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Introduction
16 the world’s wicked problems: This term of art has a long and rich history. For more, see Horst Rittel and Melvin Webber, “Dilemmas in a General Theory of Planning,” Policy Sciences 4 (1973); and more recently, John Kao’s “What Is Large Scale Innovation,” 2009, www.johnkao.com/Large%20Scale%20Innovation.pdf.
Chapter 1: Wicked Problems, Wiki Solutions
22 Can you change the world: Jeff Denby gave a lively presentation of his business strategy at this Ideas Economy event in March 2010: http://ideas.economist.com/presentation/sustainable-underwear.
26 Geoffrey West: West presents his arguments on the role that scaling plays in driving innovation at this Ideas Economy event on Intelligent Infrastructure in September 2010. Careful listeners will catch his off-color description of the Singularity concept (described in Chapter 4), which he thinks is complete bunk: http://ideas.economist.com/presentation/urban-physics.
26 More amazingly, the rise of those economies: For a good overview of the prospects for ending absolute poverty in this century, see Jeffrey Sachs, The End of Poverty: Economic Possibilities for Our Time (New York: Penguin, 2005). Note I mean absolute poverty, as measured by such objective standards as the UNDP’s human development metrics, not relative poverty. In that sense, the Good Book is right, as income inequality will always be with us.
27 The World Economic Forum has dubbed this: The World Economic Forum’s work on this topic includes a thoughtful report highlighting the interlinkages: “Water Security: The Water-Energy-Food-Climate Nexus” (2011), www.weforum.org/reports/water-security-water-energy-food-climate-nexus.
28 William Baumol: For a masterly analysis of entrepreneurship through human history, see David S. Landes, Joel Mokyr, and William J. Baumol, eds., The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times (Princeton: Princeton University Press, 2010). See also this entertaining romp through the history of innovation with two grand masters, Baumol and Harold Evans, at this Ideas Economy event in March 2011: http://ideas.economist.com/video/masters-innovation.
30 Larry Brilliant: For an overview of the grand global challenges of the twenty-first century, see “Sustaining Humanity,” a lecture he gave at the University of Michigan on March 16, 2011: http://lecb.physics.lsa.umich.edu/CWIS/browser.php?ResourceId=4021.
33 Jung is a cofounder: Many in Silicon Valley maintain that Edward Jung and his more famous cofounder, Nathan Myhrvold (the former chief technology officer of Microsoft), are opportunistic patent trolls. Intellectual Ventures has in the past fiercely rejected this label. Pressed on this point during an interview in May 2011, the amiable Jung insisted his firm was chiefly about long-term investments—but he acknowledged that it was something of a patent troll as well.
36 Beware the Superbug: The parts of Chapter 1 dealing with bacterial superbugs draw on analysis done for an Economist briefing on the same topic. I thank my colleagues and collaborators in that effort, Natasha Loder and Geoffrey Carr.
Chapter 2: Cheap and Cheerful
56 This so-called localized modularization approach: The arguments put forward by John Seely Brown and John Hagel on Chinese innovation are found in their “Globalization and Innovation: Some Contrarian Perspectives,” a paper prepared for the annual meeting of the World Economic Forum, Davos, Switzerland, January 25–30, 2006, www.johnseelybrown.com/davos.pdf.
57 Aravind, a pioneering Indian eye hospital chain: Though C. K. Prahalad first brought the Aravind story to global attention, a number of independent studies, including by leading business schools, have validated Aravind’s model. A good recent analysis is found in Suchitra Shenoy and Pavithra Mehta, Infinite Vision: How Aravind Became the World’s Greatest Business Case for Compassion (San Francisco: Berrett-Koehler, 2011).
63 For example, says Christopher Wasden: The PWC Innovation Scorecard for the global medical devices sector, published in January 2011, is found here: http://pwchealth.com/cgi-local/hregister.cgi?link=reg/innovation-scorecard.pdf.
Chapter 3: Of Stagnation and Rejuvenation
69 the transformative power of mobile telephony: For more on how cell phones and related technologies have impacted the lives of the bottom billion, see Vital Wave Consulting, mHealth for Development: The Opportunity of Mobile Technology for Healthcare in the Developing World (Washington, DC: UN Foundation–Vodafone Foundation Partnership, 2009), www.globalproblems-globalsolutions-files.org/unf_website/assets/publications/technology/mhealth/mHealth_for_Development_full.pdf, and Isaac Mbiti and David N. Weil, “Mobile Banking: The Impact of M-Pesa in Kenya,” National Bureau of Economic Research, NBER Working Paper No. 17129, June 2011, www.nber.org/papers/w17129.pdf.
