Legislature(2017 - 2018)BELTZ 105 (TSBldg)
02/20/2018 02:30 PM Senate LABOR & COMMERCE
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| Managing Innovation by Frans Johansson, the Medici Group | |
| Adjourn |
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ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 20, 2018
2:33 p.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Kevin Meyer, Vice Chair
Senator Gary Stevens
Senator Berta Gardner
Senator Peter Micciche
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
MANAGING INNOVATION BY FRANS JOHANSSON ~ THE MEDICI GROUP
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
FRANS JOHANSSON, Founder and Chief Executive Officer
The Medici Group
New York, New York
POSITION STATEMENT: Presented Managing Innovation.
ACTION NARRATIVE
2:33:08 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 2:33 p.m. Present at the call to
order were Senators Meyer, Gardner, Stevens, Micciche, and Chair
Costello.
^Managing Innovation by Frans Johansson, The Medici Group
Managing Innovation by Frans Johansson, The Medici Group
CHAIR COSTELLO announced the business before the committee was
to hear about managing innovation from Frans Johansson of the
Medici Group. She explained that every year the Juneau Economic
Development Corporation holds an Innovation Summit. Individuals
come together to talk about innovation and how it can grow an
economy. She extended thanks to Brian Holst for allowing the
guest speaker, Frans Johansson, to talk to the Senate's
committee on the economy. She noted that the legislature also
has an innovation caucus that is a bipartisan, bicameral group.
She welcomed Mr. Johansson. He is a graduate of Brown University
and Harvard and has authored several books including The Medici
Effect and The Click Moment: Seizing Opportunity in An
Unpredictable World. She welcomed Mr. Johansson to share his
ideas about innovation and offer suggestions to the state.
2:35:34 PM
FRANS JOHANSSON, Founder and Chief Executive Officer, The Medici
Group, New York, New York, said how and where he grew up helped
inform how he got where he is today. His mother is American,
Black, and Cherokee and his dad is Swedish. He grew up in Sweden
at the intersection of different cultures, countries, and races.
The only person like him in all of Sweden was his sister. What
he sees highlighted from that experience was that as ideas come
together from people of different backgrounds and perspectives,
they have a better shot at being new and different. The
diversity of perspectives, backgrounds, cultures, and countries
adds to the innovative capacity of the individual. He saw that
with his parents.
MR. JOHANSSON said he studied environmental science at Brown
University. This interdisciplinary field brings together
geology, biology, chemistry, and economics to help drive insight
for the environment. He could see that breaking down those
barriers provided a better shot at breaking new ground. He made
the connection that he saw across cultures and countries and
that he saw across fields and industries and disciplines. It's
the same process.
MR. JOHANSSON said that after doing a couple of startup
companies, one in health care and one in technology, he wrote
The Medici Effect. It's an exploration of this intersection. He
said he'd talk about that tomorrow at the summit. It is the
cornerstone of all the work he's done since then. It has
tremendous implications for economic development, which is what
makes this so exciting. Yes, individuals can be seen applying
it; organizations and corporations apply it. Most of their
clients are corporations. But where the idea truly comes to life
is in a region, when people can be brought together on a grander
scale.
MR. JOHANSSON shared that he chose to call it the Medici effect
because it harkens back to the Renaissance. About 500 years ago
in Florence, Italy, the Medici family was able to bring together
people from different disciplines architects and sculptors and
philosophers - from all over Europe. And it was through this
intermingling, through this combination of ideas and concepts
that these people were able to create one of the most creative
eras in history, the Renaissance. So, there's Leonardo da Vinci;
there's Michelangelo; that's a city that was able to rise in
just a brief period of time and basically dominate Europe. So,
this effect is kind of a curious thing. That's what he wanted to
study. That's what he wanted to research.
2:40:11 PM
MR. JOHANSSON said he would focus on three major themes for this
opening discussion that have implications for how one could
think about it from a government perspective. Because
ultimately, economic development all flows back to government
It's what can a government, a local or regional government, do
about it. The first theme is diversity drives innovation. That
is the theme for the summit tomorrow and it is the most
important part of these three themes, because it drives the
other two. First, around the world today, no matter where, two
trends are happening and accelerating. One is around innovation.
It is true in the U.S.; it is true in Europe, Asia, everywhere.
There is increased focus on innovative growth, new entrants, new
companies, new industries are being born at an accelerated rate.
MR. JOHANSSON said that's on the one hand. On the other, there
is an incredible increased focus on diversity. It's happening in
the U.S., but it is true in Europe, Asia, Africa, Latin America,
and Australia. It is a global trend. And it's not accidental.
