Innovative Cities

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Innovative Cities

James Taylor  0:00  

I'm James Taylor and you're listening to the super creativity podcast a show dedicated to inspiring creative minds like yours. Professor Dan Breznitz is known worldwide as an expert on rapid innovation-based industries and their globalization as well as pioneering research on the distributional impact of innovation policies. He is a university professor and Munk Chair of innovation studies in the Munk School of Global Affairs and public policy where the cross-appointment in the Department of Political Science of the University of Toronto, where he is also the CO director of the innovation policy lab. In addition, he is a fellow of the Canadian Institute for Advanced Research, where he co-founded and co-directs the program on innovation, equity, and the future of prosperity. In today's episode, I'm going to talk with Dan resonance about his latest book innovation in real places, strategies for prosperity in an unforgiving world, and the lessons that leaders, politicians, and policymakers can learn from innovative places as diverse as Shenzhen and China. Brenta in Italy, and Tel Aviv in Israel, enjoy the show. So Dan, great to have you here with us today, I've just been loving reading the book, I've just finished it recently. And it's called innovation in real places. I find it a very hopeful book, it's a book on innovation for all those countries and communities that don't have the word silicon at the start of them. So what was your motivation for writing the book?

Innovation In Real Places

Dan Breznitz  1:23  

Well, first, I'm glad that you find it helpful. Because I think it is a hopeful message with unlike what I've been told constantly, we have more choices than ever before, if we know how to take, and that's where we're, if it's right, it's harder to take them, but you have more choices. I started trying the book because I've become very, very angry and very, very frustrated, right? I've been working on innovation policy and economic growth, and innovation in inequality for sadly, I should say years now, right. And I found the debate, and especially with public debate and the way policymakers are thinking about it to be wrong. And that's the the the the nice way, right, the politically correct way of saying it, I find it to be completely out of whack with reality will be a better description on almost everything, right? That we have to do with innovation from the myth about what is innovation, and why we want to have it to how it then create human welfare, increase human welfare and growth, to how it works in our current global system of production, to various other things, you know, in the index of a book, like how finance work, how our intellectual property rights work, all those things. And I said, then the other horrible thing that I blame myself as well, you know, we have a lot, we have unbelievably rich research done on those questions for last 2030 years, by multiple people, including myself, and we have all done the same mistakes, we write the research. And then we say, Hey, here's our research, we never actually says, Okay, if this is the research, what does it mean, for people who want to do things want to improve their community? And especially what does it mean to any person who is not ideal, you know, President of the United States that can change over, you know, global governance, supposedly, but you know, the mayor of Birmingham, so the mayor of Birmingham wants to develop or Glasgow wants to have a prosperous community for All Blacks going here. Right? What do we tell him that she should do? And the answer is almost nothing. Right? We let the field run by either myths or consultants. So I wrote this book. And I'm not from the point of view and academic trying to prove my theories. But what all of us research means for people like the mayor of Birmingham, Glasgow, Hamilton, Canada, maybe Scotland, right, but not above.

James Taylor  4:25  

I mean, when when I think one of the great things you do in the book is you, you lay out a different kind of way of thinking about innovation. And you kind of talk about these four different stages, I think, I think this is very useful for public policymakers in thinking about this and for people, that kind of maybe are agents and change in different ways. But before we kind of get into these four stages, I think it's such a key part of your book, and then you can have use different examples of different countries’ cities and how they apply that in different organizations. It might be useful for our audience. We have a mixture of the audience here, some people Coming more from the maybe coming from a design like creativity side, or the folks coming more from the traditional innovation or the academic side. So it's something very early on in the book, as you talk about it can have definitions. So can you just give us your perspective as your is maybe slightly different from other people's perspective? First of all, the difference between what we sometimes think of as an invention and innovation? And also, how can you define innovation for us in what you're doing?

