An Adaptive Response to the

Converging Forces of Innovation and Economic Globalisation

March 2010

Best way to Predict the Future, is to Create it!

Neil Movold

Managing Director

SB2 International Ventures Limited

1.0 - Today’s Challenges

New Zealand and the Global Economy“To survive in a world of shrinking economic distance, New Zealand business must organise itself in complex systems spanning many countries, tapping into differences in costs, skill, resources and tastes to maximise overall returns.” (source: Office of the

Minister for Economic Development – Advancing Economic Transformation, 2007)

“Enhance global knowledge transfer by assisting New Zealand firms and industries to locate, transfer and absorb new knowledge and technologies from overseas.” (source: Office of the Minister for Economic Development –

Advancing Economic Transformation, 2007)

“New Zealand’s vision need to be firmly connected to the global economy in ways that are in the best long-term interests of all New Zealanders. Achieving this will come about through strengthening connections between local businesses and the global economy. This needs to be done through (1) more sophisticated and integrated in-market support, (2) greater fostering of international investments and partnerships, and (3) promoting increased collaboration offshore.” (source: Export Year 2007 – Platform for the Future)

Need to Manage Innovation Ecosystem

“Given our unusual RS&T funding profile... ‘low rate of collaboration and ideas flowing from universities and research institutions to business’… this is not compatible with a future in which New Zealand will have to face many challenges to improve its productivity and maintain its relevance to the world.” (source: Office of the Prime Minister’s Science Advisory Committee, ‘Improving translation of

publicly funded research for economic benefit’, Sep 2009)

“One reason that improving the commercialisation of science is challenging is that the process of commercialising science is complex, involving numerous connections and relationships among participants and institutions. That is why it is referred to as an ‘innovation ecosystem’. (source: ‘Standing on the shoulders of

science: Getting more value from the innovation ecosystem’, The New Zealand Institute, Dec 2009)

“The issue of going to scale is critical for a small country far from its potential markets. Consideration must be given to what stage in the innovation chain should international partnering opportunities be sought on the way to market. (source: Office of the

Prime Minister’s Science Advisory Committee, ‘Improving translation of publicly funded research for economic benefit’, Sep 2009)

The Evidence-Based Policy “Paradox”

Policy is about solutions for the

Future – looking forward

We can project trends going forwards… but all trends eventually change over time

The Evidence-Based Policy “Paradox”

But conventional “evidence” is about

the Past – a typical economic

development approach

Diversity of Opinions

Everyone involved in the Paradox resembles one of these partially sighted persons

1.0 - In Summary

• The impacts and challenges of Economic

Globalisation are strongly linked with a country’s ability to

embrace Innovation

• The Evidence-Based Policy Paradox is alive and well!

• There are a myriad of opinions around what these

impacts and challenges are and how to deal with them that is

leading to various silo approaches and inadequate

steps forward

2.0 - But Wait! … the World is Evolving and Getting

More Complex!!

Globalisation

Regulation

Competition

Customer Demand

Technology

Market Changes

Turbulent Times and Many Forces at Play!

The Need for Adaptability

Influence Has Been Revolutionized

A large portion of new ideas and formal collaborative relationships come from

external contacts

Even once found, few systems currently offer clues

about an external contact’s trustworthiness,

communication skills or willingness to help

What People Value in Expertise:

o Trustworthiness

o Communication Skills

o Willingness to Help

o Experience

o Currency of Knowledge

o Awareness of Other Resources

o Extent of Knowledge

The Massive Filtering Problem

Findability as Alternative to Search is Now Key!

The cost of not finding the right people

and information is too great!!

2.0 - In Summary

• While time is spent assessing the current economic

situation, the world is evolving with new realities and

becoming more complex

• Many forces and changes in society are outpacing the

ability to educate for change using historical approaches

• Growing external networks and realm of influence are

revolutionizing business and economic growth

• Traditional search and introduction approaches to finding

the most appropriate external contacts are becoming

inadequate – Findability is now the key!

3.0 - How to Approach a Solution?

