«What Dancing Can Teach Us about Innovation»

«It’s remarkable how many different things can teach us about innovation: historic figures, such as Thomas Edison; outdoor activities, such as skateboarding; sports events, such as sailing competition The America’s Cup; consumer products, such as iPhone 5s and Spanx. And then, there is Hollywood, The Karate Kid, and (my favorite) “a parking lot full of meat lovers.”

»In fact, one shouldn’t be surprised, for innovation comes in so many different shapes, shades, angles and facets that it can originate from almost any source, not just as a neat package delivered by a college or business school professor.

»Inspired by the above examples, I decided to contribute my fair share to the list. As a competing amateur ballroom dancer, I’d like to argue that dancing too can teach us about innovation. To prove my point, I’ll share with you some wisdom that I’ve learned from my dancing teacher.

»Make every move your move

»In a sense, there is no “correct” way to dance. True, textbooks and competition guidelines would describe recommended sequences of steps that every basic dancing move is composed of. Yet, every dancer knows that it’s his or her body—its structure, flexibility and responsiveness to music—that ultimately defines the choice of dancing moves and the way they’re performed. You succeed in dancing only when your every move fits your physical and spiritual abilities; you become a dancer only if every move becomes your move.

»When launching innovation initiatives, organizations—especially those with a shorter innovation history—often look for “best practices,” a set of supposedly proven approaches that can guarantee a successful outcome of any given innovation project. The truth is that there are no “best practices” in the innovation management practice (remember Steve Shapiro’s “Best Practices Are Stupid”?). Instead of chasing the elusive silver bullets, the organizations should try a number of very different approaches and identify those that fit the best its corporate strategy, organizational structure, the level of innovation maturity, resources and culture. Only after finding the moves that are its moves, can the organization successfully conduct an innovation dance.

»You move with your feet, but you dance with your whole body

»When I was taking my very first dancing lessons, I was absolutely sure that once I memorized the sequence of required steps (“slow-slow-quick-quick-slow”), the art of dancing will be mastered. But then, I was told that my arms mattered too. Later, I realized that without moving hips (not something taken for granted for a man of my age), my dance will look bland. Finally, I understood that it’s my brain (or guts?) that ultimately drives my dance, bringing together my feet, arms, hips, shoulders and, yes, my face expression. In fact, the more experienced I get in dancing, the less I think about steps as such.

»Usually, organizations begin experimenting with innovation by creating a dedicated innovation team—be it within R&D, business development or IT unit—whose responsibility is to learn and conduct first “steps” of innovation journey. It’s crucially important for this group not to stay indefinitely focused on the pure technicalities of the innovation management process. To begin with, the innovation group should rapidly reach out to the marketing to make sure that all planned innovation initiatives incorporate customer feedback. Then it should talk to human resources to ensure that employees who made significant contributions to innovation projects are properly recognized and rewarded.

»And don’t forget corporate communication whose help with celebrating success stories may play a crucial role in changing the very way the organization views innovation. Finally, little will come out even of the most brilliantly conceived innovation initiative, if the senior management team, the company’s brain and face, would fail to support the innovation group. It’s for a reason that innovation is called a team sports.

»Motion creates an emotion

»I’d lie if I told you that I’m always in a dancing mood; no, quite often I don’t feel like dancing. But sometimes, I simply have to, for example, to get prepared for my next lesson. So I get up, turn on the music and take my first step. Then another. Then one more. And, all of sudden, a magic happens: my body sheds the rust and gets filled with life, and the rhythm of the music begins pulsing in my blood vessels. My dancing motion is creating a dancing emotion, and, fueled by this new emotion, my next step is better than the previous.

»There are so many excuses for organizations to place innovation at the bottom of the list of priorities. “We don’t have time,” “We don’t have resources,” “Our CEO doesn’t care”—have we all not heard this before? The only way to shake off the innovation lethargy is to leave the proverbial couch and take first step. Then another. Then one more. Trust me, sooner or later, the motion of repeated innovation “steps” will change the spirit of the innovation group and then gradually start taking hold of the emotional state of the whole organization. Repeated acts of innovation will become the habit of it.

»It’s likely that one of your innovation initiatives will eventually succeed. And there is going to be a celebration, perhaps, even party. And, who knows, there may be even a band in the room playing music. Enter the floor and make a few dancing moves.»

Innovation Excellence, Eugene Ivanov


«How innovation nearly killed LEGO»

«Take six standard LEGO bricks, and there are more than 915 ways to stick them together. Actually that’s incorrect; there are 915 MILLION permutations. I think ‘endless hours of fun’ is most appropriate in this case.

»LEGO was the world’s most profitable and fastest growing toy company from 2007 to 2012, but the past wasn’t all that rosy - the company had a near-death experience in 2003. So how did this happen even though they ticked all the boxes for innovation?

»The building blocks of innovation

»LEGO managed innovation in a somewhat more ‘textbook’ fashion. This was in stark contrast to Apple where Steve Jobs had the final say of what would or would not go to market. If he never came to work, no new products would come out the pipeline. The LEGO process was, in comparison, decentralised. LEGO CEO Jørgen Vig Knudstorp stated that he could leave his company for three months, and its innovation process would continue unabated. I’m not saying that any one method is better than the other is. In contrast, LEGO’s methodology was fine, as you shall soon discover.

»The whole truth

»There are seven truths to innovation proposed by David Robertson, and this is how LEGO did all the right things in the wrong way [1]:

»1. Hire diverse and creative people

»They did hire the best creative minds; unfortunately there was no communication between design and production, or even marketing for that matter. Nothing that came out the system made profitable sense. Although some of the products were awesome.

»2. Head for blue ocean markets

»Blue Ocean Strategy is a concept proposed by Chang and Mauborgne that purports that an organisation should create new demand in an uncontested market space, or a “Blue Ocean”, rather than compete head-to-head with the competition in the same way with the same products in a “Red Ocean”. [2]

»Not exactly brain surgery, but makes a valid point (although the junkyard is littered with those who drowned in blue oceans).

»Other companies were producing similar bricks, so LEGO went for the blue ocean and came up with the LEGO Studios Steven Spielberg MovieMaker. It took off relatively well in the States, and LEGO then rushed to give the market add-on sets to be used with the original kit. Without the camera kit, these add-ons meant nothing - so the line got flooded and it wasn’t long before the add-ons hit the discount bins at the retailers. And so MovieMaker became an unprofitable line and it was ‘The End’.

»3. Be customer driven

»The market wanted ‘edgier’ products - kids were now playing pretty violent video games. They brought out a character called Jack Stone - a kinda superhero who would save the day. He was about as edgy as a tennis ball, and neither did parents find any of the core LEGO values in it: “the joy of building, pride and creation”. Jack Stone took a bullet to the head.

»4. Practise disruptive innovation

»It was time to fish where the fish were: in the video games arena. Forget about the physical joy of building, just go digital in a big way. So they tried to duplicate the experience digitally, which required the computerisation of every single LEGO part. It was an enormous ground-breaking project appropriately called DARWIN. Maybe it was too soon (the technology to create 3D wasn’t very advanced at that stage) and they tried to create everything - taking LEGO completely into the digital realm. Irrespective of the technological problems, the DARWIN team proceeded independently and just tried to reproduce the total experience in a virtual world. This was too big a task too soon, with the added advantage of limited feedback from top management - no one high up was digital-savvy. So DARWIN’s evolution became extinct. The site has since gone digital, but under a very different paradigm without trying to replicate the physical building experience.

»5. Leverage the ‘wisdom of the crowd’

»LEGO came up with a digital service called Design ByMe. You could put together your own custom design and LEGO would ship you the appropriate parts. The truth is that people aren’t really that creative (as Steve Jobs often reminded us), and with the expensive price tag for bespoke sets, the crowd wasn’t that wise at the end of the day. It too died.