Invention And Innovation

Dan Breznitz  5:30  

Sure. So first of all, and that's I think the first myth, right, that I try to debunk in this book is what is innovation? And what is it not? innovation is not an invention, okay? So invention is you and I sit in a lab, and we come up with an unbelievably new technology that is going to maybe revolutionize medicine. Great, excellent. That's the invention. For it to become innovative, you need to well actualize it in reality, to make it into products and services. Otherwise, who cares? Right? It's lovely, that somebody from the University of the Glasgow University of Toronto has the best amount of publications and even patents, if that does not translate to products and services, it doesn't help any other human being. And that's innovation. It's the act of taking ideas and making them into products, but it's not just you know, completely new products to a world. That's what you refer to as stage one. It is all through the chain, if you will, of making products and services from new inventions to improving them to recombining them, to figuring out ways how to make them better, to figuring out a way how to distribute them better, how to sell them better, how to maintain them better. And we have a wonderful example now. And it's called vaccines and COVID vaccines. It's wonderful that we came up with a new invention called mRNA. And it's even was beautiful to molecular. So it seems to be working very well, well created, basically, within 72 hours after, you know, those people got the genome. For COVID, to be solved, we know how to figure out how to make those vaccines in the billions. And now we know every six months, distribute them to all the people in the world. And to solve that it's not enough to come from molecular, we have to solve how to produce them into the billions we have to solve material science problem of specific last. And then we have to solve distribution problems, how to get to the people needed. And with all due respect to you and me, it's not you and me, we have lovely homes, we can stay there for six months. And that's the real impact of innovation. Think about the fact that you and I are talking on zoom. 30 years ago, even 15 years ago, it will be a ridiculously expensive thing. Now we don't even think about it. And the reason is, yeah, it's good late at somebody invented the CPU and the fiber optic. But then there were millions every year of engineering hours, that made those things so better, and so much cheaper. But now everybody can use zoom and not even think about it. And that's when you know, you have an impact. Okay.

James Taylor  8:40  

But you just reminded me to talk about the zoom example, which we're speaking about today. I was doing a talk the other day with Baillargeon. In Canada, where you're based, and we were talking about the obviously Alexander Graham Bell Telephone. And immediately after you design the telephone, someone probably said to him, do you want to be great with this? Can we add some video, like some image imagery just so because he and I, there's a great picture, people go and check the icon iPhone, I think it was the name of the device from the 1920s like what we do, we're doing just now in a video on zoom. It was kind of a very early version of that. So this kind of leads into my next question on this, which was in the book, I think one of the most outstanding parts of the part that I'm going to probably talk to other people about and have them and my thinking as well changed is these four stages. Because often when we think of innovation, we think of those, like the startup nations of this world, or the Silicon Valleys or that kind of places. But you did, I think, do an amazing job of laying out a different way for us to think about innovation. So can you talk about basically what these four different stages aren't and then we can drill into each of those.

Stages Of Innovation

Dan Breznitz  9:51  

So let's talk about those four stages. And I think you also mentioned something which we'll talk about later, but that is that our obsession with Silicon Valley, we forgot that this is probably the worst model that you can have in terms of inequality. So even if you're successful, and you turn your Glasgow Hamilton into a mini Silicon Valley, you also have created a society that has levels of inequality not seen since the 20s. Just so you all know, right? It's okay to do it. But we should be aware of stages let's, let's make it more concrete. And think about semiconductor and industry I did a lot of research about but now everybody knows because we cannot produce cars or anything else. After all, we don't have. Right. So semiconductors, if you think about countries that have successful semiconductor industries. So you mentioned startup nations, Israel, Silicon Valley, Korea cell, Taiwan, Taipei, in China, all of them have unbelievably successful semiconductor industries, in many of them the same companies work. However, now when we look not just at the industry in the companies, but what happened in each look call, you will see that even those companies, and definitely over our companies are doing something completely different. So in Israel, they come and Silicon Valley, we come up with new ideas, basically to put on silica. And then they send those basic prints and soft pieces of software to Taiwan, where they innovate, and they know how to take those ideas and make them into real silicon. This is exactly so stage two, which is exactly the problem we have now. And that is the US and actually, almost all the world apart from Taiwan forgot how to innovate and fabricate new chips. So now we don't have them right. In Korea, we decided something else altogether, they're looking at and controlling specific niches like memory, or the touchscreens that we use an indeed you look at every smartphone that we buy in the West, and after the brand name, let's say Apple, Samsung will have the second-highest profits. And then you look at the place, okay, we have 10s of 1000s of components, constantly changing materials, and we need to somehow put them all into something which is this size, maybe even smaller, with cameras and overthink the work and be in a price you and I can pay. And the place will know how to make it happen. No aim to make it happen in Shenzhen in China. And indeed, almost every smartphone producer on earth visited those places we just talked about as it was doing, let's say each travel into becoming a real product. So you have stage one, novel innovation, stage two, component innovation, second-generation innovation. Stage Three is innovation in the production itself. And stage four is what we think about as assemblies doing everything, putting everything

