“The best way to predict the future is to create it” — Peter Drucker
The world has entered a rather turbulent and unstable economic period. Developed countries dramatically slowed down growth of GDP, job and economics. The “new normal”, as it was named by Larry Summers — 8th Director of the National Economic Council of USA, is much lower than 4% growth in the 1990–2000s. Prosperity and growth is declined in USA, European Union, UK, Japan and other developed countries.
Such a slow rate just cannot give the necessary quantity of jobs and provide needed welfare. Workers without a secure long time job in USA jumped from 31% to 40% in comparison with 2005 year. The number of not working men of the age between 25 and 53 has become three times bigger since the nineteen sixties and now is 16%. There are more than 7 million of these ages males who gives up and don’t even try looking for a new job. The middle class also sees the downturn in their economic well-being. This downturn left unaddressed is capable of causing large-scale disintegration of the society. To avoid stagnation the world has to look up to technologies and innovation as the only way to survive.
The New World’s Shape
Adapting to a new world is a challenge that most companies and even countries cannot meet. Rapid technology improvement and intense innovation competition with huge wide open markets are providing such opportunities as never before. All these are distinctive features of the modern global innovation economy.
In the coming decades, competition with the US will increase. Every single month up to two million Chinese people move from countryside to cities of China. Every Year on its way forward America is going to find itself in competition with three new cities as big as New York.
The pace of innovation is greatly accelerated by technological progress. Innovations such as artificial intelligence create new tools that provide new capabilities. As a result, technology growth is exponential. The world becomes transparent and more antifragile, which makes it competitive and even further speeds up the progress.
Lack of Flexibility Makes it Crack
Looking through S&P 500 companies list it is evidently that average company lifetime is decreasing. Drop is from 70 years in the 1950s to 20 years today. Every year now 200,000 more companies are crashing than are being born. Such a situation has never happened in the history of the U.S. before. Even the Silicon Valley is no exception and most VC bear losses. University “tech transfer” programs are mainly unsuccessful absent a major drug license, like NYU’s Remicade. Poor management is makes companies lose more than $3T each year in USA. Almost all measures of innovative output show poor results. Our innovative performance is like the poor product quality before Total Quality Management (TQM).
RD&I
If situation would the same in the next decades, America would lose the precedence of RD&I. The Asian countries already are investing in RD&I 50% more than US companies and government do. For America to win its share of jobs and prosperity it must leverage its core strengths and work smarter.
The need for greatly improved innovative performance is being amplified by automation, it also improved the need of innovations in other segments of life. During the years of the next decade, automation in its many forms may make irrelevant up to half of needed today jobs. Robots, three-dimensional printers, biological engineering along with many other rapidly developing technologies and new models of business are going to make big changes in shape and structure of almost every industry.
In connection with the unsatisfying results many states RD&I bureaus are reconsidering their practices. Too often the impact of their current initiatives is inadequate. 23% cut of Tekes’ 2017 the equivalent of NSF funding is the result of the unsuccessful RD&I in Finland. On the other hand, in America were designed DARPA and then I-ARPA and ARPA-E, which are known as best innovations agencies in the world so far. It also proven by Japan’s ImPACT program of commercial innovations modeled after DARPA. To be even more successful, CREATE — project of Singapore — is connecting Research Development and Innovation centers in different Universities such as Cambridge, ETH Zurich and MIT. To teach basics of value creation NSF created the I-Corps. DARPA also uses “grand challenge” competitions to create new innovations at the speed of the innovation economy.
Brand New Workforce in the Key
The new problems are being increasingly addressed by universities. There’s an understanding that to be successful in the world needing fast and continue value creation the students have to have innovative skills. The great example is Finland’s Aalto University also known as “innovation university” with completely project-based curriculum. The experimental d.school of the University of Stanford and the Bio-X are now being mirrored worldwide. Worcester Polytechnic Institute was the first to launch in 1970 an educational program called the WPI plan that was based on projects. It has team projects to be performed internationally, with India and China included. Later Olin College of Engineering had a curriculum with no specific departments and no permanent professors. It would be great to mention Swiss systems which makes young people to learn everything at the future workplace, not in a university.
Today’s Winners
Nowadays, just a handful of specialists and a few companies possess skills and procedures for innovation and value creation and can notice new important possibilities and develop them on a systematic basis. Among them are Apple, P&G, Google, SRI International, GE, and IDEO — all of them are in leading positions in their areas. Recently improved value-creation processes are being developed, such as Agile and Lean.
Also, for pushing forward innovations enterprises are using other platforms, such as X-Prize or Google-X, more and more often. Impressive results are being produced by the online contest from Kaggle. Such programs confirm the possibility of considerable and regular improvements.
Keys
What today’s successful company, government RD&I, venture capitalist, and university programs all have in common is the strict adherence to proven value-creation best practices. The main components are as follows:
- a focus on important opportunities;
- complementary teams composed of the best practitioners,
- Value-creation playbook;
- intense, continuous team ideation.
Only the most effective teams can gain a victory in such super-competitive transparent world of nowadays. Lack of teamwork, personal skills, management and result-orientation can badly affect a company. That’s why value-creation playbook is important. It points out acknowledgment of every team member of value-creation tips and concept of innovations, which leads to success. Intense, continuous team ideation is required because exponentially fast learning is required to stay ahead of the rapid, exponential improvements in technology and the competition.
The practices discussed above are only the beginning. In future decades the world is going to become much more competitive. Better value-creation practices will be definitely found and improved. Making world transparent, competitive and antifragile as well as working jointly in business, education and government sector will proceed to prosperity of innovations and value-creation for all humanity. Only hard work of best value-creation practitioners can proceed to RD&I all over the world.
As is works with TQM, the usage of best value-creation practices leads to exponential growth. A result of better impact on important opportunities can be even 10 times bigger. Looking forward, new generation of workforce and business have to know and apply new principles of innovation and value-creation.
Many of those lessons are the same as today’s organizations are experiencing, trying to adapt to the demands of the global innovation economy and the use of value-creation best practices. But today, companies do not even have 5 years to adapt, and they are not likely to be bailed out by the U.S. government with an n-billion dollar loan.
If they are not going to be another boiled frog, they’d better do it very quickly.
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