Why Ignorance Is A Threat To Innovation In The U.S.
A Twitter post really ticked me off yesterday. It was written by @seansrich, the Twitter name of Sean Rohde, a software developer and political blogger in Texas, and it was caught in my search filter because it mentioned Denmark. It went like this:
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@MAXHDTV we still have it good here in Texas and all the non liberal states. Entitlements kill innovation look at Denmark 26% on pub income.
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Contrary to what Sean believes, Denmark is one of the most innovative countries in the world, and we are consistently ranked in the Top 3 on various indexes that measure the happiness of the populations of countries around the world.
Yes, we have a big government, we do pay a lot in taxes and we do have a lot of people on public income. Actually, I think we should cut down on the big government, but not too much because life is pretty good in Denmark. This is a fact that you should bear in mind when Denmark and the other Nordic countries are dragged into the political debate in the U.S.
The tweet also made me think of some issues that have bothered me for a while.
I have the pleasure of travelling a lot and I believe this gives me a pretty good perspective on global innovation and societies in general. One thing that I have always paid closed attention to is how the general public seem to respond to change and how much desire they have for making things better. As examples, I noticed how women in Dubai have a spirit that can lead to great things, and I am impressed by the drive of the Chinese people.
What do I see in U.S.?
When I look beyond the great universities, the great people who know how to build companies and the big dreams you can have there, I see a population in denial. It seems as if the middle and upper classes prefer to ignore that the U.S. is spending money it does not have and that this will have huge consequences for the future. Just look at what Warren Buffet said recently in the New York Times in his comment, “The Greenback Effect”.
I specifically mention the people who are better off in the U.S. because they will be hit hardest by this development. The 12 million poor people in the U.S. and the 46 million without health insurance in a country where a serious illness can lead to bankruptcy are already hit hard, and I think they understand things need to change. What do they have to lose?
I especially find Americans to be in denial on two fronts that go hand-in-hand; over-consumption and energy. Look at your cars, houses and lack of recycling. The U.S. has a deficit of $1.8 trillion, which equals 13% of the GDP. The U.S. is home to 5% of the world’s population and yet it consumes 26% of the world’s energy. Do I really need to say more?
In my opinion, the U.S. is a sinking ship. Do not get me wrong. I have lived in the country, and I have many good friends there. I would really like to see the U.S. prosper and do well – also because it would make the whole world do better. I am quite sad to see this development…
What does this mean to innovation?
In the long run, the U.S. might not be able to afford to innovate as they do today. The debt will cause the public sector to collapse even further, lowering the quality of education and resulting in less innovation.
The private sector is already fighting hard with the companies in the emerging countries, which has the great benefit of seeing high internal growth that continues to fuel their innovation engines. And as mentioned, they have a drive that we are losing in the Western world. There is a great risk that the U.S. innovation engine will lose its power.
What can the U.S. do?
The U.S. needs to buckle up sooner or later. Why not sooner and then apply the mighty innovation engine (while it still is there) to turn constraints into innovation that can lead to growth? In the last decades, the Danish government has put a lot of constraints on our companies with regards to environmental protection. Yes, our companies first balked at this, but today we have a leading position in the clean-tech industry because the early constraints forced our companies to seek new solutions, which in itself created new companies. Many Danish companies are also more competitive as we have already made adjustments that companies in other countries need to make now.
Of course, this is easier to do in a small country as Denmark, but one advantage of the U.S. is its ability to scale up. Things are just bigger in the U.S. and, if done right, this constraints-leads-to-innovation mindset could also lead to huge revenues, profits and lots of jobs.
What else can the U.S. do? I know this is a very controversial topic, but let’s have an open mind and share our views on this. Comments are highly appreciated.
I can't agree with you more, Stefan! Thanks for the posting, and perspective!
Cheers!
Dear Stefan,
May I disagree with your proposition?
You basically making an argument that Americans are ignorant, over-consuming, and therefore their ship will sink. You also give advise to this nation.
I would ask a question, is the character of the US is worse now than it was 50 or 100 years ago?
The fact is that the US has become the dominant force in the world with ignorance, arrogance, greed, individualism, etc that used to be worse than now. You would probably agree, the US is much better place than it used to be 50 years ago.
Therefore the ship will not sink. This nation has a remarkable ability to repeat the same mistakes and learn from them for the 2nd and or 3rd time. It is a part of their empirical culture. And they will do it again.
It is true that here people know very little about how competitive Denmark is. That is probably because Denmark matters very little for an average US business person. BRIC matters much more.