James Taylor  13:13  

together. So another big theme in your book is whichever surprised it's not the usual topic we hear. I mean, there's a name, I've suddenly forgotten. economists think she's Canadian or American constantly lives in England Italian Mariana Mazzuca starts to talk about this in terms of the inequality part of the community part. And that's something else you bring into the book as well. So somebody and someone who used to live in the Silicon Valley area, in that stage one, where we often think of the world of kind of VCs or Silicon Valley, you show how that model leads can lead to inequality and strangely low growth for some places that looked to copy that model.

Dan Breznitz  14:03  

Yeah, so the one thing that changed right, as it created those stages, if you will, and it is the way we do mobilization now, right? We have fragmented this, all of our activity used to happen, maybe in one company, but definitely in one place, right? Silicon Valley was called Silicon Valley, not because it had Google, but because it produced silicon. What we have now is its stages specialize, as I said, not just in one industry, but in one stage. When you look at that one stage, you need to ask yourself two questions, who is employed, and how many, and how the fruits of success, profits, and overdressed are being distributed. What happened in Silicon Valley, especially after the.com bubble is that he got extremely aggressive in just that stage one. So And even worse, if you want to be cynical, and you look, for example, at Tel Aviv startup nation, that's really what it is. The industry is not an industry of creating new products and services, the industry is of creating small companies and selling them as quickly as possible for the highest price. So you have a VC, and a VC is, for them to make money, they need financial exit, preferably within five years. So you have a whole model, which is on steroids, looking for the fastest, and the biggest financial exits, okay? That's really how it works. When people make money. Everything else is secondary. Now, who is involved in that the elite nerds, as I call them, the Geek elites, right, a graduate of in Silicon Valley of EMI, M, MIT, Stanford, Berkeley, other top universities? So people, you know, we shouldn't worry about verifying unclear. And maybe if you are celebrity chefs, right? Those people not only get unbelievable wages, and do not create any jobs for anyone else, in terms of good jobs, right, not service jobs. And we also now give him lottery tickets, which are called you know, stock options or stock. So when there is a financial exit, they become rich, we can become a billionaire. That's about 10, if you want to be, you know, really large 15% of the population. And as I said, the top of the top, the other 85% are now stuck in an economy with really no career path and no good jobs, because their skills are not needed unless they know how to, you know, clean and cook. in Silicon Valley, we've seen the results. This is even more on steroids when you go abroad, I mean, outside the US, because the main financial markets where that financial exit happens, and many times the investor themselves, like in Tel Aviv are foreign. So even those profits are now when there is a financial exit are taking away from Tel Aviv. And moving back to the US. So the Israeli economy as a whole does not even get those profits, right, they get a trickle, like 15% of those profits, and no jobs. And the results are very clear. Israel moved from being one of the ugliest terian let's call it Western democracies to now one of the most, maybe the second most, in eco with one out of every five households under the poverty line of OECD, meaning that one of every five families in Israel does not have enough food, money to buy food for the whole month. And that's, that's the lovely things of startup nation. So the question is, are other models, creating better outcomes in terms of who is employed, who have good jobs, and how those profits are destroyed?

