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Global Innovation Index 2016

The Global Innovation Index (GII) 2016 is an annual publication which features a composite indicator that ranks countries/economies in terms of their enabling environment to innovation and their innovation outputs. The GII covers 141 economies around the world and uses 79 indicators across a range of themes. The Global Innovation Index 2016 was created by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO). The theme of the 2016 Global Innovation Index (GII) is ‘Winning with Global Innovation’.

Here is an overview of the indicators that are used to create the innovation index and how they are related:
Global Innovation Index factors

And this is how the measures are calculated:

  • The Global Innovation Index is the simple average of the Input and Output Sub-Indices.
  • The Innovation Efficiency Ratio is the ratio of the Output Sub-Index over the Input Sub-Index.
  • The Innovation Input Sub-Index is the simple average of the first five pillar scores.
  • The Innovation Output Sub-Index is the simple average of the last two pillar scores.

Global Innovation Index Ranking

Here is the 2016 ranking for the Global Innovation Index. Switzerland, Sweden, the United Kingdom (UK), the United States of America (USA) and Finland are the world’s five most-innovative nations:

  1. Switzerland
  2. Sweden
  3. United Kingdom
  4. United States of America
  5. Finland
  6. Singapore
  7. Ireland
  8. Denmark
  9. Netherlands
  10. Germany

The Netherlands falls five ranks to 9th place, mostly driven by an FDI-related (Foreign Direct Investment) variable and missing data points.

The GII rankings have shown a remarkable level of global diversity among innovation leaders over the years. Among the top-ranked 25 innovative nations this year are not only economies from Northern America (such as Canada and the USA) and Europe (such as Germany, Switzerland, the UK and the Netherlands) but also from South East Asia, East Asia, and Oceania (such as Australia, Japan, Korea, and Singapore) and Northern Africa and Western Asia (Israel).

The distance between the performance of the top 10 ranked innovation nations and all others is still wide. The innovation divides remains in 2016 according to the GII 2016.

The Netherlands in the Global Innovation Index

The Netherlands has been ranked in the top 10 economies of the GII since 2008. It’s fall on the ranking this year is largely because of methodological considerations (see below). This year its ranking is affected by its lower ranks on both the Innovation Input Sub-Index (12th) and the Innovation Output Sub-Index (9th).

The Netherlands achieves a top 25 ranking among all economies for all pillars of the GII, with a better ranking this year in Infrastructure (12th) and Business sophistication (9th). Conversely, the Netherlands’ performance falls at the pillar level in Knowledge and technology outputs, where it ranks 16th overall. This change is mainly a consequence of lower rankings in the Knowledge diffusion sub-pillar (114th) and the indicator FDI net outflows (118th).

The latter indicator, identified as highly volatile in previous GII editions, partly drives the fall in the ranking of the Netherlands. Also, for some new variables—namely, IP receipts and ICT services exports — the Netherlands lacks data.

A business that can endure the future

Even if your business can sort of escape competition by crafting a monopoly, it is only a great business if it can endure the future. Is one of the statements in the book Zero to One by Peter Thiel and Blake Masters.
A great business is defined by it’s ability to create cash flow in the future. In other words, the value of a business today is the sum of all the money it will make in the future.

Most value of low-growth businesses is in the near term. Valuation of technology companies follows another trajectory. They often lose money in the first years: it takes time to build a valuable thing. This means delayed revenue. For this to happen a company mustn’t just grow it most also endure. In other words, will this business still be around a decade from now?

Characteristics of a business that can endure the future

Companies with a large cash flow far into the future usually share a combination of the following characteristics:

  1. Proprietary technology
  2. Network effect
  3. Economies of scale
  4. Branding

Proprietary technology

Proprietary technology is the most substantive advantage a company can have. It makes it difficult or impossible to replicate the product. As a rule of thumb proprietary technology must be at least 10 times better than its closest substitute in some important dimension. If it is perceived lower it is harder to sell the product especially in a crowded market.

