Innovation and Entrepreneurship

in a Flat World

Michael Dowling
Professor of Innovation and
Technology Management
University of Regensburg

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement

 "It's hard to make predictions -
especially about the future." --
Robert Storm Petersen

In the late 1950s…..

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 3
 Other Computer Visionaries!

• "I think there is a world market for maybe five computers.“

– Thomas Watson, Chairman of IBM, 1943

• Computers in the future may weigh no more than 1 1.5

5 tons
tons.“
– Popular Mechanics, forecasting the relentless march of
science, 1949

• "There is no reason anyone would want a computer in their

home “
home.
– Ken Olson, president, Chairman and Founder of Digital
Equipment Corp.,1977

• "640K ought to be enough for anybody.“

– Bill Gates
Gates, Founder of Microsoft
Microsoft, 1981

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 4

1981- The first IBM PC ran on a 4.77 MHz Intel IBM Lenovo Laptop
8088 microprocessor.
microprocessor The PC came equipped
Intel® Core 2 Duo T5500 / 1.66 GHz
with 16 kilobytes of memory, expandable to
Memory - 2 MB
256k. The PC came with one or two 160k
Hard Drive - 80 GB
floppy disk drives and an optional color monitor.
The price tag started at $1,565, which would be Price € 929
nearly $4,000 today.
Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 5
1993 - Apple introduced Newton PDA
140 000 units sold in 1993 and 1994
140,000
less than 1% of Apple revenue
considered a flop!
2007- Profit and sales jumped in the
second quarter at AT&T Inc.,
Inc from new
iPhone users, launched June 29. In
two days, AT&T activated 146,000
iPhone subscribers, with more than 40
percent of them new customers.

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 6

 Outline

• The World is Flat

• 10 Forces that Have Flattened the World
• Opportunities in a Flat World
• C
Conclusions
l i

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Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 8
Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 9
 The World is Flat – Thomas Friedman

• Three-time
Th ti winner
i off the
th Pulitzer
P lit P
Prize
i ffor
journalism as a foreign affairs columnist for the
New York Times.
• Christopher Columbus traveled to America in 1492
and proved the world is round
• Friedman traveled to India in 2003 and found
– Radiologists reading X X-rays
rays from Midwest
Hospitals
– Accountants doing US tax returns
• 2003: 25
25,000
000
• 2006: 400,000
– Call centers doing a variety of services
– Leading US companies (e (e.g.
g Microsoft
Microsoft, IBM
IBM,
Accenture, etc.)
– Successful global Indian high tech companies
(e.g.
(e g Infosys,
osys, TATA))
• His conclusion: The world is flat! And getting flatter!

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 10

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 11
 The Story of Infosys

• 1981 Infosys was founded in Pane on July 2, 1981 by N. R.

Narayana Murthy and six others – Nandan Nilekani, N. S.
Raghavan, Kris Gopalakrishnan, S. D. Shibulal, K. Dinesh and
Ashok Arora.
– Murthy
M h b borrowed dRRs.10,000
10 000 ffrom hihis wife,
if S Sushi
hi M
Murthy,
h to start
the company.
– The company was founded under the name “Infosys Consultants
Pvt Ltd.
Ltd ” with its head office in Raghavan’s
Raghavan s house in Matunga
Matunga,
north-central Mumbai.
• 1983 Infosys moved its head office to Bangalore.
• 1987 Infosys won its first overseas client: Data Basics Corporation
from the USA.
• 1993 IPO
• 1999 $100 million in sales
• 2001 $400 million in sales
• 2004 $1 billion in sales
• 2006 50,000+
50 000 employees
l - $ 2 billi
billion iin sales
l

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Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 14
 10 Forces that Have Flattened the World

1. 11/9/89
1
2. 8/9/95
3 Workflow software
3.
4. Uploading
5 Outsourcing
5.
6. Offshoring
7 Supply
7. S l Ch
Chaining
i i
8. Insourcing
9 Informing
9. I f i
10. The Steroids