James Taylor  18:06  

Before we can get into some of the other stages, the other models? So I guess now knowing what we know, now, policymakers, governments, they can make a decision, okay, we're willing to do that and go that that requires a certain kind of things, but the outcome of that will be high levels of inequality. And they might still want to go for that for you. So I mean, I look at, for example, in Israel, Mecca, the population of Israel is it's 6 million, or how many

Dan Breznitz  18:32  

Muslim? Well, depends on how you count. But let's say about eight, okay, but

 

James Taylor  18:37  

8 million, and then Scotland, where I'm joining us today is about 5 million or something. And often, policymakers in Scotland look to Silicon Valley as the place and it's that's if you want that model, that's not the best place to be looking you probably better looking Israel as an example if that's the model that you want to go for. But something that in each chapter, I think you're very fair in each of the chapters, could you lay out different stages? You don't say, one stage is like, here are all the bad things about that stage or the good thing. But you’re pretty even-handed I would say maybe you're a little bit anti-VC. But in the book, if people read it, they'll understand why that's the case. But one thing that Israel did seem to do, which was pretty smart. And pretty early on, was this Office of the Chief Scientist. That seemed to be a bit of a that was a bit of a kind of game-changer in that. Can you talk about that? Because I think that's maybe something other companies if they want to go debt countries and want to go down this route, is a quite an important component.

Innovation Authority

Dan Breznitz  19:32  

Sure. And by the way, I would argue that other countries, so we, the solution that Israel had was to create a dedicated agency called the Office of Chief Scientist, it's now called the Israeli innovation authority, which is so mission back then, was maximizing r&d in the economy. Remember, it was a closed world, not a global world, and that If you do that the positive spillovers, rights will be distributed for the economy. So the focus needs to be on maximizing r&d. And that was operationalized by companies that do r&d to create new exportable products and services, okay. And then they try to fix this right? Over 20 or 30 years, every year, with new policies figure out what to do scaling up what or killing up what didn't work. Which was a complete game-changer, because when it started, Israel had 800, and something, people with any kind of academic education doing any kind of r&d in the whole private sector, which I can tell you, and since you've been in those places, as well, some classes in modern universities have in one classroom before COVID more people. So it was a game-changer. And it took about a generation to see it right, the agency started in the early 70s, to act. And by the mid-90s, you see the impact. And indeed, if you look around the world, also in the case of Finland and Citra. And other you see that the creation was agencies, which don't just come up with policies, but are giving a very specific Mission Innovation mission, and then enough budget to play with it. But not so much budget that they become just a regular agency, do the trick. And it does the trick. And policy became very, very important also in places that went to other states. So you cannot talk about Taiwan, for example, without understanding eatery, which was vair solution to the same problem but they were solution was like a public research institute very much like Germany, France.

James Taylor  22:04  

I'm James Taylor business, creativity, and innovation keynote speaker and this is the super creativity podcast. If you enjoy listening to conversations with creative thinkers, innovators, entrepreneurs, artists, authors, educators, or performers, then you've certainly come to the right place. Each week we discuss their ideas, life, work, successes, failures, creative process, and much much more. You'll find show notes for today's episode, as well as free creativity training at JamesTaylor.me. If you're enjoying learning about down business, then check out my interview with Professor Roger Kneebone, where we discuss why experts matter and how to develop mastery in your chosen profession. Hear my conversation with Professor Roger Kneebone at JamesTaylor.me. After the break, we returned to my interview with Dan resonance, where we discuss the benefits of innovation. This week's episode is sponsored by SpeakersU the online community for international speakers, SpeakersU helps you launch grow and monetize your speaking business faster than you thought possible. If you want to share your message as a highly paid speaker, then SpeakersU will teach you how just go to SpeakersU.com to access their free speaker business training, they will also go out for a different stage as well in the innovation process. They weren't so focused on things. And, you know, you talk about Canada in the in, in the book as well. And it seems to have like so many of the components, great universities, really highly skilled people, finance places like Toronto. But it just seems to be the laggard in that. And so in the book, you kind of talk about why you believe that Canada is not reaching the potential that it could be reaching.

