Innovation and Society: License and Precautions
Sir Peter Gluckman
24 September 2015
Different societies have very different histories, contexts and cultures. When we think about the relationships between science, innovation and society it is important that we bear this in mind. Certainly there are features that are common across the modern, western democracies with their increasing focus on innovation, but there also remain important cultural and contextual differences, despite the impacts of globalisation
New Zealand is a young country without a deep intellectual history. We have faced little in the way of an existential risk and our economic history has been rather straightforward: Grow food and sell it – first to “mother England” and now to Asia. But we all know that simple model is no longer adequate – in no small part because it is difficult to sustain a developed world economy from a predominantly commodity-driven export cycle.
Fundamentally we have the challenges of geography and history which means that we have evolved as a frontier society, one that has led to a lot of self-sufficiency and an inventive culture. One in which we generally solve things as problems occur – this is summed up in the number 8 fencing wire national myth. What we have been less good at is thinking long-term – that is taking, a strategic view and investing for the long-term and this weakness comes through particularly when reflecting on this country’s thinking about science and science-based innovation.
Robert Soklow was awarded the Nobel Prize in Economics in 1987 primarily for demonstrating that over 80% of economic growth in the USA came from technological advances, not from what economists had thought were the main drivers: labour, capital and resources. Thus the dominance of the USA economy really came on the back of investment in science, education and engineering.
Most advanced economies have come to understand this, perhaps NZ somewhat later than others although for many it still feels less tangible than investing in the traditional presumed drivers; however, many policy dilemmas still remain. Should such areas be managed top down or bottom up? What is the role of the State versus the private sector? How much to invest?
There is enormous interest in these questions. It is a focus of the Small Advanced Economies group that my Office leads.
What is now becoming clear is that it is not only the level of investment in new knowledge that is important, but also how a society chooses to manage that investment and how a society responds to and uses the ensuing new knowledge.
Further, inventiveness and technological innovation are not the same thing. Societies can be very inventive in solving problems, as I think we generally believe New Zealanders have been (at least in some sectors), but this does not necessarily translate to being innovative – at least as that term has come to be understood today which includes getting an economic return on that inventiveness.
There are three primary questions I want to address in the first part of this paper: the level of investment and by whom; the management of that investment; and the interaction between science, invention, innovation and society.
Challenges in choosing to make any investment of any type arise from attitude and worldview. Does the investor have an appetite for risk or not? Does the investor seek a short-term or a long-term return? Is this a sector the investor is interested in or not or at least should be? And when that investor is the public purse, these questions take on the added dimensions of ensuring good stewardship of taxpayer funds and broad distribution of benefits to society.
These questions are at a heart of a national R&D strategy where the taxpayer is investing funds for the production of impactful knowledge. While there are many forms of impactful research, my focus here is on economic impact. A key question becomes where and what is the public sector role versus the private sector role? It is generally assumed that the public sector role relates to where the benefits are the public good or are precompetitive or the scientific and intellectual risks are too high for most companies to undertake. The private sector is expected to invest an increasing proportion as a commercialisable product becomes identifiable.
But when countries have a generally low output of innovation the question for a government becomes how to stimulate it? And here there have been divergent but not mutually exclusive approaches. Those that try to ‘pull’ it through by industry subsidies, tax credits etc and those that how try to ‘push’ it through promoting basic research and higher education.
Of course all advanced countries do a bit of both but finding the balance between these two is a core policy conundrum and it is here that cultural and contextual factors really play a role. Short-term thinking tends to bias towards pull and a private sector focus. Long-term thinking tends more to the push model and towards developing a smart society.
In sum, a low risk culture focuses on the pull-model as it appears safer, a high risk culture focuses on the push-model because it knows that if there is a sufficient flow of clever entrepreneurial scientists and creators, the private sector will pick up the challenge when bright ideas of innovative potential emerge. And, increasingly, the latter is not a case of two distinct sets of people with a transactional exchange across from public to private sector actors. Instead, we are seeing smart countries producing individuals with a foot in either sector.