71 Though some dismiss any talk of a middle-class squeeze: Barack Obama has often commented on the middle-class squeeze, for example, during his State of the Union speech of 2010. Ronald Haskins made his observation during “America’s Endangered Middle Class: Exploring Progressive and Conservative Remedies,” an event organized in February 2011 by the Brookings Institution in Washington.
72 Consider the evidence: The best data sets for working out the Gini coefficient and other metrics relevant to income inequality in America are maintained by the Internal Revenue Service and the U.S. Commerce Department.
72 Alan Greenspan: He made similar comments at various times, but most notable was during congressional testimony given in June 2005. See Peter Grier, “Rich-Poor Gap Gaining Attention,” Christian Science Monitor, June 14, 2005, www.csmonitor.com/2005/0614/p01s03-usec.html.
74 Indefensible as these are: For a thoughtful take on the broader implications of tax breaks for employer-provided health insurance, see Len Nichols and Sarah Axeen, “Employer Health Care Costs in a Global Economy: A Competitive Disadvantage for U.S. Firms,” New America Foundation policy paper, May 2008, www.newamerica.net/publications/policy/employer_health_costs_global_economy, and Jonathan Gruber, “The Tax Exclusion for Employer-Sponsored Health Insurance,” National Bureau of Economic Research, NBER Working Paper No. 15766, February 2010, http://econ-www.mit.edu/files/6404.
77 What should one make of this: The McKinsey Global Institute has done quite a bit of work on productivity growth versus stagnation. The consultancy’s website ran a debate between Tyler Cowen and two MIT experts, Andrew McAfee and Erik Brynjolfsson: “The Debate Zone: Has the U.S. Passed Peak Productivity Growth?” http://whatmatters.mckinseydigital.com/the_debate_zone/has-the-us-passed-peak-productivity-growth.
79 Angus Maddison: Much of Maddison’s work can be found on his website, www.ggdc.net/MADDISON/oriindex.htm. Since his passing, a group of dedicated scholars has maintained another site, which publishes work done in the same spirit: www.ggdc.net/maddison.
80 For example, health care gobbles up: See, for example, the OECD’s ongoing work on health indicators across the developed world at their website, OECD.StatExtracts: http://stats.oecd.org/index.aspx.
84 In early 2011, Ben Bernanke: His speech, “Promoting Research and Development: The Government’s Role,” given at the conference “New Building Blocks for Jobs and Economic Growth,” Washington, DC, May 16 2011, can be found at www.federalreserve.gov/newsevents/speech/bernanke20110516a.htm.
86 The great Victorian age of invention: For more on this topic, see Vaclav Smil’s scholarly Transforming the Twentieth Century: Technical Innovations and Their Consequences (New York: Oxford University Press, 2005), and my colleague Tom Standage’s delightful book on the age of the telegraph, The Victorian Internet (New York: Walker, 2007), http://tomstandage.wordpress.com/books/the-victorian-internet.
87 The American financial industry: A provocative report on this topic is Paul Kedrosky and Dane Stangler, “Financialization and Its Entrepreneurial Consequences,” Kauffman Foundation Research Series: Firm Formation and Economic Growth, March 2011, www.kauffman.org/uploadedFiles/financialization_report_3-23-11.pdf.
Chapter 4: The Singularity and Its Discontents
93 Time even put the Singularity on its cover: Lev Grossman, “2045: The Year Man Becomes Immortal,” Time, February 19, 2011, www.time.com/time/health/article/0,8599,2048138-1,00.html. Singularitarians often check out Kurzweil’s website at www.kurzweilai.net.
94 One man who was not at all surprised: Vivek Kundra, who served as the Obama White House’s chief information officer until mid-2011, is a believer in the Singularity. See “An Interview with Vivek Kundra,” http://ideas.economist.com/presentation/interview-vivek-kundra.