The clearest way to a 10 times improvement is to invent something completely new. In that case the increase in value is theoretically infinite.

Amazon made a 10 times improvement by offering at least 10 times as many books as any other bookstore. The Apple iPad made the tablet go from almost unusable to useful.

Network effect

The network effect make a product more useful as more people are using it. However this will only work if the product has value for the first customers. Paradoxically businesses based on the network effect must start in small markets. Facebook started with just Harvard students.

In general network effects businesses aren’t started by MBA types, since the initial markets are too small to appear as a business opportunity at all.

Economies of scale

With economies of scale the fixed cost (engineering, management, office space) of creating a product can be spread out over greater quantities of sales. Software startups enjoy an hughe economies of scale because the marginal cost of producing another copy of the product is close to zero. Service businesses, like consultancies, yoga studios, etc, gain limited advantages as they grow.

Branding

Creating a strong brand is a powerful way to create a business that can endure. However techniques for polishing the surface don’t work without strong underlying substance. Starting with a brand without substance is dangerous. Coolness is interesting bus what products and value will the business create?

Velocity 2015 Amsterdam

Thursday was a very interesting day for me at Velocity 2015 Amsterdam, build resilient systems at scale. It is one of the best conferences I attended in the last years. Using some quote’s and bullets I’ll give a little insight.

On retro’s, post mortems, etc

Lindsay Holmwood showed that what goes wrong in retrospectives, post mortems and the like is mostly based on:

  • Confirmation bias – aka ignore alternatives
  • Hindsight bias – aka – alter memories to fit a narrative. Talk about events with the knowledge of the outcome.

To overcome these we could use techniques like: Take opposing viewpoints (on purpose, to investigate things), contrarian thinking, let people explain stuff in terms of foresight and all kinds of sharing information.
In short for this to work we need a safe environment where people can speak up. Starting from the believe that everyone did the best they could. And always keep in mind that there is a difference between work as imagined and works as done.

Optimizing teams in a distributed world – Conway’s 3 other laws

Conway’s Law stems fro the greater part from his 1967 paper: How do committees invent.
The slides and all references mentioned in the presentation.

  1. Whose structure is a copy of the organisation’s structures. To put it different: Communication dictates design. Also check The Mythical Man Month and Dunbar’s number. So manage communication between teams.
  2. – Doing it over – There is never enough time to do something right, but there is always enough time to do it over. Engineering and architecture are always about: Trade offs. Also check: Satisfying vs Sacrificing. So remember it is a continuous process.
  3. If you or your team cannot explain all the code in your release package your release is too large.

  4. Homomorphism – If you have 4 groups working on a compiler, you’ll get a 4-pass compiler. So organise teams in order to achieve what you want (around business capabilities).
  5. Disintegration – The bigger they are, the harder they fall. Time is against large projects and teams. Aim for a scope that supports a release cycle of two weeks or less. So keep your teams as small as necessary.

It is better to be too small than too big.

We are all DevOps

One of the best talks on DevOps in the Etsy world by Katherine Daniels.

On hiring:

It is easier to teach someone a new technology skill, than to teach someone not to be an asshole.

European Digital City Index 2015

European Digital City Index 2015The European Digital City Index 2015 describes how well different cities across Europe support digital entrepreneurs. The aim of in the index is to support digital entrepreneurship across Europe and for policy makers, the index provides a tool to benchmark cities and decide where they may need to devote more resources.

The EDCI is a composite index based on the following factors:

  • Access to capital
  • Business environment
  • Digital environment
  • Skills
  • Entrepeneurial culture
  • Knowledge spillovers
  • Lifestyle
  • Market
  • Mentoring & managerial assistance
  • Non-digital infrastructure

The data for the European Digital City Index stems from among others Digital Economy & Society Index (DESI).

