According to IBM…

“Every day, we create 2.5 quintillion bytes of data — so much that 90% of the data in the world today has been created in the last two years alone. This data comes from everywhere: sensors used to gather climate information, posts to social media sites, digital pictures and videos, purchase transaction records, and cell phone GPS signals to name a few. This data is big data.”

And after spending the week running around investor conferences it seems that big data is big business, but it also seems that we are only scratching the surface.

While IBM’s vision of big data is unsurprisingly focused on the enterprise, using better analytics to predict customer behavior or make better decisions, it raises the question about whether better data driven analytics is the only use for this. Already we are seeing a rash of start ups working with the rather unimaginative application of using big data to allow people to sell things to us – OK there’s a business model there as brands are willing to pay for innovative marketing – but that’s hardy a revolutionary business model these days. Monitoring trillions of tweets to get real time brand awareness information is just an extension of what we have been doing for a decade on the web, and monitoring financial transactions for fraud or opportunity, and oh, yawn…..does the future always have to come in tiny incremental steps? History shows that innovation comes in big disruptive lumps.

So where are the opportunities for big data?

When we look at big data we see two issues where disruptive models can be developed, combining data and creating better data.

By combining data we can use pre existing data sets and combine them with real time information. Areas such as improved diagnosis of disease, where decisions are made by an individual on the basis of their expertise, but with no way of accessing the millions of similar accurate or false diagnoses that would allow them to make a better decision. A couple of applications that immediately spring to mind would be:

• Combining genomics with biometric security to predict neurological disorders – the computer you sit in front of for most of the day will probably know more about your behavior than you do, and this can be an important predictor for a wide range of disorders;
• Combining real time MRI/PET/CT scanning with millions of patient records to improve tumour detection – stage one was being able to process the data on the fly so that radiologists could visualize features of interest, but combining that with millions of patient records could massively improve the accuracy most scanning techniques.

But as anyone using the maps in iOS6 will know, the applications are only ever as good as the data they are based upon, and getting that data is still a challenge. As we move towards the ‘Internet of Things,’ and most of these things will be sensors of some kind, we will have more and better data about everything from the environment to personal behaviour.

As with the medical applications above, the winners, the game changers and the disrupters will come from companies that look beyond the software, and create integrated data acquisition and analysis businesses that control the source of the data as well as its end use.

Software is great tool, but you still need to think about the hardware and the context in which it used, so a triple play of ‘Internet of Things’ + Big Data + Cybersecurity could be a game changer, with many of the low power low cost  ’things’ being enabled by nanotechnology and organic electronics

R&D Magazine has an intriguing article linking the decline of entrepreneurship with Japan’s economic woes, something that has consequences for Europe too. One of the biggest differences I often see between entrepreneurial economies like the US and China and more stagnant ones such as in much of Europe and Japan is the attitude to failure, something that is always part of the entrepreneurial process. Even in the scientific world failure is more common than success, although this seems perfectly acceptable.

“In order to have innovation, you must accept a certain amount of failure. To the Japanese, this has become taboo”

The article highlights the way that Japanese companies have become risk averse, focussing on minor improvements, or better quality control rather than big ideas ;eading tot he wonderful description of the situation

“The companies (have) grown to be a giant Gundam robot that isn’t able to handle delicate innovations, which are like ants at its feet, and may instead squash them.”

I’m not convinced that this is a purely Japanese problem and the risk averse climate  means that even many ideas described as ‘emerging’ or ‘disruptive’ simply bore the pants off me. Most are tiny improvements to existing technologies, or a web based solution or app that does something marginally better than a dozen other competitors. But if you want to be truly disruptive you have to take a risk in order to achieve what Geoffrey Moore describes as “an outcome competitors are either unable or unwilling to match.”

Where Are The Big Ideas?

As part of my growing obsession with the inefficiency of the innovation system that leads to a huge proportion of good ideas going nowhere if they cannot overcome the multiple hurdles to commercialisation I’m in discussions with a local university business school about pursuing a PhD in the subject. It’s an issue that everyone recognises but no-one has proposed any workable solution, bearing in mind that it’s not just about chucking money around, but you also have to have the right financial structures in place to make it possible for institutions to invest.