96 Even in the heart of Silicon Valley: The skeptical gathering was one of the many spontaneously organized “unconference” sessions at the annual SciFoo conference, a marvelous event organized by Google and O’Reilly Media. Several hundred of the world’s very sharpest scientists and technology experts, Google’s founders Larry Page and Sergey Brin, and a few lucky journalists come together for a weekend of provocation and prognostication. There is no prearranged agenda whatsoever, merely a set of large white boards, empty meeting rooms, and lots of good food and wine.
98 His magazine ran a damning critique: Mark Anderson, “Never Mind the Singularity, Here’s the Science,” Wired, April 2008, www.wired.com/medtech/drugs/magazine/16-04/ff_kurzweil_sb.
98 “Forget the Singularity”: Juan Enriquez’s essay was published by the Technology, Entertainment and Design (TED) conference’s publishing arm in 2011. A detailed book building on the essay is forthcoming, but this talk covers the key points of his argument: www.ted.com/talks/juan_enriquez_shares_mindboggling_new_science.html.
99 There is reason to think all of this talk: See “The OECD at 50: Science and Technology, 2010.”
100 William Nordhaus: See William D. Nordhaus, “Two Centuries of Productivity Growth in Computing,” Journal of Economic History 67, 1 (March 2007).
100 For example, the 2030 Water Resources Group: Not to be confused with the Water Resources Group, a for-profit firm, the 2030 Water Resources Group is a collection of leading experts and public figures concerned about the global water problem. See its “Charting Our Water Future: Economic Frameworks to Inform Decision-Making,” 2009, www.2030waterresourcesgroup.com/water_full/Charting_Our_Water_Future_Final.pdf.
105 Paul Saffo: Saffo makes the argument that the Singularity will come, but “we won’t even notice.” Views of the future of innovation put forth by Google’s Hal Varian and Paul Saffo, offered at the start of an Ideas Economy conference in March 2011, are found here: http://bit.ly/gbQY8a.
Chapter 5: So Long, Silo
109 The only way forward, the firm decided: The Harvard Business Review published “Connect and Develop: Inside Procter & Gamble’s New Model for Innovation” in March 2006; it ran a story reviewing that program’s progress, “How P&G Tripled Its Innovation Success Rate,” in March 2011.
114 Big-company bosses have figured out the bottom line: The source for these R&D figures is Henry Chesbrough.
117 Studies have shown that how people relate to the products they use: See, for example, work by NYU’s Sinan Aral.
121 What’s more, at times hardly 1 percent: See, for example, work by the Wharton School’s Peter Fader.
123 as typically happens in incentive prizes: For an academic investigation of prizes, see Brian Wright, “The Economics of Invention Incentives,” American Economic Review, September 1983. See also V. V. Chari, Mikhail Golosov, and Aleh Tsyvinski, “Prizes and Patents: Using Market Signals to Provide Incentives for Innovations,” Working Paper 673, Federal Reserve Bank of Minneapolis, Research Department, August 2009.
127 Happily, the Board of Longitude: See Dava Sobel’s lively history of this prize, Longitude: The True Story of a Lone Genius Who Solved the Greatest Scientific Problem of His Time (New York: Walker, 1995).
128 When Lindbergh’s plane went on a national tour: The estimate of the number of people who saw the plane comes from Peter Diamandis.
129 McKinsey did a thorough global review: McKinsey & Company, “And the Winner Is . . . : Capturing the Promise of Philanthropic Prizes,” 2009, www.mckinsey.com/app_media/reports/sso/and_the_winner_is.pdf.
129 A study led by Liam Brunt: Liam Brunt, Josh Lerner, and Tom Nicholas, “Inducement Prizes and Innovation,” Centre for Economic Policy Research, CEPR Discussion Paper No. DP6917, July 2008; an abstract is at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1307507##.
131 A study co-authored by Karim Lakhani: See Karim R. Lakhani, Lars Bo Jeppesen, Peter A. Lohse, and Jill A. Panetta, “The Value of Openness in Scientific Problem Solving,” Harvard Business School, HBS Working Paper 07-050, January 2007, www.hbs.edu/research/pdf/07-050.pdf.
132 Thomas Kalil: Before he joined the White House as a science advisor, Thomas Kalil was an advocate of government embracing incentive prizes. See “Prizes for Technological Innovation,” Brookings Institution, Hamilton Project Discussion Paper 2006-08, December 2006, www.brookings.edu/~/media/Files/rc/papers/2006/12healthcare_kalil/200612kalil.pdf.