Dan Breznitz  23:41  

So Canada, it's sad to say, but if you look at the public policy, right, and the amount of money we put on innovation, public spending on r&d is not bad at all. It's not the best in the world. But it's not bad now. And it has been slightly moving up. When you look at business r&d. And it's constantly going down, it's no less intense in Poland. So the worse of a worse in OECD. So if you think about policy, as you say, I spend more money, but every year I get less matching from the private industry, you should conclude that your policy is wrong.

James Taylor  24:28  

So we should be paying more attention almost not to the top-line figure of what percentage of GDP as a country spending on r&d. But how is that breaking down between the public sector and in progress? Absolutely.

Dan Breznitz  24:38  

Which by the way, is one thing we haven't talked about, and that's another problem and why I wrote the book. If you think about innovation, the way we just talked about you quickly realize that there are only two agents of innovation in the economy. And those are companies and individuals which we tend to call entrepreneurs, everything else VCs accelerators. Universities are complementary institutions. But if your companies and entrepreneurs are not going to innovate, no one else will innovate. I mean, I love my university. We're a great university. But we are not the innovator in the Canadian system. So we can be the best university in the world. And England just next door to you have Oxford and Cambridge supposedly to have the best of the best. And they are not innovators. So if if you don't have a system that translates all that into and changes your behavior of companies and individuals to innovate, you're failing no matter how much we see, you have many patents. That doesn't matter unless it's action in the economy by companies and individuals.

James Taylor  25:49  

And then in the second stage, we can move into using different cities, different places to explain these different stages. And so you can like say, you know, what people think a VC is is the tech, it and biotech really, and it kind of like gives us this weird picture of what innovation is. But then you talk about the second stage, and then the third and fourth, and it's all these companies, many have never heard of doing like phenomenal, amazing work, but in a slightly different way when we think about innovation. So one of the areas, an area I love Italy at home there is brenta Bremner. And so they're in what you call the stage to innovation. So can you tell me about how they did because we many people they hear like innovation, they instantly think of tech? But this is not that it's a different thing. And it came out from a slightly different challenge that they were having as well. Sure so.

Dan Breznitz  26:44  

But wait one-hour thing, I don't know if you want to talk about it. But other places like Glasgow should know it's almost impossible to create another Silicon Valley in the world when you already have a Silicon Valley. So just as an aside brenta if this is an industry as far away from Tech as possible, this is luxury woman shoes. And when I'm saying luxury, I'm saying the top end right. shoes that will start that few 100 euros, and we'll move to a few 1000. But basically, every one of us shoes with you buying no matter what the brand is, in the end, have visited has visited Brent at some point, because Brenda has become for shoes, what Taiwan and tsmc have become for semiconductors. So if I'm a designer in Milano, I'm a designer in New York and designer Terry, and I come up with a new idea for a shoe. And I want that idea to become a shoe. I go to Brent. And in Brenta, we have people who then figure out how this unlike what you see, in reality, TV show, you know, the shoe come up in 24 when you want a shoe with a woman will buy and will wear especially if they you know pay 1000s of euros, you want the shoe to you ruin needs to put her leg in the shoe and actually walk and preferably not just half an hour as the shoe breaks down. So you need to then take this design and figure out how you make it into a real shoe with what kind of equipment, what kind of materials, and how you can do that in a certain price range. Right? The people who know how to do that are people in Brent. And the reason they know how to do that is brenta had for years. And when I say yours is this is since the Venetian Republic have a place in which we made sure, but for a very, very long while it was nameless shoe production low end

James Taylor  28:56  

the OEM or you may think is yes.

 

Dan Breznitz  29:00  

And then actually, unlike what happened in Israel or Taiwan, local business leaders say okay, the world is changing. We see East in Eastern Europe coming we see East Asia coming, we have no future unless we figure out what to do. And they started to go to the fashion houses in Paris and Milano and start to figure out what they need, right? In order. And what when Brenta can supply them that nobody else does. And figure out of this stage right? I'm a great designer. That does not mean that I know how to make shoes. So we will do that for you. Give me your design, and I can make you a shoe out of it. And then produce this shoe you know few 1000 times. Which tells you something about what you need to do in this world. It's not enough to just have this vision and this industry, you have to figure out how you tie yourself into the global industry, both, as I just described, to understand the needs and the trends, but also for the global industry, you'll know that you exist and start buying that stuff from.