»6. Explore the full spectrum of innovation

»LEGO had great success with the Star Wars and Bionicle range. They came with a rich story background, and kids were eager to get their hands on it. So LEGO decided to go for the whole channel: invent a character and then make the TV series. The item was Gallidor which featured a unique build - not one of the traditional bricks came with the kit. LEGO knew that only one in five action figures was a success, but they felt they had the control, and what’s more, kids loved it in focus groups. To cut a long series short, the TV programme was awful and once again you would find Gallidor in the discount bin.

»7. Build an innovation culture

»There was an enormous innovation culture at LEGO. The problem was that there was no feedback loop (no one learnt from their mistakes), poor communication between innovation cultures and creativity was put on somewhat of a pedestal immune from guidance of the brand’s value proposition. Ideas flourished. Products bombed.

»An amazing comeback

»LEGO revisited each of these issues to experience a major resurrection. In 2012, the group increased revenue by 25% to over US$4bn - nearly triple the sales of 2007. [3]

»So now you can build a full-size Rolls-Royce aircraft engine by using just 152,000 bricks. It doesn’t work though, but it’s great fun.

»To find out more about joining the Innovation Generation in just one day, contact Sid Peimer on 082 659 9167 or email sid@stratplanning.com. And you get to play with real LEGO.


»1. David C Robertson (with Bill Breen). Brick by Brick. How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry. Crown Publishing Group, 2003.

»2. Blue Ocean Strategy. Wikipedia.

»3. Successful LEGO strategy delivers continued strong growth.»

Bizcommunity.com, Sid Peimer


«Book Excerpt. Shifting your focus to the 'less fun' side of innovation. From Beyond the Idea: How to Execute Innovation in Any Organization by Vijay Govindarajan and Chris Trimble»

«The Other Side of Innovation

»Innovation is a two-part challenge. Part one is ideas; part two is execution.

»To win, you have to succeed at both. Many companies, however, expend most or nearly all of their energies on part one. As such, they tend to produce a great many ideas on paper that never become anything more than... ideas on paper.

»The most important message in Beyond the Idea is very simple: Part two, innovation execution, is its own unique discipline. It requires time, energy, and distinct thinking. Unfortunately, few companies treat it as such. In fact, few companies give it much thought at all.

»First, shift attention to execution

»Companies wishing to improve at innovation must shift a substantial portion of their time and energy to part two, the other side of innovation. Doing so is not easy. The gravitational pull toward the front end of innovation is powerful. For one thing, the front end has the natural advantage of being first in the sequence. You can’t even get started without an idea! That’s not all. Most everyone instinctively agrees that the world needs more front– end activity– more imagination, more creativity, more out-of-the-box thinking. Strategists see innovation as the pathway to disrupting your competition. Scientists and engineers link innovation to technological breakthroughs. Romantics see innovation as dramatic advances delivered by chance meetings and chance occurrences; by magic and by luck.

»And then there is the icing on the cake – the rewards. We put idea people on a pedestal. We celebrate them, we promote them. We mythologize inventors and their inventions.

»As such, it’s a snap to entice people into the front end. Getting people to attend creative brainstorming sessions, for example, rarely requires heavy persuasion. The front end offers the possibility of an exciting discovery, a eureka moment, an unexpected insight. It is, plainly put, fun.

»The other side of innovation, on the other hand, is about practical matters. It is about getting the work done. It is blood, sweat, and tears. It is, plainly put, less fun.

»Indeed, many people withdraw when it comes time to execute. Suddenly, innovation becomes just one more thing on a crowded agenda. Rather than the promise of outsize rewards, many will anticipate being blamed if the initiative does not go as well as hoped.

»No wonder, then, that the front end gets all of the attention. No wonder that part two lives in part one’s long shadow. This imbalance of attention shows up on many maps that companies create of the innovation process. The typical map breaks down the front end of innovation into several substeps – for example, generating ideas, cross-pollinating ideas, evaluating ideas, selecting the best ideas. Then, on the far right side of the page, just barely hanging on in the consciousness of the mapmakers, is that one final step: execution.

»These maps speak volumes. They show just how dramatically innovation execution is underestimated. The attitude is: The real innovation challenge is the epic search for the breakthrough idea! What is part two? That’s just getting the work done! Be careful. Many companies are quite confident that they excel at execution of day-to-day operations. Therefore, they mistakenly conclude, they must be equally good at executing innovation. Unfortunately, comparing the two is like comparing a simple somersault to a triple flip with a quadruple twist. There really is no comparison.

»Organizations Are Not Built to Execute Innovation

»So why is innovation execution so hard? Simply put, organizations are not built for it. Quite to the contrary, they are built for ongoing operations. They are built to be Performance Engines.

»A well-run Performance Engine is the master of many challenges. It excels at serving today’s customers and fighting today’s rivals. It is terrific at driving for efficiency by holding employees accountable. It is on time, on budget, and on spec– every day, every week, and every month. It delivers bottom-line results each and every quarter. Like a finely crafted Swiss timepiece, a great Performance Engine never misses a beat.

»As impressive as this may be, the Performance Engine confronts innovation with high hurdles. Innovation promises short-term pain for long-term gain, but the Performance Engine wants to win now. Innovation requires experimentation; the Performance Engine demands efficiency. Innovations sometimes fail; the Performance Engine struggles to forgive.

»These contrasts illustrate the first law of the other side of innovation: Innovation and ongoing operations are always and inevitably in conflict.

»One indicator of just how deep the incompatibilities run is the fundamental accounting premise that a business is an ongoing concern, meaning that the current period will look an awful lot like the prior one. This is, of course, the antithesis of innovation.

»The most fundamental source of conflict, however, lies in the method of the Performance Engine. This method is the same in every industry, in every part of the world, and in every type of organization – including private sector, public sector, and social sector organizations. It is to try to make every process and every activity as repeatable and as predictable as possible.

»There is great power in both. When a process is repeatable, it is possible to break the process into small tasks and have people specialize. For centuries, specialization of labor has been recognized as a remarkable expedient to efficiency. Of equal importance, when a process becomes predictable, performance standards can be set and employees can be held accountable for very specific and quantified results.

»Repeatability and predictability may be foundational for the Performance Engine, but they are also the antithesis of innovation. Far from being repeatable, innovation initiatives are intentional departures from the past. Far from being predictable, innovation initiatives proceed into territory in which there is no precedent upon which to base any forecast.

»The Performance Engine strives for repeatable and predictable, but innovation is, by nature, nonroutine and uncertain. These are the fundamental incompatibilities between innovation and ongoing operations. They strike right at the heart of how managers are trained and how organizations are designed.

»With such deep incompatibilities, perhaps the solution is to tear down the Performance Engine and rebuild organizations from scratch! Alas, we cannot. It is not that simple.

»A well-run Performance Engine is a very powerful asset. Indeed, it is the foundation for an organization’s wellbeing. Great companies have great Performance Engines. Without one, customers leave, costs rise, profits fall, and organizations fall apart.

»There may be deep incompatibilities, but that does not make the Performance Engine the enemy. In fact, without profits from the Performance Engine, there is no funding for innovation. Furthermore, the aspiration of every innovation initiative is to someday be just like the Performance Engine – successful, stable, and profitable.

»Therefore, throughout this book, we have taken as our first obligation that we must do no harm. The challenge is not just to make innovation happen, but to do so while simultaneously excelling at ongoing operations. The challenge is to tackle two very different activities – in fact, two diametrically opposed activities– at the same time.

»We think you will agree, then, that we have our work cut out for us.»

Globe Small Business, from The Globe and Mail


«The Role of Play in Innovation»

«In the Creative Economy, inspiring a sense of play in culture, marketing and innovation is critical to success. You have to engage your people so that they can engage prospects and customers with a lively sense of mission and purpose. Too often the roles we assign diminish this sense of play.

»In a tightly wound corporate culture, business people can become stuck in the role they are forced to assume while at work. They are not allowed to be human and expressive. Like a mask they cannot take off, they turn into a predictable cliche with a limited set of expressions to new ideas.

»Talking about breakthrough innovations with such automatons can be as odd as talking to the tax man about poetry, even though innovation could supercharge their careers and help their companies gain or regain a leadership position in a market category. These corporate zombies have lost their sense of play.