Chapter 6: Black Swan Kills Sitting Duck
138 Consider violence: Steven Pinker lays out his arguments on violence at this Ideas Economy event in September 2010: http://ideas.economist.com/presentation/history-violence.
139 More than half a century after the height of the Cold War: So how does Martin Rees justify his suggestion that mankind might have only a 50-50 chance of surviving the twenty-first century—our final hour, to use the alarmist title of his book? Rees took my review copy of Our Final Century (as the British edition of his work was called) and penciled in a question mark after the title. He said his British publishers had ruled the question mark out. He insisted that the American publisher, Basic Books, even changed the title from Our Final Century to Our Final Hour upon publication in 2003. Reese is clever enough to know that the end is not nigh, but he put up with the chicanery in order to gain a wider audience. A small sin, perhaps, in such an important book.
140 Consider, for example, the mysterious decimation: For more on the trouble with the bees, see “UN Report Warns Bees Now Disappearing Worldwide,” The Extinction Protocol, March 22, 2011, http://theextinctionprotocol.wordpress.com/2011/03/22/un-report-warns-bees-now-disappearing-worldwide.
143 Every year, the World Economic Forum: For more on the WEF’s ongoing work and analysis of risk issues, including its new initiative to create a global risk response network that could serve as an early warning system for systemic risks, see the page on “Global Risks” on the WEF’s website, www.weforum.org/issues/global-risks. Please note: I serve as an advisor on sustainability issues to the WEF’s Global Agenda Council network, but I played absolutely no role in developing the WEF’s correct predictions of global financial troubles. Also, on the rising cost of disasters, see the analysis done by Swiss Re’s experts at www.swissre.com/sigma.
146 Global Catastrophic Risks: Nick Bostrom and Milan Cirkovic, eds., Global Catastrophic Risks (New York: Oxford University Press, 2008), www.global-catastrophic-risks.com/docs/global-catastrophic-risks.pdf.
149 The Rockefeller Foundation asked: Rockefeller Foundation and Global Business Network, “Scenarios for the Future of Technology and International Development,” May 2010, www.rockefellerfoundation.org/uploads/files/bba493f7-cc97-4da3-add6-3deb007cc719.pdf.
156 great promise in using genetic science to feed the world: For more on how the global spread of genetically modified crops has taken place safely and to the great benefit of farmers in the developing world, see the annual reports put out by ISAAA at www.isaaa.org. I do believe that activists have a legitimate point in arguing for prudent regulations and for keeping a watchful eye on possible health, safety, and environmental issues—but two decades of experience across the world proves their wilder claims wrong and their obstructionist approach in Europe misguided. The concerns expressed by some that rapacious multinational corporations would use GMOs to trap small farmers into a new cycle of poverty are also important to note. On this score, the embrace by China and other emerging markets of this technology offers hope: even the chief technology officer of Monsanto acknowledges that a lot of the innovation in GMOs is shifting rapidly away from the developed world toward the research laboratories of such countries.
Chapter 7: The Sputnik Fallacies
164 the Gathering Storm: This report can be found at the National Academies Press website, www.nap.edu.
166 If China is up, then the United States must be down: Much of the concern about America’s loss of competitiveness centers around the decline in manufacturing employment—remember Ross Perot’s warnings about the “sucking sound” of jobs moving to Mexico because of NAFTA? New research into the matter, done by the Boston Consulting Group, suggests that manufacturing and other jobs are, in fact, coming back to the United States (“Made in the USA, Again: Manufacturing Is Expected to Return to America as China’s Rising Labor Costs Erase Most Savings from Offshoring,” Boston Consulting Group press release, May 5, 2011, www.bcg.com/media/PressReleaseDetails.aspx?id=tcm:12-75973). One reason for this is that the wage gap with India and China is, due to rising wages in those countries, much smaller than it was twenty years ago. Another reason, says GE’s boss Jeff Immelt, is that it is harder and more expensive to get educated and motivated employees in those countries now that they have plenty of other opportunities. His firm is currently moving call centers back from India to the United States, and he claims the wages are only about 10 percent more expensive in America for comparable workers. He predicts firms will keep manufacturing jobs relevant to servicing emerging markets in those markets, but bring back jobs that involve making stuff for Americans—a move that has pleasing side benefits in reducing supply chain risk.
