My goodness, we’re struggling with the innovation idea
For about the last four years we have, as a country, been courting the idea of innovation as the driver of the economy. Maybe it all started when we read Michael Porter’s argument that as an economy matures it needs to move from being investment-driven to being innovation-driven. As we digested this, our approach to competitiveness was adjusted, and the government adopted the Strategy for Science, Technology and Innovation. More recently we have obscured the innovation agenda slightly by moving the language to concepts such as a ‘smart economy’ – which sounds good but doesn’t really disclose through the label what it means; but on the whole the innovation agenda is still alive.
At any rate, I hope it is, because there is no shortage of people wanting to have a go at attacking it. Most recently this has been Constantin Gurdgiev, the editor of the magazine Business and Finance, though in this case writing in the Sunday Times newspaper. I don’t believe that the Sunday Times has published the piece on its website, so you have to go with my summary for the present.
In a nutshell, Gurdgiev believes that as a country we are seriously wasting money. He argues that all the investment in Science Foundation Ireland will yield peanuts in terms of start-ups and commercialised intellectual property. He believes that doubling the number of PhD graduates (a key goal of the Strategy for Science, Technology and Innovation) is ‘patently absurd’; and he argues that our universities are nowhere (and will be nowhere) in terms of global competitiveness. I am finding it more difficult to identify what he is arguing for (as distinct from what he is arguing against), but it seems to be more focus on ‘communications services’; he also mentions ‘marketing, sales and distribution.’
The first thing to say about all this is that we are actually going to go nowhere at all if we are not single-minded about what we are doing. If we adopt scientific innovation as our iconic aim today, but drop that tomorrow in favour of, say, being the home of global PR, and then something else next month, we won’t be much good at any of them and we won’t be taken seriously. This country put innovation – understood as investment in high value science and technology – at the heart of its development plan three or four years ago. This is not an agenda that produces all its benefits in eight months, and we had better stay consistent, because if we give any indication of loss of resolve now we lose all credibility. Companies have invested in R&D located in Ireland on the basis that we are investing in innovation, and right now there are people in laboratories all over Ireland working on discoveries that will provide both technological innovation and commercial focus. All of that can easily travel somewhere else. And we would have very little to replace it with.
We need to get out of the mindset of bean counters, in particular the idea that what we must count is jobs. Innovation is not in the first instance about jobs. It is about economic progress, and about work, and about wealth, and about social benefits. Some of that my result in what traditionally we have called jobs, but even where innovation creates jobs the link may be too indirect to allow anyone to count anything much. But what innovation will deliver is a potential for serious economic growth. Jobs are a by-product of that.
If this country dodges the demands of an innovation economy, then we had better get ready for sustained decline. We have no other offers on the shelves, and none we could put there with much credibility. We need to be consistent, and we need to stay the course.
Explore posts in the same categories: economy, science, universityTags: Constantin Gurdgiev, economic growth, employment, innovation, jobs, R&D, research
You can comment below, or link to this permanent URL from your own site.
University Blog 
June 2, 2009 at 1:06 am
I am by tradition an opponent of Fianna Fail but there are two things I have liked about them these last few years; the first relates to your post of yesterday, they appreciate the cruelty of unemployment and have privileged, perhaps to a fault, employment over all other economic metrics. The second is their ambition for Ireland; it is easy to say we would be safer concentrating on this service or that, PR or tourism, or, by holding down cost, bulk manufacturing. It is more ambitious, more dignified, more impressive, to hope we will grow through science and innovation, that we will benefit by supporting activities which aren’t just of benefit to us but are also of huge benefit to the human enterprise.
It is easy to mock the idea of Ireland growing by contributing to our shared estate through an investment in science and it is impressive that the government has proposed just that.
June 2, 2009 at 6:33 am
Innovation is a bit like purity, all say they have it but none can define it. And that makes it very difficult to pay for when you have the specter of 20% unemployment in few years.
June 2, 2009 at 8:33 am
Gurdgiev is, of course, a rabid right-wing free marketeer. Didn’t he also advocate deregulation of the financial sector and such in the past? Or is that a false memory? Loud, yes, but nonsense nonetheless.
