Fletcher in the News

America's Future Depends on Global Innovation Capability: Dean Chakravorti

Forbes

Bhaskar Chakravorti is a Senior Associate Dean at The Fletcher School of Law and Diplomacy, Tufts University.

Solving Apple's Innovation Problem

On the face of it Apple has one innovation problem that it needs to overcome – find a new category-busting product like the iPhone. Not so easy, of course. But the intervention of hedge fund manager David Einhorn, mad at the company’s inability to leverage value from its $137 billion cash pile, tells us that its innovation problems are significantly bigger.

It needs to re-instantiate the idea that it could be worth a $1 trillion.

Instead Apple is a company whose current, core customer-centric mission has acted like a dehydrator in the company’s idea closet. Its insistence on a very narrow definition of what it does has made it impotent to use that money. It’s creativity is all but dried up. …

… We face two simultaneous problems in the global economy. The first is the accumulation of capital for non-productive uses – Bain reports that by 2020 the total of financial assets in the world will be $900 trillion, $300 trillion more than today, and its effect is constantly to threaten a surge in non-financial asset prices such as commodities. Apple is a symptom of that problem hoarding cash it is too scared or unimaginative to spend.

The second is the growth of a global middle class that will be extremely resource hungry and that is causing enormous structural problems – or opportunities – because of the pace of development. These are Apple’s future customers.

I got talking recently about this, and the role of the USA, to Bhaskar Chakravorti, senior associate dean of International Business & Finance at The Fletcher School at Tufts University. Bhaskar also runs the Institute for Business in the Global Context.

“America’s future actually depends on a global system capability in innovation,” says Bhaskar, “that is deep, long-term investment in solving problems on a systemic basis.”

There’s some sense in applying this obligation also to corporations. As Bhaskar points out 40% of global GDP comes from emerging markets, yet only 10% of US GDP comes from these areas. America is letting opportunity slip by.

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