Monday, July 20, 2015

What Theoretical Physics Brings to Entrepreneurship

http://de.slideshare.net/coilpsu/klemmer-presentation, p.5
Quite by serendipity, having lunch with a theoretical physicist from Asia some days ago I learned that theoretical physics is not plain theory, but the science field trying to make sense of seen reality. In short an experimental physicist finds a new material, which has some "unexpected" properties (that is the practical part). However, as Kurt Lewin (1890-1947), the famous German-American experimental social psychologist, is quoted, "There is nothing more practical than a good theory" which underlies and explains that real-life phenomenon. For this very same reason theoretical physicists then work to figure out, with the help of computer simulations, perceived patters of reactions of the material due to change of particular parameters, and known knowledge, what the underlying root causes of the new material's properties, and how they can be used, and eventually made practical in future applications.

What has all this to do with entrepreneurship, and eventually innovation?

Let's have a look at innovation and how it comes (in various forms) into the world, and to practical use. Peter Drucker, "management guru" and "Renaissance Man" of the 20th century well respected in the global business community in some form laid out a "theory of innovation", namely the sources of innovations that lead eventually to their economical success. In "Innovation and Entrepreneurship" he lays out seven distinct sources, which range from "The Unexpected" to "New Knowledge". See Andre Kearns' Slideshare  presentation for a good overview of these (and a condensed overview of the book itself) here.

Quite often the public focuses on the innovation based on new knowledge, such as technology-based (generally on new knowledge), and wonders why innovation is not taking off shortly after discovery, and first prototypes of possible products or services based on it. Due to Drucker this kind of innovation is the one with the longest lead time (and quite a high loser rate, due to the shift of other relevant parameters that change over time, especially shifts that touch society as a whole, such as demographics, immigration, or world politics) this should "In the theory and practice of innovation and entrepreneurship, the bright-idea innovating belongs in the appendix" ("The Daily Drucker", 20 July, p. 220).

So making sense of how innovations diffuse into society (and not just on some edges due to price, or perceived value by a minority) is more challenging than it looks like at first sight. Prof. John D. Sterman, Jay W. Forrester Professor of Management, Director MIT System Dynamics Group, not only gave quite a thought-provoking presentation in early 2008 stating that "technological solutions are not enough to address the problem of creating a sustainable world" but has covered the issue of innovation diffusion in his book "Business Dynamics - Systems Thinking and Modeling for a Complex World" (chapter 9.3, Innovation Diffusion as Infection: Modeling New Ideas and New Products, p. 323-347).


So the question stays, "What does it need to bring innovations into the world?"

To close this post, and keep the question open that underlines Kurt Lewin's "There is nothing more practical than a good theory", perhaps it is time for what Jay W. Forrester envisioned in 2007 at the International System Dynamics Conference in Boston in his speech "System dynamics - the next fifty years" and his statement at the end of the speech, "We should be able to move sufficient understanding of the behavior of complex systems into the public sector."

Isn't a "school of thought" (even a quite independent department of an existing university), based on theory and practice alike, the "perfect" place to make this happen?