Interestingly on his biography page to which you link it states he was awarded the “World Medal of Freedom” by the American Biographical Institute. That is interesting since they are a company that sells titles and awards for hundreds (or thousands) of dollars, this one included!
The Dept of Consumer Affairs of Western Australia has an interesting page on this particular award and its cost http://www.docep.wa.gov.au/ConsumerProtection/scamnet/Scams/World_Medal_of_Freed.html In addition, even humble old Wikipedia follows up on it. http://en.wikipedia.org/wiki/American_Biographical_Institute.
On this particular issue there are of course many questions not least of which is the narrow working definition of the fields in which the government is prepared to invest and the consequences for those areas that are unfunded. However, as you effectively point out, creativity and innovation can only arise from a lot of hard work over many years and it is from a pool of activity that new ideas are able to emerge, so it is very much a long haul. For those who are funded, however, the constant calls to ‘innovate’ and come up with commercially successful ideas by the end of the grant funding period is problematic. You cannot simply programme/schedule these things and the danger is that applying more and more pressure for short-term deliverables is likely to lead to a lot of submissions of patents and other IPR ‘artefacts’ which are measurable but not necessarily particularly valuable. Similarly, there is a danger of researchers being drawn into a culture of spin and you can see this in many newspapers for example where it seems like we’re on the verge of a cure for cancer every week!
Ben Goldacre commented on university press releases recently: http://www.badscience.net/2009/05/dodgy-academic-pr/
June 2, 2009 at 9:35 am
Constantin replies to your post here: http://trueeconomics.blogspot.com/2009/06/economics-2062009-innovation-debate.html. He also says he will post the original article on his blog later today.
June 2, 2009 at 9:39 am
I think you’re missing the point of Gurdgiev’s argument. One has to distinguish between blue-sky research (MediaLab, Bell Labs etc..) and the ustilisation of technology in the evolution of business processes that will be more productive. Fetishing technology as the ‘source’ of prosperity is one of the fallacies at the heart of Mao’s Great Leap Forward and our government’s talk of a ‘knowledge economy’. The innovative manager is looking for a cheaper and better way of doing things – period. Technology will support this. What stands in the way in Ireland is not lack of ‘expertise’ or lack of ‘technology’ (though if these are necessary it is only at the behest of the manager responsible). What stands in the way is the feudalisation of Irish public and (some) private organisations around rigid management structures where status and not achievement is the main output and refusal to adapt and not organisational innovation is the main strategy – usually driven passive-aggressively by professional bodies and trades unions. Take, for example, IT in hospitals. It should be very cheap to design a web-based, secure database of patient records universally available to all health practitioners. By ‘cheap’ I mean a couple of hundred thousand euro or even less. You could probably build it using open source tools for about 50k. Now then take the article in the Irish Constitution that says that any such attempt to innovate (I don’t need to spell out why this would be a huge innovation – a true great leap forward) would require that a tender be given to Accenture and a ‘consulting’ contract be given to PWC and that numerous committees of ‘stakeholders'(i.e. all those who have nothing to gain if it works and everything to keep by pretending to be engaged in ‘consultative process’) spend years consuming the legitimacy of such a project to inflate their own importance (‘major data protection concerns’ anyone?….resulting in, oh I dunno, billions wasted for no product.
The solution is not more ‘expertise’ or ‘innovation’. The technology and expertise to revolutionise Irish public and private sector productivity is cheap and easily available. What’s lacking is the management will and power. What’s in the way, at every level of Irish life, is the politicisation of management decision making by ‘social partnership’ and its baleful gravitational influence on the management culture of an entire generation of Irish managers. For example Brendan Drumm is paid more than Barak Obama – an enoumous salary – to run the HSE. With all his status he doesn’t even have the authority to fire anyone. If you can’t fire people you shouldn’t be doing such a job and, in fact, it is dishonest to remain within it. There is no danger of innovation here. More PhDs will not help.
Gurdgiev’s point is that the ‘knowledge economy’ is a distraction from the failure and continued unwillingness to take uncomfortable decisions, many of which would necessitate confronting self-serving ‘experts’ in the professions for whom productivity increases from innovation are a mortal threat.
