Podcast: The Importance of Being Wise Stewards of National Innovation Capacity, With John Kao

December 21, 2020

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The United States has no national, coordinated innovation policy system. In fact, its overall innovation system has been deteriorating. The country’s economic future and national security will depend on rising to the challenge of addressing this problem. Rob and Jackie discuss how policymakers can be responsible stewards of innovation with John Kao, a leading thinker on innovation.

 

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Rob Atkinson: Welcome to Innovation Files. I’m Rob Atkinson, founder and president of the Information Technology and Innovation Foundation. We’re a D.C.-based think tank that works on technology policy.

Jackie Whisman: And I’m Jackie Whisman. I handle outreach at ITIF, which I’m proud to say is the world’s top-ranked think tank for science and technology policy.

Rob Atkinson: And this podcast is about the kinds of issues we cover at ITIF, from the broad economics of innovation to specific policy and regulatory questions about new technologies. Today, we’re talking to a leading thought leader, who has played a key role in innovation and business creativity for over 30 years.

Jackie Whisman: His bio is pretty remarkable. So I’m going to hit the high notes of it. John Kao is a former Harvard Business School professor, serial entrepreneur, musician, former CEO, Harvard-trained psychiatrist, best-selling author, and Tony-nominated producer. He authored the best-selling book, Jamming: The Art and Discipline of Business Creativity, which describes what leaders of all kinds can learn from jazz musicians, as well as Innovation Nation, which documents America’s growing innovation challenge. Thanks for being here, John. It’s great to have you.

John Kao: It’s a real pleasure and it’s great to be jamming with Rob again.

Rob Atkinson: I think we’re less of a jazz orchestra and more of a concert orchestra. We’ll try to do a little bit of jamming.

John Kao: Always room for jamming.

Jackie Whisman: Well, I want to start by talking about your book, Innovation Nation. In it, you warn that the country’s losing its edge in economic leadership, and you say that the future of our prosperity and of our national security is at serious risk, but it doesn’t have to be this way. Can you expand on this?

John Kao: I think it matters a lot, in response to your question, to understand, or to have a shared definition of what innovation is. Too often, people refer to innovation as cool ideas or as a mood, whereas, in fact, if you look at it as harnessing the outcomes of creative thought and developing them to realizing value, what’s more important than realizing value and advancing new ways of transforming existing business models, whether they’re in a particular industry or more importantly, from a societal perspective in terms of how we handle our national security, our healthcare, our education, our approach to the environment, and many other things. So what could be more fundamental than actually deeply understanding and being the wise stewards of our innovation capacity?

I think one of the disconnects is that people don’t really associate the notion of innovation with the notion of capacity building and with the notion of proficiency. They don’t see it as a set of muscles that need to be developed, whether at the level of an enterprise or at the level of a nation. And if I distill down a few key points in terms of what our country might benefit from being able to do, especially as we look forward to a change in the executive branch of government, having an innovation strategy process or our country as a whole, which is inclusive and sophisticated would seem to be a very good starting point. And having the ability to apply principles of design thinking to re-imagining how basic societal processes should work would also be important. There’s a lot of discussion about disruption, which is the descriptor de jure of our times, but I almost would prefer to look at where we are as a time of discontinuity. The difference is pretty profound.

Disruption is like being a sailor out on the ocean, where suddenly, there’s a storm and the seas are high, and then you have to be a better sailor and you have to be agile, and you have to be flexible and courageous. But discontinuity would be like setting forth in the 17th century, if you’re Vasco da Gama, with a map that basically ends abruptly, beyond which is a legend saying, “Here are the dragons,” And you want to swing for the fences and go to India to find a pepper, but how you get there is an obscure mystery. So this whole notion that innovation becomes a set of methodologies and intentionally practice for being able to bridge those kinds of gaps is extremely important. Simply talking about returning to some level of normality is not good enough if we want to swing for the fences as a nation, like other countries are doing in their agendas.

Rob Atkinson: So John, I really love the notion of stewardship. There’s a famous Edison quote, what was it? “Success is 99% perspiration and 1% inspiration.” And I think we have this view in the US that it’s about the lone inventor in the garage, and getting some VC money, or maybe it’s just the magic secret sauce with how the market works, that we can leave this alone. And I think your point to me is really one that just frankly, is just not appreciated in the US, and that stewardship. Now, that’s very different than control or direction. It’s not China we’re talking about here, but it’s different than just laissez-faire. Can you tell the listener a little bit more, what does stewardship mean from a policy perspective in innovation?

