Nathan Myhrvold knows about innovation. An avid inventor, holder of hundreds of patents, author of books on the science of cooking, he is former chief strategist and chief technology officer of Microsoft and set up the company’s R&D arm, Microsoft Research.
And he’s not short of insights on how Europe can up its innovation game.
“There’s a very sunny story you can tell about European innovation as long as you restrict it to the things that big companies do,” he said, pointing in particular to the innovative edge of Europe’s long-established pharma sector.
The trouble starts when you look for large companies, with a market cap of $20 billion, that were start-ups 15 to 20 years ago. In the US they number at least a dozen. “How many in Europe…there aren’t any, zero,” Myhrvold said, giving the 2016 Annual Lecture at the Science|Business Horizon 2020 Conference in Autoworld, Brussels this week.
“Innovation that happens inside big companies is alive and well…But that’s not what 21st century innovation is about.” To secure the future, Europe must be good at disruptive innovation and good at growing brand new companies.
As technologies cycle, new companies will sooner or later take over many of the old established ones. A case in point is the decline of Nokia and Motorola, former peers and world leaders in the manufacture of mobile phones.
Unlike European technology icon Nokia, there was no national angst when Motorola came unstuck. “One American company destroyed another one. Okay, that happens,” said Myhrvold, adding, “If Europe doesn’t get those innovative companies you are going to see time and time again how the same story will play out, and it won’t play out in your favour.”
But noted Myhrvold, it’s not that Europe-born innovators lack what it takes to disrupt world markets. So for example, in its second year the US Defence Advanced Research Projects Agency prize for the creator of a self-driving car was won by a vehicle that could average 80 - 90 kilometres an hour. Sebastian Thrun, who led the winning Google project, was born and bred in Europe. “It turns out the problem with this kind of innovation is not Europeans as individuals,” Myhrvold said.
While it is possible that self-driving and electric cars will “fizzle” that would be in line with Myhrvold’s view that technology companies will come and go. “This won’t be a big deal of itself,” but could disrupt the car industry and that would be, “Another big, proud European cornerstone of the economy that gets disrupted by somebody else - the irony being their own folks.”The challenge for Europe is create environments that induce its disrupters to stay, or persuade them to come back. There are Europeans in every company in Silicon Valley, Myhrvold said. Take them all out and it would collapse.
Be okay with the bad scenario
Turning to his own company, Intellectual Ventures, Myhrvold described a number of current projects, including a new type of nuclear power reactor and work in solid-state physics and meta materials. “Now, the fact is, a lot of those things will fail,” he said. “Everyone is okay with risk-taking behaviour if it’s safe. But you have to be okay with the bad scenario.”
Silicon Valley actually views trying and failing as positive. “Tuition in life after university can be really expensive. Anyone who actually has taken risks and failed, and learnt from that, has learnt a really valuable lesson,” said Myhrvold. Hiring these people means hiring someone whose expensive tuition has been paid for by somebody else.
Unlike the rest of life, the law of diminishing returns does not operate in the case of innovation. “Ideas don’t obey laws like that,” said Myhrvold. “There’s nothing to say the next idea you have, or someone else has, won’t be incredible.”
So, Myhrvold advised the audience, approach innovation the way footballer Christian Ronaldo approaches goals. Two-thirds of the time you’ll miss. But okay if every now and then you score and you score big.
While it’s important to change attitudes to failure, Myhrvold also stressed the key role of strong government funding of basic science. The business model here is that if something is successful, a government can tax it. In addition he pointed to the important role that champions play in advocating great ideas. Here the business model requires a strong patenting system.
“I don’t want to scare people,” Myhrvold concluded, “but the 21st century is bound to be one where there’s a lot of disruption.” Given this, Europe has to “really look hard” to address the challenge. Part of the answer will lie in the hands of policy, part at the intersection between policy and business.
But whatever happens, the technological future is going to belong to the disrupters, almost all of whom, predicted Myhrvold, will come from inside small companies, not large ones.