Typical of the moaning from the sidelines is the attitude reported by @Maxmarmer at Havard Business Review

Many venture capitalists are up in the arms because their returns are down, their funds are drying up, and there appear to be a declining number of entrepreneurs pursuing big ideas.

They’ve turned to blaming angel investors for encouraging “an entire generation of entrepreneurs [to build] dipshit companies and hoping that they sell to Google for $25 million.” They say, “this ‘think small’ attitude is driving entrepreneurs who may otherwise build the next Google or Microsoft to create something much less interesting instead.” And this has implications for the whole ecosystem because, “then everyone loses. No IPO. No 20,000 tech jobs. No new buyer out there for the startups that don’t quite make it.”

Max goes on to elaborate why VCs are wrong, and how these smaller ideas lead to a whole range of Mittelstand companies and identifies how to build these companies by bringing in domain experts along with the brilliant engineers who found the companies.

It’s About Atoms, Not Electrons

It’s a good argument and I found myself agreeing with much of it, apart from one thing. As we discussed in Colombia the whole world doesn’t revolve around IT. There seems to be a myth being perpetuated that  every business area can be disrupted by some smart web or coupon app, and while IT has the capacity to engender major efficiencies in a wide range of industries, I often wonder whether the cries of diminishing returns and lack of ambition are symptomatic of what is essentially a service industry running out of industries to serve and cannibalising itself. As one commuter notes:

Has the author ever thought that there is only so much that can be done via computer, that at some point creation of value requires manipulation of atoms instead of electrons and that most of our best-and-brightest are involved in the simpler, lower-cost manipulation of the former?

I discussed this in Medellin with my old friend and mentor Ken Morse and we agreed that what the world need is more companies creating goods and services that people are willing to pay for, and that the business models should be about addressing customer needs – simple eh?

So, if we want to see some big ideas, some world changing ideas such as synthetic aspirin, the transistor or the personal computer  how do we get away from this myth that everything can be solved with a bit of software? In the real world we know that a workout oft the gym or mowing the lawn cannot be done with a smartphone app, but how do we convince the investor community?

Colombia Isn’t Just About…

One of the perks of this job is that I get to visit some very interesting places that one wouldn’t normally be able to justify visiting on purely commercial grounds, so this week I found myself in Medellín, Colombia for three days. It’s a city with a variety of reputations: many people still,associate it with Pablo Escobar and the drug cartels, while in the Spanish speaking world Medellin is famous for having the most beautiful women on the face of the earth.

So the city is changing, and Medellín is fast becoming a hotbed of technology, encouraged and facilitated by political support from City Hall, and this week playing host to the EmTech (Emerging Technology) conference organised by MIT’s Technology Review, and it’s a sell out!

From my perspective it’s one of the conferences I love to participate in – although I’m discussing nanotechnologies and 21st Century medicine there are others taking about smart cities, genomics, transportation, urban planning, gaming, education, and putting that all together in 48 hours offers would be entrepreneurs a glimpse into myriad future opportunities, but why on earth are all the business plans I see so unimaginative?

Let’s See Some Real Business

Every conference of this type has some kind of investor forum – it’s a good hook to get would be entrepreneurs to attend, and the venture capItal industry to sponsor an event – but sometimes it feels very much like the dotcom era all over again. Instead of taking advantage of the possibilities enabled by technological and social change, we get endless location based service ideas, localised versions of Facebook, online travel reservations systems and just about anything that a couple of smart guys with a laptop and no imagination can come up with. It’s not a Colombian problem – the entrepreneurs I  met were as lean & hungry as anywhere in Silicon Valley – but is more symptomatic of a general lack of ambition among digital startups.

The Venture Capital industry is partly to blame – their idea of an emerging technology is more of an emerging application, and it’s understandable as an Instagram is easier to sell for a billion dollars than a nanobio business, requires smart marketing rather than a development lab, and doesn’t have to spend years crawling through regulatory systems. It all sounds very attractive, apart from the fact that there is only room for one PayPal, Facebook or Salesforce.com, all the rest will always struggle and eventually fail – just look at Digg.

While there is no guarantee that any science based business will fare better, there are plenty of examples of companies which neither made it to the billion dollar IPO nor failed, and went on to provide a decent return for their investors.

