Whatever happened to Dedalus? (and, by the way, Icarus too)

The failure and opportunity of innovation in Greece

By George Zarkadakis

Many myths are born in Greece, one of which claims that Greeks rank amongst the cleverest people in the world. And yet, by examining Greece’s ranking in the Global Innovation Index[1] you would be hard-pressed not to disagree. The country was at place 42 last year, at the bottom of every other western European country, a fact reflected on the sobering absence of Greek high technology products and services from the world market. More disparagingly, when the crisis hit, the debate about recovery was focused on investing, and improving, the tourism and agricultural sectors; which makes one wonder if our politicians and mainstream journalists live on another planet, or another era.

A favorite explanation for Greece’ lack of marketable hi-tech ideas is that public investment in research and development is very low. Indeed Greece’s public expenditure on RTD, at 0.57% of GDP[2], is one of the lowest in Europe. The key for improvement, politicians will hasten to claim, is more tax money funneled to science and technology. I beg to differ. Given the current situation, not only it is mathematically impossible for the Public Purse to subsidize innovation but, as I will argue, the surest way to stifle bright ideas is through government subsidies.

Since Greece joined the EU in the early 1980s billions of Euros have been invested in research infrastructure and payrolls, in universities and research institutes. And more billions have poured in through a superfluity of EU-funded research programs. And yet, there is very little to show for it. Greek universities have failed scientifically and socially. They have become playgrounds for organized groups of brain-washed, leftist students who terrorize staff and their fellow students, and vandalize what is public property in the name of academic freedom. Meanwhile, all kinds of byzantine machinations percolate in the background, for teaching positions that rarely target talent and more often than not are cheap rewards for blind loyalty. Greek universities have thus become a waste of taxpayers’ money and confer serious damage to the social cohesion of the country because kids from poorer families cannot get the standard of higher education that rich kids –whose parents can afford to send them abroad – do. Bright professors and research students who can, have started to flee. Research institutes do not fare any better. Like every other public institution in Greece they are heavily politicized at the expense of good research work.

The private sector does not innovate either. Since the 1980s Greece has been de-industrialized whilst failing to claim a position in the global, digital economy. The result is that the majority of so-called “innovative” companies are proposal-making manufacturers that go after EU-subsidies. It is precisely this policy of subsidization that has rendered Greece a follower and not a leader; and here is the reason why.

The key to innovation is risk. New ideas are risky because you never know if they have any value unless you invest in them first and then roll them out into the real word. So the question arises who takes the risk for all this? By introducing a grant or subsidy system, the risk is borne mainly by the state (or the EU). But this is wrong for at least two reasons, one ethical another economical. Why should the taxpayer be burdened with the risk for something that, if successful, will profit only certain individuals? Secondly, the only real motivation for doing things right is when by doing things wrong you have something to lose; grant and subsidy takers do not have a strong enough motivation because they simply do not risk their own money and time; on the contrary, their main economical goal becomes the taking of the subsidy; therefore, their success is measured not by the efficacy of the end product but by the approval of their grant application by a bureaucrat who, in turn, risks not his own but the taxpayers’ money in the name of some vague “social good”. Hence, the proliferation of the proposal-making industry and the strangulation of the really good ideas; the latter constantly have to compete against government subsidies and grants, taxation and levies.

And yet there are many people in Greece with very bright ideas. They are the untapped human capital, the best of the best this country has. They are struggling against a well-entrenched system that is indifferent to merit and hostile to business. Potentially, they could be an agent for change and economic growth, if only they were given a chance. The wonderful thing about the digital economy is that you need very little infrastructure. A computer, a modem and access to the Internet is all you need; that, and a good idea. Greece may never become the innovation hub of big multinationals but can become a place for innovation start-ups in the creative industries, the media, web applications, industrial and architectural design, smart green technologies, as well as social innovation.