We are Dealing with Complex TimesComplex times require a toolkit that allows for:

o managing high levels of uncertainty

o understanding intent in a rapidly changing environment

o doing more with less

o making decisions in inherently complex environments

o managing knowledge critical to the organisation and nation

o evaluating impact of initiatives

o making invisible issues visible

Solving the Paradox

It is NOT about:

Predicting the future based solely on

preconceived ideas and the past

It IS about:

Exploring possibilities for the future to

ensure that strategies are robust

Solving the Paradox

It is NOT about:

Just accumulating, extracting and recording what

everyone knows

It IS about that… AND:

Looking ahead, beyond usual timescales and

looking across, beyond usual sources while

fostering innovation and Communities of

Practice to harness intangible assets

Harnessing Collective Intelligence

“No one knows everything, everyone knows something...“

Pierre Lévy (1997)

The trends are undeniable and the opportunities compelling

We Cannot Ignore Technologies Available to Us

Adjusting to the 21st Century Society

“... it’s the emerging social practices” Howard Rheingold

It’s Not the Technology!

Approach Needs to Embrace Legacy

The Cost of ‘What We Don’t Know, We Don’t Know”

“People had to be aware of their

lack of relevant knowledge and

be prepared to explore the area of

their ignorance with suitable

questions and help from other people

in similar positions.”, source: Reginald Revans

“… the lack of efficient and

reliable search often results in

delayed decision, quality of work

and missed opportunity which

does not get classified in the right

bucket.”, source: Search2.0

3.0 - In Summary

• Complex times requires a Toolkit approach

• The primary focus must be one of embracing social practices, with

secondary focus on the evolving interconnection of these practices and

technology

• We must break free of the dependency on pre-conceived notions

• The focus must be on looking ahead, fostering communities of

practice, while harnessing intangible assets

• Awareness of the cost of the “what we don’t know, we don’t know”

culture

• Harnessing collective intelligence, a transdisciplinary approach is

necessary to take into consideration the complexity of the problem,

integrating understandings, approaches, data, methods, and arguments

from more than one discipline

4.0 - Pulling It All Together – Informed

Navigation

Building Competitiveness & Innovation

It is about:

oEmbracing complexity

o Knowing that there is no one right

answer

o Working within the contours of the

Organisation, the Nation and the World

o Knowing that context is key

Its All About Informed Navigation

Informed Navigation is not about searching, but finding; not about access,

but sharing. Informed Navigation recognizes that human beings do not

seek and utilize information as individuals, but as communities.

Value of Informed Navigation

o Targeting the right knowledge and insight todevelop a finely-tuned strategy

o Providing a deep, forensic analysis of internal and

external contacts and opportunities that would not

otherwise be found

o Mapping a highly qualified value network of

synergistic partners, development opportunities and

funding

o Providing in-market support, advice and

engagement, going past introductions to

complement and extend public sector approaches

o Sharing risks and rewards, co-creating

accelerated and sustainable success

Supporting Two Converging Forces

Supporting Structures and Systems -harnessing and fostering the convergence of Open Innovation and Economic Globalisation,

while firmly grounding both to the ability to access Resources, Capital and Pathways to Market

Creating a New Reality for Success

This Value Creation comes together by understanding the Purpose

and Nature of International Organisations, Markets and Society and

mitigating risk by ensuring that activities are Extending and

Complementing existing programmes

Identifying Value Creating Opportunities

Multi-Sector Integrated ApproachThis approach provides the following measures of success:

• Investing in skills and knowledge

• Increasing international business connections

• Investing in infrastructure for a stronger economy

• Lowering business costs

• Strengthening the environment for innovation

• Forming key partnerships to strengthen the economy

• Increasing business exports and international readiness

Three Key Stakeholder Groups:1) Public Sector2) Private Sector3) Academic / Research

Three Core Drivers for Success:1) Enhance Collaboration2) Drive Economic Growth3) Accelerate International Success

Business influencing / guiding Public and Academic/Research Sector support

Multi-Layered Stakeholder EngagementThis approach and focus spans across countries

International Co-Creation of Value

SOLUTION:Organisation’sInternational

Readiness andSuccess

Domestic Partners and Resources

(Public, Private and Academic / Research Sectors)

