Business, Law, and Innovation
March of Innovation
Lecture 1
Spring 2014
Professor Adam Dell
The University of Texas School of Law
Big Themes:
- Innovation is ever present in our economy.
- Supportive ecosystem, culture of risk & fair incentives.
- Cheaper tools of innovation in the hands of more people
than ever.
- Results of innovation are impressive.
- A lot more to come
2
Science Doesn’t Sleep
• Engineers / Scientists are on an unending march to make things
faster, smaller, cheaper, cleaner, simpler.
• Market conditions do not alter this paradigm.
•
•
•
May accelerate investment / risk capital in a new market (alternative
energies, green technologies) but they do not dictate it’s natural
progress.
Engineers (with pocket protectors) had been working on the plumbing
of the Internet long before you ever heard of Google and they’ll be
working on improving it long after you take Google for granted.
Alternative energies (thin film solar, micro turbines) may get more
attention when oil is $150 a barrel, but they don’t go away when it’s
$50.
• Businesses are the most efficient allocators of capital (because they
think in terms of ROI). They are always chasing the next pile of $s.
As a consequence, you will forever see businesses endeavor to
make money through innovation.
3
Creative Destruction
The notion of creative destruction is found in the writings of
Friedrich Nietzsche and in Werner Sombart's Krieg und Kapitalismus
(War and Capitalism) (1913, p. 207), where he wrote:
"again out of destruction a new spirit of creativity arises".
The economist Joseph Schumpeter popularized and used the term
to describe the process of transformation that accompanies radical
innovation.
In Schumpeter's vision of capitalism:
“innovative entry by entrepreneurs was the force that sustained
long-term economic growth, even as it destroyed the value of
established companies that enjoyed some degree of monopoly
power.”
4
Creative Destruction
5
Creative Destruction
Can you think of some examples of creative destruction?
How many can we name?
Hello
Goodbye
Digital cameras
NetFlix
iTunes
Answering machine
Car Service Dispatch
Film
Blockbuster
CDs
Voice Mail
Uber
6
Ecosystem of Innovation
• Government & Education Support
•
•
•
•
ARPANET (thank the US Gov. for the Internet)
Stanford (thank, in part, for Google)
Technology Transfer Programs (Silicon Valley / Stanford)
US Patent & Trademark Office (protectors of an innovator’s ideas)
• Entrepreneurs, Venture Capitalists, Lawyers, Engineers
• Clear understanding of the steps / process associated with turning a
technology into a viable business.
• Regional Advantage (AnnaLee Saxenian)
• Cultural Acceptance of Risk / Failure
• “Regional advantage”
• Fair Incentives
• Big spoils to those whose innovations change industries.
7
Austin’s Regional Adv. / Ecosystem of Innovation
8
Tools of Innovation in the Hands of All
• Parallelism
• Definition: the independent development of a similar trait in
related species or lineages following divergence from a common
ancestor.
• Many examples (radio, nuclear bomb) of innovation which were
developed roughly at the same time by different people in
completely separate locations.
• We stand on the shoulders of those whose innovations came
before.
• Collaboration / Open Innovation
• Today we have virtually instant access to all information.
• Powerful PCs have made it possible for an individual in a single
room in Katy, Tx to work on problems that the engineers at
Research Park in Palo Alto are working on.
9
Ex. Organized Around “Open Innovation”
• Innocentive
• Reward based problem solving.
• Deep technical problems defined by a corporation.
• Published in an open marketplace, solved globally
• “Solve any of our Challenges to win awards from $5,000 to
$1,000,000. Challenges are posted by Seekers
(corporations, government agencies, and nonprofit
organizations) who are looking for your help with product
development and other business and science problems.”
10
Results
11
Results
“Technological Forecast”, in Economy & Energy (http://www.ecen.com), nº 30, fev.2002.
12
More to Come…Faster
• Because innovation is now a global collaborative
prospect….
• Because innovation is not limited to just those
employees in your company….
• Because the sheer # of people working on science &
engineering problems in much larger….
• Because the size of the market for IT & science
innovations is now much larger…
• Because innovation is a solution to environmental,
energy and food source issues….
Innovation will happen faster and be even more
important in our economy.
13
Class Exercise:
• Because innovation is now a global collaborative
prospect….
• Because innovation is not limited to just those
employees in your company….
• Because the sheer # of people working on science &
engineering problems in much larger….
• Because the size of the market for IT & science
innovations is now much larger…
• Because innovation is a solution to environmental,
energy and food source issues….
Innovation will happen faster and be even more
important in our economy.
14