I came across a very interesting two-part lecture series on innovation this week that was conducted near my home last summer at the Santa Fe Institute.

The professor giving the lecture is Andrew Hargadon, who currently holds the Endowed Chair in Entrepreneurship at UC Davis. Professor Hargadon Blogs here, and a brief interview on the series is located here.

SFI is kind enough to offer the two videos freely on the web, each of which is about 90 minutes in length. I watched both lectures within 24 hours of writing this so they are still fresh. I agree with about 90% of the lecture series and highly recommend it, but my recommendation will come with a brief critique and a warning regarding the other 10%.

The central point of the lecture from the historical review of innovation is that our history books are filled with innovators who are often mis-credited with inventions that were largely copied, stolen, or slightly improved versions of other’s work. In several cases he unveils the essential contributions of others who were generally not credited properly and lack celebrity, which is appreciated.

What bothers me about the message Andrew projects is that it’s very similar to the message coming out of finance in leading MBA schools a decade ago, which is sourced in cynicism– that there is no room for ethics or justice in business, that product quality is much less important than exploitation skills or market power, and creativity only matters relating to exploitation of others. While that has been largely true in the past, I reject that philosophy outright for the future, and particularly sourced from universities. Indeed, it is precisely because of that philosophy in so many of our MBA schools and board rooms that U.S. business is doing so poorly, and why Silicon Valley is experiencing a sea change, or a “nuclear winter”, as one leading VC partner described the valley before we both left.

Our society is quite skilled in pronouncing the obvious after the fact, supported by all manner of measuring tools, but we are severely challenged in measuring the invisible, which is often far more important. For example, while we understand the value to society of exploitation of other’s work in the past, does anyone have a clue to the enormous cost? What is the cost of not inventing? What is the cost of not sharing the most valuable science with those who exploit? Do we really think the smartest people in the world are fools? Apparently so.

The problem for venturing came to a head in the late 1990s as me-tooism reached epidemic proportions when the smartest people were exploited by the creatively challenged. Silicon Valley has been in various phases of decline ever since. The synonym for exploitation is ‘abuse’. It’s difficult to build the type of sustainable networks called for in this lecture when abusing partners or customers as the lecture also calls for. We are a networked world, increasingly aware, and SV no longer has a monopoly on venturing.

The culture of Silicon Valley often misses a key point that threatens their future. While they expect and demand enormous incentives for their work, many seem to misunderstand that the rest of the world needs incentives as well, and without the rest of the world’s support SV is toast; so a rethink of philosophy, culture, and modeling is past due. To some extent the same is true for the U.S., but truthfully my experience has demonstrated that most of this cultural problem is restricted to very few boardrooms in monopolist corporate cultures, very few business schools, a handful of VC firms, and a few firms on Wall Street. Everyone else in America seems to get it.

While it’s true that Microsoft and the early Apple were of these types of cultures, as were many others, I don’t think many thought leaders would agree that Apple isn’t focused on product quality today (Hargadon worked at Apple in the early 1990s), or much question that Microsoft needs to focus on authentic internal innovation in order to thrive in the future. The world today is much different than just five years ago and barely recognizable to the world of a decade ago.

I would like to see professors of entrepreneur programs focus less on exploitation and more on increasing structural integrity within innovation networks, which is essential. In Kyield for example we have focused on providing real incentives and protection for intellectual contributions, which builds trust, without which brilliant and creative people at best stop subsidizing those who have been trained only to exploit their work, and at worst begin to undermine the system in place, which is precisely what is happening to SV.

That said, the bulk of the lecture series is very good to excellent on the topic of innovation and the need for building strategic networks. While I disagree with Hargadon’s claim that “the network is the innovation”—to imply that Einstein and DaVinci are more irrelevant than an MBA student is ridiculous—it is a message that needs to be better understood, particularly in networked industries or regulated markets like computing, pharma, and energy, which is Hargadon’s specialty. More independent or stand alone innovations still require networks, but of a different kind.

The most valuable aspect of the lecture is the occasional focus on the enormous need for scientists and policy makers to focus research on markets, or the actual needs of people, rather than what scientists and politicians project from a conflicted chair. Our basic R&D system is wasteful and inefficient due in part to the culture and in part to poor investments that are simply impossible to adopt, whether for social, technical, or economic reasons. Granted that basic research is usually not intended to result in products, rather a better understanding, but it’s also true that the primary sponsor is broke in part because of the lack of accountability throughout the system. Fiscal discipline is absent in all of the scientific disciplines.

Part 1 of the lecture

Part 2 of the lecture

Mark Montgomery
Founder & CEO – Kyield
Web: http://www.kyield.com
Blog: http://kyield.wordpress.com
email: markm@kyield.com
Twitter: @kyield

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