John Kao: Well, stewardship to me implies that there isn’t the vast gap between let’s say who governs and who is governed as you might expect from using words like, “Control,” or, “Hierarchy,” or, “Governance.” I think that the topic of innovation in the United States almost perfectly fits the notion of a wicked problem, where there are many perspectives, many points of view, many relevant disciplines where the issues to which innovation is to be applied are similarly complex, because there is no unified point of view about what we should do about climate or education reform or things of this kind.

So stewardship is more of a horizontal process. The dictum of wicked problems is that you resolve them by getting everyone in the room and employing a creative facilitation over a lengthy period of time, until there emerges a common operating picture and agenda. So stewardship also is about nuts and bolts. It’s about who is responsible for orchestrating this process? Just putting a sign on your office door that says, “Office of National Innovation,” doesn’t get you anywhere. But having this notion of a cadence of who’s involved? What are their authorities? What are the expectations? What’s the resourcing? And so on, is fundamental. So in a sense, this needs to be orchestrated and designed as a process, not just to reward senior people who need another thing to do, but to be a really authentic creative process for coming up with this strategy.

So stewardship is a very significant departure from most gold-plated processes around a mahogany table, that yield door stopper reports that don’t necessarily lead to change. You want to have the stewardship process also integrated into the actuators of change. So connecting them to policy communities, not just at the federal level, but increasingly innovation happens in a decentralized way.

It’s not an accident that a lot of the most innovation-driven countries in the world are relatively small, they’re Finland and Singapore and Israel. They’re about the size of the San Francisco Bay area. So you start to think about states and metropolitan areas as a locus for innovation. How does that stewardship process then diffuse knowhow and diffuse methods and tools to be able to make this a more pervasive kind of phenomenon?

And governance is important. This idea, Rob, you alluded to almost the invisible hand of entrepreneurship where you just let people alone and they find some money and they make stuff happen, and all of a sudden, they’re Steve jobs, really doesn’t work in a lot of areas where scale is required. It’s no big deal to have a couple of people in a room designing an app. But if you want to innovate your way to a better climate, or you want to fundamentally restructure the healthcare system, or you want to think about creative uses of autonomy and AI in national security, you need scale, and that’s not one or 10 or even 100 startups, that’s operating at a much different level.

Rob Atkinson: Yeah. John, it’s funny, you and I have both been involved in a lot of conversations in the policy world about innovation and all, and I’m struck by, I’d say every single one of them, they end up defaulting to two things. We should have better education, and we should support individual entrepreneurs, then we’re done. And maybe throw immigration into that, but it’s the same dynamic. It’s about the individual. And sure, we all agree with that.

What’s missing, I think is your insight, which really about systems. Design thinking about systems, and then how do you do that, in other words, through a process of stewardship? And that’s a very different role historically than the federal government has thought about. They see their role as regulator, funder, or maybe direct supplier of something, like in the case of social security. But they don’t see their role as how do you facilitate, steward a process? And they don’t even know how to do it. There’s no systems put in place. There’s no education, there’s no experience for people to call upon, other than maybe calling on people like yourself.

John Kao: One can only hope. Well, what you described is the check-off-a-few-boxes approach, where we tip our hat to a H-1B visas and we tip our hat to STEM education and a couple of other things, and then we’re done, just like we were done a year ago, or five years ago, or 10 years ago. And that is not the way to make progress. It’s worshiping the sacred cows, as in nobody could argue with those, but it’s 10 minutes of the movie, it’s not the whole movie itself.

So this notion of incorporating design processes of systems into the way the government thinks, in one sense is not a big deal because the resources that are required to do it are minuscule compared to the benefit. The fear is that government will be accused of picking winners or being autocratic or being controlling and overstepping their bounds.