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 15

 11/9/89 – the Wall comes down and Windows goes up

• Fall of Berlin wall

l d tto opening
leads i off
Eastern Europe

• Windows 3.0 ships in

May 1990 enabling
individuals to author
own content

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 16

 The New Age of Connectivity

• 1991
1991- Tim Berners-
Berners
Lee creates the
WWW at CERN

• 8/9/95 - Netscape
p
goes public

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 17

 Workflow Software

• Revolutionizes
processes
• TCP/IP andd HTML
standardizes the
i t f
interface
• New standards
coming - JavaScript
and XML

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 18

 Uploading

• Open Source: self-organizing

collaborative systems
systems, e
e.g.
g
Apache server software or Linus
Linux Torvalds of
Linux
• Community developed
innovation
• Individually generated content
– Blogging
gg g
– YouTube
– Wikipedia
p
– MySpace
– Etc.
Steve Chen and Chad Hurley of YouTube

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 19

 The Power of Open Source Collaboration –
Nupeida vs. Wikipedia

Goal of both projects – which were started by the same team:

Free online encyclopedia with 100 000 articles

Nupedia.com Wikipedia.org
• Started in 2000 • Started in 2001
• Traditional editorial process • Open source model
• Expert model • Collaborative
• Editors
d o s sshould
ou d have
a e a doc
doctorate
oae • 150,000
50,000 a
articles
c es in 2 yea
years
s
• 24 articles in 2 years • 1,000,000 articles in 5 years
• Closed in September
p 2003 • Offered in ten languages
g g

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 20

 Outsourcing

Examples of Firms with RESEARCH

centers in China
• China
• India
• Eastern Europe
• And it is not just
production
anymore!

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 21

 INDICATORS OF TECHNOLOGY-BASED
COMPETITIVENESS OF 33 NATIONS

TECHNOLOGY POLICY AND ASSESSMENT

CENTER
GEORGIA INSTITUTE OF TECHNOLOGY
USA

http://tpac gatech edu

http://tpac.gatech.edu
Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement
 National Orientation – 2003

Big
g Three -
United States, Asian Tigers
Japan, and and Cubs
Germany

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 23

 Socio-Economic Infrastructure

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 24

 Technological Infrastructure

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 25

 Production Capacity

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 26

 „High Tech“- Output

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 27

 Technological Competitiveness (´93-2003)
Change in Competitiveness 1993 and 2003, by Country
USA

JAPAN

STANDING

Technological GERMANY

Standing INGDO
M
T ED K
UNIT
50
FRANCE SINGAPORE

DS

A
AN

IN
L
ER

CH
TH TAIWAN
NE

A
RE
KO
SWITZERLAND

H
UT
CANADA

SO
MA ITALY
LA
YS
CO

IA SWEDEN
XI
ME

THAIL SPA IN
AND A RY
ALAND
ES HU
NG
NEW ZE
P P IN
IL I IND
IA
PH
LIA
RUSSIA T RA
BRAZIL AU S
ICA
AFR
UT H
INDONESIA SO

ARGENTINA

50 INPUT INDICATOR

Composite of all Tech. Inputs

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 28
 Technological Competitiveness (´93-2005)

Technologischer Stand vs Tech. Inputs

China

Germany

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 29

 Technological Competitiveness (´93-2007)

