THE BIG PICTURE

A Tale of Two Quotes
Alistair Brett, International Technology Commercialization Advisor for T2 Venture Creation, from the Innovation Rainforest Blog
The theories of disruptive innovation and agile ecosystems are contrasted in an introduction to the groundbreaking ideas of author Rick Dove. Read more here.
Cheat Sheet: Understanding the Role of Design in Startups
Google Ventures
Five critical design processes give startups a useful way of viewing themselves, their competitors, and the world around them. Read more here.

The Wisdom of Crowds of People Who Don’t Believe in the Wisdom of Crowds
Evolving Economics
A group of people is more likely to arrive at the correct response if you remove those who are supremely confident in their opinions. Read more here.
How To Use Best Practices To Spur Innovation Forward
Forbes
Using industry “best practices” can backfire, stifling innovation, unless the practices are applied constructively. Read more here.
Is Social Trust a Cultural Trait?
Social Evolution Forum
Trust is essential to human cooperation and development, so it’s critically important to understand whether trust is transmitted socially or learned individually. Read more here.

THE LATEST NEWS
Welcome to Berlin’s Silicon Allee, Germany’s New Startup Hub
Los Angeles Daily News
A steep climb in funding, a push to attract foreign talent, and attention from industry giants like Google are spurring interest in a hip Berlin neighborhood where coders and hackers congregate. Read more here.

China’s Innovation Advantage
Forbes
The most populous nation on earth turns from imitation to innovation, bolstered by government support, low-cost engineers and scientists, and the entrepreneurial spirit of the Chinese people. Read more here.

Forget Silicon Valley, Meet Silicon Bali
BBC News
Tech firms are relocating to this low-cost island paradise, realizing the dream of working in a global economy from anywhere in the world. Read more here.

CALENDAR OF EVENTS
Global Innovation Summit + Week 2015
Learn.  Love.  Build… Together.
February 16-20,2015

Silicon Valley, California
50% early bird discount – last day is August 31! Plus highly discounted rates for students, startups, nonprofits, universities, and governments.

 
SPECIAL INVESTMENT OPPORTUNITY
Liquidity Nanotech Corporation
Liquidity Nanotech Corporation, one of Silicon Valley’s top next generation technology startups, has a limited investment window for friends of T2 Venture Creation. The company is targeting a multi-billion dollar market in clean water. It’s a rare opportunity to make profits while saving lives. Visit Liquidity’s crowdfunding website for more information. 

Lean and Agile Innovation Ecosystems: Part 1

Yond Cassius has a lean and hungry look,
He thinks too much; such men are dangerous.

William Shakespeare, Julius Caesar Act 1, scene 2

Before there were lean startups there was lean manufacturing. Lean manufacturing, which seeks to eliminate all expenditures which do not support value for the customer, was developed by Toyota in the 1950s and was in part responsible for the Japanese auto industry becoming the US auto industry’s fierce competitor two or so decades later. Agile software development, introduced in the 1990s was influenced by ideas and methods from the lean manufacturing. Its purpose is to make software usable, adapt to changes, and allow people to excel according to their strengths, rather than according to the system. More recently, lean startup methodology has become popular, intended to shorten product development cycles by iteratively creating products and integrating user feedback.

As noted in last month’s blog: A tale of Two Quotes http://innovationrainforest.com/2014/06/30/a-tale-of-two-quotes/ Rick Dove in his book on agile enterprises, Response Ability: The Language, Structure, and Culture of the Agile Enterprise. John Wiley and Sons, Inc., 2001, introduced the concept of “Response Ability.” He notes that “The agile enterprise can respond to opportunities and threats with the immediacy and grace of a cat prowling its territory” and goes on to explain that “response-able” components can be designed into enterprise ecosystems. These ideas are closely related to those of re-usable components within a framework (see my October 2013 blog: Create early, use often: Lego™ blocks, learning objects, and ecosystems. Part 2 http://innovationrainforest.com/2013/10/13/create-early-use-often-lego-blocks-learning-objects-and-ecosystems-part-2/).