Also, from cultural perspective, Americans don't like when foreigners point out wrong things about their country. Maybe in Denmark it is different? I can't remember the last time when a foreign advise was appreciated here.
This nation is great at innovating and commercializing foreign inventions.
Also, this country is full of brilliant people and they will figure it out, for their own sake. If not, they will import more brilliant people like yourself.
Keep in mind what Bismark said about the US.
Sergei
Sergei, of course you may disagree. I fully understand that many Americans will disagree and true to my heart I really hope you will prove me to be wrong as I have strong feelings for your country.
However, power has always shifted after x number of decades and this time power is shifting to the BRIC economies. The U.S. has had a great run in the last 70 years, but things are changing. How will the U.S. handle this? Personally, I am a bit scared and sad about the signals I pick up in the U.S which was a reason for writing the blog post.
This is just my opinion and I agree that "finger-pointers" can be an annoyance. On the other hand, this makes me think of Jim Collins, who in his latest book "When The Mighty Fall" argues that the first stage towards decline for great companies is "hubris born out of success". The second stage is "undisciplined pursuit of more" and the third stage is "denial of risk and peril". Perhaps this applies to countries as well?
The U.S. is still a great country and you have great people. Hopefully, you can turn this around. Yes, I have some doubts, but my fingers are crossed…
Stefan
A nice balanced post.
As someone who moved to Europe after a decade in the US, and even as someone who still complains about the sluggishness of certain aspects of European life, I couldn't agree more with the spirit of your argument.
One small comment for Sergei – people often use this argument that US succeeded despite ignorance and general apathy. So, detractors should keep quiet. However, they do not often take into account how 'lucky' the US was in a historical sense. When Europe was hobbling along after the wars, US was in its prime – growing and consolidating. It seems like the tables are turned now. US is hobbling and BRIC countries are poised for growth. So, perhaps Americans need to be even more alert and sensitive to these issues.
I found this on your Linkedin post. I agree with you 100%. I am an American currently living in China. I am watching the internet and consumer growth here with fascination. It reminds me of where the USA was 5 to 7 years ago. I am hoping to become a part of it.
The US "Hubris" is as exactly you postulate. The USA is a nation of entertainment and denial junkies. Sure there are lots of great people and many good businesses, but for your average middle class people they have no clue what goes on in the world economy. For the last 10 years we have been quite comfortable sending a huge portion of our wealth to the middle east and China. The only people that really prospered were the oil company execs and the Walton family.
Don't get me wrong I am proud to be an American and the nation has more resilience than many might think. But the pride has led to a fall. The current economic policies are just slowing it down. For the sake of my own pride I sure hope the average American wakes up soon and realizes he has over consumed.
Insightful Stefan. Most Americans are locked in to old, rapidly becoming mythical views, of the U.S. They can't see from inside what you can see much more clearly as someone outside. If America does not adjust its approach to many issues – including health care – it will lose its competitiveness. The big winners will be everyone who has historically been jerked around by U.S. practices in the global economy. Thanks for your observations!
@Sergei Dovgodko: "Also, from cultural perspective, Americans don’t like when foreigners point out wrong things about their country."
This is, I'd suggest, one of the reasons why Stefan's analysis is all too accurate. This aspect of the American psyche is a significant weakness, not a strength.
Stefan and others,
I have a different slant on all of this that is probably too simple. Like Charlie Brown and Lucy looking at clouds and Lucy seeing major works of art while Charlie Brown saw a horsie and a duckie.
I have been working as a consultant/trainer for the last 25 years and I focus on my version of the Toyota Production System/Lean Manufacturing. I have worked with over 50,000 employees at 150 companies and an interesting observation came out of all this work.
American's as a whole are "rugged individualists" in that they all have an opinion and they love to play on teams that can win. And when they have a championship season, they brag about it the rest of their lives. I found this out by leading innovation projects of teams of 3 to 5 employees to improve companies with a simple goal: find ideas that have $100,000 of lost opportunity with a cost to fix of less than $2,000. And then I provided help to them by teaching them the various tools that we all know that are taught by the Toyota Production System and Lean Manufacturing. I even added a few of my own tools and pilfered a few from others. I usually goaded people that had difficulties in working on a project by asking them to look for issues that pissed them off. I found that if something pissed someone off then the root cause was a good problem. I also found out that 1 out 6 of the 10,000 plus ideas was what I call a big idea with over a $1 Million of value that had a 100 to 1 payoff.