China

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 30

 Headlines

• Corporate China poised for bigger overseas deals

• By Tony Munroe Reuters, Published: February 5, 2008
• Emboldened by recent success and backed by Beijing's deep
pockets,
poc e s, an
a increasingly
c eas g y sophisticated
sop s ca ed C Chinaa Inc.
c is s po
poised
sed to
o make
a e
bigger overseas acquisitions in its quest to secure natural resources,
technology and prestige.
• The acquisition by Aluminum Corp. of China, along with Alcoa of the
U it d St
United States,
t off a 12 percentt stake
t k in
i Rio
Ri TiTinto,
t theth largest
l t foreign
f i
investment ever by China, was financed by a state-owned bank and
underscored the country's ambition and financial power.
• "The
The government has for several years had a policy called the 'go go
out' policy, in which Chinese companies are encouraged to do
outbound" mergers and acquisitions, said Philip Partnow, managing
j g "Until now,, it's been more talk
director at UBS Securities in Beijing.
than action. Now, you're finally starting to see real signs of activity."
• Outbound deals from China last year nearly doubled, to $29.5
billion, according to Thomson Financial.

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 31

 • Chinese Science on the Move, SCIENCE VOL 318 7 DECEMBER 2007

• ONE OF THE WORLD’S FASTEST-GROWING ECONOMIES IS ALSO

THE WORLD
WORLD’S S fastest-growing
fastest growing supporter of scientific R&D. As of last year,
China had moved to third place in the world in national R&D funding,
closing fast on Japan, which was number two behind the United States. Not
surprisingly, this rapid development has been garnering worldwide attention
b t also
but l some concern….. B Butt th
the rapid
id iincrease iin R&D iinvestment—with
t t ith
an annual growth rate of 18% over the past 5 years (the United States,
Japan, and the European Union grew at a combined average rate of about
2.9%)—reflects
2.9%) reflects a clear understanding by China’s
China s top political leadership
that science and technology (S&T) are critical to their nation’s future.
• The Chinese government is now working hard to recruit the brightest and
best-educated back to their homeland with jjob opportunities
pp and state-of-
the-art facilities and equipment. On a recent visit to Zhejiang University, we
saw that laboratory equipment in virtually every discipline was equal in
quality, if not yet in abundance, to that anywhere in the world.

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 32

 Offshoring
– Intel microprocessor
Dell Laptop computer • Sourced from the Philippines, Costa
Rica, Malaysia or China
sold in the USA and – Memory chips
assembled
bl d in
i Malaysia
M l i • Samsung (Korea)
• Naya (Taiwan)
• Infineon (Germany)
• Elpida (Japan)
– Graphics card
• MSI (Taiwan owned in China)
• Foxconn (China)
– Mother board
• Samsung (Korean-owned in
Shanghai)
• QQanta (Taiwan-owned
( in Shanghai)
g )
6 days a week Dell sends a 747 • Compal (Taiwan)
from Malaysia to Nashville TN – LCD display
• Samsung (Korea)
with 25 000 notebooks weighing
g g
• Toshiba
T hib or ShSharp (J
(Japan))
110 000 kg. – Battery
• Motorola (USA firm in Malaysia)
Normal time for delivery after • Sanyoy ((Japanese
p firm in Malaysia)
y )
– Memory stick
online order? 4 days ! • M-System (Israel)
Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 33
 The Dell Theory of Conflict Prevention

• “No
No two countries that are both part of a major
global supply chain like Dell’s will ever fight a
war against each other
other.”
- India vs. Pakistan 2002
- Taiwan
T i vs. China
Chi 2004

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 34

 Supply Chaining

• Eating sushi in
Bentonville, Arkansas
• World
World´ss largest retailer
emphasizes technology
• Buys in volume directly
from source
• Controls distribution
• Point of sale terminals
track inventory for rapid
re-supply
• Next step - RFID
technology
h l
Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 35
 Insourcing

• FedEx and UPS

– Take over repair
services and in
in-house
house
logistics
• Paypal
– Takes over internal
payment systems

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 36

 Informing
Larry Page and Sergey Brin

• Google
• Yahoo!
• Other search engines

$85

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 37

 The Steroids

• Digital
– Devices and Networks
• Mobile
– SMS, WLan, WiMax
• Personal
– VoIP (Skype, etc.)
• Virtual
Vi t l
– Videoconferencing
– Virtual
Vi t l WWW
(Second Life, etc.)

