Why Are Some Regions, Cultures, Organizations, Groups, and Individuals More Successful in Generating Innovation, Disruption, and Technology and Then Adapting to Change?

Innovation is about creating new knowledge. The input for that is access to information, ideas, and people. A regional cluster is about information flow. We are lucky to live in Silicon Valley, because every day it seems like we meet someone who is doing a new deal and you learn a little bit more. It is the thing we do here, so the intensity of that conversation is much higher than in other places.

So when I look at organizations, I always ask, “Are you really amplifying that flow of information, inspiring people and creating that kind of competitive juice that accelerates the development of innovation?” Look at Sweden. Once you start having a few successful people, they bring money back, which is another form of information flow. Then they become mentors and begin to build an infrastructure that is richer than just a bunch of entrepreneurs running around. They have other sources of knowledge, wisdom, information, and access to people in other geographic clusters; all of those things begin to amplify each other. So, the question for any region or organization is: Are you accelerating the flow of information and those other factors, or are you putting too many barriers in the way? Sweden has already installed the 5th generation of wireless, and we are arguing about it here in Silicon Valley, thereby creating noise.

Increase Information, Decrease Noise

There is information, but there is also noise: a signal-to-noise ratio. So, if you are an innovator, you are trying to find that new signal in the noise that tells you something is possible, or there is an opportunity, or there is an unmet need, or that technology has reached the point where you can solve a problem that hasn’t been solved before. A bureaucrat has basically stale, old information; it really carries nothing new. If it is not new, it is not information.

Can someone look at information and say that this makes something possible? That is the distinction. When you think about barriers as noise, the more you can attenuate the noise, the more powerful your ecosystem is. Anything you can do that brings in new knowledge and new insights is good and anything that slows it down is bad.

Innovation Happens in Small Teams

Typically, small teams that are in ecosystems have tremendous advantages because they are the ones who are running around, gathering that information, and trying to find new insights. Many big companies tend to put up barriers and have blockages. So, if we think about the signal-to-noise ratio argument, big companies are full of “don’t do’s” for these types of activities. Think about the enormous total resources big companies have. They have brilliant people. What encumbers them is not the people, it is not the technology, but it is really their inability to put together nodes within the company—a small community within a bigger community—that can actually behave this way. At SRI, we created an incubator, which was run by Silicon Valley rules, not run by the $500 million part of our business. They had different rules, metrics, and license to do everything. Running by those local, start-up rules, we were able to issue or create one multibillion-dollar business after another. Most big companies find it impossible to do that.

Where do we mostly find that? Smaller teams that are unencumbered by all the rules and regulations of a big company can create big, new innovations. Consider all the multibillion-dollar companies we have formed in Silicon Valley in the last 10 years; there has been a flood of them. They are not coming from the big companies; they are coming from new start-ups.

Singapore and Sweden Are Model Eco-clusters for Innovation

Singapore has much more of a learning culture than we do in the United States. I have served on their Innovation Council since it started 15 years ago, and they literally went from zero to being a competitive place, just by doing the right stuff. But again, you have to put in place—using the signal-to-noise ratio argument—the attributes to get the signal strong enough, to get the right information coming in, doing those kinds of things, and usually leverage some strength.

In Singapore, you can form a company in one day, and there is no capital gains tax. The regulatory restrictions to forming a company are very minimal. Their goal was very simple: to make Singapore the most competitive place to do business, because they have to. They are a little, tiny place. They have no natural resources, no water, nothing. So, the only thing they have is people power. They needed to accelerate and make all these other factors as low-friction as possible, and then recruit people, and do the other things to bring the ideas in. On one side, they were reducing the noise by getting rid of all the friction stuff, and on the other side, they were amplifying the flow of people and talent and information into the country with the long term goal—although it didn’t take them very long—of creating a cluster where these attributes are in place.

Sweden is also a perfect example. They decided not to be a brick-and-mortar innovation hub. Forget that. Swedish government managers asked, “What can we do? We can put up an IT information structure. We can put the best equipment in place and if we encourage hubs around things that scale over the web, then we can create multibillion-dollar companies.” So regions can do it.

Global Interconnectivity Is Necessary

What is the hard part about creating big innovations? It is not the lack of ideas. There are plenty of ideas, and there has never been a better time for innovation. Let’s assume a government and an organization remove the noise to enhance innovation. Once you get that in a reasonable position, the big problem is how do you identify those opportunities and assemble a team that can actually solve them? Increasingly, the best talent is all over the world, so increasingly the whole idea is the guy who wins is the guy who pulls together the best team wherever they come from, and actually knows what they are doing, and finds the signal in the noise, and gets out there first. And, if you can do that, you can create a billion-dollar business today.