It sometimes seems the web based business model is binary, but the rest of live in an analogue world.

There has been a lot of anger about banks this week, this piece by Mathew Parris in Saturday’s Times is one of the more eloquent analyses of what is going on.

Do you know what Libor is? Be honest. Can you unblushingly claim not just to have furrowed a studious brow over the little potted summaries in this week’s newspapers, but to have a well-founded understanding of what the London Interbank Offered Rate means in the world of the City?

How grounded are you in the business culture surrounding such matters? Have you made any calculation of what Libor-rigging might have cost (or indeed benefited) you yourself? Have you any real feel for how much it matters?

I haven’t. And so I surprised myself by the depth and spontaneity of my fury on learning this week that Barclays has been manipulating Libor. My indignation felt genuine but I confess that had I read that it was the Robil rate — or indeed the Brilo or Orbil rate — I would have been just as cross. Incandescent, in fact.

For all of us, press and public, the sequence is becoming a habit. First the anger. Then a scramble to find out what precisely it is we’re going to be angry about. And finally a bit of hasty cramming so we can express the anger with fluency and apparent authority. Again and again, that has been the story for the past four or five years. We seize upon an abuse, rip it out of context, kick aside the caveats and explanations, stamp our feet, pucker our faces with rage, do a little homework on Wikipedia — and shout. Somebody must swing for this!

The point that Parris makes – that our indifference and ignorance blinds us to what is happening until it is too late to avert disaster – also applies to our reaction to technological change. Can many people claim to understand nanotechnology, genetic engineering or synthetic biology any more than they understand how the Libor and Eurobor are calculated? Is there any better understanding among politicians  of what goes on in a pharmaceutical research lab or a City dealing room? Probably not.

The parallel between finance and science continue. Both are global in nature, and the imposition of regulations on one country just results in the transfer of activities to another, friendlier jurisdiction.  In fact any thoughts of regulation feel futile – the only people with sufficient knowledge of the banking industry are bankers and the only people who can claim to understand science are scientists.

The danger, as Parris points out, is the angry backlash, the thirst of politicians for a scapegoat…

But when I look at the suddenness and intensity of each succeeding squall, the arbitrary way in which groups of offenders are plucked from context and skinned alive as public enemies, and — this is very telling — the careless shrug of shoulders when it subsequently turns out an accusation was false or unfair (it’s by no means certain that the News of the World deleted Milly Dowler’s messages), I see something deeper is at work.

This is the Age of Disenchantment. We’re all going to hell in a handcart and it wasn’t meant to be like this; it wasn’t what we were promised. We’re furious, but we don’t quite know about what. We’ve been robbed, but we’re not quite sure how. We want to settle scores, but we can’t decide with whom. Destiny has dumped on us and we don’t know why. We secretly wonder whether it might be a little bit our fault and that makes us even angrier.

And that neatly sums up my fears for a variety of new and emerging technologies that have the potential to do far more good than harm. GM crops are a prime example of an arbitrary technology being made a scapegoat for public ignorance of technology, and it probably won’t be the last. GMO’s, nuclear power (especially post Fukushima where how many people died as a result?) have all been collectively demonised, with no distinction being made between leaky soviet era reactors and improving crop yields in drought prone areas.

Can anything be done, short of compulsory science education to age eighteen?

In 1981 the UK was one of the world’s most research and development intensive economies, with large scale R&D efforts being carried out in government and corporate laboratories in many sectors. Over the thirty years between then and now, this situation has dramatically changed. A graph of the R&D intensity of the national economy, measured as the fraction of GDP spent on research and development, shows a long decline through the 1980′s and 1990′s, with some levelling off from 2000 or so. During this period the R&D intensity of other advanced economies, like Japan, Germany, the USA and France, has increased, while in fast developing countries like South Korea and China the growth in R&D intensity has been dramatic. The changes in the UK were in part driven by deliberate government policy, and in part have been the side-effects of the particular model of capitalism that the UK has adopted. Thirty years on, we should be asking what the effects of this have been on our wider economy, and what we should do about it.

Gross expenditure on research and development as a % of GDP from 1981 to 2010. Data from Eurostat.