So why is this relevant. I rarely got to do my work in a healthy company. I was usually working with someone on the brink. And when the employees had to rally behind the company CEOs to help the company, they always did. They all did. Some didn't want to help the "basterd" leading their company but they ultimately did.
So that gets me to Stefan's point. Leadership. Right now, Obama is fighting for his political life trying to get the health care agenda implemented in some form of universal care. But whatever he does, he needs to lead the parade. This isn't a deal that he signs into law and steps back. He needs to focus on holding all the players (vendors, businesses and stakeholders) accountable. He needs to manage the process or it will fail.
For example, a few of my business associates and I are running an experiment that is of interest here. We are working with a large California School district to see if we can move the health meter the other way (lower costs). In this school district, we had to get unions, insurance companies and all the providers on the same page and consent to be measured for what they committed to deliver (if you don't measure it you can't change it). And low and behold after 2 months we are seeing a flat health care expense. People are taking their medicines (up to 81% from 62% compliance – you can actually measure this number – the AMA says that employees are going to be cured unless they take their medicines at least 80% of the time). We have a whole bunch of metrics that show big time progress.
So after all this, the message is this, Stefan. We can change, we have that evidence. But will the President put in place a system that will allow us to measure and hold accountable all parties participating in the health care program. And all parts of our broken system.
So this whole discussion boils down to measurement and driving change and I believe that is possible.
I thank you giving me the time to write in response to your insightful diatribe. It got my attention. Keep it up.
Best,
Len Bertain
len@bertain.com http://www.bertain.com
Stefan: good article. You are on the right track but even you are writing with an eye to political correctness, however I sincerely applaud your understanding and graciousness in trying to reach and educate a broader market here. We (The US), do have an incredibly talented, engaged, creative, driven, well educated top 5%. We have lost competitiveness in many critical areas, most notably critical thinking skills in even that top 5%. The remainder of us generally like to follow someone else's directive or perceived "leadership" and yes, the bulk of our population has lost competitiveness in far too many critical areas. Regardless of the competitiveness of our top 5%, we have to clearly understand that when China has a population of roughly 1.3bbl and India has a pop of 1.1, their combined top 5% alone equals a population that is larger than our entire workforce…and then there is the remaining 4+bbl in the world! Beyond this, we have been co-oped by special (well entrenched and well defended) interests in many areas which have decimated not just our competitiveness and leadership in many critical areas of potential growth and future world markets but we have also acquiesced / allowed an internal gutting of financial, judicial and political institutions which has begun a wholesale erosion of the foundations of trust we have had in those institutions. Part of the solution is for each citizen to really spend the time and energy digging deeply into the issues…and educating ourelves far beyond where we conveniently excuse ourselves now. It is long past time that we stop operating "as dumb as we want to be" and articles such as yours will hopefully get more of us Americans to begin to consider and then understand the real and imminent challenges within which we are already well entangled. Thank you. Keep up the great work!
Stefan,
I am an American living in Victoria, British Columbia, Canada, having emigrated there four years ago. I did so in part because I found that I was discouraged by the ignorance and apathy that has become endemic there, coupled with a fundamental surety about people's belief that they lived in the best of all possible worlds (and to disagree with this, even providing hard evidence, was to risk being branded a traitor).
I received some significant insight about this after a couple of years I spent working for Microsoft in Redmond, Washington. The environment there was all-encompassing – you were surrounded by the Microsoft Way, the Microsoft philosophy. The only news that you received about Microsoft was positive. Everyone who worked there was the brightest and the best in the world, everything that Microsoft produced was two years ahead of everyone else and the only truly good ideas were those that originated from within the walls of Microsoft.
After leaving Microsoft, I began to spend more and more time in the open source community. In most cases, I found that the ideas there were often very superior, to the extent that you could tell fairly readily what concepts had been lifted pretty much wholesale from the cutting edge of that field. What I began to realize was the degree to which the Microsoft culture was a very seductive and not completely intentional brain-washing operation; because there were few dissenting viewpoints (you had to be a manager in order to dissent
this often meant that what was being developed often didn't have the strength of skepticism and intellectual challenge that could turn mediocre software into truly great software.
This situation is writ large in the US. Dissension has been suppressed by a mainstream media controlled primarily by major financial interests, by a political system that is similarly controlled, and by an educational system that stresses conformity of thought and action over risk taking and daring. Even entrepreneurs – who have built a self-image as daringfor the most part risk takers and mavericks – are very parochial and limited in their beliefs and perceptions. The real mavericks are usually buried … they can't get funding, they are pilloried (or worse, completely ignored), and the system intended to protect them (the patent system) has been suborned so completely that it now is used as a bar to significant innovation.