Finally, Gurdgiev doesn’t have to be arguing ‘for’ anything in order to demonstrate the patent absurdity of the Government’s (with the connivance of academia) focus on more PhDs and ‘research’. The sheer laziness of your own response to his argument merely proves his point. ‘We need to get out of the mindset of bean counters’ – really? Would that more than a fraction of managers in the public sector have even acheived such expertise? With a national deficit approaching 15 times that of California (and the FT describes CA as being in ‘fiscal meltdown’) we could have done with some bean counters in the government in the past few years.
Gurdgiev’s pointing to the impact of technology in retail is apposite. It’s a non-glamorous, mundane phenomena yet that is where it has worked.
At the same time, even, Gurdgiev unintentionally flatters those who think that technology is the only key. Wall Mart’s use of technology is better than our public sector because its organisation is adaptive. Historically the organisation is prepared to disrupt itself before it gets disrupted by its market.
Given where Ireland is at this focus on technology is a distraction from the fact that the entire public service – especially in academia – is massively overpaid compared to the rest of Europe. Think about it. A deficit approaching 15 times California and the best paid academics in Europe. Sure technology might be on the list of things to utilise but, given the scale of the fiscal disaster that these same policy-makers have visited upon Ireland, that’s a bit like a Commission to implement high-speed broadband in Zimbabwe. There are about 10,000 things on the list to get done first – starting with reviewing the salaries earned by you and your colleagues.
June 2, 2009 at 1:27 pm
Your response to Gurgdiev’s article is predictable.
You suggest that investment in a high value science and technology agenda cannot be expected to produce all the benefits in eight months.
In saying this, you ignore the evidence that basic research is only responsible for a very small amount of innovation in economies. The vast majority of innovations come from working and re-working the existing stock of knowledge.
Acordingly, we don’t expect to get significant benefits in eight months and based on the evidence from Arnold, Bhide, Rosenberg and many others we don’t expect it in the longer term either.
You say there are no other offers that could be credibly applied. That is simply not true. Besides having a high spend on R&D, the really important thing that Finland has done is its focus on being a networked society with huge emphasis on human capacity and IT.
We could also look at Denmark and learn a lot as to what else we could do. If,however, we have closed minds driven in many cases by vested interests it is easy to delude ourselves that what we do in basic research will deliver a well functioning innovation system in Ireland.
It will not deliver a well functioning innovation system for the reasons given by many experts.
It is indeed time to look to the Danes, the Fins and others to repair our dysfunctional innovation system.
If we do it right, we can have a significant population of entrepreneurial firms who will know how to come up with and develop high value products and services for customers worldwide.
June 2, 2009 at 1:46 pm
Edward, your comments are interesting, but I’ll have to differ. My response may have been predictable, but it’s still right 🙂
The Strategy for Science, Technology and Innovation isn’t on the whole funding ‘basic research’, but rather translational research (or if you like, applied research). But even then what you say is very arguable: it is estimated (and I’ll dig out the references) that most commercial innovation had its origins in blue skies research.
As for Finland, one of the key things it did was to fund high value science research – Nokia based a lot of its product innovation on that. And Finland as a model is tricky, because it is almost a one-company economy, which at some point will become very risky.
As for Denmark, while there are many interesting things to be said about it, its economy in terms of GDP growth has consistently under-performed by international standards over the past decade; in 2007 (i.e. before the downturn kicked in) its growth rate was 1.6%, compared with 2.5% in Germany, 3% in the UK and 6% in Ireland. In the recession its economy has also declined more rapidly. Finland’s growth in 2007 was 4.6%.
June 2, 2009 at 3:42 pm
You say most innovations come from blue sky research.
As long ago as the 1940’s Genrich Altshuller showed through the study of many patents that the evolution of technological systems is predictable. He was able to develop this theme to set out the 40 inventive principles and the related generic approach to solving contradictions as the basis of developing new products.
It is obvious that much of the science we have today was once undiscovered. We have a lot of so-called old science that can be exploited through technology development and technology integration.
