QUADRUPLE AND QUINTUPLE INNOVATION HELIX

ECOSYSTEMS:SMART, SUSTAINABLE AND

INCLUSIVE GROWTH

INVITED LECTUREOPEN INNOVATION 2.0

DUBLIN, IRELANDMAY 20-21, 2013

ELIAS G. CARAYANNISGWU

caraye@gwu.edu

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LOOKING BACK TO SEE AHEAD…

THE CHINA QUESTION:Li Yuese nanti

• Few people, other than scholars, will be familiar with the story of the Cambridge don whose study of China’s scientific history helped to change the West’s appraisal of a civilisation once thought hopelessly backward.

• By the time Joseph Needham died in 1995, he had published 17 volumes of his “Science and Civilisation in China” series, including several that he wrote entirely on his own.

• The Chinese began printing 600 years before Johannes Gutenberg introduced the technique in Germany. They built the first chain drive 700 years before the Europeans. And they made use of a magnetic compass at least a century before the first reference to it appeared elsewhere.

• So why, in the middle of the 15th century, did this advanced civilisation suddenly cease its spectacular progress?

• So powerful has Needham’s contribution been to the historiography of Chinese science that this conundrum is still known as “The Needham Question”. Even the Chinese themselves use it: the phrase in Mandarin is Li Yuese nanti.

• In 1936 three Chinese assistants came to work in his biochemistry laboratory. One, Lu Gwei-djen, who came from Nanjing, began teaching him Chinese, which ignited Needham’s interest in the country’s technological and scientific past. He retrained as a Sinologist and took a job in Chongqing as Britain’s scientific emissary.

• Network Ubiquity –More than a billion Internet users and three billion wireless subscribers, worldwide

• Open Standards –Widely-adopted technical and transaction specifications

• New Business Designs –Horizontally-integrated operations

World Knowledge Economies and Societies in a New and Emerging Era:

21st-Century Drivers of Change

TOP PRIORITYFROM SOCIO-ECONOMIC BEING TO

TECHNO-ECONOMIC BECOMING

From natural (and/or artificial) scarcity to technology- and knowledge-enabled abundance

(Adapted from Carayannis et al, Smart Development, MacMillan, 2005)

Key Resources of the

Knowledge Economy and Society…Adam Smith defined Land, Labor and Capital as the key input factors of the economy in the 18th century.

Joseph Schumpeter added Technology and Entrepreneurship as two more key input factors in the early 20th century

In the late 20th and the beginning of the 21st century, numerous scholars and practitioners such as Peter Drucker, have identified Knowledge as perhaps the sixth and most important key input and output factor of economic activity.

TRIPLE VS. QUADRUPLE & QUINTUPLE INNOVATION HELIX

• The Triple Helix focuses on top-down government, university and industry policies and practices whereas the Quadruple Helix focuses on BOTH:– top-down government, university and industry policies and

practices as well as – bottom-up and mid-level out civil society grass-roots initiatives

and other actions that help better shape, fine-tune and make more effective and efficient the government, university and industry policies and practices.

• The Quintuple Helix adds to the Quadruple Helix the environmental dimension to ensure that said top-down, bottom-up and mid-level out policies, practices and initiatives are indeed as smart, sustainable and inclusive as possible and meet the triple bottom line (financial, social, and environmental) hurdles criterion. 9

TRIPLE VS. QUADRUPLE & QUINTUPLE INNOVATION HELIX

• The social and natural considerations act as the “creative glue” for promoting smarter, more sustainable and more inclusive growth opportunities in the Knowledge Economy and Society for both developed and perhaps even more so for transitioning and emerging economies.

• In this latter case, civil society and environmental structures, infra-structures and institutions are often lacking or under-developed allowing for the cumulation of substantial negative externalities (such as pollution) and other transactional costs of growth (such as corruption) as well as impeding or even suppressing market, knowledge and network spill-over effects (positive externalities).

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"The innovator has for enemies all who have done well under the old, and lukewarm defenders in those who may do well under the

new law."

Nicolò Machiavelli

Words of Wisdom to remember...