Of course, you'll never hear this from most Americans.
I find it interesting that most of the comments come from people who have left the US. While I appreciate their insight, Bay Elliotts comments weigh more for me because he is still here fighting the fight.
I agree with much of what has been said here. My hope comes from knowing that the US is "young and immature." Looking back, I've seen a tremendous capacity in the US for making mistakes but also a tremendous capacity for learning from them. My hope is that we are in the midst of the "question" part of that process now.
I don't see any value in making this "us against them". I want China to succeed and India to succeed AND Denmark to succeed. I believe we all can. I am an "abundance theorist" not a "scarcity theorist." I believe abundance is regenerative and if we could shake off our failure to recognize that we are one world we could proceed with explosive delight.
I'm for hope!
For a recent example of the bafflingly cocky nature of the USA, look no further than the recent row about the health system. This presented the National Health Service in the UK as communism writ large and a place where committees sit and deliver life or death verdicts on the sick.
In reality, the NHS, which is far from perfect, does not abandon anyone to the fate of the uninsured in the USA, a state of affairs that you refer to in your own message. The UK spends half as much per head than the USA and yet on most yardsticks, including longevity, is healthier.
I suspect that Denmark is even better than the UK, but because Americans are even more ignorant about Scandinavia than they are about the UK it does not get the same wilful misrepresentation and bogus "facts". As Steven Hawking pointed out, he is alive because of the NHS, contrary to claims in the USA that it would have killed him off.
The big mistake that Americans make is to think that the whole world wants to be like them. Yes, we do complain about taxes in Europe, but mostly we accept that they are necessary in a civilised society that at least attempts to get somewhere near to equality in health and education. We will never achieve this, but at least we try.
Gosh, how messy we Americans must look to those on the outside looking in. And if you listen only to the loudmouths in the health care debate who throw around terms like socialism and communism and fear monger about Hitler-like policies with all too much ease (and irrationality), no wonder that anyone on the outside looking in would think there is not much hope for us.
However, if you have interviewed dozens and dozens of American entrepreneurs, as I have, you may have more hope for us and for our country's future, particularly when it comes to innovation. We do need to, as Stefan says, "buckle up" but I think we all know that…at least those of us who aren't glued to Fox News know it.
When my brother, a blue collar Republican all his life, tells me he voted for Barack Obama because we wouldn't afford four more years of what we've experienced in the last eight years, I know just how deeply the longing for change – real change – is in our country. We're capable of changing directions and doing it fairly quickly, given the right leadership.
Of course, it has to be said that it remains to be seen whether we now have the right leadership.
(An aside: It's one thing to run a national health service in countries with populations of 59 million (UK) and 5.5 million (Denmark). It's quite another, or at least I have always assumed it is, to figure out how to do the same for a country with 305 million.)
And amen to Paul McConaughy's comments re: the comments of Americans who are still here fighting the good fight being of more interest than those of ex-pats who have thrown in the towel. I've never had much time for people who aren't willing to stick around and help fix the problems they see around them.
Jeanne Yocum http://www.yourghostwriter.com
Public Debt as % of GDP is not a meaningful statistic, Singapore has the 5th highest in the world and no one calls them a sinking ship. Oman has the lowest in the world and they are certainly not a rising power. That is like saying a company with lots of debt is destined to fail. There are a multitude of variables you have to analyze, you cant make blanket statements because they have no meaning. Retail companies have lots of debt and that is because they have lots of assets to borrow against with steady cash flows to service the debt interest…why do you think China invested in so much cheap US debt – China isnt stupid, if they thought it was a bad idea they would have bought Euro backed assets or kept it under a mattress in China.
Energy consumption is not a good metric either, it could (and does) just mean we produce a larger share of the worlds manufactured goods, contrary to common beliefe the US actually still manufactures a huge portion and we are roughly 4 times as energy efficient as China. Europe is more efficient perhaps but geography lends itself better to train systems and super high taxes on gasoline are feasible because you can actually get from a city to another city with a train. Also last I checked most of the train systems dont make moeny, so the tax dollars are subsidizing the trains in a way. Maybe thats a good thing, but my point is absolulte value of energy consumption is a poor statistic to measure success as well.
As for innovation, proof doesnt exist again, US has the most patents in the world year in and year out. China is rising to meet that, as they eventually should since they have 4x the population, and thats fine, that doesnt threaten the US, Japan does just fine as does Switzerland being much smaller but still having very strong electronics and biopharma industries respectively because they continue innovate which is born out in their businesses (as it is in the US).
