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IFTF Explores Innovation in Brazil
I had the amazing opportunity to speak at the 4th Brazilian Congress on Innovation this week. There’s not much information about the event on the web in English, but it was a large gathering of government officials and industry leaders taking another step towards a comprehensive innovation strategy for Brazil.
It’s a fascinating time for Brazil. The country’s economy is booming, largely on the back of commodities exports. Foreign investment is pouring into Brazil, whose “ridiculous” interest rates (to quote Trade and Industry Minister Fernando Pimentel) are the only place investors can make a guaranteed high return these days. The real is appreciating, creating all kinds of macroeconomic havoc. But at the same time, Brazil’s geopolitical position is ideal. The nation has copious natural resources, more or less energy independence, and has quietly built world-class technology prowess in aviation, agriculture and energy.
The question everyone is asking, is where does Brazil go from here - does it double down on what’s working, or try to leverage its current strength into new areas? This was the most heated debate of the morning, which took place between Luciano Coutinho, the president BNDES and a panel of CEOs from Embraer, PetroBras, and other big Brazilian companies as well as the local heads of IBM, GE and Siemens. At the heart of the matter was whether Brazil needed an industrial policy as part of its innovation framework, and if so what industries should be prioritized. In so many words, Mr. Coutinho dismissed this notion, and instead emphasized the need for basic infrastructure in broadband, computing, and open data. Repeatedly, he challenged the CEOs to take the lead in innovation - saying that the government could and would do all it can to support them, but innovation was their responsibility. At one point he made what I thought was a shocking statement - to paraphrase the translation "that we need be daring, or else we will miss the boat, and it may be the last chance to catch the boat. Brazil has certainly missed many boats before." I was dumbfounded to hear him say this in such a stark fashion, but I'm not sure the audience absorbed it fully. It’s clear by looking at the massive expansion in lending that Mr. Coutinho has presided over at BNDES in the last few years, that he is doubling down again and again - he really feels this is the big moment.
The disappointing part of the day was the total lack of depth or sophistication in talking about entrepreneurship, or how to do anything about it. Of course, several times there were laments about "how hard it is to start a business in Brazil" and I got the sense this is a tired refrain. More disturbingly, it was really weird that of three panels talking about innovation, not one of them focused on startups, and I don't think a single company founder ever walked on the stage. During Q&A after my talk, when the moderator asked if Brazil was close to having an innovation strategy I asked "what about entrepreneurs? I haven't heard their voice today". I called out that there were lots of CEOs in the rooms, but how many founders? Maybe 10 people raised their hands. Good, but not good enough. I said "If we were having an innovation conference in the US, or Europe or Asia, the entrepreneurs would be on stage and we would be bowing down to worship them."
My main take away is that the deficiency in entrepreneurship is the #1 obstacle to technology-driven innovation in Brazil, and it can only be addressed through an across the board, comprehensive effort - business regulation reform, small business assistance in grants and loans, technology transfer initiatives, procurement reforms that favor small businesses, tax breaks, human capital and education, etc etc. Brazil needs a crash entrepreneurship program, and a big one. It's already far far behind, and its the biggest risk to falling even further.
I’m only just learning about Brazil, and its a big and complex country, but having seen innovation ecosystems develop in many other places, I think my hunches have some merit.
What do you think?
The full text of my speech follows:
Text of speech delivered by Dr. Anthony Townsend to the 4th Brazilian Congress on Innovation
Sao Paulo, Brazil
Sheraton WTC
Conference Center August 8, 2011
Let me begin by thanking the conference organizers for inviting me to speak on behalf of the Institute for the Future, and thank the many leaders of your country’s government and industry for being in attendance. It’s an honor to be here in Brazil at this exciting point in your history. I can speak for futurists around the world when I say that Brazil’s recent economic and cultural achievements are an inspiration to all.
If you’ll permit me, I’d like to share a few ideas about how technology can drive economic growth and social development in Brazil in the coming decades.
The 21st Century: Urbanization and Ubiquity
Put simply, the next great opportunity is at the intersection of two trends that will dominate the 21st century - urbanization and ubiquity.
We are rapidly becoming a planet of city-dwellers. In 1900 just 14 percent of the world’s people lived in cities. In 2008, for the first time, more than 50 percent do. At the end of the century, more than 90 percent will. This means that by the end of this century, we will be done building all of the cities we’ll ever need. Doing this properly is the greatest challenge humanity has ever faced. Billions of lives, and the fate of the earth’s habitats are at stake.
But just as we face this enormous challenge, there are new tools being created that will help us adapt. This is the information technology that’s spreading into every corner of our lives. This is ubiquity.
The most basic form of ubiquity is the humble mobile phone. There are now more than five billion mobile phones in service worldwide - nearly one for every person. They are becoming essential tools for work, education and health.
And every year these devices become more powerful. Within the next decade even the world’s poorest people will be walking around with a device in their pocket that is by any measure, a supercomputer.