While much of the focus of agility has been in manufacturing and software development, let’s see if any of the “response-able” components concepts illuminate how innovation ecosystems may become agile; an ability to adapt rapidly to system environment changes. After all, we have already introduced the idea of self-organization in a complex adaptive system, which implies agility. How can analyzing agile manufacturing systems help us in building agile innovation ecosystems able to self-organize and respond effectively to external shocks?

Why should we make comparisons between systems? What new understanding might emerge? Comparisons only makes sense if we can learn more about system B by comparing it with system A, and then only if any similarities are more than just coincidence. A cloud in the sky may look like a face, but I doubt we will learn anything enlightening about how faces grow from studying how clouds form.

History shows benefits of comparisons; our understanding of economic systems has been improved, some would argue, by the study of thermodynamics, and innovation flow may be helpfully compared with biological flow.

Manufacturing cell

The results of Rick Dove’s extensive research on systems such as the manufacturing cell illustrated above indicate that principles of “response–able” systems include components with certain characteristics such as (I’m simplifying considerably as this is only an introduction):

  1. Components of response–able systems are distinct, separable, self-sufficient units cooperating towards a shared common purpose.

In innovation ecosystems the function and activities of each stakeholder and the strength of their cultural alignment should be clear to other stakeholders as well as all cross-functional and collaborative activities and existing supportive and incentive policies. This also applies to stakeholders outside the community. Without alignment towards common purposes “friction” between components can be destructive.

  1. Components of response–able systems share defined interaction and interface standards; and they are easily inserted or removed.
  2. Components within a response–able system communicate directly on a peer-to-peer relationship; and parallel rather than sequential relationships are favored.

For innovative innovation ecosystems this means efficient communications to keep transaction costs low. The application of parallel rather than sequential relationships will be discussed in Part 2 of this blog.

  1. Component relationships in a response–able system are transient when possible; decisions and fixed bindings are postponed until immediately necessary; and relationships are scheduled and bound in real time.

This is not a recommendation for procrastination, rather avoidance of decision making with insufficient information which may fix an ecosystem component which later turns out to be a mistake (e.g. building a new business incubator before a reliable deal flow is apparent).

  1. Components in response–able systems are directed by objective rather than method; decisions are made at a point of maximum knowledge; information is associated locally, accessible globally, and freely disseminated.
  2. Component populations in response–able systems may be increased and decreased widely within the existing framework.
  3. Duplicate components are employed in response–able systems to provide capacity right – citing options and failed – soft tolerance; and diversity among similar components employing different methods is exploited.
  4. Component relationships in response–able systems are self-determined; and component interaction is self-adjusting or negotiated.

In previous blogs we discussed the phenomenon of emergence in complex adaptive ecosystems. Emergence is an outcome of self-organization, without centralized control (#5, #8) in the form of a new level of order in the system that comes into being as novel structures and patterns which maintain themselves over some period of time. Innovation springs from emergence. Emergence may create a new entity with qualities that are not reflected in the interactions of each agent within the system. Emergent organizations are typically very robust and able to survive and self-repair substantial damage or perturbations.

  1. Components of response–able systems are reusable/replicable; and responsibility for ready reuse/replication and for management, maintenance, and upgrade of component inventory are specifically is designated.
  2. Frameworks of response–able systems standardize into component communication and interaction; defined component compatibility; and are monitored/updated to accommodate old, current, and new components.

Reusability was discussed at some length October 2013 as referenced at the top of this blog. However, this topic will be further explored in Part 2 of this blog.

Shakespeare might be surprise to learn that his opinion of thinking men (sic) was wrong; one way the US auto industry responded to the competitive challenge of higher quality Japanese imports in the 1980s, which led to agile manufacturing concepts among other changes, was to enable more thinking among assembly line workers.