INNOVATION DEFINEDInnovation enhances the yield of resources via successful technology commercialization

Innovation resides at the intersection of invention and insight, leading to the creation of social and economic value

•US National Innovation Initiative

Innovation is a socio-economic, socio-technical, and socio-political phenomenon

Delivering an Innovation Economy AND Society is the key structural challenge for new growth in gloCalized Europe and World Knowledge Economies and Societies.

We may need to think in terms of TARGETED OPEN INNOVATION terms…

Source: Adapted from Elias G. Carayannis, GWU Lectures and in print, 2005

STAG

E O

F IN

NOVA

TIO

N

SECTORSECTOR

TECHNOLOGYTECHNOLOGY

Start-up technology

ventures

Corporate R&D Labs

Nanotechnology

Information and Communication

Technologies

Non-profit R&D Labs

Biotec

hnolo

gyDeployment

Development

Discovery

Government R&D Labs

Advan

ced

Mat

erial

s

Diffusion

Commercialization

THE INNOVATION CUBE

Idea | Research | Fuzzy Front End | Product Dev | Commercialization

Resources

Research Resources

Commercialization Resources

VALLEY OF DEATH

Early Stage Innovations

1 in 5,000!

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GLOCALIZED INNOVATION

FROM TRADE IN GOODS TO TRADE IN TASKS

S3 Business Technology Life Cycle

Time (t)

Tech

nolo

gy P

erfo

rman

cepe

r Uni

t Cos

t (TP

/$)

[ Effi

cacy

or V

alue

]

R&D or ProductDevelopment

Market Acceptance,Adoption, and Innovation

Legacy or Heirloom Technology

Diminishing Returns

Econ

omic

D

iseq

uilib

rium

EMERGENCE GROWTH MATURITY DECLINE

• Also known as the product evolution S-curve.– Showing axes and various curve components labeled

with appropriate descriptors for the world of IS.

Time (t)

Tech

nolo

gy P

erfo

rman

cepe

r U

nit C

ost (

TP/

$)

[ Eff

icac

y or

Val

ue]

Limit of PhysicsThere is a natural physical limitation to the behaviors of matter and energy upon which any technology is based.

Diminishing Economic ReturnsAt some point (even if the limit of physics is not obtained) the amount of marginal economic return becomes vanishingly small no matter how much additional resources are input.

S3 What Makes the Curve S-Shaped• Every technology life cycle S-curve inevitably

levels off at the top.– At which point, NO additional incremental gain can be derived

from a system regardless of further resource availability.

Heterogeneity dynamics – (IPO)

Number of firms

Size of firms

Number of products

Firm Performances

Market concentration

C C C

Input H Output HProcess H

Land/Labour/Capital

Technology

Entrepreneurship

Knowledge

C3 to S3: Co-opetition, Co-evolution , Co-specialization

Source: (CARAYANNIS ET AL, DIVERSITY IN THE KNOWLEDGE ECONOMY AND SOCIETY, MAY 2008)

The S3 BlueprintMode 3 C3: Co-evolution, Co-specialization, Co-opetition:

21st Century Innovation Ecosystem

BusinessIntegration

Product Effectiveness

Product Efficiency

BusinessReach

Entrepreneur

Academia

Entrepreneur

Government GovernmentIndustry Industry

INNOVATION

Developing and refining new competences

Solidifying andleveraging existingbusinessrelationships

Identifying andexploiting newbusinessrelationships

Refiningexistingcompetences

SKARSE dimensions – place & contentSKARSETM: Strategic Knowledge Arbitrage and Serendipity

Know-whatKnow-howKnow-who Know-why

Global

Regional

Local

Tacit Explicit

Strategic Knowledge Serendipity

Strategic Knowledge Arbitrage

“SKARSE” Entrepreneurial Ecosystems:Conceptual Model of New Venture Formation

5/19/2013 26CARAYANNIS_SKARSE ECOSYSTEMS

ENTREPRENEURSHIP AND INNOVATION ECOSYSTEMS:

THE CASE OF MINALOGIC

Projects Members vs. non-members

Public-private partnerships

Regional Innovation Network

Intermediaries

Model adapted from Komninos; Porter et. al.