Mobiles aren’t the only technology that’s becoming ubiquitous. A growing number of sensors continuously measure everything that happens in our cities. RFID tags track the movement of goods in the supply chain. Environmental sensors track pollutants. Video cameras and image recognition software track the movement of people and vehicles. This real-time data about the city is growing daily, and it can be analyzed by both governments and businesses. New patterns and new understanding are emerging. As a result, cities are quickly becoming the next great platform for technology innovation and the creation of new and better services.
The $40 Trillion Prize
Big business has leaped at the opportunity to build and rebuild our cities. Companies like Siemens, Cisco, IBM, and Microsoft are racing to capture a piece of market for urban infrastructure. This is a business opportunity of $40 trillion over the next 25 years. If they can capture even a tiny portion of this, it will guarantee growth for decades to come.
Industry brings tremendous resources to this challenge. IBM worked with the city of Rio de Janeiro to create an “urban command center”. This command center allows urban managers to see what’s happening in the city and respond to emergencies more effectively. By partnering with IBM, Rio got access to world-class technology and engineering talent, which were crucial to making this project possible. Working with IBM allows the city to focus on governing, not building new technologies.
But I think that big companies actually have very few new ideas about the future of cities. I see this lack of vision in New Songdo City, a project that Cisco Systems is building in Korea, and which it claims is the world’s first fully networked city. Cisco is putting videoconferencing in every room in the entire city - every home, every office, and every classroom. But they don’t know what people will want do with this new communications system. It’s a vision of the city driven by a product. We’ve made that mistake before. In the 20th century, we let General Motors convince us to design our cities around cars. We can’t make that mistake again.
The truly innovative ideas about how we’ll live in smart cities of the future are being invented not by big companies, but by entrepreneurs and citizen hackers. Ten million people around the world use a mobile app called Foursquare, created just two years ago by one of my former students at New York University. Foursquare is a kind of Facebook for the city. People use it to “check in” at bars, restaurants, schools, wherever - and broadcast their location to their friends. Foursquare turns the city into a game, and you score points by doing new and fun things. Like gathering together in a “super- swarm” with hundreds of friends.
Foursquare is just one of thousands of apps invented by young people, that show us a very different vision of the smart city of the future. Instead of efficiency, it’s about sociability. Instead of controlling behavior, it’s about inventing new experiences. Big companies like IBM and Cisco don’t get this, and they probably never will. It’s not in their DNA. So we need these grassroots innovators badly to realize the full potential of the smart city.
Governments are starting to understand this. In the last three years, dozens of cities around the world have sponsored apps contests that challenge citizens to create a more bottom-up vision for the smart city. They are opening up government data to the public to fuel this innovation, and become more democratic and transparent.
And government is slowly finding ways to bring together the resources of big companies, startups and citizens to create truly visionary new ways of living in cities. The city of Houston, Texas is bringing together technology giants and a tiny startup called SeeClickFix, to create a citizen-friendly system for reporting problems to government.
A Planet of Civic Laboratories
Now, multiply these three streams of innovation - big business, startups, and government - by ten thousand, and you see the global revolution that is happening as cities and computing come together. New technologies are being combined to create innovative public and private services. But because every city is different, we’re seeing ubiquitous technology used in thousands of different ways around the world.
At the Institute for the Future, we call these places “civic laboratories”.
Think about this word -“laboratories” - for a moment, because its very important. We are very early into this process of inventing the smart city. These are experiments, not finished products. Wonderful things are happening. But there are many failures, many dead ends. We still need to spend the time and money to make them work.
Like good scientists in the lab, we also need to openly share what we learn. What I call “computational leadership networks” are forming around the world. These are networks of city leaders sharing lessons about what works and what doesn’t. For instance, in the United States the Chief Technology Officers of the biggest cities hold a conference call every week to share news and insights. It also much easier now for ideas about urban innovations to spread thanks to the rich multimedia of the web. Think about the many years it took innovations like Bus Rapid Transit and participatory budgeting to spread from Curitiba and Porto Allegre to the rest of the world. In the future these ideas will spread from city to city in days, not years.
Buggy, Brittle and Bugged
However, as any good scientist knows, experiments also have risks.
Perhaps the greatest risk is that a single company will control a vital piece of the city’s infrastructure. Rio’s command center is remarkable, but what happens if the relationship develops problems? What if the city wants another company to take over instead? Or to run the system itself? It may be difficult to take control back, because IBM has virtualized the system into the cloud. That means the servers, the software and data that power it could theoretically be located anywhere on earth. And who owns the data that companies collect in smart cities? I’m sure Rio has taken many precautions, but other cities may not be as careful in the future.
There are many other risks. But the three things I fear are that smart cities will be buggy, brittle and bugged.