Next time: Lean and Agile Innovation Ecosystems: Part 2


Rainforest Rev: Sharing Ideas and Stifling Innovation

THE BIG PICTURE

Why More Start-Ups Are Sharing Ideas Without Legal Protection
The New York Times
T2 Venture Creation’s CEO & Co-Founder Victor Hwang contributes to a lively discussion about nondisclosure agreements, the culture of the Valley, and legal protections for entrepreneurs. Read more here.

How Visionary Leaders Can Stifle Innovation
The Huffington Post
There’s a general consensus today that the best leaders are those who have a clear and compelling vision and inspire others to pursue that vision. But leaders of innovation actually avoid doing just that. Read more here.
5 “Next” Practices for a Culture of Innovation
Executive Street
Encouraging a culture of innovation requires more than putting a pool table in your obsessively hip workspace — it’s about leadership that encourages experimentation, tolerates failure, and accommodates uncomfortable ideas. Easier said than done. Read more here.

Some Puzzling Questions about Innovation in the Digital Economy
Irving Wladawsky-Berger (blog)
Innovation in the digital economy is very different than it’s ever been, and is much harder to control because of the complexities of human and organizational behavior. Read more here.
THE LATEST NEWS
Fleur Pellerin Works to Make France Safe for Tech Startups
Bloomberg BusinessWeek
A deputy finance minister is helping France’s uphill battle to become one of Europe’s premier hubs for tech startups. Read more here.

Scottish Business Start-ups Rise
BBC News
Scotland’s national business advice service is supporting thousands of the nation’s entrepreneurs. Read more here.

In Innovation Quest, Regions Seek Critical Mass
MIT Technology Review
Proximity to human talent and new ideas matter most when looking to grow a local tech ecosystem. Read more here.

CALENDAR OF EVENTS
Global Innovation Summit + Week 2015
Learn.  Love.  Build… Together.
February 16-20,2015

Silicon Valley, California
50% early bird discount – last day is August 31! Plus highly discounted rates for students, startups, nonprofits, universities, and governments.

 
SPECIAL INVESTMENT OPPORTUNITY
Liquidity Nanotech Corporation
Liquidity Nanotech Corporation, one of Silicon Valley’s top next generation technology startups, has a limited investment window for friends of T2 Venture Creation. The company is targeting a multi-billion dollar market in clean water. It’s a rare opportunity to make profits while saving lives. Visit Liquidity’s crowdfunding website for more information. 

Rainforest Rev: Disruptive Innovation and Global Innovation Barometer

THE BIG PICTURE

Disruptive Innovation Is Nonsense
Henry Doss, Chief Strategy Officer of T2 Venture Creation, from Forbes
The myth that a business can engineer disruption and maintain control of the results is unsupported by the evidence. Read more here.

Red Tape Blues
The Economist
Small businesses care less about taxes than over-regulation. This report shows the best and worst states for small business in America. Read more here.

GE Global Innovation Barometer 2014: Insight on Disruption, Collaboration and the Future of Work
Ideas Lab
T2 Venture Creation’s Chief Evangelist & Co-Founder Greg Horowitt contributes to the report on an expansive innovation survey of executives throughout the world. Read more here.

Too-Big-To-Innovate Is Not About Innovation
Forbes
Despite cumbersome bureaucracies and investors focused on short-term gains, large companies do innovate successfully, but only when their leaders properly allocate resources. Read more here.

THE LATEST NEWS
Think Locally, Act Locally: Building a Robust Entrepreneurial Ecosystem
Kauffman Foundation
A survey of participants in Kansas City’s 1 Million Cups entrepreneurship program suggests paths cities should follow to build strong innovation hubs. Read more here.