James Taylor  30:19  

And I can put it on that you also mentioned the book was the financing piece because unlike Silicon Valley, where you have VCs on Sand Hill Road, they had to do something a little bit different in Italy because they didn't have that same financial setup,

Dan Breznitz  30:32  

not just the same financial setup, but when you talk about companies, but what they do is they take those designs and they build truth out of them. You're not talking about, you're talking about the company that if it's successful goes up, which is wonderful growth rates of 20 60% a year right? over 20 years, stable, high profits,

James Taylor  30:55  

no, no money for the VCs, no money for the

Dan Breznitz  30:59  

money for the VCs, and not this, john, you also talk about smaller companies, and the owners don't want equity, right? Because we don't want a financial exit, we want to have a growing business. So you have to find figure different ways of financing usually debt, and you have to figure out how those institutions know, wherever, you know, to give Alberto money because Alberto and his friends actually can deliver. But you know, you and I, yeah, we claim were deliver. But you know, we are a professor and podcaster maybe we don't know how to make shoes, right. And that's a completely different way of how you give finance, how you use finance, and how finances make a profit on their phones.

Differences When It Comes To The Innovation Process.

James Taylor  31:47  

And then one of the other models you talk about stages is this kind of stage three, then going into stage four, as well, which the first kind of look at the definitely I feel like the less sexy side of innovation, but almost feels like this is the most exciting in some ways as well. Because there are so many different ways of doing it. There's a lot of new places, it feels like there's a lot of potential for Newark, New cities in your country, your communities to go there. You one thing I think would be kind of juxtaposing two places. One is Detroit in Michigan, I kind of like what happened there and innovation with cars. And there but the other one is Shenzhen, in China, different completely worlds apart different, separated by 100 years or whatever. But there are some things kind of going on with some similarities, but also some differences when it comes to the innovation process.

Dan Breznitz  32:39  

Absolutely. And and and even before that, I'll just want to give one more example of stage three, before we go to stage four. Think about your bicycles. D is bicycles.

James Taylor  32:51  

Yeah, they love cycling. Great cyclist,

Dan Breznitz  32:53  

right. So two things probably happen. If you look at your bike, you'll see the name Shimano, for over, and that's a company from Japan, which is focused intensely on innovation and power transmission, and have become the Intel over Microsoft of you cannot buy a good bike without shining which produced by way, a huge amount of profits and jobs for people who are not. Some of them are r&d engineers, right. But many are not different skill levels. And the other is if you love cycling, you probably realize within the last 2030 years, I mean, you have bikes, especially mountain bikes, which I like strong, and people like you and me, and even older people can now do mountain biking Well, when I was young mountain bike will be something that you need to be a semi-professional athlete to even you know, lift. And that's from a different company, we stand in Taiwan, with, again, focus solely on material science innovation to produce new kinds of frames, carbon fiber frames, and once we figure this out, we could completely revolutionize the bicycle industry. And you know, the design of bikes is about 100 150 years old, right? The diamond and the two wheels. And yet those companies even when you have China and India and all those places come to offer cheap bikes, making billions of dollars a year, year after year for several decades, if not more, probably are doing better than ever producing a lot of good jobs. So that's one

James Taylor  34:38  

that's like the kind of almost now we're moving from what you think was the big bang tail innovations at the start now to this kind of more incremental style, constantly adjusting, constantly improving thinking about new material, new ways of doing things, new processes as well. If that feels like almost in some ways, it feels harder. It's kind of that you know the aggregation of 1% Mark gains is more in that world.

Dan Breznitz  35:02  

It's much harder. And it's especially harder. And that's why we're in Taiwan, the government was so important eatery, because a lot of us manufacturing companies, even if they know that, if you're given a new material, they can do stuff. They don't have people to do the r&d. They don't know how to do this r&d. And sometimes they don't have the financial resources, especially in the beginning to do this r&d. And you need to figure out a way that public and private venture can together, do the r&d, the private sort of figure out or tell you where the r&d should happen. But the public helping makes the r&d happen and then diffusing instead of leaving it you know, in patents and papers, diffuse the r&d and the capability to then start and do this concept innovation.

