I gave the speech below this afternoon to an event organised by Leyton on “Securing Ireland’s Future through Research and Innovation”, held at the IMI. About 140 people attended. My main focus was the role that the multinationals can play in catalysing the innovation economy in Ireland…
“Governments don’t create jobs, entrepreneurs do: the risk takers, the business people, the exporters up and down the country who have succeeded often despite, not because of, Government action”.
So stated the May 10th press release from the Minister for Jobs, Enterprise and Innovation, Richard Bruton, on the Government’s new Jobs Initiative. In presenting the initiative to the Dail, his colleague the Minister for Finance, Michael Noonan, used the word “jobs” 43 times; “enterprise” 8 times; and “innovation” just 4 times. In fact the only time he said “innovation” was when he explicitly referred four times to the “Minister for Enterprise, Jobs and Innovation”. Note too that Minister Bruton thinks his title is jobs first; Minister Noonan thinks his colleague’s title is enterprise first; and both agree that regardless, innovation is last.
I’m writing separately on what impact the Jobs Initiative gives to the innovation economy in the next edition of the Irish Times Innovation magazine, so I won’t dwell on this topic here. But suffice to say it is very unclear to me whether the new Government has yet constructed a strategy for job creation in the innovation economy. Taoiseach Enda Kenny recently passionately spoke on April 15th last at the Youth Entrepreneurship Strategy Forum at Dublin Castle on the need for a jobs engine for the economy. But it is unclear to me whether he has yet assembled the necessary components into an engine, still less whether all the gears are meshing together, and even more whether it can be accelerated from first to second to higher gears without over-revving the engine or running out of fuel.
I fervently agree with Minister Bruton: Governments don’t create jobs, entrepreneurs do. In my view, we determinedly need as many entrepreneurs as possible – our own, and immigrants from elsewhere in the EU and also beyond. Each start-up on its own in general is unlikely to make a material impact on our unemployment rate. Collectively, the impact for jobs could be immense.
The Jobs Initiative targets the tourism sector. I was initially excited when I heard the headline of the announcement of a visa waiver scheme, but then frankly disappointed that it was not more creative. President Obama spoke in El Paso, Texas, on May 10th last: “Look at Intel and Google and Yahoo and eBay – these are great American companies that have created countless jobs and helped us lead the world in high-tech industries. Every one was founded by an immigrant.” Taoiseach Enda Kelly could do very well to copy an Obama speech for a second time..
I fervently agree with Minister Bruton: Governments don’t create jobs, entrepreneurs do. A very small number of ventures grow into large companies (like Intel and Google and eBay). Many more are sold before they become large: but each such sale yields experienced serial entrepreneurs, business angels and new aspirant entrepreneurs keen to replicate the success. Some ventures fail, but those involved almost inevitably pick themselves up and try again. Each cycle of the engine generates experience, new business angels and an even greater pool of entrepreneurs and ventures. More entrepreneurs and more ventures means more jobs, and more spill-over wealth to fuel the rest of the domestic economy. Do everything to oil the engine once built, and it will rotate faster and stronger, accelerating faster up through the gears – and all for an affordable effort.
How do we encourage our own entrepreneurs to base their ventures in this country and not abroad ? What are we doing to encourage entrepreneurial immigrants to found their companies and create jobs in Ireland ?
Taoiseach Brian Cowen did have a vision for the innovation economy, and was implementing a strategy. The details are contained in his Innovation Taskforce Report and its associated Implementation Group. There are many aspects – an entrepreneur-centric system; catalysing risk capital alongside our current foreign direct investment policies; the role of public service broadcasting in the innovation economy; infrastructure support, including wet laboratories; innovation alongside public procurement; re-targetting Enterprise Ireland, the IDA and Science Foundation Ireland; unification of academic technology transfer; creating world class CFOs as well as CEOs; education policy; taxation policy and so-on. Building a successful jobs engine requires many components, each crafted to mesh with the others, so that the engine not only ticks over but can accelerate and move faster and all using a steady consumption of the necessary fuel.
Are these various tactics the necessary and sufficient components for a successful innovation economy ? Will they collectively encourage entrepreneurs to stay in Ireland and to attract even more to come here ?
In my view, Ireland has a largely unrecognised, under-marketed, and sorely under-exploited resource which ought to be a huge magnet for entrepreneurs; the most compelling reason to chose Ireland; and is the largest competitive advantage which Ireland has over Silicon Valley, Israel, Bangalore, Guangzhou, Cambridge London, Munich or Amsterdam or indeed any other innovation centre in the world.
What is that resource ? No, its not our education system, our great people or our tax system, all of which our politicians and media periodically promote. They’re missing the picture. The resource is: our multinationals.
The IDA has led the world in making Ireland the most densely concentrated location of multinationals, and from very many different sectors. Over 50 years, well over 1,000 companies have established operations here. From pharmaceuticals to medical technologies to information and communication technologies to financial services to entertainment and media to clean technologies to business services, Ireland now leads the world as a multinational hub. Why is this so important to entrepreneurs ?
There are a few reasons. It is easy to network and get an introduction: we are a garrulous nation. When I started IONA as an unknown campus spinout in the early 90s, I went and visited companies in Ireland like HP, IBM, Digital Equipment Corporation, Microsoft, ICL and Lotus Software. I asked the Irish managers there to whom should I talk inside their company: in every case they were able to steer me and give me an introduction to the appropriate team, frequently back in their corporate headquarters. In 1993 Sun Microsystems invested in IONA, assisted our global reach and channels, and gave us the initial credibility we needed to gain access to Fortune 1000 customers.
But although incredibly valuable, introductions, access to corporate finance, access to channels and markets, and general industry intelligence are all probably no longer the biggest attraction to working with a multinational. In my view, the largest opportunity today for entrepreneurs is access to under-utilised intellectual property.
A large number of multinationals, but not all, have substantial reserves of dormant intellectual property. In some cases this is for defensive reasons against potential future alleged patent infringements by others. In some cases, the IP is judged to be premature for commercial exploitation, but held in reserve in case the core market changes or evolves. In many cases the IP is the result of interesting work carried out by engineers and scientists within the corporation, but ultimately judged (or sometimes even unknown and unrecognised) by corporate strategists as insufficiently significant to create a new market which would have a material impact on the business and revenues of the corporation.
Several multinational corporations are now quietly – and one or two not so quietly – seeking to identify appropriate entrepreneurs who can work with them by licensing very interesting intellectual property. The resulting market opportunity might initially be moderate or small for the multinational, but large for a start-up, and perhaps ultimately grow to be material for the multinational. Creating a new commercial initiative can be easier outside of the corporation since the existing corporate sales, marketing and channel organisations are focussed on the core products and services. Investing technology, and indeed both finance and corporate brand credibility, in a start-up, can create a win-win situation.
Governments don’t create jobs, entrepreneurs do. The new Government, the Minister for Innovation (and then Enterprise and Jobs) and especially the Taoiseach already have the necessary components sitting right in front of them, the blueprints for a great design and they really could build a world leading engine for the innovation economy.