169 Research done by Vivek Wadhwa: See, for example, Gary Gereffi, Vivek Wadhwa, Ben Rissing, and Ryan Ong, “Getting the Numbers Right: International Engineering Education in the United States, China, and India,” Journal of Engineering Education 97, 1 (2008): 13–25. For his forceful and, in my view, correct arguments for reforming America’s immigration laws, see Vivek Wadhwa, “Our Best Imports: Keeping Immigrant Innovators Here,” Democracy Journal 21 (Summer 2011).
171 The latest five-year plan from Beijing’s technocracy: For more on China’s innovation ambitions, see China’s 12th Five-Year Plan (2011–2015), www.gov.cn/english/2011-03/05/content_1816822.htm; “Hearing on China’s Five-Year Plan, Indigenous Innovation and Technology Transfers, and Outsourcing,” June 15, 2011, U.S.-China Economic and Security Review Commission, www.uscc.gov/hearings/2011hearings/written_testimonies/hr11_06_15.php; also see Dieter Ernst’s work at the East-West Center.
172 The OECD recently examined China’s innovation policies: OECD Reviews of Innovation Policy: China (Paris: OECD, 2008), www.OECD.org/sti/innovation/reviews/china.
175 Schloss Leopoldskron: The cognoscenti will have recognized this as the setting for The Sound of Music.
176 Samuel Kortum and Josh Lerner: Samuel Kortum and Josh Lerner, “Assessing the Contribution of Venture Capital to Innovation,” RAND Journal of Economics 31, 4 (Winter 2000): 674–92, http://home.uchicago.edu/kortum/papers/rje_2000.pdf.
184 The Council on Competitiveness: The papers referenced here, as well as much other research of relevance to national competitiveness, can be found at www.compete.org.
186 Giving faculty and employees of government laboratories: See the provocative arguments made on this topic by Robert Litan and the Kauffman Foundation. On the striking Supreme Court decision on academic innovators, contrast the New York Times editorial denouncing it with Vivek Wadhwa’s take on the matter: “Innovation’s Golden Opportunity,” Washington Post, June 10, 2011, www.washingtonpost.com/national/on-innovations/innovations-golden-opportunity/2011/06/09/AGWrnJOH_story.html.
186 encouraging innovative entrepreneurship: The topic of entrepreneurship was explored in some detail with leading academic experts (among them UC Berkeley’s Henry Chesbrough and Babson’s Daniel Isenberg), government figures (Aneesh Chopra, the White House’s chief technology officer) and cutting-edge entrepreneurs (among them SpaceX’s Elon Musk and Twitter’s Jack Dorsey) at the Ideas Economy event held in March 2011. The full two-day event can be viewed on www.foratv.com for a fee, or tantalizing tidbits can be viewed for free at www.ideas.economist.com. Look in particular for the explanation from TrueCar’s Scott Painter (a remarkable serial entrepreneur who has raised over $1 billion for several dozen firms he has started) of why he refuses to hire any entrepreneurs at his firms.
186 While in the past most start-ups targeted local markets: Daniel Isenberg has written much about entrepreneurship that is worth reading. See, for example, his “The Global Entrepreneur,” Harvard Business Review, December 2008, http://hbr.org/2008/12/the-global-entrepreneur/ar/1.
188 AnnaLee Saxenian: The comparison of Silicon Valley and Route 128 was made in an earlier work of hers, Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (Cambridge, MA: Harvard University Press, 1994). Her more recent and equally worthwhile book, The New Argonauts: Regional Advantage in a Global Economy (Cambridge, MA: Harvard University Press, 2006), shows exactly why immigrant networks connecting Silicon Valley with hot spots of global innovation like Israel, Taiwan, and southern India should be viewed as brain circulation rather than brain drain.
190 Yes, really: The French government’s sovereign wealth fund, Fonds Stratégique d’Investissement, put $3.1 million into Meccano, a local toy manufacturer. Why making those toys in France, as opposed to making them anywhere else, is of “strategic” import was not disclosed, perhaps for national security reasons.