»We have already discussed the immense value of play in a successful marketing mix in an internationally read article (http://bit.ly/1mCE0DZ [“Mashing Up the Marketing Mix: Introducing the 6th P...Play”]) but now we’d like to explore the role of play in innovation.

»The issue we are really discussing is one of harnessing the most creative value out of your team. As a leader or manager you cannot set up the metrics and measurements and stranglehold the results out of your team. Instead, you have to foster a deeply playful culture that inspires an environment of breakthrough thinking. The best way to cultivate such a culture is to allow play to serve as a North Star of all endeavors.

»Let’s apply a lesson from a successful author, James Michener, from his autobiography:

» “The master in the art of living makes little distinction between his work and his play, his labor and his leisure, his mind and his body, his information and his recreation, his love and his religion. He hardly knows which is which. He simply pursues his vision of excellence at whatever he does, leaving others to decide whether he is working or playing. To him, he’s always doing both.”

»We are not suggesting anything ridiculous here, but something cunningly pragmatic. Companies that blur the line between play and work thrive in the creative economy. Before you bring in a sandbox the size of a swimming pool, realize that we are recommending just a few simple exercises.

»What we are saying is your culture needs to formalize a little playtime where the lines of work/play blur. Those responsible for innovation at your place of work should schedule a weekly exercise to expand the capacity to imagine and allow for wild possibilities of team members – one hour per week spent socializing the boon of the human imagination without judgment.

»Further, we recommend that every new product development process have at least two formal points in the process where generative, creative thinking without boundaries is encouraged.

»Very often, the most effective and brilliant idea sits close to the most ridiculous one, out on a limb next to the fruit and flowers. This idea will only present itself to those who blur the lines, enjoy themselves and have a mindset that scans for possibility after possibility.

»In the end, innovations will be judged by revenue or cost savings – and this counting itself is a deep form of play for the mathematically minded.»

The Daily News, Jocelyn Atkinson and Michael Graber

Innovation Posts Collection January 21 to 24

AxLR, «Regards sur l’innovation et le transfert de technologie avec l’Institut des hautes études pour la science et la technologie (IHEST)»

Diego Andreasi, «O Dilema da Inovação. Resumo do livro “O Dilema da Inovação: quando as novas tecnologias levam empresas ao fracasso”, de Clayton Christensen»

Doug Williams, «The Power of Co-Creation in Healthcare Innovation (eBook)»

Eric J. Henderson, «Making Sense of Data and Information in the Social Sector»

Fabiana Batista, «BNDES e Finep preparam programa de inovação agrícola em cana-de-açúcar»

France 24, «Marième Jamme Il y a beaucoup d'innovation en Afrique, surtout avec les femmes ! #ActuElles»

Gouvernement du Canada, «Appel pour propositions - Prix Canada-Italie pour l’Innovation 2014»

Hernán Araneda, «VetaMinera, innovación para la formación en oficios»

ionline, «Três ministérios lançam projecto de partilha de conhecimento agroalimentar. Rui Machete, valorizou o “elevado potencial do SKAN”, como um “moderno e dinâmico mecanismo de partilha”»

José Tadeu Arantes, «Inovação tecnológica na agricultura orgânica é pesquisada. Os pesquisadores buscaram mapear as tecnologias empregadas e as demandas, adaptações e inovações tecnológicas»

La Prensa, «China, de seguidora de tendencias tecnológicas a cuna de la innovación. Las empresas chinas aún deben superar obstáculos como la percepción prevalente de que sus productos no tienen la misma calidad ni son tan confiables como los de otros países»

LOCAL.PT, «Missão Empresarial aos Emirados Árabes Unidos com o Ministro do Ambiente, Ordenamento do Território e Energia para atrair investimento externo»

Luís Manuel Cabral, «Cientistas vão estudar a estrutura interna do Etna»

Mayte María Jiménez, «Innovación: prioridad para desarrollar el país»

N.V., «Calculus of innovation»

Natalia Trzenko, «El lugar de la innovación. Hoy comienza la nueva edición de la muestra creada por Robert Redford y el Sundance Channel estrena ciclo con sus mejores films»

Notícias ao minuto, «A doutoranda da Universidade Católica do Porto Mailis Rodrigues é uma das 23 semifinalistas do concurso Margaret Guthman, do Instituto de Tecnologia da Georgia, nos EUA, que distingue as melhores inovações tecnológicas na música, disse hoje a investigadora»

Quentin Capelle, «Innovation inversée: délocalisation ou changement de point d’impulsion?»

The White House, Office of the Press Secretary, «President Obama Announces New Public-Private Manufacturing Innovation Institute. North Carolina headquartered consortium of 18 companies and 6 universities partnering with the federal government to strengthen U.S. manufacturing»

Vanessa Costa Duffy, Marcelo Silva Ramos, «O desafio de transformar a criatividade em inovação: o caso do Rio Criativo»


«President Obama Announces New Public-Private Manufacturing Innovation Institute. North Carolina headquartered consortium of 18 companies and 6 universities partnering with the federal government to strengthen U.S. manufacturing»

«The President today will announce new steps with the private sector to strengthen the manufacturing sector, boost advanced manufacturing, and attract the good paying jobs that a growing middle class requires. The President will announce the selection of a North Carolina headquartered consortium of businesses and universities, led by North Carolina State University, to lead a manufacturing innovation institute for next generation power electronics.

»President Obama has declared 2014 a year of action, and while he will continue to work with Congress on new measures to create jobs and grow the economy, he will also use his executive authority to get things done. After shedding jobs for a decade, our manufacturers have added 568,000 over the past nearly four years, including 80,000 over the past five months. Manufacturing production has grown since the end of the recession at its fastest pace in over a decade. The President is committed to building on that progress.

»In last year’s State of the Union address, the President proposed a series of three new manufacturing institutes that the Administration can create using existing resources - this is the first of those institutes. In May, President Obama launched a competition for these three new manufacturing innovation institutes with a Federal commitment of $200 million across five Federal agencies – Defense, Energy, Commerce, NASA, and the National Science Foundation, building off the success of a pilot institute headquartered in Youngstown, Ohio. The additional two institutes led by the Department of Defense – focused on Digital Manufacturing and Design Innovation and Lightweight and Modern Metals Manufacturing – are still in the selection process and will be awarded in the coming weeks.

»Each institute is designed to serve as a regional hub designed to bridge the gap between applied research and product development, bringing together companies, universities and other academic and training institutions, and Federal agencies to co-invest in technology areas that encourage investment and production in the U.S. This type of “teaching factory” provides a unique opportunity for education and training of students and workers at all levels, while providing the shared assets to help companies, most importantly small manufacturers, access the cutting-edge capabilities and equipment to design, test, and pilot new products and manufacturing processes.

»The new manufacturing innovation institute announced today in North Carolina is focused on enabling the next generation of energy-efficient, high-power electronic chips and devices by making wide bandgap semiconductor technologies cost-competitive with current silicon-based power electronics in the next five years. These improvements will make power electronic devices like motors, consumer electronics, and devices that support our power grid faster, smaller, and more efficient. The winning team, led by North Carolina State University, brings together a consortium of leading companies that included some of the world’s leading wide band gap semiconductor manufacturers, leading materials providers, and critical end-users like John Deere and Delphi with universities on the cutting edge of technology development and research, all in a vibrant and entrepreneurial region that can serve as the foundation for ongoing U.S leadership in this important technology. The Department of Energy is awarding $70 million over five years, matched by at least $70 million in non-federal commitments by the winning team of businesses and universities, along with the state of North Carolina.

»Today’s announcement is another step forward toward fulfilling the President’s vision for a full national network of up to 45 manufacturing innovation institutes, which will also require legislation from Congress. In July 2013, Senators Brown (D-OH) and Blunt (R-MO) and Congressmen Reed (R-NY) and Kennedy (D-MA) co-sponsored bipartisan legislation in both the Senate and House that would create a network for manufacturing innovation led by the Department of Commerce consistent with the President’s vision, helping the United States to take advantage of this unique opportunity to accelerate growth and innovation in domestic production and create the foundation for well-paying jobs that strengthen the middle class. The President will continue to support this bipartisan legislation and will work with Congress to get it passed, and will continue to make progress where he can through existing authority to boost these partnerships that are key to supporting high-quality manufacturing jobs.