The second graph breaks down where R&D takes place. The largest fractional fall has been in research in government establishments, which has dropped by more than 60%. The largest part of this fall took place in the early part of the period, under a series of Conservative governments. This reflects a general drive towards a smaller state, a run-down of defence research, and the privatisation of major, previously research intensive sectors such as energy. However, it is clear that privatisation didn’t lead to a transfer of the associated R&D to the business sector. It is in the business sector that the largest absolute drop in R&D intensity has taken place – from 1.48% of GDP to 1.08%. Cutting government R&D didn’t lead to increases in private sector R&D, contrary to the expectations of free marketeers who think the state “crowds out” private spending. Instead the business climate of the time, with a drive to unlock “shareholder value” in the short-term, squeezed out longer term investments in R&D. Some seek to explain this drop in R&D intensity in terms of a change in the sectoral balance of the UK economy, away from manufacturing and towards financial services, and this is clearly part of the picture. However, I wonder whether this should be thought of not so much as an explanation, but more as a symptom. I’ve discussed in an earlier post the suggestion that “bad capitalism” – for example, speculations in financial and property markets ,with the downside risk being shouldered by the tax-payer – squeezes out genuine innovation.

UK R&D as % of GDP by sector of performance from 1981 to 2010. Data from Eurostat.

The Labour government that came to power in 1997 did worry about the declining R&D intensity of the UK economy, and, in its Science Investment Framework 2004-2014 (PDF), set about trying to reverse the trend. This long-term policy set a target of reaching an overall R&D intensity of 2.5% by 2014, and an increase in R&D intensity in the business sector from to 1.7%. The mechanisms put in place to achieve this included a period of real-terms increase in R&D spending by government, some tax incentives for business R&D, and a new agency for nearer term research in collaboration with business, the Technology Strategy Board. In the event, the increases in government spending on R&D did lead to some increase in the UK’s overall research intensity, but the hoped-for increase in business R&D simply did not happen.

This isn’t predominantly a story about academic science, but it provides a context that’s important to appreciate for some current issues in science policy. Over the last thirty years, the research intensity of the UK’s university sector has increased, from 0.32% of GDP to 0.48% of GDP. This reflects, to some extent, real-term increases in government science budgets, together with the growing success of universities in raising research funds from non UK-government sources. The resulting R&D intensity of the UK HE sector is at the high end of international comparisons (the corresponding figures for Germany, Japan, Korea and the USA are 0.45%, 0.4%, 0.37% and 0.36%). But where the UK is very much an outlier is in the proportion of the country’s research that takes place in universities. This proportion now stands at 26%, which is much higher than international competitors (again, we can compare with Germany, Japan, Korea and the USA, where the proportions are 17%, 12%, 11% and 13%), and much higher now than it has been historically (in 1981 it was 14%). So one way of interpreting the pressure on universities to demonstrate the “impact” of their research, which is such a prominent part of the discourse in UK science policy at the moment, is as a symptom of the disproportionate importance of university research in the overall national R&D picture. But the high proportion of UK R&D carried out in universities is as much a measure of the weakness of the government and corporate applied and strategic research sectors as the strength of its HE research enterprise. The worry, of course, has to be that, given the hollowed-out state of the business and government R&D sectors, where in the past the more applied research needed to convert ideas into new products and services was done, universities won’t be able to meet the expectations being placed on them.

To return to the big picture, I’ve seen surprisingly little discussion of the effects on the UK economy of this dramatic and sustained decrease in research intensity. Aside from the obvious fact that we’re four years into an economic slump with no apparent prospect of rapid recovery, we know that the UK’s productivity growth has been unimpressive, and the lack of new, high tech companies that grow fast to a large scale is frequently commented on – where, people ask, is the UK’s Google? We also know that there are urgent unmet needs that only new innovation can fulfil – in healthcare, in clean energy, for example. Surely now is the time to examine the outcomes of the UK’s thirty year experiment in innovation theory.