191 This is especially true in energy: See Richard Newell discuss the fine book on energy innovation edited by him and Harvard’s Rebecca Henderson (Accelerating Energy Innovation [Chicago: University of Chicago Press, 2011]) at an Ideas Economy event held in September 2010: http://ideas.economist.com/presentation/interview-richard-g-newell; Henderson’s comments on this and related topics are found here: http://ideas.economist.com/presentation/capitalism-and-climate-change.
194 In contrast, Canada’s tax law: See the OECD’s comparative analysis of national innovation policies for more on this point.
194 However, there are worrying signs: I think there is a real danger that efforts at developing smart grids or electronic health records, done in the name of enhancing national competitiveness, will be co-opted by the technology firms that are most favored by politicians in Beijing and Seoul or who have the best lobbyists in Washington and Brussels. One proposal now making the rounds that would address this problem of elite capture is for the creation of a Sustainable Energy Free Trade Agreement, or SEFTA (see www.youtube.com/watch?v=l8_wIZ3oFZ0). Such an accord would differ from the WTO’s frustrated efforts at a new global trade pact in that it would be only for a coalition of the willing: those countries that want to go further than global norms on standards harmonization, market access, subsidy withdrawal, and so on are free to do so—and laggards are welcome to join later. There is a precedent for this in the information technology free-trade accord reached during the Clinton administration, which has proved to be GATT and WTO compatible. Please note: My role here is merely as an advocate of this idea. Credit for it goes to the entire sustainable energy Global Agenda Council that I chaired for the World Economic Forum, especially to Michael Liebreich, Peter Brun, and Busba Wongnapapisan.
195 the best industrial policy is probably no industrial policy: See Clay Christensen’s observations on why government intervention often stifles innovation here: http://ideas.economist.com/video/innovationand-government-intervention-0.
Chapter 8: Can Dinosaurs Dance?
200 That points to several of the big lessons: For a useful take on how managers at incumbent firms, who face the unenviable task of delivering short-term profits even as they invest in the innovations that drive long-term results, can cope, see Vijay Govindarajan and Chris Trimble, “Stop the Innovation Wars,” Harvard Business Review, July-August 2010.
200 experiment more readily, failing faster: There is no shortage of books and articles on the importance of experimentation and failure in the innovation process. My favorite site is the courageous one maintained by Bessemer Venture Partners, arguably the oldest extant VC firm in America, that tracks the firm’s biggest failures over the years (www.bvp.com/portfolio/antiportfolio.aspx). Fascinating work is being done at the Stanford Institute of Design on novel approaches to innovation that incorporate design, rapid prototyping, and fast failure. See also Tim Harford, Adapt: Why Success Always Starts with Failure (New York: Farrar, Straus and Giroux, 2011). A number of leading thinkers, ranging from John Sexton and Shirley Tilghman, who are respectively heads of NYU and Princeton, to Steven Pinker and Clay Shirky, give their insights on failure at “The Ideas Economy, Failure, and Innovation,” PopTech, http://poptech.org/the_ideas_economy.
201 Intuit, a California firm: Intuit’s progress in opening up its innovation process is reviewed in Roger L. Martin, “The Innovation Catalysts,” Harvard Business Review, June 2011, http://hbr.org/2011/06/the-innovation-catalysts/ar/1. You can hear Scott Cook present various ideas of his at Ideas Economy events (www.ideas.economist.com).
202 Two decades ago: David Gelernter, “Surviving the Unabomber,” Big Think, April 27, 2010, http://bigthink.com/ideas/19763. He spoke about the prospects for, and perils arising from, intelligent infrastructure at this Ideas Economy event in September 2010: http://ideas.economist.com/presentation/human-network.
203 McKinsey futurologists: See Jacques Bughin, Michael Chui, and James Manyika, “Clouds, Big Data and Smart Assets,” McKinsey Quarterly, August 2010. See also recent in-depth reports by the firm on Big Data and productivity.
204 “A BMW is now actually a network”: While the hydrogen-powered roadster is a sexy and potentially über-green idea (if the hydrogen is made from renewable sources), it is one that is ahead of its time. BMW developed the Hydrogen 7 to the point where it was ready for full commercialization, but because the market for hydrogen and fuel cells (a related technology) never materialized, the German firm never put this model into production.
208 reverse innovation: For more on reverse innovation, including how it compares with the notion of disruptive innovation, see Vijay Govindarajan’s articles in Harvard Business Review and his postings on his blog: www.vijaygovindarajan.com.