While the first Lasers were developed around 1960 we have since then had a diverse range of applications. The underlying science was formulated by Einstein in 1916 so here was a case of old science being used to facilitate the execution of important jobs that people wanted to have done. Depending on the product, there are differing degrees of technology development and integration required to come with a reliable working solution. In the case of the CD Rom for example, we are talking about software, over sampling routines, error correction routines, electronics, data layer response, data trackability and so on.
It was technology development and technology integration that has brought about the laser applications and it is wrong to suggest that this is contemporaneous blue sky research when we are actually working and re-working the stock of existing knowledge to make use of old science.
This is just one example of the very many that can be quoted. Nathan Rosenberg’s work Inside the Black Box deals with this in authoritative detail.
What this proves is that there is a vast amount of so-called old science we should be working and re-working to come up with new solutions to significant customer needs or problems. Other nations have no problem doing this and so we have the development of products such as the iPod, CD and DVD players and so on.
Going back to Gennrich Altshuller, he found that only about 2% of all patents were related to pioneering solutions. He found that in 98% of cases, the patent was based on a modification or enhancement of an existing solution.
This allowed him to conclude that whatever problem requires to be solved will already have been solved generically by somebody else in some other industry.
This thinking lead him to develop the very powerful tool TRIZ that is used by top companies in the worlds most advanced economies. While this is a very powerful Tool and it should form part of the training of many graduates, it is not popular in Irish universities.
The point of these comments is to say that there is a huge basis for discovery of significant innovations using existing knowledge. There are tools to do this.
The firms who create our economic wealth are the ones to do it.
The ones that have the ambition and leadership will play a crucially important role in our innovation system. The complete the picture the companies need to learn the thinking, practices and the tools of technology and innovation management. .
Companies at this level will be able to adduce the most significant unmet needs of important customer groups and they will be able to identify the solutions required. The technology development and integration is a different matter. Here the companies will need the help from the colleges and what is needed is an applied research response.
Bringing our best companies up to this standard of technology and innovation management capability would be enormously beneficial to our economy. It would put innovative activity right at the centre of business development and it would have a supportive college response.
Far from their being no credible response to building a well functioning innovation system in Ireland, this is the place to begin.
June 2, 2009 at 6:37 pm
Ferdinand,
You seem to be unduly dismissive of a serious point addressed by Gurdgiev about science research, particularly in the way you talk about changing course from one month to the next and not achieving all benefits “in eight months”. In practice, there should be a long way between the (apparent) fickleness that you ridicule and the stubbornness that lies at the other end of the spectrum. Stubborn adherence to a one-dimensional policy strategy is even more absurd, particularly in the face of substantial evidence that science research is, at the very least, insufficient for a properly functioning innovation system. Edward above provides reference to sources of some of this evidence.
At the heart of some of these misunderstandings is the meaning of the word innovation. To the person in the street, ‘innovation’ can mean anything new. In an economic or business context, it must mean something new ‘that adds value’, and this usually means being adopted by a customer.
Irish science research adds significant value only through increasing the stock of human capital, giving the state absorptive capacity. The number of DIRECT jobs created is, and must be expected to be, minuscule.
But doing science research alone (as an ‘innovation policy’) is like training football defenders, and then forgetting about the forwards, the coaches and the managers. Such a team inevitably fails.
For a proper innovation system, we need other disciplines in balance to the science & technology cohort. The two main disciplines which need to be cultivated, now, for a balanced national innovation system in Ireland are Innovation Management and Design. I have argued more extensively for Design in a February Business and Finance article. See here http://www.businessandfinancearchive.com/digital-archive/26_02_09/index.htm, (page 24).
Gurdgiev is right. Think of it this way: We should halt EXTRA spending on science research until the other complementary components of an innovation SYSTEM have caught up. Science spending is wasted until it can be properly utilised in the real (business) economy.
The bottleneck now (unlike the 80s) is not science; it is the lack of other components of the national innovation system.
June 2, 2009 at 10:30 pm
The Celtic tiger came about not through innovation in manufacturing but by innovation in terms of taxation.
The Property bubble did not come about through innovation in building, materials or urbanism but through innovative financial products.
Why do we think that we can build a smart economy by just investing in science and technology?