These two trends are connected and people are only going to see
more discussion of this accelerate. The reason they're connected
is because diversity drives innovation. So, if someone is
focused on it doesn't matter which side of the equation
someone is coming at this from - if someone is focused on
innovative growth that person is going to have to be thinking
about diversity one way of the other. The convergence of
industries, the convergence of cultures.
MR. JOHANSSON said he is going to give them a sense of what the
basic concept is. There's a hospital in Cambridge in the U.K.
that had a particular problem. When they were transferring
patients from the surgical unit to the intensive care unit, they
would have errors because two separate teams were dealing with
the patient. They have to coordinate and figure out what is
required. Because these are two separate teams they could have a
lack of coordination, they could have failures, and those
failures and errors could be fatal. This happens in hospitals
all over the world. The obvious solution would be to look at how
other hospitals solve the problem. But they didn't. Instead,
they looked at how a Formula 1 pit stop crew solved the problem
of coordination. Through those lessons, the hospital was able to
decrease their error rates. The idea here is that if people look
for concepts or insights outside of their field or discipline or
culture, they have a better shot of breaking new ground. That is
essentially what the Medicis did during the Renaissance. That
has huge implications for a region.
MR. JOHANSSON asked what happens when people who are different
are brought together, when a platform, opening, or space is
provided for people to combine ideas that are not obvious, that
are unexpected. That is the most exciting part of the Medici
effect, the idea that diversity drives innovation. It is this
notion that people are seeking insights in places different from
their own, their own expertise, their own background. That is
fascinating to see in the real world. He gives many examples in
his book, like the Cambridge hospital example.
MR. JOHANSSON said occasionally he gets to hear how his ideas
have influenced a region. Many years ago, he gave a talk in
Lincoln, Nebraska for the Rural Futures Conference. They have
similar issues to Alaska, a fairly dispersed population, only
two major cities. A few years after that talk, he read a story
about how one person at the conference, Vishal Singh, was
inspired by this message. His background was not in agriculture;
he had studied visual arts. He founded a company called
Quantified Ag, a high-tech company that improves the detection
of sick cattle. Cattle find ways to mask illness. He realized
that an innovator does not have to be a traditional expert. All
someone needs to do is make a connection. He teamed up with
someone and created essentially a Fitbit for cattle. Cattle and
their health can be tracked through a mixture of sensors and
drones. He did not have an agricultural background and was not
into drones. By seeing things differently and being encouraged
to reach out to someone from a different background, he made a
difference and began a successful company.
MR. JOHANSSON said that this suggests for government, that to
the degree that one can encourage people from different
backgrounds, different industries or fields, different cultures
and countries, whatever gives people a different perspective, to
come together, the better. In a place like Alaska, there is a
role to facilitate, to enable, anyone who wants to bring people
together, and not just the obvious suspects. Many times the same
people show up. They all know each other. He encourages bringing
diverse perspectives to get unexpected ideas. He gave an example
of working with groups in Rhode Island to innovate around the
food business. They brought in lots of parties, but not just
people interested in food. When working in Trinidad and Tobago
in their work to diversify the economy beyond natural gas and
oil, they encouraged them to bring the tech sector, research and
development science sector, the international trade sector, and
through these interactions, foster the environment for diverse
connections to happen. So, that is the first point.
2:50:44 PM
MR. JOHANSSON said he is often asked what type of diversity,
what combination, is the best one. His second theme is that it's
not that easy to predict what is going to be a success when it
comes to innovation. Companies that spend millions and billions
get it wrong all the time. All the ideas today that seem so
obvious usually came from something very unexpected. Today it
seems obvious that a site like YouTube should exist, but YouTube
started as a dating site, which was a failure. And out of that
came YouTube. This is the nature of innovation. It is
unexpected. It is difficult to predict. The implication for
government is huge.
MR. JOHANSSON said he often finds himself in situations where
people are trying to pick the winner. The likelihood of picking
the winner is very low. Instead, to the degree possible,
encourage lots and lots of different types of bets to happen. He
gave an example of what that would look like. A place in
northern Sweden, Jukkasj?rvi, used to be a mining town. A man
there tried to sell summer activities. Summer is three months,
but winter is much longer. He created the original ice hotel. At
the time, perhaps, it did not sound like a good idea, but the
question he asked is how he can sell the winter. He tried
various ideas until he landed on the ice hotel. The ability to
decide what is going to work only works after the fact.
MR. JOHANSSON said create the environment to bring lots of
diverse people together and allow the ideas to spring to life
and avoid the siren call of immediately pinpointing which one
will be successful. That is hard for organizations to do because
everyone wants to get to success right away. Successful
organizations avoid that. Amazon constantly launched all kinds
of new products and was agnostic which ones were going to work.
