ECONOMIST CORRESPONDENT: Here Are The New Rules Of Innovation

Vijay Vaitheeswaran

“Need, Speed and Greed,” an exclusive interview with bestselling author, Vijay Vaitheeswaran
John Nyaradi: Hi, everyone, I am John Nyaradi, Publisher of Wall Street Sector Selector, a financial media site specializing in exchange traded funds and global markets. Today I am pleased to welcome our special guest, Vijay Vaitheeswaran. Vijay, welcome to Wall Street Sector Selector.

Vijay Vaitheeswaran: Great to be with you.

John Nyaradi: Vijay as an award winning global correspondent for The Economist. He is a member of the Council of Foreign Relations and adviser to the World Economics Forum. His writings have appeared in major media like The New York Times, Wall Street Journal and ABC’s Nightline, among many others. Today we are going to talk about his new book, “Need, Speed and Greed –How the New Rules of Innovation Can Transform Businesses, Propel Nations to Greatness and Tame the World’s Most Wicked Problems.”

Vijay, let’s talk about your purpose for writing the book. What would you like people to get out of this?

Vijay Vaitheeswaran: We are in a age of wicked global problems, a middle class squeeze here in America and an educational system that’s out of touch with the 21st century reality. But in the midst of these problems, there’s an innovation revolution that’s just getting going from the bottom up, and if we embrace the new rules of innovation that I describe in “Need, Speed and Greed,” we can actually turn adversity into tremendous opportunity.

John Nyaradi: One thing that caught my eye right away was your concept of “globalization” and “Googlization.” We have all heard about globalization but if you could just touch on those two terms and how you view those in the context of your book?

Vijay Vaitheeswaran: The last couple of decades we have witnessed the power of globalization which has brought the world closer together, but “Googlization” makes information infinitely accessible and ubiquitously accessible to the point where a school child in Africa with a cell phone has more information at her fingertips than an American President did in 1970. It is an astonishing transformation and we are seeing the benefits of that in the global economy.

It is actually the best time to live in the bottom billion people around the world, why – because ,of course it is terrible to be in the bottom billion, you are very poor, but because of mobile telephony, new forms of micro financing and credit and mobile banking, you are seeing incredibly disruptive innovations coming from the bottom up that are actually beginning to change how the middle class and the elites live in other parts of the world. So I think this is one of the disruptive forces of change that’s happening.

The flip side of globalization and “Googlization” creates some of the problems. For example, climate change. We live in an age of deadly pandemics that spread much more quickly now than they did back in 1970 because we are so hyper-connected. And so I think we need to be able to face the challenges as well as the opportunities.

John Nyaradi: You say that this innovation revolution is really the biggest since the Europeans came to America and, of course, technology is the core of that, how do you see that?

Vijay Vaitheeswaran: A lot of people are familiar with, obviously, not only the internet and mobile telephony, but now we also have the coming next waves of big data in genomics and proteomics, exponentially expanding technologies that are happening below the radar and so are often missed. They are not just exponential technologies but they are converging, creating entirely new kinds of disruptive business models. We see investment opportunities in things like clean energy and synthetic biology, things that people didn’t even think of 10 years ago, and so these industries are being reinvented at breakneck speed and the markets haven’t absorbed them yet. We are just beginning to come to grips with the huge potential that all of this creates.

John Nyaradi: You’ve taken the title, “Need, Speed and Greed,” and you have broken the book up into those three sections. So let’s touch on each one. Let’s start with need and why innovation matters.

Vijay Vaitheeswaran: I think innovation has always been a part of human existence, but right now I actually think we live in unprecedentedly difficult times. The rise of China, India and a billion people living in poverty have brought a lot of prosperity and global trade but it has put enormous pressure on resources. I think this is going to be the great challenge; things like climate change, the resource crunch and I think this is a bigger problem and opportunity than anything we have seen in 500 years. So we have a dire need for fresh innovation. When I talk about speed, I am really talking about the change in meta innovation, how the rules of innovation themselves are being changed, and I have offered three simple rules to manage this: move nimbly, be open, fail gracefully. These are the rules you will find in the book and they give us a sense of the flavour of how to succeed and potentially create a much better world.

