Innovation Blog

Reinventing Ireland:  How to Build an Innovation Ecosystem

By Shlomo Maital

Dec. 10/2009

  Consider Ireland.  Once Europe’s poorest nation, in 1988, Ireland reinvented itself.  Driven by a powerful vision that united government, labor and industry, Ireland attracted multinational companies to build factories, attracted by an educated English-speaking labor force, low tax rates and Ireland’s strategic membership in the European Single Market.  Ireland went rapidly from one of Europe’s poorest nations to its fastest-growing one. 

    But the 2007-9 global crisis hit Ireland hard.  The economy contracted, and unemployment soared.  Now, like other countries, Ireland again is working to reinvent itself — to build a new growth engine to replace the old worn-out one.  I believe they will succeed.  I believe that other countries should carefully study Ireland’s approach, given their past record of success.

    Ireland’s two top universities, University College (Dublin) and Trinity College (Dublin) began a joint project, known as the Innovation Alliance, to work with government, business and venture capitalists.  The aim?  “To develop a world-class ecosystem for innovation that will drive enterprise, development and the creation of sustainable high-value jobs”.  

    The core of this ecosystem is a plan to link angel investors, venture funds, service providers and entrepreneurial mentors, that can help translate a novel idea into successful job-creating businesses.  [1]   Spearheading the effort is Burton Lee, a key member of the Irish Government task force whose mandate is to design the new system.  “There is nowhere in Europe where all the elements of (such an) ecosystem are really functioning”, he notes.  

    Ireland has great universities and top scholars.  Lee’s plan is to “turn Ph.D.’s into savvier businessmen and women.”   I am sure he is aware of MIT Professor Edward Roberts’ finding, that other things equal, a Ph.D. seriously reduces the chances of success for an entrepreneur (in America), compared with an entrepreneur with an M.Sc.  (Ph.D.’s, trained for perfection, take far too long to get to market). 

       I believe Ireland’s approach is validated by a new book, written by Harvard Business School Professor Josh Lerner,  Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed—and What to Do about It.   Lerner’s key point:  government can play and often has played a key role in creating and stimulating entrepreneurial ecosystems, in Israel, Singapore — and even Silicon Valley,  but more often, inept government policies have utterly failed.    “Particularly during the early years, the government played a critical role in shaping Silicon Valley,  especially spending and funding from the U.S. Department of Defense,”  Lerner notes.

       In the post-global crisis era,  the rules of the game have changed radically.  The most important rule change:  Governments today must be part of the solution, rather than be regarded as part of the problem.  It is governments that will lead the effort to redefine and reshape innovative ecosystems.  Countries that recognize this fastest, like Ireland, will reinvent themselves better and faster.   

[1] See:  Yasmine Ryan, “Banking on a Ph.D. ‘ecosystem’ to help the economy bloom”,  IHT, Dec. 2, 2009, page 11 (www.iht.com).