»Additional Background on the Next Generation Power Electronics Innovation Institute:

»The Next Generation Power Electronics Institute will provide the innovation infrastructure needed to support new product and process technologies, education, and training to become a global center of excellence for the development of wide bandgap semiconductor devices and industry-relevant processes. The DOE-supported manufacturing innovation institute’s headquarters will be located on North Carolina State University’s Centennial Campus. The university will also host some of the institute’s shared research and development facilities and testing equipment, as well as workforce development and education programs.

»In the last century, silicon semiconductors transformed computing, communication and energy industries, giving consumers and businesses more and more powerful devices that were once unimaginable. Today, as we reach the limits of silicon-based electronics for some critical applications, WBG semiconductors offer a new opportunity to jumpstart the next generation of smaller, faster, cheaper and more efficient power electronics for personal devices, electric vehicles, renewable power interconnection, industrial-scale variable speed drive motors and a smarter, more flexible grid.

»The institute will provide shared facilities, equipment, and testing and modeling capabilities to companies across the power electronics supply chain, particularly small and medium-size manufacturers, to help invent, design and manufacture new semiconductor chips and devices. The institute will also pair chip designers and manufacturers with large power electronic manufacturers and suppliers, such as John Deere and Delphi, to bring these technologies to market faster and will offer training, higher education programs and hands-on internships that give American workers the skills for new job opportunities and meet the needs of this emerging and globally competitive industry.

»Compared to silicon-based technologies, wide bandgap semiconductors can operate at higher temperatures and have greater durability and reliability at higher voltages and frequencies — ultimately achieving unprecedented performance while using less electricity. These technologies can reduce the size of consumer electronics like laptop adapters by 80% or the size of a power station to the size of a suitcase. By supporting the foundation for a strong wide bandgap semiconductor manufacturing base, the United States can lead in some of the world’s largest and fastest growing markets from consumer appliances and industrial-scale equipment to telecommunications and clean energy technologies — creating the well-paying jobs that support a growing middle class.

»The winning consortium, led by North Carolina State University and headquartered in Raleigh, North Carolina, includes the State of North Carolina and:

»• 18 Companies: ABB, APEI, Avogy, Cree, Delphi, Delta Products, DfR Solutions, Gridbridge, Hesse Mechantronics, II-VI, IQE, John Deere, Monolith Semiconductor, RF Micro Devices, Toshiba International, Transphorm, USCi, Vacon.

»• 7 Universities and Labs: North Carolina State [Lead], Arizona State University, Florida State University, University of California at Santa Barbara, Virginia Polytechnic Institute, National Renewable Energy Laboratory, U.S. Naval Research Laboratory.

»Background on DOD-led Manufacturing Innovation Institutes:

»Competitions continue for the two Department of Defense led manufacturing innovation institutes, which will be selected and awarded in the coming weeks. Those institutes will focus on technologies critical to the Department’s needs that also have broad commercial applications across different manufacturing industries that will help to drive U.S. leadership in the technologies and skills needed to encourage job-creating investment in the U.S. The two institutes are:

»• Digital Manufacturing and Design Innovation: Advanced design and manufacturing tools that are digitally integrated and networked with supply chains can lead to ‘factories of the future’ forming an agile U.S. industrial base with significant speed to market advantage. A national institute focusing on the development of novel model-based design methodologies, virtual manufacturing tools, and sensor and robotics based manufacturing networks will accelerate the innovation in digital manufacturing increasing U.S. competitiveness.

»• Lightweight and Modern Metals Manufacturing: Advanced lightweight metals possess mechanical and electrical properties comparable to traditional materials while enabling much lighter components and products. A national institute will make the U.S. more competitive by scaling-up research to accelerate market expansion for products such as wind turbines, medical devices, engines, armored combat vehicles, and airframes, and lead to significant reductions in manufacturing and energy costs.»

The White House, Office of the Press Secretary


«The Power of Co-Creation in Healthcare Innovation (eBook)»

«I’m proud to announce the launch of a free eBook entitled, The Power of Co-Creation in Healthcare Innovation. LeAnna J. Carey, Kevin Riley, and I wrote this book to start a broad conversation about the ailing healthcare industry, and how co-creation amongst key stakeholders can lead to its transformation.

»This 18-page eBook addresses the following key topics:

»• Why the US healthcare system is unsustainable in its present form;

»• Why solving healthcare’s biggest challenges requires a collaborative approach; and

»• How co-creation helped build the modelH business model canvas for healthcare, and how it can drive innovation within your company.

»The eBook contains exclusive IX Research survey data from healthcare professionals that support this perspective, and provides a clear view of how co-creation and collaboration amongst key stakeholders can spur innovation in healthcare. The eBook also contains a mini-case study of the modelH business model canvas for healthcare, which highlights the authors’ own experiences using the Batterii co-creation platform to develop and validate a tool that itself will hopefully spur the development of innovative business models within healthcare.

»The eBook is a natural extension of the work we’ve been doing to develop modelH, the business model canvas for healthcare. In early 2013, Innovation Excellence, Kevin Riley & Associates, and Batterii created a groundbreaking partnership to develop the modelH canvas over the course of the year. You may have seen our regular modelH updates on these very pages. We successfully completed the co-creative development phase of modelH in December 2013, and we are anxious to continue to test and refine the canvas in 2014, as well as publish more about our findings and the process that led to those findings. But we also realized that there was a bigger story to tell regarding co-creation in healthcare. We wanted to share our experience with co-creation in the context of the bigger opportunity it holds to transform the healthcare industry as a whole, not just in the development of a new tool for generating healthcare business models.»

Innovation Excellence, Doug Williams


«Making Sense of Data and Information in the Social Sector»

«Over the past several years, a set of organizations—including online giving platforms, nonprofit information providers, evaluators, philanthropic advisors, and volunteer connection platforms—has convened periodically to discuss how to improve the global philanthropic ecosystem. Called Markets for Good, this collective has included GuideStar, Charity Navigator, GlobalGiving, Kiva, VolunteerMatch, BBB Wise Giving Alliance, and many others.

»In 2012, a team of collaborators saw an opportunity to develop a complementary online forum so that a broad range of organizations could access and participate in discussion about how to strengthen the social sector “information infrastructure” —the sector’s system for generating, sharing, and acting on data and information. In October of that year, Jeff Raikes, the CEO of the Bill & Melinda Gates Foundation, launched this site, MarketsforGood.org, at the Social Capital Markets (SOCAP) conference.

»Over the past 15 months, the site—supported by the Bill & Melinda Gates Foundation, the William and Flora Hewlett Foundation, and the progressive financial firm Liquidnet—has hosted a conversation that connects, aligns, and accelerates both long-standing and nascent efforts to strengthen the information infrastructure. We’ve had terrific guest contributors, thoughtful comments, and welcome challenges to the central question of how to best upgrade this infrastructure. A diverse range of people have contributed to the site, including nonprofit leaders, technologists, foundations, academics, evaluators, intermediaries, entrepreneurs, and business people —and the conversation has been better for it.

»To capture some of this discussion and debate, we developed an eBook, Markets for Good Selected Readings: Making Sense of Data and Information in the Social Sector, which features a collection of posts from our blog.

»We start off the eBook with an introduction by Jeff Raikes, which highlights the “continuing wave of efforts that will push our sector to achieve even greater impact.” Following Jeff’s letter, the Markets for Good Collaboration Team recaps the first 15 months of the campaign, and how it expects Markets for Good to evolve going forward. We wanted to share this team’s view on MarketsforGood.org’s progress, complementary offline efforts, and the way forward.

»We then present 17 posts, chosen for their popularity with readers, topic diversity, and thought leadership. The posts and complementary authors’ updates provide a range of perspectives on the most critical data-related challenges facing the social sector and how we can address these challenges. Posts debate new and recurring hurdles such as capacity and capital constraints; how we can incorporate qualitative data, including stories and beneficiary insights, into data-driven decision processes; and big-, medium—, and small-data management.