2:56:53 PM
MR. JOHANSSON said his third point is that if something is
working out, gaining traction, support it. Today more than ever
is a winner-take-all world. Companies that are first and gain a
critical mass early tend to get outsized returns. His favorite
example of supporting a winning dynamic early is New Zealand
around 1998. New Zealand made about 1.5 movies a year. If
someone had told New Zealand that they would become a top center
for making movies in the world, no one would have believed that,
but that's what happened because of the Lord of the Rings movie.
The government went all in to support the movie and the tourism
industry that resulted. In Orlando, Florida, Tavistock
Development Company's creation of Lake Nona Town Center was
inspired by the Medici effect, the idea of bringing together
different sectors, around the theme of health care. Early
success is being built upon. Now it is a $3 billion development
and growing.
MR. JOHANSSON summed up his three themes. Diversity drives
innovation. It is difficult to predict what will be successful.
Double down when success appears because the market is more
winner take all. From a government perspective, if they can
encourage different ideas, encourage meetings to occur, not just
the obvious ones, encourage lots of different ideas to take
hold, even in small ways, and then encourage the ones that start
to take off, then they can play into the true dynamics of
innovation that have been going on since the Renaissance.
3:02:22 PM
CHAIR COSTELLO opened the discussion to questions.
SENATOR STEVENS asked how they educate and encourage students to
be innovative.
MR. JOHANSSON said the discussion on education often bifurcates.
People want to stay competitive. They say the country is falling
behind in math. They look to see what Singapore is doing. When
he met with teachers in Singapore, they asked him how to emulate
the American school system. There is much Singapore is not
trying to emulate, but they are looking at emulating creativity
and innovation. This country needs to be better at math, but
something is here already. That is his first point. Second, the
country seems to be trying to get rid of that thing. The country
is trying to make education as predictable as possible. He gave
the example of the concern of a student not being at an exact
point at an exact grade level, yet innovation is increasingly
very unpredictable. The future is unpredictable and the school
system should reflect that by encouraging students to do what
they're good at. That talent can be combined with something in
another field, and it will drive creativity and innovation. The
education system should be driven to the idea that virtually
everyone has insightful knowledge. Today breakthroughs are
coming from all kinds of people who were not experts in that
field. The notion of expertise is being challenged. The
education system should be designed to promote the pursuit of
connections and the pursuit of what students are eager and
passionate to do. Instead, it is being driven to the opposite,
increased structure, increased predictability.
3:09:44 PM
SENATOR MICCICHE commented that throughout history some of the
most innovative failed in the traditional education system. He
said, "We still do that. We still punish those that think
differently." He gave the example of the experiences of his four
daughters. He asked how to adjust the educational model to
develop individual learning plans when students are very young.
MR. JOHANSSON said it must be solved because the country is
going to rely on talent and the question is how the talent is
expressed. There are many different models trying to address
Senator Micciche's point. Ultimately there is going to be
acceptance of insights, skill, drive, that doesn't conform. If
there is tolerance of difference, other pieces will fall into
place. It is challenging because a factory model can't be used
to push people through. He didn't mean to say that educational
milestones at younger years do not matter. The point is that
because someone may not have hit a bar at a particular time
doesn't mean there is an issue. Teachers, parents, and the
community at large should accept differences.
3:14:22 PM
SENATOR GARDNER said it's different kinds of intelligence. Kids
who sit in rows in a classroom are evaluated on specific traits
and specific kinds of intelligence. The system doesn't encourage
or teach innovation, obviously, but also emotional intelligence
and leadership. People bring all sorts of things to the table
that are not identified in the same way.
MR. JOHANSSON agreed. Most schools are focused on satisfying the
parents' needs to understand what is going on with their
children, so lots of homework, for example, which may not be
designed to encourage creativity. It is challenging to know how
to evaluate creativity. He asked what if something is created
out of failure. Failure is a key piece of innovation. He heard
from an Apple executive that when they design a new user
feature, they create ten separate teams to create ten solutions.
So, each team has a 90 percent chance of failure. But failure is
necessary to drive new ideas, which is becoming increasingly
necessary for economies. He would like homework to encourage
that, but it's different so people are hesitant to enact it.
3:17:12 PM
CHAIR COSTELLO thanked Mr. Johansson for his thought-provoking
comments. She said she's taught in a school setting with
instruction that was driven by essential questions and multiage
classrooms. Countries that have the most Nobel-prize winners
have many afterschool clubs that are multiage. She assumes that
interaction is diversity of age.
MR. JOHANSSON agreed.
3:19:09 PM
There being no further business to come before the committee,
Chair Costello adjourned the Senate Labor and Commerce Standing
Committee meeting at 3:19 pm.
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