Finally, I think it’s worth looking at these statistics again, because they contradict the stories we tell about ourselves as a country. We think of our postwar history as characterised by brilliant invention let down by poor exploitation, whereas the truth is that the UK, in the thirty post-war years, had a substantial and successful applied research and development enterprise. We imagine now that we can make our way in the world as a “knowledge economy”, based on innovation and brain-power. I know that innovation isn’t always the same as research and development, but it seems odd that we should think that innovation can be the speciality of a nation which is substantially less intensive in research and development than its competitors. We should worry instead that we’re in danger of condemning ourselves to being a low innovation, low productivity, low growth economy.

I have been in & out of Spain, running companies, getting married, having children, closing companies and more for almost two decades, so the unrelentingly grim news from the Spanish economy is particularly unwelcome.

While I was living in Spain I argued vociferously for more investment in translational research, but found myself working with two communities with no incentive to change.

Soon after arriving in Spain I received a call from a local academic who informed me “In this country, research is done in Universities, not companies so please go back to wherever you came from!” This, more than any other event, indicated the cultural problems encountered when translating from a system in which academic research is pursued for its own sake to one where it supports the needs of the wider economy.

Translational research was also a low priority for regional and local governments. Construction was booming, the EU was funding massive infrastructure projects and tax revenues were up. While there was funding for the education system, there wasn’t too much interest in starting new technology businesses.

A decade and a half later the landscape looks very different.  Much of the old guard, the Franco era administrators who had their secretaries print out emails so as to avoid having anything to do with computers are long gone. For decades Spanish mothers advised their offspring to get a safe job in a bank or the government, stifling entrepreneurship, but those jobs are no longer secure. Universities are building technology parks and encouraging spin outs.

The current economic situation is giving a boost to entrepreneurs – with virtually no jobs for Spanish graduates more and more are creating their own jobs.  In a tough economic climate many will fail, but plenty will survive.

For Spain to recover, there is no need for more grandiose projects.  There are roads and houses enough for twice the population. What the country should be doing is encouraging the current crop of entrepreneurs, making it easier to hire and fire, set up businesses and change attitudes to failure.

While things may be tough at the moment it will take a change in political mindsets to move away from ‘safe’ industries such as construction and tourism to riskier high tech ones.  Spain has the talent and the enthusiasm to reinvent its economy, let’s hope the dead hand of political conservatisms doesn’t waste this opportunity.

Two weeks ago I received a press release from Konarka’s PR company announcing that the company’s power plastic products had been integrated into another company’s wall panel systems. As with many of the previous announcements it was greeted by the incredulity that they the company was still going, running around making deals, as they have been tipped for disaster for most of the past decade.

Unlike many Nanotech failures where sound technology has been misexpoloited by poor management, Konarka’s management spent the past decade trying to make a silk purse out of a sows ear, and more importantly keeping investors convinced that they could pull it off. Howard Berke may now be the CEO of a bankrupt company, but he is also a great example of how grit and determination distinguishes entrepreneurs from the rest of us.

I spend a huge amount of time discussing entrepreneurship with various academic institutions and government agencies, all looking for a magic bullet which will turn scientists into entrepreneurs. After ten thousand years of trying to make a buck, shekel, cow or ear of corn there is still no formula for entrepreneurship, whether commercialising the plough or organic photovoltaics. All you can say is that entrepreneurs, for better of worse, just don’t give up, so before the sniping at Konarka starts, just remember that that tried, tried very hard, and raised the best part of a hundred million dollars along the way.

Of course the sniping is opportune, “Mitt Romney’s Solyndra” is one of the phrases being bandied around by people trying to score a cheap political point, but the state of Massachusetts only provided a fraction of the money raised, most of which was clawed back in income taxes and knock on effects in the local economy.  Konarka was so much more than a political failure.

When I first met Bill Beckenbaugh and Howard Berke back in 2002 they were a couple of guys with a vision of using the then emerging Nanotech enabled organic electronics to harness solar energy. Like many of their contemporaries looking at Nanotech to replace then current data storage technologies they could not predict a)that it would take ten years to get close to market  and b) that cost cutting by Chinese solar suppliers would remove their cost advantage over silicon based technologies.