James Taylor  35:51  

It's more like moment more kind of what we think is maybe a patient more patient capsule in longer.

Dan Breznitz  35:56  

or Germany has been very good at doing that with

James Taylor  36:01  

metal, style metal, the middle-sized companies.

Dan Breznitz  36:04  

Yeah, and people talk about the Fraunhofer institutions in doing that for multiple different industries. And now let's talk about Kim Jeong and Detroit. So but let's talk since you called me an optimist. Let's talk about the optimistic story. So let's talk about ginger. So, children when children, men, China opened up in the 80s, Ginger was a very, very poor, if not the, one of the poorest places in China, fishing village, with two people who claim that they're engineers about 100 and something yards of roads. It is right now, one of the biggest and very richest cities in China. Even more importantly, if you stop for a moment, and have those dreams of Beijing and Shanghai, instead say we're the most innovative Chinese companies with the western economies and companies are either afraid or respect. Huawei, ZTE, btw, DJI drones, and a 10 cent, all of them come from Schengen. And what is interesting, because I just described the village, there has been no great university essentially, not even great public research institution. Instead, what Schengen has done is they came up from the actual boring assembly. You know, for years, people thought that this is just a place of sweatshops. And real innovation happened in Beijing.

James Taylor  37:44  

I'm sure your fellow academics must have been wondering about you your sanity, going to Shenzhen, looking for innovation, like what you're doing going there, that's just they just assemble things they don't there's no innovation kind of going on there. Surely,

Dan Breznitz  37:56  

not only there, but they can also tell your stories with the people of Hong Kong, when we started doing that in early 2009, at the end of the 90s had this plan that the only thing which Japan can do is produce their stuff over because we're just not sophisticated. Instead, what the chin Jennings has done and the cities around it, like Don Juan, is figure out how to produce stuff, and then figure out how to do constant innovation in the production and stuff and in how you map the supply chain. So how do you create a system an ecosystem of suppliers that together can do innovation extremely quickly, in one place? So around two hours, if you need almost any component for a smartphone Now, within two or three hours of congestion in the one you can get all those components.

James Taylor  38:53  

And this makes it very difficult for I guess for Vietnam somewhat a low even lower-cost place to because, in Shenzhen, that person that boss of that factory can just call up, and the part is delivered in an hour or something. Whereas in Vietnam, that other part is going to come maybe from another country.

Dan Breznitz  39:12  

Also in our places in China. And even more importantly, what they have is knowledge. So they have production engineers who can figure out how to do that. They know how things are produced. And then they can figure out innovation based on them to specific niches. Right? It's not a surprise that the most successful Chinese smartphone companies came not only from Shenzhen but basically from what we used to call pirate phones. They figure out to make phones, they figure out how they can make smartphones, they because they have this ecosystem know that they can get this same material as Apple or Samsung, and the same supplier service and quality and they figured out how to create We make our smartphones, with innovation on the level that they can do. So not new software, not new, you know, operation system. But phones that work very well for factory workers versus office workers, phones that make you feel you're a cool teenager versus, you know, old farts like us

James Taylor  40:24  

centric. So with that, I'm running going back to what we originally started with invention, invention versus innovation. What does invention what was something caught me recall, think about just creativity. What does it look like for those stage four organizations? Or stage four companies? Or does it is their invention? Or is it? Is it more of a kind of innovation?