There is a movement of people, young or less young entrepreneurs, who are willing to take risks. Today, if they want to start a business they must go through a bureaucratic labyrinth and begin to pay taxes and contributions before they make their first euro. This is a serious impediment for someone who aspires to something speculative and risky. Greece cannot afford to lose her brightest entrepreneurs. At the same time, no one expects the Greek socio-political system to change overnight to suit them. And yet this crisis can become, paradoxically, a golden opportunity for those innovators, if only the government would be willing to allow them to mitigate risk outside the system. No subsidies, no grants, no nanny state. In fact, the best recipe would be to have as little state intervention as possible.

This can be achieved, for example, by allowing technological start-ups a two-year tax and social contributions’ break. If you think you have a great idea register your tech company with the tax office on-line and get a VAT Number. This procedure should only take one minute and be done wholly on the web. Then, all you have to do is concentrate on being inventive and profitable. For two years you don’t have to pay tax. If you want to employ someone, you do not have to pay IKA. You can pay him/her cash in hand at a level agreed between the two of you. You don’t have to pay TEVE, the various levies, whatever. If after two years you have managed to prove that your idea can succeed in the real world then start paying your dues to the society that permitted you to realize your dream. If not, stop - or maybe try again another idea.

Let the government do that and all else will follow. Given this tax-free framework for innovative start-ups the private sector will be more willing to invest in risky projects. There is a superb example called “Open Fund” right now, a wholly-private, grassroots initiative, which offers seed money and precious business advice to technological start-ups. One must not lose hope that in the near future a major reformation of Greek state universities will also take place under pressure by Greece’s lenders, as well as the establishment of the first private universities, which may be able to transform the current, ruinous situation of higher education in Greece. World-class education standards, a business-friendly environment and less government, and this country may manage to bootstrap itself out of its perennial debts, and become a place we can all be proud of.

I am not a believer of myths, but I do believe in people and individuals with a vision and the will to take risks. What we need is for the Dedalus spirit of inventiveness to be given a chance. Remember that there came a time that Dedalus had enough of his state sponsor and decided to move on; whereupon he had his greatest idea: to fly. Like Dedalus we have to leave behind the shores of false security and take to the skies. Which is a risky business, because for innovation to take flight you need to test the limits and aim to go beyond. To invent like a Dedalus but to think, and dream, like an Icarus.

An edited version of the article was published in Odyssey magazine (Summer 2010 issue)

[1] he Global Innovation Indexis a global index measuring the level of innovation of a country, produced jointly by The Boston Consulting Group (BCG), theNational Association of Manufacturers (NAM), and The Manufacturing Institute (MI), the NAM's nonpartisan research affiliate.

[2] Eurostat Newsrelease 8/9/09

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Can Governments Till the Fields of Innovation?

This is an article from the New York Times (June 20,2009)

Peter DaSilva for The New York Times

John Kao, right, a former professor at Harvard Business School, spoke this month at a meeting covering the appropriate government role in creating industries and jobs.

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By STEVE LOHR

Published: June 20, 2009

INNOVATION — the tricky, many-step process by which ideas become products and services — has typically been seen, studied and celebrated at the micro level, as a pursuit for entrepreneurs and clever companies.

But governments are increasingly wading into the innovation game, declaring innovation agendas and appointing senior innovation officials. The impetus comes from two fronts: daunting challenges in fields like energy, the environment and health care that require collaboration between the public and private sectors; and shortcomings of traditional economic development and industrial policies.

Innovation policy, to be sure, is an emerging discipline. It lacks crisp definitions or metrics. The most explicit embrace of it has been outside the United States, though the Obama administration is taking some initial steps. Its new budget directs the Bureau of Economic Analysis to develop statistics that “uniquely measure the role of innovation” in the economy. And the government’s new chief technology officer, Aneesh Chopra, speaks of building “innovation platforms” to spur growth.

The rising worldwide interest in innovation policy represents the search to answer an important question: What is the appropriate government role in creating industries and jobs in today’s high-technology, global economy?