John Nyaradi: You have a great phrase, “the black swan kills the sitting duck. Talk about that, if you would.

Vijay Vaitheeswaran: I think this is a dangerous time for incumbents, that is big companies or governments or even an individual entrepreneur who is well established. It’s a lot easier for people to challenge you, the barriers for entry in whatever field you are in are dropping fast so that you may have to adapt to different business models from around the world.

Your new competition could be two kids in a garage around the corner or they could be in India or Africa, and in a world that’s much more disruptive like this, you need to move faster because the sitting duck really will get cooked.

John Nyaradi: So how do we win in this age of disruptive innovation?

Vijay Vaitheeswaran: It’s fashionable today to bash capitalism, and I understand that in the age of Enron and Lehman Brothers and the excess of greedy capitalism we’ve seen. But I actually think that we need more capitalism, not less, but a better kind of capitalism, one where we go from greed is good to greed for good. And I talk a lot in the book about how do we harness capitalism, not just for profit but also for community, to do social good, and we’re starting to see that in people like Bill Gates and his foundation. I think we are seeing a lot of new things that are leading to rethinking the profit motive and incentive, which I call greed, but harvesting it for good.

John Nyaradi: You say that the path from stagnation to rejuvenation runs through innovation.

Vijay Vaitheeswaran: I think the central question facing our country right now is the middle class squeeze. Rural villages in Africa have gotten a lot better off thanks to the innovation revolution, and wealthy people everywhere are better off, but what about Kansas, you know, what about the heartland industries, what about ordinary working Americans, blue collar and white collar workers, who worked hard, got a good education and now are feeling left behind? I think this is really where we need to think about how to rejuvenate our economy, and to me in the 21st century, the answer lies in innovation.

We need to invest in the things that will enable Americans to participate and profit from the innovation economy, the idea economy. Now 80% of our GDP already comes not from brawn and brute force but from factors that use the brain, whether it is IT or services or value added. We are already the most advanced country in the world in terms of using the brain. And that means the only future competitive advantage America can hope to have is through innovation, and so I argue that the country has to invest in more innovation related capability and you do that by improving our educational system, federal funding of R&D, for example, and encouragement of private R&D. You do that through smart infrastructure and there are things like immigration policies where they used to be open to the brightest minds in the world but post 9/11 we have turned our backs on that. So I think this is short sighted on our own part.

John Nyaradi: Vijay, I always like to end these discussions with an open ended sort of question. You know what is the one thing on your mind right now in early 2012 that keeps you awake at night, that people like us should watch out for and be thinking about as we move into the new year.

Vijay Vaitheeswaran: The number one question for the global economy is what will happen to China. People say America has lost our competitiveness, America has lost its innovation, its mojo, and people blame China, and I worry that there is this zero sum mentality that has taken over; if China is up, America has to come down. Now this isn’t true. We know what happened with Japan where 30 years ago people said if Japan comes up it has to be at America’s expense. But innovation is not a zero sum game; what happened was that Japan’s rise was peaceful and prosperous and made America much wealthier.

When the world is open, open markets, open minds, open ideas, open innovation, the country that benefits the most is America, and so let’s not forget that and so I worry about that when I hear things like trade wars might be coming or branding countries as currency manipulators and going down the dangerous road of protectionism. Let’s remember that the biggest beneficiary from an open world is America and let’s embrace our traditional strengths.

John Nyaradi: Vijay’s book is called “Need, Speed and Greed’ and it’s getting wonderful reviews and endorsements from people like Kirkus Reviews and Mark Malloch-Brown, former deputy UN Secretary-General. Vijay is an award winning global correspondent for The Economist and to learn more about Vijay and his work just go to the link at the bottom of this interview and that will take you to “Need, Speed and Greed” where you can learn more about the book and what Vijay has to say. It was wonderful chatting with you today, Vijay, thanks for joining us. I know we are looking forward to talking with you again soon.

Vijay Vaitheeswaran: Thank you so much for the opportunity and good luck to all of your readers.

Go to “Need, Speed, and Greed”

 

(recorded interview, edited for length and clarity)

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