A related challenge is that there are two broad classes of innovation: incremental innovation and disruptive innovation and with this, the type of education and research settings that foster each differ. Further the returns on each can also be very different.
If a research system is top-down controlled or private sector dominated then one can primarily expect incremental progress to meet the short-term interests of industry or the government, where they see a very clear pathway to market enhancement at the outset. By contrast, if a system is bottom-up and can accept intellectual risk, then disruptive science and innovation may be more likely. Getting this balance right is complex, with contextual and political (‘small p’) dimensions, in that a society that focuses primarily on the push model has to have a culture that can accept a long-term thinking, a risk of individual failure and unexpected opportunity.
New Zealand is going through a transition. We have been a low risk society; and that is why we have been viewed as inventive but not particularly innovative; it is why we have invested little in research either from the public sector or the private sector; it is why our research system has had a focus on tight contracts and institutional health with a reduced focus on scientific excellence, intellectual risk taking and true innovation (which generally happens at disciplinary boundaries).
However, this is now changing as we are undergoing a complex transition where inevitably short-termism (which is still deep in the NZ psyche), political and policy processes and the private sector, interact. There is now a growing recognition that to be a smart country, there is a need for a longer-term strategy. Policy makers, scientists and the private sector are all facing challenges in this transition. In particular scientists and their institutions that have been successful in one frame, may find the need to shift challenging.
But we are indeed making the transition. This is evidenced by the obvious entrepreneurship of our current generation of young professionals, in the growing number of start-up companies, in the growth of high value development and manufacturing and in the signs of some very clever ventures emerging.
The change has started but is far from complete. Our private sector is still a very low investor in R&D – about 0.5% of GDP after government subsidies are adjusted for. This is about a half to a third of what other comparative economies invest. But this is complicated by a couple of significant factors. Firstly, we have very few large companies that invest in R&D and most of our large companies are in the service sector. As a consequence, we have the lowest spend on R&D by large companies of any OECD country. Secondly we are in fact a country of small and medium enterprises (SMEs) and our main industrial sectors have not been in defense, pharmaceuticals and transport where the bulk of R&D spend in large companies occurs.
We are unlikely to be able to address the second point but we can the first. This may be by encouraging more clustering of pre-competitive research, by supporting mergers amongst our SMEs, by encouraging partnerships between companies here and offshore and by attracting multinational corporations (MNCs) to do R&D in New Zealand. The latter point is critical as MNCs create the ecosystem in which smaller companies thrive. There is no successful innovation system that does not have a high role for MNCs as an active component and as major clients for local small companies.
What will bring them here is not market size. Rather things like, sectoral expertise in areas such as high value nutrition, agritech and medical technology, emerging opportunities in the green technology and the digital entertainment industry are important. But most compelling of all to MNCs is the availability of clever well-trained ideas generators within our academic sector and in our entrepreneurial space.
And this brings me back to the public sector. One of the most important contributions to innovation that the public sector can make is in the production of high quality, entrepreneurial graduates who can take their skills and ideas and knowhow into the private sector in both new and old firms as well as into the public sector. It is increasingly clear that the key role of universities when it comes to innovation is in graduate production but it has to be the right kind of graduate. This requires an acceptance of risk taking, and the possibility of failure, combined with lateral thinking, associative learning skills, exposure to a wide range of disciplines and work environments, and overall self-confidence. It also leads to a public sector that would become more innovative and evidence informed.
The idea that the State will be the primary employer of scientists and engineers is no longer valid, but there is a key role for the state in training quality researchers, and research training comes in the doing. Of course academics tend to be good at training more academics. Again it is why ventures that expose students to the private sector are so important. It is also why an increasing range of partnerships between academia and the private sector is important even though that in turn challenges some aspects of the academic tradition. With this however, there is a danger that academic and policy leadership might presume that the university and the research institute can displace the private sector by focusing on direct commercialization and the establishment of spin-offs as the primary reason for institutions engaging the private sector. That is not a valid expectation – most of the relationships will be less formal than that in consulting, partnerships, internships, contract research etc.
