10 Lessons on Growing Innovation from the “Davos for Doers”

Last week, a remarkable thing happened.  400 people from 49 countriesgathered in Silicon Valley for an ambitious vision.

They convened to do something that had never been attempted before: to reinvent the whole notion of economic growth, by shifting the focus from subsidizing individual projects to growing entire ecosystems of vibrant entrepreneurship and innovation.  We call such systems Rainforests.  And rather than just talk in the abstract, attendees actually worked on building real Rainforest solutions, in-person and in real-time.  We literally watched hundreds of “Rainforest Makers” in action.  It was like a Davos for Doers.

You can read the rest of this article here: http://www.forbes.com/sites/victorhwang/2012/07/27/10-lessons-on-growing-innovation-from-the-davos-for-doers/

ForeWord Reviews: book review of The Rainforest

We received a great book review of The Rainforest today from ForeWord Reviews…


Every once in a while, a business book with a big idea that defines a way of thinking comes along. Such books as Crossing the Chasm by Geoffrey Moore and Jim Collins’s Good to Great come to mind.

The Rainforest feels like one of those books. The authors, Silicon Valley venture capitalists, present an intriguing metaphor: that Silicon Valley is a kind of rainforest with its own unique “innovation ecosystem” in which “talent, ideas, and capital are the nutrients.” Hwang and Horowitt go on to explain in considerable detail exactly how that magical place known as Silicon Valley maps to a rainforest, replete with its intricate interdependencies.

In true business-bestseller style, Hwang and Horowitt present the reader with both theory and practical application. They offer the reader fourteen specific “Rainforest Axioms” to help explain how the Silicon Valley rainforest operates; for example: Axiom #5: “The vibrancy of a Rainforest correlates to the number of people in a network and their ability to connect with one another.” These axioms are supplemented by the seven Rules of the Rainforest, which the authors liken to the Ten Commandments, including Rule #1: “Thou shalt break rules and dream,” and Rule #7: “Thou shalt pay it forward.”

The Rainforest is overflowing with numerous examples; in addition, the authors make exceptionally good use of graphs, charts, and illustrations to further explain and expand on the text. Some charts, such as The Rainforest Canvas, are particularly helpful in graphically representing what is required to develop and sustain the rainforest type of business environment.

Hwang and Horowitt make the point that the rainforest concept should be transferable to locations other than Silicon Valley; however, they admit that duplicating that area’s success will be challenging. In the end, they write, “Rainforests thrive because of normative culture that accelerates the evolution of human organizations into ever-increasing patterns of efficiency and productivity.” Surely, replicating the culture of Silicon Valley is no easy task, but hidden in the pages of The Rainforest is a roadmap leading to the exciting potential for other places to create similar innovation ecosystems.

This is an important book that not only provides rare insight into what makes Silicon Valley so special; in addition, The Rainforest effectively presents a model for innovation that, if successfully applied, could have a major impact on the way innovative businesses develop and prosper.

Yes, we’re crazy. Rainforest eBook for 99 cents this week.

To celebrate the launch of our big Global Innovation Summit on July 16-18 (www.innosummit.com), we are pleased to offer the Amazon Kindle version of the Rainforest for only 99 cents (including 99 euro cents, too!).

This special promotion lasts for one week only!  It’s a big party week for us, and we want to share it with the world.

Here you go!  Click here — http://www.amazon.com/dp/B007AUWLU0 — to purchase.

[Guest column] Patent Law, Meet Rainforest

We are pleased to feature a guest blogger today, Chris Gallagher of New Venture Advisors.  Chris was actively involved in the Congressional debate over the America Invents Act, which reformed the patent system.  Below, he offers some insights about what the new law means in the context of building broader innovation ecosystems.  In short, how does the new patent law affect the Rainforest, and what can we do about it?


Rainforest Implementation: a welcome offset to AIA’s increased transaction costs
by Chris Gallagher

Patent reform, the America Invents Act (AIA) was enacted by Congress in 2011. It is fully effective in March of 2013. Among other radical changes in the present law, in order to more closely “harmonize” our patent award system with those of other countries, AIA will soon change our system of awarding patents from its present “first-to-invent” (FTI) format  to “first-to-file” (FTF). AIA also significantly weakens existing IP grace period protections now provided to inventors who share patentable subject matter with collaborators and investors situated beyond institutional or contractually protected boundaries. These and other new burdens have added significant new transaction costs to early stage innovation that is not conceived and developed within the four walls of a single established enterprise.  Independent inventors participating in innovation ecosystems must now pursue new and legally significant precautions to protect IP ownership and in some cases, to preserve patent eligibility. Accordingly, for investigators engaged in university scientific research, increased care must accompany implementation of the Rainforest Recipe. As depressing as this seems the good news is that Rainforest reductions in today’s transaction costs can offset  AIA’s transition costs tomorrow. Rainforest implementation has thus become more important than ever. Allow me to explain.

When IP protection is desired during research collaboration or to enable later commercialization through private investment, AIA’s new requirements and pitfalls must be accounted for throughout the process. As we all know, the eventual  outcomes of  innovation are too uncertain to attract investment beyond traditional “fools, friends and family”. It is thus supported as a public good by Congress at the annual level of $145 Billion. Funding is mainly distributed through our nation’s research universities. The benefits of successful research are then returned to the public through university technology transfer, either by licensing to incumbent enterprise or through start-ups. In furtherance of this important economic cycle, federal granting agencies are now re-emphasizing the importance of distant, diverse and cross-disciplinary collaboration and commercialization through start-ups.

