The three laws of innovation: open, open and open

by: Eric Schmidt, executive chairman of Google
From: The Australian
November 28, 2011 12:04PM

IT’S a common mistake to assume that if you want to innovate, then you need technology. In fact, that’s exactly backwards.
When you look at the world-changing innovations through history you find that technology wasn’t the primary cause of innovation. Whether it was the printing press in Germany, the Cochlear implant from Australia or the Walkman in Japan: the technology was the consequence, not the cause. People were able to arrive at those inventions in an atmosphere of openness: being open to new ideas, open across boundaries and open to collaboration.

It’s hard to define openness. It’s easier to demonstrate that whenever you try to embrace whatever you think it is, you come out ahead.
Let me start with what it means to be open to collaboration. When people ask me what my favorite Google product is, it’s not Gmail or Maps or YouTube. It’s Google – the company.
For the last decade as CEO of Google, my number one priority was to help build a community of amazing people who will endure long after I’m gone, and all our current products have been replaced by the next wave of innovation. This kind of community, where all rewards, challenges and responsibilities are shared, allows us to dream big things, then achieve them.

The Internet expands this concept of community beyond the confines of a company, or the borders of a country and to the world. Android is a perfect example. It is the software platform for smartphones found on over 200 million different mobile devices today. It is open source – which means that other people can take our code, modify it and ship it in product forms that we never imagined.

And because of this, there are more options for telcos, developers, and consumers. A global community of app developers and entrepreneurs have produced over 500,000 apps and grown into an entire industry. In this case, our desire to collaborate within Google has over time made us collaborators with every developer of Android across the world.
Let me give another example of how being open to collaboration can make a big difference. A few years ago, our engineers in India were growing frustrated by how much of their country was literally off the map. So they created a tool that allowed people to build digital maps collaboratively. The response has been phenomenal. Volunteers are at work improving the maps of 180 countries on our MapMaker tool. In Pakistan alone, users have marked 25,000km of previously uncharted roads.
We need to enable the building of these kinds of communities in society, not just at a corporate level. We need to allow people to come together so they can learn, collaborate and innovate in a decentralized manner.

That means that we also need to be open to the world. Thanks to the web, there is no limit to opportunity. Geographical borders don’t have digital equivalents, so there is no such thing as a local business anymore. Your market, your customers, your partners, your suppliers are all global.
So the question is – are you? In this century, the world is going to keep on getting smaller. We’re seeing the rise of new economic powers. And we’re seeing the birth of a global middle-class which will have huge spending power. The Internet will clearly be the best way to engage this new world. We know 3 billion more people will come online by the end of the decade. Any kind of business can tap that opportunity.

That’s true of Sydney start-up “Shoes of Prey”, a purely Internet based shoe store that lets you design your own shoe online. Around 60 percent of their sales go overseas; Japan is their second largest market after Australia. Their latest innovation bridges the online and offline world: a department store in Kyoto lets you see and touch samples of their shoes and create your own pair at a computer right in the store.

That’s one small example of how any new idea now takes place in a global context, thanks to the Internet. Millions of people from all walks of life across the Asia Pacific region are demonstrating that as they turn to the Internet as a platform for opportunity and prosperity – and to advance billions of new ideas of their own. They are shopkeepers. Manufacturers. Artists. They’re finding ways to reach new markets, in new ways and with new partners.
Some are intimidated by the consequences of this openness, especially as the Internet disrupts some industries. But the benefits are astonishing. When you go beyond anecdotes and into hard numbers, you see that borne out by economic reports. McKinsey estimates that for every job lost due to the Internet, 2.6 more are created. In Australia, according to the Connected Continent report by Deloitte Access Economics, the Internet contributes 3.6 per cent of GDP — more than iron-ore exports. And every business can benefit from the Internet’s growth.

But that’s only the beginning. The Australian digital economy is forecast to grow by $20 billion to be worth $70 billion over the next five years. This is a 7 per cent growth rate, twice as fast as the forecast for the rest of the economy.

This assumes the Government keeps adopting flexible and sensible policies aimed at supporting investment and innovation in the Internet economy. The NBN and other investments in high speed broadband will act as a catalyst that will help to close the gap between Australia and the leading digital economies worldwide.
Australians also need to be more open to failure. There seems to be some moral taint associated with business failure in this country. But you cannot innovate without failure. At Google, we say: “Fail fast and iterate.” This is something we need to train all entrepreneurs to do. We have to make sure that the cost of failure is not seen as so great that many great ideas don’t get off the ground.

Australia is blessed with an amazingly talented and creative population, and many brilliant developers, businesses and entrepreneurs. It’s important that businesses and politicians keep up with the imagination of Australia that will allow all of us to benefit.