June 2, 2009 at 10:43 pm
FPL, it’s not quite like that. The Celtic Tiger was certainly helped by taxation, but a key need was the education of people in ICT and (later) life sciences. The property bubble came through over-valuation of houses and real estate, nothing else. A knowledge economy requires R&D. No knowledge economy, no new investments, no end of recession.
By the way, I have never before heard the crazy lending decisions of the financial institutions described as ‘innovative financial products’. They were ‘innovative’ in much the same way that British MPs’ expense claims were. 🙂
June 3, 2009 at 9:59 am
Prof,
We are talking about innovation here and benefits to the Irish economy.
The Celtic Tiger was driven by FDI into manufacturing in Ireland by US companies. Yes educated people were needed that is not disputed there were other components such as builders, electricity, roads, phones etc. The point is that we have always had educated people in Ireland as well as many of the other components mentioned, so what was the trigger that started the Celtic Tiger? The Eureka moment?
If we seek to draw an analogy with today’s S&T strategy it is difficult because the celtic tiger although manufacturing led was not based on innovation in manufacturing
So what drew these companies here? The innovation, the new thing that triggered the shift was taxation. We were the first European country to spot the advantage of low tax in the European context and were able to do it politically and socially, simple as that.
To say the property bubble was caused by over-valued property is a bit like saying wind is caused by air, or rain is caused by water, clearly they were not.
Ask yourself the question, how did the banks manage to make what are now considered to be crazy decisions?
Your own university is a leader in financial mathematics, perhaps you should ask your staff to explain how a raft of new products based on derivatives and insurance contracts were used to increase leverage and rack up debt on people.
At a very basic level, a subprime mortgage is innovative. Yes they were harmful, but innovation is not confined to doing good.
June 3, 2009 at 12:56 pm
The latest round of Enterprise Ireland Innovation Vouchers, which were designed to assist SMEs in becoming innovative, has just been cancelled (or ‘deferred’) How innovative is that!
June 8, 2009 at 1:26 pm
[…] may offset the total impact, while still achieving social outcomes. (These are the broad arguments for and against fiscal support for innovation.) Taxes that meet other objectives society has set itself […]
June 8, 2009 at 10:29 pm
[…] Ferdinand von Prondzynski, from DCU, has written in his Blog about the need to be single minded about our need for research and innovation. To a point I agree. The policy of investment should continue in high value areas. There must also be a viable environment that can take on this new knowledge and ultimately help support the funding of the research. […]
June 9, 2009 at 9:33 am
[…] was some discussion in the comments section on the blog of Ferdinand von Prondzynski of […]
June 22, 2009 at 11:56 pm
True innovation in a sense that adds meaningful value to our lives is in the implementation of the creative ideas or discoveries. The problem as I see it at the moment is that we have a €25b gap in our finances to fill over the next five to 10 years. How we fill that gap will determine the shape of our society for a generation. At the same time we are deleveraging €400b of private sector debt.
The world is increasingly flat due to technology but with spikes of wealth developing around competitive city regions where clusters of technologies or natural resources create competitive advantages. As a small island on the edge of Europe with no control over our monitory policy, we must trade and be super competitive, be it our services industries, tourism, agriculture, technology exports and in particular our public sector.
We can deflate and cost cut our way to competitivness, we can innovative our way to adding more value. My guess is that we have to do both and pretty fast in both public and private sectors and get back to adding value through trade.
So true innovation might look like reforming our public sector to deliver better services at 35% of GNP.
Necessity being the mother of invention strongly suggest that we prioritise resources on the innovations which will deliver jobs, productivity gains, or aid the implementation of creative ideas in the pipeline which may fail because of lack of connected thinking across the channels of implementation.
Nokia did not emerge from a technology backwater, but from a country which 30 years ago, one ordered a phone on Thursday and it arrived at the agreed time on Saturday, not six months later as it was here at that time.
Our taxation structure was an important innovation, but demographics, language, and US trained talent pool were important factors in our industrial development over the past 20 years.
We now need new innovations, perhaps in international law, innovative trade agreements in digital products, innovative supportive environments for micro industries etc. Imagine business’s bidding for University resources to help businesses innovate.
I don’t have the academic background to prove my proposition, but lots of practical experience of fighting against the odds.