Now let me look at the other side of the innovation coin:
As science and science based innovation become core to an advanced nation’s strategy for economic, environmental and societal wellbeing, other critical issues tend to emerge. New technologies have been emerging globally at such a pace that society has had difficulty addressing them and absorbing their impact. This is so much so, that perhaps the biggest challenge facing an innovation strategy is society’s response to certain specific forms of innovation. The reality of all technology developments from the control of fire (which emerged with the first modern humans) to what we know of as genetic modification is that there are always going to be trade-offs for society to consider.
That escalating rates of discovery can lead to the introduction of technologies that show real or potential downsides is becoming more obvious. Such developments create the risk that society will become increasingly anti-science as some commentators have suggested.
Just as science and technology are essential to providing solutions to every one of the global challenges from dealing with an ageing population to climate change, they have also played a major part in creating the issues directly through the impacts of better public health and medicine in the case of the former, and large-scale industrialization in the case of the latter.
Such advances have led to the human population explosion and to all that is associated with the rapid rise in greenhouse gas emissions that drive climate change. Obviously technological advancement has both changed the nature of warfare and our exposure to it with all of its tragic consequences – think how Hiroshima affected our parents’ views of nuclear technology. Combine this with the confusion caused by a welter of information and misinformation on the internet and social media, and the result is a significant and perhaps growing concern in some as to the role of science and technologies.
Some technologies have crept up on us because they have appeared uniformly useful – the internet and subsequent mobile devices to access it, and the internet of things are the most obvious examples. But now we face a wide range of societal issues as a result: the loss of privacy; fundamental changes in the way we work; how we communicate; fears of the power of the mega companies like Facebook and Amazon with their control over information (even while we willingly provide it); cybersecurity issues and so forth.
Then there are technologies that have appeared to emerge almost without warning and which impact on that most visceral of domains – our understandings of life and who we are. These include genetic modification, newer reproductive technologies, synthetic biology, and nanotechnology applied in the natural world. Different countries with different paths to public reason have reacted differently to these. For example stem cell research and treatments have been accepted by some and genetic modification rejected within the same country and vice versa.
But a feature of these conversations has often been their shallowness, steeped in rhetoric but with scientific information either absent or misused. Why has this been the case? In part this is because science and innovators did not explain what they were doing earlier enough to allow society to give their input, to discuss the policy settings that would allow society to put the proper parameters on innovation on one hand and assist shaping societal demand on the other. In part it’s because scientists and innovators have not realised they do not stand apart from society as sociologist Robert Merton once described the relationship, but are part of it, and the 21st century concepts of co-design and co-production are important. But it is also because concepts of risk and precaution are less well understood than they need to be.
And I want to dwell on the issue of risk as my final point.
Individual perceptions of risk are not primarily actuarial. Even when a risk can be explained with numbers, telling a person that a medical procedure has a 1 in 20 risk of a bad outcome has a different effect to telling them that there is a 95% chance of success.
The concepts of risk and hazard are often confused. Risk from a hazard or threat is a product of exposure, sensitivity, resilience, and ultimately a subjective value that we place on something that we deem could be ‘at risk’. But perception of risk is much more complex. It is affected by all sorts of cognitive biases such as past personal experience, of whether we feel we have control (ie driving a car) or whether we have no control to risk exposure (ie being a passenger in a plane). It is affected by whether we think we will personally benefit or merely pay a price – think about how a shareholder in a mine thinks versus the landowner neighbouring the property to be mined. But most of all it is affected by our worldview which arises from our culture, our upbringing, our experiences.