Creativity And Innovation

Dan Breznitz  40:46  

So first of all, I have to say that all of those stages are, the successful companies in all those stages are unbelievably creative. It is, it is unfair to tell someone who figured out how to produce stuff in the world world, right. And actually, you know how to solve that problem. In the end, somebody has, it has to be a physical product, and somebody wants to buy it, and need to constantly do it cheaper and better. To claim that they're not creative is ups to the West. Okay. And it's not only a universe of the West when even a company like an apple and I talked about in the book wants to vent, move that stage back to the US, but it also finds out that it can't because the US have lost so much of what you need to be innovative in that stage. So

James Taylor  41:47  

So also can what we're looking at here a little bit is almost like a bit of a clone, post-colonialist kind of thing going on in terms of attitudes to innovation and creativity. And so I remember once reading, in terms of difference I was speaking at an event actually in Singapore, we were talking about the difference between what's sometimes perceived as is Western creativity, or Eastern creativity or invention. You might call it another way of thinking about it. But, one thing we were just discussing as we're in the West because we tend to come from a Judeo-Christian background. So the idea is like, the creation is that the world was created in seven days or you know, there's something it's just created out of nothing. Where the Asian system tends to come more from the confusion of the Buddhist background, where it's something that already exists is how it's remixed, remade, remolded rethought about and, and it's still creativity, but it's just coming from a slightly different perspective on creativity.

Dan Breznitz  42:38  

So that might be one, we also have to remember that 50 years ago, we claim that we are the best in the other kind of creativity, right? American manufacturing and, and Bible wave and Germans. I don't know if a non-Judeo Christian but they seem to be really, really good and exactly that creativity. So I think it's more of an institutional system, including finance, and what we glorify. So I remember Maurice Chang, who was the legendary CEO of tsmc, who was the president of the eatery before everything was spun off as a company. And people, you know, New York analysts asking how does he judge rate his profits, right return on assets within all those metrics that create incentives for American companies not to invest in capital, equipment, and production, because when they have an asset, so will metrics go down, and he looked at them very strangely. And he said, I usually just counted in billions of profits. And they just couldn't figure out his joke. And he tried to tell them is, to excel in my business, what you need to do is to produce billions of units with maybe low margin cost and margin profits. But I'm now in a business model where I know I'm going to produce 10s of billions of units a year, even if I just make $1 profit on each of those units. As long as I innovate enough to constantly make that $1 I will have every year 10s of billions of profit, or your companies might have profit margins of 500. But in the end, the real profit is, you know, two minutes.

James Taylor  44:34  

So it sounds like you know, if I was listening to this just now or watching this in, in maybe parts of sub-Saharan Africa or parts of Latin America, maybe that's a better model to be thinking about and you don't maybe get some so many of the inequalities that might come around from that. But I think the book is a fantastic book innovation in real places. Strategies for prosperity and an unforgiving world. So many great ways to think about innovation for policymakers for business owners. for academics, innovators, Dan, where is the best place for people to go to learn more about both the book but also some of your other words, your other writing your other academic work. So on the book,

Dan Breznitz  45:11  

unfortunately or not, unfortunately, everything in life now is on the internet thanks to COVID. So for, you know, you can do the Book Depository and Amazon, which is now the same thing, but you can also just go to a bookstore, your local bookstore, online or physically and ask for a book and look online for my talks around the book. My speaking engagement and come to one of them, I hope to start traveling to Europe to talk about the book in, in, in real life, not just through a screen. My other work is slightly more academic, but if you're especially if you're interested in questions of innovation, inequality, and not just, oh, it's awful, but what can we do about it? I have got a co-director of a CIFAR program, Canadian Institute for Advanced Research called innovation, equity in the future of prosperity, which is extremely, it's global. So people from all around the world and it's extremely multidisciplinary. We have lawyers, we have historians, we have engineers, we have people like me. So again, everything now is online, go to CIFAR and look for innovation equity in the future of the Spirit,

James Taylor  46:27  

fantasy, we'll put all those links down. resinous Thank you so much for coming on the show today talking about innovation in real places. Go we're gonna put all the links here, go and check out the book, fantastic book, and hopefully, we'll get a chance to share a stage in the future as well.

Dan Breznitz  46:41  

And then have a pint of

James Taylor  46:42  

Glasgow if possible. Cheers, cheers. You can subscribe to the super creativity podcast on Spotify, Apple Podcasts, or wherever you get your podcast while you're there. Please leave us a review. I would appreciate it. I'm James Taylor, and you've been listening to the super creativity podcast.

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