That central issue animated much of the discussion at an unusual gathering earlier this month at a lodge north of San Francisco. This invitation-only affair was organized and moderated by John Kao, a former professor at Harvard Business School and founder of the Institute for Large Scale Innovation.

A few speakers covered big-think issues like climate-altering geoengineering and water-management technologies. But the main participants were innovation-policy practitioners from nine countries: Australia, Brazil, Britain, Chile, Colombia, Finland, India, Norway and Singapore.

The meeting offered a window onto the state of innovation policy — how it is being defined, and what countries are doing. Above all, innovation policy is an attempt to bring some coordination to often disparate government initiatives in scientific research, education, business incentives, immigration and even intellectual property.

“It’s about setting an agenda and helping build a portfolio of skills that let an economy and a society move forward in smarter, faster ways,” Mr. Kao said.

Yet if the reach of innovation policy is broad, the attendees agreed, it is best done with a lighter touch than industrial policies of the past, which often focused on specific companies for government support. They used metaphors like “impresario” and “orchestra conductor” to describe government’s role. The ideal, they said, is “stewardship,” not command and control.

In Britain, a national innovation agenda is beginning to take shape with policy documentsand the creation of a Department for Business, Innovation and Skills. “We’re determined not to second-guess the future by trying to pick winners and losers,” said Philip Rycroft, a senior government official overseeing innovation policy. “But we do think government can create the conditions so that new industries can rise more easily.”

Finland has long taken a comprehensive approach to innovation policy, investing in areas as varied as an outstanding national education system and high-speed Internet connections for its residents. It has also produced a power in the cellphone industry,Nokia.

But Mikko Kosonen, president of the Finnish Innovation Fund, a public investment fund, says Finland now needs an “innovation policy 2.0” to climb the economic ladder to remain competitive. “We see value migrating to software and services,” he explained.

The country has the second-fastest-aging society in the world, after Japan, and its health care costs are rising rapidly. To turn that challenge into a growth engine, Finland intends to become a global leader in developing software and services for medical monitoring and preventive health services. “We think well-being services are the next big opportunity for Finland,” said Mr. Kosonen, a former senior executive at Nokia.

Other governments are also focusing on targets of potential advantage. In Australia, the government is looking to nurture industries that arise from its harsh climate and a scattered population. So research centers are working to improve strains of drought-resistant wheat and cotton for export as adaptive technologies to cope with climate change, said Terry Cutler, who recently headed a government-appointed expert panel on innovation in Australia. And Boeing last year selected Australia as the location for a Phantom Works lab for developing unmanned aircraft, he said.

“Test flights don’t bump into things,” he said. “Sparsity can be a global competitive advantage.”

In India, the government and industry have financed research into products and services that reverse the traditional pattern of innovation flowing gradually from wealthy nations to the rest of the world, said R. A. Mashelkar, chairman of the country’s National Innovation Foundation. Early evidence of the trend, he said, includes the $2,000 Nano automobile, and low-cost drugs for tuberculosis and psoriasis.

“If you make something for the rich, the poor cannot afford it,” Mr. Mashelkar said. “But if you design for the poor, everyone can afford it.”

CLEARLY, the innovation meeting in California was a gathering of enthusiasts. One view not heard was that innovation policy itself is a mistake — government meddling in decisions best left to the marketplace — as free-market purists contend.

Lars Aukrust, executive director for innovation at the Research Council of Norway, answered that criticism by comparing a nation with a large corporation. “If you are going to run a big company,” he said, “are you going to leave it all to serendipity or make some strategic choices?”

“Innovation policy is a probability game,” Mr. Aukrust added. “You can improve the odds of success.”

Creative Athens - a 2 day open conference on the creative economy

Friday 26 and Saturday 27 March 2010. At the Benaki Museum (Pireos Street)

The importance of creativity and innovation for the survival of an industrialized economy in the globalized, extremely competitive economic environment of the 21^st century cannot be overstated. More than ever, during this period of economic turmoil, there is an ever growing recognition that a large proportion of the new economy will depend on creativity and innovation. New circumstances demand new solutions and creativity and innovation will be keys to finding a way out of our economic and social troubles.

