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The innovation imperative

This article appears in the issue July/August 2008, [Vol 17, Issue 7]
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KMWorld interviews John Kao, author of Innovation Nation and opening keynote speaker at our annual KMWorld & Intranets Conference Sept. 23 to 25 in San Jose.

Q.  KMWorld: Your book, Innovation Nation, has been widely acknowledged as bringing innovation to the forefront of our thinking, not just for the business community but also for society itself. What factors have created this innovation imperative for you?

A.  Kao: I wrote Innovation Nation because I was personally more and more disturbed by what I perceived as taking our foot off the gas pedal in the U.S. with regard to innovation. I think right now there is kind of a dual narrative at work in the sense that my perception is that the U.S. is slowing down the pace of its game while many countries around the world are accelerating their progress toward the perceived grail and high ground of greater national innovation capacity.

Some of this has been inevitable. After World War II, America was pretty much the only game in town, and so it’s natural that talent, quality of life, scientific capacity and funding capacity have become more globally distributed. What is alarming to me, though, is that foreign talent has surpassed our national innovation capability, especially when it comes to education at all levels.

Investment in the future by both U.S. companies and our government is, to put it kindly, not as robust as it has been historically for us. From my perspective, a global innovation economy is emerging, where flows of talent ideas and capital between countries, regions and from city to city, are going to become decisive factors. In the U.S., we have had the luxury of perhaps not having to pay as much attention to the transformation of these kinds of global dynamics. I’m convinced those days are over. My mission these days is to take the optics around innovation and raise them to a higher, more focused level. Beyond what an enterprise needs to do, what do we as a global civil society, global civilization, need to do to innovate for our shared benefit? These are the questions that I’m thinking a lot about these days.

Q. KMWorld: Immediately, education comes to mind.

A. Kao: Right. To borrow Clay Christianson’s phrase, education contains an "innovator’s dilemma" these days. More schools and more homework and more teachers aren’t necessarily going to change the trajectory of an education enterprise. Just to take half a step back, we are a country that probably spends more per student than any public education system in the world, yet our relatively poor performance, especially in areas of science and math, are quite well known.

We are somewhere south of 24th in the world for math and literacy, which is dismal [performance]. We need to think about how to transform education and the education process itself. There are very big conceptual issues that have to do with what the role of educational institutions should be in terms of providing access to the digital domain in a world where kids arguably get more digital capability and experience outside a school than inside a school. So, if you have access to search technology, to Web 2.0 applications and communities of practice at home, how does that affect the in-school, K to 12 experience?

I also think there is a values question. There seems to be an ever-waning interest in science and math and an ever-waning interest in school. The graduation rates for high-school-age students in America are shocking. Barely two-thirds of students in the United States finish high school.

It’s a ticking bomb in the sense that if you leave school before you get a high school diploma, you are marginally employable. Your opportunities of getting back on some kind of career track are diminished. We still have 37 of 50 best universities in the world. We have lots of smart people. We are a big society, so our share of the bell curve is big—or, at least, it translates into a big number. But what I’m afraid of is that we will wind up seeing through an innovation lens as a society where there is going to be a top end of well-educated people with lots of opportunities and then there is going to be almost like this new kind of lump in the proletariat of people who are poorly educated, are marginally employable and where the mechanisms for retraining are not terribly evident.

We need to have a way of employing fully the population base—engaging them, giving them the relevant skills to do extraordinary things. The innovations of yesterday, today and tomorrow are not necessarily super labor-intensive, and there are several reasons for that. One of them is that the crème de la crème are driving innovation forward. There are not a lot of people, for example, who are experts in quantitative biology, but you don’t need a lot of them to create an industry. The other point is that America has very smoothly adapted to the notion of outsourcing elements of the innovation value chain.

It’s very common now to see ventures that will have a management team in the U.S. but will outsource the big chunks of the value chain. Let’s say you’re in the pharmaceutical development business. You’ll outsource to Vietnam or India and have a whole bunch of low-paid workers who at the same time can focus on the needed path and who have fewer regulatory barriers, and where there’s less friction and they cando a better job.

So, there is a question, which is really a social policy question, of how to make the innovation economy acceptable to all—equal access to opportunities. Obviously that starts with education. Education is what puts everyone at the same starting line. And then people will have a lot more choices about how to participate in this innovation economy. And maybe will be prepared with the minimum requirements for success. You know without that, the stage is set for being a new kind of two-class society, one that I don’t think we would find particularly attractive.

Q. KMWorld: Can you cite some examples of organizations that have demonstrated that innovation is crucial to a culture of an enterprise, part of its DNA?

A. Kao: Some of the companies in high-tech, such as Google and Apple, clearly have well-defined cultures that create a certain fanaticism and focus around innovation. Or an enterprise like Procter & Gamble, where the CEO evangelizes about innovation. These, and plenty others, have been very specific about how they want innovation to be something that they in-source from the outside world just as much as they do internally—they want the whole innovation culture and well ingrained.

Look at companies in the logistics business, such as UPS, and retail—Target—for examples. These are companies that have been able to take an original business concept and build on it, thereby transforming the enterprise by adding innovation to their business process as a fundamental part of their culture.

Q. KMWorld: You taught at Harvard for many years. How do you go about trying to encourage people to find their individual creativity and to develop their penchant for innovation?

A. Kao: Those are two separate questions; one is the level of developing individual creativity and the other kind of looking at innovation processes that may be resident in a team or an organization. The approach I take is very much one of making the assumption upfront that these are clinical, not theoretical, disciplines. But we’re never going to have a three-ring binder in which you can have all the principles and then simply deduce what you have to do in a particular situation. It’s about people and interactions and culture, as well as human-centered processes that are somewhat ethereal and complex.

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