“A slow sort of country!” said the Red Queen. “Now, here, you see, it takes all the running you can do to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!” This passage inspired the title of Prof. Dan Breznitz’s new book “Run of the Red Queen,” about China’s phenomenal growth engine and its innovation strategy, based on three years of field work in China by him and his student, co-author Michael Murphree. Focusing on China’s technology companies, Breznitz smashes the myth that countries must invent new things in order to prosper.China’s technology companies, Breznitz and Murphree found, are world leaders in second-generation process and production innovation.China’s secret lies in its skill in incremental innovation – making things in new and better ways, rather than inventing better things. Like the Red Queen, Chinese firms run as fast as they can to stay in the same spot – right at the global technology frontier, without actually advancing it.Chinese firms offer 80 percent of global best quality, at half the cost.For instance, Apple engineers design the iPhone in America. Within three weeks Chinese engineers know how to make it in China – faster, cheaper, better. The result has been to give China 7 percent annual GDP growth, or more, for 44 years, between 1961 and 2005 – almost unprecedented in history, boosting China’s per capita Gross Domestic Product from an abysmal $105 in 1961 to $1,400 in 2005 and putting China on track to become the world’s largest economy by 2030, deposing America.Breznitz shows why leading-edge innovation of sophisticated products is neither sufficient nor necessary for sustained economic growth.Moreover, he claims, China’s success is in spite of central government policy, rather than because of it. He thinks that the Chinese government’s expensive state-directed product-development projects may undermine China’s privately owned companies, which at times act contrary to government policy with great success.“Chinese companies have been doing wonderfully by being on the cusp of the latest available technologies developed elsewhere and then being able to work on them,” Breznitz says. “It’s a strategy that is basically against the central government’s push for product innovation.Those “Red Queen” innovation capabilities are probably going to maintain Chinese growth for the next 15 years – unless the Chinese government’s thirst for big state-directed R&D projects ruins its privately owned companies.” The central government’s current push for “Invented in China” instead of “Made in China” may actually harm China’s competitiveness, Breznitz believes.BREZNITZ IS A CERTIFIED SYSTEMS ANALYST – WHO plan software and hardware for information systems. And he is a bona fide start-up veteran – he co-founded Jerusalem-based Nocturnus Ltd., a software house. After gaining his BA at the Hebrew University in Jerusalem, he completed his PhD in political science at MIT in the US. He has consulted for governments in Finland and Ireland on their innovation policies. He is currently a professor at Georgia Institute of Technology’s Sam Nunn School of International Affairs, in Atlanta.I attended an informal seminar he gave at the Technion on his new book and then conducted an email interview with him.The Jerusalem Report: Is China a threat to Israel, or an opportunity? How can we transform the threat elements into opportunities?Breznitz: “From the point of view of business, China is mostly an opportunity. If you look at what China is excelling at – taking ideas that have been proven profitable elsewhere and running with them, as well as supplying components and system design, production and delivery services – it is easy to see that China’s impressive innovative capabilities are almost perfectly complementary to Israel’s.
Run of the Red Queen
Perhaps it is time innovative Israelis began to think differently, urges innovation consultant Dan Breznitz
“A slow sort of country!” said the Red Queen. “Now, here, you see, it takes all the running you can do to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!” This passage inspired the title of Prof. Dan Breznitz’s new book “Run of the Red Queen,” about China’s phenomenal growth engine and its innovation strategy, based on three years of field work in China by him and his student, co-author Michael Murphree. Focusing on China’s technology companies, Breznitz smashes the myth that countries must invent new things in order to prosper.China’s technology companies, Breznitz and Murphree found, are world leaders in second-generation process and production innovation.China’s secret lies in its skill in incremental innovation – making things in new and better ways, rather than inventing better things. Like the Red Queen, Chinese firms run as fast as they can to stay in the same spot – right at the global technology frontier, without actually advancing it.Chinese firms offer 80 percent of global best quality, at half the cost.For instance, Apple engineers design the iPhone in America. Within three weeks Chinese engineers know how to make it in China – faster, cheaper, better. The result has been to give China 7 percent annual GDP growth, or more, for 44 years, between 1961 and 2005 – almost unprecedented in history, boosting China’s per capita Gross Domestic Product from an abysmal $105 in 1961 to $1,400 in 2005 and putting China on track to become the world’s largest economy by 2030, deposing America.Breznitz shows why leading-edge innovation of sophisticated products is neither sufficient nor necessary for sustained economic growth.Moreover, he claims, China’s success is in spite of central government policy, rather than because of it. He thinks that the Chinese government’s expensive state-directed product-development projects may undermine China’s privately owned companies, which at times act contrary to government policy with great success.“Chinese companies have been doing wonderfully by being on the cusp of the latest available technologies developed elsewhere and then being able to work on them,” Breznitz says. “It’s a strategy that is basically against the central government’s push for product innovation.Those “Red Queen” innovation capabilities are probably going to maintain Chinese growth for the next 15 years – unless the Chinese government’s thirst for big state-directed R&D projects ruins its privately owned companies.” The central government’s current push for “Invented in China” instead of “Made in China” may actually harm China’s competitiveness, Breznitz believes.BREZNITZ IS A CERTIFIED SYSTEMS ANALYST – WHO plan software and hardware for information systems. And he is a bona fide start-up veteran – he co-founded Jerusalem-based Nocturnus Ltd., a software house. After gaining his BA at the Hebrew University in Jerusalem, he completed his PhD in political science at MIT in the US. He has consulted for governments in Finland and Ireland on their innovation policies. He is currently a professor at Georgia Institute of Technology’s Sam Nunn School of International Affairs, in Atlanta.I attended an informal seminar he gave at the Technion on his new book and then conducted an email interview with him.The Jerusalem Report: Is China a threat to Israel, or an opportunity? How can we transform the threat elements into opportunities?Breznitz: “From the point of view of business, China is mostly an opportunity. If you look at what China is excelling at – taking ideas that have been proven profitable elsewhere and running with them, as well as supplying components and system design, production and delivery services – it is easy to see that China’s impressive innovative capabilities are almost perfectly complementary to Israel’s.