledge systems outside of their (academic) silo. Similar situations are found in most crises I have studied, to include in venturing where we’ve been holding up a red flag for a dozen years. The audit rule that led to Enron.. the Asian contagion.. the dotcom bubble.. institutionalization of venture capital.. the housing bubble.. I missed the SEC rule allowing IBs to leverage up to 50 to 1 on mortgage securities– I was too busy designing systems to prevent crises…

One credible sign of a failing system is one that defends against improvement — in the U.S. there is no effective manner to sell new innovation to the governments, including systems that would make the government smarter and more functional– I’ve been trying for a dozen years, during which time I turned down offers from other governments foolishly.

I spent much of the past decade founding and operating an early stage tech VC while working on designing more functional knowledge systems. Among those I found before my peers, but unfortunately didn’t profit from (we’ll save alignment of interests and incentives for another day, despite the importance), were Google and Skype. Unlike most firms sprouting up in the past decade (VC radically changed when institutionalized in the 90s), we were not geographically strategic. What we discovered was that the Internet had changed the game in ways far beyond what most were considering in the U.S. Not only were collaborators disbursed worldwide with around the clock functionality, but the technologies and even business plans were very quickly becoming of higher quality in other countries. The smart kids and adults were learning at a much faster pace. I myself am a product of sorts of self-learning using the Internet, quickly catching up and passing the majority of post docs in my fields of interests.

During the past decade many other countries have proven more likely to support locally produced innovation than the U.S., particularly at the critical early stages with real dollars from real customers, during a time when the U.S. flooded VCs with capital and freeism as the primary adoption model (“sling spaghetti against the wall to see what sticks”) — extremely destructive to functional markets. Market after market in the U.S. embraced what I will call blind globalization, losing local support and bias as our culture became mobile, cities began to all look similar, and the soul of many communities were gutted. Franchises and global giants dominated, which requires much different skills of managers than independent businesses– not creativity or innovation — a very poor environment for creating business leaders or entrepreneurs.

What’s worse, I noticed a sharp decline in the level of competency in the venture firms, entrepreneurs, and senior managers in global companies– in VC we experienced a generation who had never built a real business, yet those were precisely the individuals institutions felt the most comfortable placing money with — for those willing to shell out $3k you too could learn that PE was no longer about competency, but rather relationships. We have thousands of people in venturing who are incompetent now. As IPO markets sprouted up around the world and capital poured into regional venture firms, real entrepreneurs became some of the world’s best VCs in other countries.

Innovation is a very complex topic that is less influenced by R&D dollars than lobbyists would have us believe. We’ve identified well over a dozen essential elements for markets to be successful in venturing, involving macro global issues (including markets), micro local issues, internally in the venture, and of course the interconnected relationships. Even though I refer to the elements as essential, exceptions occur missing one or two, and they are not the same in each case, particularly recently in emerging markets. No market in the U.S. still has all of the essential ingredients due to both local and global macro issues. The probability of the next Intel emerging from the U.S. is substantially less in my view than in several other countries, and the list is growing rapidly.

Imagine if you will a tech titan that experienced change within a decade from market dominance, manageable debt, and large reserves, to a market with dozens of competitors, many of which now have healthier balance sheets, equally competent workers, newer infrastructure, and much healthier markets. That scenario more closely resembles in my view what the U.S. is faced with today, and no where is it more challenging than for emerging innovation that is still the underlying engine of our economy; particularly of the type the economy desperately needs. We need revolutionary improvement in our systems, complete with much smarter learning systems, far more effective incentives, realignment of interests, and cultural management that places a priority on self-preservation rather than self-destruction.

Radical perhaps to some, but may well be too timid given the challenge.

Mark Montgomery
Founder & CEO
www.kyield.com

HBR debate continued

Steve Hardis contributed an interesting article in the Harvard debate (Is the U.S. killing its innovation machine) on U.S. competitiveness titled: Beware of Government Solutions for America’s High Tech Sector.

My comment to the HBR blog is shared here as follows:

While I can appreciate Steve’s commentary on the negative impact of government on innovation, I disagree that reinforcing the past will work moving forward — indeed our approach has been outdated for over a decade.

I don’t see many here involved with tech transfer, or innovation for that matter, but I can say that the reality I see in the trenches doesn’t support either big government or global corporation’s view on innovation. Since our universities serve primarily government and corporations now, particularly in research, then I suppose we shouldn’t be surprised at the content of the sermons, regardless of merit.

The U.S. enjoyed a dominant role in technology innovation that has only occasionally been challenged within certain sectors in the post war period. That dominance was achieved largely through a command and control structure with gatekeepers on information and capital, increasingly through institutions suffering from the extension of the dysfunctional bureaucracy. In the past decade and a half, much of the world has improved significantly while the U.S. has deteriorated.

Business professors need to invest a bit more time reading scientific journals. MIT provides the bulk of its publication online for free as a matter of policy, but is no longer within the top five in computing worldwide. One can argue about ratings models, but the actual work I consume tends to support the ratings — not only is our K-12 system declining rapidly, so too are our universities relative to the world. As is the case with our investment in education and healthcare, we are investing increasingly more in higher education with deteriorating returns. The same is true with the bulk of investment in R&D both in the public and private sectors. (MM: suggesting a cultural problem).

Moreover, our financial markets have lost much of their credibility from seed to maturity, while much of the world has emerged as direct competitors, now leading the U.S. in many areas.

After 15 years in the trenches, it has become obvious to me that we need a more fundamental revolution in our thinking about models of incentivizing innovation. The models of the past will clearly not work moving forward– the ground has shifted, the environment completely changed, and the dominant markets have become hyper-competitive.

This debate has been interesting, is long overdue, but is not yet itself approaching competitive solutions, in large part due to lack of incentives for those with the knowledge to engage. As is so often the case today in our society, we hear primarily from those with conflicts; not those with solutions.

Mark Montgomery
Founder & CEO
Kyield