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Victor W. Hwang

RAINFOREST DYNAMICS
WHAT MAKES ECOSYSTEMS TICK?
Where are we today in history?
1776




Classical economics
economic value from cost of raw inputs
1871




Neoclassical economics
economic value from supply-demand equilibrium
1990




Business cluster theory
economic productivity from geographic concentration
Today, it all seems unsatisfactory.

How do we cultivate systems,
not just describe them?
The world needs a new framework
to accelerate growth…




  1776    1871     1990
                           ?
                           2012
A new paradigm for innovation…
  Plantation         Rainforest
While plants are harvested most
efficiently on farms,
weeds sprout best in Rainforests.
Rainforests nurture serendipitous interactions...
A radical shift in perspective,
from this...
… to the real world.
Not gears, but human beings.

                   Landlord

       Land                     Engineer

       Labor
                                           Output
      Capital
                 Investor
   Technology?
                            Scientist
And real human beings are separated
… by geography, culture, language, social networks, and
lack of trust.
This happens across entire systems.



             Across an entire system
Elinor Ostrom, 1933-2012
Nobel Prize in Economics, 2009




                                 Zero-sum games can indeed
                                 become positive-sum
The Secret of Innovation Ecosystems


  Economies thrive when culture
                 Across an entire system
  overcomes social barriers and fosters
  connectivity, trust, and collaboration
  between diverse people…
But how do we design networks
where value comes from chaos?

Can we engineer serendipity?
It’s not just creative destruction.
Far more important—and harder—
is creative reassembly.
The culture of the American frontier
required strangers to trust fast, or die…
Rules of the Rainforest
Rule #1: Break rules and dream.
Rule #2: Open doors and listen.
Rule #3: Trust and be trusted.
Rule #4: Experiment and iterate together.
Rule #5: Seek fairness, not advantage.
Rule #6: Err, fail, and persist.
Rule #7: Pay it forward.
How do humans change behavior?



          Across an entire system
Tools to Build Rainforests
Tool #1: Learn by Doing
Tool #2: Enhance Diversity
Tool #3: Celebrate Role Models and Peer Interaction
Tool #4: Build Tribes of Trust
Tool #5: Create Social Feedback Loops
Tool #6: Make Social Contracts Explicit
What does it mean?
OLD                           NEW
1. Factors of production      1. Cultural transformation
2. Clusters, technoparks,     2. Human connectivity, not just
   and incubators                physical proximity
3. Local first, then global   3. Wherever the value chain goes
4. Writing smaller checks =   4. Fund managers and their
   venture capital               human qualities matter
5. Hiring by skills and       5. Character, trust, respect, role
   resume                        models matter
6. Plan specific outcomes     6. Experiment, adapt, iterate
7. Measure output             7. Measure environment
Rainforests thrive by nurturing
what makes us uniquely human.
Victor Hwang, Act I (Global Innovation Summit 2012)
Victor Hwang, Act I (Global Innovation Summit 2012)
Victor Hwang, Act I (Global Innovation Summit 2012)
Victor Hwang, Act I (Global Innovation Summit 2012)

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Victor Hwang, Act I (Global Innovation Summit 2012)

  • 1. Victor W. Hwang RAINFOREST DYNAMICS WHAT MAKES ECOSYSTEMS TICK?
  • 2.
  • 3. Where are we today in history?
  • 4. 1776 Classical economics economic value from cost of raw inputs
  • 5. 1871 Neoclassical economics economic value from supply-demand equilibrium
  • 6. 1990 Business cluster theory economic productivity from geographic concentration
  • 7. Today, it all seems unsatisfactory. How do we cultivate systems, not just describe them?
  • 8. The world needs a new framework to accelerate growth… 1776 1871 1990 ? 2012
  • 9.
  • 10.
  • 11.
  • 12. A new paradigm for innovation… Plantation Rainforest
  • 13. While plants are harvested most efficiently on farms, weeds sprout best in Rainforests.
  • 15. A radical shift in perspective, from this...
  • 16. … to the real world. Not gears, but human beings. Landlord Land Engineer Labor Output Capital Investor Technology? Scientist
  • 17. And real human beings are separated … by geography, culture, language, social networks, and lack of trust.
  • 18. This happens across entire systems. Across an entire system
  • 19. Elinor Ostrom, 1933-2012 Nobel Prize in Economics, 2009 Zero-sum games can indeed become positive-sum
  • 20. The Secret of Innovation Ecosystems Economies thrive when culture Across an entire system overcomes social barriers and fosters connectivity, trust, and collaboration between diverse people…
  • 21. But how do we design networks where value comes from chaos? Can we engineer serendipity?
  • 22. It’s not just creative destruction. Far more important—and harder— is creative reassembly.
  • 23. The culture of the American frontier required strangers to trust fast, or die…
  • 24. Rules of the Rainforest Rule #1: Break rules and dream. Rule #2: Open doors and listen. Rule #3: Trust and be trusted. Rule #4: Experiment and iterate together. Rule #5: Seek fairness, not advantage. Rule #6: Err, fail, and persist. Rule #7: Pay it forward.
  • 25. How do humans change behavior? Across an entire system
  • 26. Tools to Build Rainforests Tool #1: Learn by Doing Tool #2: Enhance Diversity Tool #3: Celebrate Role Models and Peer Interaction Tool #4: Build Tribes of Trust Tool #5: Create Social Feedback Loops Tool #6: Make Social Contracts Explicit
  • 27. What does it mean? OLD NEW 1. Factors of production 1. Cultural transformation 2. Clusters, technoparks, 2. Human connectivity, not just and incubators physical proximity 3. Local first, then global 3. Wherever the value chain goes 4. Writing smaller checks = 4. Fund managers and their venture capital human qualities matter 5. Hiring by skills and 5. Character, trust, respect, role resume models matter 6. Plan specific outcomes 6. Experiment, adapt, iterate 7. Measure output 7. Measure environment
  • 28. Rainforests thrive by nurturing what makes us uniquely human.