But I would argue that the role of federal government is to establish some alignment around rules of engagement is to promulgate best practices, is to generate a richer inventory of ideas and methods and tools which can be used by all. And there’s nothing wrong with that. It’s just, as we know, government bureaucracy arose in an era where bureaucracy was not a dirty word. One person in federal government a long time ago defined bureaucracy as, “The ability to preserve continuity in the face of idiocy.” And of course, nobody could argue with that. But on the other hand, it doesn’t necessarily lead to the absolutely large volume, the quantity and the quality of new thinking that’s required in this era. If we were in a more stable era, not beset by so many crises piled one on top of another, maybe this wouldn’t be as acute a set of needs, but right now we’re in the red zone.

Jackie Whisman: So John, you’ve said there are profound gaps between the desire for innovation and the ability to practice it effectively. What’s the biggest thing you think policymakers get wrong about innovation and innovation policy?

John Kao: Well, I think the key word is practice. It’s one thing to have a theory about innovation, but it’s another thing to actually do it. Sometimes I liken the gap in understanding of leaders with regard to innovation, to playing the piano. It’s one thing to write white papers about the piano and show power presentations about the mechanics of a piano and so forth and so on. But unless you actually sit down at the piano and play, you’re not going to develop the capabilities through practice that will allow you to actually do the work of innovation over and over again.

So I think the other limitation is that a lot of our understandings about innovation, which Marvin Minsky said, “Innovation is like a suitcase word, where there are so many meanings that you have to unpack them.” And I think a lot of senior leaders talk about innovation with a lingo that’s derived from a more industrial model of, “We’re going to have a product development funnel and we’re going to be very rational and analytical and we’re going to plan,” and it’s kind of like ballistics, we do excellent planning and then we’re going to get value out of our innovation process. And it ignores the notion of design thinking and the reality of doing disruptive innovation, especially as opposed to just improvement-oriented innovation, where iteration and exploration and activation of the imagination and invoking collaborative processes are all extremely important.

So I think, whereas there are mountains of white papers that are often affectionately referred to as door stoppers in the public sector. It’s not clear that the mechanisms for translating the theory of innovation into the practice is really something that’s ingrained in the thinking of many senior people. And it’s a remediable problem, it’s just that it’s a problem that exists. There’s this notion that somehow if we exhort people and wave our hands and talk about broad cultural issues and encourage people and say they can do it, that that, along with a very rational planning model will be sufficient. And that leaves a lot out.

Rob Atkinson: Yeah. John, it seems to me, I 100% agree with that. Being here in Washington now for, I don’t know, long, long time, focused on innovation, I can tell you, I think I see it as two problems. If you talk to a typical policymaker in Washington about innovation, they immediately think R&D, they immediately think NSF, and then if you say, as opposed to system innovation, which is really a lot of what you’ve been focused on, and rightly so, how do we have innovation across the economy, across society, across all these different verticals?

And then secondly, as you pointed out, it’s really not about the practice of innovation, partly because I really sometimes wonder how much people really want innovation, because it disrupts the status quo, it’s hard. Why not just do what we’ve been doing? And I think that may be another reason why you don’t see this embraced. Now, in companies, you’ve seen that, certainly in many companies over the last 15 years, you’ve seen companies try to embrace the systematic practice of innovation. I’m not saying they all do it well, but they at least understand they should do it well. I don’t think we see that here in government yet.

John Kao: Well, companies, private sector enterprises are under the pressure of surviving, and if they don’t get it right, they’re not going to survive. And as we know the circulation in and out of the Fortune 500 is highly Darwinian, and being in the Fortune 500 or the Fortune 50 is no guarantee of sustained success. Whereas governments, I think have mechanisms for sustaining themselves over a longer period of time. I think implicit in what you said, Rob, is this notion that a lot of senior people, they want to be seen as leading innovation, but they don’t necessarily have the capacity or the desire to do it in an expanded way because to do it an expanded way is messy. So if somebody comes in and presents you with a checklist and you can say, “Oh, R&D, NSF, product development funnel, et cetera. Boy, that tracks with the literature and I’m done,” it just leaves a tremendous amount out. And even some of the rubrics that are being advanced now in the name of innovation fall back, I think on that nostalgia of innovation as R&D as an expansion of the National Science Foundation’s remit and so forth and so on. And that’s not going to get us to the promised land.