It should be no surprise that access to capital is by far the best in London, followed by Paris and basically all the others are really small compared to these.

Mapping to other indexes

First of all it is interesting to compare this map to the Global Startup Map. The number 1, London, in the EDCI has tentimes the number of startups in the global startup map compared to the number 2, Amsterdam.

The European Digital City Index maps really well to the Digital Evolution Index (DEI). However we should note that the DEI is not as optimistic about the growth of the digital capabilities of most of the countries where the top-10 cities are located.

Support doesn’t equal results

The European Digital City Index looks at support of digital entrepreneurs in Europe. This doesn’t equal results! If we look at global list of unicorns (in short billion dollar startups) both compiled by WSJ and TechCrunch results differ. There is just one unicorn in Amsterdam (Adyen), the number 2 on the EDCI, where both Berlin (number 7) and Stockholm (number3) have more.

Bloomberg Innovation Index

bloomberg innovation index logoBesides the Global Innovation Index there are other indexes measuring and comparing innovation around the globe. Another interesting index is the Bloomberg Innovation Index.

Bloomberg’s innovation index is based on six equally weighted metrics. Their scores are combined to provide an overall score for each country from zero to 100.

  • Research and development – Research and development expenditure as a percentage of GDP.
  • Manufacturing – since it takes a lot of knowledge and know-how to stay at the leading edge of making things. Manufacturing value-added per capita.
  • High-Tech companies – Number of domestically domiciled high-tech public companies as a share of world’s total high-tech public companies.
  • Postsecondary education – Number of secondary graduates enrolled in postsecondary institutions as a percentage of cohort; percentage of labor force with tertiary degrees; annual science and engineering graduates as a percentage of the labor force and as a percentage of total tertiary graduates.
  • Research personnel – Professionals, including Ph.D. students, engaged in R&D per 1 million population.
  • Patents – Resident utility patent filings per 1 million population and per $1 million of R&D spent; utility patents granted as a percentage of world total.

bloomberg innovation index  2015

The Bloomberg Innovation Index takes less factors into account compared to the Global Innovation Index (GII). The GII gives more attention to context. It includes political and regulation environment, infrastructure, market sophistication and creativity.

Other innovation lists

There is a more extensive list of innovation indexes.

Global Innovation Index 2015

The Global Innovation Index (GII) 2015 is an annual publication which features a composite indicator that ranks countries/economies in terms of their enabling environment to innovation and their innovation outputs. The GII covers 141 economies around the world and uses 79 indicators across a range of themes. The Global Innovation Index 2015 was created by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO).

Here is an overview of the indicators that are used to create the innovation index and how they are related:
Global Innovation Index factors

And this is how the measures are calculated:

  • The Global Innovation Index is the simple average of the Input and Output Sub-Indices.
  • The Innovation Efficiency Ratio is the ratio of the Output Sub-Index over the Input Sub-Index.
  • The Innovation Input Sub-Index is the simple average of the first five pillar scores.
  • The Innovation Output Sub-Index is the simple average of the last two pillar scores.

Global Innovation Index Ranking

Here is the 2015 ranking for the Global Innovation Index. Switzerland, the United Kingdom (UK), Sweden, the Netherlands, and the United States of America (USA) are the world’s five most-innovative nations; at the same time, China, Malaysia, Viet Nam, India, Jordan, Kenya, Uganda, and a group of other countries are outpacing their economic peers in 2015. Global Innovation Index Ranking

The top 25 countries in the GII consistently score well in most indicators and have strengths in areas such as information and communication technologies and business sophistication, which includes knowledge workers, innovation linkages, and knowledge absorption; they also create high levels of measurable outputs including creative goods and services.

Technology Gap

On average, the technology gap between developing and developed countries is narrowing. One explanation for this phenomenon is that more and more developing countries outperform in innovation inputs and outputs relative to their level of development.