In- Market Partners and Resources

(Public, Private and Academic / Research Sectors)

e.g. FinancialServices

(Private Sector)

e.g. BusinessServices

(Private Sector)

e.g. Research&

Development(Academic

Sector)

e.g. Manufacturing

Facilities(Public Sector)

e.g. MarketAnalysis

(Public Sector)

e.g. LogisticsServices

(Private Sector)

Facilitating and managing the “docking” of

selected value network partners and

resources with the competencies to fit

an organisation’s individual needs

Value occurs by mitigating the risks created by an

individual partner’s bounded areas of focus and expertise

The International ExpresswayOn Ramps = Government, Incubators,

Investors, Organisations,

EDAs, Academic / Research, etc.

Off Ramps = License, Trade, Capital Markets,

Market Access and Growth, Investment,

Physical Presence, Partnerships etc.

Entry / ROIGateway

Entry / ROIGateway

Where Should We Be Looking For Off Ramps?

Sector Synergies / Niche Market Opportunities

Sector Synergies / Niche Market Opportunities

BRAINS + MONEY + CULTURE

=

Demand-based, Outward Focused Innovation

Entrepreneurship has Deep Roots

Increased Speed (commercialisation, innovation)

Improved Scope

Scalability

Multi-dimensional Innovation

They “Huddle Well”

Culture

BrainsMoney

Regions in the

World which have:

These Regions are Intelligent Communities of Practice

Why Are They Different?Intelligent Communities of Practice:

• Promote awareness and collaboration

• Strong levels of trust and integrity

• Identify and leverage high-value individuals

• Share best practices

• Stable and diverse economic growth

• Have superconductivity of connections

• Produce unintended consequences

Assumptions:

• Learning is fundamentally a social phenomenon

• Knowledge is integrated in the life of communities that share values, beliefs, languages, and

ways of doing things

• Real knowledge is integrated in the doing, social relationships, and expertise of these

communities

• The processes of learning and membership in a community of practice are inseparable• Knowledge is inseparable from practice

• It is not possible to know without doing. By doing, we learn.

• Empowerment – or the ability to contribute to a community – creates the potential for

learning

Intelligent Community Indicators

Source: John Jung, Intelligent Community Forum (www.intelligentcommunity.org)

They actively engage in “Future-Proofing” – Creating Intelligent

Futures and building on a new economy with the following elements:

1. High Quality INFRASTRUCTURE

2. Exceptional EDUCATION creating, attracting and sustaining SKILLED WORKERS

3. Attracting INNOVATION and CREATIVITY

4. Building on COLLABORATION and inspiring Superior LEADERSHIP

5. Effective and stable GOVERNANCE

6. Excellence in ARCHITECTURE and URBAN DESIGN

7. Nurturing CULTURE and DIVERSITY

8. Attracting RISK CAPITAL, Incubating and Commercializing

9. Promoting DIGITAL INCLUSION

10. Ensuring SUSTAINABILITY

11. Ensuring HEALTH and SAFETY

12. Effective MARKETING and ADVOCACY

What Makes These Communities Successful?

Source: John Jung, Intelligent Community Forum (www.intelligentcommunity.org)

4.0 - In Summary• The problem is complex and there is a necessity to embrace the

contours and contexts of its complexity

• An Informed Navigation approach provides needed knowledge,

insight, engagement and influence

• Informed Navigation provides a key support and engagement

mechanism for the two converging forces of Open Innovation and

Economic Globalisation

• Value creation is achieved through a multi-sector integrated

approach, recognising the need to understand the relationships

between resources

• Domestic efforts to deal with the complex problem cannot be isolated

from international activities, which should be centred around engaging

Intelligent Communities of Practice – parallel activities must occur!

5.0 - Discovering and Understanding Relationships

Discovery is less about predicting precisely right about what someone wants

It is more about the entire flow of discovery, with all the hits and misses

Flow of Discovery

Co-Creating Value Through Flow of Discovery1

2

3

4

5

678

If People Were Perfect

If people were perfect, we wouldn’t need to collaborate – we would just clone!

