Entrepreneurial Cities should become Urban Labs
Remember the days when Nokia and Motorola owned the phone market? They are not so distant, only a few years ago. Yet how many of you have a Moto or a Nokia now? Let me guess: none!
If you are sceptical about the power of innovation for shaping markets and destroying fortunes, these two examples are a reminder of how fast things can go. But they tell us more; they describe a change in the way we compete.
Not so long ago, firms competed on price. In a way all societies started here, taking advantage of low wages, natural resources or any other factor that might provide a sustainable advantage, difficult to replicate. As we know now, these advantages were far from sustainable. Low wage countries, if successful, became richer, raising wages. Shifts in extraction technology, such as fracking, made extraction advantages less relevant, and so on. So, let’s forget about sustainable, ok?
Competing on innovation needs early adopters, experimentation and fast market validation of proposals.
Productivity replaced low costs as the main form of competition. Knowledge became the new buzzword. Nowadays however, knowledge is everywhere and while some sectors strive to maintain their knowledge advantage, engineers in India or China have become just as competent as their rivals in Europe or America, and with them the productivity level of these different societies is levelling out.
We are no longer competing on productivity. Some of the biggest, most thriving companies such as Apple, Google, Airbnb, Tesla, Facebook, GE, Amazon and Apdo still compete on productivity of course, but they earn their huge surplus and tremendous market share from innovation. They compete not on making similar things more efficiently but on transforming the world with completely new products and services.
This Copernican change in the way we compete has huge implications.
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