Ophir Marko - Social Impact of Innovation
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In this lecture, Ophir Marko talks about the social impacts of innovation and how the state of Israel transformed from an economy based on agriculture to one based on high tech. For Lecture Notes: http://www.slideshare.net/ophirmarko/social-impacts-of-innovation
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Ophir Marko - Social Impact of Innovation
- 1. Social Impacts of Innovation European Research & Innovation Conference Barcelona, 2012
- 2. Ophir Marko • Joined 1st start-up at age of 14 • 2nd one at 15, which sold for $300 M • Served as intelligence officer • Physicist • Patent Attorney (soon!) • BizTEC – Israel’s Innovation Competition
- 3. And his grandfather… • Born in 1928, when this was the state of technology
- 4. Today
- 6. Role Models
- 7. Phases in Israel’s economic development 1948-1968 • Export is mainly agricultural • Science based capabilities: • Technion (1924) • Hebrew University (1925) • Weitzman Institute (1934) • Innovations and entrepreneurship in Agriculture (Kibbutz) and Defense
- 8. Phases in Israel’s economic development 1969-1992 • Arms embargo after six day war in 1967 • Building defense-industry-university complex • 65% of R&D defense related • Defense as % of GDP grew to 25% in 1980 • Prime industry for planes, tanks, electronics warfare • Army R&D and Academic Reserve
- 9. Phases in Israel’s economic development 1969-1992 • Spin-offs from defense (e.g. Elscint, Scitex, Orbotech) • Multinationals entering Israel (e.g. Intel, Motorola). FDI is R&D driven, not labor or manufacturing • Due to historical labor-socialist tradition deep antagonism toward individual entrepreneurship • Establishment of Office of Chief Scientist in 1968
- 10. Tipping point the for hi-tech growth in Israel during the -90’s • Availability of technology in defense sector and universities (ICT and SW) and FDI • Dramatic reduction of defense expenditure and defense industry labor • Influx of Russian scientists needing jobs • Supporting government (OCS), Incubator Program • Double digit growth in engineering/science graduates • Thousands of experienced engineers from IDF • Influx of US VC capital and Yozma funds • “Legitimization” of individual entrepreneur as role model and fast adoption of US entrepreneurship culture • Availability of Social Capital
- 11. The Israeli Diamond Technion University of Haifa 100 km2 Bar-Ilan University Tel-Aviv University Weizmann Institute of Science The Hebrew University of Jerusalem • 6 TTO’s • 23 Incubators Ben-Gurion University • Over 2000 start-ups • Over 80 VC’s • Leading multinationals • Matured Israeli high tech cluster
- 12. Jaffa Oranges vs. Software Exports ($ millions) Apple ™ and Oranges 3500 3000 2500 Export ($MM) 2000 Citrus 1500 Software 1000 500 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
- 13. So what is the social impact of innovation?
- 14. New Role Models
- 15. City of Netanya 1993 vs. 2012
- 16. Growth of Human Capital • 20% of population (25-64 yrs) have academic degree • 26% of all university graduates in science and engineering • From 1994-2004, the number of annual science and engineering graduates grew from 3,963 to 9,458
- 17. Growth of Social Capital • Extensive ex-army network • Easy access to expertise and volunteers • Institutionalized social capital through incubators, educational programs, competitions, Israel Venture Fund Association, Angel networks etc. • Access to network of Israeli expats in the USA. • Between 1978-2000, 14,000 professionals and technical workers moved from Israel to the US. Many returned with their companies.
- 18. A Final Anecdote
Editor's Notes
- Today I’ll be talking about the social impacts of innovation, and I’d like to do that by looking at the case study of a small middle-eastern country called Israel.
- Before we begin, I’d like to introduce myself. My name is Ophir Marko. I joined my first startup when I was 14, and my second one at the age of 15. Both were successful companies, and I was able to leverage my experience working for a dynamic environment when I applied to become an intelligence officer. I have a degree in Physics from the Technion – Israel Institute of Technology, where I have also led BizTEC, Israel’s innovation competition for entrepreneurs.I would also like to introduce another person, who is not present today.
- When my grandfather was born, the first computer was still 20 years away from being announced.Travel was done by ships and trains. Few owned cars, and airplanes were just becoming safe enough for the general public.Just a year before, in 1927, the telephone got a new look, when designers combined the receiver and transmitter. Telegrams were still the popular way of transmitting information. Also in 1928, the first television sets were presented.
