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The Great Asymmetry: Industry 4.0, Tools 3.0

The Great Asymmetry: Industry 4.0, Tools 3.0

Congratulations to Cyprus House of Representatives for hosting a very high level and extremely useful conference last week titled “Fourth Industrial Revolution: Innovation, Artificial Intelligence and Inclusion”. The two-day event, which was also superbly organized, included a series of workshops and lectures by world-renowned experts on all conference topics. I had the honor to participate in this important conference and below I present some ideas and suggestions as my contribution to the ongoing open dialogue for the creation of a new business model for Cyprus and beyond.  

According to Nassim Nicholas Taleb–the leading global authority on Risk Management–we live in the Age of Black Swans: a highly nonlinear world characterized by fluidity, uncertainty, randomness, variability, complexity, volatility, interdependencies, hidden asymmetries, explosive risks, fierce competition and winner-takes-all effects. We face multiple, interdependent. crises. The past is increasingly misleading as a predictor. Important events are not predictable. We are not prepared for rare events that have catastrophic consequences (negative Black Swans).

At the dawn of Industry 4.0 you cannot innovate effectively with Tools 3.0. The static tools designed for the 20th century linear world have not succeeded in exploiting the huge opportunities of the Fourth Industrial Revolution. Traditional tools are not sufficient (or even not appropriate). This great asymmetry carries a huge cost on national economies. Most (all) challenges are cross-cutting; this calls for cooperation across disciplines and co-creation. New innovation strategies and dynamic tools are needed that: a) Maximize performance / returns and minimize risk and b) take into account complexity, randomness, uncertainty and nonlinearities.

The most important –internal– obstacle to startup success is the lack of differentiated branding.

The main –external– reasons why it is difficult for a business to grow can be summarized as follows:

a) Lack of access to technological advancement (universities).

b) Lack of pro-growth regulatory frameworks.

c) Lack of available / accessible capital. There is a need for alternative financial channels and instruments e.g. Blockchain, Peer-to-Peer, Crowdfunding.

The Cyprus innovation ecosystem in particular faces a number of key challenges: a high level of fragmentation (silos), lack of critical mass, the problem with bureaucracy, lack of alternative financial channels and instruments, the need to focus on reducing inequalities etc.

After many years of research, I have developed a new Innovation Model which:

a) Accelerates the innovation cycle –from idea to global market– by using more than 100 creative, strategic, sustainability, patentability and commercialization criteria and success factors.  

b) Helps investors tackle the information asymmetry that “plagues” the effort to provide growth capital to companies by matching capital with credit deserving small and medium size businesses and startups.

This pioneering Innovation System implements new strategies and techniques that offer the following unique advantages and benefits:

1. Combinatorial Power. A polyparametric approach is applied which combines ideas, concepts, symbols, signs, codes, image schemas, features and capabilities from the four basic types of innovation: product, process, organizational and marketing. This interactive process creates novel connections, multiple perspectives and diverse combinatorial possibilities, maximizing the probability for breakthrough innovation.

2. Innovation Symmetry. Innovations should be designed for maximum performance, impact and resilience. Within the framework of the new Innovation System, symmetry between the different types of innovation –product, process, organizational and communication– requires that these are semiotically similar, equally powerful and mutually reinforcing.

3. Harnessing antifragility. The architectural design of a new innovation should be such that it allows it to benefit from volatility, variability, disorder, randomness, uncertainty and time by minimizing exposure and harm from negative –unfavorable– asymmetries and maximizing exposure and gain from positive –favorable– asymmetries; in other words, more upside than downside from volatility and randomness.

The first step is the detection and removal of any fragilities and the elimination of the risk of ruin. Positive Black Swans (opportunities) also have a necessary first step: you need to be exposed to them. The main creative mechanisms used for modifying innovation exposure is convex transformation. Convexity to uncertainty: Innovations can benefit from randomness more than they can be hurt by it.  

In his book Antifragile: things that gain from disorder Professor Taleb notes that «Antifragility is beyond resilience or robustness. The resilient resists shock and stays the same; the antifragile gets better. This property is behind everything that has changed with time: evolution, culture, ideas, revolutions, political systems, technological innovation, cultural and economic success, corporate survival, the rise of cities, cultures, legal systems».

Industry 4.0 requires connectivity and clusters to harness scale and specialization. New strategy tools are also required to help organizations harness antifragility and produce a multiplicative effect on innovation impact, startup success rate and public policy outcomes.

The dynamical Innovation System proposed can help organizations create more and better innovations in all domains and at all scales and sizes: spinoffs / startups, small and medium size businesses, large corporations, public sector and local government reform, education, standards and regulatory compliance, economic diplomacy, nation branding, risk management, cyber security etc. It could also be a useful tool for international organizations such as the World Bank, the International Monetary Fund, the European Investment Fund and the Organization for Economic Cooperation and Development in the design of policies and programs that aim to catalyze positive reform and sustainable growth, boost employment, facilitate technology transfer, tackle inequality and create new business models.

This versatile, cross-cutting tool can also help:

– Align all key stakeholders for faster innovation.

– Cyprus improve efficiency / productivity and competitiveness, promote fast-track entrepreneurship and attract foreign direct investment.

– Establish Cyprus as a Reginal Innovation Hub.

– Maximize the impact of Horizon Europe Program.

– Europe deepen its innovation edge.

– Organizations leverage digital capabilities to foster real-time innovation.

– Transform science into innovation; turn Big Data Analytics into Social Innovation and Social Entrepreneurship. The countries that will reinvent Smart Cities, Health and Education will become innovation leaders.

In summary: The new Innovation Paradigm described very briefly in this article will disrupt the global innovation landscape. It will change the way we innovate by embedding three critical factors in the innovation process: Combinatorial Power, Antifragility and Innovation Symmetry. This multidisciplinary tool is presented analytically in an Innovation Toolkit I have prepared – a blueprint for creating resilient innovations under conditions of extreme uncertainty.

 

 

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