The Necessity – Understanding Relations Between Resources (Contours & Context)

Problem of Two Separate Worlds

Intangible assets and human interactions represent 50-70% of business value and activity, yet management practices are

poor to non-existent

THE PROBLEM: Human interactions and business transactions are treated as two separate worlds

Source: Intangible Asset Magazine, Jan 2009, Accenture 2004

Utilizing Tangible and Intangible Assets

Tangible and Intangible Assets

Roles

Transactions

Deliverables

Utilize Assets Realize Value

Tangible and Intangible Assets

Roles

Transactions

Deliverables

Utilize Assets Realize Value

Tangible and Intangible Assets

Roles

Transactions

Deliverables

Utilize Assets Realize Value

Participants in a Value Network, either individually or collectively, utilize their tangible

and intangible asset base by assuming or creating roles that convert those assets

into more negotiable forms of value that can be delivered to other roles through the execution

of a transaction. (Source: Verna Alee, ValueNetworks.com)

The Informed Navigator’s Value Network

5.0 - In Summary• Findability is more about the entire flow of discovery than precision

predictability

• The flow of discovery can be harnessed to co-create economic

value and potentially unpredicted new value creation

• It is a necessity to understand the relations between resources in

the flow of discovery, with particular focus on the various contours and

contexts involved

• Discovering the tangible and intangible assets utilised between

resources will bridge the gap between human interactions and business

transactions

• Informed Navigation centres its strength around the relationships

necessary for fostering co-creation of more negotiable forms of value

6.0 - An Action Learning Case Study

Intelligent Communities of the World

Nearly 90 cities and regions around the world are officially recognized as Intelligent Communities

Source: Intelligent Community Forum (www.intelligentcommunity.org)

Diverse. Innovative. Entrepreneurial. Creative. Enterprising.

Case Study: Why is it Canada’s Technology Triangle (CTT)?

Case Study (CTT): World Class Academic / Research Institutions

University of Waterloo (UofW) • World’s largest Mathematics / Computer Science Faculty • World’s largest Co-operative Education Program (12,000+)• Canada’s largest Engineering School – fully Co-op• No. 1 reputation ranked University in Canada

• One of Canada’s most research intensive Universities• Spins off 25% of all technology start-ups in Canada• Policy 73 – You Make it, you Own it, end of story!• New School of Pharmacy – 1st in decades in North America• Centre for Entrepreneurship, Business and

Technology – MBA in Entrepreneurship• 25,000+ students

Wilfrid Laurier University (WLU) • Canada’s second largest Business and

Economic School• Schlegal Institute of Entrepreneurship• Largest Business Co-Op Program• 12,000+ students

University of Guelph (UofG)• One of Canada’s most research intensive Universities

• Largest MBA in Agriculture in North America

• World leader in agriculture and bio-science research

• Understood to patent more bio-science patents than any other research institution in the world

• College of Biological Science – only one of its kind in Canada

• 18,000+ students

Conestoga College• Highest ranking Polytechnic Institute in

Ontario for 9 consecutive years • 83,000+ students

Over 150 Research Institutes, many world

renowned, including:• Institute of Quantum Computing

• Perimeter Institute of Theoretical Physics

• The Centre for International Governance Innovation (CIGI)

• Giga-to-Nano Electronics Laboratory

• The Centre for Wireless Communications

• Waterloo Centre for Automotive Research

• Schlegel Centre for Entrepreneurship

• Guelph Food Technology Centre

• Academic Council on the United Nations SystemOver $344 million in R&D.

On a regular basis, Microsoft hires more graduates from UofW than from any other institute in the worldBill Gates’ only Canadian visit on recent North America University tour was to UofW on 21st February, 2008

Case Study (CTT): A World Class Eco-System Evolving

Case Study (CTT): Tapping Into the Ecosystem

LignoTech is a bio-composites company based in Ashburton, New Zealand

SB2 facilitated a 3 day intense in-market visit to Ontario in July 2009

Their in-market objectives:

1. To identify a location to establish their North American Headquarters

2. To identify a location to establish a Centre of Excellence and Pilot Plant

facility

3. To identify opportunities to raise capital (USD$5 to $8 million) to deal with 1.

and 2.

Harnessing Informed Navigation - Down to Business!