Rob Atkinson: Yeah. We wrote a nice report a few years ago, early on when the Trump administration had made initial moves or foray into this Office of American Innovation, which really unfortunately underperformed. It was a good idea. But one of the things we did is we looked at the mission statement of virtually every single federal agency, including things like the Federal Reserve Bank and the National Economic Council and agencies, none of them have the word innovation in their mission statement. It’s just not even there. And I know mission statements are sometimes not all that meaningful, but that tells you something in my view.

John Kao: Well, if you are not talking about it, then how can you possibly do it? Actually, it’s funny, I thought you were going to say the opposite, which is they all had innovation in there, but weren’t doing it. Or it was like a Shibboleth that they were acknowledging, but not anything that was actionable. I think it amounts to kind of the same thing.

But, it speaks also to the nature of government bureaucracy, which I think I referenced earlier, as one person said to me, “It’s the preservation of continuity in the face of idiocy.” It’s the ability to sustain, and often for its own sake. And that would be okay if we lived in a time of relative stability, where we could incrementally innovate and we had the luxury of a certain pace of events, but we’re in this whirlpool of disruption, where many of the fundamental pillars of society, like what are we going to do about healthcare, education, the environment, national security, face radical discontinuities that require a very different way of engaging with these issues and require a host of different proficiencies at the leadership level.

One of the things that I’ve been doing recently is trying to imagine what a refreshed view of leadership of innovation to navigate towards desired outcomes would look like. And a lot of people in government have innovation fatigue or innovation cynicism. So I’ve been talking, rather about the importance of understanding your context, understanding the principles by which you operate, understanding your ability to behave in terms of emotional intelligence and cultivation of talent, your ability to really exhibit a sophisticated view of innovation, your technological literacy and your ability to orchestrate transformation. And I think if you have those things, you have an innovation tool set. And if you don’t have those things, you don’t. So we tend to reify innovation as this esoteric discipline that we can chip away at. But I think it gets down to some more fundamental meat and potatoes about how leaders need to engage with the overall agenda.

Rob Atkinson: Yeah. It sometimes gets mystified like, “Ooh, innovation.” And it’s a practice, as you have written about, and others have as well. One thing, John, you mentioned, companies can go bankrupt. They’re always under the sword of Damocles if they’re smart, because they know they are, because the reality is their. Countries are in the same way, it’s just that the sword just slowly, slowly, slowly drops, and eventually we realize, “Oh yeah, the Chinese are ahead of us,” or, “We’re bankrupt,” or, “We have a massive public health challenge,” or whatever it might be.

And the issue I see is one of the big differences between companies and the government is the companies, basically they only have one mission, which is to help innovate in their organization. That’s their mission. That’s fine. But the government looks at innovation the same way. “I’m in the Department of Transportation. How do I innovate in the Department of Transportation,” or, “in the Department of Interior?” And I always complained that the CIO’s role or the CTO’s role in the White House has always been looked at too narrowly. In my view, they should be innovation stewards in that particular area. How do we enable innovation in the transportation system, writ large, or in the land system, writ large, or in the health system, writ large? Do you have any thoughts on that? Is that right? And how do you do it?

John Kao: Well, I think it gets back to this notion of bureaucracy as specialization and silos. And so you have a Department of Transportation to extend your argument that focuses really on transportation, and their chief innovation officer, to the extent they have one, has limited opportunities to do horizontal linkages to other elements of the federal government, and indeed NGOs and civil society that have a stake in this as well. And I think this speaks to the notion that the issues we’re dealing with these days are no longer neatly compartmentalize, but they have blurry boundaries, they’re mashed up, and they’re interconnected. So you can’t, for instance, look at policy around broadband, just as, “We need more broadband,” but how it touches healthcare, how it touches education, how it touches national security, how it touches privacy policy and civics. These are all important issues.

So, it used to be that talking about interdisciplinary or cross-functional committees was almost a dirty word in the corporate sector because it spoke to a lack of focus or a weak response to complicated issues. But I think these days we need a new model of collaboration that is in fact, about these horizontal connections and that forces government to be almost like a matrix organization where, yes, we’re the Department of Transformation, so we have our functional responsibility. But we also have a horizontal responsibility to driving innovation in our government and our nation as a whole. So we have dual responsibilities and our responsibility in the innovation sector, as stewards is to be as sophisticated as possible and as interconnected as possible, so that the wickedness of these various problems we’re talking about can be addressed in a much more effective way.