A New Rainforest Is Emerging in Latin America and the Caribbean
Innovation Rainforest Blog
The Inter-American Development Bank is looking through July 16th for 15 startups to support from the region, which is abuzz with startup activity. Help spread the word! Read more here.
Tech Startups Replace Bankers as Dublin Begins Recovery
Bloomberg BusinessWeek
Real estate that was occupied by high-flying financiers has seen its fortunes fall, benefitting the Irish capital’s upstart startups. Read more here.

CALENDAR OF EVENTS
Global Innovation Summit + Week 2015
Learn.  Love.  Build… Together.
February 16-20,2015

Silicon Valley, California
50% early bird discount —
last day is August 31! Plus highly discounted rates for students, startups, nonprofits, universities, and governments.

 
SPECIAL INVESTMENT OPPORTUNITY
Liquidity Nanotech Corporation
Liquidity Nanotech Corporation, one of Silicon Valley’s top next generation technology startups, has a limited investment window for friends of T2 Venture Creation. The company is targeting a multi-billion dollar market in clean water. It’s a rare opportunity to make profits while saving lives. Visit Liquidity’s crowdfunding website for more information. 

A New Rainforest is emerging in Latin America and the Caribbean

Where are the most innovative startups? Would you help us find them?

The Brazilian amazon is the largest rainforest in the world but a new emerging rainforest is taking hold in Latin America and the Caribbean (LAC). It is a sweeping movement, a growing ecosystem that is fostering entrepreneurial activity and innovation that improves people’s lives. Several hubs are sprouting around the region. There are hackathons, startup weekends, awards, contests, events and conferences happening almost every week if not more often. All this activity is bringing about a new kind of hope, a new vision for the near future, of a region full of talent, potential and opportunity.

As of mid-June and up to July 16th, the Inter-American Development Bank (IDB) is looking for startups based in Latin America and the Caribbean that through technology are improving people’s lives. The goal is to select the top 15 startups, invite them to Washington, D.C to participate in one of the most innovative conferences on innovation and development –Demand Solutions- and to take part in a series of activities that will help them expand their networks, pitch to investors, receive mentoring from top experts and successful entrepreneurs, and increase their chances of scaling up their ventures.

Many key actors are actively engaged in helping to build this new ecosystem: universities, governments, private sector, civil society, think tanks, and development banks. One of those actors is the IDB based out of Washington, D.C and with regional offices in 26 countries in LAC. For the past 50 years, the IDB has been a partner supporting its member countries with their development goals of poverty reduction and improving people’s lives. As part of this emerging ecosystem and to support the growth of this new rainforest, the IDB is highlighting the role that innovation, creativity and entrepreneurship have in supporting development, strengthening economies and fostering stable democracies.

If you have a startup or know of startups based in the LAC region, please tell them about the call. Also, if you would like to be a part of this growing movement and engage with like-minded visionaries that see Latin America and the Caribbean as the next Silicon Valley, come to DC on December 2nd and participate in Demand Solutions, you’ll be glad you did.

More information on the call for startups and on Demand Solutions the event, please write to Demandsolutions@iadb.org or visit http://www.iadb.org/demandsolutions
Please join the conversation @BID_idear #DemandSolutions


Rainforest Rev: The San Diego Ecosystem and Deadly Decision-making

THE BIG PICTURE

San Diego Startup Week: T2 Venture Creation’s Greg Horowitt
33 Voices (video)
An interview with T2 Venture Creation’s Chief Evangelist & Co-Founder Greg Horowitt about the San Diego startup ecosystem, the theory of The Rainforest, and the joys of surfing in the morning. See more here.

How Groups Make Great Decisions
Stanford Social Innovation Review
Decision-making in organizations too often relies on brainstorming and conflict, instead of a carefully orchestrated process that emphasizes consensus and inclusion. Read more here.
How Innovation and the ‘Reimagined’ Classroom Will Change Learning
Knowledge@Wharton
The global “Reimagine Education” competition looks for the most innovative ideas, approaches, tools and solutions to delivering education inside and outside the classroom. Read more here.

The Mind Does Not Belong in a Cubicle
The Atlantic
Use of the term “innovation ecosystem” to describe supportive startup environments seems especially apt in light of new research demonstrating that natural settings spur our brains to be more effective and creative. Read more here.

What Silicon Valley’s Diversity Reports Say About the Tech Workforce
The Wall Street Journal (blogs)
Maybe it’s no surprise that whites and Asians make up the bulk of Silicon Valley’s tech workforce, but the numbers reported recently by Google, Yahoo, LinkedIn, Hewlett-Packard and Intel reveal an even more lopsided homogeneity than expected. Read more here.
THE LATEST NEWS
Enhancing Europe’s Competitiveness: Fostering Innovation-Driven Entrepreneurship in Europe  
World Economic Forum
What’s wrong with Europe’s startup ecosystem? A new analysis of the region’s lagging innovation capabilities looks at the challenges and solutions needed to bolster support for the continent’s risk-taking entrepreneurs. Read more here.

California Dreaming: London’s Hi-tech Aspirations
BBC News
London Technology Week is shining a light on the UK capital city’s thriving tech ecosystem. Should you believe the hype? Read more here.

Australia’s Unregulated Tech Incubator Scene Could Be Doing More Harm Than Good
The Sydney Morning Herald
Aussie startups struggle coming out of the nation’s incubators, faced with a lack of native risk capital and start-up skills that puts them at a distinct disadvantage. Read more here.

CALENDAR OF EVENTS
Global Innovation Summit + Week 2015
Learn.  Love.  Build… Together.
February 16-20,2015Silicon Valley, California
50% early bird discount —
last day is August 31! Plus highly discounted rates for students, startups, nonprofits, universities, and governments.
 
SPECIAL INVESTMENT OPPORTUNITY
Liquidity Nanotech Corporation
Liquidity Nanotech Corporation, one of Silicon Valley’s top next generation technology startups, has a limited investment window for friends of T2 Venture Creation. The company is targeting a multi-billion dollar market in clean water. It’s a rare opportunity to make profits while saving lives. Visit Liquidity’s crowdfunding website for more information. 

A Tale of Two Quotes

“I don’t like using words like ecology to explain in shorthand a rich and useful organizational concept for business. For one, these soft edged metaphors turn off a lot of hard edged business people who occupy a large portion of the organizational power structures, especially in operations and manufacturing.. For another, nature has the patience and resilience to absorb a lot of failed or marginal experiments that would terminate a business enterprise…. Simply referencing the metaphorical links and then postulating a new business paradigm doesn’t appear successful in communicating with most people who have operational concerns.” Rick Dove, Response Ability: The Language, Structure, and Culture of the Agile Enterprise. John Wiley and Sons, Inc., 2001, p 134.

A Harvard business school alumnus responding to the intra-Harvard debate between Jill Lepore, an historian, and Clay Christensen, a business school professor, about theories of disruptive technologies is quoted as saying “We don’t learn laws of business. We learned stories.” John McDermott, Career Advice from Marina Keegan, Financial Times (US), June 26, 2014.

Rich Dove’s book is about agile manufacturing but also much more. In the next blog in this series I shall introduce a few of Rick’s concepts and discuss whether they can throw more light onto how innovation ecosystems may become agile; an ability to adapt rapidly to changes and shocks.

Meanwhile, let’s (1) gently dissect these two quotes, and (2) suggest what practical results the complex adaptive systems theory of innovation ecosystems predicts which will be of value to the most skeptical operations person. We only have space to begin here, and will continue next time.
In the above “.. throw more light onto..” is itself a metaphor; we are not literally going to use a flashlight. Francis Thompson (1859-1907) in his poem Contemplation uses the metaphor which nudges us into a sense of contemplation.

“This morning so I, fled in the shower,
The earth reclining in a lull of power”

Much has been written by philosophers about how the hearer decides to seek a nonliteral meaning in a metaphor, makes us attend to some likeness between two things, conveying an idea to open different frames of mind beyond the more straightjacketed analogy (A is like B, freshness after a rain shower is like the earth resting).

Thus, we are saying that a metaphor can help express a theory, but first we should be sure that we have some common ground as to what is a theory. Thomas Kuhn, a philosopher of science, set out criteria (although not necessarily precise ones) to help chose a theory or chose from competing theories. He stated that a theory should be:

1. Accurate, in that it empirically adequate with experimentation and observation.
2. Consistent, namely internally consistent, but also externally consistent with other theories.
3. Broad Scope, with consequences extending beyond the phenomena it was initially designed to explain.
4. Simple, using the principle that the simplest explanation is usually the better one.
5. Fruitful, in that any theory should predict new phenomena or new relationships among phenomena.

Others might add one more requirement, that of “falsifiability” or proving a theory to be wrong by making an observation or conceiving an argument which proves a theory statement to be false.

Or, put more succinctly, a theory must explain and predict. Without prediction a theory is worthless. I suggest we should hold stories and other narrative forms to Kuhn’s five-test scrutiny. Narratives have become a popular (as the Harvard graduate stated), and effective, metaphorical explanation of events – for example, in complex adaptive systems, where a mathematical description is not possible. Can narrative predict as well as explain? Let’s begin to investigate by applying Kuhn’s tests to complex adaptive systems concepts introduced in recent blogs in this series. For example:

Emergence
Emergence is an outcome of self-organization in the form of a new level of order in the system that comes into being as novel structures and patterns which maintain themselves over some period of time. Innovation springs from emergence. Emergence may create a new entity with qualities that are not reflected in the interactions of each agent within the system. Emergent organizations are typically very robust and able to survive and self-repair substantial damage or perturbations.

Kuhn’s Tests
Kuhn’s tests 1 through 3 are easily satisfied, whereas #4 might be more problematic – depending on how we define ‘simple.” Complex adaptive systems theory has been especially fruitful (test 5) as we described in April’s blog Games of chance? Cause and effect in innovation ecosystems Part 2 http://innovationrainforest.com/2014/04/21/games-of-chance-cause-and-effect-in-innovation-ecosystems-part-2/ which reported the work of Sharon Zivkovik on social entrepreneurship. Prof. Zivkovik reports on how complex adaptive systems theory predicts, under certain conditions ” interactions between independent agents produce system-level order as agents interact and learn from each other, change their behavior, and adapt and evolve to increase their robustness. Empirical research has shown large complex systems such as communities require enabling conditions to be created in order to maintain the coordination required for emergence self-organization and adaptive capability.”

In T2VC’s recent innovation ecosystems work with Medellín, Colombia, similar behavioral changes and adaptations occurred by adjusting certain conditions (this case example will appear in a future blog).

Another concept is:
Stabilizing feedback
If new emergent order is creating value it will stabilize or legitimize itself, finding parameters that best increase its overall sustainability in the ecosystem. Stability results by slowing the non-linear process that led to the amplification of emergence in the first place.

Kuhn’s Tests
We don’t have space this month to go into detail, but discussions of empirical studies on networks scattered among several previous blogs, such as the stabilizing effects of weak links, could be shown to meet all five requirements.

I hope readers of this blog series will now at least be beginning to understand that Rainforest innovation ecosystems are complex adaptive systems, and that the Rainforest metaphor expands our thinking. Philosophers have postulated that “even a quite definite speaker intention does not finally determine the meaning of a metaphor’ and that “the interpretation of the light the metaphor sheds on its subject may outrun anything the speaker is thought explicitly to have in mind.” An Irenic Idea about Metaphor, Philosophy, Vol.88, No.343, p 25. In the Rainforest case the metaphor in fact preceded the more detailed analysis of the complex adaptive systems model. The metaphor worked.

Next time, more on agile innovation ecosystems and more tests of theory and predictions.


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