Very few if any of these arguements are based on facts but mostly on subjective feelings and interpretations of broad top level statistics. If you want to critize the US at least do so accurately:
1) Our healthcare is the most expensive in teh world (20% of GDP by 2020)
2) We spend too much on social security because its a giant ponzi scheme
3) Too much income inequality and disparity of services across population
4) Immigration policies are absolutely senseless and were made for a system that existed 100 years ago
If the US had to, they could national healthcare and chop that down, but I dont want that (but I do support a public option if it has to break even). Social security we are just going to have to cut benefits, we already screwed that up 40 years ago. Inequality means we have to pay teachers more because we arent educating the bottom 50% nearly as well as the top 50% and when you pay the least amount with ultra strong teachers unions that refuse quality measurements you dont get the most qualified teachers or motivate them properly and thus an inefficient primary/secondary school system for a large number of the lower/middle income – this is the most important issue, with healthcare being #2.
Immigration would be easier to fix if the religious groups would stop clamoring to keep the family system and switch to a points based system like the UK has (I believe) where if you have good skills you get in the country (like a PhD in Physics from Harvard). The government has tried to do this but always loses because states with high immigrant populations always block it because of immigrant voters who want to bring their families over and religious people who want to protect the sanctity of family. Or maybe we should just lift the quota if you have a certain education level.
The US has its fair share of problems and I look forward to citizens and my government working to fix them as we move along. But a large organization or even small ones always have problems that you must continually work toward fixing. As a non-US person you probably get a jaded few because when Americans are lectured by outsiders they get defensive and go the usual route of "we are the best and most powerful nation ever!" (youll notice if you insult a Chiense citizen they get the same way – everyone does). But amongst ourselves we know there are very systematic problems which is why you saw a huge government turnover from the Republicans to the Democrats in hopes that a change in government will address some of these issues to continue to make us more competitive. And if it doesnt change itll probably switch parties again until someone straightens out some basic concerns voters have (which to your surprise are not completely out of alignment with the problems you think we have).
But to say the US is collapsing is just sensationalism. Ive lived abroad briefly and visisted everyone continent except Africa & South America, but ultimately as a disclaimer Ive lived the large majority of my life in various parts of the US – in case anyone couldnt tell
The last post beat me to the punch! To follow along with the last post let’s put everything as we take a look at statistics for patent filings from WIPO http://www.wipo.int/ipstats/en/statistics/patents…
I agree that there are issues in the US, just as there are issues in other countries. I am open minded and would like to take part in this discussion. But where I struggle with this article is trying to find the hard facts that state the US is becoming less innovative. And as far as the “everyday Joe” having to be in charge of innovation I just do not see how they can have the proper tools to be innovative in this era of high technology that I can only see being driven by large corporations and universities. Globalization has done its job and countries like Korea and Japan are very innovative and I am glad to see that they have progressed in such a short period of time as the report above will show.
America needs to change, China needs to change(I live in China), and India needs to change along with many other countries where wealth with consumption equals disaster for the whole world if it goes unchecked. I applaud European countries like Germany, Switzerland and the Netherlands to name a few who have taken the right steps towards conservation. I also applaud them for their working ethic that does not require the everyday citizen to work incredible hours that take away from friends, family and recreation.
So back to the topic at hand, and like I said I want to be open minded. Let me give you my thoughts as to why innovation might be “past its best” in the US with two of what could be countless contributors to the possible decline:
1. Health insurance. Ok, so everyone wants to beat up on health insurance but what does this have to do with innovation? The American worker is tied to their company since it subsidizes the workers health insurance and in turn the insurance for the family. In turn this leads to the workers feeling like they are stuck in their job which in turn causes them to stay longer instead of being more mobile. When you have a society of mobile workers this leads to cross pollination of ideas which is healthy for innovation. This was one of the main vehicles in San Francisco and surrounding bay area that helped internet technologies to mature in such a short period of time. When you leave your job you go to a competing company instead of starting all over again in a new profession and you bring these ideas with you. This is not a new idea and you can find articles on the internet to support this.
2. VC Funding – There is allot of money going overseas to new startups. One of the main reasons is due to the controls that the US has in place from the evil corporations who have cheated countless people out of their money. It is hard to take a company public in the US and the extra weight involved in not only cumbersome accounting practices but also with formal procedures in place that slow down startups.
Please continue to post articles like this. I do enjoy this and other postings.