On 22nd October 2009 a conference was held here at the Bassetti Foundation entitled ‘The Network Society, Business, Innovation and Responsibility’. The conference was organized in conjunction with PDMA and ‘Europe in my Region’, and chaired by Bassetti Foundation President Piero Bassetti.

The conference was made up of 8 twenty-minute presentations and an hour-long debate. In this posting I would like to give an outline of each speaker’s presentation and will follow up with a posting reporting the ensuing debate.

The conference was held in Italian and streamed live, and recordings of each speaker are available for viewing through The Foundation website.

The first intervention was an introduction by Piero Bassetti.
In this introduction he gives a background presentation of the foundation describing its now 20 year established project of addressing the problem of responsibility in innovation. During this presentation he outlines what he perceives as two types of confusion about innovation, the first being that innovation is seen merely as novelty, and the second that it is seen as discovery.
He then offers his own definition, that innovation is ‘the achievement of the improbable’.

He goes on to argue that innovation does not necessarily have to be science intensive, that it involves intuition and sensibility and can also be cultural and social. He gives the example of the mini skirt, an innovation in design that changed the world. He goes on to state that in a competitive society innovation is important because the more you innovate the more you win, but that this process does not necessarily improve the world and that we should exercise caution in this process.
The examples of nuclear power and the problem of pollution demonstrate that this societal belief in the per-se good of innovation should be challenged.
He outlines the aims of the Bassetti foundation stating that it wants to push innovation protagonists into thinking about the responsibility that they take when they start the innovation process. In order to do this he argues that we have to reflect upon a definition of responsibility. Innovators must then be made to think about their own responsibility in the innovation process. Morality and ethics are not credible tools, innovators have to be made to think about the consequences of their actions and think about how to proceed whilst bearing in mind their conclusions.
He points out however that it is impossible to see the consequences of something new.
One more difficulty highlighted is that it is very difficult to criticize innovation.
He also outlines how the methodology of political decision making and that of science are very different, but that decision making tends to be given up to technicians, which leads to technocracy and away from democracy. He concludes by stating that decisions should be taken drawing from as broad an information base as possible – not merely technocratic – as this should help to promote responsibility.

The second speaker is Paolo Zanenga of PDMA who is interested in the theme of the management of innovation. He argues that the biggest innovators are creating working practices that are very different from contemporary management models, and that the managerial class is not able to control innovation. Innovation or development departments look for freedom while management structures restrict their movement. He gives the well-known example of Xerox. The development team works to produce new innovations but then the management team decides that some things are not compatible with their business model and innovative proposals are lost. He goes on to speak about the ‘cognitive transaction’ that could be described as interaction within a net leading to innovation. He also cites the use of social networks, which enable broad discussion circles of new ideas. This cognitive movement therefore becomes something bigger than its components, creating what he describes as patterns. He gives the worldwide web as an example. He concludes that communities of knowledge are the necessary resources for this development, but we need a certain type of manager that is capable of holding everything together. He seconds the proposal made by Bassetti that this process should be as widely drawn as possible as this can lead to more responsibility, as those involved have skills and hold viewpoints from different sectors. He argues that this development could lead to a different type of economy, one based upon implicit understandings, with each network within this economy forming an ecosystem. He argues that these networks can in some way be defined through a kind of DNA, and that this DNA could have an intrinsic inbuilt responsibility.

The third speaker is Mauro Biscotti of IBM. He presents a series of concepts and what he describes as instruments. He defines 3 types of innovation, product and service innovation, operation innovation and business model innovation. He is interested in the third, business model innovation and gives several examples including that of DELL computers. He describes how Dell business model innovation lead to the elimination of the salesman and the direct marketing of their products to the end user. Xerox are once again cited for their pay-by-copy policy which was adopted to negate the problem of the high production costs of their photocopying machines. The modern economy is described as an economy of knowledge, the change being provoked by the movement from a local to a global competitive economy. This requires a change in business modeling and leads to companies selling different products and skills. He concludes with the example of Fiat and their agreements to produce parts and engines for other auto manufacturers, but also to sell design and expertise to other manufacturers and in different fields.