»We invite you to read and download this eBook. We also look forward to your perspectives on how the information infrastructure has strengthened in the past year and where opportunities exist to do more —so that foundations and nonprofits of all sizes have the information and knowledge that they need to do the best work possible. We invite you to share your comments on this compendium and to join the Markets for Good discussion in the coming months on our blog, Twitter, Facebook, LinkedIn, Vimeo, and Storify

Stanford Social Innovation Review, Eric J. Henderson


«Calculus of innovation»

«What is it that American policymakers do not get about proficiency in mathematics and science at high school being one of the most important predictors of economic success—both for individuals themselves and for the country as a whole? The Chinese get it, whether in Shanghai, Hong Kong, Macau, Singapore or Taiwan. So do the South Koreans and the Japanese. Likewise, the Swiss, the Dutch and the Finns take great pains to ensure their high schools teach mathematics and science rigorously, so that they can continue to keep their research lights burning brightly and their industrial batteries fully charged.

»Nations now realise that any slowdown in the supply of technical talent can cause their industries to become less innovative and competitive. And as innovation supplies half or more of economic growth these days, that could quickly lead to national hardship.

»Of the 65 countries and economic regions that participated in the latest Programme for International Student Assessment (PISA), 15-year-olds from the Shanghai were top of the class in mathematics, science and reading—the three subjects tested in the triennial study that has become the yardstick for evaluating the quality, fairness and efficiency of school systems around the world.

»All told, some 510,000 high-school students participated in the latest PISA test, administered by the Organisation for Economic Cooperation and Development (OECD) in Paris. Pupils take a two-hour standardised test, and then spend up to an hour filling out a questionnaire on their learning habits, background and family. The results of the 2012 test were published in December 2013. After Shanghai, four tiger economies plus South Korea and Japan occupied the next half a dozen places. Meanwhile, America continued its downward slide in the rankings, this time coming a lowly 36th in mathematics, 28th in science and 24th in reading

»It is not as though America does not spend enough on high-school education. In the recent PISA test, the United States and Slovakia got roughly equal marks (481 and 482 respectively) in mathematics, but America spent more than twice as much per head ($115,000 versus $53,000) in purchasing-power-parity terms to achieve its score. The Czech Republic, with broadly similar rankings as America, spent a third as much per pupil. Only Austria, Luxembourg, Norway and Switzerland spent proportionately more.

»In America’s case, the extra money did not buy better results. One in four of the country’s 15-year-olds failed to reach PISA’s baseline Level 2 of mathematical proficiency (the level at which pupils begin to demonstrate skills needed to participate in the workforce). Among the high-performing countries, only one pupil in ten failed to reach Level 2. Meanwhile, just 2% of American 15-year-olds achieved Level 6 in mathematics, the highest level of proficiency, compared with 31% in Shanghai.

»Apologists say that comparing America with Shanghai is like comparing apples with oranges. A sample of high-school pupils drawn from such a diverse nation as the United States will inevitably contain a greater proportion of pupils from poorer districts with dismal schools than a sample selected from just the wealthiest part of China.

»Others note that education systems based on Confucian values—such as those of South Korea and Japan as well as Hong Kong, Singapore and China itself—have long used private tutoring and crammer schools to supplement lessons learned in public classrooms. Such cultures, they say, excel at preparing students to pass tough government tests, rather than solve real-world problems.

»And yet, one of the biggest weaknesses American 15-year-olds have consistently displayed in PISA tests over the years has been establishing mathematical models of real-world problems and interpreting the results. On more routine matters, such as applying formulae or extracting data from tables and charts, their mathematical competence has been better than average.

»Also, China is rapidly becoming more like America than many realise or care to admit. Shanghai, for instance, is no longer an elite enclave for professional families with smart kids and dragon mothers. Home to 23.5m people, it is not only the largest city in China, but also the biggest in the world. According to the OECD, the Shanghai education authority has successfully jettisoned its traditional focus on educating a minority of high performers for top jobs in government, business and academia, and is nowadays far more inclusive. High-school enrollment exceeds 98%, with 80% of the relevant age group going on to college.

»Moreover, tests carried out in a dozen rural regions of China produced results close to the PISA average. The implication is that the educational reforms pioneered in Shanghai and elsewhere are now spreading rapidly across the country. Inevitably, such reforms will make the Chinese people even more productive.

»What, then, should America do to slow the dumbing down of its workforce and shore up its position as the sixth wealthiest nation in GDP per capita?

»It is not easy to say. Many of the measures that work in other countries are culturally specific, and thus difficult to emulate. Finland, for instance, has achieved its consistently high PISA ranking over the years by ensuring that only the country’s best and brightest become teachers. As such, those who do so have high social status, though not necessarily high pay. As a measure of how prestigious teaching is in Finland, the New York Times reported recently that 6,600 applicants competed in 2010 for 660 primary-school preparation places in the eight Finnish universities licensed to educate teachers. In Finland, school teachers are clearly the pick of the graduate crop.

»That is not the case in the United States. With its free labour market, America over-produces teachers for elementary schools, where the qualifications required to enter teacher-training school are minimal. But the country seriously under-produces teachers for more rigorous STEM subjects (science, technology, engineering and mathematics). Unable to offer competitive salaries and short on prestige, teaching is shunned by the best and the brightest of America’s STEM graduates for careers in business, finance and research. Only 10% of the 1,200 teacher-training programmes examined recently by a government advisory body were rated high quality, with the rest requiring low or no qualifications for entry.

»The obvious answer is to make teacher-training more selective. The teaching profession might then become more prestigious and effective. How to do that, though, is the difficult part. Providing teachers with better working conditions, more opportunities for professional development, and granting them greater freedom to chose what and how to teach their coursework could do much to make the profession more appealing to top-notch graduates.

»Increasing pay for teachers with STEM qualifications would also help, though remuneration has never been the main attraction that has drawn talented people to teaching—as Finland’s experience so amply demonstrates. Yet more market-related pay for STEM teachers would certainly increase the pool of applicants, allowing the teacher-training schools to become more selective. But when it comes to awarding merit pay, vested interests have a way of thwarting the best of intentions. In a new merit-pay system introduced recently in Florida, 99% of the teaching staff in one county got top marks—prompting one local citizen to wonder whether all the children were above average, too.

»Joking aside, ensuring that all the children, not just the gifted, can participate to the best of their abilities at school is the key to raising education standards across the board. Countries that perform best on the PISA tests are ones that allocate resources more equitably between good schools and bad ones.

»Canada has been particularly successful at doing this. In the most recent PISA test, it ranked 13th in mathematics, 8th in science and 7th in reading. The trick has been to move funding from the local school districts to the provinces, which then allocate resources according to a formula that takes into account a school district’s size, needs and local demographics.

»That is harder to do in America, where school districts rely to a far greater extent on local property taxes. As a consequence, schools in wealthy areas tend to be well funded and those in hard-scrabble places a lot less so. Meanwhile, supplementary money from state taxes is rarely enough to make up the difference. Overall, the wealthiest school districts spend twice as much per pupil as the poorest. In Massachusetts and California, the ratio is more like three to one. This lop-sided allocation of resources traps 40% of high-school kids in districts that offer them little chance to shine.

»It is not just the distorted allocation of resources that hobbles American education. An outdated curriculum, especially in mathematics, shares much of the blame for the country’s poor performance on PISA tests. In numerous surveys, nine out of ten high-school students admit they are not interested in studying STEM subjects, because classes are dull, the subject matter irrelevant, and the teachers ill-prepared. Great hopes are therefore being placed by education authorities in the new “Common Core” curriculum for high-school mathematics and English language instruction. This is currently being implemented in 45 of America’s 50 states.

»No question, the Common Core learning initiative embraces all the right buzz words—like “deeper learning” and “critical thinking” being taught to “fewer, clearer and higher standards”. But insiders worry that the necessary text books for the new curriculum do not as yet exist, while existing ones are wholly inappropriate. Another concern is that the teachers, lacking guidance, are likely to struggle as much as their pupils when it comes to comprehending the new material.

