Making the Middle Matter – Trish Cotter

MIT Sloan Entrepreneurship Lecturer Trish Cotter

From Xconomy

Call it the problem of the middle—the middle states and the middle class—two groups that have struggled with problems that, while they are inexorably linked, are different all the same.

Historically, most of the venture capital in America has been active on the coasts, leaving a vast portion of the country without seed money for innovative new startups. At the same time, the Midwest has suffered from a loss of manufacturing jobs and, as a result, has in some ways failed to flourish in the same ways as other parts of the country. And, of course, there is no shortage of news articles outlining the many struggles facing the middle class, in general, in America.

“We live in a fractured society,” argues MIT economist Peter Temin in an MIT News article on America’s two-track economy. “The middle class is vanishing.”

According to Temin, America now features two sectors: an FTE sector, where people who work in finance, technology, and electronics tend to thrive, and a low-wage sector, where workers often struggle. The middle class, traditionally an area of national strength, is starting to disappear. Moreover, the FTE sector, overwhelmingly focused and fixated on both coasts, has for a long time neglected investment opportunities in the Midwest.

Venture capital—specifically venture capital aimed at the oft-ignored middle states—could be part of the solution. The central part of our country is often ignored as an ideas hub. Most accelerators, venture capitalists, and startup programs are focused on a few key cities on the east and west coasts. The Kauffman Foundation, known for its emphasis on education and entrepreneurship, recently published an article focusing on both the middle class and the middle states, asking: “Is the Middle the New Edge?”

It states: “The middle ground is too often dismissed as unremarkable, when it is truly necessary. The middle should be appreciated as an admirable place to be – where people work together to solve big problems and move our nation forward.” Read More »

China, the innovation dragon – Simon Johnson and Jonathan Ruane

MIT Sloan Professor Simon Johnson

From Project Syndicate

China has achieved much since 1978, when Deng Xiaoping initiated the transition to a market economy. In terms of headline economic progress, the pace of China’s transformation over the past 40 years is unprecedented. The country’s GDP grew by nearly 10% per year on average, while reshaping global trade patterns and becoming the second-largest economy in the world. This success lifted 800 million people out of poverty, and the mortality rate of children under five years old was halved between 2006 and 2015.

The question now is whether China, well positioned to become the world’s innovation leader, will realize that opportunity in 2018 or soon after.

China’s transformation has been underpinned by an unprecedented manufacturing boom. In 2016, China shipped more than $2 trillion worth of goods around the world, 13% of total global exports. It has also pursued economic modernization through massive infrastructure investment, including bridges, airports, roads, energy, and telecoms. In less than a decade, China built the world’s largest bullet train system, surpassing 22,000 kilometers (13,670 miles) in July 2017. Annual consumption is expected to rise by nearly $2 trillion by 2021, equivalent to adding another consumer market the size of Germany to the global economy.

Earlier this month, Apple CEO Tim Cook declared that, “China stopped being a low-labor-cost country many years ago, and that is not the reason to come to China.” The country’s manufacturing strengths now lie in its advanced production know-how and strong supply-chain networks. Understandably, China’s leadership wants to increase productivity and continue to move further up the value chain.

Read More »

Beer’s role in innovation – Joe Hadzima

Joe Hadzima,
MIT Sloan Senior Lecturer

From Huffington Post

Many great—or seemingly great—ideas come to fruition during the course of drinking a beer. When you’re out with the guys (or girls), one or two cold ones could have you rhapsodizing about how you’re going to change the world. This is most likely when self-lowering toilet seats, automatic pet petters, and self-twirling ice cream cones were all dreamed into existence.

As great as these and other inventions are, we’re not sure beer had any role in their creation. But has beer had a role in actual innovation?

Self-driving cars are all the rage in the news lately, with Google and Uber fighting it out over patents and racing to the front of the line for consumer release. While they were focused on cars for the everyday driver, the first self-driving truck delivered 50,000 cans of Budweiser 120 miles in Colorado.

That’s right. The first self-driven truck was used to deliver beer.

Budweiser has come a long way since the days of the horse and cart, right? In the first days of beer delivery, customers only had access because their drink of choice was brought daily by horse and wagon.

You’re probably familiar with the Clydesdales, still often used in Budweiser commercials to tug at heartstrings. These horses were bred by farmers along the banks of the River Clyde in Lanarkshire, Scotland. The Great Flemish Horse was the forerunner of the Clydesdale, which was bred to pull loads of more than one ton at a walking speed of five miles per hour. While that kind of pulling power was amazing during those days, it was still slow and expensive. Each hitch horse needed 20 to 25 quarts of whole grains, minerals and vitamins, 50 to 60 pounds of hay, and 30 gallons of water per day.

Is it any wonder that Anheuser Busch was the exclusive US licensee of the Rudolph Diesel patents? One might assume Ford or the railroad would have been first on board with the development of diesel powered trucks, but it was actually beer.

Knowing how much was needed to keep those magnificent horses healthy and hardy, it seems diesel was a logical next step. This is a classic example of early adopter customers driving a new technology.

Read More »

“The Future of American Innovation”– a podcast with David Schmittlein

MIT Sloan Dean David Schmittlein

MIT Sloan Dean David Schmittlein

MIT Sloan’s David Schmittlein appeared on CEO Global Foresight to discuss how the United States is leading world innovation in life sciences, information technology, and energy.

The segment was recently made available as an 8-minute podcast on the Innovation Gamechangers podcast, available on iTunes.

Dean Schmittlein also discusses innovation clusters and how the MIT community encourages a culture of collaboration and action learning. The program also includes interviews DARPA director Arati Prabhakar and Carl Dietrich, an MIT alumnus and CEO of flying car company Terrafugia.

Listen to Innovation Gamechangers podcast, available on iTunes.

David Schmittlein is the John C Head III Dean and Professor of Marketing at the MIT Sloan School of Management.

New study offers hope for commuters caught in traffic – Ioannis Ch. Paschalidis

Ioannis Ch. Paschalidis, a former Visiting Professor at MIT Sloan

If you live in Boston, Los Angeles or any other major U.S. city, you know this fact: traffic is a nightmare. Sometimes it seems that traffic is all anyone talks about and each delayed meeting or event begins with a story about how bad it was.

The average commuter in the U.S. spends 42 hours in traffic per year. The cost of commuter delays has risen by 260 percent over the past 25 years and 28 percent of U.S. primary energy is now used in transportation. Road congestion is responsible for about 20% of fuel consumption in urban areas. According to one estimate, the cumulative cost of traffic congestion in the U.S. will reach $2.8 trillion by 2030. At the individual citizen level, traffic congestion cost $1,740 per driver during 2014. If unchecked, this number is expected to grow by more than 60 percent, to $2,900 annually, by 2030.

It’s a problem with a classic common and tragic root.  No individual driver has an incentive to make changes that would make the entire system better.  In other words, each driver seeks to make the best time or take the most convenient route, but no one is in charge of making the system work better as a whole.  As a result, traffic just keeps getting worse.

But technology, which in the form of the automobile gave us this problem, may now offer up the faintest hope of a solution for this problem—that is, the global positioning system, the pervasive use of cell phones, and the advent of the self-driving vehicle could bring new solutions to this seemingly intractable problem. Read More »