innovation course

So the Bank of Canada recently released some interim results from Project Jasper.

Here is a set of slides explaining the experiment and here is an opinion piece written by Carolyn Wilkins who is a Senior Deputy Governor at the Bank.

Basically at this time the system does not meet all the Principles for Financial Market Infrastructures (PFMIs).

In case you are wondering what 'T1 Cash' means. Canada has something called the Large Value Transfer System (LVTS) - so it is a wholesale system. It has two payment streams Tranche 1 (T1) and Tranche 2 (T2). In the T1 system banks pledge collateral with the Bank of Canada. So I (being a bank) can send a T1 payment if my net owing position is less than or equal to the collateral I have pledged. So T1 payments are fully collateralized - I don't have access to any line of credit.

So step 1 (in the 6 steps) - Banks pledge T1 cash.

Step 2 - BOC converts cash to CAD-Coin - and this is used to fund participant accounts with the BOC.

So CAD-Coin is a settlement asset - for settlement between banks.  It is 'money' for them, not for us.

Central bank money is being exchanged on par - 1 CDN $ (cash) = 1 CAD-Coin - so the Money supply is constant.

Gordon has written a book ... in case you want to read a really long book ... The Rise and Fall of American Growth

But you could just read the papers the first piece and the sequel.

Basically he is suggesting that recent innovations 'tech' have not been as good for the U.S. as previous ones (electricity, internal combustion engines etc.). Good ... meaning in terms of productivity and economic growth. So the growth rate of output per hour was 2.36% p.a. over the period 1891-1972 and 1.59% from 1972-2013. Did computers etc. make no difference? They did, but looks like diminishing returns may have set in. The same statistic (rate of growth of labor productivity):

1972-1996: 1.38% p.a.

1996- 2004: 2.54%  <<<< here is the spike

2004- 2013: 1.33%

Hal Varian's consumer surplus argument does not cut it with Gordon (and rightfully so). Varian says many of the 'new' tech innovations give us more consumer surplus and consumer surplus is not part of GDP, so that's why things don't show up in growth statistics. Gordon says consumer surplus was never part of GDP.

Here is a recent HBS working paper by Christensen and others. He clarifies the concept:

Sustaining innovations - when technological change occurs along dimensions that main stream customers care about and that incumbents have provided in the past.

Disruptive innovation - the new innovation does not improve the attributes on which existing firms built their business (different trajectory/new 'unique' combination of product attributes - could in some ways be perceived to be inferior to existing product)

Technological change outstrips growth in demand for 'higher performance', So incumbents over-serve the market in terms of product features/attributes (consumers don't really want them) and this also leaves some room at the lower end of the quality scale for entrants (mini-mill story).

Incumbents don't see the attractiveness of investing in 'inferior' product with lower margins (and this is also why they are not a source of disruptive innovation). Or we could use Ghemawat's argument about commitment to explain why this does not happen.

All disruption does not have to be 'inferior' - new market disruptions "take hold in a new value network" and compete against 'non-consumption' - example: Godrej chotuKool portable refrigerator.

Here is a story from the NYT on opening up hardware design.

The internet of things in the home.  A story from the NYT.

And a search engine for the internet of things:

We talked about Kodak and its patents.  An article from the NYT on Kodak and a short NYT video.

Here are two reports on Bioinspiration that may be of interest - both commissioned by the San Diego Zoo. An Economic Progress Report and a Global report.

And here is a very cool video on Geckskin - (one of the examples in the case)

Here is a video on the reading by Micheal Porter for the last week of class.

A short video on the Harvard Business School Case Method.

Our speaker yesterday spoke of developments in data center efficiency.  Here is an article from Wired magazine on Google's data centers.  Although this is not the latest and greatest.  That is secret.

The next big thing:  Quantum Computing.  The Canadian company which makes these is D-Wave.  Google has bought one and so has Lockheed Martin.

In devices:  A material called Graphene. Can't wait to dump my iPhone!