»The anxieties do not end there. It has recently come to light that the basic aim of the new mathematics curriculum is not to raise standards all round, but to provide high-school pupils with just enough maths to meet the needs of a “non-selective college”—ie, one without courses in science, engineering or mathematics. “The Common Core deliberately leaves out major topics in trigonometry and pre-calculus,” says Sandra Stotsky, professor emerita at the University of Arkansas and a former member of Common Core’s validation committee.

»Students needing calculus in their first year at university—a prerequisite for studying any of the major STEM disciplines—will therefore have to take extra courses in mathematics beforehand. That is going to be a challenge for those who cannot afford private tuition. In other words, rather than increase the number of future scientists and engineers, America’s new high-school curriculum will more than likely throttle the supply. Sad to say, the Common Core is an admission of defeat, not the innovative inspiration for higher achievement that many parents had hoped for.»

N.V., Babbage, The Economist blog on Science and Technology issues

Innovation Posts Collection January 14 to 17

C. Ossorio, «Corresponsabilización para sostener la equidad e innovación en el sistema. Pacientes y profesionales sanitarios reivindican poder de decisión para que prime la coste-eficacia»

Canaltech, «Cisco vai criar centro de inovação brasileiro para a Internet das Coisas»

Constantin Gurdgiev, «Individualism v Collectivism: Dynamic Effects of Culture on Innovation & Growth»

David Friedman, «How My Son’s Autism Inspired Business Innovation. Tapping the Potential of Young Adults with Autism»

Esquerda.net, «Jorge Malheiros: “Só se inverte esta tendência com criação de emprego estável”»

Floraj, «Quand Internet vient en aide aux copropriétaires»

Forética, «Los incentivos y la buena gobernanza a nivel socio-político, claves para el desarrollo de la innovación en un país»

Hubert Guillaud, «L’innovation est-elle darwinienne?»

Hugo Ferreira Tadeu, «De volta para o futuro: Inflação ou Inovação?»

Issa Goraieb, «La preuve par huit?»

J. F. Santiago, «Empresarios entre la innovación y el arte»

Jean-François Blarel, «Inovação franco-portuguesa»

La Prensa, «Amazon innova en la forma de contratar. Un grupo de empleados de la compañía está a cargo de entrevistar a los candidatos y ver si encajan en la empresa»

Matt Arguello, «Making Space for Innovation»

Notícias ao Minuto, «A fase final do prémio internacional Fundação Altran conta com um projeto português. Omniflow consiste numa turbina omnidirecional que permite produzir energia eólica ou solar e vai competir com finalistas espanhóis, belgas, italianos e britânicos»

PR Newswire, «Makheia Group, premier groupe français de création de contenus annonce l’acquisition de l’agence Big Youth, acteur historique de l’innovation digitale»

Prêmio EDP Inovação 2020, «Prêmio EDP Inovação 2020»

SIMI (Sistema Mineiro de Inovação), «Sete anos promovendo inovação em Minas Gerais. O Sistema Mineiro de Inovação comemora sete anos de história, disseminando a cultura da inovação em indústrias e universidades, e enfrentando desafios para superar os gargalos tecnológicos do país»

Sol, «Investigador português eleito para comité europeu de comunicações móveis»

The Information Daily, «UK Local authorities to stage delivery transformation with innovation fund. Local authorities will be able to make use of a £1 million fund under the Delivering Differently government programme»


«Making Space for Innovation»

See more images here

«I’m a big believer in the importance of space. Remember how sacred your bedroom felt as a child? I still think about when I finally got my own room and no longer had to share with my brother. It was heaven and it was mine. Teachers are known for the thought they put into classroom design because it matters. Arrangement of furniture, lighting, color, and what adorns the walls goes a long way to making a space conducive to learning. But, as education changes to a less teacher-centered model, we’ll need to rethink our spaces and design for student-centered collaboration.

»You’ve no doubt noticed the explosion of makerspaces popping up around the country and world. These community spaces are specifically designed to foster hands-on, self-directed learning that incorporates technology, design, and engineering. But the most important aspect of a makerspace is that it is a shared, collaborative space. A good introduction to the maker movement, and a resource to which I often return, is the Makerspace Playbook.

»At my school, we are now about four months into life with our new and improved Innovation Center, created by combining the existing space with the former computer lab. I was fortunate enough to be part of the team that designed the space and now coordinate its use. After a year of planning, gathering input from students and teachers, and visiting other schools, the space was finished this past August. I’m happy to say we now have an awesome community space where students can imagine and create.

»In planning and designing the space, we wanted to keep things as flexible as possible so the Innovation Center is not only a makerspace, but an idea space. The open plan, moveable furniture, and plentiful whiteboard surfaces make it a perfect setting for brainstorming sessions. Multiple projectors allow for quick and easy presentations and sharing.

»Our students do a lot of video work with green screen. The last iteration of the Innovation Center was often used for video projects and we knew this was an important feature to keep. Instead of painting walls green with chromakey paint we opted for a retractable green screen and LED studio lights. As shown in the photos, the studio side of the space is perfect for video work but maintains flexibility for other activities.

»Lastly, the space also serves as a prototype classroom. The Innovation Center gives us an experimental setting to try new features that might become part of regular classrooms. Flexible furniture, interactive wall projectors, folding walls, and hidden whiteboards are just some things we’re trying out.

»The Innovation Center has opened up so many possibilities for our students and we will continue to iterate how it is used. I look forward to all that will stem from this amazing space in the years to come.»

A Drive to Learn, Matt Arguello


«How My Son’s Autism Inspired Business Innovation. Tapping the Potential of Young Adults with Autism»

«My son, Matt, was diagnosed with autism at age three, so I was accustomed to the annual meeting at school to discuss progress with his individualized education plan. But in 2009, when Matt turned 14, I found myself unprepared for the “transition planning” meeting required by law to help parents set a course for high school and afterward.

»“How in the world is Matt going to support himself when he’s finished high school?” This was the question my wife and I hadn’t thought through very well, though we knew we would have to face the issue once we accepted that our son would not sail through high school, go to college and then be off on his own.

»I knew there had to be a place for Matt. But it wasn’t until then that I realized that this place I would have to create ―a business that would support my son and other young people with autism―. Many people with autism have unusual talents ―from pattern memory, to extreme focus and accuracy―. Could their skills be used to solve a real business need?

»According to Autism Speaks, the national advocacy organization, nearly 90% of young adults with autism are unemployed, and an estimated 50,000 people with autism disorders enter the workforce each year. This represents a vast amount of high-potential human capital, sitting around untapped. Was there a way to harness all that potential?

»The 2009 “transition planning” meeting happened when I was president of a large advertising agency, Razorfish. But it was only when I was working at Sears Holdings that the business idea came together. At Sears, we produced 90 million advertising circulars each week ―20 to 50 pages each with multiple images, prices and text―. We had a factory of circular workers who quickly got bored with the repetitive, process-oriented work. At Razorfish, too, we were struggling with an industry-wide overcapacity of digital advertisements that needed to be trafficked, reconciled and reported by agency professionals.

»More often than not, these tasks were done by junior-level advertising folks who had envisioned a career full of exciting creative decisions, not the repetitive, exacting tasks associated with processing ads’ backend with excel and other tools. Yet, to any number of people with autism spectrum disorder, the order and consistency of doing tasks requiring laser focus on the tiniest of details over and over again is not tedium but comfort. It seemed like a perfect fit.

»AutonomyWorks, the company I founded to give my son Matt and others like him access to a career, has been running for over a year, offering marketing agencies a pool of workers who can execute highly-detailed, repetitive, technology-based process tasks like data, analytics and web-maintenance functions. Right now we employ 15 people (11 with disabilities and four managers) and are able to pay a living wage for our region, with benefits for full-time associates.

»Employing this population does require a few more one-time expenses than usual ―a little more training, one-on-one training, up-front process design and workstation design―. The additional cost is minimal and more than balanced by lower turnover and improved productivity. One of the advantages of this business model is that we have all of our associates working in a dedicated facility. We are able to leverage these expenses across our entire population of associates very efficiently. Our clients can get the work they need done affordably without having to outsource it abroad.