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 38

 Triple Convergence

• Convergence I
– Sharing of knowledge and work in real time without
regard to geography,
geography distance
distance, or in the future even
language.
• Convergence II
– Combination of IT technology with new business
models and practices
p
• Convergence III
– Integration
g of economies in China,, India,, Eastern
Europe, Latin America

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 39

 In a flattened world, it is imagination that counts!

“Imagination is more important than knowledge . . . for

knowledge is limited to all we now know and understand,
while imagination embraces the entire world
world, and all there
ever will be to know and understand.”

- Albert Einstein

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement

 Two Kinds of Imagination

Destructive imagination
g
9/11
People who dared to kill as
many innocent people as
possible

Creative
C ti imagination
i i ti
11/9 - dismantling of the
Berlin Wall
People who dared to imagine a
more open
p world

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 41

 Creative: Spring 1999 – Start of Jet Blue Airlines

• Raised $130 million in VC

capital
“II am a total optimist.
optimist
Jet Blue was created • Bought a fleet of Airbus 320
in my own mind jets
before it was created • Recruited pilots with 7-year
on paper.” contracts
• Set
S t up a reservation
ti system
t
David Neeleman with stay-at-home moms in Salt
Lake City,
City Utah working at
home on PCs

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 42

 Destructive: Spring 1999 Planning of 9/11 by Osama bin Laden

• Accepted a proposal drawn up by Khalid Sheikh

Mohammed – a Pakistani mechanical engineer
• Sought “adventure
adventure capital”
capital
• Recruited pilots from Saudi Arabia
• “Outsourced”
Outsourced pilot training to flight schools in the USA
• “Leased” Boeing 757,767, A 320s
• Raised money from Islamic charities - $ 400
400,000
000

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 43

 “From the primordial swamps of globalization
h
have emerged d ttwo generic
i variants.
i t OOur ffocus
has to be how we can encourage more of the
goodd mutations
t ti and
d kkeep outt the
th bbad.”
d”

CEO of Infosys Naritan Nilekani

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 44

 What do the experts tell us?

• “It
It is not necessary to change
change. Survival is not mandatory
mandatory.”
– W. Edward Demmings

• “We always overestimate the change that will occur in the

next two years and underestimate the change that will occur
in the next ten. Don't let yourselves be lulled into inaction.”
– Bill Gates

• “Change is inevitable ….
• …except from vending machines!”
– Robert Gallagher

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 45

 If you think you can ….

or you think you can't …..

You are right!

g

Henry Ford (US Automobile Industrialist 1863 - 1947)

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement

 Thank you!

Prof. Dr. Michael Dowling

U i
University
it off Regensburg
R b
Tel. 49-941-943-3226
Fax. 49-941-9433230
michael.dowling@wiwi.uni-regensburg.de
www.wiwi.uni-regensburg.de/dowling

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement

 Dollinger Saal
Zieroldsplatz 1
Haus Heuport
Domplatz 7

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 48

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 49
 IBM´s Innovation Networks

PROJECT PARTNERS PURPOSE

Cell Chip Sony, Toshiba, Albany 2001. Design the cell multimedia
Nanotech processor used in PlayStation 3, TVs,
and speedy computers.

Manufacturing Chartered, Samsung 2002. Develop common manufacturing

techniques for chips made in any
foundry.

Foundry R&D Chartered, Infineon, 2002. Develop manufacturing

Samsung, Freescale, processes for chips in mobile phones
STMicroelectronics and consumer electronics.

High-Performance AMD, Freescale 2003. Develop manufacturing

R&D processes for high-performance chips
for powerful computers.
Advanced Applied Materials, AMD, 2005. Research next-generation
Research Sony, Toshiba, materials and processes to achieve
Freescale, Albanyy breakthroughs
g in chip
p science.
Nanotech

Prof. Dr. Michael Dowling Lehrstuhl für Innovations- und Technologiemanagement 50