I’ve followed Konarka closely through the past decade. Through their original idea, commercialising Nobel laureates Alan Heegers ideas through to licensing Michel Graetzels  dye cell technology. A great idea in principle, but it was one where the the market got way from them, and while the technology worked, producing commercial devices that could deliver on cost, efficiency and lifetime proved elusive. It’s standing joke that most organic thin film solar technologies work fine under vacuum and in the dark (moisture and UV radiation kill the devices quickly) and Konarka were not the only ones taking this approach.

Last time I suggested that a company was badly run with failing technology and was heading for failure I got sued (unsuccessfully) for defamation by a company that ceased to exist soon afterwards, so I’ll refrain from naming some of the other companies who will be soon following Konarka into bankruptcy. Suffice it to say that this won’t be that last organic electronics company we see fail, although I’m equally convinced that some will survive and do exceedingly well.

So how did Konarka last so long despite being six months away from shipping product since 2003?

Successful entrepreneurs don’t just put in the hours, they tell the story that investors want to believe in. In the early part of the  last decade investors wanted a piece of nanotechnology in the latter half they wanted to invest in renewables. Konarka gave investors what they wanted and told the story well.

So before we write this one off as another Nanotech  failure, remember this. Someone has to see the potential in new technologies and work their butts off to realise that potential. Sometimes its hard to remember that when sniping from the sidelines, but was we saw with the whole molecular nanotechnology and NanoBot scene last decade, talking is much easier than doing.

What Konarka had was a brilliant and potentially world changing idea. The technology didn’t fail, it was just that their version of it didn’t work out. At least they tried.

It’s wonderful to see new funding for life sciences in the UK being announced, but the amount is tiny compared with the potential of the industry. I think its obvious to most people that life sciences and material or nanotechnologies will be vital to the 21st Century economy, and more effort on diagnostics, therapeutics and sustainable manufacturing (biorefineries, green chemistry etc) is needed.

Science Minister David Willets was quoted as saying  ”We are backing the risk takers, and are willing to take a risk ourselves.”

This will probably get his backside kicked up & down Whitehall as the official UK Government response is invariably “We are committed to reducing the deficit and will not and cannot take risks with public money.” It is the unfortunate nature of adversarial politics that the failures are highlighted in preference to successes.

Increasing Crop Yields With GM?

An editorial in this week’s issue of Nature “A charter for geoengineering” highlights the difficulties faced in the application of emerging technologies.

As we argue in ‘Using Emerging Technologies to Address Global Risks” the technology itself is the least of our worries, and the fact that a relatively simple geoengineering experiment involving spraying water from a balloon at an altitude of 1000m was scuppered “by intellectual-property rights, public engagement and the overall governance regime for such work” further reinforces that view.

It is safe to say the we are living through a period of rapid technological change. The power of information technology has been harnessed to speed up the flow of information between researchers, and to largely automate routine data collection allowing vast amounts of scientific data to be collected, modelled and tested without going near a lab bench. At the same time the huge investment in research in Asia over the past decade means that there is more and better science being done than at any time in human history.

So the science isn’t the problem, it’s what we do next. I’ve mentioned the problems of funding innovation plenty of times in the past, but that is only part of the issue. At a conference last week I was fascinated by Huw Jones‘ talk on the 2020 wheat project and why we need GM technologies, and the reaction from other speakers and the audience in trying to justify not improving agriculture. The arguments against included the oft quoted but widely discredited examples of GM corn harming monarch butterflies and suicides among Indian farmers. One participant even suggested a causal link between GM crops and childhood eczema in the UK. Balanced against this is the need to develop higher yielding crops, and to deal with new emerging crop diseases while avoiding an arms race with pests who also evolve.

Unfortunately rationality is often left behind when discussing high emotive subjects such as climate change and food, and this can have a disastrous effect on government policies where a scare story in a tabloid newspaper is given equal weighting with several years of peer reviewed research.

A major worry is that while we have the tools to address a wide range of  global issues, water, food, heath etc, the implacable opposition to technologies, especially new and powerful ones that are remote from the daily experience of most people, will mean that some of the best chances we have to support nine billion people with a decent quality of life may be lost. It seems far easier to say no to deployment of emerging technologies rather than doing the hard work of ensuring that issues of governance and communication are addressed.

GM and geoengineering may prove to be vital tools in avoiding or mitigating future food shortages, but how can we ensure that they will be available, if needed?