I often say there are more honor students in China than there are students in America. Now the influx is coming from the Chinese and the Indians. Without them, there is no Silicon Valley, and increasingly that means you have to go find them overseas as well.

The Transparent World

All the technologies that you know about are making the world increasingly more transparent. It is a mixed blessing, because it means the level of competition goes up exponentially, but also the ability to make connections with people goes up exponentially. So, one of the skills in the signal-to-noise ratio argument is how do you use these tools better than the other guy? Because there are going to be people who are going to use them very well and turn them into a huge competitive advantage.

You know our conversation 10 or 15 years from now will be done in 3D, and it will be more vivid than if I were sitting across from you. There will be an automatic note taker, and you will say, “Curt, do you know Joe?” Then a Siri-like device pulls up all the information about him, and annotates, then brings Joe online into our conversation. It is all going to happen. The other thing that is going to happen is there will be new collaboration platforms that facilitate all that; again, finding the signal-to-noise ratio addressing that problem, and actually creating tools and abilities to help facilitate the value of information.

Many companies have been formed to find workers, so that addresses one of the big problems. How do you match people up? How do you do real-time interviews? Absolutely, there is the people-gathering activity that has also to be developing as part of this.

Bureaucracies Cannot Innovate

It is a paradox. Small groups with motivation, interconnected with others, who are pursuing excellence, who have a hunger in the belly, and are looking at ideas and at opportunities to create something that becomes magic. Government bureaucracies don’t have that.

However, when I do see that, I think that the chance of success is enormously high. That is exactly how the intelligence service works in Israel. Small teams working together. They have access to anyone; they can talk to the prime minister if they need to, because there is no excuse for failure, and that comes with great responsibility. That is the way their whole operation is run. It is done with teams of four, five, or six people. They don’t have these massive bureaucracies. They bring these kids in, and say, “You are going to work 100 hours a week for the next 3 to 4 years, and you are going to solve every problem you have been given. That is your mission.” And that works.

When I visit China I find teams like that, who keep their heads down, but they are doing exactly that same thing.

Access to Opportunity Is a Culture Shift

Indian culture has a social hierarchy and the caste system, which could potentially turn around with global access to work. Knack provides certain insights for an individual, which are not available to an Indian underprivileged kid or parents, even with access to good schools, through teachers or educators, or peer networks. There are a lot of things a kid would get to know about him or herself by just going through the Knack experience.

India cannot provide individual attention to 400 million people in a 10-year period because the ratio of teacher–student care, all of what is required, is going to be pretty phenomenal. Now, the second challenge is that institutions should be able to recognize the skills that are needed within a short period. The quality of education, the learning system, and the knowledge systems, even the skilling systems can’t be created overnight. It takes a certain amount of time. So that’s the big challenge we face at a country level.

Let’s say an institute only offers three programs: one in retail, one in banking, and one in telecom. The only choices a student has are these three. So, he or she has to pick his or her career based on three institutional options or choices that are put in front of them. The learner doesn’t know what his or her true potential is for them to assess whether the three choices given are good or bad for him or her. However, that student can better move forward to actually learn more about themselves through understanding inherent skill sets already possessed.

Skill Sets Can Uncover Opportunities

Knack can enable students to discover capabilities that match a marketplace reality they could not have comprehended. Did you know that there is an attribute called problem solving? There is a trait that goes along with it—persistence. The kid has never heard that before, ever. So, the kid may never have thought he was good at mathematics or problem solving. You can see the logic we are operating—an opportunity to disrupt the microconcept of a limiting environment, giving the student an opportunity to correct that loss through better information.

I need to get the information to the kid and through a mobile application be able to change his or her life prospects.

Wider Employment Participation Is Enabled on Digital Platforms

Now, you also have IT engineers coming out of the Philippines. In the back office centers in India, those are the guys who are most willing to learn and try, because they want to stay one step ahead, and they’re going to be our primary customers.

We’re almost acting like an insurance agent for them.

In a world of digital information, digital transactions, digital applications, and digital system integration in an economy that is going to be powered to involve more and more participation, more people getting on digital means more opportunities.

How much value can you get from an individual at a given time with the skill sets of the person? The skill sets that one has acquired create value. I think it’s going to be very important, so skill sets will be more important than just geography and educational pedigree.