For some things we might take a non-consequentialist approach, sticking to our entrenched views no matter what the context or consequence. That is, nothing will change our mind. For other issues, we may be a consequentialist. That is, we think in terms of the risk and adaptive management in deciding what we will accept. So some oppose genetic modification on fundamental grounds related to their concepts of nature, or the use of embryonic stem cells on religious grounds. Others might oppose these for a variety of reasons related to their understanding of risk and benefit. These are valid positions and must be respected.
Science and technology cannot proceed unless society gives license to do so and this means thinking about how these different views must be listened to and addressed. Ultimately reconciling different world views is what a democracy stands for and what policy makers must address. From this, our future entrepreneurs must also respect and engage in the democratic process of societal consensus building. They cannot stand apart from it or take the elitist and self-serving view that is seen so often by those controlling social media.
Entrepreneurs are understandably keen to proceed to their own advantage but the societal response will often be one of precaution and society has every right, indeed the duty, to think that way. If you think of what innovation may be bringing: synthetic biology, artificial intelligence, driverless cars and planes, medical implants of all sorts including brain implants, robotics, thought communication. There are also types of ICT that impinge on privacy or presage the potential loss of jobs, as the technological innovation does not necessarily assist employment. Similarly there is the potential for the transfer of greater knowledge, and therefore power, to the internet giants and the potential to develop an innovation divide that will promote inequality.
Such are the issues that society has to grapple with and not just leave to the innovator. Society has a right to understand and reflect on what is going on and entrepreneurs need to realise that far better partnerships are needed if we are to take the best of new technologies and limit the fear of them by controlling their potential to do harm. The successful entrepreneur of the future will act in partnership with society not in isolation from it.
Much of this is encapsulated in the proper use of the ‘precautionary principle’, and not its misuse. The precautionary principle when it was introduced was meant to be a recipe for adaptive management. In the face of a new technology with uncertain implications, constraints were to be put in place that were either to be relaxed or adjusted as new information came forward.
Instead precaution has come to mean, for many, in the absence of certainty of zero risk that no action can be taken. But most people who are science literate will know science is about disproving and explaining in terms of probabilities. The concept of zero risk is thus implausible. Thus the misuse of the precautionary principle becomes a tool for absolute inaction and thus a tool of rhetoric rather than of inductive logic – that is of evidence based policy. Its original meaning and intent – that of adaptive management and responsible monitoring – must be reclaimed.
This is the world of the 21st century. The accessibility of information is a great tool for democracy but it is of very variable reliability and this can undermine the assumption of inductive consideration and lead people to fall back on polemic. When this happens it can limit the opportunities that innovation and entrepreneurship bring, but conversely society does have the right to govern the use of such technologies. Hence entrepreneurs, technologists and scientists must engage properly with society and not just after the fact.
If we look back over recent years across different western societies including our own, a robust partnership between society and science and technology has not always been obvious. That lack of partnership has not been healthy.
In New Zealand we certainly have been no different in that regard but we might have differed in another way – we have not told our stories and we have not valued intellectual capital enough. As I said, we may have been inventive but we have not been innovative and this is reflected in both our low public and private spend in R&D and low investment in innovation. But things are changing. This change will only accelerate if scientists and innovators tell theirs, engage our multiple publics, listen to them and bring them along on the journey. Only then will we complete the transition to a country that will succeed in the 21st century.
 This essay is an extended version of remarks I made at the invitation of student organisers of the New Zealand Chiasma event at Victoria University in Wellington on September 24th, 2015. Chiasma is a non-profit organisation with the aim to connect university students to high-tech industries.
 While there are many forms of science-based innovation (for example in governance, policy, management and process), but in this paper I am primarily talking about market-relevant innovations that are driven by science and technology – of course some of this is systems-related rather than the creation of new technologies.
 For a comprehensive review see: http://www.smalladvancedeconomies.org/wp-content/uploads/SAEI_Impact-Framework_Feb_2015_Issue2.pdf
 For a excellent discussion on this see Marc Saner’s article: “Real and metaphorical moral limits in the biotech debate.” Nature Biotechnology 19.7 (2001): 609-609.