»We are building the business with an eye toward scalability and are working to build a prototype service center in Chicago of about 300 people that will be completed at the end of 2015. Success so far shows that we have found a way to employ an exceptional, but hidden, workforce. Best of all, parents of young men and women with autism have one more answer to the question, “How will my child support himself when he grows up?”»

Ad Age, David Friedman


«Individualism v Collectivism: Dynamic Effects of Culture on Innovation & Growth»

«A few years old, but very good paper: “Culture, Institutions and the Wealth of Nations” by Gorodnichenko, Yuriy and Roland, Gérard (September 2010, NBER Working Paper No. w16368: http://ssrn.com/abstract=1678911)

»Based on an endogenous growth model with cultural variable the paper “predicts that more individualism leads to more innovation because of the social rewards associated with innovation in an individualist culture. This cultural effect may offset the negative effects of bad institutions on growth. Collectivism leads to efficiency gains relative to individualism, but these gains are static, unlike the dynamic effect of individualism on growth through innovation.”

»Empirical findings: “Using genetic data as instruments for culture we provide strong evidence of a causal effect of individualism on income per worker and total factor productivity as well as on innovation. The baseline genetic markers we use are interpreted as proxies for cultural transmission but others have a direct effect on individualism and collectivism, in line with recent advances in biology and neuro-science.”

»And robustness checks: “The effect of culture on long-run growth remains very robust even after controlling for the effect of institutions and other factors. We also provide evidence of a two-way causal effect between culture and institutions.”»

True Economics, Dr. Constantin Gurdgiev


«UK Local authorities to stage delivery transformation with innovation fund. Local authorities will be able to make use of a £1 million fund under the Delivering Differently government programme»

«The Delivering Differently Programme will support 10 local authorities that are pioneering innovative new delivery models.

»Successful applicants will, the government says, be able to “transform” their services by combining public, private and voluntary sector support via mutuals and partnering.

»Minister for the Cabinet Office Francis Maude has argued that this range of models “breaks down the old binary choice between in-house and outsourced delivery”.

»“We know that by letting front-line staff leave the bureaucratic state hierarchy behind and take ownership of their services, greater efficiency and success can be achieved”, he added.

»Each local authority will receive a fund of £100,000, as well as professional support to guide them in their consideration of all the available options.

»The programme is organised jointly between the Cabinet Office, the Department for Communities and Local Government and the Local Government Association (LGA).»

The Information Daily

Innovation Posts Collection January 7 to 10

AICEP, «SPI assina novo acordo de parceria estratégica com a Peking University Suzhou International Technology Transfer Center»

Ana Bárbara Matos, Ana Sofia Figueiredo, Ana Filipa Mesquita, Isadora Freitas, Sara Silva, «O Revivalismo no Porto: Mudam-se os tempos... Mas e as vontades?»

Center for American Progress, Mortgage Finance Working Group, «Expanding Access Through Responsible Innovation: The Market Access Fund»

Diário de Notícias, «Tecnologia made in Bragança vai revolucionar radiodifusão»

Estrategia & Negocios, «Cinco startups latinoamericanas que destacaron en 2013. En 2014 tendrán el reto de consolidarse y lograr atraer a inversionistas»

Fabiana Cardoso, «Estácio Lança Maior Biblioteca Digital da América Latina. A Instituição passa a contar com um acervo formado por bibliotecas unificadas de 63 países»

Gi Group, «Wyser traça perfil do executivo brasileiro»

Jornal Novo Tempo, «Inovação industrial brasileira esbarra em burocracia»

Julia King, «Portugueses sorriem muito pouco, estudo científico pioneiro com 10 anos». O estudo foi realizado pelo Laboratório de Expressão Facial da Emoção (FEELab/ UFP), da Faculdade de Ciências da Saúde (FCS) da Universidade Fernando Pessoa (UFP)

Márcio Juliboni, «Por que a Vigor pegou um caminho sem volta com o iogurte grego. Para Gilberto Xandó, presidente da empresa, produto marca um novo modelo de negócio»

Martín Sola, «La conversación digital de 2014. El cruce de caminos entre lo digital y lo físico implica que muchas de las disrupciones que lo digital generó en sectores tales como la música, los libros o el cine comienzan a generarse en el mundo de las manufacturas»

Motocompetición, «Michelin en el Dakar 2014: Por el deporte y por la innovación (Desde 1982, el Grupo Michelin se compromete regularmente con el Dakar, una prueba que tiene un sentido especial para el fabricante)»

Oxylane, «Tribord, vainqueur des Oxylane Innovation Awards (OIA) 2014»

Paré à Innover, «Serge Kergoat: “Pour réussir, la curiosité est essentielle”»

Patrick Seghi, «Lille: avec la start-up Missmap, Christian Kelma met le monde en cadre. “Nos cartes couvrent tous les lieux de la planète”»

Peru this Week, «Canada supports Peru’s efforts in healthcare innovation»

Ruth Blatt, «The Remarkably Simple Technique Behind These Innovations In Music And In Business»

Ruth Ladenheim, «Innovación y desarrollo»

The Official Government Website of Jilin Province, «Changchun Microsoft Innovation Center Was Inaugurated. It is the first automotive industry-focused innovation center built by Microsoft in the world»

UQAR (Université du Québec à Rimouski), «Le succès entrepreneurial rime avec innovation»


«Expanding Access Through Responsible Innovation: The Market Access Fund»

«A couple walks along the Atlanta BeltLine as the midtown skyline stands in the background in Atlanta, November 20, 2012.»

«An essential goal of a reformed housing finance system must be to serve all markets, including low- and moderate-income communities, communities of color, and other underserved or hard-to-serve markets. To help meet this goal, we recommend that the new system include a Market Access Fund, or MAF, which would enable private-sector participants in the new system—such as lenders, issuers, and guarantors—to safely and sustainably serve the broadest possible market. The MAF would provide grants and credit enhancement to support product research and development aimed at these markets. It would also encourage testing at a scale sufficient to enable commercial evaluation of new products and processes. Over time, private actors would adopt successful models without the need for further subsidy.

»In this fact sheet, we will address common questions about the MAF and provide details about its many economic benefits.

»Why is the Market Access Fund necessary?

»Our mortgage market currently underserves many communities with creditworthy borrowers who can sustain homeownership but who may not be—or may not appear to be—as profitable for the financial system to serve as those in other communities or with other demographic characteristics. One of the reasons for this market failure is that it is sometimes challenging for market participants to invest in what is required to serve those markets, including:

»• New products, services, and systems that serve a limited segment of the market, particularly segments that may be difficult to reach or evaluate using mainstream outreach and processes.

»• Products that have characteristics differing from standard, well-known products and that are not well understood or may appear to be riskier.

»• Innovations that require significant up-front investments in product development or system design.

»Only the secondary market has the reach, scale, and potential for standardization to develop and test the marketability and performance of such products. The MAF would provide resources to help the secondary market work with the primary market in developing responsible products, services, and system innovations.

»What would the Market Access Fund do?

»The MAF would make funds available on a competitive basis to research, pilot, and evaluate innovative programs to expand access to and address gaps in housing finance. It would use a prudent and experimental approach: If a product or process worked, it could be moved to commercial-level testing and eventually brought to the broader market, but if it failed—if, for example, it had excessive default rates or experienced a poor uptake rate—it would be abandoned or developed further based on initial experiences and tested again.

»MAF funds could help defray some of the upfront costs that new products and process innovations entail. It is costly to develop and model new product structures, underwriting standards, counseling protocols, and specific servicing measures; establish specialized tracking systems and early warning indicators; do outreach to find originators to offer products; or prime the pump in other ways. The MAF could also offer credit enhancement for products with an uncertain risk profile, such as lending that supports newer or less-understood activities.