Our research university’s tripartite mission of student education, scientific research and public service through transfer of promising technology to the private sector has lately come under severe financial strain. Adding new transaction costs to research tech transfer is unwelcome to say the least. Preserving their mission-critical independent curiosity-driven research is forcing some universities into financial over-dependence on the sponsored research of established market incumbents, whose market-driven objectives naturally tend to be more incremental than fundamental or disruptive. Universities appreciate this financial boost but maintaining their educational mission also requires continued traditional curiosity-driven research, a public good that has brought such amazing benefits to the tax-paying public supporting it and to our nation’s global economic superiority. Preserving the availability of the start-up option has thus become a necessity.This requires that collaboration and commercialization costs be contained. Enter Rainforest…

As the book so elegantly articulates, in rain forests, the flow and volume of interaction promoting evolutionarily “fit” adaptations transpires in a unconsciously functioning biological interchange empowered by the combined energies of wind, sun and sexual plant activity. And although human innovational evolutionary interchange may be biologically identical to the unconscious evolutionary activity of flora and fauna, our unique human consciousness has a way of slowing the process. Matt Ridley appropriately describes human collaboration as “ideas having sex”, an intimate  process that usually requires trust and familiarity. But since sexual consciousness underpins much of the developed world’s commerce and economic development  it is highly unlikely to evolve away. Indeed human collaboration in all forms is evolutionarily necessary and is thus here to stay. Aided by the book and the upcoming GIS, our collective objective is to improve collaboration’s economic efficiency. That said, however helpful more efficient collaboration with familiar agents may be, it is not as conducive to productive innovation as is  collaboration with more distant diverse and different agents …its genetically-evolved counter tendency.

Unlike its personal and real property cousins, intellectual property is “non rival” which means it can be simultaneously possessed by more than one claimant. It is easily borrowed, copied or stolen.Through cyber-hacking, its unauthorized use is increasing. Nevertheless technology cannot be transferred except by assuming the risk of sharing. This requires trust. Dan Dennett describes evolution as “good tricks for survival”. Transferring acquired knowledge is such a “trick” but fearing loss from  whatever is unknown or unfamiliar successfully mutated its way into human DNA eons ago. To make it all work, trust evolved  as a “good trick for survival”. As “Rain-foresters” the new “trick” we must learn is to extend collaborational trust beyond familiar boundaries. Genetic absence of such trust reveals itself in the form of frictions and other social barriers to efficient communication beyond our comfort level. Rainforest says we must be more “trusting. AIA requires that such trust be “verifiable”. Can these opposing forces also be reconciled ? In short they must.

Our constitutionally- created and congressionally codified US patent system has worked well for 200 years, surpassing in volume, flow and quality that of all other countries. This occurred in significant part because our unique FTI filing format has accommodated the serendipitous pace of scientific research and the varied resources of all innovators, allowing those who must share ideas to support their development to do so with relative IP safety. With its weakened grace period and first to file format however, AIA undoes much of that flexibility.This change adversely impacts independent early stage innovators operating in open ecosystems. Among other frictions, inventor collaboration and commercialization’s transaction costs have been increased. Because much of early stage innovation can ill afford such transaction cost increases, Rainforest transaction cost reductions can offset them .

Borrowing Coase’ transaction cost analysis , Rainforest suggests ways to reduce our genetically-implanted social barriers to efficient innovation which will reduce its transaction costs. This in turn will encourage the more diverse and distant collaboration and cross collaboration that will improve the volume, flow and quality of collaborative interchange. Through the well-known congressional phenomenon of “unintended consequences ” AIA has imposed new barriers to independent early stage innovation, particularly to university based scientific, curiosity-driven research. Rainforest implementation can reduce those overall costs and thus preserve scientific research and its benefits that otherwise would become “unfit” for survival.

AIA’s enactment has thus significantly elevated both the importance and urgency of the book and this Conference. AIA’s added transaction costs cannot be eliminated. Perhaps some can be avoided. But most must be offset by quickly adapting the conduct of scientific research to the new AIA landscape using Rainforest techniques.To be sure some scientific research continue through greater reliance on the sponsored financial support of market incumbents. Research university over-dependence on such incremental support however is not broad enough and indeed may lead to the loss of independence avoidable only by retaining the availability of the start-up option.  And without question, such independence has been critical to our scientific progress, our economic growth and our global innovative standing. Indeed today’s market incumbents who benefit most from AIA are living proof of that.

Now that Rainforest implementation has become a more urgent  imperative, it must be implemented as widely and as soon as possible. Despite having to fuse the arcanities of patent law and innovation dynamics, we must quickly figure out; how to adapt Rainforest to AIA, how to separate tolerable risks of collaborator “defection” from intolerable “infections” to patent eligibility and how to establish a reliable compliance verification regimen that will enable private capital to continue its keystone role in the complex adaptive ecosystem of our innovation economy.

What’s the big deal about innovation ecosystems?

I just posted a new article on Forbes.  This is something I have written for our Global Innovation Summit next week (www.innosummit.com).  It’s my attempt to put the whole discussion about innovation ecosystems in the bigger historical context.  Why should we care?  What does it mean?  Hope you enjoy…