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Week of July 14 - 20, 2008 |
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The Changing Face of Innovation
Today’s innovation is not your father’s—or
your grandfather’s---innovation. The way that new products, services,
and technologies emerge has changed, and innovation policies need to
change in response to this transformed innovation ecosystem. A new study
sponsored by the Information Technology and Innovation Foundation
analyzes forty years of data from R&D Magazine, which has annually
ranked its top 100 innovations since 1976. This historical perspective
yields some interesting insights. One major finding is that the role of
Federal investments in supporting innovations has grown rapidly. Also,
collaboration is more important. In the 1970s, a large portion (80%) of
innovations came from large corporations acting alone. Today, a similar
portion of innovations—roughly 2/3--results from inter-organizational
partnerships and collaborations. American firms and government agencies
are quite effective in building partnerships, and this collaborative
mindset is something of a competitive advantage for the US. The author
contends Federal innovation policies need to respond to these trends
with more funding and better collaboration across government agencies.
Both of these moves will ensure that Federal support for R&D has greater
impact as well as greater efficiency. |
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For the past few years, the British think tank Demos has been engaged in a very interesting exercise (dubbed ‘the Atlas of Ideas’) that examines the new “global geography of innovation.” The latest project report assesses Brazil’s innovation system, and argues that Brazil is a “natural knowledge economy.” This term refers to Brazil’s competitive advantage that links knowledge and innovation with environmental and other natural assets. The study describes Brazil’s strengths in biofuels and other agriculture-related sectors. The author, Kirsten Bound, argues that Brazil’s innovation trajectory has been unique in that it has sought to bridge the traditional chasm between environmental protection and industrial development. In Brazil’s case, success has been achieved when natural assets and business development are integrally linked. Future innovations will need to build on this legacy, and also overcome major challenges of growing income inequality as well as significant pressures on Brazil’s rain forests and other natural assets. Another champion of Brazil’s capacity for innovation is Infectious Greed blogger and Kauffman fellow Paul Kedrosky. In a post last week on Private Equity HUB, Kedrosky claims that the place to be for entrepreneurial 20-somethings isn’t Silicon Valley, but Brazil. In a previous entry on Infectious Greed, he points to optimism over an emerging entrepreneurial ecosystem in the country as the main attraction: A transition to a stable democracy combined with a more entrepreneurial economy and more sophisticated investors, plus an increasingly enlightened and business-friendly regulatory structure, not to mention a more functional capital market and clean tech boom, and slowing inflation, have laid the ground work for continuing expansion.
Access the July 2008 Demos report,
Brazil: The Natural
Knowledge Economy, by Kirsten Bound. |
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Policymakers around the world are concerned about the impact of private
equity buy-out firms. Their fear is that these firms swoop in, strip a
company of its assets, and move on. A new study sponsored by the Census
Bureau offers some support for these fears. The researchers examined
private equity buyouts that occurred in the US between 1980 and 2005.
They find that targeted firms have lower employment growth (when
compared to control firms) in the immediate aftermath of a buy-out. The
target firms also exhibit higher levels of job destruction and
establishment closings after the buy-out. These lower job creation
numbers most likely occur as a result of the shedding of unprofitable
units by the company’s new private equity owners. These effects are
limited to retail, services, and financial services firms. Manufacturing
firm performance did not differ greatly. Buyouts also had some positive
outcomes as target firms were much more likely to create jobs through
the opening of new greenfield facilities. These companies are also more
likely to be involved in new acquisitions after the initial buy-out
transaction. |
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The Future of Social Enterprise
A new Harvard Business School study offers
another take on the question of social enterprise. The paper reports on
discussions held at the March 2008 HBS Future of Social Enterprise
Centennial Colloquium. It describes the ongoing boom in social
enterprise and lays out three potential scenarios for the future. Under
Consolidation, the industry will continue its steady linear growth.
Organizations will compete based on performance, and some industry
consolidation will likely occur. Under the Entrepreneurial scenario, new
organizations, new funding models, and other innovations will transform
the field and fuel widespread success. Finally, Expressive projects a
future where funders are not obsessively concerned with program
performance and impact. Instead, giving is viewed as an expressive civic
activity, where participation and commitment are as important as
efficiency and impact. The authors note that the social entrepreneurship
is on the cusp of a major transformation. Organizations, their leaders,
and their funders must be prepared to respond to these and other future
scenarios. |
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The National Dialogue on Entrepreneurship is an initiative of the Public Forum Institute made possible by a grant from the Kauffman Foundation of Kansas City. Through NDE-news, we bring you short summaries and analyses of various trends driving entrepreneurship around the world. Subscribe now to receive your weekly copy. Archived issues are available online. |
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National Dialogue on Entrepreneurship
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stories © 2008 The Public Forum Institute
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