Rob Atkinson: Yeah. That would be great advice. I think hopefully the Biden team would take that to heart because I really haven’t seen an administration organize itself around that principle to date.

John Kao: And also, the government is filled with mahogany tables, where people file in and they have these relatively short, almost ceremonial meetings. You see this in hearings on Capitol Hill all the time, where they pull in experts to talk about the future of social media. And really, you’d scarcely call them brainstorming sessions or ideation sessions or problem-solving sessions. They’re almost theatrical in nature, and they don’t exhibit much in the way of facilitation acumen or a desire to really use the opportunity of assembling divergent viewpoints to come up with something different. So you would wish for a model of facilitation and a model of collaboration that, at the appropriate time, would allow for much deeper exploration of these important issues, and thrash them out almost in a spirit of humility and open-mindedness, which we could all wish for.

Jackie Whisman: That’s a good joke. Humility and open-mindedness. Let’s hope for it though.

John Kao: Well, we can always hope. And the other thing is that change often happens when something bad happens, and we talk about the Sputnik moment. And we’re heading into an era of history where the United States is going to experience multiple Sputnik moments on different levels. So the question is whether that can be used to galvanize the sense of urgency, which in turn will drive change and on a timely basis. It’s so evident that our vulnerabilities in various areas, the affordability of our healthcare system, the asymmetric response to our core competencies in national defense, our increasingly small return on investment for our efforts in public education. These are all the existential problems that really need fresh thinking.

Jackie Whisman: Well, I wanted to end with a fun question that we ask a lot of our guests. What is the technology you’re most excited about right now?

John Kao: Well, I thought they were all fun questions, by the way.

Jackie Whisman: Oh, good.

John Kao: But I think the general infusion of artificial intelligence into the fabric of our lives is, I think going to be the most visible and exciting area to explore. And I pull out one specific example. As natural language processing and all of the embodiments of data science become ever more robust, the barriers of language are going to fall away in the sense that we’ll be able to have live conversations with people from many different language families, but there will be universal translation. So what used to be cultural barriers and enclaves with exclusivity and lack of transparency and so on, is going to give way to a world in which everyone can talk with everyone else. And if we believe that innovation comes from diversity, and diversity of perspective, that alone I think is going to be a real accelerant to the proliferation of ideas.

But you can see that everywhere in terms of the transformation of personal healthcare, managing our own data, so that we’re not going in once a year for a blood test, but we’re having 24 by 7 monitoring of endocrine and cardiovascular function, that leads to algorithms that make more profound recommendations in terms of modifications of our activities and our lifestyle and things of this kind. So I think it’s when AI and data science really come down to the level of human needs that we’re going to have a different world.

Rob Atkinson: So, John, I have a question for you. Why do you want to destroy translator jobs and put them out of work? I think we should oppose these technologies, because these are good translator jobs?

Jackie Whisman: He’s kidding, everyone.

John Kao: Well it’s not an either or. I think if you look at it as a tier of translation capabilities, you wouldn’t want an AI to translate for you in a diplomatic negotiation or a sensitive activity. So it opens up the door for translators to up the level of their game and add new capabilities, facilitation skills, emotional intelligence training, and so on, and become intermediaries.

Rob Atkinson: Yeah. I was joking, only in the sense of what you see today though, is that oftentimes when anybody talks about a new technology like that, you automatically hear the bad part like, “Oh, we’re going to lose jobs.” I read some article recently about telephone operators who’ve lost their jobs. They got new jobs. That’s going to happen here.

John Kao: Change always has a cost.

Rob Atkinson: And bigger benefits.

John Kao: And bigger benefits. Exactly.

Rob Atkinson: Well, John, thank you so much for being here. Great conversation, as always. Look forward to more of them.

John Kao: A pleasure, Rob. Anytime.

Jackie Whisman: And that’s it for this week. If you liked it, please be sure to rate us and subscribe, feel free to email show ideas or questions to [email protected]. You can find the show notes and sign up for our weekly email newsletter on our website itif.org, and follow us on Twitter, Facebook and LinkedIn @ITIFdc.

Rob Atkinson: There’ll be more episodes and great guests lined up. New episodes will drop every other Monday, so we hope you’ll continue to tune in.

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Podcast: The Importance of Being Wise Stewards of National Innovation Capacity, With John Kao