Innovation Financing

Technology R&D

Enterprises

• Private/ Venture Capital

• Federal• State/Local

• Management• Firm Size• Resources/ Skills

• University Licenses• Patents/IP• R&D Expenditure

• Role• Source• Programs

Regional Innovation Network: Comparisons

2 March 2011 Carayannis/Schoonmaker 29

Maryland

Universities 56R&D Spending $14.3 billion

Incubators 15

Portugal

Universities 39R&D Spending $2.1 billionScience Parks 8

Mode 3: Regional Cultural Comparisons

Dimension Maryland Portugal

Entrepreneur - Focus on product development

- Well-educated (MBA/Ph.D.)- Often, 1st start-up- Focus on incremental steps

- Focus on going global- Well educated (MBA/Ph.D.)- Often, 1st start-up- Focus on incremental steps

Government - Primary support programs offered at regional/local level

-Primary support programs offered at regional/local level

Academia - Limited transfer of knowledge through TTO

- Transfer of knowledge is active via TTO

Industry - Private financing at early stages

-VC financing typically with Biotech

- Private financing at early stages

- Corporate funding for spin-offs

2 March 2011 Carayannis/Schoonmaker 30

Mode 3: Regional Innovation Network

2 March 2011Carayannis/Schoonmaker31

Dimension BusinessObjective

Network Resources

Culture Goal

Entrepreneur -Firm revenues-Firm profit

-Skills-Knowledge

-Focus-Incremental Approach-Learning style-Well educated (graduate degree)

Creating a going concern

Government Economic development

-Support-Grants

-Motivated by political environment and role of public service

Economic showcase(Political clout)

Academia Royalties IP -Motivated by research –grants and placement of publications

Power of knowledge success (Access to grant funds and best researchers)

Industry ROI Funds -Private/Angel smaller risk profile-VC controlling (larger risk profile)

High “hit” rate (Attracts other investors and higher quality investments)

Triple Helix to Quadruple Helix: Industry Map

2 March 2011 Carayannis/Schoonmaker 32

Mode

1

Mode

2

Mode

3

Government Academia Industry Civil Society

B2C

I1CI2I

I3I

B5G

M1G

B6G

B7G

I4G

B8G

B9G

I5G

M2GC1G

I6G

E1G

Biotech

Chemical

Energy

ICT

Media

B1G

B1I

B1A B1C

B2A B2IB2G

B3G B3A

B3I

B3C

B4G

B4A B4I B4C

I1G I1A I1I

I2G I2A I2CI3G

I3A

I3C

B5A B5I B5C

M1A

M1I

M1C

B6A

B6I

B6CB7A

B7I

B7C

I4A I4I I4C

B8A

B8I

B8CB9A B9I B9I

I5A

I5I

I5C

M2A

M2I M2C

C1A

C1I C1C

I6A

I6I I6C

E1C

E1A

E1I

Triple Helix to Quadruple Helix: Regional Map by Cluster

2 March 2011 Carayannis/Schoonmaker 33

Maryland

Portugal

R&D

Funding

Support

Government Academia Industry Civil Society

I2

B5

M2

B3 B5

M2

C1

I1

E1

B1B2 B5 B2B2

B2

B3

B1

B4

I1

I3

I1

I1 I3

I4

B6

B6

I2

B7

B7 B8

I1

B9

B1

C1

I6

E1

B1 B1 B1B2 B3 B5 B9

I2

B4 B5 B6

B2 B3 B7

E1 I1 I4 I5

B2 B4

I5 I6

E1

I6I5

M2M1

B6

B7 B8

I2 I3 I4

M1

B1

I1

B2

I1

E1

B5 B2

B3

B3 B5 B2

B6 B8

I2

I4

I1

M1

M1I3

B7

Empirical Evidence

2 March 2011 Carayannis/Schoonmaker 34

• Networks with largest number of nodes and density represent 70% of all connections in regional innovation networks. Pharmaceutical and ICT industries are examples. (Christ)

• Positive and significant correlation between universities and regional technology innovation. (Florida)

• Mode 3 regression analysis demonstrated strong prediction (~80%) for payroll, salary, and revenues (Carayannis & Schoonmaker)

