Individual Change Agents Are Responsible for Innovation, Not Institutions

Thurow ¢ Institutions always have vested interests. Big companies may invent a new technology and then not be able to use it. For example, the cellular telephone was invented by AT&T, which owned the copper wire system. They thought the cellular telephones had no future. Revolutionary changes blow up institutions and so the institutions resist them. Someone starting from ground zero has a better chance to innovate.

The key thing to being an entrepreneur and having an entrepreneurial environment in business, government, and NGOs is the willingness to tolerate failure. In the U.S., in venture capital supported companies, nine out of 10 companies will go out of business within five years . Since the probability of failure is about 90%, you have to have a fall-back position. The individual should feel confident he can get another job or he can get financing to start another business in a different area. The best, most successful entrepreneurs, are most likely to succeed on their third try ” because they learned something in the first two failures.

If you are in an institution, failure has bad personal consequences. And that is why most institutions have difficulty innovating . A venture capitalist will fund somebody who fails more than once. Historically, big institutions have shown that they will not trust somebody who has failed more than once.

American universities are very tolerant of professors going off and trying to start businesses. They might fail, and then come back to being a professor . Or they may run a successful business and still be part of the university. A great example is Dr. Amar Bose of Bose Corp. (one of the top selling premium sound systems companies), who also teaches acoustics at MIT. In many places that is just not allowed.

Attali ¢ We have many entrepreneurs in France who belong to a decentralized new elite. This new elite is made up of leaders of growing and mature start-ups, venture funds, and city government. There are now mayors and heads of regional entities who are taking risks and encouraging their universities to create new companies. The new local elites will create something out of the blue, like a New Middle Ages.

The bureaucracies can only create the conditions for the non-bureaucrats to create the companies. I initiated the Eureka project in 1985. This program provides a match for the university and industry. If you have a joint program between a research center and a company, we in the bureaucracy will fund this program. If you take risks, we will take risks with you. Eureka has been at the source of genome mapping.

The only field where the bureaucracy may not take initiative is with e- governments , because this can transform government, and bureaucrats may not want to give up power.

CRM (customer relationship management) is a dictatorship of the consumer, which transforms drastically the organization of business. Instead of customer relationship management, we need citizen relationship management, where citizens through the new technologies could direct what they want, to find out about their rights or financing for their rights, and to be informed rapidly . Then a huge transformation would happen.