211 Andy Grove: For more on Andy Grove, see both his books and the authorized biography by Richard Tedlow, Andy Grove: The Life and Times of an American (New York: Portfolio, 2006).
215 The best such nugget . . . is Kaiser Permanente: For more on Kaiser Permanente’s success in using electronic medical records to improve patient outcomes, see various articles in Health Affairs, including Catherine Chen et al., “The Kaiser Permanente Electronic Health Record: Transforming and Streamlining Modalities of Care,” Health Affairs 28, 2 (March-April 2009): 323–33, http://content.healthaffairs.org/content/28/2/323.abstract, and Yi Yvonne Zhou et al., “Improved Quality at Kaiser Permanente Through E-Mail Between Physicians and Patients,” Health Affairs 29, 7 (July 2010): 1370–75, http://content.healthaffairs.org/content/29/7/1370.short.
Chapter 9: Greed for Good
219 A big problem for the future of capitalism: For more on proper accounting of natural capital, see works by Amory Lovins of the Rocky Mountain Institute, including Natural Capitalism: The Next Industrial Revolution (Great Barrington, MA: E. F. Schumacher Society, 2003). On cradle to cradle analysis, see Bill McDonough’s writings and the work of his Cradle to Cradle Products Innovation Institute (www.c2ccertified.org).
220 Financial experts see the beginnings: In December 2010 J. P. Morgan released a report done in collaboration with the Rockefeller Foundation, “Impact Investments: An Emerging Asset Class,” that argued that impact investing could become an asset class with value in the range of $400 million to $1 trillion. To investigate the underlying assumptions, see the full report here: www.rockefellerfoundation.org/what-we-do/current-work/harnessing-power-impact-investing/publications.
220 Jack Welch: On Welch’s apparent U-turn (some still claim he has not changed his position at all), compare his comments made in 1981 with this interview given to the Financial Times in March 2009: www.ft.com/intl/cms/s/0/294ff1f2-0f27-11de-ba10-0000779fd2ac.html#axzz1Re1HSmap.
222 Roger Martin: Martin spells out his views on the evolution of capitalism in “The Age of Customer Capitalism,” Harvard Business Review, January-February 2010.
226 Bill Drayton: Drayton summarizes his worldview in “Tipping the World: The Power of Collaborative Entrepreneurship,” What Matters, McKinsey Publishing, April 8, 2010, http://whatmatters.mckinseydigital.com/social_entrepreneurs/tipping-the-world-the-power-of-collaborative-entrepreneurship. David Bornstein, How to Change the World: Social Entrepreneurs and the Power of New Ideas (New York: Oxford University Press, 2007) traces Drayton’s history and profiles Ashoka’s “change makers” in depth.
230 A big obstacle to reaching such customers: For a well-grounded, skeptical take on what multinationals can and cannot do at the bottom of the pyramid, see Ashish Karamchandani, Mike Kubzansky, and Nishant Lalwani, “Is the Bottom of the Pyramid Really for You?” Harvard Business Review, March-April 2011.
233 Dan Pink: For a brilliant cartoon rendering of Pink’s ideas, see this video produced by the RSA: www.youtube.com/watch?v=u6XAPnuFjJc. Also, for more on using purpose as a motivator for social good, check out Purpose, a nonprofit started by Jeremy Heimans and David Madden. Heimans makes the case for the “movement entrepreneur” here: http://ideas.economist.com/presentation/movement-entrepreneur.
235 Brian Trelstad: On Trelstad’s concerns about metrics, see “Simple Measures for Social Enterprise,” Innovations, Summer 2008.
238 a concept known as microfinance: On the debate among economists on the true impact of microfinance and the importance of randomized control trials, see Dean Karlan, More than Good Intentions: How a New Economics Is Helping to Solve Global Poverty (New York: Dutton, 2011) and the feisty panel discussion “Promise and Peril of Microfinance Impact Evaluations” during the Microfinance USA Conference, New York, May 23–24, 2011: www.microfinanceusaconference.org/videos-2011/session-01-promise-and-peril.php. On related topics, also see Abhijit Banerjee and Esther Duflo, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty (New York: Public Affairs, 2011). A pointer to recent economic studies on the impact of microfinance is “Microfinance’s Elusive Quest: Finding an Accurate Measure of Social Impact,” Knowledge@Wharton, http://knowledge.wharton.upenn.edu/article.cfm?articleid=2391.