First, as we all know, all computers and all software have bugs. What happens when the smart city crashes? How long is it going to take us to trust these systems? In the United States, Google recently tested a driver-less automated car on the highways of California. This test sparked a furious public debate over the future of smart cars mixing with human-driven cars on our roads. Our expectations of safety will be very high for smart systems. I think it will take many years before we accept these systems, and even a single failure could make us reconsider our dependence on them.
Second, smart cities depend on the most fragile infrastructure we have - the electrical grid. We saw that vulnerability in Japan, where after nuclear plants were destroyed the country now has to cope with a chronic shortage of electricity. Entire cities now face regular scheduled blackouts like the one shown in the middle picture. You can’t have a smart city without reliable electricity.
Finally, smart cities are also a spymaster’s dream. In China, we’ve seen the city of Chongqing plan a network of 500,000 video cameras. The stated purpose is for crime prevention, but many people - both inside and outside China - fear that it will be used to spy on citizens and political dissidents. Every city, every society will have to balance how much information it collects about citizens for good purposes, and the risks for misuse of that data.
Don’t misunderstand me. These risks, and there are still others, are all manageable. The potential benefits outweigh the potential risks. But what will decide the winners from the losers will be those that look into the future, and anticipate the risks and unintended consequences of building cities with smart technologies, not just the opportunities.
Driving Innovation Forward
So how do we drive innovation forward? Three key technology infrastructures are needed to lay the foundations for success. These are steps that will shape the opportunity for cities, but must be pursued at a national level to be truly effective drivers of innovation.
Ubiquitous, affordable broadband is the first foundation. Compared to other kinds of public infrastructure, broadband is surprisingly inexpensive. In the average European city, for example, it costs the same to lay fiber to every single home as it does to build just 20 miles of roadway. Wireless makes it even cheaper. So cheap that in the former Soviet republic of Estonia an NGO built a ubiquitous network of 1100 free Wi-Fi hotspots with no public funding.
Open data is another foundation for smart cities. Governments all around the world are opening up archival and operational data to businesses and NGOs to create new applications with it. Just in the last few years the governments of Finland, the US, the UK have opened up data stores on the web. The great world cities of New York, London and Paris all have as well. Even the World Bank, so secretive in the past, has launched a major open data initiative. Companies like MasterCard and ThompsonReuters have jumped into the open data game too.
Finally, cloud computing is the engine that will deliver services to citizens in the future. Markets are leading the way here, but in a handful of countries policymakers are starting to create a so-called “government cloud” or “g-cloud”. The UK is leading the way here to save money, but the World Bank is exploring how this model can help developing countries like Moldova and Ghana leapfrog into the future. Brazil clearly is at a more advanced stage of development, but a g-cloud could be a way to help streamline government information systems, boost university research, and also create infrastructure and economic opportunities for small businesses.
Once these three pieces are widely available, things start to catch fire. In the US and Europe we have reached this tipping point and it is breathtaking to see what is happening in our civic laboratories. I’m in the process of writing a book about this and its just impossible to keep up with all of the new innovations.
An Historic Moment
But the book gives me time to reflect on the big picture, and I keep coming back to this diagram. It was created in 1855 by Ildefons Cerda, the great Catalonian urban planner who laid out the expansion of Barcelona. It was a time like today, when urbanization and information technology were expanding and reshaping cities. The reason it captivates me is because it shows the value of thinking ahead. His design included conduits for water, sewage and gas pipes - standard practice for the times. But Cerda could see that the telegraph, which was less than a decade old, would transform cities. And so he included a fourth set of conduits for telegraph wires. He prepared the city for growth in an age where culture and commerce would flow at the speed of light, not horseback. In a strange twist of history, today Cisco Systems calls the Internet “the fourth utility”. I wonder if Cerda’s great-grandchildren will sue for copyright infringement!
We’re at a similar moment in history today. We can take actions that allow us to build cities as great as Barcelona became in the nineteenth century.
Intelligent cities are a great opportunity for Brazil. This country has already gone through its urbanization - Brazil is 85 percent urbanized, a figure that China and India won’t match for 50 years or more. Brazil has shown so much resolve, and success, in addressing its urban problems. You have some of the best civic laboratories the world has to offer. The question is - how will you use them? How will you create new tools for cities and citizens that not only solve this country’s challenges, but can be exported to the rest of the world. You have a huge competitive advantage in this area. Please don’t waste it!
The most important thing to understand is that everyone has a role. It’s not just big companies, not just entrepreneurs and not just government who will build the smart city. You need to get everyone moving forward together in the same direction. We cannot afford a battle over the future of smart cities, with big companies and citizens in opposition, or governments that fail to lead with a clear vision of the future.
Finally, let’s do this together. I haven't said much about my organization, the Institute for the Future. We work with organizations of all kinds to help them make better, more informed decisions about the future. The Institute for the Future is located in Silicon Valley, which gives us a unique vantage point where many of these technologies are being invented. But we know that the world is changing fast, and we are eager to build bridges with whats happening in Brazil, and share knowledge and ideas about how to move into the future. I encourage you all to reach out to us.