By tracking global progress in innovation and focusing on those developing countries that out- perform in innovation compared to countries at similar levels of development, the GII can be used to monitor progress in innovation and identify areas of strengths and weaknesses in innovation efforts.

At low income levels, countries that outperform their peers focus on removing structural obstacles to innovation, such as poor access to finance and poor linkages within the innovation systems. At higher income levels, efforts concentrate on increasing investments, spurring growth in innovation outputs, and improving human capital.

Research and development (R&D) is one of the key policy areas that can secure technological potential and, therefore, innovation and economic growth. In order to reach the income levels of high-income countries, low- and middle-income countries need to expand their access to technology and their capacity to use it.

And digital?

Given the importance of strengths in areas such as information and communication technologies (ICT) for leading countries in innovation, it should be no surprise that the top 10 shares a lot of countries with the leader in the Digital Evolution Index. Especially since innovation is one of the underlaying drivers in the DEI.

Same remarks hold for the Digital Economy and Society Index. Only the latter is just focussed on Europe.

Performance testing at bol.com

On Monday October 12th Rob de Groot and Chris Kramer of the bol.com test automation team and development process innovation team will present on performance testing at bol.com. The presentation is for the Dutch Web Performance & Operations Meetup, as a pre-event for the WebPerfDays.

Rob and Chris will elaborate on how performance testing evolved at bol.com and show how modern tooling like Docker and Mayfly fits into the future of performance testing? Mayfly is the user story centric Continuous Delivery development platform, developed by bol.com.

The event will be hosted at bol.com headquarters in Utrecht (map).

RSVP and join!

Lessons of product development at Netflix

Just a month after sharing my post on Spotify engineering culture, I found a post on Startup lessons from Netflix. That was written inspired by a talk on fast delivery devops by Adrian Cockcroft. Who spent a long time building up Netflix’s cloud infrastructure and spearheaded the development of many new cloud-related technologies and techniques at the company.

Adrian Cockcroft’s lessons of product development at Netflix

Adrian’s lessons of product development at Netflix are summarised in this sheet:
Lessons of product development at Netflix
Besides from the different angle and focus on cloud, I think that there is quite some overlap with the Spotify presentations. If you have a different take at this, please leave a comment or meet me at the LAC congres where I will be presenting on time-to-market vs architecture…

Spotify engineering culture part I & II

I’ve been reading quite some article on engineering culture and ways of working. The videos on Spotify Labs are among the best sources I’ve watched or read in the last year on the subjects of agile and culture. Recently the second part of their series on Spotify’s engineering culture was released.

Spotify engineering culture part I


Important take aways for me were:

  • Agile over scrum
  • Principles over practices
  • Servant over master

Spotify engineering culture part II

Very cool that one of my favorite quotes by Mario Andretti was used in the video:

If everything seems under control, you’re not going fast enough.

To cope with this aspect you need a fail friendly environment and a limited blast radius. For the first focus on fail recovery instead of an fail avoidance. For the latter focus on a decoupled architecture.

A healthy culture heals broken processes! Growing organizations have growing pains. Culture can either magnify or heal them.

Update: Henrik Kniberg on Scaling agile at Sporify

The hour talk that Henrik Kniberg gave on Scaling agile @ Spotify is also available on vimeo:

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Online product recommendations using Hadoop

One of the leading portals on BigData, Dataconomy, had an interview with a colleague of mine on product recommendations systems. These are systems aimed towards personalizing content and recommending the ‘right’ products, in other words products that inspire customers. The article – The Science Behind the Finding the Perfect Product – is a nice read that covers quite some areas.

Stack of Hadoop nodes for product recommendationsAt bol.com we use Hadoop for batches, and we have our own custom-built technology for the real-time part. The picture with this blog post shows some of the new nodes that were added to the Hadoop cluster yust this week.

This colleague also held a talk at BerlinBuzz 2014 on product recommendations. It covers quite some interesting stuff on a great case of the use of Hadoop and BigData in under 20 minutes: