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Innovation Blog

 Benjamin Franklin, Innovator: Back of the Bus, da Vinci!

By Shlomo Maital

 

Ben Franklin bill

On a long flight, recently, I read Benjamin Franklin’s Autobiography on my Kindle.  I realized that while we attribute multidisciplinary creativity to da Vinci, in art, science, engineering, urban planning, etc.,  when it comes to practical needs-based innovation driven by a deep understanding of society, the Boston-born American innovator Benjamin Franklin (1709-1790) is far ahead. 

  Franklin was born and raised in Boston, on Milk St., but left at an early age to find his fortune.  He was self-educated and read widely.   Here are a few of his innovations, driven by an independent inquiring mind:

   He invented the lightning rod (flying a kite into an electrical storm that by all odds should have electrocuted him), the Franklin stove (highly efficient stove), bifocals (he wore them), the urinary catheter (none of his inventions were patented, he utterly opposed such wealth-creating monopolies).  He wrote,  “as we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours; and this we should do freely and generously”.  He charted and named the Gulf Stream ocean current.  Once doubting sea captains believed him, they cut two weeks off the voyage between North America and England.  He founded the American Philosophical Society, where scholars could present their research findings.  He first noted that electricity has positive and negative charges.  Franklin published ideas for sea anchors, catamaran hulls, watertight compartments, shipboard lightning rods and a soup bowl designed to stay stable in stormy weather.  He founded the University of Pennsylvania.  He invented the public library.  He innovated the post office and stamps.  He realized there was a shortage of printed money and, against the wishes of the wealthy oligarchs who controlled what little currency there was, printed currency to foster commerce.  To this day the Franklin Mint prints currency and mints coins, in Philadelphia.

  And finally, Franklin helped write that amazing document, the American Declaration of Independence.

   The fundamental difference between Leonardo da Vinci and Benjamin Franklin, was that da Vinci tried to keep his innovations secret by his mirror-writing, and most of them were thus never implemented. Franklin, in contrast, purposely sought to give away his ideas and implement them as rapidly and as widely as possible.  Generally he succeeded.   His method was one widely taught today: Identify a social need, build a business model to acquire resources (he liked to use a subscription model – pay a small regular fee and enjoy library services, or hospital, or education, or postal services).  

    It is worth re-reading his Autobiography; innovators will find much in it to emulate.

 Global Crisis Blog

Global Crisis:  Big Mess, Caused by Blunders, Not Mother Nature

By Shlomo Maital

 

Alan Greenspan

The American Federal Commission established to investigate the underlying causes of the global financial collapse, 2007-8, has now reported its findings (this is breaking news, within the past few hours).  Here is what they found:

“The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire. The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble.”    “The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion, it will happen again,” the report states.

    The major blame is placed on Fed Chairmen Alan Greenspan, as well as current Fed Chair Ben Bernanke.  Among those blamed:  Government regulators and policy makers; corporate mismanagement; two presidential administrations; two Fed chairmen; greed in several financial institutions; and unnecessary Wall Street risk taking.   The report is from the New York Times, which got a preliminary glimpse at the commission’s findings.

  According to C.B.S.,  “former Fed chairmen Alan Greenspan and his successor, Ben S. Bernanke. Greenspan are singled out for advocating financial deregulation and failing to stem the flow of toxic mortgages.”

  The 10-member commission was not unanimous.  Six members appointed by Democrats agreed with the findings.  Four members appointed by Republicans opposed them.  This is typical of the current fiercely partisan atmosphere in U.S. politics.   Republic minority members will soon issue their own report, blaming – you guessed it – the Democrats.

  The Report does not fail to blame the lobbyists as well. “Lobbying is also blamed, [including] the $2.7 billion spent between 1999 and 2008 by the financial sector on convincing politicians and federal officials to let them have their way.”

   “Overall, the report paints a grim picture of mismanagement, miscalculation and a general lack of will to tackle obvious flaws in the financial system by government officials, industry leaders and regulators.” 

    The 6-4 split in the Commission will effectively neutralize any possible policy changes arising from the Report, since Republicans now control the House of Representatives. 

Innovation Blog

Great Depression, Great Innovation: Will We See a New Wave of American Innovation?

By Shlomo Maital

  

Neoprene wetsuits

 Recent scholarly research reveals a surprising fact about the Great Depression, 1929-1939.  It was an era of unprecedented innovation.  According to Alexander J. Field, *   “The years 1929-1941 were, in the aggregate, the most technologically progressive of any comparable period in U.S. economic history.”

   Examples?  (cited by Nabar and Nicholas) **:  Dupont scientist Wallace Carrothers invented synthetic rubber (neoprene), creating an entire new industry (tires, etc.) that created American jobs, rather than Malaysian rubber-tree plantation jobs.  Dupont scientists also invented rayon, enamels and cellulose, generating 40 per cent of Dupont revenues in 1937 from products that did not exist in pre-Depression 1929.  Automobile innovation forged ahead, especially in the improvement of internal-combustion engines, also creating a massive job-creating industry.  Television and FM radio were introduced by RCA (though their introduction was somewhat delayed by lack of money).  Catalytic cracking for complex hydrocarbons was introduced, creating huge refineries that employed many thousands.  And the early jet engines were developed, building on newly developed titanium alloys.

   What is it about hard times that spurs innovation?  Nabar and Nicholas, economists, offer a convoluted jargon-ridden theory:   “we show that firms with imprecise sector-level priors on payoffs to innovation updated their beliefs and responded stronger to sector-level signals than firms holding more precise priors. “  Translation: Firms less locked in to strategic plans (i.e. major cutbacks) could move faster to innovate and seize emerging opportunities”.

   I think the reasons lie elsewhere.  The legendary former mayor of the Brazilian city of Curitiba once said, “if you want true creativity, slash two zero’s off your budget”.  He meant that resource scarcity spurs innovation, rather than hampers it.  He was right.  Desperation, poverty, lack of funds, all these create a can-do creative atmosphere in which innovators seek ways to save resources and improve existing technologies, simply in order to survive.

   I do not see the same atmosphere in today’s America.  As an observer once said, “a crisis is a terrible thing to waste”.  The 2007-9 crisis was wasted.  By reassuring Americans that the crisis is over, America’s political leaders are a) wrong, and b) are wasting an opportunity to leverage the enormous energy that Depressions foster, as happened in 1929-39.  There ARE innovations.  iPads create jobs for Asians.  Facebook creates a few jobs but not industries, as happened in the 1930’s.   What is vitally needed are innovations that create breakthrough products spurring creation of massive new industries [synthetic rubber, refineries, car plants] with equally massive job creation, at home in America, not in Chungking or Nanjing. Here are some suggestions.  Cleantech: alternative energy breakthroughs. Medical devices: lowering soaring medical care costs. Transportation: New technologies for public transportation.  Education: ways to deliver high-quality education to the masses, using technology.   Alas, I see few signs this is a national objective.  It should be.  Wake up, America!  This Depression may end before you reap its potential benefits.

* Field,  Alexander J., “”The Most Technologically Progressive Decade of the Century,””American Economic Review, 2003, 93(4) 399-1413

** Malhar Nabar,  Tom Nicholas “Uncertainty and Innovation During the Great Depression” Harvard Business School, January 14, 2010

Innovation Blog

Nature Innovates #3: The Octopus & Jet Fuel, The iPad and Darwin

By Shlomo Maital

 

 Octopus: Jet Propulsion

 

Nature yet again inspires human innovation, to help save Nature itself.    A Georgia Tech researcher named Arie Glazer studied so-called “boundary layer” effects on the upper edges of aircraft wings.  As air passes over the wing, in flight, turbulence develops. This causes drag and reduces fuel efficiency greatly. And combustion of jet fuel is a major cause of carbon emissions and global warming.   Basically, the longer air molecules travel over the wing, the more they become ‘fatigued’, and began to ‘misbehave’.  Glazer thought that counter-intuitively, by disturbing the air flow somewhat, you could get the air molecules to ‘forget’ they’ve been smooth for too long, and begin the smooth flow again.  But, how to do this?

    Why not create tiny microjets that expel air onto the wing surface, especially near the trailing edge?  But this will use fuel, not save it!   What can we learn from Nature, Glazer asked?  Who inhales and exhales jet?  Octopi.  They suck in water, they expel it to propel themselves very rapidly through the water. Glazer (along with researchers at Australia’s University of New South Wales) designed tiny 1 mm. microjets that, like octopi, suck in air, and then expel it again.   The result dramatically reduces boundary layer effects and improves the smoothness of air flow over the wing, thus improving jet fuel mileage and reducing carbon emissions.

   And, while we’re praising Nature, why not use Nature to help save Nature itself?  Apple, after announcing Steve Jobs’ medical leave, now announces the 10 billionth (!) download of iPhone and iPad apps.  There are 350,000 such apps, created by a storm of innovative energy by enthusiastic users.   Did Apple learn its lessons well?  By closing its Mac operating system in the 1980’s, Apple managed to transform a winning product (the world’s best operating system and world’s best personal computer) into products defeated by inferior Microsoft and IBM products. By opening its software to all developers, IBM enlisted massive creative energy and made its PC the global standard. Apple lots tens of billions of dollars in market value.  But Steve Jobs learned.  Today the open Apple system enjoys the vigor, creativity and innovative skill of many thousands of developers.  In doing so, Apple emulates Nature.  Thousands of mutations, or “natural experiments”, occur in Nature, as Nature tries to improve.  Most of those experiments fail and disappear, because they do not help living things to survive to reproduce.  But a tiny fraction do succeed, and they prosper, procreate and eventually dominate.  Same with apps.  Most are not successful and sell very few copies. A few are highly successful and find wide use.  And the only way to find out which is which, is to toss 350,000 apps up into the air, put them into the apps stores, and see what happens – just like Nature’s evolutionary process. 

   Innovator:  Can you build an innovation system that emulates evolution?  If so, you can massively change the world for the better!

 Innovation Blog

 (Lack of) Innovation in B-Schools: Help!!!

By Shlomo Maital

  

 

 

Alan Brandt GMAC

 

Bloomberg Business Week reports on a contest for ideas to innovate business school programs.  There were some 650 entries.    Winner Alice Stewart conceived this idea:    She envisioned professors from different disciplines creating micro-curriculums, where they’d weave content together from business education, engineering, and the sciences.  Students who completed the classes, which she dubbed “stackable knowledge units,” would get a certificate.  Eventually, they could combine these certificates to earn a business degree, she wrote in her proposal, thereby allowing students to customize their education track.

   According to Alan Brandt, who heads the GMAC-funded contest, “This is essentially building your own degree based on creating stackable units. It is something that is different enough and could help you, as an individual student, in approaching a program in the way you want to do it without a wholesale change to the existing way a school is working.”

    As always, I am distressed by the lack of innovation in business schools that teach innovation (all do), because I live and work in a biz-school environment.   My former student B. Joseph Pine,  co-founder of Strategic Horizons, an innovative consulting firm,  published Mass Customization 12 years ago.  In it, he noted the strong trend of ‘markets of one’ – creating customized products for customers.  Many consumer products have done this for year,  for instance Dell Computer Co.’s customized design-it-yourself computers.  Yet MBA programs continue to offer a curriculum of standard functional stovepipe core courses and a few “electives” – mainly, one size fits all.  There is little integration, little cross-disciplinary teaching, little team-teaching (too expensive), little customization.

    When will we see Alice Stewart’s idea truly implemented? At the current snails pace of innovation in B-schools – I may not see true mass customization in MBA programs  in my lifetime.   

Innovation Blog

Hu Jintao in America – U.S. vs. China

By Shlomo Maital 

 Here are a few brief observations about U.S.-China relations, as Chinese President Hu Jintao ends his U.s. visit, in Chicago.

  • President Obama is a lawyer.  Hu Jintao is an engineer.   So is Premier Wen Jiabao. Whom would you choose to lead a nation into new technologies and innovation, a lawyer or an engineer?  When was the last time America chose an engineer as President? (Answer: Jimmy Carter, 1976, but he was trained as a nuclear engineer, and never really practiced). 
  • What subject was studiously avoided during Hu’s visit?  The trade deficit.  America’s overall trade deficit shrank in October, last available data, to $38.4 b., but the trade deficit with China grew, to $25.6 b.  In other words,  two-thirds of America’s trade deficit is with China.  Why? Because the U.S. no longer produces stuff China really needs.  Containers from China return from Long Beach Harbor to Shanghai carrying…paper for recycling, or are simply empty.   
  • Look for China to be increasingly assertive, as its economy grows.  According to a recent McKinsey Report by Gordon OrrUs :     “China will step up its “invest out” program in the new five-year plan. The government may well seek to double the country’s cumulative outbound investment within the next five years. There will be resistance by governments in some countries (probably in Africa, Eastern Europe, and Latin America) where public opinion is not yet convinced that so much Chinese ownership of key assets is really attractive. This opposition will visibly upset China’s leaders, who may decide to sell the bonds of the reluctant governments and to increase the challenges that enterprises from these nations face in selling to Chinese state entities.”

   Herein is the answer to America’s reticence about its trade deficit with China. China can crash the dollar, simply by ceasing to buy U.S. Treasuries at the weekly auction, let alone sell a tiny fraction of its $2.8 b. worth of dollar assets.

  • A Times of India article [1] asks:  Did China overtake the US as the world’s biggest economy in 2010?  New numbers for the GDP of different countries at purchasing power parity (PPP) seem to suggest so.   When you correct China’s GDP, by dividing GDP measured in renminbi (yuan) by the appropriate exchange rate (that accurately reflects the high purchasing power of the yuan), some experts find China’s GDP exceeds America’s (though, of course, its population is four times greater, so its GDP is still only about a quarter that of America.  According to economic Arvind Subramanian, “the adjustments increase China’s GDP from the current estimate of $10.1 trillion to $14.8 trillion (an increase of 47%, of which 27% is due to the revision in the 2005 estimate, and the rest due to smaller-than assumed increases in the cost of living between 2005 and 2010. This $14.8 trillion figure exceeds US GDP of $14.6 trillion.”   There is psychological significance to this number.  The world’s largest economy conveys substantial geopolitical clout as well.

[1] 21 Jan, 2011, by Rukmini Shrinivasan.

Global Crisis

Guess Who’s Making Your Gasoline Bills Soar? Clue: Not OPEC

By Shlomo Maital

 

 

 crude oil price volatility 

A recent business commentary on Canada’s CBC radio made a great deal of sense.

  An expert from Enfo, an energy consulting firm, discussed the recent spikes in the price of oil and gasoline, as petroleum soars over $90/bbl.  Back in June 2010, oil was only $78/bbl.   

   Why?  Geopolitical instability?  OPEC?  None of the above.

   Speculators.

   The crude oil market has become a favorite sandbox for speculators. With huge amounts of liquidity floating around the world, with banks reverting to old habits of ‘nostrum’ speculation to generate huge profits, and with very few opportunities to earn high returns,  traders have put huge amounts of money into crude oil futures and options. 

    They are speculating that the global economic recovery, which will drive world GDP growth to 4.5 per cent this year (according to the IMF), will create demand for oil and hence drive up prices. 

   What is the problem with this?

   It creates a kind of doom loop.  The more speculative money that flows into petroleum trading, the higher the volatility.  The higher the volatility, the higher the potential speculative profit from guessing right.  The higher the potential profit, the more money this market attracts… and so on.    We have seen this before in other derivatives markets. 

   The problem with this doom loop, or feedback system, is that we USE oil, to run our cars, heat our homes, produce electricity.  So a relative handful of speculators can make energy more expensive, generate profits for Arab  despots and in general fuel global cost-push inflation.   The speculators and oil-producing countries, mostly non-democratic, share a common interest – make money, at our expense. 

    It appears that regulators are powerless to prevent it.  What ordinary people can do, one at a time, is conserve energy, as best they can, and press their elected officials to spearhead policies that do the same. 

Innovation Blog

How to Milk Goats for their Spider Webs –  Say That Again??!!

By Shlomo Maital

  

 Spider silk surpasses steel

 

In this blog, I often write about how Nature, with its ultimate patience that uses millions of years of evolution to create winning innovations, surpasses by far human ingenuity.  Here is a story about how human innovation partners successfully, and highly creatively, with Nature’s innovation.   You can learn more by watching the wonderful four-part Public Broadcasting System Nova series on “Making Stuff”.

    Spider silk is amazing. It has higher tensile strength than steel.  Nature has patiently, through evolution, enabled spiders to spin tough silk. Nothing humans make rivals it.

 . A thread of silk can resist more pull before breaking than a thread of most kinds of steel. It is also quite stretchy. In the spotlight recently has been the newly discovered Darwin’s bark spider of Madagascar, which builds one of the largest webs known. The silk of this spider is twice as strong as other spider silks, ranking it among biological materials with the highest tensile strength and toughness known. 

[At the American Museum of Natural History, you can see a large orange blanket, woven from spider silk.  It took four years to painstakingly collect enough thread, by ‘milking’ spiders into an alcohol bath, then retrieving the threads that coalesce in it.] 

   Univ. of Wyoming molecular biologist Randy Lewis asked himself, how can we create spider silk commercially (since humans cannot synthesize it)?  Here is what he does.

   First, he extracts one of the two key genes spiders have, that enable them to produce their silky threads.   Next, he inserts it into goats, creating baby goats that have the spider-silk DNA.

   Next, he milks the goats, and extracts the spider silk compound from their milk.  The level of spider silk in their milk is about 1 per cent (like low fat milk).  A quart of goats’ milk generates a tiny thimble of spider silk material, that can be used to produce ultra-strong threads.

    Here is how Lewis describes his thinking:  “We needed a way to produce large quantities of the spider silk proteins,” Prof Lewis said.  “Spiders can’t be farmed, so that route is out and since they make six different silks, even that would not work if you could.” Spiders also have a tendancy to eat each other, so milking one thread from six out of a solo spider was clearly never going to service the entire human race. Prof Lewis and his team singled out the “dragline” – the outer strand of the web – as the strongest of the six types of silk. They spliced the DNA that creates the silk into a female goat’s DNA, then waited for it to give birth and start lactating.”

   Lewis says he is thinking of inserting the gene into alfalfa, rather than goats.

   It is therefore time to begin thinking about uses.  What uses can you, reader, think of, for ultra-light  [a strand of spider silk that circles the world, 25,000 miles, weighs only one pound!] and ultra-strong, stronger-than-steel, thread?  Fishing line?  Bullet-proof vests (we use Kevlar today)?

Innovation Blog

Art as Common Stock: Will It Fly?

By Shlomo Maital

     

Vezzoli, Premiere of a play that will never run

The French company A&F Markets has come up with a venture called Art Exchange that will treat artworks as investment vehicles, opening them up to partial purchase by shareholders.  The first two works to be offered by Art Exchange are both owned by Paris’s Yvon Lambert Gallery.  Pierre Naquin, the founder and president of the investment venture, related that the initiative has just launched with an offer of shares in two pieces, one by Sol LeWitt and the other by Francesco Vezzoli.   Now 11,000 shares of LeWitt’s “Irregular Form” are available at €10 ($13) per share, for a total value of €110,000 ($142,000) and 13,500 shares of Vezzoli’s “The Premiere of a Play That Will Never Run” are also offered at the same rate, giving it a total price of €135,000 ($174,000).

    What is the basic idea of this innovation?  Suppose you are an investor, and believe that art is a good investment, as part of a diversified portfolio.  You can invest in it by buying a painting or a sculpture.  But the price is high, and you may lack expertise.  So why not offer ‘shares’ in a painting, so that when the value of the painting rises, you profit (and take the profit when the painting is sold).

   Apparently this art stock market is not the first.   China’s Shenzhen Artvip Cultural Corporation started selling shares last year on the Shenzhen Cultural Assets and Equity Exchange.  Instead of selling slices of an individual work, Artvip sold 1,000 shares in a collection of pieces by artist Yang Peijiang, which sold out immediately.

    Is this idea good for art?  I heard an expert criticize the idea.  But surely, by making art ‘liquid’, you attract resources to art and thus help both galleries and artists. 

    This art stock market is not for collectors.  They are well-heeled, and want to own paintings, so they can enjoy them while perhaps making capital gains.  This market is for ordinary people who feel that perhaps, the market for art is bullish and worthy of, say, a 10 per cent tranche of their total investments. 

    There are some open questions.  How is the decision made to sell a painting, and when?  By a ‘shareholders’ meeting’?  Majority of shares decides?  How are shareholders consulted?

   Like all innovations, the market will determine this one’s success.   I think it might just work. Stay tuned.

Innovation Blog

“I Have a Dream!” – Merging Spontaneity and Discipline in Innovation

By Shlomo Maital

 

 

 

Today America celebrates Martin Luther King Day.  We recall the remarkable “I Have a Dream” speech given on Aug. 28, 1963, for only 17 minutes, from the steps of the Lincoln Memorial – a speech that influenced millions and probably changed history.  But how did those memorable words at the very end of his talk happen?  Where did they come from?

  The particularly moving and dramatic segment, with the refrain “I Have a Dream”, almost didn’t happen.  King came to the end of his prepared speech.    And then, gospel singer Mahalia Jackson, on the stage with him, had an insight.  As a performer she realized that King had failed to energize and impassion his audience – which is what gospel singers do, and do it wonderfully.  And she also knew how King could do it.  She had appeared with him at various rallies, and recalled one particularly powerful speech King gave earlier that year in Detroit, when he marched at a demonstration with legendary labor leader Walter Reuther. 

    “Tell them about the dream, Martin!”  Mahalia Jackson said.  You can clearly hear her speaking these words on most of the YouTube versions of the speech.  “Tell them about the dream!”. 

    M.L. King listened.  He got it.  He understood.  He seized the moment.  He was able to improvise, turning an ordinary speech into one of the most extraordinary orations in history.  He did this with a combination of spontaneity – he probably made the decision to add the “I have a dream” segment in a split second – and discipline, because he had given the “dream” segment before, prepared it, thought about it, and it was like a perfectly designed suit of clothes ready to be taken out of its wrapping and worn immediately. 

    Spontaneity, and discipline – the oil-and-water combination that when combined, create history-making innovation.  This for me is one of the messages of M.L. King’s wonderful speech.

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
January 2011
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