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"Knowledge is not enough; it is what you do with it"

Philip McCann, Professor of Economic Geography at the University of Groningen

A few days after being appointed as Johhanes Hahn’s Special Advisor, European Commissioner for Regional Policy, Philip McCann, Professor of Economic Geography at the University of Groningen, delivered the inaugural lecture of the TECNIO First Annual Meeting, in Barcelona. McCann focused his speech on technological change and its effects on the new economy and, according to his experience, stressed the importance of concepts such as innovation and knowledge in the tortuous overcoming from the current crisis.

Clara Cardona, Octavi Planells | 5 may 2010

Philip McCann

What is innovation?
Innovation is basically translating our knowledge and our ideas to the market. It is about generating revenue and wealth. In a region such as Catalonia, you cannot compete on low costs. Nowadays, in a global world, you compete against China, Indonesia, India and so on. Innovation is the critical component for adding value. You can add value when you are doing something different. It has to be different, and it has to be better that the competition, something which you can really compete with. You use skills and knowledge, ideas, and then you translate them into marketable propositions.

For many people this concept is still unclear.
Many people think about innovation as in a big technological breakthrough: iPod, computers, MS-DOS. But this is not what innovation is about. Innovation is about incremental changes, small steps, because lots of small steps lead to big changes.

Can you give us an example?
The best example here is Toyota. The company became the leading automobile maker in the world in terms of technology and quality of products. They made lots of small changes, small innovations every day. All the employees in the company were encouraged to come up with new ideas. So, innovation is a bottom-up approach, not a top-down approach, and this is very important.

Is it a kind of continuous creativity?
Well, innovation is also a process, a mindset, a culture. Everything you do in your organization, in your business or institution, you have to think all the time about how to improve. In order to survive and to move on, it has to keep improving. You cannot get to a point that you stop and say: “Ok, we are happy with that; now, we just take it easy and play golf”. It is not going to happen. Somebody else will pass you. It is a process of continuous improvement, undertaken by businesses, which generates economic growth, which increases wages, revenue, income...

What is the role of knowledge in this process?
Knowledge is critical. You can think of knowledge as an asset, something you have, you own. But it does not pay the mortgage. Having knowledge is not enough; it is what you do with it. And this is what innovation is about. You need the knowledge, you need research and development. Scientific and technical knowledge is also market knowledge. You need a great deal of market research. Then, in order to translate the knowledge into innovation, the first thing you need is entrepreneurship, you need to take risks. The better your knowledge is, the more reduced the risks become. And then what you need is also the expertise to translate the idea of the knowledge to something that the market will pay for.
And what is the reason of this continuous innovation? Basically is that these rising countries, which the OECD calls the BRIC countries –Brazil, Russia, India, Indonesia, China and South Africa–, have just continued growing; they get bigger and bigger. And a new set of countries such as Vietnam or the Philippines are just growing and also want to continue. So, competition is going to get bigger, and bigger, and bigger.

Knowledge, ideas, entrepreneurship… What else is needed? .
Marketing and communication. Marketing, branding, working out new issues is extremely important, because many businesses know that they have a good idea, good technology, but the point is that for the market that is not enough. You have to convince the market that what you have is a really good idea.

What about communication?
Communication is also extremely important. To think about knowledge as a part of a communication process. If you have good knowledge, you need to communicate it. You need to give a market knowledge, to work out where to position your product or your service. These are very difficult things, but after a while these processes become natural.

What have you talked about in the TECNIO meeting?
About regarding technology not just in terms of science or engineering, which of course are also very important. I talked about the whole aspect of technology: it is also a social process involving systems of people, the relationships between people, relationships in businesses and the marketplace. And every business is also different, we know that is true, and businesses have to work out who they are, what they are and where are they going. That is how you build a strategy; by really, really careful assessments of what your real skills are, what your competitive advantage is today. That is what strategy is about.

Has the world changed?
Yes, completely. Between 1989 and 1994 the whole world changed. Nowadays, a third of the system, or a Spanish system, or even a European system; competition is global now. world’s population wants to appear in the marketplace. We cannot think anymore of a Catalan Businesses in Barcelona are in competition with businesses in Jakarta. Twenty years ago that was not true; it is true now. For example, in Catalonia, you have to think about how innovation processes work in a part of the world, what kind of knowledge and capabilities you possess. But you must not think about Catalonia as the marketplace, no. The marketplace is a global market, and this is very, very different.

Is this the only way to overcome the current crisis?
Absolutely. To me there is no plan B. Countries like Spain, the Netherlands, the United Kingdom, where I am from, New Zealand, where I was working, were rich countries. The idea of competing in the future with low costs is simply not possible. We have to minimize the costs of what are we doing, absolutely, but the focus is much more about adding value. In the end, we cannot compete in terms of cheap labor, cheap land prices with China, Indonesia... it is not possible. Think of how the businesses here could be different, how to define market issues, make them different, distinct, in terms of competitiveness with other parts of the world. That is really what the future is. I cannot see any alternative.

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