Giorgio Casoni is the fourth speaker and he addresses the problem of design as an innovation tool. He defines innovation in several ways. His first definition is of innovation as something you do if you try to change an existing situation into a different, preferable situation: how things could be and not how they necessarily are. He gives the examples of doctors and engineers working to improve concrete situations. His second definition is that innovation is to do something, give it a symbol and define its relationships (with clients and users) or in other words to give it meanings. Casoni in fact sees design as a mediator of meaning. He speaks about open innovation but argues that it only works for big organizations, and not for those with restricted organizational capacity. He goes on to discuss design based innovation, offering descriptions of several different forms. These range from creating new forms with a new language, new cultural models for example such as happened with the Apple mp3. He argues that Apple designed a new way of using music through the design of their MP3 players. Another form of innovation could be using technology in a new way, a re-interpretation of use or a way of applying technology to something that it hasn’t been used for before. He also describes aesthetic innovation and typological innovation, described as an improvement or innovation of meaning. He concludes with a question, how can we design innovation incentive systems? He argues that technology in itself is no longer sufficient and incentive schemes are necessary to promote innovation. He goes on to describe something he calls ‘the European paradox’, the need to create things that are economically valid.

Paolo Bertoli teaches economics at The University of Pisa. Over that last 2 years he has been studying the unfolding global economic crisis.
He symbolically describes the current system as a container that is undergoing rapid technological change and discontinuity. He argues that one problem that requires analysis is that of complexity, because complexity implies stress and systemic modification. He argues that as in the past we bring with us everything previously learned, but the present situation has changed and now knowledge has a sort of shelf life. This is a revolution that requires both the symbolic container or system to change, but also its contents. He gives the example of the global finance industry, every action has some global effect. Wealth is linked by communication channels that he sees as tubes linking different containers. He argues that a skewed distribution of wealth is not sustainable, his tube and container metaphor demonstrating the leveling effect that gravity has on the distribution of the liquid. He goes on to raise various questions affecting smaller businesses including questioning how they can invest in innovation during an economic crisis. He concludes by stating that a global world with localized rules is unable to regulate itself on a global basis; models need to be created that are new and innovative but there is little time available. He goes on to suggest a series of 10 proposals aimed at helping global recovery:
Look at strategic planning and put in variables
Make the most of technology
Change the finance model (look for partnerships and try to create a support network)
Have real governance system and long term monitoring
Be aware of the need to create ethical understanding in governance
Change the existing management model
Use networks as old style hierarchy doesn’t work
Value human resources
Try not to concentrate power into a single head (family model) because this model doesn’t have the ability to govern expansion
Don’t become discouraged.

Mario Calderini is interested in complexity and the challenges it presents for education. His key words are confusion and transaction cost economics. He argues that confusion is caused by the use of the words research and innovation. He suggests that these terms lead to the idea of a linear process in action. He criticizes government policy, claiming that it comes from a distorted viewpoint because it talks about innovation through creativity, but in fact only finances the science based approach. He claims that this distorted approach is born from the EU strategy outlined in the Lisbon treaty. The model proposed argues that more money creates more innovation, but governments soon realized that this approach doesn’t work. The treaty aimed for the investment of 3% of national GDP in research projects, but governments discovered that this was neither possible nor probably even useful. He states that the management of innovation is absolutely new and constantly evolving due to the fact that we don’t have a concrete model of innovation. This presents a problem for classic economics, as a formal economic model for the representation of innovation does not exists. This leaves the door open for everyone to ‘have a say’ and this creates confusion. He continues by saying that we don’t have a good enough understanding of knowledge, only 1 word that refers to all types of knowledge and skills and this also creates confusion.

Andrea Terzi is an economist and he speaks about fundamental uncertainty.
His first question is ‘How can we order risk through statistics?’ He argues that you cannot do this for future actions, as probability cannot be measured, so we have to make a hypothesis. He describes a type of metaphoric can opener that works using the philosophy that history tells us what will happen in the future. History offers an indication because we can presume that the future will unfold in a similar way to past events. Our trust in probability is not a constant however, in different periods external factors will lead us to trust probability more or less, and as a result we are likely to proceed differently in different situations, even given the same hypothesis. He suggests that we should read Keynes as he argues that his theory is still valid today as it describes rational decision-making. He claims that business ability exists within this decision making process. A businessman has animal spirit, the taste for risk, and this saves capitalism. He claims that the rest of the world is less tolerant of risk, liquid investments that allow you to quickly retrieve your money prevail, and this fact has macro economic consequences. He describes the underlying philosophy for this model as being that the future is predetermined. We just have to find the map in order to foresee it and possess this vital information. The more information in the present that you can refer to, the better your possibilities, and this leads to a tendency towards secrecy and data protection. He goes on to outline the efficient market theory. The market guides investment creating equilibrium, and the more efficient the markets the less the possibility of making a lot of money. But he points to the paradox that with less regulation finance earnings have exploded. His conclusion is that uncertainty is a part of daily life and this means that we have immense difficulty producing a model. He claims that we are condemned to pretend that we can assess risk. He asks the question of how we can control this. He argues that in recent years the importance of finance has been far too great and claims that the financial world has invented products that have made the system unstable. He underlines the importance of public trust, but concludes that governance and regulation also obtain uncertain results.