The world is not flat… and that creates many opportunities!

© Roberto Alvarez 2016.

In his famous book “The World is Flat: a Brief History of the Twenty-First Century”, Thomas Friedman highlights ten forces that are shaping a ‘flat world’. Later in 2005, Richard Florida wrote an article in The Atlantic disputing Friedman’s idea that people could innovate without having to emigrate. To Florida, the world is “spiky”, as the geographical concentration of people, economic activities and talent suggests.

I can’t agree more…. with both of them. There’s a global convergence, but it shouldn’t be taken for granted. Economic systems have been falling short of delivering better living conditions and hope for a lot of people around the globe, giving raise to political radicalization, extremism, anti-globalization, protectionism, xenophobia… The world is becoming flatter for the global professional class, but not necessarily for all citizens. The very nature of globalization and the magnetic power of talent make the process self-recursive: talented, creative and highly productive people cluster in places where they find their peers.

To be clear: there are big differences among countries and their innovation ecosystems. The place where you are and work can make a big difference for the success of your business, project, idea, new venture, life… That’s why so many entrepreneurial, passionate, skilled and ambitious folks want to move to Silicon Valley — according to The Economist, the new “Florence”. But, by no means, this implies that Silicon Valley and/or other dynamic innovation clusters have a monopoly of opportunities.

The asymmetries and convergences associated to an uneven and sometimes contradictory globalization process create unique opportunities. Chief among them is the opportunity to arbitrate knowledge assets across regions, countries and innovation ecosystems. That possibility makes sense because of the combined effect of…

[1] the convergence in technical and scientific capabilities around the globe

  • The capacity to create knowledge has expanded dramatically in the world and scientific capabilities in emerging economies were significantly expanded in the last 10–20 years, across the board, in any scientific discipline. For instance: in 1983, 66% of all paper published in Physical Review and Physical Review Letters were originated in the United Stated; that percentage dropped to just 25% in 2003.
  • In the past, knowledge was concentrated and hard to access — you’d need to go to the MIT to have access to the content of MIT courses. With connectivity and digitalization, almost anyone can access online content, at any time, from anywhere. Access to formal knowledge was never so easy.
  • Price points for research equipment — from computers to bio labs — were sharply reduced and will go further down. Building a lab and/or having advanced computation capacity was never so cheap.

[2] the asymmetries that exist among countries and regions in relation to business structures, capabilities and environments

  • Value creation and innovation depend a lot of soft business capabilities — financial modeling, business design, marketing, supply chain management, international development, legal design and so on. These capabilities are underdeveloped in most emerging markets when compared to dynamic innovation ecosystems and countries — you are not likely to find in São Paulo, Brazil, the same supply of expertise on fund raising and business development for operations targeting the Indian market as you’ll in NYC, for instance.
  • Building an innovative business requires a lot interactions, connections, and inputs from clients, business partners, mentors, investors, services providers etc. The processes, environments and connections to make that happen in a structured, fast-paced and efficient way — creating a positive learning cycle for the new business — still are being developed in emerging markets.
  • In general, the expansion of scientific and technical capabilities is not being accompanied around the globe by the necessary developments in institutional frameworks to promote innovation.

There’s a mismatch that results from the combination of all elements mentioned below: in different places around the globe, technical/scientific assets are not creating the value that they were expected to and/or could create, because they are not accompanied by the necessary business assets. Investments in scientific and technical capabilities are not paying off because of constraints in business structures and soft capabilities.

So… what do I mean by “knowledge arbitration”? In short: to create value moving knowledge assets (capabilities, IP…) around the globe and combining them in new ways. There are opportunities to:

  1. Take/supply underutilized technical/scientific knowledge assets available in emerging countries to dynamic innovation ecosystems. Hypothesis: a knowledge asset that is not fulfilling its value creation potential in market A (for instance: Argentina) could create a lot value if connected to business structures available in market B (for instance: Flanders/Belgium).
  2. Take/supply to emerging markets business skills, capabilities and structures that are plenty available in advanced innovation environments/ecosystems. Hypothesis: a knowledge asset that is creating some value in a mature where it is abundant (for instance: the US) could create a lot more value in a market where it is in short supply (for instance: Vietnam) — the marginal gain is positive.
  3. Create a business (connector+accelerator+fund+advisory) to map assets, identify asymmetries in innovation ecosystems around the globe and create knowledge-resource bundles that would unleash value creation in a global scale.

Those ideas have potential implications to investors, researchers, government and entrepreneurs. Anyone interested?