Key Findings

2 March 2011 Carayannis/Schoonmaker 35

• Civil Society– Virtual extension of all actors

• Industries– Biotech and ICT are industries that are beginning to demonstrate

‘Mode 3” and the ‘Quadruple Helix’

• Regions– Maryland is leading the regional progression towards M3/4H– Portugal is operating on the frontier of M3/4H

• Companies– M3/4H Best in Class companies are able to leverage all 4 actors– Highly networked, globally to locally, typically 2nd start-up

Mode 3: C3 Findings

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• Academia and entrepreneurs tend to focus on the product dimensions (effectiveness and efficiencies)

• Government and industry tend to focus on the business dimensions (integration and reach)

• All work dynamically as part of the Ecosystem

Affordability

Awareness

Accesibility

Availability

CharismaCharacter

Culture

Communication

Coordination

Co-optation

SustainableEntrepreneurship

Entrepreneurial Critical Success And Failure Factors

–Gestation Period and PATIENCE are KEY Factors…–Co-location and a Global / Local View are KEY Factors…

Source: (CARAYANNIS, DIVERSITY IN THE KNOWLEDGE ECONOMY AND SOCIETY, MAY 2008)

Robust Competitiveness

Tomorrowwith iDeaFramework

What we propose…

What we propose…

QUADRUPLE HELIX AND DEMOCRATIC CAPITALISM

• Knowledge-based innovation should never be seen as a privilege of industrialized countries.

• This indeed would be a misleading approach. Knowledge-based innovations are just as valid for emerging economies and developing countries.

• In that sense, the Quadruple Helix and the Quintuple Helix are global und universal.

• The more appropriate question to ask would be what the specific implications and ramifications for knowledge-based innovation would be when applied in diverse political, economic, social, and technological contexts around the globe (Carayannis et al, 1998 to 2012) and how this concerns developed democracies versus emerging autocracies.

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QUADRUPLE HELIX AND DEMOCRATIC CAPITALISM

• In particular, the Quadruple and Quintuple Innovation Helix constructs may well serve to reveal and promote ways and means to help advance growth in a manner that is becoming increasing aligned with the progress of democracy instead of having growth advancing in defiance of and for the suppression of democratic institutions.

• Over the medium to long term, our fundamental belief and premise is that true and transparent democracy constitutes a sine qua non for smart, sustainable and inclusive growth and this constitutes our main motivation and guide for our focus on ways and means that concepts such as the Quadruple and Quintuple Innovation Helices, can serve architect a better tomorrow for the peoples of the world.

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• The brightest frontiers of knowledge reside at the intersection of technology, insight and traditional disciplines

• A collaborative, sustained commitment by industry, government and academia is essential

• Innovation is a culture, not a department

•Nick D’Onofrio, –IBM Sr. Exec. VP–Invited Lecture, GWU SoB, October 2007

Points to Remember…

Ending Thoughts...• 'Until philosophers are kings, or the kings and princes of this world have the spirit and power of philosophy,... cities will never have rest from their

evils - no, nor the human race as I believe...' [Plato, The Republic, Vol. 5, p. 492]

• 'The lowest form of thinking is the bare recognition of the object. The highest, the

comprehensive intuition of the man who sees all things as part of a system.’ [Plato]

THE CHINA QUESTION Re-visited…:Li Yuese nanti

• Needham never fully worked out why China’s inventiveness dried up.

• Other academics have made their own suggestions: the stultifying pursuit of bureaucratic rank in the Middle Kingdom and the absence of a mercantile class to foster competition and self-improvement; the sheer size of China compared with the smaller states of Europe whose fierce rivalries fostered technological competition; its totalitarianism.

• With its unreformed one-party system, its rote-learning in schools and state control of big businesses, “new China” is hardly a haven for innovative thinking. Yet the Chinese continue to fret about the Needham question.

• A Communist Party chief of a middle school in central China recently said that it deserved deep thought and that the answer lay in an education system that fails to emphasize improving “character”.

• A former government minister also referred to Needham’s lament that China had produced no idea or invention of global impact for more than 500 years. Its contribution henceforth, the official said, should be “harmony”.

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She – she !!!