241 The profit motive: For a lively debate on this matter, see Matthew Bishop’s video encounter with Felix Salmon, complete with color commentary by the thoughtful David Roodman: http://blogs.cgdev.org/open_book/2011/02/felix-salmon-and-matthew-bishop-head-to-head.php. All three have excellent blogs that are worth a look.
243 companies must put society’s great needs front and center: On the question of whether taking the long view will really lead businesses to solve big social problems profitably, see this intriguing paper: Daniel Altman and Jonathan Berman, “The Single Bottom Line,” June 13, 2011, http://dalberg.com/sites/dalberg.com/files/sblfinal.pdf.
Conclusion: We Are All Innovators Now
252 what has been called frontier economics: The arguments about frontier economics are put forth well in Brink Lindsey, “Frontier Economics: Why Entrepreneurial Capitalism Is Needed Now More than Ever,” Kauffman Foundation Research Series on Dynamics of Economic Growth, April 2011, www.kauffman.org/uploadedFiles/frontier_economics_4_06.pdf.
253 Jack Hidary: For more on Jack Hidary’s role and vision for electric cars and ride-sharing, see www.youtube.com/watch?v=RmOL1fN_jpQ.
255 most promising are advanced software, Big Data: On the transformative power of Big Data, see “Big Data: The Next Frontier for Innovation, Competition, and Productivity,” McKinsey’s Global Institute, May 2011, www.mckinsey.com/mgi/publications/big_data/index.asp. Also see some very cool data visualizations, as well as discussions about the future of Big Data, at an Ideas Economy event in June 2011 (on www.fora.tv for a fee, free snippets at http://ideas.economist.com/video/power-big-data).
255 Apple’s first mouse: A typically Gladwellian take on the development of the computer mouse by Xerox PARC, IDEO, and others is found in Malcolm Gladwell, “Creation Myth: Xerox PARC, Apple, and the Truth About Innovation,” New Yorker, May 16, 2011, www.newyorker.com/reporting/2011/05/16/110516fa_fact_gladwell.
255 The traditional uncompromising focus: Design thinking has failed to achieve its promise and it is time to move onto the next management fashion, argues Bruce Nussbaum, one of design thinking’s greatest proponents over the past decade, in “Design Thinking Is a Failed Experiment. So What’s Next?” Fast Company’s Co.Design, www.fastcodesign.com/1663558/design-thinking-is-a-failed-experiment-so-whats-next. For more on the tension between Six Sigma and design thinking, see Tim Brown, “Six Sigma and Design Thinking,” Design Thinking: Thoughts by Tim Brown, September 10, 2009, http://designthinking.ideo.com/?p=387, and a related article by Sara Beckman, “Welcoming the Old, Improving the New,” New York Times, September 5, 2009, www.nytimes.com/2009/09/06/business/06proto.html?_r=1.
256 The key is to focus on the needs of people: The nifty Embrace concept and product are explained at the Embrace website, http://embraceglobal.org, and on the website of the Stanford University Institute of Design, http://extreme.stanford.edu/projects/embrace.html.
257 everyone can join the “maker revolution”: See Chris Anderson’s fine cover stories on the topic in Wired (for example “In the Next Industrial Revolution, Atoms Are the New Bits,” Wired, February 2010, www.wired.com/magazine/2010/01/ff_newrevolution/all/1), and his interview with Carl Bass in June 2011, www.youtube.com/watch?v=yXBGNggO3hI.
257 And what about talent: The WEF/ BCG report on global talent mobility, published in March 2010, can be found here (www.weforum.org/reports/stimulating-economies-through-fostering-talent-mobility?fo=1).
258 Companies will also have to redouble efforts: Pepsi has a stellar record in employing the disabled, which is worth further study and emulation. The Council on Competitiveness has done studies showing that it is older entrepreneurs, not two college dropouts working out of a garage, that are responsible for many of the start-ups in America. The group argues for rethinking the opportunities made available to older workers. See also Sylvia Ann Hewlett et al., “The Battle for Female Talent in Emerging Markets,” Center for Work-Life Policy, 2010.