30+ Multi-Sector Organisations

40+ Decision Makers / Influencers

Not a Show and Tell visit!

Summarising

Getting on planes … failing!

Evidence Based Paradox!

Findability is Key!

Collective Intelligence

Understanding Relations

Knowledge and Insight

Culture

BrainsMoney

Engaging Communities of Practice

Innovation is Co-Created!

How Can This Work?Behaviour, habit & culture changes

always come first

Monetization is a possible consequence(not a starting point!)

Every large and engaged audience can

be turned into economic value

Attract the right people by providing

relevant content with context

Get and hold their attention – build trust

Think Followers not Users

Offer added values to convert followers and

intangibles into currency

Culture

BrainsMoney

Start Simple With Small Steps!

Untap the Potential

Inventing the Future!

Neil Movold

Managing Director

neil@sb2ventures.com

www.sb2ventures.com

APPENDIX:Understanding the

Tangibles and Intangibles

Research is the transformation of money into

• Knowledge new to the offering

• Knowledge new to the company

• Knowledge new to the industry

• Knowledge new to the world

Innovation is the transformation

of knowledge into money

“The traditional focus on direct support to R&D has been reduced and more

attention has been given to improving market and systems

mechanisms for sustained innovation performance” (OECD)

Research and Innovation

True Innovation

True innovation is not the making of novel units of

output but the designing and creating of new markets through service provision

Source: Steve Vargo, sdlogic.net

Value is Always Co-Created

Is It About Open Innovation?

Open Innovation means that Companies (or Countries / Individuals) should make

much greater use of external ideas and technologies in their own

business, while letting their unused ideas be used by the other counter parties

(Cross-borderly). Source: Chesbrough, 2006

Enterprise Behaviours to Open Innovation:• Networking• Collaboration• Corporate Entrepreneurship• IP Management• Research & Development

Knowledge can only

ever be volunteered: it cannot be conscripted

Collaboration

Knowledge

Collective Intelligence

People + Interest

Ideation

Sensemaking

Insight

Open Innovation Issues:• It’s really uncomfortable (generational

issue)• Governance, control• What is the asset?• Shared assets• Openness (tools, content, process)• Vulnerability

Why is Insight Important?

The “Ah Ha” Moment

Insight – 2 Types

1. As seen from Cognitive Science Community• To name the process by which a problem solver

suddenly moves from a state of not knowing how

to solve a problem to a state of knowing how to

solve it

• Complex, deep, qualitative, unexpected, and

relevant

• A Moment of Enlightenment or

Spontaneous Insight

2. As seen from Information Visualisation

Community• An individual observation about the data by the

participant, a unit of discovery

• An advance in knowledge or a piece of

information

• Knowledge Building Insight

Insight and Units of KnowledgeInsight as knowledge and information is more or less units of

Knowledge

PartialTacit

Scientific

Situated

Explicit

Intuition Living

Lack of Insightful Decisions

Tacit and Explicit Knowledge are Inseparable

Hence all knowledge is either tacit or rooted in

tacit knowledge. A wholly explicit knowledge is

unthinkable.”Source: Michael Polanyi “Knowing and Being”

“While tacit knowledge can be possessed by itself, explicit knowledge must rely on being

tacitly understood and applied.

The Swing in Approach

Source: The Gilbane Group

Apprehending the Inner NatureInsight is the act or result of apprehending the inner nature of things or seeing intuitively

Source: Websters

Perspectives filter an information space

according to particular situations

Perspectives A and B preferentially

select different types of resources and

relations

Informed Navigation: Different Perspectives

Source: Mark Gahegan, University of Auckland

Informed Navigation: Remembering Situations of Use

resource

Same Resource

Different Situations

Source: Mark Gahegan, University of Auckland

Collaboration Teaches Context

“Human collaboration is what wraps context around and within a knowledge

element/object”Source: Richard Close

KnowledgeNexus

Concepts

Resources

Tools

People

Places

Tasks

Combining Tangibles and Intangibles

Intangibles are Real

They are real assets that accumulate

as a result of specific observable,

manageable activities

They are real deliverablesthat build relationships

They are real negotiables that

can be traded for other tangible and

intangible value