»The following are some examples of innovations that the MAF could potentially support:

»• Reserve funds and homeownership success. To make a down payment and pay closing costs, low-wealth households often use the bulk of their savings to acquire a home. But new homeowners with additional liquid reserves have lower default rates. Using credit-enhancement funds from the MAF, grantees such as lenders, guarantors, and issuers could attract capital to buy loans from lenders who experiment with requiring smaller down payments from borrowers while also requiring them to contribute to a dedicated reserve fund. MAF funds also could defray lender costs of marketing and servicing this new product. Such experimentation could demonstrate whether participating borrowers experience lower default rates than similar borrowers who make somewhat higher down payments but have fewer reserves.

»• Energy efficiency and underwriting. Household energy costs in this country are about $230 billion annually, making up 15 percent of the total cost of homeownership for average families and even more for lower-income families. Research has found a clear association between home energy efficiency and loan performance, but more research is needed to quantify that link and incorporate it into the mortgage qualification process. Lenders in markets with high energy costs could test using energy savings to adjust their loan underwriting, supported by secondary market institutions with MAF credit-enhancement or product-development funds.

»• Affordable housing preservation. The cost of refinancing loans for affordable rental properties can make it difficult for owners to maintain their properties without setting rents prohibitively high. As a result, affordable units disappear from the market. Yet replacing these units is less efficient and more expensive than preserving them. MAF resources could be used to explore whether loans with longer terms, lower costs, or lower levels of credit enhancement perform sufficiently well under different market conditions to win broader acceptance from commercial multifamily lenders. The MAF could also support exploring approaches to improve the sustainability of existing affordable rental properties by reducing utility costs.

»• Process innovation. In the market for smaller apartment buildings, it would be useful to develop new forms of appraisal and building quality studies that can reduce the cost of underwriting while yielding better information about the profitability and risk related to these buildings.

»Who would run the MAF?

»A dedicated office at the public guarantor would run the MAF. Locating it there would be efficient, as most parties will already deal with the guarantor in their core business activities. It would also ensure strong coordination between the public guarantor’s safety and soundness activities—which would be concerned with the prudent use of any government funds—and the MAF’s purpose. Both the grant and the credit-enhancement parts of the MAF would be run as competitive rather than formula-based programs.

»Who would be eligible to apply for MAF awards?

»The MAF staff would establish criteria for allocations of direct subsidy and credit enhancement. Applications for research and development funds for initial product development would likely come from single entities, but applications for credit subsidy and larger awards should require a team that can demonstrate a mechanism for both primary market origination and delivery into the secondary market. Such teams could include many different partnerships of nonprofit and for-profit financial institution lenders; Community Development Financial Institutions, or CFDIs; state and local housing finance agencies; private mortgage insurers; mortgage-backed securities, or MBS, issuers; and MBS guarantors. Applications should be rewarded for risk sharing and for leveraging MAF funds with other capital sources.

»How would the MAF be funded?

»A modest fee of 10 basis points—or 0.01 percent—on all mortgage-backed securities, including those using the government guarantee and securitizations that are entirely private, would fund the MAF, as well as the previously established National Housing Trust Fund and Capital Magnet Fund. The fee would be structured as a “strip,” like the monthly servicing fee, meaning that it is assessed periodically for the life of the loan. The funds would accumulate as mortgages and be securitized under the new system, and after five years, the annual contribution to all three funds combined would be in the range of $2.5 billion to $8 billion. The size of the MAF matters because without very significant dollars available, it is unlikely that primary lenders or secondary market entities would have sufficient incentive to compete for its grants and credit enhancements.

»How would the MAF differ from the National Housing Trust Fund and Capital Magnet Fund?

»These three funds support different parts of the market through very different mechanisms. The National Housing Trust Fund is a formula grant program in which the Department of Housing and Urban Development, or HUD, gives states grants to support rental housing for extremely low- and very low-income families. The Capital Magnet Fund, administered by the Community Development Financial Institutions, or CDFI, Fund at the U.S. Treasury, provides grants to CDFIs and other nonprofits to support rental housing for low-income families.

»Can the MAF also support rental-housing innovation?

»Yes. Many rental properties need attention from the private secondary market but are unlikely to get it without some incentive, particularly rural rental housing, small properties, and rental housing that serves low-income seniors. Financial product and process innovation to serve these segments would be eligible for MAF funding.

»Would the MAF completely replace Fannie Mae and Freddie Mac’s “housing goals” and “duty to serve”?

»No. The MAF is a critical piece of a new approach to housing finance that would provide a form of direct and transparent subsidy to support innovation that expands access and reaches underserved markets. The “housing goals” and “duty to serve” rule encourage Fannie Mae and Freddie Mac to support lending to certain underserved communities and housing types.

»The MAF and an affirmative charge to serve all markets are crucial elements of a well-functioning housing finance system. But other elements must be part of reform legislation as well, in order to ensure that the system can serve all markets at all times. For example, the system will need to take a comprehensive approach to data collection, analysis, and evaluation to ensure that all qualified borrowers have affordable and safe access to mortgage credit regardless of geography, population demographic, or housing type.

»Won’t the MAF encourage risky lending?

»No. On the contrary, the MAF encourages—through carefully designed and monitored experimentation—the development and testing of responsible lending products to serve the changing demographics of the United States in all markets at all times. This approach contrasts with the so-called innovation of the mid-2000s, during which time untested products, such as hybrid adjustable-rate mortgages, negatively amortizing loans, and no-documentation loans, were rapidly and inappropriately mainstreamed with no regulatory oversight.

»Would the MAF become a permanent subsidy program like HUD programs?

»No. Although it would serve as an ongoing mechanism for research and development, the MAF would not permanently support products. It would instead focus on innovation, design, and testing, with the intention of creating products and programs that could either become mainstream offerings of the conventional market or become eligible for ongoing subsidy from other programs. Some of the projects would be of longer terms than others, and credit enhancement would need to remain in place for the term of the loans made during the trial period. Once created and tested, some processes and products will be proven feasible. These can be adopted by lenders without further support and become regular features of the primary and secondary markets. Some will fail and will not be offered beyond the proof-of-concept stage, while others may prove useful for state Housing Finance Agencies or government agencies but not for the broader secondary market. In some cases, it may become clear that permanent subsidies are needed, and the MAF results will help enable policymakers to consider such needs based on empirical data and market-tested approaches.

»Why should private securitizations also pay the fee that finances the MAF and other funds?

»The market as a whole benefits from greater liquidity, stability, and access to credit, and it thrives when the first rungs on the homeownership ladder are accessible and stable. With shifting demographics, homeowners of the future are more likely to be minorities, younger, and less wealthy. Figuring out safe and sustainable ways to enable these families to develop stability and build savings through affordable, quality rental housing—and to acquire an affordable mortgage for their first homes—benefits the whole market. Furthermore, as stable, affordable housing provides a basis for economic opportunity, the ripple effects for the rest of the economy will go well beyond the housing market.

»The government’s longstanding support of the mortgage market has provided a framework that benefits all mortgage lending, even those loans made without explicit government involvement. For example, the jumbo market—the market for loans that are larger than those eligible for Fannie Mae and Freddie Mac to purchase—is modeled on standards and processes established by Fannie and Freddie. Looking to the future, government-sponsored enterprises are building a common securitization infrastructure—a platform for issuing mortgage-backed securities that would also serve non-guaranteed transactions. Additionally, products developed and tested in the government-supported market could ultimately be adopted by other segments of the market, and the oversight and macrostability framework maintained by the government enables all segments to function better.


»Creating a Market Access Fund would help our mortgage market responsibly innovate and therefore better serve all communities and creditworthy borrowers. It would do this by providing grants and credit enhancement to support responsible innovations that reach hard-to-serve markets. After these innovations are piloted, the broader market could adapt those that prove successful, allowing more and more communities access to safe and sustainable mortgage credit. The MAF is an important part of a reformed housing finance system that supports the housing needs of all communities and families.»

Center for American Progress, Mortgage Finance Working Group

The Mortgage Finance Working Group is a group of housing finance experts, affordable housing advocates, and leading academics who started meeting in 2008 to better understand the causes of the mortgage crisis and to discuss policies that will shape the future U.S. mortgage market. Endnotes and citations are available in the PDF version of this issue brief.