- Technology has evolved in many ways since 1928. It has evolved in ways they barely imagined back then. Google, with Project Glass, is re-imagining what a personal communication device is. Apple has already disrupted our lives with the nuisance of iPhone. Hundreds of fiber optic lines connect the world with information travelling at the speed of light. One third of the entire world population (about 2.5 billion people) are connected to each other with the internet. How did all this happen in such a short period of time? How did these technologies engulf our lives, and what are the impacts?
- For the first 20 years Israel is mostly a socialist country, having strong influence from many immigrants from Eastern Europe. As such, value is placed on labor, and the role models of the time are factory workers, farmers, and land developers. Most work in innovation is done in the fields of agriculture, and due to ongoing war in the region with neighboring countries, military innovation is inevitable. Engineers and scientists are being slowly churned out by the 3 existing technical institutes.
- 1967 serves as a tipping point for military R&D. After the 6 day war, an international arms embargo is imposed. As the mentality of Israel after the Holocaust is to never be dependent on others for survival, a tremendous effort is put into defense R&D.The army, seeing it is short of scientists and engineers, begins an academic reserve program. In return for 3 more years of service, higher education is provided for those selected for the program. The education is free, and upon completion of the academic degree, individuals were placed in positions of power over a (relatively) large R&D budget, which led to very creative solutions.
- Alongside the defense sector, civilian sectors were not far behind. The academic reserve churned hundreds of experienced scientists and engineers each year which then entered into the civilian sectors. Multi-nationals such as Intel and Motorola entered Israel. Foreign Direct Investment was driven by R&D, not labor or manufacturing. However, due to a labor-socialist tradition, there was still an antagonism towards individual entrepreneurship.In 1968 the government establishes the Office of Chief Scientist (OCS). The OCS is directly responsible for an R&D budget which is spent on tech companies within Israel, whether they are local or foreign made no difference.
- The 1990s were the tipping point for the tech industries. There is a high availability of technologies alongside foreign investments. The defense industry is reduced dramatically in size due to established deterrence. When the Soviet Union collapsed, 1.2 Million Russians emigrated to Israel. Over 30% of Russian immigrants hold advanced degrees. Support is given by the government through the OCS and various incubator programs.Whereas Israel tried to emulate Europe in the past, it was now looking towards the US. In fact, after embracing good European practices, it went on to embrace the stronger points of the US culture. All these factors converging led to an inevitable tipping point.
- In an area of only 100 Km2 (out of a total of merely 22,000) are concentrated 6 Technology Transfer Offices, over 23 incubators, thousands of start-ups, under 100 VC’s, leading multinationals and tech clusters
- Intel and Microsoft build their first overseas R&D centers in Israel, and “geeks” are the new role models. Teva develops Copaxone ™, for treating multiple sclerosis (MS)Intel develops the core duoA team of 50 Israelis work full-time at CERN, operating the Large Hadron Collider (LHC)Ilan Ramon is celebrated as the first Israeli astronautMoolyEden (left), VP of Intel CorporationYossiVardi (center), investor in ICQGil Shwed (right), founder of CheckPoint
- This is the south-side of the city of Netanya, where I was born. Netanya, up to the 80s, was a city known as the Diamond Center of Israel. The diamond industry had it’s HQ here and combined with proximity to the seaside, tourism was strong in the area. The 1980s saw a decline in the diamond industry, as cheap labor was no longer available and the competitive edge diminished. Crime rates rose, and at the beginning of the 90s, Netanya was not considered one of the best places to live.The picture on the left is from 1993, of an area adjacent to a developing industrial complex. The complex was home to a brewery, a canary and a few office buildings. During the 90s, the complex grew to house Cellcom (One of Israel’s leading telecom providers), Elbit (No. 2 defense tech company), Tower, Saifun, WSI, Commtouch and others. The growth led to an influx of tech companies establishing their HQs here, since it was prime real estate available for cheap (sometimes subsidized) prices.Within 10 years the population of the city was reinforced by young couples and early families, mostly with higher education and good backgrounds. Crime rates decreased significantly, and additional real estate was developed. Service providers, such as restaurants, lawyers, patent attorneys, post offices, furniture companies, car dealerships, etc. were all forming around the high tech industry. High schools, which require students to choose majors, saw a rise in demand for electronics, physics, biology and chemistry.
- More often than not, it is necessary to look at the impact of innovation through the lens of time.Progress and innovation will always be hindered by those who fear change. Change is not something we can always plan for, but it is important to be able to adapt and embrace it when it does happen.