The proposed event aims to take a closer look at the both the British and Greek experience and share knowledge and best practice between the two countries. It will bring together experts from Greece and the UK and from various fields of science, technology, humanities and the arts, as well as real-life innovators, to discuss and exchange ideas on the subject of innovation and creativity. What are the barriers and how can we overcome them in order to jump-start a creative economy? What are the different facets of creativity and how do they come together in meaningful and socially beneficial ways? What is the role of technology and technological culture - for instance, web-open-collaborative culture (in the spirit of “We-Think”) - and how do they influence economic development, empower grassroots creativity in solving local and global problems? What lessons can be drawn from the British experience that could be applied in Greece and vice versa?

The event will aim to address these questions and many more, as well as engage in debate the invited speakers and the interested communities of businessmen, artists, engineers, technologists, social entrepreneurs and others who will comprise the audience.

Day 1 – Friday 26 March 2010

Topic A: The Creative Economy: the role of innovation, creativity and entrepreneurship in the 21^st century

The question: How do innovation and technological creativity, entrepreneurship and culture (artistic and cultural creativity) interact and interplay in establishing a sustainable creative economy?

Creative economy is defined by the integration of innovation and technological creativity, entrepreneurship in business and social activities, as well as artistic and cultural creativity. Policy-makers and experts discuss the interplay of those dimensions, as well as the importance of the creative economy in terms of competitiveness vis-à-vis the global economic environment, job creation and social mobility. Speakers include Prof. D. Bourantas, B. Wicksteed, Ass Prof G. Klimis and Shelagh Wright. Facilitator: Prof Dimitris Potamianos, Panteion University

Topic B: Fostering Innovation by means of public policy

The question: Can government aid creativity and innovation?

Policy-makers and academics discuss issues of policy, including government intervention in education, research and business incentives, with particular emphasis on successes and failures and lessons learned. How does the EU compare to the USA in terms of their different approaches towards innovation (“more” versus “less” government)? Speakers include Prof. T. Giannitsis, A. Mistos, J. Newbigin, Ass Prof B. Tsakarestou. Facilitator: George Zarkadakis, novelist and publisher

Day 2 – Saturday 27 March 2010

Topic C: Innovators

The question: What makes an innovator?

Real-life innovators (businessmen/women, designers, engineers, architects, etc.) discuss their stories and their experiences. Where do novel ideas come from? How do successful innovators sustain their “ideas factory”? Creative individuals, creative communities, creative networks discuss their stories and experiences. Speakers include S. Connif, G. Tziralis, S. Karagos, Theodora (Theia) Provopoulos. Facilitator: George Zarkadakis, novelist and publisher

Topic D: Rethinking the city: urban innovation and community-building

The question: How should we reinvent our cities and our civic values in order to foster creativity and innovation?

In today’s world of pressing environmental and demographic problems we need to adopt a new urban behaviour and new development models for our cities. Experts discuss the effect of the urban environment in kindling the creative mind, as well as social innovation for the benefit of urban communities. What social, technological, institutional, physical and urban investments, policies, institutional and organizational changes are needed for “creative ecologies” to emerge?Topics to be discussed may include urban farming by means of efficient and attractive vertical growing systems, greener and more fertile urban landscapes, re-building/renovating public spaces, stimulating creativity and arts through green design and architecture, green fashion, new food models and active lifestyles. Speakers include M. Fillipides, E. Tsirtzilaki, D. Kaponis, D. Barrie and J. Tsakonas. Facilitator: Associate Professor Betty Tsakarestou, Panteion University.

The conference is organised by the British Council in collaboration with the Department of Communication, Media and Culture at Panteion University, and Ianos Publications.

The conference will stream live on http://www.livestream.com/creativeathens Twitter channel at @creativeathens